Wednesday, November 12, 2008
Witty and engaging ads, a hallmark of the Memphis based FedEx Corp. for more than two decades, had helped propel the success of the shipping and transportation company. In September 2003, however, in response to an economic downturn and highly competitive television advertising from rival United Parcel Service (UPS), FedEx sought to redefine itself to the public. That year the company launched ‘‘Relax, It’s FedEx,’’ its most ambitious ad campaign. Unlike past advertising, the ‘‘Relax, It’s FedEx’’ campaign placed more emphasis on ground delivery and international shipping. It also emphasized the appeal of FedEx’s integrated services in helping businesses solve their shipping problems. Created by ad agency BBDO New York, the campaign initially kicked off with a series of eight spots created for television, but it eventually included print, radio, and Internet components. Television, as expected, consumed between 65 and 70 percent of the campaign’s $90 million budget. Each of the humorous spots contained the campaign’s tagline, ‘‘Relax, It’s FedEx,’’ reinforcing the point that harried workers need not worry about shipping dilemmas. The eight spots in the initial phase of the campaign were titled ‘‘Call Center,’’ ‘‘Career Maker,’’ ‘‘Chinese Office,’’ ‘‘Crate,’’ ‘‘Drama,’’ ‘‘MBA,’’ ‘‘Problems,’’ and ‘‘RemindMe.’’ In ‘‘Drama,’’ for example, two workers melodramatically repeated that they were ‘‘doomed,’’ believing that they would not be able to get a shipment to Houston by the next day. Each repetition of the word ‘‘doomed’’ became more melodramatic than the previous one. But the final voice-over announced, ‘‘You can try, but we’ve taken all the drama out of shipping overnight.’’
The campaign was successful enough for FedEx to continue running it through 2005. It also won a number of awards. In 2004 the spot ‘‘Drama’’ garnered a Gold Addy Award, while ‘‘Chinese Office,’’ with the entire commercial spoken in Cantonese without English subtitles until the company name was mentioned at the end, won a Silver Addy Award. The campaign also won an Andy Head Award and an LIAA (London International Advertising Awards) Trophy in 2004. FedEx enjoyed an increase in sales, reporting revenues of $24.7 billion for fiscal 2004, up from $22.5 billion the previous year.
Since FedEx’s founding in 1973 as Federal Express, the company had concentrated on air shipping—on its first day of operation it shipped 186 packages—as the key to successful express delivery. Over the next three decades the company remained the leader in that sector of the delivery industry, and by May 2003 FedEx was making 2.7 million air shipments per day. Yet the number marked a decline of four-tenths of a percent over FedEx’s previous fiscal quarter. In fact FedEx’s air shipment numbers declined in 9 of the 10 fiscal quarters between 2001 and May 2003. Meanwhile, the company’s ground delivery service enjoyed double-digit growth for seven consecutive quarters.
FedEx Ground came into being in 1998 after the company purchased Roadway Package Service. Within five years its popularity with customers, based on its lower costs, was on the verge of altering the company’s original approach. The move by customers away from express delivery was attributed to the stalled economy, in which cost had taken preference over an item’s ‘‘absolutely positively’’ —an earlier FedEx tagline—arriving quickly, though FedEx took great pains in the ads to assure that it would. This reality was acknowledged by Laurie A. Tucker, a FedEx senior vice president, in a Wall Street Journal article by Suzanne Vranica and Rick Brooks that appeared the day the ‘‘Relax, It’s FedEx’’ campaign kicked off. ‘‘The [domestic] express industry took a big hit,’’ she admitted. Tipping off Wall Street Journal readers as to the content of the upcoming ad campaign, Tucker observed that the industry’s immediate future was in ground shipping and international express shipping.
The wry tone of the new ad campaign was a return to the style of earlier FedEx campaigns. Since ‘‘Relax, It’s FedEx’’ was the company’s first campaign to focus on ground and international express delivery, however, the target market was therefore expanded from the core audience the company had previously sought to reach. Whereas ‘‘Chinese Office,’’ for example, emphasized the reliability of FedEx’s international delivery, ‘‘Call Center’’ took a different approach by humorously emphasizing the company’s prompt home delivery service. The latter commercial showed a man whose shower had been interrupted by a FedEx delivery calling the service department of a company he had done business with to complain that he had not expected his package so soon. While these ads highlighted the shift in FedEx thinking, the spots also appealed to the company’s important target market of middle management and small-business owners. The ads also highlighted FedEx’s Internet service. Spots such as ‘‘Drama,’’ ‘‘MBA,’’ and ‘‘Remind Me’’ were aimed at midlevel shippers or poked fun at the boss.
A sluggish economy was not the only factor contributing to the shift in FedEx’s thinking. The company’s major rival and the leading ground shipper, UPS, launched its own successful ad campaign with the tagline ‘‘What Can Brown Do for You?’’ In the Wall Street Journal article by Vranica and Brooks, Alan Brew of Addison Branding & Communications in San Francisco declared, ‘‘Brown has put some pressure on FedEx.’’ The writers mentioned Brew’s observation that the UPS campaign employed an important branding strategy—personalization—which, inadvertently or not, had been emphasized by Brew himself in his use of the term ‘‘Brown’’ for UPS. Furthermore, UPS had been outspending FedEx in advertising. In 2002 UPS spent $163.8 million on advertising, while FedEx spent only $84.6 million. FedEx enjoyed a modest improvement in its share of the ground delivery market in 2003, though more than half of all ground deliveries in the United States were made by UPS. In 2004 UPS had revenue totaling $36.6 billion.
The United States Postal Service (USPS) ranked second in ground deliveries, but its 2004 revenue totaled $69 billion. As Douglas P. Shuit pointed out in Workforce Management, however, the revenue for those services that placed the USPS in competition with the privately owned companies—priority and overnight mail and package delivery—totaled approximately $7.4 billion per year. Also in 2003 another rival, the German-owned DHL International, sought to make inroads in the express delivery market. The purchase of Airborne Express was part of its $1.2 billion investment plan in the U.S. market.
The ‘‘Relax, It’s FedEx’’ campaign debuted with two 30-second spots on October 4, 2003, during a telecast of the first game of the National Football League season. The game, between the Washington Redskins and the New York Jets, was played on the Redskins’ home field, FedEx Field, thus reinforcing the company’s brand name. FedEx had also purchased naming rights to the arena that was home to the Memphis Grizzlies of the National Basketball Association, and the company was a sponsor of the Orange Bowl and of Professional Golfers Association events. In an article published in Traffic World soon after the first ads appeared, Angela Greiling Keane quoted Brian Philips, FedEx’s vice president of U.S. marketing, as saying, ‘‘We rely heavily on sports to reach the decision makers in our industry. We can track a return on investment for each and every sponsorship property we engage with.’’ But FedEx was not about to put all of its advertising eggs in one basket, and the company’s television spots showed up more and more on cable specialty programs. In addition, the ‘‘Relax, It’s FedEx’’ ads encompassed the full range of the media. As the campaign progressed through 2004, FedEx made further efforts to secure a larger portion of the ground delivery market. The preparation for this had been made in December 2003 when the company purchased Kinko’s, the Dallas-based photocopying chain, for more than $2 billion. Kinko’s was the largest such chain in the world, with more than 1,200 stores, located primarily in the United States. FedEx, which already had drop-off centers in Kinko’s stores, planned to expand the chain into Europe and Asia, thus facilitating electronic transfer and the delivery of scanned documents and PDF (Portable Document Format) files.
In December 2004 the company announced that it would extend the ‘‘Relax, It’s FedEx’’ campaign into 2005 with six new 30-second television spots, which previewed that month. BBDO New York once again produced the spots. Highlighting FedEx’s integrated services—express delivery, international delivery, ground delivery, FedEx.com, and FedEx Kinko’s—the ads turned on the same winning formula of wry humor. The six spots in the second series were titled ‘‘Bus,’’ ‘‘Job Counselor,’’ ‘‘Shower,’’ ‘‘Sweeps,’’ ‘‘Tom,’’ and ‘‘Wrong.’’ ‘‘Job Counselor,’’ in which a pirate was interviewed for a job in a company’s shipping department, highlighted FedEx.com. China was again the focus of one spot—‘‘Tom’’—promoting FedEx’s international delivery service. In the spot the world’s seemingly most inept worker was still able to ship to China by using FedEx. ‘‘Wrong,’’ a commercial for FedEx ground delivery, featured a befuddled worker whose coworkers were constantly pointing out his linguistic and other confusions: the leaning tower of pizza, French benefits, and actor James Dean and singer and sausage pitchman Jimmy Dean.
In keeping with its policy of advertising heavily on sports broadcasts, thus directing the spots primarily to males between the ages of 25 and 55, the second series of ads debuted throughout the Bowl Championship Series of college football during the first weekend of 2005. Another ad was shown during the Super Bowl in February of that year.
The ads not only won awards in the advertising industry and recognition from the public, but they were accompanied by an upturn in FedEx business. As the United States emerged from the recession of the early years of the twenty-first century, FedEx market shares also improved. In fiscal 2004 FedEx Ground had revenues of $3.9 billion. Its share of the ground delivery market in 2004 ranged from 27 percent, according to Pittsburgh analysts SJ Consulting, to 31 percent, according to J.P. Morgan. Both figures showed that FedEx was making significant inroads into what was formerly seen as unassailable UPS territory.
In May 2005 the Atlanta consulting firm the Colography Group confirmed a trend that the ‘‘Relax, It’s FedEx’’ campaign not only capitalized on but also nurtured. The Colography Group estimated that the year would see FedEx Ground and FedEx Freight handle 50.1 percent, or more than half, of the company’s shipments. Without commenting directly on the shipping percentages for these two segments, FedEx officials gave tacit approval to this figure. As quoted by Jane Roberts in the Memphis Commercial Appeal, the president of the Colography Group, Ted Scherck, noted, ‘‘This is a watershed because you have the carrier that defined the concept of air express now providing more shipments on the ground than in the air. . .The mode of transportation is increasingly irrelevant to shippers.’’ In 2004 the U.S. Department of Transportation awarded FedEx 12 additional flights to China, including the sole direct flight from the United States to the Pearl River Delta area, which was one of China’s major economic and manufacturing centers. In 2005 FedEx signed an agreement to use the Guangzhou Baiyun International Airport as its Asian transfer hub beginning in 2008. In the first quarter of fiscal year 2006, which ended on August 31, 2005, FedEx reported that ‘‘total combined average daily package volume at FedEx Express and FedEx Ground grew 5 percent year over year for the quarter, due to continued growth in international express, U.S. domestic express and ground shipments.’’ The company further reported that its overall revenues were up 10 percent, to $7.71 billion as opposed to $6.98 billion the previous year. Net income rose 3 percent, from $330 million to $339 million. These increases were reflected in the various segments of FedEx services. FedEx Express revenue was up 11 percent over the previous year, to $5.12 billion, and FedEx Ground revenue increased 14 percent, to $1.22 billion. The daily package volume had increased 6 percent in comparison with the previous fiscal year. Revenue in the FedEx Freight segment increased 11 percent, to $882 million, while FedEx Kinko’s saw a 6 percent increase, to $517 million. This last increase was largely attributed to the growth of FedEx Ground and Express services in conjunction with the conversion of FedEx World Service centers to FedEx Kinko’s Ship Centers.