Hits & Misses
(Business 2.0) – [HIT] Frothy sales. When Starbucks hiked its coffee-drink prices an average of 11 cents in October, analysts worried that java guzzlers would take their business elsewhere. But despite the increase, Starbucks is showing no sign of a slowdown. Same-store sales jumped 13 percent the first month, yet less than a third came from the price increase. Starbucks attributed the growth to its decision to get a jump on the holidays, rolling out its first seasonal drink, the pumpkin spice latte, two months earlier than usual.
[HIT] No, thanks. We wouldn't mind a cheaper Internet though. Imitation may be the sincerest form of flattery, but it's also not a bad way to steal your rival's customers. At least that's been the case for cut-rate Internet provider NetZero, which recently spoofed AOL's latest ad campaign to great effect. Six weeks after AOL began airing its spots—which pose the question "Want a better Internet?" and show a crowd of subscribers coming to AOL HQ to offer advice—NetZero came out with a parody in which the crowd is holding up signs that read "See ya" and "Bye." The copycat ad drew raves not only from critics but from a far more important constituency: Analysts say NetZero's subscriber growth immediately jumped about 15 percent.
[MISS] Make that "underperformance." With Gap subsidiary Old Navy pushing performance-fleece clothing for the third holiday season in a row, the results were as predictable as the merchandise—same-store sales fell 5 percent in November as compared with the previous year. In a conference call with analysts, Gap CEO Paul Pressler took the division to task for failing to roll out enough new products. Wall Street's reaction was just as blunt, with Gap shares quickly falling by nearly 20 percent.
[HIT] Clean sweeps. For the first time since J.R. took a slug to the chest on Dallas in 1980, CBS is the undisputed king of network television. Thanks to stalwarts like Survivor and Everybody Loves Raymond, new hits like Two and a Half Men and Cold Case, and the rabbitlike proliferation of the CSI franchise, in the latest sweeps period CBS nabbed the most sought-after audience—viewers 18 to 49—every night of the week. Especially painful for former champ NBC was the loss of its "Must See TV" stranglehold on Thursday—the night when ad rates are highest—after controlling that evening's prime-time slots for the last 21 years.
[HIT] A fast $1 billion. Long shut out of the U.S. wireless infrastructure market by archrival Nokia, Siemens decided to play leapfrog rather than catch-up, working to perfect its third-generation systems. That effort paid off in late November, when it won a $1 billion contract to upgrade Cingular's network with technologies that could boost data speeds by 100 times or more. The sweetest part, however, may have been the reaction from Finland: Three days after the Cingular/Siemens deal was announced, Nokia said that Sari Baldauf—the head of its infrastructure unit, who was once seen as a contender to succeed CEO Jorma Ollila—had resigned.
[MISS] Got any insurance for lousy advertising? After spending nearly $200 million over the last four years on ads featuring a duck that quacks its name, Aflac has gained plenty of name recognition. Too bad name recognition isn't the same as product recognition: 60 percent of the people Aflac surveyed in a recent poll weren't sure what the company actually does (it sells insurance that pays the bills when an accident keeps you off the job). The fix? A new $50 million campaign that subtly lays blame at the feet of its mascot. In one spot, Gilbert Gottfried, who plays the voice of the duck, shows up at a pet store trying to return the bird.