NEW YORK (AdAge.com) -- A year ago, Best Buy was dialing back its holiday spend in anticipation of a devastating season. This year, the retailer is hoping a slew of Facebook applications with potential to go viral, and a series of commercials that reference the "Twelpforce" will boost its presence during the all-important period.
CEO Brian Dunn said Best Buy would be going full-throttle this season, as it seeks to continue gaining market share and pick up former Circuit City customers. "We are not pulling back on our promotion," he said at a media event held in New York. "We raised our [annual] guidance and are very confident we will achieve guidance. ... We anticipate demand to be there this holiday season."
Executives declined to comment on spending for the season, though efforts appear to be more robust than a year ago. The company spent $102 million in the fourth quarter of last year, down 25% from $136 million in 2007. "Absolute dollars isn't the right metric anymore," said Barry Judge, Best Buy's chief marketing officer. "It's where you decide to spend those monies and where you're going to get the impact."
Mr. Judge went on to say that the market, to some extent, is helping the retailer to keep its budget in line, with deals to be had in TV and online.
"It's really irritated me in the last five years -- I believe people are watching TV, but TV networks always say more people are watching and prices kept going up. TV prices are down," he said. "There's a plethora of inventory on the internet. And, as we understand our customers better through Reward Zone, we're driving much higher response rates and can send less mail," referring to the retailer's loyalty program.
Best Buy plans to run six or seven TV spots focused on branding, in addition to vendor spots, which focus on products. The branding spots will feature the Twelpforce, Best Buy's Twitter group (think Twitter plus "help force"). Mr. Judge said the retailer would focus on the Twelpforce because it reinforces the retailer's service focus and garners interest from media outlets. Since launching the Twitter group in July, it has answered 20,000 questions. "We've found it to be an incredibly powerful idea," Mr. Judge said. "We don't send any promotion out through Twelpforce. It's all about reinforcing our helpfulness."
In the upcoming branding sports, Twelpforce carolers will sing about gift ideas. About 25 songs will be recorded, linked to tiny URLs and posted online, sent to consumers via e-mail and through Twitter. Crispin Porter & Bogusky handles creative for the retailer and is working on the holiday campaign.
Best Buy will also be focused on Facebook applications, which it hopes will be picked up and passed around, creating buzz throughout the season. One application, Hint Hacker, allows consumers to choose gifts -- for example, an iPhone -- and then pick a friend or relative that they want to pass a hint to. That person will receive an e-mail, and if they opt in, a cookie will be placed on their computer. Then, as the friend or relative is moving around the web, they'll be served up ads for iPhones.
"We think it could go incredibly viral, especially with younger consumers," Mr. Judge said.
Price remains a focus
Other applications include Secret Santa and Holiday Morning Simulator. The simulator allows consumers to make a holiday card using photos of friends or family, select a gift for them and choose a happy or sad reaction. The animated cards can then be e-mailed around.
Still, despite Best Buy's optimism, price will continue to be a key focus. Mr. Dunn said Best Buy wouldn't directly go after Walmart, as it did in a True Stories spot this summer, which emphasized Best Buy's service and Price Match Guarantee. But it will have a strong pricing message.
"We've got to be there on price, as Walmart gets stronger and with Circuit City out, in the consumers mind," reiterated Mr. Judge. "We are doing a lot of things to reinforce our pricing. We're trying to put that at bay. Our pricing is good; it's not a differentiator."
Gift cards will again be a focus for Best Buy, with a new Pitch In card set to launch Oct. 6. The reloadable card connects to Best Buy's Wish List feature and allows various people to contribute amounts toward a gift. In a nod to what Mr. Dunn called a "new normal," the retailer is also testing a layaway program in Michigan and will be doing some "interesting things" with financing this holiday. It's unlikely that layaway will be ready to roll out before the holidays, but Mr. Dunn said he expects it will become a part of Best Buy's repertoire.
As for the hot gift items this year, Mr. Dunn cited e-books, saying he's excited about Sony's new reader, as well as iRex, a joint venture between Best Buy, Verizon and Barnes & Noble. He also highlighted Samsung's Instinct HD as a "very interesting" smartphone. And, he expects it will be a strong season for netbooks and Blu-ray DVDs.