Under the Influence with Terry O'Reilly - S3E12 - Sunny With a Chance of Mousetraps: How Weather Affects Marketing

Episode Date: March 23, 2014

This week, we explore how the weather affects marketing. With 75 years of climate data cross-referenced with reams of shopping research, marketers can now use the weather to predict sales. Sears Automotive knows that 5-year old car batteries die after three consecutive days of sub-zero temperatures, so they advertise on day four. The busiest day of the week at Harley-Davidson dealerships is exactly 22°C and sunny. When spring temperatures hit 21°C, hair removal products surge 1400%, and BBQ sales jump 200%. And did you know that when the temperature drops just one degree in the Fall – just one degree - mousetrap sales surge 25%? Marketers do.And while they can’t manage weather, marketers can certainly now manage the financial implications of weather.It’s a whole new day. Hosted on Acast. See acast.com/privacy for more information.

Hi, it's Terry O'Reilly. As you may know, we've been producing a lot of bonus episodes while under the influences on hiatus. They're called the Beatleology Interviews, where I talk to people who knew the Beatles, work with them, love them, and the authors who write about them. Well, the Beatleology Interviews have become a hit, so we are spinning it out to be a standalone podcast series. You've already heard conversations with people like actors Mark Hamill, Malcolm McDowell, and Beatles confidant Astrid Kershaw. But coming up, I talk to May Pang, who dated John Lennon in the mid-70s. I talk to double fantasy guitarist Earl Slick, Apple Records creative director John Kosh. I'll be talking to Jan Hayworth,

who designed the Sgt. Pepper album cover. Very cool. And I'll talk to singer Dion, who is one of only five people still alive who were on the Sgt. Pepper cover. And two of those people were Beatles. The stories they tell are amazing. So thank you for making this series such a success. And please do me a favor, follow the Beatleology interviews on your podcast app. You don't even have to be a huge Beatles fan. You just have to love storytelling. Subscribe now and don't miss a single beat. new year new me season is here and honestly we're already over it enter felix the health care company helping canadians take a different approach to weight loss this year weight loss is more than just diet and exercise it can be about tackling genetics hormones metabolism felix

gets it they connect you with licensed healthcare practitioners online who'll create a personalized treatment plan that pairs your healthy lifestyle with a little help and a little extra support. Start your visit today at felix.ca. That's F-E-L-I-X.ca. From the Under the Influence digital box set, this episode is from Season 3, 2014. You're not you when you're hungry. You're in good hands with all. You're under the influence with Terry O'Reilly. Back in 1792, a man named Robert B. Thomas decided to publish an annual reference book. He called it The Old Farmer's Almanac because he thought his publication would be particularly helpful to those on farms.

His mission statement for the almanac was to be, quote, useful with a pleasant degree of humor. The content would cover topics like planting charts, recipes, gardening, sports, astronomy, tide tables, and especially weather forecasts. Over the years, the Almanac's ability to predict the weather was uncannily accurate. Starting in the 1970s, it hired a NASA weather specialist to create a formula that combined solar science, climatology, and meteorology. Only a few people have ever seen the Old Farmer's Almanac weather formula,

and it is kept locked in a black tin box at the head office in Dublin, New Hampshire. Many claim the Old Farmer's Almanac to be 80% accurate in its weather forecasts, but that accuracy was severely tested back in 1815. That year, the almanac was published and distributed as usual. But publisher Robert B. Thomas suddenly noticed that the printed weather forecast for July and August called for snow. He realized that the July and August forecasts had been mistakenly transposed with the January and February forecasts. He tried to destroy all the copies, but they had already been sent out, so he couldn't recall them all.

Thomas became a laughingstock among farmers as they snickered about snow in July. But then, something strange happened. That very year, a massive volcano erupted in the Dutch East Indies, now Indonesia. The dust from that eruption circled the globe for the next six months, lowering worldwide temperatures three to five degrees. Then, guess what happened? It snowed in July and August. That summer of no summer

solidified the Old Farmer's Almanac as the go-to publication for weather forecasting, and it is now the oldest continuously published periodical in North America. But back in 1942, the Old Farmer's Almanac almost missed a year of publication for the first time. American forces captured a German spy at Long Island, presumably dropped off by a German U-boat. The spy had a copy of the Old Farmer's Almanac in his pocket. At that point, the War Department wondered if it was dangerous for the Farmer's Almanac in his pocket. At that point, the War Department wondered if it was dangerous for the Farmer's Almanac to continue publishing, lest its accurate weather forecasting

be used against them by the enemy. But the editor of the Almanac managed to convince the War Department to keep the publication going by changing the name of the weather forecasts to become weather indications. That small change saved the almanac. To this day, the cover still shows the four seasons,

it still retains the hole in the top left corner so readers can hang it from a string in homes and barns, and millions still refer to it to predict the weather. Predicting the weather plays an enormous role in the world of advertising and marketing, too. Weather determines which products sell and which don't, and it influences our moods when it comes to spending money. Even a one-degree shift in the temperature has dramatic effects on the sales of dozens of products. And that's why predicting the weather has become a huge business on Madison Avenue.

You're under the influence. Weather happens to everyone. Its massive fluctuations are one of the consistencies in our lives. And predicting the weather has always been fraught with problems, inaccuracies, and expensive mistakes. 25 years ago, a five-day forecast was a complete pipe dream. Moving from a five-day forecast to a seven-day one only began in the year 2000. As recently as six years ago, the National Hurricane Center didn't issue four-day forecasts of hurricane tracks,

whereas today we are given multi-day warnings of when a hurricane will reach land. And up until fairly recently, all weather forecasting was handled by government agencies. The atmosphere is a complicated place, but the huge advances in computing technology, algorithms, and the ability to crunch data has made predicting the weather much more precise. In the world of marketing, retailers have always had a fundamental knowledge of weather because they had to navigate conditions to transport products from manufacturing plants to retail locations. They also had a good grasp of rudimentary seasonal strategies. Lawn seed sells well in the spring, sun products in mid-summer, outerwear in the fall,

snow shovels in the winter. But because of climate change, traditional four seasonal strategies are no longer predictable sales indicators. And it's been estimated that weather affects around three trillion dollars worth of business in the private sector alone. While you can't manage weather, you can manage the financial implications of weather. It's a matter of looking for patterns. Sears spotted a pattern in their auto parts department. They realized that car batteries more than five years old tend to die after three consecutive nights

of sub-zero temperatures. So they began to place ads on the day after the third freeze. Battery sales skyrocketed. Campbell's Soup began monitoring weather in 30 markets and created a Misery Index. Whenever the weather turned cold, wet, or snowy, causing the Misery Index to rise 5%, Campbell's would ramp up chicken soup radio advertising in those locations. When that proved to be very successful,

advertising Age magazine reported that Campbell's added a flu tracking system, monitoring the movement of the flu across the nation while implementing comfort food advertising accordingly. Harley-Davidson dealerships realized that sunny and 72 degrees Fahrenheit, or 22 degrees Celsius, was always their busiest day of the week. It was becoming clear that consumers engage in different consumption patterns based on weather. And much of that thinking began with something called the Weather Channel. The Weather Channel was founded by the weatherman from ABC's Good Morning America.

His name was John Coleman, and he was frustrated. Good Morning America host David Hartman never left him much time for his forecasts. Coleman had worked his entire career to get to the big leagues, and here he was, not getting any meaningful airtime. In a famous meeting, Coleman requested more time so he could give a more in-depth weather report. Hartman said absolutely not and added that if more time were to be given

to the weather forecasts, then Good Morning America could find itself another host. That's when John Coleman decided to leave ABC and start an all-weather channel. From that moment in 1977, John Coleman was laughed at by all the TV networks and financial backers he approached. No one could imagine a cable channel dedicated to weather, or even imagine, for one second, that anybody would want to watch it. But Coleman persevered and brought together a team of weather experts and TV graphic specialists, found a backer, and launched the Weather Channel in 1982. Live! From Atlanta, Georgia, home of the new Weather Channel Network.

And from Las Vegas, where the National Cable Television Association is opening its annual convention. This is the official inaugural program of cable television's newest 24-hour live network, The Weather Channel. Ten years later, it was seen in 50 million homes, and today it boasts the second most popular mobile app and is watched in over 100 million homes, making it the most distributed cable network in the U.S. Yes, you could say John Coleman was on to something. The Weather Channel's come a long way since 1982 and recently rebranded itself as The Weather Company

to reflect its growing digital data business, a big part of which is helping marketers monetize the weather. By crunching data and sales results from hundreds of categories, The Weather Channel has the ability to spot patterns. For example, it learned that bug repellent sells well in Dallas during the spring when there was a below-average dew point, the temperature at which dew begins to form. But in Boston, bug repellent only sells when the dew point is above average. The Weather Channel discovered that the first day of above-average heat in Chicago

results in a surge of air conditioner sales. But in Atlanta, people will sweat it out for two days before making the same run to the appliance store. The Weather Channel realized it could provide timely and lucrative information to marketers by harnessing the technology to monitor the weather in over 4,000 postal codes. And by cross-checking those forecasts with 75 years of climate data and past shopping behavior, it could predict sales. That allowed the channel to sell weather to marketers. Pantene hair products bought

humidity, for example. So when women checked the Weather Channel app on their smartphones and saw a humidity warning, they would also see an ad for a frizzy hair-taming product. Conversely, in a low-humidity location where hair might go flat, Pantene would advertise a hair volumizing product on the app. Pantene also provided coupon codes and addresses of nearby drugstores using location data, giving women a timely product, a money-saving voucher, and directions to the nearest store. Using this same predictive technology,

the Weather Channel helped increase revenues for Michaels' arts and crafts stores. Michaels traditionally increased their advertising during rainy days, as many people stay indoors and look for things to do. But the Weather Channel convinced Michaels not to advertise on rainy days, but rather three days ahead of a rainy forecast.

Sales spiked. Prior to the Weather Channel, the paradigm of business and weather was to cope and avoid. But now, marketers could anticipate and capitalize. So could insurance companies. The Weather Channel has a division dedicated solely to the insurance business. For example, it can alert an insurance company

30 minutes before a hailstorm hits. The insurer could then send out text messages to its clients saying, Shelter your cars, you're about to be hit with a hailstorm. In a medium-sized hailstorm, that message can save insurance companies between $1 million and $5 million. That's why industries like insurance, airlines and retailers spend enormous amounts of money understanding how weather can affect their business.

While the Weather Channel was the pioneer today there are over 350 companies who sell commercial weather it is a three billion dollar industry one of those companies is called planalytics which helps businesses plan inventory based on weather it helped Duracell allocate more batteries to parts of the country that were expected to be hit with hurricanes, giving companies like Duracell twice the accuracy than if they were just left to guess using seasonal averages. Planalytics helps golf courses predict the number of rounds that will be played in various regions

and can predict when spring golf weather will start. The company also predicted the cold winter of 2014. That information helped home improvement chain Lowe's start planning for the winter back in July, allowing it to be ready for strong demand in ice melt, pipe insulation, space heaters, and generators. Planolytics also convinced their retail clothing clients, who sell outerwear, fleece, and cold weather accessories,

to scrap plans to mark these items down in February and keep them on the shelves at full price for a longer period of time. That advice resulted in a windfall of profit. And we'll be right back. know how life goes. New father, new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. If you're enjoying this episode, why not dip into our archives, available wherever you download your pods.

Go to terryoreilly.ca for a master episode list. Bad weather has its benefits for marketers, too. Rain and cold snaps persuades people to stay indoors and activates the use of holiday gift cards for ordering online. Negative moods caused by bad weather can make consumers respond better to negative messaging. On dark, gloomy days, a dental floss manufacturer tells customers to floss or they might get gingivitis. It ignited more sales than messages telling people flossing would give them brighter smiles. The Spin Neapolitan pizza chain came up with the idea of offering their customers crummy weather vouchers.

They could only be used on bad weather days. Not only did it drive sales during the rain, but the increased traffic spilled over onto good weather days. And even though rainy summers kill barbecue sales, lawnmowers and grass trimmer sales go up because the grass grows faster in wet weather. In the UK, supermarket chain Sainsbury's conducts strategic weather forecast meetings every day, which lets them plan at least 8 to 10 days ahead. They know the first signs of frost kicks up demand for birdseed, milk, and cauliflower. When the temperature is forecasted to increase just a few degrees in early spring, Sainsbury

knows sales of two disparate products will shoot up. First, hair removal items surge by 1,400% as women decide to bare their legs, and barbecue sales rise 200%. In Scotland, a temperature of 20 degrees Celsius or 68 Fahrenheit will prompt barbecue sales to triple. But in London, the temperature has to be exactly 24 degrees Celsius or 75 Fahrenheit to see the same result. Interestingly, supermarkets in the UK sell more ice cream on a sunny, cool day

than a cloudy, warm day. When the temperature reaches 25 degrees Celsius or 77 Fahrenheit, ice cream sales plummet. The reason? Shoppers worry it will melt before they can get it home. All of this information helps merchants streamline their inventory and maximize profits. From small companies to big ones.

Coca-Cola sells its 4,000 products in over 190 countries. 22% of those markets generate 80% of Coke's revenues. Can you guess what Coca-Cola's most profitable product is worldwide? Answer? Canned coffee. Yes, Coca-Cola makes canned coffee, and it is the most profitable

Coca-Cola product on the planet. Coke uses an analytical program called WIND, which stands for Weather Information News and Data. It carefully tracks weather in all its countries and regions. For example, canned coffee is sold hot and cold in vending machines, depending on the temperature and the region. So Coke needs to monitor weather patterns

to know when to heat up the coffee and when to cool it. How important is this monitoring? Coke loses about a billion dollars in out-of-stock

lost opportunities every year. And they are one of the most astute marketers in the world. As the age-old Maxim says, failing to prepare is preparing to fail. Weather Trends International is another company that helps marketers profit by weather.

They publish a fascinating list called The Profit of One Degree. It's a list of how the change of just one degree in temperature can affect sales. So, when the temperature drops one degree colder, soup sales go up 2%. When the temp goes up one degree, beer and soft drink sales go up 1.2%. One degree colder in the fall equals a 4% increase in children's apparel sales. Just one degree hotter in summer translates to a 10% increase in sun care products. Just one degree colder in the fall means a 25% increase in mousetrap sales. And just one degree hotter in summer, just one degree, results in a 24% increase

for air conditioner. If you're looking for flexible workouts, Peloton's got you covered. Summer runs or playoff season meditations, whatever your vibe, Peloton has thousands of classes built to push you. We know how life goes. New father,

new routines, new locations. What matters is that you have something there to adapt with you, whether you need a challenge or rest. And Peloton has everything you need, whenever you need it. Find your push. Find your power. Peloton. Visit Peloton at onepeloton.ca. Meanwhile, here in Canada, Planalytics has this to say about 2014 weather. After a tough winter this March, Torontonians will welcome spring showers, so rainwear sales will be up by 10%. By June, there will be a heat wave in Ottawa, so kids' shorts and t-shirts will be up by 16%. Warmer July temps in Vancouver will result in a modest 5% drop in lawn tool sales. Dry conditions in August in Montreal will push demand for

lawn watering equipment up by 15%. Winter will come early to Winnipeg in September, causing sales of outerwear to jump by 9%. And a chilly October in Edmonton will mean sweater sales will be up by 6%. Canada, you've been forecasted and forewarned. This year, the Super Bowl was played in an outdoor stadium in East Rutherford, New Jersey. It was the first Super Bowl played outdoors in a cold-weather city in NFL history. Average temperature historically in East Rutherford for February 2nd was 29 degrees Fahrenheit

or minus 1 degree Celsius. The Weather Channel dubbed it the Weather Bowl. Fox broadcasted the game and invited viewers to be part of, quote, the biggest, boldest and coldest event in television history. Needless to say, weather became a big part of Super Bowl marketing. GM's GMC brand became the title sponsor of Super Bowl Boulevard, which was a closed 14-block section of Times Square in New York that featured outdoor attractions and exhibits, including a toboggan run.

Campbell's Soup planned to be on the ground on game day, providing hot, chunky soup to chilled fans. A free welcome package was provided by the NFL that included hand warmers, courtesy of cell provider Verizon, scarves and warming stations were provided by SAP Software, and puff tissues were included from Procter & Gamble. Lots of participating brands were praying for snow. Under Armour, the NFL's official supplier of gloves and footwear,

advertised their latest cold gear technology that uses infrared coating to recycle body heat. Nike offered a collection of winter wear, including a goose-down game jacket with a titanium coating. Even Tommy Bahama, usually associated with warm weather wear, featured new NFL team jackets and pullovers. Fans packed their own winter gear, including ski pants, Long John's boots and blankets. Then came game day. Temperature at kickoff, 49 degrees Fahrenheit or 9 Celsius. During the game, the temperature climbed to 52 degrees Fahrenheit.

As a matter of fact, the temperature was just 9 degrees off the record high. It was just 1 degree colder than Super Bowl VIII in Houston, Texas. Fans peeled off their hats, their gloves, their coats, and their scarves and watched the game comfortably in shirts and jerseys. The old farmer's almanac had predicted a stormy Super Bowl XLVIII. But the biggest, boldest, coldest event in television history ended up being big, bold, and mild, proving it's still hard to second-guess Mother Nature.

Weather happens to everyone. It could be rain, snow, frigid temperatures, heat, humidity, lack of humidity, winds, clouds, sunshine, or a combination thereof. And those various conditions have an enormous effect on how we shop. Weather has the single biggest impact on sales, second only to the general state of the economy. It's the reason forecasting has become a $3 billion industry. In the 20th century, marketing looked at weather simply as four seasons and made decisions

accordingly. But, with the arrival of massive computing power, algorithms and data crunching capabilities, combined with over 75 years of climate history, marketers can now make selling decisions based on humidity, cloud cover or even the shift of one single degree. But the atmosphere is a complicated place and weather is getting more extreme. Nine of the hottest 10 years on record have occurred since the year 2000. All of which is to say

that those who can gain revenue from a force of nature they can't control have an enormous competitive advantage. So, if the temperature dips one degree today, it could explain why the forecast might be sunny with a chance of mousetraps when you're under the influence. I'm Terry O'Reilly. Oh, hi Terry.

I'm just calling to let you know I really enjoyed your show today about the weather. And I'm also letting you know that you can just one degree of effects radio listening. And if the weather gets colder, even more people listen. And if the weather goes one degree, less people listen. Thought you needed to know that. Under the Influence was produced at Pirate Toronto. Sound engineer, Keith Ullman. Theme music by Ari Posner and Ian Lefevre. Series coordinator, Debbie O'Reilly. Research, Tanya Muryusuf.

Okay, I won't beat around the bush. I like the cut of your jib. And your jib would look even better in an Under the Influence t-shirt. You'll find them on our shop page at terryoreilly.ca slash shop. See you next week.