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Posts by lancethornswood

Weiden+Kennedy and P&G take home first Olympic Gold

In their new TV spot for P&G, It takes someone strong to make someone strong, Weiden+Kennedy has pulled off an impressive Mother’s Day tribute to the moms who’ve stood behind us all. It’s a powerful, emotional tour de force that will bring tears to even the most jaded among us.

Watching the spot makes me long for the days I spent working with Weiden+Kennedy when I was at Target and definitely makes me miss the years I spent working in the agency world.

And even though I’m not an Olympic athlete, their terrific spot makes me feel especially grateful to my own mom!

Amazon is primed for a price increase


In last week’s analyst call, Amazon executives noted they were considering a price increase of up to 50% for their popular Amazon Prime subscription service. This paid “loyalty program” offers subscribers:

  • Free two-day shipping on millions of items
  • Unlimited instant streaming of 41,000 movies and TV episodes
  • Over 350,000 Kindle titles to borrow for free

It’s been a hot news item in the popular press and in the retail industry, but is it a big deal?

The price elasticity of a Prime membership will be based on customers’ perceived value, of course. At $79/year this seems like a relatively simple decision for someone who buys a handful of times per year, uses Prime Instant Video and maybe borrows a few Kindle titles. The emotional arithmetic goes like this: 80 bucks divided by 12 months is just under 7 bucks per month seems like a good deal for free shipping and videos (BTW, nobody seems to talk about the Kindle book borrowing; I guess we don’t care about this one very much).

At around $7/mo, that’s less expensive than Netflix, so it’s a no-brainer if you’re a light-to-moderate viewer of streaming video. I believe if the price rises to exceed the monthly Netflix charge, people will reconsider. They may not leave Amazon, but they will pause to compare whether it’s still the good deal they were getting before a price hike.

I believe Amazon could soften the impact by letting all us subscribers know how much value we’re getting from our Prime subscriptions. At least, they could personalize and let those customers who are receiving “high value” know what a deal they’re getting:

  • Your subscription costs $79/year
  • You’ve received $68 in free shipping + 12 months of streaming video (compare to Netflix or Hulu Plus at $96/year) + 4 Kindle books borrowed for a savings of $54 (compared to their purchase price)
  • Amazon Prime gave you $218 in value for just $79.

Reinforce that value-received message a few times and most folks won’t balk at a modest rate increase.

A few more recommendations for Amazon:

  • Do a phased increase rather than a 50% rate hike overnight
  • Test various rates to get an accurate measure of elasticity — easily done with all the customer behavioral data at Amazon’s disposal
  • Test a monthly rate rather than an annual one to emphasize the value compared with Netflix and Hulu Plus (and to lower the perception of being “locked in” for a year)
  • Consider personalized pricing based on the value customers are already receiving people who order frequently may find a higher price to be a good deal while infrequent buyers may be more sensitive to a rate hike
  • Validate whether the payment of a Prime subscription increases customer propensity to buy from Amazon so they can maximize the value of the subscription fee — then weigh the elasticity risk against this increased purchase propensity. That calculus could help find the ideal sweet spot where Prime subscription cost balances perfectly with increased purchase volume.

See my comments and others from the RetailWire Brain Trust on

Black Friday Turns Into Black Eye for Target — Thanks to Sophisticated Hackers

This morning CNN reported that Target fell victim to a massive and very sophisticated hacking scheme. Target and credit card issuers say as many as 40 million credit cards may have been compromised in this attack, which began on Black Friday.


What’s fascinating about this is that the attack was NOT aimed at, but was instead focused on the brick-and-mortar stores — a place we usually consider to be more secure because major retailers have implemented thorough security measures in the form of PCI.

PCI is The Payment Card Industry Data Security Standard (PCI DSS), a proprietary information security standard for organizations that handle cardholder information for the major debit, credit, prepaid, e-purse, ATM, and POS cards. The standard began in 2004, but it really took hold after the massive credit card security breach at TJX Companies (TJ Maxx and Marshalls) during the Christmas shopping season in 2006. That attack affected 94 million accounts, more than double the number affected by the recent Target attack, and according to Visa it resulted in at least $68 million in fraud-related losses.

In a less PCI-compliant environment, the hack might have worked as shown in this YouTube video, “Hacking your credit card as you shop”. What makes this recent Target attack especially interesting (and a bit scary) is that thieves apparently figured out a way to jump in at the very front of the security chain and steal mag stripe information BEFORE hitting any of the PCI measures were designed to prevent theft. Target’s security is top-notch and their PCI implementation quite rigorous, so how did the hackers do it? According to reports, the sophisticated hack may have been in the firmware or software of the credit card swipe devices, so the hackers were able to bypass all the normal PCI-compliant security measures and get to the card data BEFORE it was ever encrypted.

Over the coming weeks and months Target, the Secret Service, and credit issuers will undoubtedly revise security protocols and work to overcome this latest hack. In the meantime, consumer vigilance continues to be our best last defense. If you’ve shopped Target recently, you may want to call a special hotline Target has established for people who suspect unauthorized usage of their card information: 866-852-8680. And it’s a good idea for all of us to do these four things to ensure your credit information is secure.

This may not be all bad: I’ll use this as an excuse to explain any gifts I may have forgotten to buy.

Amazon Goes Down – Score One for the Little Guys

Yesterday the little guys in retail—by that I mean everyone smaller than Amazon (in other words, everyone)—got a brief reprieve from the e-commerce juggernaut that is According to, the site was down for something like 41 minutes. Across the U.S., would be Amazon shoppers received errors starting around 2:50 pm EDT. I received a few incredulous calls from friends and family assuming the problem must be with their ISP and asking if I was experiencing the same outage.


Since I’d recently reposted an infographic about what happens in 60 seconds online, I had the one-minute sales figure for Amazon in mind. A quick calculation says Amazon’s outage cost them about $3.4 million (41 minutes X $83,000/minute). Ouch, that’s more than most of us make in a week!

As soon as I realized Amazon was unreachable, I looked out my window and was reassured to see that local brick-and-mortar retailers were still up and running. The good news: brick-and-mortar retailers tend not to go down except in case of 7.3 earthquakes or other natural disasters, which are pretty rare, thank goodness.  The bad news: their other major threat, Amazon, is ever present — well, except for yesterday’s brief outage.

Retailers are racing to reinvent themselves to stay relevant in the face of the ongoing weak economy, rapid technological change, and the threat of show rooming—where their stores become the de facto showroom for online retailers, who frequently end up getting the sale because of their lower prices. The pressure is intense, and Amazon’s outage didn’t even last long enough to let retailers catch their breath. But maybe, if you just HAD to buy something during that 40-minute outage, your local electronics store, bookseller, or apparel shop might have gotten your business. It’s a nice thought, anyway.

Amazon has been mum about what happened, although they say they were NOT hacked, so apparently this was not a malicious outage. Malice or not, there may be a few IT folks in the Seattle area soon looking for new jobs. If you’re a mid-sized specialty retailer looking for experienced eComm IT hotshots to help you nail your omni-channel tech, now’s your chance.


p.s. If you’d like to do your part to help Amazon make up for yesterday’s lost revenues, you can start with my “Gift Ideas for Lance” wish list. Don’t delay. Amazon needs you!

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