|
|
|
|
Tuesday, January 27, 1998 Monday, Iomega closed at $8 1/2, down $5/16 (-3.55%). TODAY'S RECAP: Posters continued to debate the merits and demerits of Iomega's Superbowl ads -- these opinions were constrasted with the general populus's rankings (see post from ~EOHogdrivr~). Also, posters discussed the overall marketing strategy -- including a few commercial ideas -- as well as possible reasons for missing earnings estimates. For the most part, however, the board stayed closely focused on the advertising future. A few announcements: Iomega signed a deal with Paradigm which will provide SRAM chips for the Zip drive. Also, posters mentioned the appearance of the 333 MHz processor computer and Gateway including Zips as an option (earlier reports had Gateway dropping IOM products altogether). Enjoy! INDEX: Use the Search or Find feature of your word processor to locate the article number (Find: 1++, 3++, etc.) - or use AOL's Edit>>Find in Top Window Feature. If Find in Top Window is dimmed, just click on some text, anything, in the IOM Today window and try again.
1++ Duuwhee talks about "disk gravy."
Recap written and posts compiled by TMF Weekly. _______________________________ And now, the Best of the Board...Started 2:00pm ET 1/25/98. 1+++++++++++++++++++++++++++
Subject: Re: new ad In the furor, I overlooked the disks. If the ads can inspire the installed base of 12,000,000 to buy just one disk each on average, what is that? $60M? That seems possible. I think you could even see 2 disks over the course of the year. If everyone buys an extra $20 worth of disks, the ads are covered and we make around $20M The disks remain the gravy. Hopefully the ads will improve tie ratios at the point of purchase as well. This is no sure thing, but I think the ad campaign looks like less of a gamble than it did on Thurs. My portfolio is still not amused. 2+++++++++++++++++++++++++++
Subject: my take I don't claim to be an expert, especially about "technology advertising" -- but I do know something about product positioning and brand awareness, and if there's one thing I definitely learned in 20+ years in the business, it's this: Everybody's a copywriter. That's not to slam anyone who's made suggestions about what Iomega's ads should say.... some of those are really good ideas. But... who's to say those issues aren't going to be addressed as the campaign moves forward? I was surprised Iomega unveiled more than one ad tonight. It seems they have a plan and we'll just have to see how it progresses. As for those who feel cute and cool is not appropriate for technology, I disagree. There was a time I barely noticed Intel advertising -- I'm one of the great unwashed masses who doesn't have a clue, or cares what's inside my computer. When Intel penetrated my brain-dead consciousness with those ridiculous disco-dancing moon-suited people (hey, what's a clean room?)... I paid attention and the message began to sink in that computers run better and faster with Intel. Heck, I still don't know why - but who cares? I'm sold :) That's what Iomega needs to do. First grab attention (the cute, cool part); then educate what a Zip drive is how it benefits you. Listing features ain't gonna do it, friends. Features only impress early adopters. Benefits are for the masses. First rule I learned in copywriting: Sell the benefits, not the features. The Twilight Zone ad addressed the benefit of safety (using the"fear motive" of lost data). The Family spot addressed the benefit of simplifying life by having lots of disks. One ad was positioning the drive and other was pushing for tie ratios. Perhaps later we'll see spots that hammer home the compatibility issue of 12 million already out there. But IMHO, this was not a bad start. Just my 2 cents. As of right now, I like the ads - hate the stock :( 3+++++++++++++++++++++++++++
Subject: Another take on tonight's ad I received the following e-mail from my brother after the game. I think he has the right idea... << Did you watch the superbowl. It seemed like Iomega is the only advertiser that "didn't get it". A Superbowl commercial had to be something different - something that tells a story. Iomega's commercial was a fine prime time or afternoon commercial, but it looked totally out of place with the other ads on the Superbowl. The best-ad prize definitely went to Federal Express with the testpattern and the story scrolling across the screen about the ad agent who didn't ship the expensive commercial to the network in time (and lost their account in the process). Very funny and smart in its self-reference - very sensitive to place and the snappy commercials that surrounded it - and it got the point across about the need to ship in a timely manner. And as a bonus, it must have cost an order of magnitude or two less to produce than the other commercials. But it used its imagination to more than make up for its lack of pizzazz.Iomega was neither imaginative or splashy. >> Jeanie has posted about advertising the benefits. Absolutely!!! So when will we see a good benefit ad. The disorganized household didn't quite make it. But it could have. What Iomega needs to do is send some consumer researchers out to people's homes and offices. Have them take pictures (stills) of the computer area, the collection of disks. Are they neatly stored? Thrown into boxes, drawers, being used as coasters? Run a video of how people use their diskettes. Do the same with users of Zip. Look for the differences. Look for the emotional differences in the people. Then create a commercial that reinforces the verbal message with visual cues. For instance, look at almost any laundry product ad. The specific laundry items and problems you see are intentionally chosen. The items represent the key judgment articles for a specific benefit. You see sheets and towels in fabric conditioner ads because these are the items which must be soft and smell nice after laundering. (Fabric conditioners are excellent fragrance carriers.) Kids clothing is shown for stain removal products. White socks for general cleaning. Iomega can do similar things to support Zip. 4+++++++++++++++++++++++++++
Subject: Dear Mr. K. Edwards - Ads Dear Mr. Edwards, I watched with great interest the IOM ads for the ZIP during the Super Bowl programming. Please know that I am an IOM shareholder, so I offer these comments not as ridicule, but as sincere suggestions from several people who viewed these ads, which I also video-taped. First of all, every one in my house had seen a ZIP before...so there was familiarity in this group. However, no one knew what the ad was selling ("Family Dog" and "Bermuda Triangle" were the ads we viewed) I assume these ads were designed to foster "brand" recognition. In that case, it probably was OK. It seems to me that the most frustrating experience of a ZIP (and JAZ) owner and user, is not having a backward compatible drive to read both ZIP's and 3.5" floppies. I realize that IOM does not consider this to be important...but let's face it...the ZIP would be in every computer today if it were backward compatible! My company just bought me a new IBM Thinkpad notebook computer...it came loaded with the latest "hi tech" features. However...it still has an obsolete "3.5" floppy" drive! This is very frustrating to a heavy computer user like me...the 3.5" can't hold most ".exe" files that are used today...so it is virtually worthless! All the new software is now preferably in CD format...so the 3.5" is on the way out...we all know that! My concern is this: the LS-120 is starting to show up in notebooks and desktops....granted there are problems with the LS-120 "beating the ZIP", e.g. price, etc. However, I NEED the ability to use both 3.5" and ZIP's (or LS-120's) NOW....not next month...or next year! I think it is time for IOM to "put this floppy issue" to bed...once and for all. And this means....face the real problem, i.e., "backward compatibility"...head on....before the LS-120 (or some other competitor's drive) "muddies the water" even more! Here is my suggestion: Right now...Iomega is selling "external" ZIPS to circumvent the "internal" 3.5" floppy shortcomings. How about telling each computer manufacturer that you will give them an "external" 3.5" floppy with each computer that comes with an "internal" ZIP? This may sound crazy...and may not be economical initially...but just think a minute about what I just proposed...a paradigm shift in your marketing philosophy! I am not a computer peripheral expert...so I am sure you can take this concept and turn it into something that achieves our common objective...much faster....why would anyone want an absolutely useless 3.5" floppy "INSIDE" their computer..if they can have it attached...and have a ZIP inside? First of all, by having it "inside"...people will use it "first"...not second. And...after a few days or weeks or so...people would no longer have the patience to wait for an Excel file to "save itself" on a 3.5" snail drive. Well...I hope you think about my suggestion...or variations of it...(two internal drives for desk tops...external 3.5" floppies for notebooks, etc) Be bold in your marketing...go for the "golden ring"...the time is now. Finally, your ads should focus on the "3.5" dinosaur" inserted in the heart of a sleek Pentium computer with 4 gig drive, 56K modem, multimedia, etc. Then...show a computer next to the dinosaur with a ZIP....give a "speed" and "capacity" demonstration...let your ad man "DEMAND"...the new technology...NOW! The ZIP is a Mercedes...the 3.5" floppy is a horse and buggy....good grief....how much more do you need to convince the public to storm Compaq, Dell, IBM, etc to ask for a ZIP INSIDE? I hope you agree that my suggestions are well intended...as I am a frustrated shareholder...but even more... a frustrated computer 3.5" floppy user! (since most of my business associates jsut bought new computers with 3.5" floppies "INSIDE"..and are too lazy to figure out how to attach an ZIP "OUTSIDE"!!! 5+++++++++++++++++++++++++++
Subject: Re: The new $100M Ad Budget is just a $ 35- 40M program Harry states: << This is my worst nightmare. The ads must work. If not sales growth will continue to decline and eventually it is plausable that we could reach a point of no growth or even possibly a decline in sales. >> Harry where did IOM get the increases in its business the last 2 1/2 years? Is there a marked reduction in this business other than the amount caused by the present lower tie in ratio from OEM inculsions and focus more effort in this area than in the retail area apparently. IOM isn't the only one placing ads or having Zips mentioned in their catalogs, advertising, websites, newspaper ads, etc. Del, Compaq, Micron, Fry's CompUsa, Circuit City and other retailers and catalog sellers like PC Connection, PC Zone, PC Mall, and many others. The whole enchilda does rest only on IOM's efforts, but it wiil; be a big part. All companies I have had expeience with tried various types of advetisng without committing the entire budget until they saw what type of medium worked best and slowly increased those that were successful. What makes think that KE will blow it all on one roll? In spite of his performance on CC, he did not bring this comapny so far without a hell of a lot of good marketing sense and organizational leadership. Has he made mistakes? Of course. Are they permanent and irreversible? Not in my opinion. 6+++++++++++++++++++++++++++
Subject: USATODAY Ad Rankings Looks like 16th of 52 rated. Apparently all Iomega ads were lumped together in the ranking. http://www.usatoday.com/money/msb004.htm 7++++++++++++++++++++++++++
Subject: NYT piece Iomega marketing is attracting some attention: 1/26: Iomega Buys Name-Recognition aol://4344:2334.fi01264.24970201.570260666 I've been among those who have been waiting for Iomega to really sell to market. So far its been early adaptors/ graphics users. In the conference call, Kim Edwards alluded to how, at Comdex, Iomega demonstrated how they could turn up the volume really loud- with those clickers. I'm eager to see how the overall promotion unfolds. Don't forget that as Iomega grows, they gain the resources to market the product. Margins are holding very well for a product over 2 years old and increasing OEM sales. I'm surprised to see the Fool Port's commentary growing lukewarm about Iomega. As far as I can tell, the overall story remains intact. Just a few more operational difficulties with parts and shipping delays. Its where improvement is needed, but it doesn't destroy the company in the long haul. A P/E near 20 is cheap for the stock. I hate to admit it, but with the stock bashed once again, it will be time for the Wise to start singing the company's praises. Hence the NYT article. 8++++++++++++++++++++++++++
Subject: Re: Twilight Zone ad << Put me in the camp that believes KE did(said) what he felt was necessary to make this company more fertile property for the institutional folks. Many here have complained that he needs to court the street. Well, last Thursday's/Fridays redistribution might have been a little drive down lover's lane. >> In the words of INXS, "Mystify, mystify me...." I am Kim Edwards. I am here to report earnings below expectations. I have done this once before at The New Iomega (kind of like the New Argentina, eh Evita fans?), making me about 10 for 12. [A good batting average in this business, but by no means a great one.] Although demand for our products is soaring, it is not -- at this time -- sufficient for me to claim that either the Zip product line is going to replace the floppy or that the Jaz product line is so entrenched as to be assured of crushing its competitors. Because of this, I plan to spend $100 million on advertising this year. I will not tell you whether this is incremental or total spending. If I did this you might be able to use this information to understand our business. Why would I want that? I can see no reason. You see, I provide no guidance or insight into my business to any of you -- except what is required by law. I have no meaningful competitors today (the largest is 1/10th my size) but I fear somehow allowing investors to understand my business (which they don't) might tip these competitors to some trade secrets or other minutiae. Anyway, back to these ads. I don't know if they're gonna work. It's three years into this thing and I still can't convince the PC makers that everyone needs one of my Zip drives. I mean, it's a really useful device but it doesn't appear to make or break PC sales. OEMs use it as sort of an add-on gadget. They will surely add it to more machines if users demand it... But that's my dilemma, I gotta get users to demand it. So I'm gonna run a lot of ads. Still don't know if they're gonna work. Don't know whether to tout storage, capacity, risk of data, compatibility, low cost, whatever. Don't know if people will run out and buy. If they don't, I will miss your targets again. I won't tell you this because that might be construed as guidance, but you can at least -- for a change -- read between the lines. Because of new-found lack of confidence in the future (listen to my old calls, where I sounded really upbeat despite problems) and the fact that my stock has just fallen by one-third, I feel that money managers will suddenly discover my great company. A company many have ignored despite its powerful ascent from $150 million or so in 1994 to $1.8 billion or so in 1997. But now that we are advertising in a campaign I'm not sure I can justify the expense of, don't know where the money for it is coming from, and can't guarantee the results of, I figure you should all be real excited about me and the company right now. Oh yeah, you won't hear a word from me for three months. Hello, McFly, is anybody home? This is a romance with the money community? You romance the money community with two things: (1) Earnings growth (2) Consistency of earnings growth That yields high stock prices, happy investors and a virtuous cycle that only a fundamental business shift can break. Look at Cisco, Microsoft... On the cycle... Microsoft falls only when it appears either the Internet will kill it (a few years back) or the DOJ will kill it... Microsoft guides analysts but more importantly, it delivers every time. When Oracle appeared to have saturated its market, the stock plummeted... Only then did the stock plummet.... And some institutions probably got out. Intel fell when it appeared lower average-selling prices would hurt margins. They didn't, yet, but they still might, regardless of what Ashok Kumar seems to think. Iomega fell because it missed its number (bad) and then failed to present either a compelling explanation -- lies about Asia, please -- or a blueprint for returning to greatness in the future (worse). No confidence was shown. Earnings momentum has slowed -- momentum, not earnings growth. The analysts believe it may only be a 20% EPS growth year. That's bad, by the way, given where things have come from. Rebuilding the little institutional interest that existed in Iomega is going to take a while. A long while. Winner over more analysts is not going to happen for a while. A long while. Life sucks that way. Especially when like many of us, recent events have cost us a fortune. The biggest mistake I ever made was staying involved with this stock. I was out a couple of times before but I kept getting caught up in it again. The profits did a great deal of good in my life, the losses have been emotionally and financially devastating. If I could have had a little less of each, I'd be much happier. I have no idea where the short-term price of the stock is going. None. I do believe that in my generally pessimistic case the company will do $2.3 billion in revenues this year (on 15 million Zips, 1.7 million Jaz, and some growth in Ditto and teeny Clik/Buz/Etc.). Do the math of that yourselves and you'll see I believe EPS growth is gonna be 30% and perhaps much more... In fact, I wouldn't rule out duplicating last year's performance. But I can't "rule it in" either. So I'm out of the stock right now. Whether Tokyo Joe is right or now, the stock could fall more from here. I am a big buyer at 5-6 because I believe the stock is worth $12-14 right now on a conservative basis. Why then shouldn't I buy at 8 3/4? Because I don't know that the stock won't fall further and I don't have the stomach for it anymore. 9++++++++++++++++++++++++++
Subject: New Ad Ideas Was at the game so I haven't yet seen the Super Bowl TV commercials. BTW, at the game a helicopter circled the stadium about 2 hours (from about 1:15 to 3:15 (kick-off)) toting a banner of a zip disk so there was another incident of "turning up the volume real loud". Based on the posts, the ads were adequate at best but not memorable. I have thought of what others here seem to think would be good educational ads. Here is one I thought of: Commercial Begins: Split screen. Two sons (one on each side of the screen - also a clock on side of the split screen in the top RH corner) call their dads who are at the office at the same time and ask if the father could come home and play catch (football of course for the superbowl, maybe shoot baskets for basketball for NCAA final four, or NBA finals). Each dad says simulataneously "Let me save this last project to bring home and I'll be right there". Up to this point both screens and scripts are identical with the exception of a different father and son. Now the Zipped father saves his project on a zip drive and the elapsed time is something like 5 minutes, shows him in his car driving home, and then in the yard playing catch with his son conclude with his son tackling him and hugging him (a la Simba hugging Mustafa in the Lion King (great father-son moment). On the other side of the screen the unzipped father is using a 3.5 drive and the elapsed time illustrates that saving on a 3.5 disk takes forever. This father is still saving his project; he waits impatiently and looks at his watch as a half hour goes by. Then this side of the screen zooms in on his computer screen with the message "Please insert Disk #67" as he unfrantically is turning over his office looking for another disk screaming "I don't have any more disks!". Then it shifts to him in the car calling his son (on a Q phone of course, I own QCOM stock and I'm the director of this commercial so I'm plugging the Q phone) telling him he is late (traffic looks real bad, maybe a draw bridge is up or something to demonstrate that if he had a zip he would've made the bridge - in fact maybe you show the other father on the other side of the drawbridge calling his son telling him he's 5 minutes away - just think out loud). Meanwhile, back to the unzipped father who is calling his son telling him he is late and maybe they can play catch tomorrow, screen then zooms in on son (some can't miss adorable 5 year-old, maybe the kid from Jerry Maquire) with tears welling up in his eyes. Then commercial fades out.....With only Zip Built-in logo and announcer saying "Zip Built-in - spending time on the more important things in life. Certainly one benefit of the Zip and I think compares it to dinosaur floppy which afterall isn't the bet being made here? To replace the floppy? I like the other one I read too about the girl who saves the family's day with all the files backed up on one zip. Just an idea...Any others out there. Maybe management will read these posts some day (although it would be tough to wade through all the posts that are far too myopic one way or the other) and select an idea (based on the 3 or 4 that I've read here) that appear to educate as well as entertain the viewer (as opposed to the Cargo plane commercials that I've read about). Can't opine on the others but anxiously await those. _______________________________ End Report. Posts covered through 9:00pm ET 1/26/98. _______________________________
WE
DELIVER - Get IOM
In Fooldom Today delivered
|
||||||||||
|
|||||||||||
