Hot! Hot! Hot!

Thursday, June 19, 2008

global warming isn’t fantasy. DAngerous as it is, it comes with many chances to make ‘green’ bucks too! In a line – It’s clear & present danger, with the right opportunities!


What do Arnold Schwarzenegger, Barclays Bank, ONGC and students of Oberlin College (Ohio) have in common? They are all working towards a greener tomorrow by reducing the emission of greenhouse gases in their own way.

With people now realising that global warming is a reality and climate change is happening, it was time someone decided to do something about it. So, out came the Kyoto Protocol by UNFCC to tackle climate change by reducing man-made green house gases or emissions. Each of these gases causes global warming, but not all are equally sinful. If CO2 (carbon dioxide) has been given a score of one on the global warming-potential scale, then sulphur hexafluoride with a score of 23,900 makes it the most lethal of all.

So, if you develop a mechanism to reduce the emission of these gases, you gain points accordingly. As an example, stopping emissions of a tonne of CO2 gives you one point, while reducing emissions of one tonne of sulphur hexafluoride will get you 23,900 points, and similarly so on so forth. These points [or CERs: Certified Emission Reductions] could be sold to countries, which under the Kyoto Protocol, need to reduce their green-house-gas emissions by at least 5% from 1990 levels.

The heat is on

Yes, literally! With climate change comes a whole lot of other changes too. Bankers, insurers and institutional investors have begun to realise that climate changes leading to storms and destruction of property are causing them big financial losses. They are now demanding that companies, in which they hold stakes, sit up and take notice and alter their business plans accordingly.

Businesses too are realising how soaring energy costs are increasingly eating into their profitability and it’s time they did something about it. Citigroup is encouraging the sale of energy efficient homes, IBM has reduced its energy bill, Unilever has reduced its greenhouse outputs by 10% in one year. DuPont, way back in 1980, had introduced substitutes for Chlorofluorocarbons (CFCs) in refrigerants as they were destroying the Ozone layer.

Siemens has developed more energy-efficient motors plus has stared using renewable energy systems like wind-energy. The firm conserved some 1.2 billion tonnes of carbon dioxide since 1995! Intel has chipped in too by developing a technology where a PC on standby mode would consume just 5 watts of electricity, resulting in a saving of 71% of power consumption.

Toyota, always a pioneer and leader, beat everyone in energy conservation by launching the Toyota Prius. This hybrid averages 55 miles to the gallon and emits 55% less carbon dioxide than other midsize cars. Not just are these companies helping the environment, but tomorrow when regulations on carbon emission get stricter (which they will, if we need to save our planet), these companies, who have already got a ‘heat-start’, would find it very easy to not just comply with the norms but stay ahead of competitors too.

DuPont in 1994 set a target of cutting emissions by 40% by the year 2000. It achieved that. Then it targeted 65% reduction by 2010 and achieved that by 2005. It found that despite producing 30% more goods, it was using 7% less energy, which helped it save $2 billion. It surely makes business sense today to think green.

Green bucks, green planet

There are some companies who are unable to reduce their carbon emissions for various reasons. Sometimes, it’s just not practically possible and sometimes, it’s too expensive for them to replace their existing equipment with the modern energy saving ones. They needn’t lose hope. All they need to do is pay companies in developing countries to cut emissions and earn CER credits.

A business opportunity

As the West realises it’s cheaper and easier to buy carbon credits than earn them on their own, it has now developed a huge new business opportunity for many. One company that’s made a very big fortune for itself is the European Climate Exchange (ECX). In its first month of operations, it traded a million tonne of CO2 credits. Today, it handles 85% of the 1.2 billion carbon emission trade made in Europe.

If that’s not all, it’s expecting the volume to grow to 4.8 billion tonnes by 2009. If earlier, it cost $13 to buy one carbon credit, then today, the price has doubled to $26. Not surprising that Goldman Sachs shelled out $23 million for a 10% stake in Climate Exchange (which owns the European Climate Exchange & Chicago Climate Exchange).

Carbon trading volumes are exploding. From 10 millions tonnes traded in 2004 to more than 600 million tonnes by 2006, analysts predict the market for carbon credits to be worth some $45 billion annually by 2008. As the deadline of 2012 nears, the buying of carbon credits would increase frantically.

It’s a huge business opportunity for India and many of the developing countries. Big players have entered the game making it more lucrative. J.P. Morgan plans to invest $3 billion in carbon trading. They would work as intermediaries – buying direct from emission cutting projects and selling to governments & industries later. Merrill Lynch too has entered into carbon consulting. India’s premier bank IDBI has now got a dedicated carbon credit desk, which provides all the services in the area of clean development mechanism (CDM). Japan has turned out to be one of the biggest buyers of carbon credits. It bought 38% of the carbon dioxide credits offered worldwide. Britain, at 15%, stood second.

With big buyers around, come big brokers too. The biggest “emissions broker” named Evolution Markets is doing brisk business today. It made the world’s first cross-border carbon trade in 2002 when it brokered the sale of carbon credits from government of Slovakia to Japan. It now even offers “carbon finance,” wherein, by using the value of future emission reductions, it would finance emission reduction projects. As the business grows, new opportunities keep coming up. Is this going to be the future of growth?

Everybody loves green

Students of Oberlin College in Ohio now have timers inside their showers. Anything more than 3 minutes of shower time is no good. They have also decided to share refrigerators, which, according to them, is “one of the top energy suckers in a household.” Some students are even persuading their administrators to switch to fossil-free fuel on campus. They are doing their bit to reduce carbon emissions and global warming from their lives and the planet.

Even the Pope has joined in. Cardina Paul Poupard accepted a donation, which would make the Vatican the world’s first carbon-neutral sovereign state. A part of the reforestation project in Hungary would be designated as the “Vatican Climate Forest” where, depending on the Vatican’s energy usage, a proportionate number of trees would be planted to offset its carbon emissions. The 2006 Super Bowl too aimed at offsetting all the CO2 the championship generated by planting trees.

The blockbuster film The Day after Tomorrow was again a “carbon neutral” film. Its scene advisor, Dr Molitor, persuaded the director to invest in carbon reduction projects to compensate for the emissions during production.

A whole new world

The world is changing – this time for the good. A whole new world of opportunities seems to have opened up. This has even made ‘pig-flatulence’ feature on the London Stock Exchange! An Irish company AgCert has found a way to collect methane from rotting pig manure and generate electricity. Whoever thought that world over, companies would be scrambling for it!

There are some surprised beneficiaries too. Villagers in South India have been using biomass as cooking fuel. They never knew how much they were contributing towards prevention of global warming. Today, the Chicago Climate Exchange is giving them carbon credits and they get to earn a minimum of Rs.800 per year. Bangkok makes electricity using swine manure; villagers in Andhra Pradesh use seeds of the Honge tree to make cleaner fuel; China is using wind energy... Yes, the world is changing and earning too. Save the planet and your bottom lines - there can’t be a better combination. The good news for India is that while China’s leadership in the CDM market has shown a decline, India has jumped from a 3% share in 2005 to 12% in 2006 (World Bank data). “Reducing emissions” is the latest trend and Indian entrepreneurs have a lot to gain. The climate is warming up and making business opportunities go hot! Hot! Hot!

ADVERTISING IS DEAD

Thursday, June 5, 2008

With clutter on the rise and agency commissions on a regular decline, integrated 3600 marketing communications is the way forward as a more holistic solution


“Every movie looks good in a trailer – Seedhi Baat, No Bakwas, Clear Hai?!” That’s a hoarding you might come across in front of movie theatres. Or at a bus shelter, you might be greeted with a hoarding, which you couldn’t help but agree to... “Just when the conversation gets interesting, her bus arrives – Seedhi Baat, No Bakwas, Clear Hai?!” You might have guessed the brand in question by now. Yes… Sprite. Which, over the years has become synonymous with the old adage, “Honesty is the best policy.” The brand is using a host of mediums to reach out with its message of no-nonsense attitude to the youth. To break through the clutter of message, it’s going to customise its message according to the locations. Not just outdoor hoarding, the brand would be using the digital platforms too. It would create a “Sprite-itude” zone, an interactive online site, where apart from a host of fun activities, users could even judge their “Sprite-itude”, i.e. they could find out by filling a questionnaire whether they were individuals who set their own rules or found it easier to follow others. All this and much more is being done to supplement the advertising campaign and the new TV commercials conceptualised by Ogilvy & Mather.

What Sprite is doing this year, Coca-Cola, its parent brand, did last year, It used its superhit punch-line “Sabka Thanda Ek” from its commercial, starring Aamir Khan, and built a one-stop interactive online destination www.myenjoyzone.com.

When the business paper Business Standard wanted to promote its Hindi edition earlier this year, not only did it use print and TV campaigns, but a whole lot of on-ground events and various “below-the-line” activities to communicate its message “Behtar business woh jo aapki bhaasha mein ho!” Today, the way to build brands is changing… and very fast.

You can reach anybody...that’s the easy part

Till a few years ago, marketers worked hard to find ways to make their message reach target consumers. Today, the game has changed. According to Wenda Millar, former Chief Sales Officer of Yahoo! Inc., “You can reach anybody today. The challenge is to be able to ‘connect’ with the consumers.” As a result, marketers today cannot depend on just one form of communication – be it TV, print, outdoors, or digital. They need to think 3600. According to a recent report published by the American Association of Advertising Agencies (AAAA), developing integrated marketing communications is the number one concern for senior marketing executives. It started as a media planning tool, but today it has taken a whole new dimension. Thinking 3600 is a way of not just reaching, but surrounding your target audience and convincing them through innovative ways to buy your product or service. It is a way of understanding every form of media (new and old), its strengths and weaknesses and using it to leverage the maximum benefits for your brand. Today, it is the way to build brands.

If you could name the models of the sport car that Saif drives in the movie Ta Ra Rum Pum, you could win yourself a Chevrolet Aveo! This was a part of 3600 marketing initiative of Goodyear to promote its tubeless tyres. It also set up ‘Goodyear Corners’, which were actually shops-in-shops, where their representatives gave potential consumers information about the product and helped them purchase it too. Basically, they wanted to remove the perception of tyre stores being “dirty places” to visit. A “women on wheels” event was conducted on International Women’s Day, an online club called ‘Goodyear my turf’, a toll-free number helping you use the service ‘Goodyear Wheel Assist’, were some of the other initiatives. Ofcourse, it advertised too, borrowing visuals from Ta Ra Rum Pum, in addition to a radio contest. A total 3600 effort!

UTV launched its Hindi general entertainment channel with a fundoo initiative called “Bingo Bindaas Go to Space Contest!” You had to watch Bindaas every evening at 8:00 p.m. and answer the questions flashed on the television screen. If you got lucky, you could go to space! The campaign got them more viewership than an isolated TV campaign could ever have.

Mahindra & Mahindra used a total 360 degree marketing communications plan for promoting its second hand car outlet named ‘FirstChoice’. They integrated TV commercials with SMS to help create a buzz. You could SMS any purchase or service-related query. They expected 1200 to 1500 SMSes a day. In fact, the company received as many as 15,000 SMSs a day. Integration is always more effective.

The new-agency business

Agencies need to reinvent themselves. They have to learn to think beyond the 30-second spots (TV commercials). According to BBC World Ad Avoidance Study, an average TV viewer sees 438 ads a week. Hence, just advertising, however good, isn’t sufficient to build a brand. According to Tateo Mataki, Dentsu Chairman & CEO, “The business model in which the agency’s sole function is to create advertising and buy media is no longer viable.” According to him, the agency and the client need to share risks & rewards equally, which is exactly what Dentsu did with the brand Cup Noodles. They decided to promote the Cup with anime (animated) advertising. They then created comic books, and even episodes, which were sold on DVDs, which soon became best sellers and helped earn additional revenue for Dentsu & the client.

Plain advertising or vanilla PR ain’t working any more. Think about it, some 40% of O&M’s Rs.1,000 crores billing comes from the non-ad business. Lintas set up IMAG (Integrated Marketing Action Group) to provide clients with a single window to integrate all marketing efforts. When ICICI wanted to promote its children’s growth bond, it decided to go in for a direct mailer. A 1% response would be considered a success. Its agency contract however decided to organise a drawing competition on “What is your dream career” for children. The parents of the children, a few days after the competition received a letter which read like this: “Did you know that Aditya wants to be a pilot!” and then explained them how ICICI could help their child achieve his dreams. 20% parents responded; ICICI spent Rs.6 lakhs but generated Rs.2.8 crores.

A great creative guy is not enough today. Clients need a person who understands their brand and has a full grasp over all the media options available and is capable of designing a plan which best fits them. They no more want just an ad, or an event or a DM or PR. They tell the agency to do whatever it takes to make their brand grow.

The changing consumer

In 2005, when customer Jeff Jarvis wrote about his problems with Dell in his blog, little did he know that he was changing the way people would decide how to buy. Thousands joined him in his blog and made Michael Dell realise that customer service was a problem and resulted in the launch of Direct2Dell. With blogs, social networking sites et al gaining prominence, people are making more informed decisions. To influence the consumer today, you need to communicate to him from various different touch points. Even before watching a movie people check out reviews, blogs, and websites.

Conventional advertising is out. BMW created films of its cars’ stunning driving experience with the help of a series of directors; and then it put these films on its website. The young internet-cum-blackberry addicts lapped it up & loved the idea. It created a buzz no advertising could have created. Apple created a buzz and built awareness around its iPods with minimal mass media advertising. You need to work on total branding solutions to stay in business. Clutter is increasing, commissions are decreasing, you need to rethink your strategies... for plain advertising is dead.