Author: Andrew Veitch (page 3 of 3)

Professionalism in Marketing

The founder of modern consumer research was George Gallup who set up the eponymous Gallup in 1935. One of his early studies for advertisers showed that when a consumer is reading a magazine, headlines in BLOCK CAPITALS are read less often than headlines in Title Case. With identical adverts, simply changing the font of the headline would increase readership of the whole advert.

David Ogilvy, one of the founders of modern advertising, makes this point in Ogilvy on Advertising which was published in 1983.

In 1963 Margaret Calvert along with Jock Kinneir were given the task of redesigning British roadsigns to make them easier to read for road safety. Of course part of her work was moving from block capital to title case, in the process becoming the first person to earn an OBE for services to typography.

The Americans finally caught up and in 2010, New York began the $27.5 million process of changing their signs from capitals to lower case for safety.

In short, there was been nearly a century of research that has constantly shown that Title Case is more effective than BLOCK CAPITALS for headlines and this research has been widely covered in the media and in the literature (if you Google you will find many more articles I could have mentioned). Why then do most adverts still use block capitals?

It’s a very good question to which I’m not sure I have a complete answer. I do think a big part of it is that marketing is simply not perceived as being a serious profession. Recently I came across a company where the Chairman’s son had been given a vital marketing role despite having no experience in the subject. It would be hard to imagine this happening in accountancy or law. We really do need similar standards being demanded for marketing as for the other professions.

What’s the point of an acquisition?

There are many, many reasons for acquiring companies. Roll-up’s to save costs, taking out a competitor, financial engineering and vertical integration to name four common strategies.

At Move Fresh we have only one reason for acquiring a business: to grow it.

More specifically to at least double the size of the business within a few years.

Frankly the idea of buying a business to try to save a little bit of money is pretty ridiculous. However one of the things we are very good at is growing direct to consumer FMCG businesses very rapidly and indeed Diet Chef was in the Fast Track 100 as the 3rd fastest growing company in the UK.

The trick? Spending very large amounts of money on marketing. Well, there is a bit more to it than that, we are investors in a leading marketing analytics business and spend a lot of time with numbers. But we find it hard to see how a business can grow rapidly without spending millions on advertising in an effective way.

So our acquisition strategy is really very straightforward: to find businesses with a great product that just needs a big marketing boost. We’re delighted if the shareholders are willing to join us on the journey.

A new name for Melville Street Investments

We’ve changed our name from Melville Street Investments Ltd to Move Fresh Ltd. We think Move Fresh makes it clear that we are a food e-commerce business.

Also Melville Street Investments is quite a mouthful and our new shorter name saves a lot of typing!

Art v. Move Fresh

I was recently speaking to someone into art investment and was comparing it with e-commerce.

According to WikiPedia King Francis I bought the Mona Lisa for 4,000 écus in 1519.

What is that in today’s money? A tricky question but someone’s had a good go of working it out here over at Yahoo Answers.

So let’s say the King paid about $270,000. We don’t currently have a value for the Mona Lisa and as far as I’m aware nobody has taken it to the Antiques Roadshow. Let’s just give it a pretty ridiculous valuation of $1 billion.

On that basis the Mona Lisa returned the King’s investment 3703 times over 497 years. Diet Chef returned our investment 899,999 times over 3 years. Therefore Diet Chef as an investment was 24,304% better than buying the Mona Lisa.

So if you are certain that you can identify the next Leonardo da Vinci then the lesson of history would seem to show that it is not a great financial investment.

Good to Great

I’ve finally got round to reading Good to Great, many years after everybody else!

One of the entertaining things about reading a business book that’s nearly a decade old is seeing how it has aged. The comments about Fanny Mae revolutionising their business through the creation of mortgage backed securities was not a high point!

The bulk of the book is all pretty obvious and solid stuff: you need to get the right people in place first, once you’ve got the right people the strategy will emerge, you should focus on one thing as much as possible, you need to have a rigorous culture, etc.

I think my favourite comment was about the importance of “To Not Do” lists which in the author’s view is more important than the traditional To Do list.

I guess the other thing that came clear from reading the case studies is that no company goes from good to great very quickly. One of the CEO’s talks about a twenty year overnight success story.

Even step one – getting the people right – generally took a couple of years to do. The businesses tended to have high staff turnover for that initial period then very low turnover from then on.

As I spend more time working with our businesses I am personally finding it much more satisfying to try to help create a great business than simply to flip the business for cash.

Experience Counts

Here’s a couple of classic Kwik-Fit ads:

I love both these adverts and the other 20 or so.

First of all they have great standout and even inspired a spoof.

It’s also immediately obvious from the start through to the end exactly what the advert is actually for. Surprisingly most adverts avoid making it clear who client is.

Every advert is also very focused on a USP (boring I know!). The first ad focuses on why you should trust them and the second ad shows the range of people who trust Kwik-Fit (a classic “that’s me ad”).

Jim Downie was at Hall’s Advertising when we came up with “You can’t get better than a Kwik-Fit fitter” and he visibly squirmed as I told him how much I admired these adverts but I actually think they are complete genius and earned Tom Farmer many millions of pounds. I can’t wait to see what Jim does for me.

It also reminds me of some of the arguments I have had with marketing consultants. Their view was that hiring very experienced creative directors who were older was a huge mistake and that instead we should be focusing on the new talent. I think this is completely wrong.

Scalability by Wally

Wally is of course the real star of the Dilbert cartoons.

I was thinking today in talking to a new entrepreneur that there is a lot to learn from Wally in creating a scalable business.

Everyone in business is presented with enormous numbers of things to do. It’s very easy to become a “busy fool”. But being slightly lazy is a much better approach by following my 5 stage guide to avoiding unnecessary work:

1. Don’t do the task

The first thing when presented with a task is to consider whether it’s worth doing. A surprisingly large number of tasks can simply be dumped completely. When deciding whether to dodge something a key criteria is how much time the task will take to complete. Many meetings or phone calls fall into this category.

2. Procrastinate

There’s a lot of tasks that really need to be done at some stage but not right now. If it doesn’t cut costs, increase sales or improve customer satisfaction then it probably can be pushed back a few months without much issue.

3. Automate the task

A huge number of tasks in an e-commerce business simply should never arise in the first place. Some real world examples from my experience of massive time wasters are:

  • Reporting and KPI’s which should be an automatic reports;
  • Standard emails to customers which should be templates;
  • Customer contacts which should be self service;
  • Google bidding is almost always done better by Google Conversion Optimizer;
  • Form filling which should be eliminated (such as TSCA by ETD);
  • Checking customer orders from Zen Desk (should be thru API);
  • And lots more.

4. Outsource the task

I am a reasonable accountant and I quite enjoy it. Give me a complex journal entry to complete and I imagine myself in Dickensian London with a quill pen sitting on high stool in front of an ink stained desk and thinking through my double entry.

However this really isn’t a great use of my time. In the last month I have doubled sales at FCC through concentrating on the US project. There’s no way I could add anything like that value through my accountancy skills and much as it pains me people like Paul Kelly at Blue Crest are much better at it than me.

5. Delegate the task

Arranging for our bins to be collected from FCC has been a truly Herculean task. It took many hours of effort. I’m very pleased that Clare rose to the challenge and battled with Biffa to get the bins collected and the sums taken out of our account refunded.

However it really would not have been a very sensible use of my time to do this.


I’ve just read an excellent book Amazon: The everything store. For anyone in e-commerce Amazon is the company you have to admire.

Amazon has three founding principles:

  1. Customer focused
  2. Long term
  3. Inventive

Jeff Bezos says that there are very, very few companies who are all of these three things.

“There are two types of retailers: those that try to work out how to charge more and those that try to work out how to charge less.” – Jeff Bezos

I do absolutely love that quote. Actually both business models work pretty well but what doesn’t work is trying to be both.

It’s very obvious which Amazon is trying to be. I learnt from the book that Bezos was very influenced by Walmart.

“Our marketing strategy is our pricing strategy,” says Lee Scott the Walmart CEO. He sees advertising and pricing as two ends of a spectrum; if you get pricing right then you spend less on advertising. Walmart spends 0.4% on marketing and even that is just advertising about specific low priced products.

The other big influence was Costco. Stock at Costco is all sold with a 14% margin which is breakeven. The profit comes almost exclusively from the annual membership fee. I suspect this was one of the things that made Bezos go for the Amazon Prime idea when it was presented to him.

I think it is interesting that one of the areas where Amazon failed badly was jewellery. This clearly was one of the areas where just being the cheapest and most convenient wasn’t what consumers were wanting. It is also interesting that Amazon hasn’t quite cracked clothing for a similar reason I expect. However I would expect them to do incredibly well in grocery.

Hiring was quite interesting. Amazon do not offer great renumeration but they have a pretty rigorous recruitment process. They also try to hire doers rather than managers.

Amazon was generally pretty bad at acquisitions with the vast majority of them failing utterly. On the other hand they have been very good at launching new business lines themselves.

Big picture wise, I think it is interesting how much of a platform Amazon is becoming. They have an API of course but also AWS, the ability for authors to self publish, the Kindle, Amazon Payments, FBA and no doubt Amazon Logistics in due course.

I found the book quite inspiring. What we are doing is different and I think it is very important that we don’t try to be Amazon but there’s a lot to learn from.

S&P 500 v. Hedge Funds

Warren Buffett has a $1 million charity bet with Protégé Partners. It started on 1st Jan 2008 and lasts for 10 years; the bet is on the performance of a fund of hedge funds from Protégé verses an S&P 500 tracker from Vanguard.

At the Berkshire Hathaway annual general meeting a delighted Buffett gave the six year update on the bet: Hedge funds at 12.5% and the S&P 500 at 43.8%.

Only people without much grasp of the basics of investing would put money in a hedge fund however it is worth considering some of the issues around tracker funds.

Key points to consider are:

  • Fees Over a typical saving period you could have virtually double the performance using a tracker fund with the lowest fees compared to a tracker fund covering the same index with high fees.
  • Stock lending Many tracker funds loan shares to short sellers. This obviously increases risk but is acceptable providing the fees go to the investor. It’s worth checking if this is done and if so the policy on splitting the spoils.
  • Physical verses Synthetic There are two basic replication methods. Physical means that the underlying stocks are purchased which is pretty much as safe as possible. Synthetic means that a swap agreement is entered into with an investment bank and as a result the solvency of the investment bank is a risk factor. The funds invested will still be held in some sort of collateral but this may well be unable to recover any losses.
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