All Wired Up and Nowhere to Go
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All Wired Up and Nowhere to Go
Author: by Carole Jeffries and Jerre Paquette
Date Added: Friday Apr 02nd, 2004
Category: Miscellaneous
All Wired Up and Nowhere to Go
by Carole Jeffries and Jerre Paquette
Can you help me with my marketing plan and advertising campaign?\" the caller inquired, his voice tinged with anxiety. \"I\'ve just paid thousands of dollars to a California advertising firm, and they\'ve got the whole thing wrong, dead wrongóthe target market, the product description, the benefits, our corporate image, everything.\"
It was 6:30 on a Friday night and the tail end of a sixty hour week. We should have been calling it quits for the day, but the caller (we\'ll call him Phil) was so keen about his invention, his company, and his marketing opportunities, any week\'s end weariness evaporated as he told us his story.
Apparently, this was not the first marketing and advertising campaign Phil had seen slide to a halt in a quagmire of confusion.
\"This is the second advertising firm I\'ve gone through,\" he explained. \"Now, I\'m running out of timeóand budget.\" We could hear the barbs of frustration poking through his optimism and enthusiasm. As he told us more about his invention and what it does, we asked Phil if he had prepared a business plan. \"Well, yes,\" he said. \"I have all the financials done, but what I need now is the advertising. That\'s where I\'m lacking.\"
\"Have you done a Vision Statement and a Mission Statement?\" we inquired. \"What about a Marketing Plan?\"
He hadn\'t. Nor had he done a Statement of Core Values, a Statement of Goals, or a Statement of Strengths, Weaknesses, Opportunities, and Threats (SWOT Statement). We were beginning to understand why the advertising campaigns had gone, as Phil described them, dead wrong.
By the end of the conversation, we managed to explain the value of these key ingredients to Phil, and we suggested he sit down and give some concentrated thought to their development. We explained to him that the advertising firms surely had little or nothing to work with because his company has no well-articulated Vision Statement declaring where it is going or why and no strong Mission Statement defining what the company does, how it does it, who its customers are, or where they are located. He had written a product description and posted it to his web site, expecting cutting-edge technology to do his communications for him. Its language, however, was complex and rambling, and it provided little of the passion we heard in Phil\'s voice and certainly none of the customer-focused material essential to a good advertising campaign.
Phil had a lot of good information in his head, though. The problem was he needed to synthesize it and write it down. He needed to make his ideas easily accessible to others, build a solid foundation for his entire Marketing Plan, and ultimately create a springboard for an inventive and effective Promotional Plan.
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About the same time, across the continent, in the industrial heart of the United States, the Board of Directors of a Fortune 500 company sat blinking in baffled dismay at one another. That afternoon, an advertising firm had presented a campaign that also totally missed the point. \"We are not,\" the CEO explained patiently, \"a company that sells this product. We are the supplier to independent franchisees who sell it.\"
In the ensuing discussion, they realized that even to their own advertising consultants, the company had described its core business inaccuratelyóor at least vaguely. The culprit? A poorly-articulated, out-of-date Mission Statement that failed to describe exactly what the company does and who its customers are.
The cost? For the market research, focus group work, concept development, and preliminary artwork creation: One million dollars USóand counting.
In the end, the company had to rework its advertising campaign from the bottom up. Even more interesting, though, is that the new corporate slogan around which the new campaign will be built came from one of the company\'s directors, not from the advertising firm.
This is not a surprising or even unusual development. Typically, a company\'s owners or directors, not outside consultants, are the ones who have the requisite passion for running the businessñand it is that passion that should and often does end up on a billboard.
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Clearly, Phil\'s and the Fortune 500 company\'s stories illustrate the value of a comprehensive business plan. But the crashing failure of Wired Ventures\' attempted IPO provides one of the more stunning examples of what happens when sound business planning goes ignored.
In 1996, Wired Ventures, publisher of Wired magazine, was in the process of taking the company public. According to writer Jerry Useem\'s article entitled How Did It Go So Wrong? (Inc. Magazine, February 1998, p 59 - 69), \"it should have been a slam-dunk IPO. . . . but instead Wired\'s IPO failed spectacularly.\" Useem\'s article describes a number of conditions that all combined to create the disaster. Chief among them, two key elements:
A mismatch between Wired Ventures and its IPO underwriting team. Wired magazine was famous for its wild and wacky design, irreverent attitude, and leading edge editorial contentóand it had hooked a remarkable total of 95 pages of advertising per issue and a circulation of 325,000 readers.
Although it had been actively courted by the aggressive and progressive Robertson Stephens & Co. of San Francisco, Wired Ventures awarded management of the IPO to the ultraconservative Wall Street firm of Goldman, Sachs & Co. and assigned Robertson Stephens the role of co-manager. The mismatch of styles foreshadowed failure.
An unrealistic valuation of the company that, by some accounts, exceeded its real value by as much as 17 times.
The problem seems to have been borne from an inaccurate perception of the company\'s core business and its industry. To set the offering price, the underwriters compared Wired Ventures to Netscape, Yahoo!, America Online, and other computer media companies that were, to be sure, red hot and rolling. They were not, however, print publishers.
Wired was compared to and promoted as something it was not.
While there were other factors involved in the ultimate failure of this IPO, these two alone set the stage for the drama.
Had Wired linked its Vision Statement, Core Values Statement, and selected portions of its SWOT Statement with those of Goldman, Sachs & Co., they would have come face to face with the glaring discrepancy between the two corporate styles. From there, they would have had at least three options:
develop a plan to bridge the gap between Wired and Goldman Sachs
award sole management of the IPO to Robertson Stephens
go shopping for another IPO manager altogether
What happened, instead, was that Wired and Goldman Sachs developed a strategy fraught with problems. A series of stylistic inconsistencies and chronic last minute changes weakened the corporate message, frustrated the presentation team and, in all likelihood, confused potential investors. The design of the prospectus alone offers a telling example of the communications confusion, and it suggests that, from the outset, the entire communication strategy would fail to reach, and move, its intended audience.
According to Useem\'s article, the original prospectus design was devoid of Wire\'s distinctive neon colors and wild fonts. Instead it was greyed down to a plainly-bound document containing lines of dense text. The struggle between client and underwriter began. The design may have been what the financial community typically expected and it may have coincided with the underwriters\' Wall Street image, but it was not consistent with the Wired vision and existing market presence.
In the end, Wired and Goldman Sachs compromised on a white cover with neon yellow accents. The design could not have spoken to either the financial community or to Wired\'s upbeat computer community. Clearly, there was no strong, shared Vision, and the resulting document was neither mackerel nor chickenóalthough it seems to have closely resembled a turkey.
While the confusing corporate message is one key element that contributed to this fiasco, the other, and more deadly element, was the failure of Wired Ventures and Goldman Sachs to value the company more realistically. How they conducted an industry analysis of companies such as Yahoo!, Netscape, and America Online with the intention of comparing them to a print publication boggles the imagination. It\'s a little like comparing a dragster and a racehorse because they both go fast and appeal to racing enthusiasts. Developing a well-articulated Mission Statement and paying careful attention to it, however, should have disclosed the error. Let\'s have a look at a Mission Statement format and see what writing one for Wired would have uncovered:
What did Wired do? Publish a magazine.
How: Using print media (HotWired was the on-line version.)
For Whom? Readers interested in the computer industry.
Where: Throughout its distribution area.
Had such a Mission Statement been adhered to, it surely would have brought Wired and Goldman Sachs back to terra firma before their flight of fancy took them streaking beyond the outer limits of the ozone layer. It should not have been that hardóand it should have pointed to the foolishness of comparing Wired magazine to any of its electronic cousins or distant relationsórelations that provided editorial content and advertising potential for the magazine, not a basis for comparison.
In the end, the IPO was cancelled and, as Useem points out, Wired was \"deprived of the more than $60 million it had initially hoped to raise, [and] it had to swallow whatever it had already spent on advisors\' fees and other expenses. . . [which] could have totalled as much as $1.3 million.\"
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In stark contrast to these three examples of advertising and IPO campaigns gone wrong, Larry Clausen of Communication Incorporated-Shandwick in Calgary speaks of public relations campaigns gone right. In particular, he cites one campaign he and his colleagues worked on. \"The client,\" Clausen explained, \"was so easy to work with. Everything we needed to develop an effective campaign was right in their business plan. We did some talking back and forth, of course, but the plan was so complete, we really knew our clientówho they are, what they\'re about, who their target market isófrom the outset. It was an enormous help.\"
You guessed itóthat plan contained five crucial elements:
Vision Statement
Mission Statement
Goals Statement
Cores Values Statement
SWOT Statement (Strengths, Weaknesses, Opportunities, Threats)
From this material, advertisers and public relations firms, graphic designers and writers can extract ideas and images that lead to a concept and from there, to everything from logo and slogan to business cards, web page, print advertising, radio spots, and television commercials.
A comprehensive business plan that includes these five elements can help these professionals develop a promotional campaign that is entirely on targetña campaign made more effective and less expensive all because of a comprehensive, well-considered business plan that starts with five core elements.
Source: Carole Jeffries and Jerre Paquette operate J-BOGG Communications Inc., a full-service communication firm specializing in business writing, editing, video production, and workshops. Tel: (403) 229-2847
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