Portal Strategy – Part II: Targeting Green Consumers on Yahoo!

December 29, 2006

For online advertisers, Yahoo Auto’s Green Center provides a rich opportunity for targeting consumers receptive to a green message.  While Yahoo has clearly enabled opportunities for contextual advertising, smart marketers may work with Yahoo to enable targeting of consumers based on user behavior within the Green Center and an across the Yahoo portal based on an affinity for products that are green.Yahoo’s Green Center offers advertisers a powerful way to focus their ad spend by targeting only those that are interested in green cars.  Today, Yahoo enables two ways to do so within the Green Center:

  • Affinity marketing.  It is likely that everyone who visits the Green Center has an affinity for green cars.  For advertisers, therefore, any ad placements within this section are likely to have greater impact than equivalent placements within the general auto portal due to this affinity.
  • Contextual advertising.  Yahoo offers its advertisers the opportunity to place contextually relevant ads on key content pages of the site.  Contextual advertising is common practice today and entails matching page content or page categorization with relevant advertising.  For Yahoo’s Green Center, this means that if a user is searching for information on the Toyota Camry hybrid, Toyota has the opportunity to serve ads on related (contextual) content pages.  In a sense, the ad complements the site content, providing Toyota the opportunity to reinforce its brand message and value proposition. 

Contextual Advertisement (on right and at top) Aligns with Search for Toyota Camry 

camry-advertisement.jpg

While current options provide advertisers with valuable ways to target prospects, Yahoo may have the opportunity to do more for its advertisers.  Specifically, Yahoo may have the ability to enable:

  • Behavioral targeting within the Green Center.  Not only can ads be dynamically served based on page content or categorization, but they also could potentially be served based on online user behavior.  For example, let’s say that the user who was browsing Toyota Camry hybrids decided to click on financing options.  Using behavioral targeting, Toyota (or a local dealer) could place a relevant ad – highlighting current financing options and incentives for the Camry – next to the generic financing content on the page.  If that same user clicked on the generic gas mileage impact calculator, Toyota could serve a relevant message about how the Camry has higher gas mileage and lower emissions than its competitors.  If the user had started by searching for a Honda Civic instead, Honda could serve similarly branded messages on these content pages based on the consumer’s online behavior.

Opportunity for Behavioral Targeting on Generic Financing Page 

financing.jpg

  • Affinity targeting across Yahoo portal.  When a user visits any site, a cookie is dropped onto his/her web browser which enables the site server to recognize that user when he/she returns.  This cookie may also store specific information about the user including site preferences.  When a user visits a particular page of the site, embedded site “tag” appends additional information to the cookie that enables tracking of usage patterns on the site.  Smart green marketers may work with Yahoo to leverage this information to target consumers in two ways by:
  •  
    • Serving different ads to returning visitors (e.g., different messaging, more aggressive offers) within the Green Center.
    • Targeting users that have a green affinity (i.e., those that previously visited the Green Center) across the Yahoo portal.  By leveraging this information, green car companies may serve (green) affinity-based ads to users anywhere on the Yahoo portal to entice them to reengage.   It would even be worth a test by other companies to leverage this “green affinity” in order to target prospects that may be more receptive to eco-friendly messaging than others.
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Portal Strategy – Part I: Engaging Green Consumers on Yahoo!

December 28, 2006

Yahoo Auto’s Green Center is a powerful auto buying portal focused on hybrid and other eco-friendly vehicles.  Its web pages are packed with engaging content, tools and community features that help users evaluate, compare and find the green car that is right for them.   

Site features target consumer needs at every stage across the purchase funnel – from building awareness of green cars and technology to enabling comparison of available choices to facilitating purchases at the dealerships.  Moreover, Yahoo built the site using relevant proprietary applets such as Yahoo Answers, Groups and News that are used across its portal, while forming partnerships to do the rest.  In doing so, Yahoo is able to integrate best-of-breed tools within the site experience.

 

Yahoo Auto's Green Center

yahoo-auto-center_screen-shot_3.jpg

Green Center Site Features and Partners

Features

Partners/Yahoo Applets
Content  
  Car information including pricing (MSRP and invoice), rebates and incentives, features & specifications, performance reviews, photos and videos JD Powers
Exclusive “Green Ratings” Environmental Defense
Federal and state purchasing incentives HybridCars.com
Gas saving tips; Hybrid newsletter HybridCars.com
Relevant news articles Yahoo! News, del.icio.us
Tools  
  Car comparison  
  Gas mileage impact calculator (consumption, costs, emissions) HybridCars.com, ACEEE's Green Book
  Alternative fuel gas locator US Department of Energy
  Financing (rates + quotes) CapitalOne, CarsDirect, Bankrate.com
  Insurance (quotes) Allstate, Progressive, GEICO
Community  
  Groups Yahoo! Groups
  Q&A Yahoo! Answers
  Opinion polls  
  Most popular/viewed cars  

One of the most engaging tools is the Gas Mileage Impact Calculator which enables direct comparison of vehicles based on gas milage, fuel costs and emissions.  Here I have provided a direct comparison between the Camry and the Camry hybrid.  Note the 2,500 lb reduction in carbon dioxide emissions when shifting to the hybrid.

Gas Mileage Impact Calculator
gasmileageimpactcalculator.jpg

One of the best community features on the site is Yahoo Answers which allows users to pose questions and others to provide answers. Users then select the best answer through popular vote.

Yahoo Answers on the Environment & Ecology


yahooanswers.jpg


Sharing Green Videos Online

December 26, 2006

According to Jupiter Research, more than 20% of online users in the US regularly view videos online today.  This segment is growing rapidly, driven by the adoption of broadband and emergence of video sharing sites such as Grouper, Veoh, vSocial, and YouTube, recently acquired by Google.  Marketers are taking note.  Once the domain for sharing consumer-generated content, such sites are increasingly being seeded with professional content including movie trailers, TV commercials and news stories. 

For green marketers, video sharing offers a powerful new channel to reach consumers and promote their message.  Specifically, video sharing enables marketers to:

  • Engage consumers through compelling, multimedia experiences
  • Facilitate word-of-mouth marketing efforts
  • Attract highly influential online users they can leverage as brand advocates.  In fact, 28% of users that view online videos regularly “ranked themselves as the first person people come to for recommendations about TV and movies, compared with 12 percent of all online consumers” according to Jupiter Research (Online Video Search, 11/06)

To assess the state of green video sharing, Marketing Green recently surveyed YouTube’s top “green” videos (based on number of views).  Here is what we found:

  • Green marketers are experimenting with online video, though with varying degrees of success.  Green videos can be categorized as either pro-environment or anti-environment.  They are being produced by an array of organizations – including Hollywood film studios, non-profits and news agencies – as well as independent filmmakers.  Somewhat surprisingly, no product companies made the top list, though a quick search yields content from eco-friendly campaigns by GE and Toyota.
  • Overall, the most popular videos had a mix of entertainment and celebrity appeal.  Moreover, most top-viewed videos were distributed to support more extensive, multi-channel marketing effort – say to promote Al Gore’s movie or TBS’s Earth to America! comedy, rather than produced as stand alone content in of themselves. 
  • Only three videos, all directly related to An Inconvenient Truth, have been seen by more than 100K viewers* to date.  This is significant because it says that most environmentally related videos appeal to niche audiences that perhaps have high pre-existing levels of awareness and understanding of these issues. 

Top 10 Pro-Environment Videos on YouTube 

Video Title

Topic Source Celebrity Views
“A Terrifying Message from Al Gore”

Global warming

Paramount

Futurama Al Gore

1,287,858

An Inconvenient Truth – Trailer

Movie trailer

Paramount

Al Gore

659,940

Will Ferrell on George Bush on Global Warming

Global warming

“Earth to
America”, TBS

Will Ferrell

137,710

Robert Redford on Saving the Arctic Refuge

Protect ANWAR

NRDC

Robert Redford

106,910

Water Powered Vehicle

Hydrogen-powered vehicles

Fox News

NA

102,968

A Global Warning…

Global warming

Independent Film Maker, WordofMouth

NA

56,619

Global Warming: From ‘If’ to ‘When’

Global warming

Health Politics.org

NA

43,248

Blue Man Group video featured on ‘Earth To America!’

Global warming

“Earth to
America”, TBS

Blue Man Group

42,359

The Bush Administration’s approach to Global Warming

Global warming

TheDaily Background. com

NA

34,984

Greenpeace anti-SUV Commercial

Anti-gas guzzler

Greenpeace

NA

32,448**

Top 5 Anti-Environment Videos on YouTube 

Video Title

Topic Source Celebrity Views

Al Gore’s Penguin Army

An Inconvenient Truth Parody

Anonymous

NA

471,871

Global Warming – Glaciers

Refutes Global Warming

Competitive Enterprise Institute

NA

105,042

Global Warming – Energy

Refutes Global Warming

Competitive Enterprise Institute

NA

43,849

Michele Bachmann doesn’t believe in global warming

Refutes Global Warming

Individual

NA

41,705

Al Gore: An Inconvenient Story

Anti-Al Gore

Competitive Enterprise Institute

NA

30,177

 

Jupiter Research reports that the top three ways for video users to “discover” videos include recommendations from friends, search engine results, TV/movie preview or trailer and directly from online video sites.   For green marketers to have significant impact, they must leverage these tactics in order to appeal to a mass audience. (Programming for Three Screens, 12/06).

 

Tactics for green marketers to consider:

  • Facilitate word of mouth.  Embed “pass-along” tools with content.  Identify key influencers and seed with content.
  • Enable search. Pay for relevant keywords and align ad copy.  Optimize landing pages for natural search.  Tag online videos to enable video search engines to crawl them. 
  • Create compelling content.  Content does not have to be associated with the latest blockbuster movie for it to be compelling.  Our quick assessment of green videos on YouTube suggests that comedic formats have broad appeal.  Case in point: “A Terrifying Message from Al Gore” produced by Paramount was by far the most viewed video – 2x over the actual trailer for the movie – through a clever parody of Al Gore using Futurama characters. 

Yet, serious documentaries can play to broader audiences but may require celebrities that leverage the affinity of the actor to legitimize the cause and broaden its appeal to do so.  Two examples include Al Gore and Robert Redford, the latter paring up with the National Resource Defense Council (NRDC) in a video that promotes saving the Arctic National Wildlife Refuge from drilling. 

News articles may be more challenged to generate broad appeal, not by the nature of the content, but rather by its apparent lack of exclusivity which may diffuse the audience base across multiple channels.

  • Distribute through existing video sharing sites.  This may include organic seeding or paid placement of content when appropriate.   In addition, links can be created from popular blogs, boosting reach.

*Interestingly, the top anti-environmental video, “Al Gore’s Penguin Army”, was released by DCI Group, a PR agency, while the producer and financial backers remain anonymous.   

** Listed twice.  Other listing has 25,733 views. 


Taking the Online Pulse: Green Marketing in 2006

December 23, 2006

As 2006 draws to a close, it is important to reflect on the trends that are emerging globally on “green marketing”.  Free web analytics tools can help marketers quickly take the pulse of this space online.

“Green marketing” references clearly increased in the blogosphere during 2006, perhaps by 50-100+% according to Technorati Charts tool.   

 bitmap-image-jpeg.JPG

The year started off with more than 100 references daily, but soon increased to an average of 150-200+ for the remainder of the year.  Many factors contributed to this, perhaps none more than the release of The Inconvenient Truth in May or rising gasoline prices which spiked in April and hovered near $3 throughout the summer.

Searches for “green marketing”, on the other hand, held relatively steady throughout 2006 according to Google Trends, a prototype analytics tool from Google Labs. It is difficult to assess the broader significance of this, however, as the term is hardly a bellwether for consumer interest in green products, but more likely a reflection of (lower volume) interest by marketing professionals.

What is interesting, however, is where the dialogue is taking place.  On a normalized basis, searches for “green marketing” are happening globally – and especially within the developing markets of Asia. (NOTE: normalized basis is defined as users’ propensity to search for a topic on Google on a relative basis)

Top “Regions” based on (normalized) search for “green marketing”

  1. India
  2. Malaysia
  3. Thailand
  4. Colombia
  5. Ireland
  6. United Kingdom

  7. Australia

  8. United States

  9. Canada

  10. Finland

 

I look forward to monitoring these emerging trends in 2007.


Aligning Corporate Strategy and Social Responsibility on Climate Change

December 20, 2006

In a recent Harvard Business Review article, “Strategy & Society” (Dec, 2006), Michael Porter and Mark Kramer present a strategic framework for linking strategy with corporate social responsibility (CSR).  This approach reinforces the interdependence of business and society based on “shared value”, making it clear that corporations should prioritize those social efforts that yield both mutual benefit and competitive advantage in the market.  As such, businesses should focus on those social issues that are aligned with their strategic objectives, rather than dilute their efforts more broadly.

 

While this framework has broad application for businesses across social issues, climate change presents a unique case because its cause and potential effects are global in nature.  Being a truly global social issue introduces new dimensions – universal impact and breadth of influencers – that need to be considered when prioritizing strategic objectives using this framework.

 

Porter and Kramer’s framework identifies three ways that social issues impact business:

  • “Generic: Social issues that are not significantly affected by a company’s operations nor materially affect its long-term competitiveness
  • Value Chain: Social issues that are significantly affected by a company’s activities in the ordinary course of business.   
  • Competitive Context: Social issues in the external environment that significantly affect the underlying drivers of a company’s competitiveness in the locations where it operates.” 

Porter and Kramer provide a simplistic example to illustrate how this framework applies to climate change as a social issue.  In their view, climate change is considered as a generic social issue by financial services companies such as Bank of America, a “negative” value chain issue for transportation companies such as UPS, and both a “value chain impact and competitive context issue” for Toyota, the leading hybrid car manufacturer.     

Yet, climate change is a unique social issue that differs from most others in two ways: 

  • Universal Impact: It is unlikely that businesses will escape the impact of climate change as the remedies for climate change will involve all industries – directly or indirectly – across the value chain. 

  • Breadth of (Potential) Influencers: Climate change poses greater risk for abrupt change to existing competitive dynamics than most other social issues because potential instigators of change – consumers, businesses, NGOs and governments – are more numerous, diverse and global than for other social issues. 

As such, climate change may impact the underlying competitive context (versus remaining purely a generic or value chain issue) for more companies and industries than the example would suggest.  For instance, financial institutions such as Bank of America may find their loan portfolio at risk from exposure to climate change impact which may lead to changes in their investing strategy and product offering.  Moreover, increased pressure on business to reduce carbon emissions may enable UPS to carve out a new competitive niche focused on carbon-neutral delivery services – perhaps charging a premium to do so.

Moreover, the breadth of influencers may accelerate changes with the existing competitive context.  In fact, there are many examples where a rapid shift – accelerated by only a few influencers – has caught companies (and whole industries) off guard based on “issues they had not previously thought were part of their business responsibility”.  Examples cited by Porter and Kramer include Nike for its labor practices in developing markets, Shell Oil for its proposed sinking of an “obsolete” North Sea oil rig and pharmaceutical companies for their seemingly lethargic response to the AIDS crisis in Africa.  Given the global nature and broad number and diversity of potential influencers on climate change, it therefore could be argued that there may be an even greater likelihood of abrupt change due to global warming than for most other issues.

Indeed, competitive dynamics may already be shifting: 

  • Consumers are increasingly incorporating the impact of climate change into purchase decisions.  One example is Toyota’s hybrid.  Not only is Toyota rolling out hybrid engines in conventional models (in addition to the acclaimed Prius), but it has shifted its primary target from early technology adopters to more of a mass audience.  One billboard tagline I recently noticed in New York says it all: “green is the new black”, leveraging a staple of every New Yorker’s wardrobe to sell cars. [Note: climate change, however, is just one reason why consumers are adopting hybrids in greater numbers].
  • Businesses are increasingly expecting partners – both upstream and down – to make climate change impact a key consideration.  UK-based B&Q, a global home supply chain, has adopted a Social Responsibility Policy with 12 core values that includes ensuring a sustainable supply chain across its product line.  Porter and Kramer report that as part of this effort, B&Q “has begun to analyze systematically tens of thousands of products in its hundreds of stores…to determine which products pose potential social responsibility risks and how the company might take action before external pressure is brought to bear”.  By doing so, B&Q has effectively shifted the competitive context in which its suppliers operate, providing incentives for companies to introduce innovative products and business models. 
  • Governments are increasingly mandating change. The clear example here is Kyoto which sets caps on carbon emissions and facilitated allowance trading under those caps.

For marketers and strategists, Porter and Kramer’s framework offers an invaluable starting point for thinking about the impact of climate change on competitive advantage.  The unique dimensions of climate change as a social issue – universal impact and breadth of influencers – suggest, however, that more companies should think strategically about climate change and its potential impact on the competitive context in which they operate than the framework may initially suggest.


Influence from Consumer-Generated Content

December 17, 2006

An Interview with Flemming Madsen, Managing Director of Onalytica

 

The Internet is emerging as a powerful publishing platform for consumers to express their opinions, share ideas and influence others. Indeed, the volume of consumer-generated content – including blogs, message boards, social networks and chat/community group discussions – has grown exponentially in recent years.

 

Today, companies such as BrandIntelCymfonyNielsen BuzzMetrics, Umbria and UK-based Onalytica are monitoring this online chatter and leveraging data-mining techniques to understand consumer sentiment and identify emerging trends. 

 

Not surprisingly, consumer-generated content is becoming a powerful tool in the green space to help shape opinions or brand perceptions.  Today, for example, individuals and non-governmental organizations (NGOs) are leveraging the web to influence the behavior of multi-national corporations.  Given the viral nature of the Internet, such initiatives are often highly effective at influencing opinion or brand perception.  If done effectively, the Internet can be leveraged to achieve “disproportionate voice”. That is, substantial influence can be attained by enlisting the support of a handful of key influencers and by leveraging viral tactics to spread an idea or an opinion.

 

Corporations are playing catch-up as they monitor buzz to understand public opinion and interject their views into the dialogue or enlist advocates to do so on their behalf.

 

Companies such as Onalytica have emerged as leaders in the green space by measuring green “influence” online.  Recently, I had the pleasure of speaking with Flemming Madsen, Managing Director at Onalytica, to discuss how individuals, NGOs and corporations use the Internet to exert green influence.  Here is what he had to say:

MG: Public opinion is swayed by information gathered in the public domain – including articles in the press, consumer blogs and PR campaigns.  How does Onalytica measure influence and map relative influence from each source?

FM: People want to understand who the influencers are in order to make their PR campaigns more effective.  The exercise is to find out where you get the most influence for the time you spend engaging. 

 

[To identify influencers] we use ‘citation analysis’.  This is a technique that has been used for thirty years to measure the influence of academic journals and is the sort of de facto standard for measuring influence in the academic space. 

 

What we do is take everything that is written about a certain issue – say climate change – and we analyze who is referencing whom in this context. We extract those citations, map them by reference source, turn them into mathematical equations and solve them to get influence.  

 

We also count [citations] to get their popularity.  Popularity is how many talk about you.  But, you do not need to be popular to have good influence.  And because the cost of engaging with a stakeholder is closely related to their popularity, those that are more popular have more demands on their time.  But the value is more related to the influence. [see “Influence and Popularity on the Topic of Blog Marketing” publication] 

MG: How do individual consumers and consumer advocacy groups use the Internet to voice their opinions on environmental issues? 

FM: Our [Kimberly-Clark] analysis is an example of how a relatively small and unresourceful environmental NGO can utilizes the web to get, what some may describe, as a disproportionate voice.

MG: How did that work? 

FM: The fact is that at NGOs the people tend to be tech savvy and able to move faster that those that they are trying to influence.  It gives then a huge edge in getting their message to market [online].  Actually, you could mount a campaign like the one against {a company like] Kimberly-Clark with only a few people and have impact.  That was unheard of say 15 years ago.  They way you could do it is by leveraging the Internet and social networking better than Kimberly-Clark. 

 

In the old days Adam Smith said that the market was governed by an invisible hand.  But, today, that invisible hand that disciplines the behavior of corporations is largely social media. [see “Brands Under Attack” publication]

 

Yet, what is typically the case is that [the NGOs] are not as influential as they are popular.  What that means is that NGOs have more tracking with people who themselves do not have much influence. NGOs are much more popular than actually influential.

MG: And by influence you mean having an impact on corporate behavior? 

FM: No, on swaying the opinion.  So, for example, you say that we should fish less cod because we are fishing all of the cod out of the ocean.  If an environmental group said that, the issue may get good traction, but it does so with those who already believe that we should fish less than we do. 

MG: So they are not swaying many people in the middle.

FM: They are not swaying as may as their popularity should lead us believe. Those that they impact are more often those that do not have influence themselves rather than policy makers, corporations, journalists, and so on.

MG: So people that have influence are those that have a network that they can, in turn, influence.

FM: Yes. 

MG:  Tell me how corporations are leveraging the Internet to generate PR on green issues?

FM: We have done some interesting work in relation to green issues.  For example, a very big publishing house came to us last year before they published a book about climate change and asked us to provide them with a list of the most influential bloggers on this issue in several countries so they could seed part of the book them and gain traction with the community before it was published.  We also tracked the sentiment about the book and how it faired in the discussion, including to what extent it raised the influence of the author in the community.

 

We also have interest from producers of certain raw materials and oils that are keen to understand what the environmental NGOs are saying about how to behave.  They are also keen to understand who are the gatekeepers in the environmental community that they could talk to about their side of the story. 

MG: How are organizations monitoring the impact of brand campaigns or PR initiatives in market?

FM: We benchmark an organization’s relative influence on certain topics of importance.  There is an increased acceptance that if you want to be seen as credible supplier of anything – say bread – then you need to be an authority on all aspects of bread not just have a great bread brand.

So organizations want to make sure that they to an increasing extent own the topic not just the brand.  For example, a pharmaceutical company may want to be considered an expert on the use of drugs that they have.  So that every time that there is something written in the press, the journalist will consider the pharmaceutical company an authority on this issue.

MG: Are corporations encouraging consumers to participate in social media like blogs and social networks?

FM:  There is good research to document that if people have a good outlet for any grievances or frustration towards a brand, they will vent it in a moderated tone of voice versus what they would do on a blog. 

MG: What about when NGO’s do exert influence via the Internet? How do corporations counter-act negative PR?

FM: [In the case of] Kimberly-Clark, if they wanted to, they could employ their online assets to effectively silence this. 

MG: How would Kimberly-Clark go about doing that?

FM:  They would use a technique commonly known as ‘crowding out’ whereby you if you are a big corporation you would take all of your online assets and arrange them so that when people search for your keywords you are occupying the first three, four pages of Google with your own assets.

MG: Sort of an intercept strategy?

FM: More like clogging up everything that is written about the topic with your message.  And because you have such a huge presence and have a lot of web sites, they could do it.


Offsetting Carbon in a Voluntary Market

December 5, 2006

An Interview with Adam Stein, VP of Marketing at TerraPass

 

Founded in 2003, the Chicago Climate Exchange (CCX) is the world’s first voluntary exchange for registering and trading emission allowances for gases that cause climate change.  What does that mean?  Exchange members as diverse as Ford, DuPont, IBM, Waste Management, Safeway, Tufts University and the City of Chicago have made a voluntary but legally binding commitment to reduce carbon emissions, and then trade on the exchange to meet those commitments.  If members reduce emissions below target levels, excess permits – or rights to emit carbon – can be sold on the exchange.  If they exceed target levels, they must purchase permits to do so.

 

CCX was modeled after an earlier market-based success story – established by Title IV of the 1990 Clean Air Act – that facilitated the reduction of sulfur dioxide (SO2) using transferable emission allowances.  A cap and trading system was established whereby a target level was set, and utilities bought and sold allowances to emit SO2 under the cap. 

By any definition, the market-based approach for reducing SO2 was an overwhelming success.  As Dr. Richard Sandor, Founder, Chairman and CEO of CCX, states, a cap and trade system enabled “faster-than-required pollution cuts at far lower cost than predicted”.  Indeed results were impressive: an Environmental Defense Fund report estimates that actual emissions were 30% below target levels, while Carlson et. al., estimates that a trading system saved $700-800 million annually over similar command and control systems.

Yet, given that carbon reduction is primarily done on a voluntary basis in the US (at least until this past September when California passed legislation to reduce greenhouse gases), it more challenging to gain buy-in.  Nonetheless, CCX has enjoyed remarkable success, with nearly 9 billion metric tons of carbon traded to date.

TerraPass effectively serves as an intermediary on this exchange, enabling individuals and non-member companies to offset the carbon emissions they are responsible for by buying and holding (rather than using) allowances to emit carbon. 

 

Lately, it has enjoyed remarkable growth in its business.  Corporation such as Patagonia buy permits through TerraPass to offset emissions from their operations.  For such corporations, carbon offsetting can have strategic importance.  Not only can reduced carbon emissions result in significant cost savings (say from reduced energy use) but it can generate positive PR.  It also recognizes the inevitable: that the US will one day join the rest of the global community and require reductions in climate change gas emissions.  An exchange enables corporations to legally document the reductions they make today, with the expectation that such reductions will likely be taken into consideration when carbon level baselines are set in the future.

 

In addition, individual consumers are increasingly holding themselves accountable for their activities by buying carbon offsets for their carbon-emitting activities including driving and flying.  According to TerraPass’s website calculator, for example, if you drive a 2006 Honda Civic 12k miles per year, you are responsible for emitting 6,710 lbs of carbon a year that can be offset for $39.95.  Yet, if you drive the Civic Hybrid instead, you would be responsible for emitting 4,695 lbs of carbon – or over 2,000 fewer lbs of carbon than with the conventional Civic.  This carbon could be offset for just $29.95.

 

For consumers, the rationale for carbon offsetting is less intuitive, as the benefits from an individual’s efforts are neither immediate nor enjoyed exclusively.  For some, there is a “moral imperative” to lessen the impact of climate change, as Al Gore suggests in An Inconvenient Truth.  For others, US inaction has caused deep frustration and a sense of not being in control.  Carbon offsets have provided a way to retake control.  Yet, regardless of the underlying reason, individuals are increasingly taking action, and turning to companies like TerraPass to do so.

 

I recently had the opportunity to speak with Adam Stein, VP of Marketing for TerraPass about evolving consumer attitudes, its recent deal with Expedia and its efforts to sell carbon offsets in the voluntary US market.  Here is what he had to say:

MG: What is the level of awareness for carbon offsetting as a response to global warming, and specifically, for the TerraPass brand?  

AS: The overall awareness of carbon offsets in the US is low, especially in comparison to Europe.  They are obviously operating under a carbon constrained economy and have a better sense as to what carbon marketing means.  In the US it is still a foreign concept.  If this is any gauge, I still draw a lot of blank stares at cocktail parties when I tell people what I do for a living.

 

Yet, having said that, I will tell you that more and more people are hearing about TerraPass.  In particular the Expedia deal has given us a lot more name recognition. It is one of the first and the best example of the voluntary carbon market breaking into the mainstream audiences.

MG: What does that deal [with Expedia] do for you? What about for Expedia? 

AS: So for us, the deal has been incredible.  When we signed this deal, we thought it would be a credibility booster, rather than a driver of sales.  I never expected people to dig through the list of options to find an item that few people had ever heard of and add it onto their purchase.  They did and have done it in large numbers and it has been pretty remarkable.  Not only that, but this was a different audience we were talking to, a more mainstream audience.   

 

What does [the deal] do for Expedia?  There are a lot of benefits for them.  Certainly, there is a public relations benefit.  Beyond that, this has been a big morale booster [for Expedia], as well as a very useful tool in recruiting.  It’s just something that they are generally excited about – all they way up to the CEO.

MG: Has this driven customer loyalty for Expedia whereby consumers are coming back to purchase a plane ticket with an offset?

Anecdotally, we definitely think that is true, though it has not been measured directly yet.  But, based on focused groups that we have done and emails we have received about repeat purchases, I believe that it has.  It can not be taken for granted that carbon offsetting projects will be received positively. I am not sure if you saw any of the fallout when Whole Foods launched a wind power card.  [Whole Foods sold wind credits from Renewable Choice or REC via a stored value card that was not well received or understood by the blogosphere]. 

MG: How do you differentiate between what happened with your deal with Expedia and REC’s experience at Whole Foods?

AS: First of all, we have staunchly defended Whole Foods and REC in our blog.  So we have carried a lot of water for one of our competitors.  But, it is such a small industry and we are all in it together. Honestly, one thing to bear in mind is that the controversy happened in the blogosphere – which does not necessarily reflect the real world.

 

One thing that TerraPass did differently was to link the offset directly to consumer behavior – which is something that people seem to be more comfortable doing – rather than buying them as a stand alone item. 

MG: So what is the key learning from your success with Expedia?  

As the number one thing that it has demonstrated is the demand. When these options are presented in a way so that consumers know what they are getting, there is demonstrated demand. 

MG: The Expedia deal embeds carbon offset as a consideration when conducting a transaction for plane tickets online.  What about other online purchases, say for consumer electronics?

My guess is that choices in the consumer electronics world are not yet driven by these environmental considerations and it might be a head scratcher to most.

MG: How has the consumer target evolved?  You would assume early adoptors would be more green-focused while those that purchased from Expedia are more of a mass audience.  Has the audience changed?  

It is commonly assumed that the early adoptors have been ‘deep greens’ as we call them.  Somewhat surprisingly, this has not necessarily been the case actually.  A lot of our early adoptors were techies interestingly enough.  And that make some sense.  They tended to be young, professional, male, relatively high earners and interested in technological solutions to problems.   It did not trouble them that there was a financial mechanism being applied to an environmental problem. 

 

Moreover, it was certainly affordable.  They were certainly aware of and concerned about environmental issues but weren’t necessarily willing to make huge lifestyle commitments.  For thirty six bucks a year, they were interested in supporting wind energy or supporting efficiency.

 

With that said, we do see large support from deep greens.  Interestingly, they are a harder customer to sell to because they have a lot of questions.  But once turned on to the concept, they are very devoted.

 

I think what were are now seeing is more of that ‘soccer mom’ segment: Socially aware, almost constrained to a certain degree in lifestyle choices by all of the trappings of a typical American existence and are excited to have this option for that problem.

MG: Is there a different message that resonates with ‘soccer moms’ or is it simply a matter of making them aware of this option?

AS:  We basically have one message [across segments]: this notion that we all contribute to global warming but there is something that you can do now and that something is affordable and real.  And that is something that resonates with a lot of people.

 

MG: Is the market creating a tailwind?

 

I think absolutely there is a tailwind. I think that there is a growing awareness in America that global warming is real and is a very serious problem.  And beyond that, our country is not leading the world but lagging the world and that creates sort of tension and frustration in a large number of people that feel helpless because it is very difficult to move the needle when you know that we create 25% of GHG emissions and so far seemed very uninterested in joining the conversion that the rest of the world is having.  And that has made the market ripe for voluntary carbon offset.

MG: Does interest differ across geographic regions?

AS: Less that you would think.  You are probably assuming that we sell solely in San Francisco and Seattle. We do overweight on the coasts and in urban areas, but again, less that you think.

MG: What tactics do you use to drive traffic to your site?   

AS: We do some small ad buys online, but we primarily rely on guerilla marketing.  We are a boot strapped company.

MG: Tell me about your guerilla marketing efforts? 

AS: It is mostly word of mouth.  We have a blog and a newsletter which actually has quite a large readership.  Obviously, PR has been enormously helpful for us.  The press interest has been phenomenal as everybody is interested in what is going in the world of carbon. 

MG: How do you engage prospects on your site? 

AS: The carbon calculators are definitely a key engagement mechanism.  We are all about that tangible link and the calculator makes it very real for people.  They type in their information and it spits back their exact carbon footprint.  It also lends credibility to the site when [the visitor is] able to see the number there.  Every product launched since has had a more elaborate calculator attached to it.  

MG: Where do you go from here?

AS: This market is extremely fluid because it is wrapped up in so many legislative and cultural issues.  I have no ideal what TerraPass will look like when it grows up. Everyone in the industry feels like the endgame is about making meaningful progress in America on global warming.  This is not a sales goal but more of a high-minded goal.  Hopefully, we will get there.


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