Friday, August 03, 2007

Green Procurement Ripe for Adding Value

Awareness of procurement's environmental impact is growing, but few companies are incorporating green strategies into their purchasing habits, according to a Supply & Demand Chain Executive article.

Procurement policies could have a significant impact on a company's environmental "footprint," given that somewhere between 50 and 70 percent of a company's overall costs originate from purchasing according to S&DCE. Yet, purchasing decisions are typically made based only on such criteria as product, quality, coordination or risk costs. A purchase that complies with the principles of green procurement also takes greater account of the costs for environmental damage arising from production, delivery and processing.

According to a BrainNet study cited inthe article, so far only a few companies and official organizations are taking "green" factors into consideration in their purchasing. In Germany, which often leads in these areas, fewer than 20 percent of all companies are actively tackling green procurement, and not even one in 10 companies is taking account of environmental costs as a critical factor when making decisions about its expenditure.

Studies at international levels have confirmed these trends, says Sven T. Marlinghaus, a BrainNet partner.

Yet green procurement can be a great value driver. The partially higher price of "green" purchasing processes is often at least partially offset by an improved corporate rating by the financial markets and enhanced brand perception by customers. Moreover, an ecological orientation can increases companies' planning security. Fossil fuels, for example, which today cover a large proportion of all energy requirements, harbor considerable geopolitical risks and consequently the risk of a significant price increases. Through greater efficiency and cleaner energy alternatives, these risks are reduced.

"One in three purchasing managers regard rising raw material and energy prices as a major corporate risk", says Marlinghaus. "Recycling valuable raw materials and using alternative resources will over the next few years decisively influence companies' profitability."

Oddly, the article cites one pharmaceutical company's conversion of its power plant from coal to wood as a smart choice without explaining the source of that wood.

Posted by Perry Goldschein
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Tuesday, July 31, 2007

Is the Web Marketing Industry Still Immature?

Search engine marketing (SEM) expert Kevin Lee talks about the immaturity of the SEM industry in his recent ClickZ column post. He reminds us that nearly all of the companies engaging in search marketing are less than 10 years old, and believes that the way agency/client relationships are created and maintained is immature as well.

While Kevin indicated by email that this post was more of a rant, he makes outstanding observations that apply to the state of web marketing as a whole I believe. He points out, for example, that:

"successful brands and successful marketers, be they manufacturers, retailers or catalog merchants, nearly always manage offline marketing by establishing long-term partnerships with their agencies, suppliers, and even media providers. These relationships don't always work out, of course, but there generally exists a mature understanding that in order for the company to thrive and grow, an investment in success requires both sides of the relationship to work hard to achieve agreed-upon goals and objectives, many of which will not be easy to deliver. Some initiatives take time to bear fruit; others rely on aggregation of experiential data, as well as learning by both organizations."

Some of the reasons for client dissatisfaction can include unreasonable expectations, a "dating mentality" with too short of a time horizon, and an unwillingness to communicate. Maybe because web marketing can bring such immediate results, company marketers expect their agencies to be able to maximize those results immediately as well.

In hiring employees, companies don't generally give new hires just one or even a few months to prove themselves - they have usually at least several months unless there's a clear and obvious mismatch between the company's needs and the new employee's abilities. There is a learning curve for both sides to work effectively together. To do any differently is too costly to both parties given the amount invested in the relationship (high costs of employee turnover and poor hirinig is well documented). The situation, costs and benefits are really very similar in an agency relationship.

An example of what one smart SRB client did illustrates a more mature way to approach the web marketing agency/client relationship. When we started with the client four years ago, we had to climb a learning curve in determining what would work for that client. The first few months we missed the benchmarks we had set out to achieve. The client stuck with us. By the fifth or sixth month we had become by far the client's most cost-effective marketing channel and remained that way for the following years. Had the client given up too soon, it wouldn't have realized the results that helped it grow substantially during the remainder of the relationship.

Posted by Perry Goldschein
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Friday, July 27, 2007

Yahoo Out-Greens Google?

Yahoo has taken on a leadership role on climate change action that looks to be galvanising its rivals into similar action, according to Ethical Corporation, and also gaining public approval. This is exciting especially because Yahoo, as the biggest US internet media company with 500 million monthly users worldwide, is in direct and influential contact with a huge percentage of the general public.

In May, Yahoo introduced Yahoo Green, an online education program offering environmental news, consumer tips and ideas to help consumers become personally and socially active in combating climate change. The introduction, which will ultimately be expanded to international markets, followed Yahoo’s own pledge to become carbon neutral by the end of 2007.

The company is also engaged in other online projects and parterships, including one with Wal-Mart, AC Nielsen and two federal agencies to develop 18seconds.org, a site promoting the use of compact fluorescent light bulbs. Yahoo executives say encouraging personal change is the greatest role Yahoo can play. Yahoo co-founder David Filo says the company wants to make it easy for consumers to act and help them build enduring habits that can truly make a difference.

And now, according to Global Green, which advises Yahoo on its environmental moves, Google and Microsoft are "racing to outdo one another" with environmental measures. Meanwhile even Rupert Murdoch’s News Corp has apparently pledged to make its operations carbon neutral by 2010.

Read more at the Ethical Corporation article on the topic.

Posted by Perry Goldschein
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Email Should Seem More Sexy

We've provided a variety of web marketing services for our clients over the years and email has most often risen to the top, in terms of results, for the direct response goals of most of our small to mid-size clients. This has continued to be true right through to the present.

That's why I've been confused over why the industry discussion about email on the internet and at trade events the last few years seems overly focused on things like deliverability and rendering. While these are certainly important, other very important subjects have not often been well-addressed, including specific tactics and best practices for getting and keeping customers for the still large majority of recipients who do get their email.

Discussion of best practices and tactics that truly improved email return on investment (ROI), as well as showed how best to integrate email into the overall marketing picture, would leave it looking a lot more sexy I would think!

Al DiGuido, in his ClickZ column, has indicated he was wondering the same things. He apparently doesn't feel the DMA is adequately addressing these issues, despite its recent acquisition of the Email Experience Council. He is now planning to start an "EROI Council", which plans to take many of the topics that will most greatly improve email ROI and how it integrates into the big marketing picture.

Posted by Perry Goldschein
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Tuesday, July 24, 2007

Will European Ad Trends Help Green CAFEs in U.S.?

Nope, I'm not talking about Starbucks or other coffee-serving cafes. I'm talking about corporate average fuel economy standards (CAFE).

The Wall Street Journal reports today that as high gasoline prices and climate change weigh more heavily on car buyers' decisions, Europe's premium auto makers are tweaking their ads to cast themselves in a greener hue.

This should be no suprise, as made obvious by the increasing importance in the business world, as indicated in earlier blog posts here, of getting a green message across to consumers. WSJ reports that the new emphasis on alternative energy and low carbon-dioxide emissions also reflects the pressure Europe's premium car brands are under from environmental groups and European Union regulators to tone down their emphasis on power and speed -- or at least reconcile those traits with the theme of environmental stewardship.

So why can't we get that message across to the U.S. auto industry, which constantly lobbies against any increase in CAFE and has much higher CAFE than Japanese and many European auto makers? Should we be looking at how the auto industry advertises its cars so that U.S. auto makers aren't pushing Hummers and big SUVs, but lower emission vehicles? Can the ad industry make efficiency and sleek design of vehicles like hybrids the cool in car buying?

If you don't have a subscription to WJS online, but would like to see examples of the ad themes, check out Environmental Leader's post on the topic at European car makers' green messages.

Posted by Perry Goldschein
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Friday, July 20, 2007

Americans Want More from Business & Seek it Online

Increasingly, Americans, both as customers and as employees, are seeking more from business, according to the 2007 Cone Cause Evolution Survey. They want companies to be socially and environmentally responsible, and this desire is increasingly affecting their purchasing decisions and expectations of their employers.

More than two-thirds of Americans say they consider a company’s business practices when deciding what to buy. And Cone believes that long-term support of social issues has become a major brand differentiator - something SRB Marketing as seen with our mostly small and mid-size clients for years now. That brand differentiator is a big reason many of our clients and their colleagues have been snapped up by Fortune 1000 companies (e.g., Ben & Jerry's, Cascadian Farms, Stonyfield Farm).

Americans’ expectations of companies are at an all time high — 83 percent say companies have a responsibility to help support causes, and 92 percent acknowledge they have a more positive image of a company that supports a cause they care about.

In many areas, Americans are more likely than ever before to reward companies for their support of social issues. Eighty-seven percent are likely to switch from one brand to another (price and quality being about equal) if the other brand is associated with a good cause - an increase of more than 31 percent (from 66%) since 1993.

American employees' expectations of companies have also increased, and quite dramatically — 72 percent wish their employers would do more to support a cause or social issue. This has climbed 38 percent (vs. 52%) since Cone’s last survey in 2004.

Advertising and the Internet are the two main ways Americans prefer companies to communicate their social and environmental issues and practices (45% and 41% respectively). Americans are also using technology proactively to learn about and support social and environmental issues and causes. More than one third are searching for information on issues (37%) or are forwarding important messages to family and friends (38%).

"Consumers have always relied on word of mouth recommendations to influence their decision making, and the increase in prominence of viral communications has made this form of idea exchange even easier," explains Julia Hobbs Kivistik, executive vice president of Cause Branding, Cone, LLC. "When a company communicates its cause activities in relevant, emotionally compelling ways and highlights the related social impacts, consumers will pass along the message to those around them."

Posted by Perry Goldschein
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Sunday, July 01, 2007

Reduce, Reuse, BUY GREEN, Recycle

The green consumer movement has gone mainstream with breath-taking speed the last year or so following such events as Hurricane Katrina, the release of An Inconvenient Truth, and significant coverage in both popular consumer magazines like Vanity Fair and Time, and business magazines like Fast Company and Business 2.0.

While many in the environmental movement have welcomed this trend with some caveats, others, mostly individual commentators, are criticizing it (see, for example, "Buying Into the Green Movement" in The New York Times, and my recent blog entry on an AlterNet article). The main criticisms seem to be that we can't buy our way out of global warming or other environmental problems, and that the mainstream media and corporate America are seducing Americans into believing just that while continuing their gluttonous consumption patterns.

I continue to greatly appreciate the watchdog role both organizations and individuals play and believe the criticisms leveled at the growing green consumerism movement are healthy in reminding us of its limitations and drawbacks. I agree with them whole-heartedly that "buying green" will not, by itself, solve our environmental problems. The problems are too complex and pervasive for that alone.

I also believe that many of the critics are missing or conveniently omitting an important point in their arguments - Americans, and the rest of the world for that matter, need to buy and use things to survive. They need to shelter themselves (homes), sustain themselves (food, energy, healthcare), and protect themselves from the elements (clothing), among other things. And, while almost everything else may be deemed as luxuries by the hardcore, it's simply not realistic to believe consumption patterns will change significantly among citizens of wealthy Western nations until they're absolutely forced to change them. I'll leave it to the anthropologists to address that one, though.

Given this reality, I propose to add "buy green" to the environmentalists' 3 Rs of righteous living, so that the new set of green commandments reads "reduce, reuse, buy green, and recycle". Not as catchy, I admit, as the 3 Rs alone, but an important addition nonetheless. When we must buy things, shouldn't they be things that are made more sustainably, operate more sustainably, and/or are provided by organizations that operate in a more sustainable and socially-responsible manner?

Wouldn't this be at least be a part of the solution to our environmental problems when taken in the right context? Shouldn't we be encouraging people to buy the products they're going to buy anyway in a manner that reduces their environmental impact? I'm not saying we should influence people to consume more - just more consciously.

Posted by Perry Goldschein
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Monday, June 25, 2007

How green is Home Depot's Eco Options?

There's a good article on the NY Times website today (free registration required) on Home Depot's Eco Options marketing campaign in which the retailer is working with the manufacturer's whose products it sells to identify the most sustainable options.

The Times reports that some environmentalists are claiming Home Depot is too inclusive and not doing enough itself to make green claims. Sierra Club and Natural Home magazine executives were quoted in making a good point about the current "mad scramble" by companies to make green claims for their products in the face of rapidly-rising consumer interest, and how confusing the variety of claims can be.

While it's good to have the environmental nonprofits watchdogging these types of efforts as green marketing continues its hot mainstreaming streak, it sounds like a sincere effort on Home Depot's part that will help its many customers make better, more sustainable choices. These types of programs will certainly be far from perfect - but they will improve over time as the Fortune 100 and the rest of the business world respond to consumer demand for more sustainability processes and options.

The fact that HD's rejecting the vast majority of manufacturer claims to greeness and is working with independent Scientific Certification Systems is encouraging. SCS audits and certifies company claims, grading a product based on its environmental record over its entire life cycle — including the sustainability of its production process, its efficiency and longevity, and how it can be recycled when it is no longer useful.

Posted by Perry Goldschein
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