iPod Nation

Desperate housewives, bikini-clad babes, jungle-stranded hunks…and favorite chicken recipes. All are migrating to the small screen, primarily via the iPod. And promotional marketers are following the charge.

Downloadable music is all very nice, but with the video capabilities from the latest crop of Apple iPods, marketers have a whole bushel of new reasons to think small. Some are bookending promotional spots with downloadable content; others are offering video downloads (podcast episodes of Desperate Housewives and Lost, or pictorials from Sports Illustrated’s annual swimsuit issue). Apart from video content, dozens of brands are leveraging the appeal of the sexy little gizmo through events and other offline promotions.

Kraft Foods was among the early adopters when it started delivering recipes to iPod users last summer. Since its launch, Kraft has logged 130,000 recipe downloads, says Kathy Riordan, Kraft VP-global digital consumer relationship marketing.

The program was born when Kraft researchers noticed a commonality among Gen Xers in its focus groups. “Everyone came with an iPod,” Riordan says. “We have all these twenty-something consumers buying iPods. Over time, we knew, there are ways we can use this to reach consumers.” Kraft asked its focus groups if they would surf the Internet for recipes. Not likely, they answered — but would you deliver recipes to me?

So Kraft tested recipe delivery with a flight called “Summer Hits.” Consumers accessed recipes at Kraft’s Web site to store in the Notes section of their iPods (a basic version holds up to 1,000 notes, or 1,000 recipes). Users of the recipes said shopping became easier, with ingredients readily accessible via the iPod scroll function. Kraft repeated the effort over the holidays, offering 300 fresh recipes; new recipes are scheduled for release throughout 2006.

“It’s really about skinnying down the application so it works in these devices,” Riordan says. “We want to take the power of our brands and the power of technology to deliver solutions. If we are trying to connect with consumers…it’s going to be increasingly important for us to understand how to use these devices and fit with consumers’ [lives].”

In 2005, more than 15.7 million MP3 players were sold in the U.S., according to market research firm NPD Group. Of the top five manufacturers, Apple dominated with more than 80% of market share, followed by Sanisk, Creative Labs, iriver and Samsung, NPD Group says.

Since the iPod debuted in October 2001, Apple has sold more than 42.2 million devices — about 14 million over the 2005 holiday season. By 2009, the number of iPods sold is projected to reach 65 million in the U.S., according to Yankee Group Research. The iPod has become so ubiquitous that brands are creating new markets to link themselves to the device (see sidebar on pg. 29).

“There is an aspirational value of moving to the iPod,” explains Reed Roussel, VP-director of interactive marketing, The Marketing Store, Oak Brook, IL. “A lot of us are trying to hit that 18-34 market. The iPod is a fashion statement. It makes the company look hipper and cooler. [Brands] can get some equity that way.”

The arrival of the video iPod last November has given marketers new ground to tout their products. TV networks including ABC, NBC, MTV Networks and Showtime are on board with video podcasting (video files downloaded from the Internet to MP3 players). Consumers can download episodes of some 30 popular TV shows from Apple’s iTunes store, including ABC’s Lost and Commander in Chief, Comedy Central’s South Park, and The Office on NBC, for $1.99 each.

“We need to be where consumers are getting their media,” says Albert Cheng, executive VP-Digital Media, Disney ABC Television Group. “Video downloads provide another opportunity for consumers to catch up at their convenience so that they can get back to [the] linear network broadcast and join in the water cooler conversation around our shows.”

Networks won’t disclose the number of downloads for their shows, but The Office and Lost top the iTunes list.

INFORM AND ENTERTAIN

Purina began experimenting in the MP3 space last June, offering audio podcasts of its Animal Advice radio program. Podcast topics include animal training, pet care tips, pet insurance and behavioral theories. Bumper spots tagging Purina support the program. Arc Worldwide, Chicago, handles.

The pet-care company and Arc followed up that campaign in January, launching video podcasts of its Incredible Dog Challenge (think Olympics for canines). Purina divided the program into free five-minute downloadable segments on iTunes and Purina.com.

While the company wouldn’t release the number of downloads, “early indications are there’s an audience for it,” says Michael D. Moore, director of interactive marketing, Nestlé Purina PetCare Co. Purina has a ready audience: Some 63% of U.S. households (69.1 million homes) own a pet, according to the American Pet Products Manufacturers Association, Inc.

“These are all geared toward people who are raising their hands saying, ‘I want to hear or see this great content from Purina,’” Moore says. “We are always looking for ways to develop more relevant content for consumers.”

Other brands are inviting consumers to download and share ads originally developed for TV viewers. For Super Bowl XL, Anheuser-Busch posted eight ads (totaling five minutes) on Budweiser.com and BudLight.com for consumers to download to their video iPods or computers for free.

The effort has paid off. In the two weeks after the Super Bowl, the company reported more than 200,000 commercial downloads and more than 1.2 million online views of its ads. Super Bowl viewing on Budweiser.com and BudLight.com rose 23%, compared to the same 48-hour period following the 1995 game.

“People [in] this space want to be entertained,” says Tim Murphy, senior director, creative development, for St. Louis-based Anheuser-Busch. “We were looking for ways to connect with our consumers. This was just another extension.”

“It’s this concept of cultural phenomenon that makes other companies want to latch on to [the iPod],” says Michael Goodman, senior analyst at Yankee Group. “They want a little of that Apple magic to rub off on themselves.”

TARGET AUDIENCES

As on the Web, brands can measure their ROI based on the number of podcasts produced and served for the month and the number of total downloads. Yet, marketers need to move past the measurement of “cold numbers” and focus on the quality of their target audience, argues Megan Novy, VP-group creative director for The Marketing Store.

“Measuring ROI will have to turn to other things like word-of-mouth, gap scores, brand measures,” Novy says. “None of these new and exciting ways of speaking to consumers will ever be as simple as counting the number of coupons redeemed.”

General Motor’s Hummer division in December attached a 15-second spot for its H3 SUV to a video podcast that took viewers backstage at GQ magazine’s “Men of the Year” issue party. Like the iPod, the Hummer brand targets early adopters of new technology, so the brand decided to reach its audience via podcasting.

“Everyone’s on the go,” says Aaron Smith, interactive manager for Hummer. “We need to be smart about how we communicate. Podcasting is just one way of bringing more…content to the consumers’ hands.”

Still, some brands are taking a different approach to the space. To boost its Mario Kart DS video game, Nintendo sandwiched ads around video content on GrindTV.com and StupidVideos.com — properties owned by PureVideo Inc., of Los Angeles.

“We’re dabbling in a lot of different, viral ways to reach consumers,” says Perrin Kaplan, VP-marketing and corporate affairs, Nintendo of America. “The old formula is just not as effective.”

Chicago-based Starcom MediaVest Group, the media-buying unit for Nintendo, launched the campaign to test ad-supported free content versus subscriptions, says VP-Video Innovation Director Tracey Scheppach.

“We’re not forcing consumers to watch the ads,” Scheppach says. “We are giving them a choice. Clearly, if we can prove the business model works, we will get more creative.”

But not all marketers agree with that business model. When it comes to podcasting, video or audio, some experts say original content is the golden ticket. Though popular with tweens and young adults, the iPod is geared toward consumers with disposable income who are concerned about trends, technology and fashion. Brands have to give consumers a reason to set aside space on their iPods for something other than music.

“[Brands] need to understand the consumer and what types of content they want, and provide it to them rather than treat podcasting as a mass advertisement,” says Matt MacQueen, experience planning director at Arc Worldwide. “The problem with podcasting is it assumes we should shoehorn regular advertising into this channel.”

“The whole idea of podcasting is…it is the ultimate opt-in channel,” he adds. “There is a more intimate connection with consumers.”

Others say the video iPod isn’t quite ripe as a promotional vehicle. Steve Greifer, senior VP-promotions at Boston-based Digitas, says there’s a lot to learn before the device can be used for mass marketing.

“Using video on an iPod as a promotional tool is cutting edge, [but] is still a little bit ahead of its time,” Greifer says. “We still need to do a good job of…leveraging the audio elements of the iPod as part of the broader marketing program. Eventually, the video will catch up with the audio. It will be nearly as ubiquitous among the right target audience.”

BEYOND THE POD

Brands that can’t figure out how to get on the small screen are reaching the MP3 player audience via events and giveaways.

Last summer, Nestlé launched a mobile tour with Napster to teach consumers how to download music while boosting the candy-maker’s key brands and Napster’s To Go subscription digital music downloading service.

During the “Nestlé Sweet Summer Sounds” tour, a custom vehicle outfitted with Nestlé candy-branded kiosks visited music events and benefits across the country. At each station, Nestlé assigned a “music personality” to three candy bar brands — alternative music for Butterfinger, hip hop for Crunch and classic rock for Baby Ruth. Under the promotion, Napster reps taught consumers how to download, buy music and send songs to a friend while touting Napster To Go.

At each event, Nestlé and Napster gave away a free iriver H10 MP3 player (24 in all) and 52,000 cards for one free month of Napster To Go. RedPeg Marketing, Alexandria, VA, handled.

As a result, 151,000 people interacted with the kiosks. The tour gave brands a “way to connect with the younger audience and still seem relevant and hip,” says Teresa Pipia, account director for RedPeg.

“It was educating people about the different options out there,” Pipia says. “We tried to get people to think differently about music and their collection.”

While digital music downloads are still hot (Apple has sold more than 850 million song downloads through its iTunes service so far), the market has shifted to tapping the iPod as the premium itself. “It’s a must-have,” says Marc Wortsman, executive VP, Marden-Kane, Manhasset, NY. “Now that Apple is including video, the demand is much greater.”

In March 2005, Paper Mate launched a 14-month-long sweepstakes that gives away an iPod mini each day (457 in all). Stickers on 20 million packages of Write Bros. Stick pens and 10 million packages of American Woodcase and Sharpwriter mechanical pencils drive consumers to enter at PaperMate.com. The company is also offering free iTunes on 1.7 million packages of Flexgrip Elite pens and mechanical pencils. Consumers redeem a code online for one free download per package. The offer runs through May 31.

Paper Mate launched the sweepstakes — its first-ever with Apple — to show consumers it’s on track with consumer trends, says Ailinh Hoang-Kim, senior brand manager for Paper Mate.

“Music is so hot,” she says. “It’s something we want to make sure we are part of in speaking to [consumers’] needs.”

NEXT GENERATION

Despite the iPod’s appeal, the price leaves the average consumer cold. With prices ranging up to $399, and peripherals like external speakers and car adapters proliferating, consumers have balked at the cost. Apple responded by slashing prices on some models last month. Its least expensive digital music player, the 512 MB iPod Shuffle, sells for $69, down from $99; the 1GB Nano is $149, down from $199.

Apple, however, has more to worry about than its prices. A Louisiana man filed a class-action lawsuit against the company on Jan. 31 in a U.S. District Court in California, claiming iPods are too loud and could damage hearing. The suit says iPod headphones can cause hearing loss because they don’t dilute sound and are too close to the ear canal. The lawsuit was pending at press time.

Then there is the competition. As MP3 technology advances, electronics manufacturers, cell phone companies, and — most recently — Web retailer Amazon.com are all gearing up to take a slice of Apple’s marketshare away. Yet there are no signs of the iPod’s popularity fading.

Some say the next big offering from Apple could be an Apple phone or an iPod with Internet connection. Others say Apple’s next big push will be to bring full-length movies to the small screen. Disney already added short films to the iTunes store.

“You have to continue to ask, what is Apple going to do next? Can they continue?” Yankee Group’s Goodman asks. “The answer has always been ‘yes.’”

Accessorize Me!

As Apple looks for its newest iPod incarnation, other brands are quickly following the wealth of add-on opportunities — iPod accessories.

Moving beyond speakers and docks, companies are linking up with the hot device. Consumers looking to tote their iPod in style can spend $58 to $198 for Coach iPod cases. Automobile manufacturers alike are jumping on the bandwagon, planning to integrate the iPod into nearly 40% of 2006 models.

“iPod ownership construes being part of the in-crowd for the highly sought after young adult market, which has made the white iPod ear bud a must-have high-end fashion statement for marketers,” says Reed Roussel, VP/director of interactive marketing for The Marketing Store. “As the iPod accessory business is now moving past $1 billion dollars, there is a great deal of borrowed equity to be attached to.”

The device is making greater strides in the apparel industry. This fall Levi Strauss plans to roll out a line of jeans compatible with the iPod. The Levi’s RedWire DLX jeans will feature a built-in iPod docking station and retractable headphones, selling for about $200.

“This was all about innovation and taking jeans into the 21st Century,” says Levi Strauss spokesperson Amy Jasmer. “So many people carry iPods. It’s a great way to integrate technology into your life.”

For stuffed animal lovers, Sakar International has debuted a new toy that serves as a portable music device. The Sound Pal, available as a teddy bear or monkey, includes a radio and a front pocket to store an MP3 player. The product, which hits stores this summer, will sell for $29.99.

“MP3 players today are like cell phones. Everybody has one,” says David Tawil, who handles product development for Sakar International, Edison, NJ. “That’s why it’s important to target MP3 accessories. You’ve got to go with the trend.”
— AJ

The Evolving iPod

In 2001, the Apple iPod played songs, and then later offered photos. Now, nearly five years later, the iPod plays video and is changing the way consumers use media. This timeline shows how Apple has dominated the MP3 player market.

October 2001 iPod (first generation): holds up to 1,000 songs and plays up to 10 hours of music. The 5GB model sells for $299.

July 2002 iPod (second generation): available in three configurations. The 5GB model sells for $299; the 10GB model sells for $399, and the 20GB model that holds 4,000 songs sells for $499.

April 2003 iPod (third generation): holds up to 7,500 songs. A 10GB model sells for $299; 15GB model for $399 and a 30GB model for $499.

January 2004 iPod mini: weighing at 3.6-ounces, it holds up to 1,000 songs and comes in five colors. The model sells for $249. In February 2005, Apple launched second-generation models — 4GB for $199 and 6 GB model for $249.

July 2004 iPod (fourth generation): features 12-hour battery life and shuffles songs. The 20GB model sells for $299; 40GB model sells for $399.

October 2004 iPod Photo: holds up to 25,000 digital photos and 10,000 to 15,000 songs. The 40GB model sells for $499; 60GB sells for $599.

October 2004 U2 iPod: a special-edition iPod that holds up to 5,000 songs and features custom engraving of U2 band member signatures. The 20GB model sells for $349.

January 2005 iPod shuffle: randomly shifts the order consumers listen to music. The 512MB and 1GB models were originally priced at $99 and $149, respectively. In February 2006, Apple slashed prices to $69 and $129.

September 2005 iPod nano: thinner than a No. 2 pencil, the device holds 1,000 songs or 25,000 photos and has a color screen. The 4GB and 2GB sell for $249 and $199, respectively.

October 2005 video iPod: holds up to 15,000 songs, 25,000 photos and more than 150 hours of videos. The 30GB model sells for $299; 60 GB sells for $399.
— AJ