Gap Inc. Says Marketing Has Been Ineffective

CEO Calls Out Old Navy in Particular, as Brand Says It Will Fine-tune Current Crispin Campaign

Gap Inc. reported a lackluster second quarter, and marketing, it seems, is at least in part to blame.



Chairman-CEO Glenn Murphy told analysts that the retail company's ad offering in the first half was "ineffective," and it will be one of two key priorities for the second half. The other priority is improving women's products.

"We've had some ineffective marketing in the first half," Mr. Murphy said. "Not that it was bad; it was just less effective than we wanted it to be."

Old Navy took the brunt of Mr. Murphy's complaints, as he told analysts he was disappointed that more customers weren't getting in the door to see the improved product. Mr. Murphy said that when there's a traffic issue, he always looks at product first, because it's easy to blame store execution or marketing. But, in this case, he said he felt good about the product Old Navy has been stocking for the last three months.

"Old Navy, we had some story lines, but the marketing did not pull, did not drive traffic as much as we wanted," Mr. Murphy said. "So, I'm disappointed in the brand. I'm disappointed in the leadership that we've been unable to get enough people and the customers we target to come in and see what [Nancy Green, Old Navy's chief creative officer] has actually put into the store."

Old Navy introduced a new campaign, "Old Navy Records: Original hits. Original styles," in February. The campaign, led by Senior VP-Marketing Amy Curtis-McIntyre, who joined the company last year, replaced the "Supermodelquins." CP&B is Old Navy's creative agency.

But executives appear to be unhappy with that campaign, which incidentally, also prompted a lawsuit. Last month Kim Kardashian filed suit against the retail brand because an actress in the campaign's "Super C-U-T-E" commercial bears too much of a likeness to her.

A Gap Inc. spokeswoman said Old Navy Records has been evolving since its launch. And an ad slated to break this weekend will build on the work that has been done to date. "We have been acknowledging recently that traffic is still a challenge, and we've been working to adjust the balance since March to drive more loyalty, through promoting the surprising quality in the product, the right blend on price and to hit on the fun and fashion elements of Old Navy," the spokeswoman said.

Mr. Murphy highlighted the importance of finding a balance between brand marketing and a strong value message. And he said the campaign initially focused too much on Mom and not enough on her family. "When we do marketing that registers about her family, she tends to respond quite well," he said. "The message, while people thought it was good and they remembered it, it wasn't anywhere near the call to action needed to get somebody to get into the car and make a trip to Old Navy."

The creative launching this weekend will serve as a "stop gap" while the retailer fine-tunes the Old Navy Records concept. "But if we can't fix what we have, we'll have a brand new [campaign]," Mr. Murphy said.

Gap Inc. reported it spent $114 million on marketing during the second quarter, up $13 million compared to a year ago. Execs expect third-quarter spending, which includes the back-to-school season, will also be up, driven in part by Old Navy. Earnings for the second quarter fell 19% to $189 million, while sales at stores open at least a year fell 3% at Gap, 2% at Banana Republic and were flat at Old Navy.

Starbucks' New Logo Signals Intent to 'Think Beyond Coffee'

CEO Howard Schultz Promises New Product Offerings in Spring

CHICAGO (AdAge.com) -- Starbucks Corp. today unveiled the latest iteration of its logo -- a move that CEO Howard Schultz said signaled the java giant's intent to "think beyond coffee."

Starbucks revealed the logo -- which drops the green ring with the text "Starbucks Coffee" and more prominently displays its famed siren -- to employees in its Seattle offices and on a webcast. Mr. Schultz said in a video post on the company's website that while allowing the siren to come out of the circle indicates Starbucks' intention to broaden its focus, "make no mistake: We have been, we will continue to be and we always will be, the world's leading purveyor of the highest-quality coffee."




In a blog post today, Mr. Schultz said: "Starbucks will continue to offer the highest-quality coffee, but we will offer other products as well. ... You'll begin to see our evolution starting this spring." He didn't say what products were in the offing, but it's clear the company has had its sights set on being more than a coffee chain for a while. It is once again selling breakfast sandwiches, which were once banned because the smell supposedly infringed on the coffeehouse atmosphere.

The new logo is part of a celebration of Starbucks' 40th year, and it is the fourth in the company's history. Starbucks revamped the logo in 1987 by dropping the brown and embracing green; it also changed the formerly bare-breasted siren to a more modest sea nymph. The company again modified the logo in 1992.

There have been a number of high-profile logo changes in the past few years; Pepsi-Cola, Tropicana and Gap all tweaked their iconic symbols. Notably, all have received further tweaks since the initial rollouts. Pepsi-Cola, which initially rolled out three different smiling logos, scaled back to just one. Tropicana reverted to its straw-in-an-orange imagery after consumer outcry and a drop in sales. And Gap quickly scrapped plans to roll out a new identity when consumers panned the logo's Helvetica font and gradiated blue box online.

An Ipsos Observer poll conducted by Ad Age in the midst of the Gap logo debacle showed that more than half of consumers expect companies to ask for the public's input before making a major change to its logo, packaging or product. Thirty-six percent said they didn't expect that, and 12% said they weren't sure.

Starbucks appears to have put a great deal of thought into the logo rollout: Mr. Schultz scheduled a call with associates, and the company posted a video explaining the change as well as a post on its website. Even so, consumers are generally quick to judge a logo change. "If you ask customers what they think, they'll say a logo change is just a logo change," said Tony Spaeth, president of Tony Spaeth/Identity. "It's easy for people to demean a logo change. Does that really reflect their genuine perception of Starbucks? I don't think so."

Brand consultant Denise Lee Yohn said consumers are "always resistant to change, and given what happened with the Gap logo, there's probably going to be a backlash in the social-media world." Sure enough, there were a few dissenters, with some tweeting comments such as, "Starbucks has to be feeling pretty confident to drop name from new logo" and "Is new Starbucks going to last as long as the new Gap logo?"

Mr. Spaeth said he thinks the Starbucks logo rollout will fare much better than the Gap logo debacle. "The big difference is that Gap management didn't really understand the significance of what they were doing and that the public was interested. Howard Schultz is very much on top of this and regards this as a very significant step forward. It's being undertaken with supreme confidence and pride."

GAP INTRODUCES NEW LOGO, MASS CRITICISM ENSUES

But Despite the Outcry, Retailer Remains Mum on Scope of and Reason for the Shift


NEW YORK (AdAge.com) -- It appears Gap is rolling out a new logo and critics aren't being too kind about the shift.

The new logo has replaced the retailer's iconic blue box, which had "Gap" emblazoned across it in capital letters, on the brand's home page. Now, a gradiated blue box is perched at the top right side of the "p" in Gap. The original logo can still be found on the retailer's Facebook and Twitter page, however.

The logo is pervasive in American culture, appearing on some 1,200 stores in North America. Gap also operates nearly 300 stores in Europe and Asia. Gap is the 84th most-valuable brand in the world, according to Interbrand's 2010 study. The group values the brand at nearly $4 billion.

Of course a brand is more than a logo, but as far as logos go, Gap's is an icon. Across the internet detractors have been picking apart the new look, with the most common sentiment being that it looks like something a child created using a clip-art gallery. A Twitter account @gaplogo has even popped up within the last 24 hours and is rapidly attracting new followers. It appears to be a parody account, given the irreverence. Posts detail, for example, how the "marketing team is huddled in a corner eating Ben & Jerry's and drinking scotch" and the "creative director just quit."


There are also references to another infamous rebrand: Tropicana. "Peter Arnell just called. He didn't say anything -- all we heard was laughing on the other end of the line," reads one tweet. "I'm not going the way of Tropicana's logo. Nowayjose," reads another.


Gap has remained mum. No official press release explained the shift, and calls for comment were not returned. It's not clear whether an agency worked with Gap to create the logo. The retailer has worked with Laird & Partners, as well as MDC's Crispin Porter & Bogusky in the past on creative campaigns.


Sales at the retailer have been tepid in recent months. Sales at stores open at least a year fell 4% during the second quarter.

GAP + iPAD = COOL

As a consumer based in Europe (and partly as a digital marketer), I never thought Gap was a cool brand. But now, a few days after the iPad has been launched, I definitely changed my mind.

The Gap 1969 Stream iPad app is so much of the moment! It's an iPad application that allows you to browse a lot of (branded) denim content, celebrities and designers videos as well as music. And on top of this, looks like you can also purchase products directly from the application. Once again, the geek marketer in me claims an iPad as soon as possible. But I guess I will have to wait until end of April to get one in Italy.