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Digital Dreams & Realities
March 06, 2008
Incentives at the Consumer Electronics Show
By Ben Chapman
Bill Gates and Slash, rocking out together onstage, 20,000 product launches, 5,000 news articles, Las Vegas ruled by nerds for three crazy days: It's the 2008 Consumer Electronics Show (CES), the $161 billion consumer electronics industry's "must-attend" event, a glammed-up super trade show where techies and their gadgets see and are seen amid 2,700 official exhibitors and 130,000 attendees.
It's also a valuable showcase for incentive pros who have anything to do with the all-powerful category of electronics merchandise. That's because CES is where important products and trends make their debuts. But with all the hubbub and hype, CES is a lot to digest. It's hard to separate the hits from hyperbole. So, whether you attended this year's show or not, we're betting you'll find our post-Vegas analysis useful.
CES 2008 was either boo-yah or blah-blah, depending on whom you ask. Most agree that the show brought out more incremental product development than huge news. But that didn't stop incentive pros from turning out in droves, despite the fact that many complained that CES is becoming overwhelming, as well as increasingly expensive to attend.
Why is this technology show so important for incentive merchandisers? "Because people in the incentive business always want to be on the leading edge," says Jimmy Beyer, national sales manager at Park Ridge, N.J.–based Sony Premium Incentive Sales Group. And Beyer saw a lot of incentive buyers at CES, getting a jump on new products. "Motivation programs often last from three months to a year, so buyers place products as early as possible to keep the cool factor for the length of the program." CES helps them accomplish this.
But though the floor was packed at this year's show, attendance was down from last year, and some remarked that energy was lacking. "A lot of folks are thinking it's become overgrown—a victim of its own success," says Dave Peer, vice president, client services for Chicago-based Hinda Incentives. "I felt that there was less innovation compared to prior years. There were no great technological leaps, although there was a lot of spin."
Peer also says that the show is becoming more difficult to navigate, thanks to increased media presence and spectacles like Mr. Gates' keynote performance with Slash. To get the most from the show, focus is a must. "I direct my staff to attend the show with a mission in mind," Peer says. "First, we gain clarity on what our customers want, and then we go to the show to seek out those objectives. We still come across new products that muscle their way into our lineup, but we keep the mission in mind."
CES works well as a fact-finding mission, but some incentive buyers make it a point to bring back hardware from CES. "We collect samples of products, like new televisions, and share them with clients," says Mark Kramer, senior merchandising manager at Maritz Motivation in St. Louis. "After CES this year, we met with two clients: a major financial client and a major technology company. We showed them new electronics merchandise and held daylong meetings about merchandise for their programs going forward."
The meetings included hands-on, show-and-tell sessions featuring hardware that debuted at CES. "We have a very nice theater at our office, and we set up the entire stage with electronics and other merchandise," he says. "This way, clients can see the goods in person" and make more informed purchasing decisions.
Unfortunately Kramer was sick this year and couldn't attend CES, so some colleagues went in his stead. But by not going, Kramer saved a lot of money: The three-day event is getting very, very expensive, and some say that area hotels and airlines have jacked up prices way too high during the event. "There were some rumblings during the show over the cost of holding the event in Las Vegas," says Gary Slavonic, partner at Dallas-based Premier Incentives. "I paid three times as much for my hotel and transportation for CES than I did the following week at the PPAI Expo, also in Vegas."
The high prices have caused some to call for CES to move to Chicago, or Florida. "I heard a rumor that it's moving to Orlando," says Donna Davis, purchasing manager at Pine Brook, N.J.–based Rymax Marketing Services. "But wherever it goes, I'll be there." And Davis shouldn't buy those plane tickets to Florida anytime soon: According to organizers, 2009 International CES will be held in Las Vegas, from January 8–11. Our advice: Book early, or pay a lot more later.
The Big News
Despite CES 2008's rep as something less than a revolutionary year, there were a couple of major news events at the show that will ripple through the incentive business in coming months, like the debut of Sony's new Organic Light Emitting Diode (OLED) screen, and Blu-ray's trouncing of HD DVD. Also, a few noteworthy trends continued to gain ground.
The 2008 show wasn't "revolution—it's evolution," says Rymax's Davis, who's been attending the show annually for a decade. "We're seeing slowing innovation in some product categories, and some categories are completely matured. With things like digital imaging, LCD and plasma displays, they're just doing a refresh of their technology."
In the trends category, all the players in the industry are making efforts to go greener, and this year CES made many strides to make the show itself more eco-friendly. "They brought in new lighting, completely recyclable food ser-vices, and better climate control to have a smaller carbon footprint," enthuses Maritz's Kramer. "It's something that we're all excited about."
Additionally, several major vendors are working to start recycling programs for televisions and cell phones for late 2008 and 2009. "They'll be recycling all types of used electronics they would have just thrown away," Kramer relates, "so that in the future you may be able to go to a Best Buy and recycle your phone. It's something that our clients are concerned with, definitely."
Meanwhile, Sony, Philips and Panasonic are bringing displays to market in 2008 or 2009 that will consume less power. The biggest story here is Sony's Organic Light Emitting Diode (OLED), likely the next generation in display tech-nology. The 11.1-inch display Sony unveiled at CES is just three millimeters thin, and it delivers quality images with less power consumption. "It made a huge impact," says Kramer. Meanwhile, Panasonic made a big splash with a massive 150-inch plasma display that's probably not so eco-friendly (plasma gobbles power) but is certainly impressively large.
When it comes to high-definition video players, "Blu-ray won the war, and HD DVD is on life support," says Saro Hartounian, CEO of Harco Incentive Solutions in Englewood, N.J. That's largely thanks to Warner coming out for Blu-ray at CES, and the CES-established primacy of the Blu-ray makes it a huge winner with incentives. "We've been seeing redemptions of four to one, for Blu-ray over HD DVD," Hartounian says. "We bundle Blu-ray titles with the video players. How is the reception [by customers]? Amazing." With five of the big seven Hollywood studios backing Blu-ray Disc, don't expect HD DVD to make a comeback anytime soon.
Meanwhile, the Federal Communications Commission's move to digital broadcasting in 2009 is stoking demand for digital televisions. "The consumer is a little alarmed about FCC cutting off of analog signals in February 2009," says Harco's Hartounian. The general response has been simple: Consumers are replacing their old analog sets. "It's a tsunami of demand, and its gathering strength. We have seen double-digit growth, thirty to forty percent, sixty percent growth in HD flat panels since 2000, and the prices are dropping to the tune of fifty percent per year. There's plenty of room for absorption—it's the tip of the iceberg."
And digital music played on, with iPod still ruling the roost, as other players made room for themselves in the kingdom of Apple. "There continues to be a tremendous amount of effort by manufacturers to ride the iPod train," says Kramer. "It's driving the popularity of small peripheral items like Bose headphones and larger pieces as well. For instance, JVC is coming out with an LCD television with a hidden iPod dock on it."
But some in the incentive industry say that other media players are starting to take a bite out of Apple: "Everyone thinks of Apple as being the hottest manufacturer of digital music players. But other makers, like SanDisk, are gaining traction in the market," says Ira Ozer, vice president of business development for Hazelwood, Mo.–based Meridian Enterprises.
And challenges remain in placing Apple's iPhone in incentive programs, due to the service subscriptions that come with it. "One of the biggest challenges we're facing in electronics incentives is finding out how we can offer subscription-based services for products like the iPhone and other mobile phone devices," says Ozer. "We can bundle a year's subscription in with mobile phone devices, but it's imperfect. We're still looking for another way to do it."
Planner Resources:
Apple, www.apple.com
Bose, www.incentiveconcepts.com
Casio, www.casio.com/home
Denon, www.usa.denon.com
Hinda Incentives, www.hinda.com
Hitachi, www.hitachi.com
iRobot, www.irobotlooj.com
VC, www.jvc.com
Maritz Motivation, www.maritz.com
Meridian Enterprises, www.meridian-incentive.com
Panasonic, www.panasonic.com
SanDisk, www.sandisk.com
Sony Premium Incentive Sales Group, www.motivation.sony.com
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