Value Innovation

As an agency we are always looking at other industries, but we seldom look at our own industry. But it is critical for one to review your own direction, your competitors and your industry as a whole. As we were looking at the industry, we wondered, “Why should the ad industry be the only one without a Low Cost offer?” Now there are “cheap” solutions. And there are even real cheap offerings out there. And if you are the local restaurant, used car dealer or home cleaning service these may be fine. But there were not Low Cost solution that delivered QUALITY, CUSTOMIZATION and a LOW COST. Cheap and Low Cost are very different. With cheap the product quality suffers along with the brand. The difference is that we defined Low Cost as providing the best value for the money. And to provide a leap in value vs. a step takes innovation and as we have seen by the Costco’s and Southwest’s innovation often disrupts an industry.  

 

In many industries “value innovators” redefined, and created powerful leaps in value for their customers and unleashed new demand for an industries services. For example, EBay, Southwest Airlines, Amazon.com, and Costco developed business models that deploy disruptive innovations that part with traditional models and create new markets. These companies developed new models that do not diminish quality, but delivers the BEST VALUE FOR THE MONEY.

 

In advertising, there was no disruptive offering, or innovative model that offered a new set of price and performance economics without sacrificing quality. So the principals of  TVLowCost USA – with over 100 years of “Madison Avenue” experience – know that traditional agencies will not/can not look to part with traditional models that will compete with existing revenue or profit margin. Besides not being in their DNA, and don’t overlook the importance of having Low Cost in your DNA,  breaking from the status quo only has negative implications for established agencies as it diminishes profit margins that are based on time and materials… the more time, the more materials, the more fees and profit. And certainly “Madison Avenue” will not align the whole system of a company’s activities in pursuit of differentiation AND low cost. Therefore a new model needs to be built from the ground up and not reengineered.

 

Market desire:

To develop a new model there needs to be foundation. And the first step was identifying a gap in the TV advertising field and address the input of many disgruntled agency customers. To anyone in the industry the results were more than expected:

•          The industry as whole desires improvements in:

–         cost of ownership

–         speed to market

–         the overall time-to-value benefit

–         predictability/no surprises

•          Without sacrificing quality

 

In other words, ad industry leaders want VALUE INNOVATION. Not really news in the ad world and I suspect not news in any industry. But we needed to look at what this really means, because it is not about just charging less. We determined that value innovation is created when a company’s actions favorably affect both its cost structure and its value proposition to buyers.  In this case, Value Innovation enables those who utilize TV to do so more efficiently and effectively and those who have not been able to afford TV to include TV as part of their marketing mix. Cost savings are made by eliminating and reducing the factors an industry competes on. Buyer value is lifted by raising and creating elements the industry has never offered. This little chart below pretty much summarizes the thought.

 

 

Traditional Costs:

We began by looking at industry costs and how they got to where they are. For example a typical spot and campaign at 150 GRPs cost about $1,000,000 – a bit less and it certainly could be more. The breakout would look something like:

Agency Fee	$     200,000
TV Production	$     335,000
150 TGRPs	$  1,025,000
Pre-Test	$      40,000
TOTAL	$  1,600,000

 

Value Curve:

In order to deliver a better value curve we looked to dissect the current industry cost structure, offering and process to determine:

1. What the industry takes for granted, but should be eliminated
2. Which factors should be reduced below current levels
3. Which factors should be raised above industry standards
4. What factors should be created

At that point, to change the Value Curve you need to keep a couple of guiding principals in mind or nothing will ever change (and this is why an established agency can not develop a new Value Curve).

1. There are no “sacred cows”
2. Break the rules
3. Simplify the process
4. Change the relationship
5. Deliver the ESSENTIAL, not the EXCESS
6. Improve results

 

Eliminate:

1. Agency abuse

•          A process that financially rewards an agency by incurring “unnecessary” time

•          The circular development cycle of Juniors creating and executing work for Seniors to comment on

•          Unwarranted exotic shoots

•          “Overkill” directors and crews

•          Beautiful creative that does not sell the product

•          Excessive and long-term retainer agreements

1. Budget uncertainty
2. Pitching/RFPs – this just adds cost

 

Reduce:

1. The cost by a factor that will make it possible for Challenger Brands to leverage TV in a meaningful manner
2. The risk of TV as part of an overall marketing channel
3. TV development time cycle from 20 or more weeks to 8 weeks
4. The time and effort that clients’ need to spend with their agency on TV
5. The number of meetings – 7 -8 meetings with focused agendas
6. The vast array of people from the Agency that work on a typical TV spot – time and excess only add to the bottom line:

•          Two partners from start to finish

1. The size and focus of the client team – Key decision makers only
2. Agency overhead

 

Raise:

1. The time/cost to value relationship
2. The number of creative ideas – from 2-3 to 10 quality concepts
3. The input that consumers have on development
4. The media value by:

•          “pre-negotiating” with cable networks and continually uncovering better values

•          Expanding TGRPs by purchasing only short form media (:10 and :15) in order to drive repetition of your message

1. The focus of the work to sell products vs. winning awards

 

And since there was nothing like this in the U.S. we prepared to build our model from the ground up. But as we dug a deeper into it, we quickly found that there was an advertising network begun in France and expanded to 10 other countries that in fact had the same focus on cost and quality as we desired to build in the U.S. Not only that, they have proven the model works for clients, they have pioneered and honed the steps and processes and they have demonstrated amazing results for their clients. So TVLowCost USA was born. And the offering is now available in the U.S.

 

 

The result of all of this was Creating a Package that offered the security and comfort of a predicable investment coupled with high-quality response driven media:

 

TVLowCost USA Pack

    $500,000

Guaranteed, Complete

þManagement & Creative Development

þTV Shoot

þþNATIONAL MEDIA BUY

þþA MINIMUM of 150 National TRGPs

þþA MINIMUM of 2,000 airings

þFocus group creative input

þOn-air 8 wks from Brief

 

THE BEST VALUE ALL-IN-ONE TV PACKAGE – A SAVINGS OF 75% VS HIGH-COST AGENCIES

 

Next Steps: Ask yourself:

 

1. Would TV benefit my brand
2. I consider my brand a challenger brand
3. Would I like to get more from my marketing budget during these tough economic times – and save around 75% on TV advertising
4. Is your time at a premium

IF you answered YES to two or more of the questions above, call Jim Lurie @ 646-839-6239 or e-mail lurie@tvlowcostusa.com and we will share with you:

–         how it IS possible

–         why only TVLowCost USA can deliver results for you WITHOUT sacrificing QUALITY

–         case studies

–         a feeling of exhilaration, excitement and freedom!