FedEx Corp.

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FedEx Corp.

BE ABSOLUTELY SURE CAMPAIGN
OUR OFFICE IS YOUR OFFICE CAMPAIGN
RELAX, IT'S FEDEX CAMPAIGN
THE WAY THE WORLD WORKS CAMPAIGN

942 S. Shady Grove Rd.
Memphis, Tennessee 38120
USA
Telephone: (901) 818-7500
Web site: www.fedex.com

BE ABSOLUTELY SURE CAMPAIGN

OVERVIEW

Founded in the 1970s, Federal Express (FedEx) quickly carved out a niche in the express package business, helped in large part by its aggressive advertising. In the early years FedEx relied on a fast-talking spokesman who anchored the "Absolutely, Positively Overnight" campaign that ran from 1978 to 1983. By the 1990s it was facing increasing competition from rival express firms offering cheaper service. Despite being far younger than United Parcel Service (UPS) and the United States Postal Service, by this time FedEx was able to portray itself in its advertising as a well-established, reliable shipper.

The "Be Absolutely Sure" campaign, which broke in January 1998, offered humorous examples of what could occur if someone relied on a cut-rate shipper rather than FedEx. In one spot a 30-something swimming-pool cleaner finally received his acceptance letter to Harvard University, news that, if received 20 years earlier, might have made a profound difference in his life. In another spot toy soldiers in a mock commercial were reduced to wearing dresses because their uniforms did not arrive on time.

The "Be Absolutely Sure" campaign ended at the close of 2000. During its three-year run it produced a number of memorable commercials. The spot "Apology," which was little more than a television test pattern and an abject apology for not having sent the tape of the real commercial by FedEx, was recognized as one of the best commercials of 1999. The toy-solider spot, "Action Figures," was nominated for an Emmy Award in 2000.

HISTORICAL CONTEXT

When Fred Smith returned from the Vietnam War in the 1960s, he entered Yale University in New Haven, Connecticut. The undergraduate Smith wrote a term paper in which he presented the idea that, with the fast-emerging service economy of the United States in the latter half of the twentieth century, what America needed was a good, reliable package delivery service. His professor gave him a C. This grade, however, did not deter Smith from raising investment capital, and by 1971 he had almost $140 million in operating funds. Bank loans accounted for $90 million of this amount, and Smith had raised another $40 million from investors. The remaining $8 million was loaned by family members. Obviously, Smith had a lot riding on this deal, and with his capital in place he proceeded to launch the largest venture-capital-funded start-up corporation in history: Federal Express. Smith reportedly chose the name because "Federal" suggested the U.S. government, a connotation that was still largely positive despite the unpopular war in Vietnam. And "Express" was chosen because it recalled the legendary Pony Express of the 1860s.

During the 1970s Federal Express—or FedEx, as it came to be called—grew rapidly alongside competitor United Parcel Service (UPS). Both profited from the fact that airlines were getting out of the parcel service and from the bankruptcy of rival REA Express. FedEx also benefited from a 1974 strike by UPS union workers, not to mention a strong record of advertising. Years later, in 1997, writers at Entertainment Weekly voted FedEx's 1981 "Fast-Paced World" spot the second greatest commercial of all time, behind Energizer's "Escape of the Bunny." In the spot, created by Ally & Gargano, actor John Moschitta managed to say 450 words in one minute, or seven words per second, as a way of illustrating FedEx's speed.

In the mid-1980s FedEx hit on a loser when it introduced the idea of ZapMail, which promised document delivery in two hours. It might have been a success if fax machines had not begun making their appearance, thereby eliminating the need for the service. The company ended up losing $300 million on ZapMail in 1986. It recovered handsomely in the 1990s, however, greatly expanding its international service and again profiting from a UPS strike in 1997. In the following year it created the FDX Corporation as a holding company for Federal Express and its other companies.

TARGET MARKET

Federal Express attained its position by appealing to businesses both big and small. The 1990s saw two opposing trends: the continued growth of large corporations through acquisitions and mergers and the concomitant growth of small business. As corporations became bigger and more impersonal, it seemed that more and more people were leaving salaried employment and setting up new businesses in their homes. At the same time, corporations outsourced more of their work and also allowed many employees to work from their homes. FedEx, like its competitors, benefited both from large corporate business and the growth of small business, which meant that more businesspeople were sending more packages.

The growth of telecommunications and a global economy helped spur an increase in international business, and here, too, FedEx was poised to reap a bountiful harvest. During the 1980s it expanded its international service greatly by acquiring companies in Italy, Japan, and other countries, and in 1995 it became the first U.S. express carrier to establish direct service to the People's Republic of China—perhaps the world's fastest-growing economic powerhouse. The mid-1990s also saw the creation of Latin American and Caribbean divisions, and in 1997 FedEx established a service hub in Miami to lead the way for greater Latin American expansion. It also set up its first hub in Europe, at Charles de Gaulle Airport in Paris.

FedEx illustrated the breadth of its customer base with 1997 ads that showed a wide array of people, separated by gender, race, ethnicity, and nationality, but united in their use of FedEx as a preferred service. According to Dottie Enrico in USA Today, a consumer poll conducted in 1997 found that FedEx's advertising was most popular with people in the 30 to 49 age group. The poll also showed that the advertising had proven particularly well received by African-American consumers, with 45 percent of black respondents judging the FedEx ads "very effective."

Later executions of the "Be Absolutely Sure" campaign had more specific targets. The 1999 television spots were aimed at companies doing business with Internet companies. A year later the campaign touted FedEx's new direct routes to China, targeting companies that were shipping to and from China.

COMPETITION

In the express-delivery market segment, FedEx's two largest competitors were UPS and DHL Worldwide, but by the mid-1990s it faced a new and formidable competitor: the United States Postal Service (USPS). The latter was a hybrid: formed as a part of the U.S. government, it became an independent entity in 1970, but it still maintained a monopoly over door-to-door mail delivery in the United States. Its dimensions dwarfed those of any competitor: as the USPS had often noted, it delivered more mail in a week than the combined forces of FedEx and UPS did in a year.

Yet as an independent entity, the USPS sought to go after the competition in its advertising to promote its Priority Mail service. There ensued a lengthy battle between FedEx and the Postal Service over ads that compared USPS's and FedEx's prices and asserted that it was cheaper to send packages through Priority Mail. FedEx took the Postal Service to court, and in April 1997 a Memphis federal judge, in the first ruling in the case, overturned an appeal by the USPS to throw the suit out of court. The USPS had claimed that, due to the Lanham Act, which protected certain federal agencies from lawsuits, it could not be sued, but the judge ruled that "by placing its no-holds-barred advertisements on national television, USPS embarked on an excursion into the commercial world unique to a federal entity."

Then there was UPS, which was nearly shut down between August 4 and 18, 1997, because of a strike by 185,000 of its employees, members of the Teamsters union. "When the Teamsters walked out on Atlanta-based United Parcel Service," wrote Tim Triplett in Marketing News, "they delivered an unexpected windfall to the U.S. Postal Service and Memphis-based Federal Express Corp., among other parcel shipping competitors. But whether UPS's rivals can hang onto that newfound business remains to be seen." UPS, the world's leading package delivery service, estimated that it permanently lost 5 percent of its business due to the strike, but it sought to recover its position with an advertising campaign in which it apologized for the strike. Meanwhile, FedEx reported that it delivered an extra 9.5 million packages during the period of the strike.

MARKETING STRATEGY

FedEx began the "Be Absolutely Sure" campaign by airing a TV spot called "Apology" during the Super Bowl in January 1998. It proved to be one of its most notable commercials of the year. The Super Bowl, with more than 100 million viewers, was always a prominent arena in which companies advertised their wares, and many opted for a glitzy approach to build on the hype. Not so with FedEx and BBDO: their spot consisted simply of a test pattern made up of colored bars. A voice-over explained that FedEx's advertising agency—a fictionalized entity—had mistakenly sent its commercial via a competing package service. Of course it had not arrived, the voice-over explained, and therefore viewers would not see its planned spot, which was to have featured dancing kangaroos and country music superstar Garth Brooks.

This tongue-in-cheek approach won the company high praise, particularly from within the advertising industry. Bob Garfield of Advertising Age, often a stern critic of Super Bowl commercials, called it "Absolutely, positively a breakthrough idea." FedEx followed this spot up with an even more attention-getting spot, whose first airing it also tied to a football event, ABC-TV's Monday Night Football on September 14. The spot, "Opportunity Knocks," featured Mort, a figure described in a FedEx press release as "a swimming pool cleaner in his late 30s." Mort "receives a letter—20 years too late—from a generic delivery company." In fact the van that delivered Mort's delayed letter bore the name "Lucky Shamrock Expediting." "Had Mort received the letter on time," the press release went on, "his destiny could have been totally different: 'You've been accepted to Harvard University,'" the letter announced. "'And awarded a scholarship. Please respond by August 1978.'" The spot then reminded viewers to 'Be absolutely sure,' and ship with FedEx.

FROGS, PUMPS, AND BARS: JUST ANOTHER SUPER BOWL

The Super Bowl was not only one of American sports' biggest events, it was also one of advertising's business events of the year, as companies vied for airtime before audiences estimated at over 100 million. Among the most notable commercials aired during the 1998 Super Bowl was a Federal Express spot that caught the attention of Bob Garfield, who described it in Advertising Age: "Somebody sent the ad to the network by a competing overnight service, so all we see is color bars. Absolutely, positively a breakthrough idea."

Among the biggest headline-grabbers at the Super Bowl were the Budweiser frogs, the ultrapopular amphibians employed by Anheuser-Busch to promote its star brand. Garfield called the Budweiser spot, in which Louie the Lizard attempted to electrocute the frogs, "a bit uncomfortably morbid but a lot funnier than the parallel soap opera playing out in Washington"—a reference to the sex scandal involving President Bill Clinton and White House intern Monica Lewinsky.

Another spot lauded by Garfield was a commercial for Mail Boxes Etc., which had turned over its commercial to a customer—a minuscule corporation that manufactured a pocket pump for inflating basketballs. "This low-production-budget commercial within a commercial not only taps vicarious excitement for the lucky entrepreneurs," Garfield wrote, "it underscores MBE's dedication to small business."

Garfield, who reviewed a plethora of Super Bowl commercials, was not so enthusiastic about a spot for Qualcomm phones in which "a man wakes up in a foreign hotel room, spooked and disoriented." The man walked to the balcony to find a crowd cheering; thinking the applause was directed at him (rather than the actual object, a dictator on the next balcony), the man raised his Qualcomm digital phone in a show of triumph. "And the point of this stunning, enigmatic, surrealistic spot?" Garfield asked. "Good question."

Another commercial in the first round of executions showed what could happen if a shipper other than FedEx was entrusted with the delivery of the Stanley Cup hockey trophy. Rabid fans who had gathered at Detroit's Joe Louis Arena to celebrate their champion Red Wings watched the team be presented not with the Stanley Cup but with a bag of donkey feed, while thousands of miles away the Cup was displayed to a group of Bolivian peasants in a marketplace.

The "Be Absolutely Sure" campaign continued in 1999, targeting businesses selling over the Internet. In one notable spot a website design team, composed of nerds and a raving madman smashing a computer, made its pitch to three befuddled executives. The message of the spot was simple: pick whoever you want to design your Web page, but stick to FedEx when it comes to shipping your packages.

During the 1999 NCAA Bowl Championship Series in January, FedEx aired more "Be Absolutely Sure" spots. This set of commercials took a less humorous approach. The 30- and 60-second spots were collectively entitled "Takeoffs" and showed FedEx planes taking off for various cities, along with songs that suggested their destinations: "April in Paris"; "Chicago"; "18 Miles from Memphis"; "Oklahoma"; and "Sweet Home Alabama."

In 2000 FedEx aired the most popular television commercial of the campaign. The spot, which highlighted the shipper's direct route to China, was unveiled on New Year's Eve 1999 during the Liberty Bowl college football game. Called "Action Figures," it was a parody of a low-budget toy commercial. The G.I. Joe-like dolls, Combat Rangers, were put through their paces: parachuted out of helicopters, plunged into mud. But the soldiers wore women's clothing and accessories, including pink handbags and blow-dryers. Watching the commercial was a trio of businessmen, one of whom asked why the Combat Rangers were wearing dresses. "That's because the commander uniforms didn't arrive from China on time," he was told as the underlings then blamed one another for not using FedEx as their shipper.

The "Be Absolutely Sure" campaign played itself out by the close of 2000. Before it ended, famed television crocodile hunter Steve Irwin made an appearance. In his spot he was bitten by a poisonous snake and reassured the audience that he had some antivenom that had been shipped via Federal Express, only to learn that someone had chosen a different carrier and the serum had not arrived. Irwin collapsed, the screen went blank, and the "Be Absolutely Sure" slogan and FedEx Logo appeared. In January 2001 FedEx retired "Be Absolutely Sure" in favor of a new approach that featured the slogan "This is a job for FedEx."

OUTCOME

As FedEx noted in its press release, the "Opportunity Knocks" spot was in line with memorable Federal Express ads throughout the years. Among those campaigns was "Absolutely, Positively Overnight," which included the famous fast-talker spot; the campaign, which ran from 1978 to 1983, had won advertising's EFFIE Award. Then there was "It's Not Just a Package, It's Your Business" from 1987 to 1988; "Our Most Important Package Is Yours," which aired from 1991 to 1994; and the short-lived "Absolutely, Positively Anytime" (1995).

Despite his sad story, Mort the pool cleaner—along with "Apology" and the entire "Be Absolutely Sure" campaign—won praise from the advertising industry. Adweek listed "Opportunity Knocks" among its "Best Spots" in the October 1998 issue. Advertising Age included "Apology" in its list of best spots in 1998, calling it an example of "zigging while everyone else zagged"—that is, pursuing a strategy that set the company apart. Though some in the industry had suggested that the spot might seem like an advertising inside joke, Advertising Age held that it "stood out amongst all the other overhyped TV ads … and cut through the clutter like the sound of one hand clapping." The most acclaimed spot of the entire campaign was "Action Figures," which, along with four other commercials, was nominated for an Emmy Award in 2000.

OUR OFFICE IS YOUR OFFICE CAMPAIGN

OVERVIEW

On February 12, 2004, the Memphis, Tennessee-based express shipping giant FedEx Corp. (founded in 1973 as Federal Express) expanded in a new direction when it purchased the Dallas, Texas-based Kinko's photocopy center chain, which was founded in 1970 in Santa Barbara, California. The purchase was not a complete surprise to industry analysts—FedEx had already been using many Kinko's copy centers as drop-off points for customers, and the purchase consolidated these services, among other things. After rebranding the company as FedEx Kinko's Office and Print Services and the outlets themselves as FedEx Kinko's Office and Print Centers, FedEx began to implement an ad campaign designed to attract small business owners as well as a more mobile customer, one who would find FedEx Kinko's services convenient as an "office on the road." The ad campaign was tagged "Our Office Is Your Office."

The campaign was created by BBDO New York, FedEx's lead agency and creators of the award-winning 2003 campaign "Relax, It's FedEx." Using the offbeat humor that had become a hallmark of FedEx advertising, the $25 million rebranding campaign broke with four 30-second television spots. Other spots were added later. In addition to television the campaign used radio, the Internet, print, and direct mail. The campaign had the important task of reintroducing a known entity to the public with ads titled "First," "Luggage," "Welcome Aboard," "Cloud Nine," and "Plastic."

"Our Office Is Your Office" intended to cement FedEx Kinko's new identity into customers' psyches. Several of the spots earned accolades from the advertising industry. Sales at FedEx Kinko's failed to soar as much as management had hoped, but for fiscal year 2005 the company still managed to report revenues of $2.1 billion, an increase over the previous year.

HISTORICAL CONTEXT

At a glance the combination of FedEx and Kinko's would seem an unlikely merger. The former was an established shipping company that practically reinvented the package delivery industry by concentrating on express delivery via jets. Kinko's, on the other hand, was one of the leaders in the print and photocopy field. At the time of the buyout, Kinko's was operating approximately 1,200 stores worldwide, serving 215 countries. The company estimated its annual revenue for calendar year 2003, which was just prior to the buyout, at nearly $2 billion. However, the relationship between FedEx and the privately owned Kinko's, which stretched back to the 1980s, had been growing more intertwined over the years. In 1988 FedEx became Kinko's exclusive shipper, and by the end of 2003 FedEx was conducting full-service retail business in 134 Kinko's stores.

Kinko's profitability aside, a further incentive for the buyout was a shift in corporate thinking at FedEx. Since its inception the company had been the leader in express delivery services, pioneering domestic and international air shipment. The financial downturn of the first years of the twenty-first century, however, was a major factor in the flattening out (and in some fiscal quarters a slight decline) in the company's express shipment sector. During this same time FedEx Ground experienced seven consecutive quarters of double-digit growth. Clearly customers were choosing a lower price over the convenience of fast delivery. With the corporate shift toward focusing more effort on its ground delivery service and the already solid relationship between FedEx and Kinko's, plus the high profitability of mobile customers who used the FedEx drop-off points in Kinko's stores, the decision to expand into the print and copy industry seemed an almost foregone conclusion in the information age.

The announcement of the buyout came in December 2003. At that time, as reported in Brandweek, FedEx chairman, president, and CEO Frederick Smith declared, "The FedEx and Kinko's combination will substantially increase our retail presence worldwide and will enable both companies to take advantage of growth opportunities in the fast-moving digital economy. Our two companies share a similar background, culture and customer focus, and that common ground is extremely important as we prepare for future growth and success." In February 2004 FedEx paid approximately $2.4 billion in cash to acquire the global operations of Kinko's.

TARGET MARKET

Aimed at small business owners and casual and regular customers in need of the office and shipping services the new FedEx Kinko's could provide, the "Our Office Is Your Office" campaign relied on offbeat humor—practically a FedEx trademark. The spots made several points, primarily that the busy mobile customer and small business owner, who might not be able to afford or have the inclination for permanent office space, let alone myriad office equipment, could find satisfaction at FedEx Kinko's. The ad campaign targeted casual, more mobile customers because they, and to a lesser degree small business owners, were more likely to pay higher shipping rates in addition to making use of the full range of printing, copying, shipping, and electronic services—the latter dealing with electronic transfer and delivery of scanned and documents and PDF files.

FedEx Kinko's also intended to lure customers away from the UPS Store, the leading provider of shipping, postal, and business services in the world. The UPS Store not only offered identical services as FedEx Kinko's, but it also provided mailbox rentals. To attract these UPS Store customers, "Our Office Is Your Office" focused on FedEx Kinko's lower shipping rates.

COMPETITION

From the outset the main competition for FedEx Kinko's was the UPS Store. Shipping rival United Parcel Service (UPS) had actually led the way in diversification with its 2001 purchase (for $191 million) of Mail Boxes Etc., which was rebranded the UPS Store in 2003. In 2004 UPS opened 525 additional outlets, which raised the total number of UPS Stores to 3,771. This was approximately three times the number of FedEx Kinko's outlets.

Regarding their retail pack-and-ship outlets, UPS had a strategy that differed from that of FedEx in three important ways. First, the UPS Stores were franchised as opposed to being a subsidiary company. The second difference was location. FedEx Kinko's were concentrated in urban areas, while UPS Stores were located in suburban and rural areas, though by early 2005 UPS Stores were expanding into urban neighborhoods as well as college campuses, military bases, and convention centers. Third, while both were after the growing retail shipping market, FedEx Kinko's offered more print and copy services than the UPS Store.

Dave Hirschman, writing in the Atlanta Journal-Constitution soon after the "Our Office Is Your Office" ad campaign broke, noted that while FedEx Kinko's lagged behind the UPS Store in terms of physical numbers, its urban stores took in "far more revenue on average than suburban UPS Stores." Nevertheless, and despite its expansion elsewhere, UPS Stores remained wedded to the suburbs. On this subject Mark Davis, a senior analyst at FTN Midwest in Cleveland, as quoted by Sandra O'Loughlin in Brandweek, observed, "UPS is very focused on the next battleground, which they believe is out in the suburbs and rural areas. That's where they feel the next opportunity exists for them to enhance their relationships with customers and provide an additional point of contact for them in their competition with both FedEx and DHL, but also the U.S. Postal Service."

In time as FedEx Kinko's services evolved, the "Our Office Is Your Office" ad campaign would seem to foreshadow a whole new dimension. By 2005 FedEx Kinko's was in competition not only with the UPS Store (as an extension of UPS itself) and DHL but with office suppliers Staples and Office Depot as well.

RETAIL MERCHANT

By the end of 2005 FedEx Kinko's was certainly venturing far from the roots of its progenitor companies. That year the company established an online office supply and furniture outlet. In doing so FedEx Kinko's expanded its competition from its traditional rival, the UPS Store, to include Staples, Office Depot, and OfficeMax. In a New York Times article by Bob Tedeschi, Kenneth A. May, FedEx Kinko's chief operating officer, noted some concern but pointed out, "They're competitors who have also been marketing at the sweet spot of our space." In other words, the aforementioned superstores offered copying, printing, and shipping services. Kinko's, on the other hand, had been selling office supplies for 15 years. While the giant office supply companies seemed unfazed by the FedEx Kinko's move into their territory, the midsize and smaller supply houses were clearly upset, especially those that had been using FedEx as their shipper. Meanwhile analysts saw the move as a response to consolidation in that sector of the retail industry.

MARKETING STRATEGY

The "Our Office Is Your Office" campaign was the first for FedEx Kinko's. The campaign debuted during the first week of July 2004 with nine television spots along with radio, print, direct-mail, and Web elements. The campaign's goal was to immediately position FedEx Kinko's as a less expensive, more convenient alternative to the UPS Store. The "Welcome Aboard" spot did this by specifically mentioning savings of up to 35 percent. As quoted in Business Wire at the time of the launch, Gary Kusin, president of FedEx Kinko's, declared, "These ads reflect the value that FedEx Kinko's offers to our customers. In addition to the industry's broadest range of services—copying and printing, computer rental, Wi-Fi Internet access, videoconferencing, and FedEx shipping—we plan to launch a complete pack-and-ship capability before the peak holiday season." And FedEx executive vice president T. Michael Glenn (quoted in the same article) noted, "FedEx Kinko's powerfully redefines the future of the business services marketplace by offering customers a fully functional office on the road." Many business journalists picked up on and advanced that theme.

From the outset the campaign strategy was to take on the UPS Store directly. When FedEx purchased Kinko's it went full steam into waters it had previously only been testing. While the number of domestic UPS Stores was far greater than the number of FedEx Kinko's, the latter relied on location—urban versus suburban—and its wider range of services to attract new customers.

The spots "First" and "Welcome Aboard" both touted FedEx Kinko's over its main rival, the UPS Store. "First" used sight and sound gags to show the availability of FedEx Kinko's as opposed to the UPS Store and empathized with customer frustrations over not finding a UPS Store open. The spot depicted a man pointing out different company artifacts (the first dollar, which was framed, and the first letter from a satisfied customer) to a woman. The third artifact was a chair embedded in a wall, which signified the first tantrum. The man in the commercial, as quoted by Barry Janoff in Brandweek, went on to explain, "because we had to ship a package and the UPS Store was closed."

In "Welcome Aboard" a boss and an employee argued over whether the employee had been fired or quit. The spot ended with the worker being rehired after mentioning that by using FedEx Kinko's instead of the UPS Store he had saved up to 35 percent. Thus the humor had a very competitive edge to it.

In another spot, "Luggage," the convenience of utilizing FedEx Kinko's services was highlighted. Two would-be entrepreneurs struggled as they tried to unload office equipment from an airline carousel. One finally suggested that perhaps they ought to have gone to FedEx Kinko's.

OUTCOME

In comparing FedEx Kinko's with the UPS Store, Jack Aaronson, CEO of the Aaronson Group, an award-winning strategy and design firm, noted in his online column "Customer Relations" in September 2004 (two and a half months after the "Our Office Is Your Office" campaign broke) that the FedEx Kinko's "rebranding was a lot more successful in terms of user perception. Users know both brands [FedEx and Kinko's] and the core competencies of each … No questions remain in consumers' minds as to what these newly rebranded stores can do … FedEx Kinko's commercials and online ads tell you everything you can expect from the stores. They reaffirm the consumer really does get the best of both worlds."

Despite Aaronson's high marks for the rebranding effort and the "Our Office Is Your Office" ad campaign, the public was slower to make use of the wide range of services at FedEx Kinko's Office and Print Centers than had been hoped by company executives. Nevertheless in the first quarter of fiscal 2006, FedEx Kinko's reported revenues of $517 million. This was a 6 percent increase over the first quarter of the previous fiscal year. Operating income, however, had declined 16 percent over the first quarter of fiscal 2005. The increase in revenue was attributed to the traditional FedEx services that were available at the Office and Print Centers: FedEx Ground and FedEx Express delivery. There was a decline in revenue in the copy product line.

Despite the decline in revenue for "traditional" office services at FedEx Kinko's Office and Print Centers, corporate officials felt that the "Our Office Is Your Office" ad campaign had successfully implanted the notion of integrated services in customers' minds. The ad industry seemed to agree, as "Cloud Nine" was designated as one of Adweek magazine's Best Spots of 2004, and "Plastic" won an international bronze Andy award in 2005.

By the end of the first quarter of fiscal 2006, FedEx Kinko's claimed more than 1,450 employees with service in more than 11 countries. One year after the launch of the campaign, FedEx Kinko's was making plans to triple its number of domestic stores. In August 2005 the parent company took the office notion one step further when it began selling office supplies and furniture online.

RELAX, IT'S FEDEX CAMPAIGN

OVERVIEW

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 "Remind Me." 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.

HISTORICAL CONTEXT

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.

TARGET MARKET

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.

COMPETITION

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.

MARKETING STRATEGY

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.

OUTCOME

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.

SNAPPY TAGLINES, FUNNY ADS

In 2003 "Relax, It's FedEx" became the latest in a series of memorable advertising taglines used by the company, some of which, because of their humor, survived in an expanded cultural context. In 1975 FedEx, then known as Federal Express, debuted its first television commercial with the tagline "America, you've got a new airline." This was followed in 1977 with the simple "Hellooo Federal." It was in 1979, however, that Federal Express commercials really began to leave their mark on the public consciousness, beginning with the tagline "When it absolutely positively has to be there overnight." That tagline was parodied on Saturday Night Live in a skit about a company called Einstein Express: "When it absolutely positively has to be there the day before yesterday." Federal Express embraced the humor and further defied industry standards with its "Fast-Talking Man" ads of the 1980s, which used the line, "Peter, may I call you Pete?" In this instance the memorable line did not even mention the company name. Nevertheless, the humor served as subliminal reinforcement.

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.

THE WAY THE WORLD WORKS CAMPAIGN

OVERVIEW

Federal Express Corporation (FedEx), founded in the 1970s, built its success on an innovative business model, offering the business world the first overnight shipping service. But savvy marketing also played a key role in the rise of the company. Just one year after becoming operational, FedEx released its first advertising campaign. Increased sales resulted, as did more advertising. In 1978 FedEx introduced the award-winning "Absolutely, Positively Overnight" campaign, which featured a fast-talking spokesman. It ran until 1983. Other memorable FedEx campaigns that followed were "It's Not Just a Package, It's Your Business," which ran in 1987 and 1988; "Our Most Important Package is Yours," which ran from 1991 to 1994; and "Absolutely, Positively Anything," a 1995 campaign. Reliability and speed were at the heart of the message in these campaigns. Then, in 1996, FedEx released a campaign called "The Way the World Works" that emphasized the company's position as a leader in global shipping.

"The Way the World Works" was designed to communicate the idea that FedEx could help customers, particularly small businesses, cultivate contacts all over the globe. The company's longtime advertising agency, BBDO Worldwide of New York, designed the advertisements, which showed customers in various countries using FedEx delivery and warehousing-inventory services to market their goods.

FedEx considered "The Way the World Works" to be one of its most successful marketing efforts. According to the company, it increased awareness levels of FedEx to new highs. Nevertheless, by autumn 1998 the company was ready for a change, and it returned to a more humorous approach with the "Be Absolutely Sure" campaign that followed.

HISTORICAL CONTEXT

When it began operations with 14 small aircraft in 1973, Federal Express was the first company of its kind to offer overnight shipping. At the time it delivered to 25 cities from New York to Florida. The next year the company launched its first advertising campaign with a budget of $150,000 and the tagline "Federal Express—a whole new airline for packages only." After the first commercial was broadcast, the company's shipping volume shot up from 3,000 to 10,000 packages a night. By the end of 1997 the company had a fleet of more than 600 aircraft and some 40,000 other vehicles, and it was handling 3 million packages worldwide every day.

Because it was the first company to offer express delivery services, Federal Express created its own market. Demand grew quickly, and Federal Express became the first company in the United States to achieve revenues of $1 billion within 10 years. Revenues mushroomed to nearly $35 billion by 1996, and, according to the company's 1997 annual report, they were expected to reach more than $250 billion worldwide before the year 2020.

Over the years Federal Express became known for its humorous advertising campaigns, including pitchmen who spoke at a frenetic speed and an employer who pretended to be his secretary when he telephoned to check on a package. With "The Way the World Works" the company took a more serious approach, stressing brand image and the ability to help businesses compete in the global economy. The latest campaign also meshed with the general FedEx tagline, "The World On Time," which had been introduced along with the company's updated logo in 1994. It was not only the tone but also the message of the company's advertising that changed. In the early 1990s the message was that consumers could rely on Federal Express to deliver packages quickly. The ads emphasized the company's technological features, such as software for tracking shipments. The principal message of "The Way the World Works," however, was that FedEx could deliver worldwide.

TARGET MARKET

According to Steve Pacheco, manager of advertising for FedEx, "The Way the World Works" campaign was targeted primarily at three groups of consumers: professional managers who were 25 to 54 years old and who earned at least $35,000 annually, small shippers and owners of small businesses who were 25 to 54 years old and who earned at least $50,000, and people who made decisions and influenced opinions in corporations, a largely male group 35 to 64 years old and with household incomes of at least $60,000. Although in the past, small businesses had not had much opportunity to buy and sell merchandise in other countries, this was becoming important to compete globally. "Federal Express is an enabler that allows them to do business all over the world," Pacheco explained.

FedEx could not only ship goods quickly, but it could also track the precise location of a package, and it offered a money-back guarantee if the item did not arrive on time. A business could predict when merchandise would arrive or exactly when it needed to be shipped. This allowed businesses to lower their operating costs by maintaining smaller inventories. Because a large percentage of inventory was in transit at any given time, FedEx planes and trucks, in effect, became mobile warehouses for the company's customers. The concept of shipping and receiving merchandise "just in time" became increasingly popular. The taglines "The World On Time" and "The Way the World Works" thus helped FedEx convey the message that it understood modern business practices and could be an important element in a company's operating strategy.

Pacheco said that FedEx hoped that the ads would surprise people who were not familiar with everything the company had to offer. At the same time the campaign was intended to broaden the company's appeal to its established customers and to encourage them to make better use of its services.

COMPETITION

FedEx was the largest express transportation company in the world. Thanks to its vast network of aircraft and trucks, it could deliver to more than 200 countries within 48 hours. It had the only routes in and out of China and exclusive rights to many other routes in Asia, where 7 of the 10 fastest-growing economies were located.

NAME CHANGE

In conjunction with the launch of its "The World On Time" campaign in 1994, Federal Express also changed its logo and brand name to FedEx, the name by which the company and its services had informally come to be known. The logo, which used an arrow to symbolize speed and efficiency, was done in the trademark purple and orange, and the company's planes and ground vehicles were repainted to match.

By 1997, although FedEx still dominated express delivery with a market share of about 43 percent, it had lost ground to competitors. According to the Colography Group, United Parcel Service (UPS) had 27 percent of the market, Airborne Express 15 percent, and the U.S. Postal Service 5 percent, with all other services combined claiming 8 percent. Worldwide, the total revenues from express shipments for FedEx were 50 percent more than those of its nearest competitor.

In terms of all shipping, however, UPS had grown to be twice the size of FedEx. In 1995 UPS shipped 3 billion packages every day and had revenues of $21 billion. By contrast, in 1997 FedEx shipped about 3 million items daily, and it reported revenues of $10.2 billion in 1996 and $11.5 billion in 1997. To better compete with UPS, FedEx merged with Caliber System and thereby acquired the RPS trucking company, which was the second-largest ground carrier after UPS.

FedEx also benefited from a 15-day strike of UPS workers in August 1997. UPS saw its share of the package delivery market drop from about 80 percent before the strike to an estimated 70 percent after. FedEx employees put in overtime to cope with the flood of extra packages during the strike, and the company reported that its earnings more than doubled for the quarter because of the additional volume. FedEx estimated that it retained 15 percent of the extra volume after the UPS strike had ended. During the strike FedEx ran a print ad thanking its employees for helping the company handle the additional workload, and it rewarded its workforce with a $20 million bonus. Among other things, the ad told the public that customer service was important to FedEx personnel.

The U.S. Postal Service competed with both FedEx and UPS by advertising its Priority Mail service, priced beginning at $3, which was notably cheaper than its competitors' charges of $6 to $12 for two-day delivery. FedEx sued the Postal Service for false advertising, because Priority Mail did not guarantee two-day delivery. Instead, it offered "two- or three-day" delivery and in 1996 delivered only 81 percent of its packages within two days. An advertising industry watchdog council said that the ads were acceptable, however, for the public understood the difference between what the Postal Service and its competitors were offering. The ads and the lawsuit continued, and the Postal Service maintained that, by promoting Priority Mail at an inexpensive price, it had pressured FedEx to lower its charges by a third.

MARKETING STRATEGY

"The Way the World Works" campaign was created at the request of Frederick Smith, founder and CEO of Federal Express, who had asked the senior management of the company to organize a campaign that would focus on the global economy. BBDO produced the commercials.

BBDO, known for the use of emotion and human interest in its advertising, tapped into the idea that FedEx empowered individuals to realize their dreams. The dream might involve designing avant-garde furniture and selling it to someone on the other side of the world or shipping a dress from Italy to Japan so that a wedding would come off perfectly. FedEx wanted people who saw the commercials to perceive them as heartfelt messages. What was implied was that the company cared as much about every package as it cared about the wedding dress.

FedEx's Pacheco said that the campaign's five key objectives were to "magnify the scope of Federal Express, show the global and international capabilities, add value to the FedEx brand, communicate all of our high-tech innovations, and position Federal Express as a leader." Previous ads had touched on some of these points, but "The Way the World Works" took a new direction by calling attention to global delivery services. The word "world" in the tagline was significant, because it emphasized FedEx's ability to deliver worldwide. In addition, it referred to the fact that the people who worked for FedEx were of all races and lived in many countries. "Early on, we identified the need to be as culturally diverse as we could. You'll see people from all around the world in the campaign," said Pacheco. Just as important was the word "works," which conveyed the idea that FedEx helped its customers get their work done by helping them solve their delivery problems.

SPECIAL ADS FOR NEW SERVICES

Over the years Federal Express had also done special advertising to promote new services and technology. The "AsiaOne" campaign, for example, promoted the company's delivery services in Asia, the "Early A.M." a new service within the United States, and "FedEx Ship" its enhanced computer capabilities. Such innovations kept FedEx a leader in its business, and they also put pressure on competitors.

The campaign featured six TV spots—five 30-second commercials and one 60-second commercial—that were introduced in late 1996. The spots ran mainly on highly rated television programs, including prime-time shows and sports and news broadcasts. In one spot a dressmaker in Italy shipped bridal gowns to customers in Japan. Another scenario showed pop-up books published in Wales being sent to classrooms in England and Thailand. The warm, distinctive voice of actress Linda Hunt asked, "How did such ordinary people come by such extraordinary powers? Believe it or not, all it took was the wave of a wand." In a humorous spot called "Doug," an employee had entrusted an important package to a delivery company other than FedEx. When the package failed to arrive on time, Doug's manager locked him in a closet and berated him while the rest of the staff looked on. Each commercial ended with a picture of a revolving globe and the tagline "The Way the World Works."

The spots were translated into various languages for the 20 markets in which BBDO handled FedEx advertising. Although they were broadcast in various countries, the commercials were created primarily for the United States. In fact, the campaign was the first that FedEx had not customized to individual countries.

OUTCOME

It was generally felt that FedEx's "The Way the World Works" campaign achieved its goals. For one thing the commercials improved the company's image with the public. "The campaign spiked our awareness level up almost to all-time high levels," Pacheco said. In a survey reported in USA Today, 28 percent of consumers said that the spots were very effective, while 15 percent said that they "liked the ads a lot." A mere 4 percent said that they disliked the campaign. The spots were most popular with people 30 to 49 years old. Pacheco claimed that the commercials were actually more popular than the USA Today survey indicated. He noted that FedEx and BBDO had conducted their own awareness studies and had found that the campaign was one of the most effective the company had ever undertaken. For example, multiple telephone surveys conducted to judge the public's perception of the FedEx brand over a period of time showed a strong, positive response to the commercials.

Perhaps one of the most important indicators of the campaign's success was the number of people who contacted FedEx directly after seeing the spots on television. One woman in New York City liked the wedding dress in the commercial so much that FedEx put her in touch with the dressmaker and gave her permission to use a copy of the gown for her own wedding. Another person used classical music from the campaign as a tribute at the funeral of a loved one. A third person obtained some 20 red chairs like those used in one of the spots. Pacheco noted, "I think FedEx, because of its closeness with its customers, probably gets more customer reaction like this."

"The Way the World Works" came to a close in 1998, when FedEx elected to shift gears, as the company now faced competition from a number of upstart overnight shippers, such as DHL. The company returned to a more humorous approach with the "Be Absolutely Sure" campaign, which offered comical examples of what could occur when someone relied on a cut-rate shipper rather than FedEx.