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Addressing Questions Regarding Advertising and Marketing Programs

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I have had the opportunity to speak with many employees and stakeholders and read a number of the comments on this blog since our recent cost reductions announcement and I thought it was important to address questions that have been raised regarding our advertising and marketing programs.

The FedEx brand is one of the most widely recognized and respected brands in the world.  Some might say we're lucky, but the strength of our brand is no accident.  The management of the brand and the discovery and retention of our valued customers has been the job of FedEx marketing for over 35 years.  And FedEx has invested in marketing over the years for a very simple reason – marketing drives business.

Our marketing group has not been immune to cost cutting efforts.  At this point, more than 25 percent of the non-contractual marketing budgets have been reduced.  We have reduced our television advertising to its lowest levels in over three years and, as Steve Pacheco noted in his recent blog post, we will not advertise in the upcoming Super Bowl for the first time in several years.

It's important to note that a large part of all marketing expenses are tied to long-term contractual agreements that we have with our various sports properties.  This means that we are committed to pay both the sponsorship fees and for advertising during broadcasts.  However, we have significantly cut back on the non-contractual aspects of these properties like hosting events during games.

It is probably not going to surprise anyone when I say that the state of "traditional" advertising has changed.  We invest in sports for very good reason.  Unlike years back when there were only three networks, we now compete with more than 150 cable and satellite channels.  It’s incredibly difficult to reach customers in this cluttered realm.

One exception is sports where huge audiences are drawn to live events.  NFL games are the #1 rated sports show on television and NASCAR races are #2.  FedEx must have a presence in these venues to reach customers.  In addition, our research shows that people making shipping decisions are sports fans.  We carefully analyze the demographic profile of shippers and this has been a recurring characteristic.

There are also aspects of our marketing programs that we cannot put a number on -- but are the right thing to do.  We heavily leverage our sports portfolio as a way to give back in our local communities.

Over the years, we have given millions of dollars to charities through our sports properties:

  • The FedEx #11 Racing team is very involved in children's hospitals throughout the country.
  • As part of our NFL sponsorship we donate hundreds of thousands of dollars to children's hospitals every year.
  • First Tee is a part of the FedExCup sponsorship and events are hosted at several tournaments per year.
  • And of course our longstanding relationship with the St. Jude golf tournament has been responsible for millions of dollars of donations to that important children’s hospital.

For small business efforts, Marketing also leads the charge with our small business customer base managing more than nine million customers.  They are directly responsible for the growth of this customer base more than 8 percent year over year.  These customers, and the revenue they bring, are absolutely critical to the success of FedEx.

So, how do we measure success?  A few examples follow:

  • FedEx gets a return on investment of $4 to every $1 we spend on sports marketing, on average.  Some promotions even generate up to $14 for every $1 spent.
  • We receive direct revenue from sporting organizations that use FedEx as a result of our sponsorships and indirect revenue from customers who use us for the same reason.
  • Just in the last 90 days, our advertising and marketing programs have been directly responsible for the opening of tens of thousands of new FedEx accounts. 
  • We have generated tens of millions of dollars in incremental revenue from our small business marketing programs. 
  • We have had over 3 billion impressions in the last seven months driven by our advertising and sport sponsorships even while being significantly outspent by our competitors.

Not to belabor the state of the economy but at no time in the history of FedEx, has the job of our marketing department been more critical.  We absolutely must stay competitive, drive new business and retain our existing customers.  Marketing budgets have decreased but our goals remain the same and we will continue, like all FedEx team members, to do more with less.

Comments (7) 

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I understand the need to spend advertising dollars, but I have never understood the way budgeting is done in this company, which is based on run rates. It would make more sense for each deparment to justify their requested spend every year, instead of just getting the same amount they received the previous year based on their run rate, especially for A&P dollars. There is no incentive to save given the fact if the budgets are not spent, the money is taken away. It is a well known fact that once June comes and money is allocated for the new fiscal year, if the budget allocation is not spent or under contract by November at the latest, most likely to the budget will be reduced. Where is the incentive not to spend every dollar in the budget?

Interesting to see how sports marketing and sponsorship is a central strategy to engage with customers in the new media landscape. Part of the change from 'interuption marketing' to 'passion marketing' that is generating a good ROI for the business.

Mr. Glenn, In terms of advertising, has there ever been discussion of a more service-based approach to commercials when it comes to the advertising for FedEx Office? We have noticed over the years that the commmercials tend to gear primarily towards the FedEx brand but doesn't provide much detail on services specific to Office. To this day we still have internal team members from other OpCo's (and customers) who enter our location and frequently say 'I didn't know you had this service.' Are there any plans to advertise the lesser-known services of FXO in the future? Thanks very much! Brian

I would love to see some of the old FedEx commercials recycled. The fast talker was one that still has people talking and has large recognition value. When I think of FedEx, I think of that commercial.

Glad to read this! It makes me proud to see the FedEx logo whether it is on a passing truck, an airplane flying overhead, on a stadium, on a race car, or on a golf trophy!

Thank you for addressing these questions. You answered the concerns that many employees have raised in a comprehensive and thoughtful manner. I support keeping our good name out there via prudent sponsorships and other effective marketing vehicles. We must continually work to build our business even more so now than ever before.

Its a really tough place to be in right now, so I am really glad to see you addressing this head on. The best news I read in this post is the reduction in television advertising - with tivo and other PVR's, the ROI for television has got to be at its lowest point ever while being engaged with the market here and in other places online provides the highest returns. The challenge for people in your position as I see it, is finding something meaningful around which your market would like to engage with you. Posts such as this one certainly draws some attention, but to have an online strategy that is more then banner ads is going to be key. There are certainly a lot of opportunities given your brand value and the relationships that you already have. As I have long said, the best marketing isn't marketing at all, its having a great product and experience at the core of the business, not having a great team of people able to sell it. To what end are you serving as the voice of the customer inside your company helping to improve your products/services?

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