SMB: FedEx woos small biz with Internet parodies

FedEx woos small biz with Internet parodies

Turns to the web for marketing, by running campaigns on video websites such as YouTube and Hulu

Helen Chernikoff

Wednesday, February 24, 2010

NEW YORK, US: FedEx Corp is famous for memorable television commercials, but like many big companies, it is following customers as they navigate from the television to the computer and in turn, shipping much of its marketing to the Web.

One of the package delivery giant's biggest Web campaigns, running on video websites such as YouTube and Hulu, is a series of three-minute parodies called "1-2-3 Succeed!" starring comedian Fred Willard.

FedEx wants the spoofs to help increase what it calls "a key market" for them -- small-business owners like Anna, a mom who makes handbags.

"With FedEx, you are now Anna, international maker of handbags!" exults Willard, known for his comic turns in mock documentary films "Waiting for Guffman" and "A Mighty Wind".

"Hey there, international businesswoman!" he bellows in one of the spots.

The spots are a departure for FedEx, which has always spent its advertising and promotion budget -- $379 million in 2009 -- on pricey marketing vehicles like the Super Bowl to snag accounts that need and can afford its premium shipping services.

But now, FedEx has set its sights on small businesses, or those with fewer than 100 employees, said Steve Pacheco, FedEx's managing director for advertising.

Small shippers, who pay higher rates because they command lower volume-based discounts, are a stronghold for rival United Parcel Service Inc (UPS.N), the world's largest package delivery company, said Morningstar analyst Keith Schoonmaker.

The New Prime Time

The Web has become the small business hub because it is cheaper to advertise and operate there, according to Richard Honack, a marketing professor at Northwestern University's Kellogg Graduate School of Management.

"Lunchtime is the new prime time," Pacheco said. The company aims to reach small-business owners as they eat at their desks, surfing the Internet.

At 10.2 million customers, FedEx's small-business segment grew 13 percent year over year, more than its usual 9 percent growth rate. The company cannot tie the increase to "1-2-3 Succeed!" but it will add more definitive metrics to track conversion rates from the videos to website business, spokeswoman Carla Boyd said.

It does know that the series, launched in July, hit the company's 1 million-view goal in February -- five months early. Such attention does seem to be driving Web traffic toward FedEx, according to data from Google Insights for Search.

Since the spots began running, searches for "FedEx" are up 6 percent year over year while searches for "FedEx small business" are have risen 10 percent.

But Wall Street has doubts.

"I'm not an advertising expert, but I'm not sure how many potential shippers will view these," Schoonmaker said, adding that he does think brand awareness will be raised.

Marketers, however, believe the ads will work. Their aesthetic, crafted to look amateurish and provincial, makes FedEx seem more accessible.

"They're not arrogant," Honack said. "They show that FedEx is also doing things with less dollars."

Saving Cash

A 30-second commercial during the 2010 Super Bowl cost $3.2 million. Running the ads on the Web saved millions in airtime alone, Honack said. FedEx, which has sat out the Super Bowl for two years, has not yet decided if it will run an ad in 2011, Pacheco said.

FedEx also hopes the association with small businesses and individuals will blunt the perception that it is the high-cost carrier compared with UPS, said George Belch, a professor of marketing at San Diego State University.

Enter Fred Willard in a tacky sweater to reassure the regular folks that FedEx is indeed affordable.

"This is great, but it sounds expensive," Anna, the mom and handbag maker says, setting Willard up to tell her that the Web-based international shipping application is free.

©Reuters