Knowledge@Wharton Sponsor Collaborations

31 posts from American Express

American Express: Advertising on Social Networks -- Is There a There There?

 On the surface, Facebook is an advertiser’s dream platform:  You can target your audience by interest, geography, age or educational level. You can decide how you’ll pay for your ad -- by impression or click-through. And that’s not all. While your ad runs, Facebook provides daily reporting so you can track your ad’s reach and effectiveness in real time.

Art for Ennen piece Yet, despite the incredible scope and robust infrastructure, there’s not much data to suggest that, outside of a few notable exceptions, advertising on Facebook – or any social network – has led to significant sales.

“These networks are paradoxes,” says Wharton marketing lecturer and new media expert Steve Ennen. “Facebook reaches 500 million people, but that doesn't mean it will reach people who are interested in buying what you are selling.”

 A social network’s strength, he believes, is in its ability to create clubs and groups around areas of interests, not to deliver revenues from traditional broadcast-like advertising. “Groups generate interest,” says Ennen. “But that's not the same as targeting someone who likes your product.”

 The community aspect is part of the paradox, says Ennen. “It's not just the ability to identify those who seem likely to buy, but to play a part in a dynamic community.” It's about participation, not simply penetration. “The idea is that businesses need to engage in a community as more than just advertisers. They need to bring something of value.”

 For example, Old Spice created a humorous ad campaign featuring actor and former pro athlete Isaiah Mustafa. “They started making short videos that became popular online,” says Ennen. “It was a viral success. It had a YouTube presence; it could be passed along and shared. It was user-generated content that propelled the message across different environments. It's active. And it's directly tied to an increase in sales. Old Spice was strategic. They allowed users to participate. The overall costs were minimized because the users did a lot of the work.”

 On the other hand, Ennen says he sees a lot of static ads that whimper out. “Samsung was advertising a phone. They developed a Facebook fan page, the purpose of which was to stream online videos of commercials – nothing of value to the users whatsoever. It was just ads running. There were 150,000 people who liked it, but nothing happened there. So Samsung stopped participating. Now they have this Facebook page on which nothing is happening. The company didn't care. The agency didn't care, so why would consumers care?”

 The key, says Ennen, is for advertisers to ask themselves what they can bring to the conversation. They will be effective by being perceived as an expert. A successful advertiser on the social networks “offers something of value to the conversation,” he says. That's a shift in dynamics from traditional advertising. “Companies don't see the results they expect because they are taking a broadcasting mindset. It's a shift to a community mindset that will make advertising on social networks effective going forward.”


American Express: Starting Up in a Recession -- Right Product, Right Price, Outstanding Service

Starting a new business in any economy is fraught with challenges. While a recession introduces an entrepreneur to a host of risky new hurdles and headaches, Wharton marketing professor Leonard Lodish Starting up in a recession art says that with forethought, discipline and planning, a successful business can take root even in the most  difficult times.

According to Lodish, about 60% of companies that go out of business owe their failure to poor marketing. “It could be that not enough people want to buy the product or service,” he says. That happened  when Global Star and Iridium came up with satellite powered phones about 15 years ago with a price point that was way beyond what consumers were willing to pay. “They lost billions,” says Lodish. “They thought, ‘this is cool. I’d want it.’ They were enamored by their own technology, but they didn’t think about people not being able to pay for it.”

And that was in a strong economy. A recession gives a new business even less wiggle room when it comes to consumers’ disposable income. That’s why today, more than ever, it’s critical to know the market before investing time, money and effort in a new venture.

One example of a successful start-up in a less than stellar economy, says Lodish, is “One of my students started it in 2005. It was recently sold to Amazon for $550 million,” he says. When the company started out, its owners wanted to be certain that the concept was feasible and that people would buy from them. So, after completing an analysis that gave them confidence that they could still turn a profit, they offered free shipping and overnight delivery. “For their first shipments they actually went to Costco and Walmart,” says Lodish. “They bought the diapers retail and manually shipped the orders overnight at a loss so they could satisfy their early customers. When they saw that the model worked, they expanded the operation, began to buy wholesale and struck deals with distribution centers to ensure overnight delivery to most areas. “Now they’re shipping tens of thousands of orders, and a big part of their new customers are referrals from existing customers.”

By talking with prospective customers, the owners of got a good handle on consumers’ priorities, such as prompt delivery and personalized service. “They have people who get on the phone if you have a problem,” says Lodish. “The customer service representatives are there for one thing: to delight the customer. They fix the problems. They make things better.

“My daughter-in-law started shopping from them before she knew I was involved, when her first son was six months old,” recalls Lodish. “Then, a month before her second child was due, she ordered diapers for newborns. But she didn't read the product reviews on the Web site that said this particular manufacturer’s weren’t good for newborns. She called and they recommended another brand that was a better fit for newborns. They accepted her order back even though it wasn't their fault.” She was so happy that she told her friends, says Lodish. Before long, they too became loyal customers.

In addition to making sure that people will actually buy what you are selling, and topping that with excellent customer service, Lodish advises selling something that's going to be a source of sustainable competitive advantage so it's difficult for a competitor to imitate you. He says that now covers 70% of the U.S. overnight. “That's one reason Amazon bought them. That's hard for a competitor to reproduce.”

American Express: Five Ways to Recession-Proof Your Business

Five ways recession art While many signs suggest economic conditions have stabilized, economic growth continues to be slow -- 
and may remain so for some time. What’s more, the uneven distribution of that growth means many businesses remain in a recession- or near-recession-like state.

  As small businesses continue to slog through this slow-growth scenario, there are several steps that nearly any organization can take to help recession-proof their operation, regardless of the industry, says

Wharton lecturer and small business expert Robert J. Chalfin.

 Chalfin offers five tips for positioning a business to weather these ongoing, rough financial times.

 1. ‘Unemployment insurance’ with purchase

 “About a year and a half ago,” says Chalfin, “Hyundai said ‘if you buy a car from us and then lose your job within a year, we will give you (almost) all your money back.’” How many owners will actually send the car back? “Not a whole lot.” Chalfin believes that Hyundai might not have sold a good number of the cars that it did over the last 18 months had they not made this offer. Plus, he says, the strategy gave the company some extra used cars to re-sell. Before trying this promotion, however, talk with a financial expert to ensure its cost effectiveness.

 2. Deferred/extended payment plans

 Buy now, don't pay for a year. “Say Home Depot borrows money at 3%, or less,” says Chalfin. “Then they give the consumer a year to pay for their purchase, so Home Depot takes a 3% hit.” That’s basically the same as allowing customers to purchase with a credit card.

 3. Rent vs. Buy

 Allow lease vs. buying. This works with cars and appliances and it might work with your products too.  Lately, more equipment manufacturers are offering a lease option. “Cell phone companies have figured it out too, as have large enterprise software companies,” notes Chalfin.

 4. Make it easy to do business with you

 Storage facilities, for example, could consider providing a truck and some people to help haul items to their facilities at no cost. Once your stuff is there, you're less likely to leave. “People don’t realize how long they will keep their stuff in storage,” says Chalfin. “They keep it longer than they thought they would. So why not help them get it there?” Other companies need to think harder about making things easier for their customers.

 5. Offer reduced services

 Cable providers and banks make this type of offer all the time. Consumers get a low rate for one year, and then the rates go up. “Take Sirius Radio,” says Chalfin. “If you purchase a new car, frequently you received free satellite radio for a limited period – and then you get used to it. I think what the banks are doing now is brilliant – offering to handle bill payments online without a service charge. People get hooked on that service. Credit card, mortgages or rent, car payments, cable and utility bills come out of your account automatically. It’s easy to enroll, but time-consuming to switch, and so it increases the likelihood you will maintain an account with that institution. Or think about accounting firms: They may have little to do in July. So they could say, ‘let us do your taxes during tax season, and then we'll give you a free financial planning session in July.’

 “In today's market everyone is looking for bargains and value,” says Chalfin. So look at your pricing structure carefully. Ask yourself where your customers or clients are taking the biggest risks – and, especially in today’s recessionary times, try to meet them halfway.

American Express: Integrate Your Personal and Professional Life in Three Steps

We asked Wharton professor and author Stew Friedman how employers could integrate their personal and work lives to find a productive and comfortable balance. Tough as it is any time, balancing the two can be a huge challenge in a recession when challenges seems to spring from every corner.

After all, work isn’t everything. On the other hand, some of us are more attached to our careers than others. And we don’t all have the same outside commitments or interests.So, how can you achieve your own best mix of the personal and professional? Most important, says Friedman, is to articulate your goals, get feedback and clarify what matters most to you. He offers the following tips:

Read More >

American Express: Overdraft Protection -- a Last Resort Best Avoided

Knowledge Partners 091016 Few goofs are as painful as bounced checks, with their attendant hassles and embarrassments. Bank overdraft protection is one option for small-business owners to handle temporary gaps in cash flow.

Banks won't necessarily cover a shortfall automatically. If you haven't signed up for overdraft protection -- or if you don’t have a small-business account that includes it -- your checks could bounce. Overdraft protection, also known as bounced-check protection, can be seen as a sort of intentional short-term loan with the bank covering your check until you make your next deposit, or linking your checking account to another account or a credit card, so that available funds are automatically transferred if needed.

Read More >

American Express: Best Practices in Finance -- a Roadmap for Funding

Not everyone who runs a business is a financial wizard. And why should they be? People go into business for a variety of reasons – to transform something they love into something that pays; to honor a family tradition; or for the freedom of working without a boss – not necessarily because they’re good with money.

Yet, a company’s financial operations are key to its success. That’s why Eric Siegel, an adjunct lecturer in management at Wharton School, believes that any entrepreneur who doesn’t understand finance ought to hire – or, at the very least, consult with – someone who is.

Read More >

American Express: Peer-to-Peer Funding Taps the Pocketbooks of Strangers

Knowledge Partners 090904  
If you've tapped out your usual sources for funding and need cash to grow your business, peer-to-peer financing may be an alternative worth exploring. Online matchmaking sites, such as and, connect business owners with investors, working much like Internet dating services or the popular auction site eBay.

Typically, an entrepreneur will post a profile explaining his business, background and what he or she needs money for. Investors can peruse the postings and choose which opportunities they'd like to back. When terms are matched, a deal is struck.

Read More >

American Express: Note to Marketing -- Get into the Conversation (Part I)

Custom Partners 090918 There’s plenty of buzz these days about businesses “getting into the conversation” with customers through social networking platforms. The goal is to enhance the brand by gaining valuable insights about and through customers.

At a time when everyone is looking for new ways to grow sales and improve cash flow, no rock should go unturned. But before you jump into the conversation, be aware that there are good ways to get involved and not-so-good ways, too.

According to Steve Ennen, managing director of the Wharton Interactive Media Initiative, “Because of the ubiquity of digital tools and interactive media platforms, consumers have for the first time in history the ability to talk among themselves. The rankings, ratings and opinions about a brand can now reach a global scale. Everyone is online. The consumer is discussing your brand so you darn well better know what they are saying.”

Read More >

American Express: Note to Marketing -- Get into the Conversation (Part II)

071509_bbk8 (2) Previously, we discussed businesses that leverage social networks to engage their customers and build their brands -- some with greater success than others. If you haven’t taken a hard look at social networking platforms in the past couple of years, you could be in for a surprise. And once you learn your way around Facebook (which boasts a population nearly as large as the U.S.’s), Twitter, and the latest generation of micro-blogs and professional networking platforms, you may want to invest more of your marketing budget online – and less on traditional media.

Read More >

American Express: Credit Unions – Another Option for Small-Business Borrowers

Credit unions may not be the first source you'd think of for small-business loans, but checking out these no-frills bank alternatives can often be worthwhile. Credit unions have increasingly reached out to small-business borrowers in recent years, and the U.S. Small Business Adminstration (SBA) is looking to use them to build a bigger base of SBA lenders.

In the current tight credit environment, few small-business owners in need of funding can afford to leave this stone unturned. "Right now, there is no normal," says Therese Flaherty, director of the Wharton Small Business Development Center in Philadelphia. "Shopping around is even more important than it was last year."

Some small-business owners have found credit unions to be an attractive alternative to traditional lenders. Why?

Read More >

About Sponsor Collaborations
The content on this page was created by Knowledge@Wharton and our knowledge partners listed below. Our partners also sponsored the articles, white papers, podcasts and video reports that appear in this section, which showcases the insights and expertise of Wharton faculty and partner companies.
Bookmark and Share
Friend us on Facebook
Subscribe to RSS Feed