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Bullmore.qxd 2/27/2008 14:32 Page 14

CHOPPING BLOCK JEREMY BULLMORE

If marketing continues to fly under the radar, it’s going to experience a very unpleasant crash

ACK IN 1955, starbursts were a sort of communications prophylactic. The Television Bill had been lengthily and If increasingly savvy Bfiercely debated: it was granted more Parliamentary time than any other Bill of the consumers have become a 20th century. When finally enacted in 1954, it broke the BBC’s broadcasting monopoly and problem, it can only be ‘independent’ television (neither ‘sponsored’ nor ‘commercial’, please note) became a reality. It was because they’ve begun to to be funded entirely by advertising. With one curious exception, the only permitted form of see through our cunning advertising was to be spot advertising – and elaborate measures were built into the Act to tricks: we’re finding it make sure that there was clear and unambiguous distinction between advertisement and harder to get away with programme content. Unlike the US system, there was to be no blurring of authority, no word from things. And that in turn, calls our sponsors. The starburst was a legal requirement – a split second of spiralling graphic that deftly for the invention of new distinguished commercial from programme, and even commercial from commercial. British cunning tricks. So what viewers were left in no doubt that they were watching an advertisement; and, despite its exactly do we mean by proximity, programme content could remain getting in under the radar? entirely uncontaminated. There was a purity about this arrangement, an innocent transparency that disarmed even those into line. There are, it’s true, things called opposed to the introduction of a commercial advertising features – already an oxymoron – but channel. This is what the starburst proclaimed: they’re feeble creatures, most of them, and their ‘You are about to see an advertisement. This has capacity to fool the punters strictly limited. been paid for by the advertiser. The advertiser But over the last ten years or so, things have will say only favourable things about his product. begun to drift a little. Two phrases, in particular, You may expect truth but not necessarily the have entered the marketing lexicon. Consumers whole truth. Do not expect balance or are universally acknowledged to have become objectivity. The fact that this advertisement is ‘increasingly sophisticated’ (or, even worse, carried by London Weekend Television does not ‘savvy’); and a great many practitioners have imply LWT’s endorsement.’ begun to boast of their ability to ‘get in under Fifty years on, though, now without starbursts, the radar’. spot television has more or less retained its A certain coyness surrounds both phrases and fastidious stance. No one is in the slightest doubt it’s easy to see why. If increasingly savvy that money has changed hands; no one confuses a consumers have become a problem, it can only be commercial with programme matter. If a member because they’ve begun to see through our of the public chooses to be seduced by a cunning tricks: we’re finding it harder to get away commercial’s praise for a product, it’s in the full with things. And that, in turn, calls for the knowledge that the praise was self-generated, not invention of new cunning tricks. So what exactly bestowed by any outside authority. do we mean by getting in under the radar? I think And in all this, of course, television has only we mean disguising our advertisements as been following its senior medium, print. Display something else. If not, then what exactly? advertisements have always been unmistakably The increasing reliance of the world’s media on advertisements – and those few that have tried to advertising revenues, and the increasing competi- pose as editorial have been pretty swiftly brought tion between the increasing numbers of different

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media, makes the maintenance of a scrupulous distinction between advertising and editorial more and more difficult. In other words, the value of Though the recent Nick Davies book, Flat Earth News, has attracted both praise and flak, it’s the placement to the well worth a read. It’s mainly concerned with the decline of rigour in journalism; for example, when product’s company is checked against source, 80% of 2,000 news stories that appeared in the four UK quality dailies were greater when the audience wholly, mainly or partially constructed from is kept in ignorance of the second-hand material – drawn either from news agencies or public relations companies (Davies fact that the placement was calls this ‘churnalism’). The readers of those papers, however savvy bought. You have to feel just they may be, will never be certain if they’re reading an honest reporter’s attempt at the a little uneasy about that, presentation of fact – or a hastily re-worked version of a company’s press release. don’t you? Product placement is another under-the-radar technique. You may guess when you’ve seen your little uneasy about that, don’t you? I daresay that blockbuster film that the car, the mobile phone life peers would value their peerages even more and the brand of champagne in the branded bar highly if their donations to political parties all owe their noble presence to an exchange of remained forever undisclosed. money. But, there again, you may not; and you’ll I have little doubt that there’ll be a lot more certainly not be told. written before very long about ‘under the radar’ I suggested to a film industry person not long marketing activities. It has all the frisson of The ago that it would be altogether more open if Hidden Persuaders, with a lot more substance to movies acknowledged any contributions from back it up. product sponsors in their opening titles: ‘The As it happens, I’m far from certain that huge following companies each contributed $10m harm is being done. If lasting harm does in fact towards the production costs of this film.’ I was materialise, it’s far more likely to be harm to the told that, were this to be the custom, product marketing community than to our increasingly placement would be a great deal more difficult savvy and confident consumers. to negotiate. But a trade that openly prides itself on the skill In other words, the value of the placement to with which it deceives its public is not only the product’s company is greater when the unlikely to come top of anyone’s list of respected audience is kept in ignorance of the fact that occupations; it will also render itself less the placement was bought. You have to feel just a effective.❦

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16 Market Leader Spring 2008 Viewpoint - Powell.qxd 2/28/2008 11:04 Page 17

VIEWPOINT CHRIS POWELL

Marketers need a clear message on the environment

SURE WAY to get no action is to give masses of contradictory advice. That's what a welter of well-meaning We all want to be seen to greenish organisations seem to be doing,A often with quite substantial budgets to be virtuous but few of us enable them to do it. Climate change communications is a mess of conflicting mes- like to suffer in a good sages. Are we to stop travelling (except by donkey, horse or foot), to turn off our TVs when cause. We tell market we go to bed, hope that science captures carbon before it leaves the power stations, recycle our researchers that we don’t bottles in Tesco’s car park, eat only organic mind paying more for green vegetables, trade carbon with our neighbour, lag the loft, blame George W Bush, doubt the benefits but only a minority CHRIS science and not worry, or put a Cameroonian POWELL has wind turbine on the roof and sell electricity back of zealots ever really will. to the grid? Or all of these? some advice for To make matters worse, some of the advice is A campaign that delivers clarifying the amateurish and unintelligible. There was quite a heavyweight campaign late last year around the more widespread green conflicting theme that any six year old could do it, featuring, unsurprisingly, a lot of six year olds who went on behaviour is going to need messages on to be photographed in Downing Street. The climate change only thing I got out of this was the clear to be cleverer than that message that I was more stupid than the average six year old and, while that may be true, it was difficult to see how that piece of abuse would On the whole, however, most people in the advance the cause. UK agree there is a problem and that action Where do these people get the money from to is required. mount so many campaigns, which come at us This is a huge advance. The avoidance (or from all different directions? Perhaps the more likely limitation) of global warming government is spraying money around any depends on action now to prevent catastrophe organisation that sounds as though it will do many years in the future. It is akin to the something about climate change, but the prevention of an epidemic, a famously difficult aggregate effect is a cacophony. communications task. Much money and many One piece of very good news, though, is that years of effort had to go in to convincing us that the sheer weight of scientific evidence and, it was worth having a slightly inhibited sex life to gradually, the weight of media opinion has avoid a disease that, at that stage, seemed to be convinced most of us (although not George W having little impact in our milieu but would if we Bush), most of the time, that there is a problem. didn’t take action now. Climate change seems to The figures go up and down a bit according to have got beyond the early problems of AIDS whether there has just been a shock programme prevention without the need for advertising. on Channel 4 with errant scientists claiming there is nothing to worry about, the melting of the Arctic ice cap is quite normal and anyway What are we are supposed to do about it? nothing to do with us. Or, helpfully to the cause, At the back of our minds is the hope that, like we have a spot of unseasonal weather and every- overpopulation or the exhaustion of oil and coal one assumes this to be evidence of climate change. reserves, science will solve the problem and we won’t need to change a thing. Power stations, cars and aeroplanes will be fitted with a device Chris Powell was CEO of BMP DDB and is now Chairman of NESTA. that cleans the emissions, or some vegetation

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VIEWPOINT CHRIS POWELL

will be found with an enormous capacity to clean the air, or fuels will just become vastly leaner. The desire for an excuse not to act lurks in most of us and any confusion or unreality about what we are to do allows us to take refuge in these hopes. We all want to be seen to be virtuous but few of us like to suffer in a good cause. We tell market researchers that we don’t mind paying more for green benefits but only a minority of zealots ever really will. A campaign that delivers more widespread green behaviour is going to need to be cleverer that that. MORI asked what action people were taking to improve matters: 60% were doing nothing or didn’t know what they were doing; 23% said they were recycling. At a minimum there will need to be a single clear, much repeated, message that is credible and is realistically likely to lead to action. It is hard enough to get over one idea, especially if it is unwelcome, so there’s no chance of success with a myriad. At the root of all this, I suspect, is that no one really knows what one single action we could all take that would at least start the process of reducing our carbon footprint and, it seems, no one person or organisation is in charge. The the same time it softens up attitudes and makes Little will be achieved Carbon Trust, the Energy Saving Trust, the it possible to bring in legislative change that with regard to Climate Challenge Fund, various regional might otherwise be unacceptable. The ban on reducing our carbon Sustainability organisations, Greenpeace, the smoking in public places could never have been footprint until there is Department of the Environment, Friends of the successfully introduced without the years of a single source Earth, Planet Energy Saving Solutions, each campaigning on secondary smoking. Drink/drive of advice. ploughs its own furrow. Little will be achieved works by the combination of advertising until there is a single source of advice. reminders of the awful social consequences that can come from drinking and driving and seeing at least one driver pulled over by the police to What could that advice be? convince us that there is still a real risk of Part of the difficulty is the paralysingly large being caught. scale of the problem. Global warming, what can Neither on its own is enough. Recycling Chris Powell of 42 Acacia Avenue do to prevent seems to be going the same way: we need to do that? The tiniest, tiniest drop in the ocean won’t it and, in the end, we will be punished if we make any discernible difference, so why bother? don’t. Restriction and legislation need to be The Institute for Public Policy Research matched by measures to make the alternatives (IPPR) has been dong some work that has easier. We, on the whole, accepted congestion pointed to this credibility gap. The world is charging in part because we knew there was going to burn, ice caps melt, deserts spread, indeed a problem, but the restriction was storms rage, populations starve, so please go out matched by the immediate benefit of emptier and buy a low-energy light bulb. There is a scale streets for public transport and more buses, problem here between the vast and the infinitesimal. which together made journeys easier. I feel inadequate to take any action that realistically Another problem facing whoever takes on this could do anything to stop disaster, so I will do task is the escape clause that governments them- nothing and hope for the best. Communications selves have been using – there’s no point in our will have to show a credible connection country doing anything because your country between the action suggested and a solution isn’t. Why should I suffer when the Chinese are to the global problem. building two new coal-fired power stations a Too much mustn’t be expected of advertising week? Not only do we need the international and promotion. Successful social behaviour agreements that are still proving so elusive but change campaigns have balanced legislation and we also need ‘confidence building’ measures to persuasion. Communications comes in first and convince us that this is a concerted global push. performs two functions. In the hyper-inflation period of the early 1970s First, it persuades many, but usually only a trade unions were insisting on deals that took minority, to take the action recommended. At into account their expectations of ever faster

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the mix. People asked to take unwelcome action will always look for an excuse and those excuses There needs to be an need to be blocked off as best as can be done. But it won’t be enough to tackle this case by underlying attitude change case. There will, indeed, need to be campaigns to achieve one behaviour change (like recycling) that makes each individual and then another (maybe low-energy light bulbs, although the government is going to phase out behaviour change make the other sort by 2011 anyway) until aggregate behaviour has lowered emissions. sense: a campaign that But there needs to be an underlying attitude change that makes each individual behaviour explains how these actions change make sense – a campaign that explains how these actions succeed in tackling the global succeed in tackling the problem so that there is a continuing reward and incentive to act. global problem so that there The scene has been well set. We do think is a continuing reward and there is a problem that needs action. There isn’t an unfortunate do-gooder image attached to incentive to act sustainable behaviour to inhibit action (indeed sustainability is seen to be pretty fashionable, probably because so many pop stars bang on inflation in prices and the presumption that about it). other unions were succeeding in doing this. It It’s just that no one is telling us what to do took a year’s campaigning with signed pledges about it. Or, rather, loads of different people are in large-space advertisements by employers telling us all sorts of different and unconvincing and union leaders promising to abide by low things we should be doing about it. inflation targets to dampen the fever down. So doing nothing is the safest bet, and that’s Something of that nature might be needed here. exactly what most of us are doing.❦ So campaigning needs to be realistic in what it asks people to do, and use legislation as part of [email protected] A masterclass in effective communications 18 winning case studies including: ● Trident, Metropolitan Police Service Includes free DVD ● Coca-Cola Zero of the ● Magners creative ● Subway Stores ● Waitrose ● Carex

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Market Leader Spring 2008 19 James.qxd 2/27/2008 14:59 Page 20

EXPERIENCE ECONOMY BOB JAMES

How to manage talent in the wider experience economy

By BOB JAMES

‘Work is theatre and every S EVERY THEATRE director Gü’s marketing director faces the business a stage,’ wrote James knows, a great production is a result same staff recruitment, development A of getting great performances from and retention challenges as other Gilmore and Joseph Pine in their the cast. Ultimately, success comes down to experience managers. 1999 book, The Experience how you manage your talent. This wider experience economy is Economy. Bob James takes When Gilmore and Pine talked about a cut-throat place. It is not the experiences, they were anticipating the preserve of radical new business their insights further by identifying evolution of many of the pure experience models, but a battleground for pres- the skills required to create brands out there today – Mark Warner, surised marketing directors seeking successful experiences and Starbucks, Disney or CentreParcs, or new ways to protect existing premiums what this means for the person in even the Priory, perhaps. But they failed and maintain critical differentiation. to recognise the true nature of the real So what are the management charge – for the marketing experience economy, which encompass- challenges of the wider experience director as theatre director, with es a far wider range of brands. economy? an ever growing cast list and an Even today’s fmcg product managers need to be able to think like service mar- Challenge 1: what skills and increasingly complex keters. But, more importantly, the competencies do you need to build production schedule organisations behind them need to think in order to succeed? like service marketers. Challenge 2: where do you find the This wider experience economy right talent to create great experi- recognises that the total brand experiences? ence (the point of awareness, the point of Challenge 3 (the critical one): how purchase and the point of consumption) do you develop this talent once is increasingly diffused and managed by you’ve found it? more specialised marketers – but these points still need joining together into a single brand proposition. Challenge 1: what talent do Today, businesses of all flavours are you need to succeed? using experience design to reinforce Success in the wider experience their existing brand value, deepen cus- economy means designing and tomer loyalty, and stretch into new seg- delivering better experiences. It relies ments and areas of need. upon the ability to unearth insight and Just look at Gü desserts, whose then successfully organise around it. puddings provide dinner-party-quality And this, in turn, means cultivating desserts of such high quality that a at least three sets of skills. First, the host or hostess can serve them ability to interpret market data and without needing to pretend that they are customer data to support a continuous homemade. The point is that Gü did not cycle of improvement. actually decide to enter the ‘pure experi- Second, the ability to disseminate ence’ world of catering – but it is most experience-led thinking across the certainly delivering a catering experience whole organisation. And third, the rather than just a taste benefit. In nur- ability to influence the allocation of turing this competitive advantage, resources against what really matters Bob James is Client Service Director at to customers. Oxford Strategic Marketing.

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Data crunching counts mechanisms for aligning specialist Surprisingly perhaps, this wider experience functions in parallel according to their This wider experience economy demands the sort of whole- role in brand delivery. Experience- organisation marketing that may not come economy marketing thinking is, if economy recognises easily to the more flamboyant, ideas-led anything ‘side to side’, not purely that the total brand marketers. It demands skills that include bottom up, and certainly not top the ability to crunch data to justify down. It involves everyone re-think- experience (the point decision-making effectively and support ing their role in the delivery process, rational investments in what US guru and being accountable for their use of of awareness, the point Claes Fornell calls the ‘Customer Asset’. resources in delivering a cost-effective of purchase and the experience. But organisation matters more Promotionally led, brand-push point of consumption) More important still, though, is the thinking has no place in the experi- ability to organise in the customer’s ence economy and, more is increasingly diffused interest. We need to build smarter ways controversially, a knee-jerk service and managed by more of working across the organisation, ethos has no place either. linking expert communities of practice The necessary side-to-side marketing specialised marketers – – like the insight community in approach requires new portfolios of Unilever, or the innovation community tools to manage it: new models but these points still at Danone – across all components for brand definition that are meaningful that form the customer’s experience of to and actionable by increasingly need joining together the brand. specialist functions. into a single brand In structural terms, experience- More importantly, it requires a focused organisations must enhance unifying marketing culture and a proposition

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would-be theatre director: once you’ve written the script and invited the audience, where do you find these data-crunching, business-model building, values-led, story- telling process gurus to put on the production? Which brings us to the second challenge …

Challenge 2: where can you find the right talent to create great experiences? The first rule of recruitment is ‘don’t recruit’. As you start to think about delivering insight-based experiences, just ask yourself, first and foremost, is the talent we are looking for already available within our business? And if it’s really not, do you have a sustainable business in the first place? What is your plan to build and grow your experience capability? If you do decide you have a real talent gap, focus on determining precisely what’s needed. Don’t hire some brand equity dreamer when what you need are hard-nosed and broad-shouldered project managers who can ‘tough it out’ internally, on behalf of the customer, from a solid financial footing. Most European fmcg companies are Tesco, Carphone Warehouse, Halifax and Whitbread recognise that they are experience still grappling with this transition in marketing organisations at heart: putting together prescriptive brand experiences, while some form. As upstream brand still enabling the individual employee to innovate ‘in the moment’ of customer service. planning and downstream brand activation have split apart in many organ- common foundation of marketing skills remove any ‘friction’ in the service isations, a chasm has opened up that to deploy these tools effectively. process. needs to be filled with stronger Preserving and improving the customer’s processes, and with marketers who are experience cannot be left to the Build your experience capability both flexible and talented enough to whim of a charismatic leader, but must This sort of cross-cutting experience keep crossing the chasm throughout be locked into processes that cut across management undertaken by Amazon their careers. But where do you find the organisation: clear processes with takes training, though. these people? clear owners. Authenticity, transparency and consis- Amazon’s ‘Skyline’ approach, for tency are key here, and therefore mar- The rise of jigsaw marketing example identifies deep root causes keting must engage the whole business It used to be an article of faith that of its unwanted customer interactions in understanding its role in the fmcg was the best place to and systematically makes process man- experience. look for marketing talent. But the agers accountable for eliminating them. Paula Vennells, Network Director wider experience economy is changing Amazon works on the premise that of the Post Office, argues that this – demanding an increasing array ‘no service is great service’. If a cus- marketing should be the shaper but of specialist skills and a new breed tomer has to contact it; something the drive must come from across the of experience assembler to deploy somewhere has gone wrong in the business. She believes the whole all these specialisms on behalf of experience design or delivery. organisation has to own the customer the customer. Simultaneously the cost of contact and outcome for it to be successful. The But now everyone has one piece of the cost of elimination are tracked to question remains, though, as the the marketing jigsaw, who’s

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in charge of putting the picture experience marketing organisations at talent during the early years in pure together again? heart – delivering tight-loose marketing: service businesses. Lower-level roles in putting together prescriptive brand marketing within some service businesses Retailers are the new experience experiences, while still enabling the can be a long way from the spotlight experts individual employee to innovate ‘in (minor roles within a support function). fmcg companies may have started with the moment’ of customer service. As such, marketers’ impacts may not be an integrated, resource-minded view of They are making a real connection to very high profile until they reach more marketing, but under the weight of the customer. Beyond these retail senior levels. Keeping smart people in cost-pressure, have gradually been dis- pioneers, financial services is also this environment means rotating them mantling and segregating their skills catching on. around different functional positions – base. Meanwhile, experience businesses In the next development cycle, critically store management, buying, like retail actually started with their smart financial services organisations brand management and promotions. marketing segregated (usually just a may well be the next breeding ground You need to celebrate the importance of promotions department) and have for talent. The next Tim Mason will understanding the total experience mix. inexorably been putting the pieces most likely be in financial services, The reverse challenge applies in together, breaking through the silos. where there’s still a perceived gulf fmcg, where responsibility still comes In the first wave of marketing between customers and organizations. early, but a period of indecision and sophistication, they put classically Having exported fmcg talent to stagnation can then set in as bright trained marketers into a marketing build the expertise of retailers and young things consider ‘What next?’ silo, disconnected from the purchasing financial services, it is time for fmcg to When P&G formed its ‘Expert and servicing powerbases of these start poaching talent back the other Track’ to accommodate and nurture experience-dependent organisations. way. This will bring with it a renewed the talents of those managers who did These mass-experience efforts failed, focus on ROI. The marketing industry not wish to pursue the relentless with Midland Orchard and Firkin will ultimately benefit from this two- broadening required for fewer and pubs being classic momentary success way flow of talent between fmcg that fewer general manager jobs, it explic- stories and subsequent crashes. ‘gets’ customer intimacy and service itly recognised this issue. The second generation of marketers organisations that thrive on opera- Of course, big-brand fmcg companies into these experience organisations tional excellence. accept and even require churn, but found a better way to adopt the lessons they also need to feed the specialist of marketing – not by building up skills both upstream and down, while the promotion department, but by Challenge 3: how do you cultivating marketing expertise where manage your talent? it counts – in buying teams, at store The marketing profession today is If you do decide you level and in CRM departments. a patchwork of fragmented skills, Tesco’s acquisition of data-mining splintered into upstream planning have a real talent gap, company, dunnhumby, is symbolic of and downstream activation, and often focus on determining this recognition. spread across complex ‘masterbranded’ Another iconic example of retail or globalised brand architectures. At precisely what’s needed. experience management is Games the same time, individual marketers Workshop, the fantasy war gaming have more and more career choices. Don’t hire some brand retailer, which now organises Saturday- In this environment, marketing direc- equity dreamer when morning in-store gaming sessions for its tors must increasingly see themselves as customers. Not only do these sessions marketing resource directors, working what you need are serve as an enhanced experience and closely with colleagues in HR and sales opportunity, but they also serve as strategy to develop a long-term hard-nosed and broad- a valuable new product development resource strategy. Most critically, they shouldered project input. Most profoundly, these gaming must find ‘win:wins’ for their people, communities also serve as a recruiting which create both fulfilling careers for managers who can pool for new employees. employees and maintain the competi- Games Workshop creates a virtuous tiveness of the organisation. ‘tough it out’ internally, circle, or ‘brand vortex’, by bringing on behalf of the customers, employees and suppliers Expose your talent to the full: the into a single community. experience-mix customer, from a solid Tesco, Carphone Warehouse, Halifax These challenges vary across businesses. and Whitbread recognise that they are It may be harder to keep marketing financial footing

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If this wider experience There are benefits to this collaborative team management with outsourced world – it means that direct consumer contact, and real economy demands resource is much more flexible hands-on proximity to key business nothing else, it and can be increased or decreased drivers. Otherwise, too absorbed in rapidly. Nevertheless, gains in flexibili- the inward-facing challenges of demands collaboration ty and cost reduction risk becoming project management, the quality of losses in brand consistency, outward-facing consumer experiences and greater awareness business understanding, commercial and market-led decisions will of real competencies. acumen, and strategic and analytical deteriorate. competence. Fewer promises, This has been a long-term and Become a better briefer accelerating evolution: first, outsource The final lesson for marketing leaders more delivery. Less advertising, then outsource responsi- is to cultivate outstanding skills self-promotion; bility for research design, placement at recruiting, briefing, motivating, and analysis, then brand design. managing and rewarding transitory more self-awareness. Then reduce promotion to trade networks of people against tight margin investment and hand the timetables. The irony is that these Ultimately, experience balance to external promotions skills may actually be better grounded management is an agencies, then offload the pack in agencies and consultancies. In a development part – now even the spirit of collaboration, it makes sense exercise in managing core business strategy is increasingly to embrace a structured borrowing of outsourced, as brand and marketing skills through secondment or project- the flow of value to management focus on niche based collaborations. These efforts and from the customer. disciplines like NPD or project should focus on transferring and delivery of brand activation strategies. embedding skills in-house, but should Everyone must take also develop the soft competencies of Upskill your data and process specialists collaboration and teamworking. responsibility for this: The outsourced nature of modern The critical skill ahead of briefing is not just the marketing experience management means that defining the problem and opportunity marketing managers increasingly act correctly – something the leaders function as project or network managers, need to apply all their experience calling diverse teams of agencies and skills to, but is an area that is together to work on topics, extracting often overlooked. also generating a cadre of marketing the best from them and moving on. As If this wider experience economy generalists who can assume P&L long as they can hold fast to a process demands nothing else, it demands control of global budgets and brands. or a key customer outcome, that’s fine. collaboration and greater awareness In many cases it may be better to of real competencies. Fewer promises, Offer zig-zag career paths take strong CRM analysts and project more delivery. Less self-promotion; For fmcg, this means thinking in managers and give them some market- more self-awareness. terms of zig-zag careers for staff, giving skills, rather than rely on general- Ultimately, experience management ing them opportunities to continually ist marketers trying to learn CRM or is an exercise in managing the flow of deepen their executional expertise, project management. value to and from the customer. while still spending time on planning Or, when you are recruiting, look for Everyone must take responsibility for to understand what their colleagues specialists with empathy and social skills this: not just the marketing function. are grappling with. as well as great technical capability. And Of course, marketing directors Resource management is not only when you have them, don’t keep them should look at their departments, confined to internal teams, of course. in a technical ‘box’ in a separate at their agencies and their whole It is very rare now for a big marketing department, keep them close to organisation; but first and foremost organisation to be able to function marketing and communications teams, they must examine their own alone, and brand experiences rely and give them plenty of opportunity leadership priorities, to see how far upon agencies and channel partners to to meet real customers. Because data they are leading the organisation’s deliver them. Most organisations are can never substitute entirely for marketing capability, not just heavily dependent on outside players hands-on experience, marketing teams the function, for future success.❦ to deliver what would once have been in big companies surrounded by done in-house. agencies must balance the process of [email protected]

24 Market Leader Spring 2008 Venkatramen.qxd 2/27/2008 15:09 Page 26

THE NETWORK AGE VENKAT VENKATRAMAN

From the industrial age to the network age

By PROFESSOR N. VENKAT VENKATRAMAN

Marketing grew up E NOW TAKE it for granted that But the business practices are all lagging so in the industrial history really started in 1995. In we have some time to think about how to WAugust 1995 a relatively unknown accommodate these shifts. But not much. age. As this age company called Netscape went public and gives way to the created a market capitalisation of one billion new network age, dollars. That itself was not new but it was the 1. A shift in business models companies will first time that a company got a billion-dollar It is very simple to look back in history and capitalisation by giving away its product free. say all the management ideas, including all grapple with Fast-forward to 2007 and consider this the marketing ideas that we take for granted dramatically new number: one trillion dollars. Companies that today, came from one industry – the auto- and challenging are capitalised with a trillion dollars are motive industry. At the turn of the last cen- issues. In this edited some of the companies that we know well: tury that was the laboratory we studied and version of his Microsoft, Google, Nokia, Amazon, Apple, where we created ideas and extracted princi- IBM. What has happened in the last 12 years ples to be practised in different industries. Marketing Society has shifted the focus from a billion-dollar Today would we actually go and study the Conference single company to a set of companies that automotive industry to steal ideas for man- presentation, make a trillion dollars in capitalisation and agement? Of course not. We are studying Professor that are ruling the world. the companies that constitute a trillion dol- They are creating products that essentially lars in market capitalisation: the network Venkatraman define the network era. It will be the norm business models. describes four for the next generation to regularly play Let’s say in 1980 you wanted a computer. major shifts that video games, interact and have conversations You could buy it from IBM or Digital or companies must with people they have never met. This gen- Unisys or ICL or Fujitsu. You couldn’t go to eration will be going into the workforce very IBM and say, ‘I love your computers but I now understand: soon to create, consume, innovate and do want to be able to get the applications from new business things on the network that we would find Unisys, the operating system from ICL and models, where the it very difficult to even imagine just a few have it serviced by Digital’. But over the next cash register is, years back. 20 years that’s exactly what happened. I the active role of Commerce is shifting online, conversations could buy the monitor from Samsung, I are shifting online, communities are being could use the Apple operating system, I consumers and built online and that is creating an entirely could get the POP line from Microsoft and I the speed of new infrastructure in which managers, and could have it sent wirelessly using Google. technology companies, products, values and markets, are That decomposition occurred in the last 20 created. I want to describe four major shifts years in other industries as well. the network age is producing, and explain Fast-forward to 2002 and we see that’s why companies, large and small, local and exactly what happened. We can buy in layers global, need to recognise these shifts. of components and knit them together so we This is not happening overnight; however do not have to be vertically integrated. the technology is happening overnight. We are now virtually integrated – buying pieces from different companies to Professor Venkat Venkatraman is the David J McGrath Jr assemble ourselves. Professor of Management at Boston School of Management. Now think about the automotive industry.

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We couldn’t really go to an automotive company like GM and say I love your chassis but I want to be able to get the engine from Jaguar, the electronics from Lexus and have it serviced by Mercedes-Benz. You can’t do that now, but we are getting to the stage where the automotive industry will become equally decomposed and loosely integrated.

What is the offer and who owns it? When that happens many questions arise: what exactly is the notion of a product, what’s the notion of an offering, what’s the notion of an experience? Who is articulating how those industries will evolve and how the experiences will be felt by different consumers? That’s the big challenge. The computer industry is simply an early example of the shift that we need to think about. Don’t think of any product or service as being vertically integrated; think about the decomposition that’s possible and the recombination that would make the values and the products and the service different in the future. Business models will be based on portfolios of capabilities assembled through different types of relationship. But these business models keep changing, so we can’t assume that what we knew yesterday is true music just a few years back. We got the today or what we assume today is going to be hardware, turntables, cassette players, Sony true tomorrow. The computer industry is Walkman. We bought the content in simply a leading indicator of what’s going to standard albums: 33 rpm, 35 rpm and 70 be much more widespread in the network era. rpm. (My 18-year-old college students wonder why we would even categorise music format in terms of rpm.) 2. A shift in where the cash register is Then we bought the music in physical In the industrial age the idea of the cash reg- stores and we shared it with our friends, and ister was very simple. Wherever you sell a the music industry didn’t worry about it. product, you extract money from the consumer. There’s after-sales service and there’s before-sales activities, but essentially the Business models keep changing, so we cash registers were very well defined. In the network era, the new rules essen- can’t assume that what we knew yesterday tially challenge where we place these cash is true today or what we assume today is registers. You need to think about this very seriously because it has profound implica- going to be true tomorrow. The computer tions for where value is going to be created industry is simply a leading indicator of and what your core competence is going to have to be to extract that particular value. what’s going to be much more widespread Let’s first look at the music industry as an example. Just think about how we bought in the network era

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phones is US$5 billion. Kids paying a huge premium to get personalised dial tones is a five-billion-dollar industry and the network operators want to control it. So now you see Apple wanting to defend the cash register for iTunes. You see the content owners wanting to defend the cash register for their albums and you see the network operators wanting to defend the cash registers for their digital dial tones. All those markets are colliding and are essentially reconfiguring themselves to figure out who Apple’s iPod and Piracy was not a big problem. The industry has the power to jockey for a particular iTunes single-handedly was very well established and every one of cash register. changed the way we buy music in the those layers could extract value; the cash reg- Look at the music industry right now. If network era. ister was very well defined. we had done the music industry analysis the The iPod single-handedly changed all old-fashioned way we would have put all the that. When I was doing research with music labels at the centre of the industry. But Warner Music, the Warner Music manager music labels don’t have the control. Who asked me in what other industry can we find actually gets to decide the price of music consumers making perfect copies of their when it’s digital? The music labels have lost product at near zero cost and distributing it control to Apple, to Wal-Mart, to Amazon on the net to people that they have never and others. met? That’s what happened with the iPod. Suddenly the decision rights will actually Now we are thinking about layers influence the fundamental nature of the of capability and so we need to introduce industry as it shifts from the content owners two new layers: software and decision to the channel, and ultimately from channel rights management. Software because we to the communities like MySpace and can digitise music and have it distributed Facebook. in different ways, and the decision Now why is that critical? I used the rights management to make sure that we computer industry to illustrate the fact that can’t indiscriminately pirate copies and the vertical integration of the industrial era is distribute them. no longer the model. The model is virtual Person-to-person sharing allows individu- integration. I use the music industry to get us als to share without necessarily knowing thinking about the fact that the person who each other and this gave rise to the entire controls the cash register is changing, so in the idea of communities such as Facebook and network era the big challenge is who has the MySpace, and so on. So now in the decision rights to control the most important networked era, music is no longer just on the part of the competitiveness, which is pricing. computer but is using the network opera- The first thing we do in marketing is to dif- tors. You’ve got Apple, wifi and Waterfall ferentially price. But what happens when and T-Mobile, and everybody else who’s someone outside the industry comes in and coming into the space. essentially creates blanket standard pricing? Think about the implications of that in your Wresting control from content owners own industry going forward. The reason why the network operators come into the space is because they want to defend The advertising cash register the cash register called dial tones. Advertising is the second example that Consider this: the global music market for redefines where the cash register is being Apple iTunes, Wal-Mart and Amazon all located as we shift from the industrial age together in 2006 was US$4 billion. The towards this information age – from the physi- industry for dial tones on your mobile cal world to the virtual world.

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We know Google allows us to search, and we these sites become the media. They become all know that it makes money monetising the channel and the conversation conduit. information by placing ads. But it also gets it So the real question to a group of marketers more indirectly. is this: what is Google to you? Is it a partner? But put yourself in the position of some- Is it a competitor? Is it a service provider? Or one like an ordinary newspaper reader – say is it a customer? Do this analysis and then ask a Telegraph reader – looking for news. One yourself what that relationship will be in the publisher makes the decisions as to what he future? Every one of the companies I work will see. Contrast that with Google News, with recognises that Google’s role is different which allows the synthesis of 4500 news for them today than it will be in the future. So sources, highly customised based on what start thinking about future Google when you you have searched for on the net. The New ask these questions of your business. York Times says ‘all the news that’s put to print’ (or all the news that’s put to print and blog and stream and everything else). 3. A shift in the role of the Google basically synthesises all that and consumer gives it to you in a highly personalised form The third shift is the shift in the role of the that’s multi-lingual and updated on a contin- consumer. In the industrial age we treated uous basis. Suddenly, it is in the newspaper customers as individuals; they were inde- publishing business. pendent and very passive. Today in the net- Going forward it can also make money work age they are highly collective, using Google maps. Maps are like searches: highly interdependent and very active. the relevant information when you want it We all know Nielsen – the company that on whatever device you want it in whatever tracks market share. But it does it the old- context you want it – free. The software fashioned way, using statistics and point-of- is free and the tools are free, so it makes sale data. But it has started a community money indirectly. Newspapers make money called Hey!Nielsen, which asks people to directly using advertising that is standard- come and discuss rather than simply have an ised. Now advertising is highly customised abstract number of market share. It wants to and contextualised as consumers do their understand our gut feelings and our shopping online. opinions in much more detail. YouTube was bought for US$1.6 billion There’s also something called Current and we all wondered why. But the interesting Television. Al Gore is the chairman and thing about YouTube is not all these crazy Current Television allows you to make user- ads that are being uploaded but the power of generated advertising; this allows advertisers to YouTube as a test marketing platform: test use consumers to create ads rather than (or in marketing a product’s features and test addition to) advertising companies. marketing communications. It’s far more ESPN in the US is a very big television chan- efficient and effective than traditional test nel for watching sports programmes. But the marketing. So YouTube might look fastest-growing feature of ESPN online is expensive at US$1.6 billion if you didn’t ESPN conversations in which people are know how to monetise it. But US$1.6 watching ESPN on television but chatting billion looks like a very inexpensive buy if it is turned into a test marketing platform

What is Google to you? YouTube might look expensive at US$1.6 Again, back to the technology. Today the billion if you didn’t know how to monetise it. maximum video that you can upload is 10 megabytes, but 10 MB files are very poor But US$1.6 billion looks like a very quality. YouTube is already experimenting inexpensive buy if it is turned into a with a gigabyte file so I can upload high-definition television clips, which means that test marketing platform

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online with their friends about what’s gasoline. A car is really a computer on going on. wheels. If we think of a car as a computer on The last thing I want to highlight in this wheels we can provide a variety of value- third shift is what’s called social retailing. added services; keep track of where you are Walk into a boutique department store in going and give directions about where to go New York and you will see a virtual mirror and eat, where to stay, and so on. that is aimed at young women. You walk in, Think about what could happen when we try on your dress or whatever and you log onto your car. The network identifies connect your buddy list to the mirror, which who is driving as well as who else is in the car beams the pictures to your friends. and provides a set of value-added services to The friends can then tell you whether this the driver and the passengers. Once a car is particular dress looks good on you or not. connected to the network there is a whole The buzz so far is the recognition that range of services that we can barely imagine shopping is not done independently but today that are going to become possible in socially. The mirror also allows you to try the near future. out all the various combinations of a Even today remote diagnostics are possible. garment without you having to put them on, The display on the car is still very because the other side of the mirror allows old-fashioned. A red light comes on and says you to try out different colours and different ‘check engine’. With what technology? You accessories. It changes shopping and changes can’t just open up the hood and see what’s marketing. going on because underneath is a computer. So now when you get a red light to fix the engine, GM is able to diagnose remotely and 4. A shift in the speed and perva- tell you what is wrong and how to get it fixed. siveness of technology Often the solution is on software downloads The fourth shift is one that encapsulates that can fix the problem immediately. many of the other shifts in a very powerful way. All this is possible because of the perva- siveness of technology. Moore’s Law makes To summarise ... computers faster and cheaper; Metcalfe’s 1. The business model shift says no longer is Law that says anything that can be connected everything done by you but things are will get connected. We can connect people, done with partners, which has implications we can connect refrigerators, we can connect for how you brand and how you deliver our Nike shoes all to the internet, and by customer experience. connecting to the internet we extract value. 2. The second one is the cash register shifts The third law is to do with bandwidth that that change how you monetise what value allows us to perform these interactions at a you bring. This can be direct or, in many much faster speed. cases, indirect. When you put it all together it impacts 3. The third one is to recognise the role of your products, it impacts your processes, it consumers: not as independent passive impacts your services, and impacts how players but as a highly interdependent customers interact with you. group who are actively shaping what your brand means. A computer on wheels 4. Fourth, all this is possible because the Here is one last example. How many lines of information technology infrastructure is core are there in an automobile? Software has changing very fast. We have barely lines of core: Windows XP has 40 million scratched the surface in terms of fully lines of core, an Airbus A340 has a billion exploiting it and I’ve simply used the auto- lines of core and a high-end automobile has mobile as one example to get us thinking a hundred million lines of core. about how different these things will be.❦ But we still think about an automobile as an internal combustion engine that runs on [email protected]

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THE NETWORK AGE DICK STROUD

Web video unleashes the power of the web

By DICK STROUD

In the same way PPROXIMATELY HALF OF all Google is evolving its video search that GIF and JPG internet traffic consists of TV shows, capability with the development of ‘universal A YouTube clips and web animations. search’. This will process all content including images added Within the next 24 months, video is expected video, images, news and websites combined richness to plain to account for 90% of internet traffic. Even into a single, integrated set of search results. text, so video though we have just begun the web video Finally, Adobe’s Flash Player has become provides a new revolution, the magnitude of its impact on the default software used by the main web the internet is already staggering. hosting companies, including YouTube and dimension to the A combination of technological develop- MySpace. Adobe estimates that 99% of the web’s ability to ments has made the creation and viewing of world’s developed markets can view Flash communicate and web video a mass-market experience. Player content. entertain. Dick The costs of video cameras and software to create and edit video have plummeted. Al Stroud explains Gore’s Oscar-winning global warming crisis The ‘YouTube effect’ why for many it is documentary, An Inconvenient Truth, was YouTube has had a lasting positive, and the most exciting of created using standard Apple Keynote and transitory negative, effect on the evolution all the new digital editing software, and with a video camera of web video. technologies costing less than US$ 4,000. The positive effect has been to propel web The production team required to create video to the attention of the general public. videos has shrunk to two people. One person This has not always been done in the most to act as the journalist/interviewer, the other appealing way. Saddam Hussein’s death, the the cameraman/editor. unguarded statements of politicians and the The second development is the wide- rantings of celebrities have quickly found spread availability of broadband. There is their way onto YouTube, often before they now a worldwide audience of 300 million were broadcast on TV. subscribers who can access the internet at Amusing nonsense videos have achieved broadband speeds. This number is expected audiences of astonishing numbers of people. to double by 2011. The demand for web ‘The Evolution of Dance’, a six-minute video and broadband access is now in a video clip, has so far been viewed over 51 cycle whereby broadband take-up is driven million times. YouTube is littered with such by the desire to view video, which in turn clips. increases the audiences and supply of YouTube has thrust web video into video material. the public spotlight but often with the Finally, the costs and simplicity of hosting, connotations of it being trivial and a faddish searching and viewing web video have thing that is only used by the young. radically improved. There are over a 100 The negative outcome is for marketers to websites providing free video hosting services pigeon-hole web video as being another part – double the number at the beginning of of this strange ‘Web 2.0 thing’ and relevant 2007. YouTube alone contains over 60 only if you are targeting the tween and teen million video clips and now even boasts a markets. This is not supported by the facts. channel for the UK’s monarchy. According to data compiled by Dick Stroud is a consultant, lecturer and writer. He is also Nielsen/NetRatings, comScore and founder of the marketing consultancy 20plus30. Quantcast, web users aged 35–64 represent

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anywhere between 48% and 65% of YouTube’s audience. The average age of US users is estimated at 39 years old. Maybe it is symbolic that YouTube decid- ed to use a video recorded by an 80 year old to launch its UK web site. YouTube has demystified web video and made it a mass consumer experience. The repercussions for how we consume information and entertainment will continue long after it has disappeared and been absorbed into its parent (Google).

The marketing applications of web video Web video is a reality, it is not going away! Marketers need to plan for its use in their organisation to ensure consumers’ time is Dove made a video called the ‘Evolution of Dove’s ‘Evolution of spent watching video associated with their Beauty’, which has been viewed by well over Beauty’ campaign has brands and marketing campaigns – not that seven million people on YouTube and other been viewed by over of their competitors. The following are the content-sharing websites. The video appears seven million people. most obvious marketing applications for to show how an image of a young woman web video. can be airbrushed and digitally enhanced to create an impossibly perfect image. It is part Advertising of the brand’s highly successful ‘Campaign By far the largest use of web video is for Real Beauty’. to extend or substitute for traditional With this video, Dove found a way to advertising channels. harness the public and the traditional media Using video to advertise on websites is an to grow its brand image. A more recent cam- evolution from static and animated banners. paign by Cadbury, using a life-like The objective remains the same: to stimulate gorilla playing a drum solo generated over click-throughs and raise brand awareness, two million views and spawned numerous objectives that apply to both B2B and B2C remixes and look-alike videos. companies. Volkswagen’s ‘Midlife-crisis Retreat’ cam- Research conducted by the US Online paign was used to promote its Passat car, and Publishers Association demonstrates the employed a viral technique enabling the effectiveness of the video format for video’s content to be customised by the achieving these goals. sender. When the receiver viewed the video he The study found that approximately 80% or she was greeted by an amusing personalised of all video viewers have watched a video ad video message referencing them by name online, and 52% have taken some sort of action. This action might be visiting the website (31%), searching for more Web video is a reality, it is not going away! information (22%), visiting a store to look Marketers need to plan for its use in their for the product (15%), or making a purchase (16%). organisation to ensure consumers’ time is Unilever’s use of the technique to promote its Dove beauty products is an spent watching video associated with their excellent example of how video provides a brands and marketing campaigns – not that relatively inexpensive, but very powerful mechanism, to build brand awareness. of their competitors

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Right: driverTV contains standardised a site dedicated to web video to assist low- video demonstrations budget travellers researching destinations. of all the leading US For more traditional travellers, Tripadvisor cars and enables users has launched a new version of its website to create their own that enables customers to share video experi- showreel containing the vehicles they want ences of hotels. compared. Web video’s most obvious use is as a training tool. When Google released its new toolbar it was accompanied by a short (90-second) low-budget video that eloquently demonstrated the application’s new functionality. Ninety seconds of video provides cus- and age. tomers with more knowledge than a mass of These are good examples of using web text and imagery. It also empowers compa- video to enhance the impact and reach nies with a rich palette of communications of traditional advertising. They are the techniques to convey their brand messages. exceptions. Most companies still have a ‘silo’ approach to their advertising, with little Extending market reach attempt to exploit a synergy between the Web video creates new ways for companies communications channels. to communicate with existing customers and This situation is partly explained by the to reach new audiences. newness of the media but also because many CNN’s entry into online video illustrates of the benefits of web video appear to be free how the distinction between television and and tend to be devalued. In an interview with the internet is blurring. CNNMoney.com’s the Financial Times, Unilever’s Senior Vice- editor succinctly makes this point: ‘The President, Global Marketing Services said: future of business television is online.’ The ‘It can be misleading to look at just our metrics support this statement. In October media expenditure, because a lot of the value 2007, CNN.com’s site serviced 61 million we get from the digital world is essentially video streams. Interestingly, the average age free or almost free.’ This is one of the rare of its user is 41 years old. times when marketing effectiveness can be Other examples of companies using web increased by spending less. videos to create new channels with their customers include Simon & Schuster. It Improving the customer’s experience launched a video-based website providing Video can be used to supplement text in-depth interviews with authors as a means and images, and extend the richness of the of promoting book sales. Haven, the UK information provided to customers. holiday company, uses video embedded The way that Ocado, the supermarket within its email marketing to engage with service in partnership with Waitrose, uses potential customers to stimulate them video recipes is a perfect example of to research and book their holiday online. this application. The company’s website con- The video starts playing as the email tains recipes listing ingredients and video is opened, showing examples of the compa- showing how to prepare a meal. After watching ny’s holiday parks. The same video content the video, all the ingredients can be added to is also promoted through Haven’s your shopping basket with a YouTube channel. single click. To supplement its cookery ShinyShiny.tv describes itself as ‘a girl’s programmes, the BBC has added 100 guide to gadgets’. The fact that O2’s interactive recipe videos to the cooking Marketing Director and Microsoft’s Mobile section of its website using celebrity chefs. Ambassador have starred in its shows illus- To add a new degree of richness to its trates how video can be employed to reach books and website, Lonely Planet has created hard-to-reach market segments.

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Google has created a ‘talk show’ channel or vetted, in the case of user-generated on YouTube, where the company’s content. The site provides web video on sub- representatives interview political and jects as diverse as cooking a roast lunch and business leaders (e.g. Hillary Clinton, learning to instant message using Skype. Michael Bloomberg). This gives Google the Surprisingly, companies that rely on opportunity to reach a massive audience customers understanding complex instructions and expose another facet of its corporate have been slow to adopt this media. identity. It is interesting to speculate on the levels of time saved and stress reduction that would Conveying complex and sensitive messages result from IKEA providing web video instruc- i-to-i is the UK’s largest volunteering holi- tions for the assembly of its flat-pack products! day company and is experiencing a growth in demand from older people (50-plus). The company’s research shows that The challenges for marketers prospective customers have a concern about Web video provides marketers with a being the only older person on the holiday. powerful new tool that can be used in all This is creating a barrier to booking the areas of marketing communications. To holiday. A video was created, featuring older ensure that their organisations extract the customers and i-to-i service staff, that pre- maximum benefit from the technology, empted and answered this objection in a far marketers must overcome a series of more eloquent and effective way than text challenges. The following are the five and imagery could ever have achieved. most important: ING Direct, the online bank, devotes half its home page to delivering a video 1. Think beyond the obvious niches. There is showing endorsements about its services a danger of stereotyping the web video user from a cross-section of customer types. The as a young, techie person. Web video is like- prospective customer can see and hear other ly to follow the same evolution path as other customers talking and can make an web technologies, with the consumer’s age instinctive judgement about the bank’s style becoming irrelevant. Marketers should and culture. assume web video will have universal appeal. Mattel used video as part of its response to 2. Be discriminating in its use. There is a the mass recall of toys. Bob Ecker, the temptation to treat video as ‘eye candy’ and company’s CEO, talked to camera to explain indiscriminately sprinkle it around the the details of his company’s response, but website. This must be resisted. Video more importantly demonstrated his personal should only be used for applications where intent to rectify the situation in a way that a it adds significant value compared with press release could never convey. other communications media. Two of the hardest things to achieve on the 3. Apply strong quality standards. The same web are product comparisons and the quality standards should be applied to video explanation of complicated tasks. Perhaps the best example of how web video can improve the product comparison process is There is a danger of stereotyping the Web provided by driverTV. This website contains standardised video demonstrations of all the video user as a young, techie person. Web leading US cars and enables users to create video is likely to follow the same evolution their own showreel containing the vehicles they want compared. There are multiple path as other web technologies, with the applications for this technique – purchasing white goods being an obvious candidate. consumer’s age becoming irrelevant. VideoJug.com hosts one of the world’s Marketers should assume web video will largest libraries of factual content. The video content is either produced by the company have universal appeal

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Web video is evolving faster than most For most people the quality of the videos they view on their PCs will be better than companies’ ability to keep up. During the that on their TV sets. next 12 months, web video will become A new generation of websites is emerging that are primarily video based, with text as a high definition (HD) web video. For most supporting medium. The YouTube ‘video people the quality of the videos they box’ will disappear, and video will expand to become the core of the website. view on their PCs will be better than that The first candidates for these types of websites will be industries where the on their TV sets visual impact of their products and services is of paramount importance (e.g. travel, clothing). as any other communications medium. The The speed at which video is adopted by novelty value of web video will only last a web sites will not be linear. We could soon short time – it may already have passed. be reaching a tipping point where the Poor quality video will then be ignored or presence of video becomes a necessity rather will annoy web users. Remember that video than an optional extra. ❦ requires script-writing not copy-writing skills. The way things are said is as [email protected] important as words. In any two-hour feature film script there are usually about 8,000 References words of dialogue. That means in a Dove ‘Evolution of Beauty’ campaign, two–minute video you would have just 133 www.campaignforrealbeauty.ca spoken words! Cadbury gorilla advertisement, 4. Choose the right metrics for judging www.youtube.com performance. Judging the effectiveness Volkswagen ‘Midlife-crisis Retreat’video, of web video requires more than simple www.midlife-crisis-retreat.co.uk website analytics. The video will be viewed Lonely Planet TV, from multiple sources other than the www.lonelyplanet.tv website. It will be distributed as part of an Ocado cooking demonstrations, email campaign, pushed through RSS feeds, www.ocado.com viewed via YouTube, or one of its many Tripadvisor: hotel comparison website, look-alikes, plus numerous other sources. www.tripadvisor.co.uk 5. Understand the intellectual property CNN Money.com: financial information, issues. As YouTube is discovering, it is very www.money.cnn.com difficult to stop people loading and Simon&Schuster: author and book promotion, displaying video material they do not own. www.bookvideos.tv If a company’s web video uses music Haven, YouTube channel, and actors then there may well be copyright www.youtube.com/user/havenholidays implications. The same applies if the video ShinyShiny.tv: women’s gadgets channel, is sourced from a video archive like http://shinyshiny.tv Mochila and Brightcove. Web video adds Google talk show channel, an extra burden for marketers to ensure www.youtube.com/user/AtGoogleTalks their content is legal. i-to-i volunteering holidays, www.i-to-i.com Web video is evolving faster than most ING Direct: customer testimonials, companies’ ability to keep up. During the www.ingdirect.co.uk/ next 12 months, web video will become high driverTV: car comparison website, definition (HD) web video. Adobe’s latest www.driverTV.com version of Flash Player and Intel’s new chips VideoJug.com: ‘How to’ video website, are both optimised for HD viewing. www.videojug.com

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THE NETWORK AGE SIMON SILVESTER

Marketing in the digital age

By SIMON SILVESTER

In this edited ACK IN THE 1960s, in the heyday have changed the game. Here are some of extract from How of television advertising, few brands the things you need to think about when you Badvertised on television apart from market in the digital age. to think Digital, foods and household products. So demand Silvester describes for airtime was low. You could launch a six features of brand with a 5,000 rating campaign. And still 1. Reaching the target audience the world of digital have money left in your marketing budget. Most analogue marketing hits the wrong marketing that Your ads got noticed too. Consumers had no people, or the right people at the wrong Xbox, no internet, no mobile phone, no text time. Digital is more efficient and more differ dramatically messages, no Gameboy, no MSN and no impactful because it can hit only the right from the world Google to distract them. They couldn’t even people, and only at the right time. of traditional change channel without effort when the Digitally targeted TV is still being analogue marketing. ads came on, because no one had remotes developed, as digital media companies before 1978. feverishly work on targeted ad packages to He argues that the But the economics of TV advertising have download onto DVRs. But the result is analogue model changed out of all recognition since the already visible when you look at a page of is broken and 1960s. In the US, Japan and Europe, real analogue classified ads from a newspaper, marketers must consumer incomes are now two to three and compare it with a page of search results times higher than then. And so consumers from Google or from Windows Live Search. learn a whole new have two to three times as much money to Or increasingly from the smart graphical bag of tricks to spend. Everyone wants their attention. banners delivered by DoubleClick or by make use of Banks, computers, mobile phones, 24/7 Real Media. the potential ringtones, vacation destinations and utilities Whatever you are looking for, the page of offered by digital all fight for the same ratings. So taking a analogue classifieds is mainly irrelevant, no long look back to the heyday of tv advertis- better than spam. But all the results on a technology ing, it’s clear that the amount an individual search page are relevant to what you want. advertiser can afford has collapsed. So, in the digital era, marketers need to In the early days of marketing, the only think less about wasteful broad media way to watch TV was live, ads and all. Today, planning, and more about hitting exactly the many people pay to watch movies ad-free on right people at exactly the right time. cable or satellite. Or they buy and watch DVD box sets. Or download shows to iTunes. Or movies to their Xbox 360. 2. Word of mouth Since 2003, consumers have been spend- There are many digital media. But the most ing more on devices and services like these powerful is digitally enhanced word of mouth. that avoid ads than the entire advertising Use it with care though – you can’ t use it to industry has been spending on media to buy your way to success. reach them. In the analogue era, consumers lacked the And so the model is broken. The rise in means to spread their opinions beyond a few demand for TV airtime, combined with the friends. So word of mouth was never that sig- much narrower target audiences brands have nificant. In the digital era, though, word of today, plus the increasingly effective mouth is very different attempts consumers make to avoid the ads, Product scares spread like wildfire via email, Simon Silvester is Executive Planning Director, Wunderman blogs, texts and social networking sites. If you Europe, Middle East and Africa. don’t handle the issue within six hours, you

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may have to explain yourself to millions of worried users. One bad review on an e-retail site can damage sales of your product. Five bad reviews, and your brand is dead. Positive brand news also spreads very fast: third-party developers on Facebook report that their applications can attract large numbers of users within hours. Some communities, like the world’s six million software developers, are so closely linked that something known by one of them is rapidly known by all. This means that word of mouth is now an incredibly powerful medium that can act positively or negatively for a brand. Marketers struggle to use digital word of mouth though, because they don’t know how it works.

3. Finding the perfect partner In the digital era, all brand owners are also media owners. Save media money and find the perfect partner. In the digital era, every brand is a media owner, and can grow through strategic partnerships. In 1998, Google didn’t exist; today it is valued at US $168 billion, more than General Motors. According to WPP’s BrandZ study, it is the most powerful brand in the world. Marketing was a vital part of Google’s rise. But Google got to number one without spending a single cent on traditional advertising. Google did it entirely through strategic partnerships. The first big one was with AOL. The partnership put a Google Brand partnerships: Diageo successfully partnered two of its brands to search bar on the AOL homepage. This put produce Baileys flavoured Häagen-Dazs. Google in front of 36 million web-literate Americans. They tried Google. And because potential new users. And because no media they liked it, they told their friends. Within costs are involved, strategic partnerships can a year or so, everyone knew about Google. be cheap to run. It was so famous, it became a verb. AOL benefited too. It had introduced its users to a cool new service, and their ratings 4. Trial as a starting point improved in line. In the analogue era the point of much In the 1990s, Diageo was very successful marketing was to encourage consumers to partnering two of its brands to produce trial a product or service. In the digital era, Baileys flavoured Häagen-Dazs. The we can be more direct. Trial can be our partnership produced a profitable brand startpoint, not our endpoint. Experience is extension. It also made a lot of Häagen-Dazs the best form of marketing. users try Baileys, and vice versa. When it works, the strategic partnership Experience is indivisible can be very effective: each brand benefits Apple succeeded with the iPod because it from rising awareness and a new group of recognised that user experience is indivisible.

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placed limousines at the disposal of passengers at both ends of the journey, Other things to pay attention to and ensured that passport and ticketing was done while the passenger sat, relaxed, in their limo. There’s no point using smart search marketing if you don’t spend as much Online, the positive experience we deliver time thinking about what happens after the click. must be the total experience the prospect No consumer will wait 10 seconds for a brand website to download. receives from the moment they think about Keeping people waiting is a sin. their need. Most marketers are dataphobes. And with good reason. Digital data There is no point having a slick website if streams can paralyse marketing departments unless they are handled it takes 25 clicks for the prospect to find it. expertly. So handle data with care. Or if the promises made in paid-for clicks Why find a new customer when you already have one? Smartly managed, don’t match the content of the digital relationships can last a lifetime. Web 2.0 is all about website. Or if the prospect can’t find it at all. consumers working together. Work out how to collaborate with them too The digital parts of the brand experience in the ‘channel of we’. must work together with the analogue parts. Handle privacy issues carefully. You don’ t need tons of information about There is no point in having a cutting-edge a consumer to influence them. Quite often, all you need is one key piece digital frequent-flyer scheme if your best of information. customers still struggle to get through Digital media are already much more efficient than analogue media. But the airport. Web 3.0 and Web 4.0 will be much more efficient yet again. Digital media If you sell everything under one need to evolve. house brand, the whole experience of your Work on predicting the future. Marketing and media are now moving faster company is what matters. Ensure that all than you think, and much faster than your company can respond to. your web presences work together. Build a closer relationship with the truth. Because in the digital era, the In the digital age, what you deliver and people who tried your service yesterday are talking to those who will try what you don’t is transparent to the it tomorrow. consumer. So, if you don’t want your The consumer has worked out how to use the internet to cut marketing marketing to sound like bullshit, it had out of their decision-making processes faster than marketers have learned better reflect the truth. how to use it to stay in control. So the consumer is in control – for now. There is a lot more demand to be had for products and services that can be delivered instantly than for things people have to wait for. 5. Digital media will keep evolving Boring isn't boring at the moment of truth. This is vital news for the finan- Search connects buyers and sellers at the cial services and life insurance companies that have seen their marketing moment the buyer expresses their need. As more than anyone else's ignored by empowered consumers. such, it is one of the most interesting mar- The world is globalising slower than you think. Localisation is much, much keting media ever invented. more than just translation. Search is getting more intelligent, or ‘All warfare’, said Sun Tzu, ‘is based on deception’. In the analogue era, ‘semantic’, as engines keep developing, everyone’s marketing strategy was obvious. Not so today – so keep learning to understand contexts rather than yours secret. just words. It’s also getting more visual, as engines work out ways of cataloguing video. But is it going in the right direction for Its iTunes software imports CDs, searches commercial use? for track names on a database, labels the Search needs to change; current search tracks and loads them on to an iPod, all with engines are weak for the following reasons: just one click. Similarly, Sir Richard Branson built up an enviable position in business- They don’t know where you are. The class travel by recognising that the plane better ones know what country you are in, journey starts as you leave your front door, and that helps. But when you are and doesn’t end until you open the front looking for a motel for tonight, the door at your destination. Virgin Atlantic results would be a lot more relevant if they

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knew that you were on Interstate 80, there’s another flight today? Or give up and 15 miles west of Lake Tahoe. head back to your hotel? You choose. They don’t know who you are. Even In the 21st century, you have three ways of sophisticated online bookstores get it deciding: you can fire up your laptop, find an wrong. You buy a big pile of books on unsecured wifi hotspot next to the freeway Dilbert, because you like Dilbert, and then and access your airline’s timetables via the you buy a Hannah Montana DVD set for web; you can hope that your mobile phone your niece who likes Hannah Montana. contract allows you to access 2.5G data So after that, the bookstore keeps services abroad, and use it to surf to the recommending you stuff for the weird sort airline’s WAP portal; or, you can phone the of person who likes both Dilbert and airline’s voicemail system from your mobile, Hannah Montana. and between bursts of static, speak the names They don’t know what drives you. Most of departure airport, arrival airport and time search engines know nothing about you of departure to the computer voice system, apart from the search term you’ve entered. and hope it gives your flight details back. Of It would help that when you type in ‘cash’, course, none of these state-of-the-art digital the search engine knew whether you were methods usually works. looking for an ATM or for country music. Compare that with ten years ago, when They don’t know more about you than you business travellers just reached into their bag do yourself. The best lover buys you a for one of the timetables airlines gave away birthday present you didn’t expect because at every check-in desk. The printed timetables that lover knows more about you than you worked fine. But they no longer exist because do. Search engines would be really useful if the airlines have gone digital. Digitisation is they could do the same with search results, making airline service go backwards. unmasking latent desires. Similarly, the music industry has They expect you to search by typing in developed digital-rights-managed music for words. Why can’t you just point and click the digital era that is less portable and less like normal? If you see a sofa you like in a secure than the CD that you bought ten virtual world, you should be able to click years ago. on it and find one to buy. Business travel agents today supply all itineraries via weblinks. ‘You can download Indeed, the next development in search them on to your PDA,’ they say. But the engines may well be the more ‘lean back’ links don’t work with most PDAs. The search engine. People already tend to type schedule is only good if you are in front of an ‘eBay’ into search engines because they can’t internet enabled PC with a printer attached. be bothered typing ‘www.ebay.com’ into And most corporations serve their their web browser. Further waves of customers much worse now that they have convenience and laziness are sure to come. replaced their switchboard operators with As this happens, search engines will voicemail jails. become less about active, committed search. The value of individual clicks will go down. But the end result will be that search will Search is getting more intelligent, or become a more powerful marketing tool. ‘semantic’, as engines keep developing, 6. Just because it’s digital doesn’t learning to understand contexts rather than mean it’s better just words. It’s also getting more visual, as You’re a business executive in a foreign country. You’re in a taxi heading for the engines work out ways of cataloguing video. airport. The traffic’s backing up. You know But is it going in the right direction for you’re going to miss your flight. Should you continue to the airport in the hope that commercial use?

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So companies thinking of developing new Smart ad serving to set top boxes. digital customer handling systems had better We understand Google and News be careful that digitisation means their International are working on it. quality of service goes up, not down. Permission marketing media with an easy off button. We’ve found that many If you offer a financial service, and your consumers like the idea of permission customers visit your site only once a year marketing – if they are thinking of going to renew, think carefully about how you let on vacation, the idea of divulging their them in. No consumer remembers a needs and a budget and asking holiday password for a year. companies to pitch at them is attractive. If you are an airline, make sure a link to But too many permission marketers your timetables is prominent on your conceal their ‘off’ button, or ask you to homepage. If your website is run by your remember a website password before you e-commerce team, they may be tempted to can stop the torrent of emails. force people looking for plane times Smart spam filters that allow stuff you want through the e-booking engine, in the hope through, rather than block all commercial that they might buy a ticket online instead. messaging. People who like Star Wars don’t Consider using CRM software to manage mind receiving mailings from purveyors of your customers. As the cost of human life-size imperial stormtrooper dolls. contact rises and rises, smart CRM No brainer e-media for people born in the software is the future of service. 1970s. People born before 1980 don’t use e-media nearly as fluidly as young people. Standards in mobile phones. The 2G GSM Other developments needed standard let 2G phones rocket across Asia A hundred new media appear every year. and Europe, leaving the US behind. Few offer useful marketing opportunities. But a lack of standards in smart 3G phones Here are a few new media that would help: is hampering the development of e-media applications. In the US and Europe, a connection between paper and the mobile phone is needed. In Japan, camera phones that In short ... photograph and interpret barcodes on The analogue world is dying, as highly paper objects are commonplace, and a segmented brands find it more and more massively used consumer-friendly direct difficult to connect with narrow target audiences response system. Mobile service providers: via blunt mass media, and as consumers spend if you want m-commerce to take off, ask more and more money on devices and services the handset makers to work on this feature. that eliminate advertising from their lives. Media that know where you are: mobile But marketers are struggling to adopt digital phones tried to do location-based services because what it does looks to them nothing like in the 90s by tracking the marketing. But that’s because the concept of mobile phone tower the user was closest marketing was first coined in 1960 to explain to, but it wasn’t precise enough. the effects of cheap mass television. Today, web browsers try to do the same Marketers didn’t select TV as their medium thing by tracking the computer’s IP of choice. Mass marketing evolved to explain address, but this isn’t very accurate either. the effects of cheap TV. To think digital, They can tell if you’re in Seattle, but New marketers need to completely erase what is in York and New Jersey are just a blur. Soon their heads.❦ we shall have the technology, though – with 2-metre accuracy on GPS chips Full book available at: a dollar each. The way some satnavs http://pubs.wunderman.com/digital.pdf download MSN Direct data points the way. [email protected]

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THE NETWORK AGE JOHN GRIFFITHS

Web 2.0 is not about technology: it’s about human relationships

By JOHN GRIFFITHS

Griffiths argues that companies are ducking the major challenges of Web 2.0 by treating them only as internet/customer communications issues. In fact, the challenges to make companies more accountable, ICTURE A STATUS meeting in a It all sounded rather too radical so the accessible and modest-sized marketing department. marketing director asked if there was a quick human, represent PThe marketing director has asked the win or two. To which the executive replied, junior marketing executive to report back on ‘Well I’ve talked to our ad agency several seminal changes the Web 2.0 conference he sent him on. times about putting all our ads on YouTube to company The youngster was chosen to go officially so people can watch them whenever they structures and because it was good for his career want but apparently they’re worried about business models development (he’d also been most useful in digital rights and repeat fees.’ Before closing helping the marketing director to set up his the meeting the marketing director asked if Facebook page) and unofficially because the there was any other business. marketing director wondered if anybody else One of the product managers asked what in the department would have been able to she should do about a letter from an enthu- make head or tail of it. siastic customer who had set up a contest to The junior exec took the floor and for 15 test their product against a competitive minutes bombarded the team with talk of product – all as part of a light-hearted night blogs, social media and user-originated out, and could they have some branded T- content. When he had finished the shirts and badges as part of the team? The marketing director sat back: ‘This is all other product manager cut in, ‘I’ve just had very interesting but what tangible a customer send me a video of his daughters recommendation would you make?’ The using our latest product – he was quite proud reply was something called a research of how prominent he had managed to get the community, which would cost two-thirds of logo – he was wondering if we were interest- the annual research budget and would ed in using it as part of our publicity’. provide apparently 24/7 contact with a range ‘That’s nothing’, said the marketing man- of customer stakeholders. ager, ‘I’ve had a newspaper on the phone John Griffiths is a communications strategist, researcher about our sponsorship of one of the British and facilitator. athletes travelling to the Peking Olympics

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this summer. They want us to clarify our longer keep up. Employees could no longer position on human rights in China and how be controlled by corporate mandate and we police our suppliers in China to ensure needed empowering to keep the they are treating their employees fairly.’ conversation going, often by proffering their own opinions and making their values more explicit. The power of Web 2.0 Eight years ago that kind of heresy could I begin with this anecdote because it demon- be (and was) brushed aside as propaganda strates the range of challenges businesses face from the digerati: fine for Silicon Valley but now that Web 2.0 is upon us. The examples I unacceptable and unworkable elsewhere. give are typical of those I have heard in the Today every business has to deal with market last year. What I want to show is that the conversations as a reality. And, to recognise biggest challenges aren’t coming from the that, we have to work harder to control the internet and new technology but rather from conversation. the different kinds of relationships customers There are three features of the new will demand from companies. It will take environment that companies have to more than sending colleagues to internet address. Business start-ups now do this conferences to paper over the cracks. routinely but for established businesses the The cultural changes – more sophisticated changes are deep seated and painful because and involved consumers, less trust, more crit- they involve changes in the whole way the icism – are real. The point is that Web 2.0 has business is run and how the business enabled these changes to impact businesses engages, not only with its consumers but much faster than would otherwise have been also with the suppliers that mediate between the case. Note that none of the examples consumer and company. given by the hapless product managers were internet based. The ability of ordinary people to engage with businesses using the internet 1. Sharing the neighbourhood with has meant that businesses are now subject to a your customers level of dialogue with their customers that The first is the new common space where was unimaginable even five years ago. customers live in much closer proximity to Web 2.0 is defined in all sorts of vague ways. companies and behave more like neighbours. But simplest explanation is this: the first era of Good neighbours talk to each other and the internet allowed companies and individu- worry about the neighbourhood. Mass mar- als to post millions of pages of information (at keting came about because companies were a stroke undermining the need for printed so far from their customers and needed to instruction manuals and product brochures). find out what they thought in order to We are now into the second era of the web, produce the right products, and needed to which allows people to use it not just to access promote the products because customers or publish information but to interact with couldn’t find out about them for themselves. each other. Hence the rise of instant messag- But now the distance between companies ing, blogging and social networks. and their markets has been cut drastically. The internet has always had bulletin boards People squeeze their way through the many and chatrooms but, for the first time, the vast gaps that have opened up in the corporate majority of inexpert surfers are using the armour. And they don’t just want to talk internet to communicate with each other, not about products any more. Nor to focus on just using text but the full gamut of multime- key product features as outlined in the sales dia, much of it sourced from the now ubiqui- plan. They may not even be using the tous mobile phone. products as they were designed to be used The Cluetrain Manifesto: the end of business as and, far from being embarrassed or diffident usual fired the warning shot. Published in about this, may be intent on promoting 2000, this book told us that markets were unconventional applications with or without conversations and that companies could no your permission.

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The implication of this is that companies and qualitative feedback straight into the have to learn to talk to their customers much client organisation. more regularly and to make it possible for Having customers and stakeholders per- their customers to talk back – and to be manently plumbed in to your company is ready to handle their responses when they threatening the hegemony of research com- do, recognising that responding to these may panies. What exactly is the research agency significantly impact the way the company bringing to the relationship? No wonder operates. For example, mrandmrssmith.com ethnography, semiotics and anthropology writes reviews and guides for boutique hotels are all the rage. Every debrief is awash with and restaurants. Its customers are supposed multimedia and stimulus material created to use its website to find the best. So it during the process. This is because research wasn’t best pleased to discover a group of its companies have to deliver so much more customers banding together one weekend than the opinions of the general public. last year to write their own reviews! People can do that for themselves. Cadbury’s Wispa chocolate bar is back. Allegedly because of upwards of 80 pressure groups on Facebook lobbying to 2. Free content freely distributed get it reintroduced. The second factor is the universal availability of content and the collapse in costs. What people were interested in used to be so How research is conducted expensive that advertisers won access to mass This shift has massive implications for how audiences by subsidising the cost and in research is conducted. The newest compo- return everybody had to watch advertising nent in the arsenal is the research communi- whether they wanted to or not. People are ty – rather like an old-style panel but online spending proportionately more time using a Facebook-like interface. These can watching content that isn’t supported be run with all the paraphernalia of blogs, by advertising, reducing the opportunities videos, bulletin boards and generate feed- advertisers have to reach them with back 24/7 worldwide. They can be run for a conventional advertising. month or for a year. The IAB Online Adspend study found that The BBC World Service recently audiences spend 35% of their time every relaunched using just such a resource. Some week watching TV, but 27% surfing the clients get so hooked they didn’t want to internet. And advertiser spend on the inter- turn it off and opted to run it themselves, net is only two-thirds of what it is on televi- providing a stream of quantitative measures sion and is much more diffused because of

Nike: word-of-foot marketing In 2007, Nike spent just 33% of its US$678 million advertising budget on ads with television networks. That is down from 55% ten years ago. Nike has increased its non-media spending by a third in the last three years. It now spends twice as much on non-traditional media as it does on conventional. Nike executives say they want to spend the budget on services for consumers like workout advice, online communities and sports competitions. ‘We want to find a way to enhance the experience and services rather than looking for new ways to interrupt people from getting to where they want to go’, says Stefan Olander, Global Director for Brand Connections. And much of Nike’s advertising has been switched to the internet where people can opt to watch longer messages in their own time when they choose. Nike executives contend that as customers spend more time online running their virtual lives, connecting with other people by typing rather than by talking, what Nike wants is a physical interaction with customers. That’s why the third floor of the New York Nike store is called the running club and is used to support runners and joggers, with whatever brand of trainers they are wearing, using coaches, pacers, information about running routes and the ability to compare training times with other runners using the Nike + sensors built into the shoes that track progress on the ipods the runners carry. The goal is to use the club to endear people to the brand and to provide opportunities for them to try products. Nike calls this word-of-foot marketing.

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the billions of pages that people are brows- stitute for playing Scrabble in real life. On ing. There is so much free content available the other hand, Hasbro would claim that the that people aren’t nearly so dependent on game would never have achieved its success advertiser-generated content. without appropriating the Scrabble brand. Of course they haven’t stopped using Where does this leave advertising? It pains advertiser-supported media, but as they me to say this, having spent so much of my become more discriminating, the program- career on the agency side, but until agency ming streams are breaking up. People appear suppliers change their business model the to be equally happy to browse content made relationship between client and supplier will by amateurs as by professionals. If the only necessarily be adversarial. A creative agency content you provide them with is hard sell of earns income by charging for the creation of your products then unless they are actually promotional content that has a narrow, in the market they aren’t going to bother specific use and is often discarded long with it. This means you need to become a before it has worn out. Then the agency puts publisher or aggregator of content that your forward proposals for making more. customers do find interesting. The current business model of agencies The media content manufacturers need to doesn’t allow them to collect or aggregate demonstrate that they can deliver more bod- third party content or, for that matter, to ies at a lower cost per thousand than the make content that can be used flexibly. You emerging pull streams or even channels that still need advertising but probably not as you run yourself. At the 2008 Broadcast much as your agency says you do. And you Forum I was startled to discover IPTV don’t need to change it so often either. Push (Internet Protocol Television) companies tar- media deliver higher response figures than geting churches to persuade them to turn pull channels do, so you need a mix of both. their video channels (normally used to beam But what you also need is content that sup- content from auditoriums into overspill ports your branded messages. For example, areas) into programming streams that could John Grant reports a conversation with the be beamed to aggregate audiences across the marketing director of Boots, who said that to internet. Indeed, some of the biggest church- increase sales of skincare products and cos- es in London are repackaging sermons, metics to British women he had to persuade music and seminars in MP3 or video formats them to think like French women. And the for people to download onto their iPods. way to do that was using a series of TV Every organisation has within it presenta- programmes, not an advertising campaign. tions, demonstrations, images, audio and video How interesting that Innocent drinks has content of all kinds. What most don’t have is a taken its promotion in-house. Here is a content strategy to organise this material and company with a creative director who reput- to orchestrate its re-use and distribution. edly designs an item of packaging every sin- Ownership is a vexed issue. In January gle working day. What do your agencies do 2008 Hasbro hit the headlines because it that really you should be doing yourself? discovered that a Bangalore start-up had provided a third-party plug-in for Facebook users called Scrabulous. The number of 3. A demand to know more about people downloading this application had what companies stand for passed two million and the number of people Third, companies need to develop, enrich playing Scrabulous daily was reported to be and expand their opinions. Most companies half a million. Hasbro called it breach of express very one-sided ones about their copyright and got the application closed products, which makes them predictable. down. On the face of it, the decision is hard The received wisdom has been that having to fathom – most brands would give their opinions about anything else may antagonise eye teeth to be handed half a million daily part of your mass audience. But the mass users for no marketing cost. After all, playing audience is mostly gone now. Instead you a game on a social network is hardly a sub- will find that having an opinion is one of the

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best ways to get the attention of your cus- about how they had responded to the sudden tomers. Of course, in recent years, companies death of Anita Roddick. ‘We opened a book have been forced to develop specific policies of condolence in every one of our stores for recycling, carbon footprint, fair trade, worldwide. We’re still collecting them to food labelling and advertising to children. pass back to the Roddick family.’ Did the But the forward-looking companies are stores close? ‘We discussed it but in the end starting to editorialise about lots of other it was just a few in the Littlehampton area, issues as well. Did you know that Microsoft where she began.’ A measured response but is building server centres in some of the nonetheless personal. colder places in the world – Alaska, Siberia and even Scotland? If you want to keep your computers cool then it helps to put them in a More accessible, more human cool place to start with. If you need energy companies then why not move your plant to North The slipstream from Enron has pushed busi- Africa and put out some solar panels? There nesses the wrong way. An obsession with is more to carbon neutrality than generating compliance led companies to redouble their lists of carbon offset trades. efforts to refine business processes to ensure The less people know about you, the more that humans couldn’t subvert them. they will attribute your mistakes to cynicism But, in doing so many companies have or incompetence. Woolworths has just become more mechanical precisely at the withdrawn its Lolita bedroom furniture range time when they need to become more targeted at 6-10-year-old girls. Apparently human in order to engage with the newly nobody in Woolworths had heard of, much empowered markets. less read, Nabokov’s novel. Clearly they don’t Web 2.0 isn’t about technology: it is about read the tabloids either. What are we the humanising of business. I genuinely supposed to think when we learn that believe that the rate of change often Butterkist’s Simpsons popcorn contains over trumpeted at marketing conferences won’t 60% of the maximum daily salt intake of a continue at the same pace. The way our 3-year-old child? Doesn’t it know what the companies work hasn’t changed significantly intake levels are? Or is this another case where since the Industrial Revolution. The Web it is left to parents to make healthy choices? 2.0 orientated company is going to be Brands who behave in this way are convey- around a lot longer. ❦ ing messages about the brand in spite of what they say in their promotional material. In [email protected] January, Ryanair’s response to the ASA’s ruling against a Ryanair press ad featuring a Lolita- References like character, was that ‘it was censorship by BBC (2008) Online panels are unsustain- self-appointed dimwits’. Hardly a model of able. Online communities are the future. corporate responsibility, but consistent with a Comley, P. & Andersson, M. (2007) Research company that offers low prices but not a lot Communities: the future BBC World Service else – plain speaking that has a branded effect. case study, ESOMAR. There seems to have been a growth in the IAB (2007) ‘% hours per week media number of celebrity business leaders and consumption,’ IAB UK online study. owners who are not short of personal opinions Locke, C., Levine, R., Searls, D. & about the way they conduct their business. Weinberger, D. (2000) Cluetrain This kind of editorialising is much cheaper Manifesto, Perseus Books Group. than paid-for advertising and communicates Mrandmrssmith.com (2007) From the the values of the organisation in a more com- podium at the Luxury Briefing pelling shorthand than mission statements. Conference, November (2007). Opinions travel further and more cost New York Times (2007) The New effectively than promoted messages. I Advertising Outlet – your life [Nike checked with BodyShop Corporate PR story], 14 October.

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THE NETWORK AGE VOGT & KNAPMAN

The anatomy of social networks

By CAROLINE VOGT AND STUART KNAPMAN

Over the last HE HUGE RECENT growth in other providers are judged. MySpace domi- 18 months, social ‘personal web spaces’, such as nated usage and collective consciousness a networking has T MySpace, Facebook and Windows year ago in other markets such as UK, US Live Spaces is changing the very face of the and Canada, but the rise of Facebook has entered internet. Media journalists are falling over now overtaken it. This illustrates how mainstream themselves to write about the phenomenon, unsettled this market remains, along with consciousness, and researchers and marketers are thrilled the power wielded by users themselves in with many brands and perplexed in equal measures by these shaping each brand’s success – if your friends vast networks of self-expression, sharing and move the conversation onto another experiencing connection. network, you will move with them. explosive growth The market is constantly evolving and is and mass press characterised by the frequent emergence of ‘Open’ vs ‘closed’ networks coverage.Vogt and overnight sensations – from Bebo to Second Most users agree, however, that a key Life. Furthermore, the market is defined in distinction between personal spaces Knapman draw on different ways by different people, depend- networks is the extent to which they are a major research ing on their personal web usage and their ‘open’ or ‘closed’. programme interpretation of the term ‘personal space’. Open networks are those that essentially conducted by As such, the market may be considered to allow anyone to connect with anyone else. Microsoft to include blogs, forums, chat rooms, photo- These largely unconstrained networks, such sharing sites such as Flickr, dating services, as MySpace and Orkut, have become hugely describe the video-upload sites such as YouTube, or ‘con- addictive in the past two years due in no key opportunities tact’ sites such as Friends Reunited, as well as small part to the ability to cultivate huge and pitfalls for the dedicated ‘spaces’ providers such as personal networks of ‘friends’. Orkut, while marketers MySpace, Orkut, Windows Live Spaces, still technically an exclusive club accessible Bebo, Hi5, Faceparty, Facebook and by invitation only, is populated by an Friendster and Badoo. incredible 89% of 15–45-year-old web users Users often apply their own structure and in Brazil every week. parameters when considering the shape of However, the major strength of such the spaces market. For example, those inter- networks is increasingly being seen as a ested in music may place MySpace at the weakness too. While open spaces allow centre of their spaces universe, while individuals to connect to others, they also Facebook is now the place they connect with allow others to connect to individuals – with their friends. Windows Live Spaces, mean- all the attendant irritants and dangers. while is increasingly seen as a leader in digi- Spaces users are increasingly considering the tal memories (often communication centred wider external implications of content they around personal photos) and keeping in may place in their personal space. Being touch with closer networks. photographed with a large joint of cannabis, For others, the market is defined by the for example, may gain the user some market leader: Orkut dominates personal credibility among his immediate friends but spaces usage in Brazil to the extent that it a growing number of users believe this kind represents the benchmark against which all of image on a personal space may also lead to rejection from a prestigious college, loss of Caroline Vogt is Head of International Research for Microsoft Digital Advertising Solutions. Stuart Knapman is owner of employment, or even prosecution by under- Essential research. cover agents lurking in the shadows of

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MySpace (The fears appear to be valid: a recent report from The Information Commissioner's Office in the UK found that 71% of 14 to 21- year-olds would be worried about colleges or employers doing a web search on them before they had removed some material). Meanwhile, media coverage of personal spaces abuses has grown. ‘Open’ networks are increasingly being portrayed as hotbeds of fraudsters, paedophiles, identity thieves and the like. The use of personal spaces has been linked to several kidnappings in Brazil and even murders in the USA. These combined concerns appear to be driving traffic (or at least certain types of traffic) away from shared open networks and towards more intimate networks of friends and acquaintances such as Windows Live Spaces or aSmallWorld (an exclusive invitation-only network frequented by pros- perous professionals in the UK and the US). Social networking brands are responding to this by increasing the privacy functionalities Developments such as mobile TV, video to enable users to set limits on who can see calling or interactive news bulletins have their profile page and the content within this. been largely technology driven. However, while the more sophisticated user By contrast, the rise and rise of personal is adept at this, some users are yet to fully spaces such as MySpace, Facebook and control how they are presenting their Windows Live Spaces has been about people personal information online. and their needs, with technology acting as an enabler. In some cases, new behaviours have grown People and behaviour – a true in quirky or unexpected ways: in China a microcosm of society strong sense of etiquette has built up around It is important to note that personal spaces personal spaces, with friends caught in a represent a true microcosm of society. The continuous cycle of reciprocal commenting idea that personal spaces are generated and on one another’s sites. In the UK, personal viewed almost exclusively by lonely spaces addresses are becoming a new social teenagers in their bedrooms is inaccurate. currency, handed out like business cards in During our research, we spoke to a truly pubs and bars, enabling initial contact with eclectic mix of spaces users, from low-tech the girl you have your eye on – without the mothers maintaining personal spaces to dreaded phone call. In Brazil, personal share pictures of their children with friends spaces have become a playground for fantasy and family, to business owners successfully harnessing the power of online social networks to sell their products. The The idea that personal spaces are generated personal spaces user-base is as varied as the population itself. and viewed almost exclusively by lonely In the world of technology, new behavioural trends are predicted on an teenagers in their bedrooms is inaccurate ... almost daily basis, but many predictions are the personal spaces user-base is as varied essentially based upon new functionalities offered by emerging technology. as the population itself

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Relevance – is our brand relevant in this environment? THE RELATIVE IMPORTANCE OF WEBSITES DIFFERS BY COUNTRY Control – will our brand message be manipulated? Context – we can’t manage the context. Intrusion – will users perceive branded messages as intrusive? More flirtatious; Orkut Less networking. Existing Market heavily friend driven. ultra-addictive. Photos of friends are key. Heavily Migration has big impact. There is an awareness that a community has social life are big. etiquette driven. Social coordinating and power and can quickly generate support for documenting are common. a brand but also, more frighteningly, against one. So because individuals create the content, own the spaces, are connected to one another, and share ideas and content on a massive scale, many of the traditional mar- Strong culture of Geographical factor; Photos of social life are big. keting rules no longer apply. personal expression and spaces as entertainment; Spaces as new social blogging; photos as mark important work/external currency. Messenger also Here are some of the important new of creativity. Far less perception factor. drives ‘new dimensions’. socially orientated. guidelines following Microsoft’s research.

Understand consumers’ motivations to use Figure 1 and flirtation – to the extent that marriages specific networking are starting to suffer. Perhaps the most obvious, but to successfully engage in social networks, marketers need Deep-seated human needs but to understand the mindsets and behaviours cultural differences that are occurring within these individual The underlying behaviours seen in personal networks, and think about both the author’s spaces may not be as new as many believe. and viewer’s motivations – as discussed Our research shows that these behaviours earlier. are essentially manifestations of a relatively small number of deep-seated human needs: Express yourself honestly for personal recognition and to express People are using social networks to express individuality or creativity; to belong; to form their individuality, and brands should too! relationships. Critically, our research illustrates an While online social networking is a global acceptance and interest by some (certainly phenomenon, behaviours can differ consid- not all, and largely this is skewed to the erably from one country to the next, driven younger adult sample) of having branded by key cultural differences (figure 1). content on their personal page to portray the ‘self’ they wish to express to their network. To benefit in this environment, brands The challenge for marketers must be willing to have a voice, expression or The move towards social networking creates character. You can use the network to unprecedented marketing opportunities for express a side of your brand that people don’t advertisers to reach both consumers and their normally see (beliefs, values and heritage) networks (a recent Jupiter survey and encourage them to interact with it. But suggested that one third of existing online it is critical to remain authentic. Expression advertisers will launch social networking pro- or characterisation that jars too heavily files for their brands in the next 12 months). against the brand values are likely to either However, social networks are distinctive in not register, or worse, create ridicule, which that the users create and spread the content – in a networked environment will spread their voice can be heard directly and immedi- quickly. ately – and so advertisers are treading with caution into this space. Some of the main Join conversations, create conversations ... main- hesitations from advertisers are as follows: tain good conversations

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The critical development for advertisers is the spaces participants, by: being creative, being shift from monologue to dialogue, and their honest and courteous (ask permission and be opportunity to benefit from dialogue between authentic); being individual; being conscious themselves and users, or within communities. of your audience, and updating regularly. First, stimulating conversation between It is worth noting that some of these social networkers. Two methods of connect- principles require a brand to lose some ing in this way are as follows. control which is an area of great concern for many brands. We have witnessed some Be relevant to the conversation: By under- examples of this backfiring, but we feel that standing the language, group dynamics by following these principles, and remaining and discussions, marketers can develop true to the brand identity and values, there engaging tools that can add to the interac- are great opportunities for brands to engage. tions. We also raise this as an important area for Associate with communities: for instance, all brands to consider going forward. We are Nike’s involvement with Brazilian football. living in a world where user comments on brands can be distributed rapidly via video Second, join the conversation – again there clips or written blogs, and can hold as much are a number of ways to do this: ‘truth’ as traditional messages from the brand owner. Create a space: for example, Canon created a Windows Live Space to form a Beyond Web 2.0: villages of networks community where people interested in A clear insight from the research was the photography could gain recognition, show- unsettled nature of many behaviours in this case and comment on photos, while environment, and this was related to both learning more about a new Canon product. product functionality as well as the relative Create branded properties for personal newness of this phenomenon. There was a association, such as wallpapers, gadgets sense among users that certain sites or and images, as well as those that can be behaviours could be susceptible to fads, easily shared and added to conversation, particularly as usage is so dominated by the such as video clips and gifts. recommendation and presence of friends in the Open up the brand for interaction, for network – once your friends leave, so will you. instance, Coca-Cola has launched a site An illustration of the unsettled nature of aimed at opening dialogue with consumers the environment is the press coverage of (http://www.letsgettogether.co.uk/home). Second Life in autumn 2006 – it became the latest space for journalists and advertisers to Empower participants discuss as an illustration of the changes on While not the case for all, some networkers the web. However, Second Life now seems actually welcome brand association as it to have disappeared from the zeitgeist as furthers their expression of self to their quickly as it emerged. chosen network, or even expresses their own This suggests we might be a little naïve in individual interpretation of the brand – be it trying to predict the shape of the an amplification of the brand or a more marketplace as sites will rise rapidly from subtle representation. For example, we had a respondent who wanted a virtual Adidas shoe on his network so that his friends could doodle on it. He then wanted to be able to We are living in a world where user send it back to Adidas to be produced as a comments on brands can be distributed customised shoe. rapidly via video clips or written blogs, and Behave like a good spaces member can hold as much ‘truth’ as traditional A fundamental principle is that the best spaces advertisers will behave like the best messages from the brand owner

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Most popular social networking sites by total audience (Europe), December 2007

Total visits Total unique Reach Total minutes Total pages Rank Website (000) visitors (000) (%) (MM) viewed (MM) 1 Blogger 51,644 22.3 215 422 160,845 2 Windows Live Spaces 40,051 17.3 579 891 176,538 3 MySpace 26,276 11.4 1,921 4,566 208,768 4 WordPress 25,725 11.1 56 107 48,036 5 Facebook 22,784 9.9 3,745 7,494 334,124 6 Yahoo! Geocities 15,630 6.8 41 93 24,837 7 Skyrock Network 15,499 6.7 2,764 7,013 239,933 8 Bebo 12,978 5.6 3,398 7,940 203,669 9 Six Apart Sites 12,761 5.5 128 189 35,760 10 Dada.net 10,033 4.3 48 96 23,593

Source: comScore

Figure 2 seemingly nowhere, immediately being As consumers will effectively own the held up as the next big thing by media brand, they will do with it as they please. commentators. Brand properties, devices or marketing out- Despite this, we believe that the importance put will increasingly be edited, mashed up or of ‘open’ networks will be diminished, with remixed. And while this undoubtedly gives participants preferring to network with rise to humorous but unwelcome PR in friends or those with a shared connection. We many cases, the best brands will benefit, as feel that the future is more likely to be char- their supporters and advocates create new acterised by ‘villages of networks’, rather than content and ideas that strengthen or homogeneous open networks. These net- rejuvenate them. works will have greater personal relevance, While a number of forward-thinking allow for greater control, and will enable organisations have already invested heavily more relevant and deeper connectivity in steering online word-of-mouth, even between those communities. seeding new ideas, in the future this will become a key element of the marketing mix. What it will mean for advertisers It will become commonplace to recruit Below are some of the key trends we expect to consumer advocates whose role is to seed see emerging. Importantly, we believe these ideas within their respective networks. trends will impact on every kind of product or In essence, online communities will service – not just the cool and the edgy. become new business partners and will be considered a crucial part of the mix – like ad Who owns the brand? agencies, researchers or media planners. Brands are essentially ideas. An idea, it is often said, is only as big as the number of Conversational marketing people who believe it. Social networks There will also need to be a shift towards propagate ideas. As social networking ‘conversational marketing’, which we feel becomes the norm, ideas and beliefs will be differs from ‘word of mouth’ marketing. shaped and shared in this arena. The con- This notion of conversational marketing nected consumer therefore assumes a certain is taking the principles from the previous amount of control of brands. As brand section and becoming part of the conversa- managers are forced to share control tion within networks. This is a significant of their brands to consumer networks, shift for marketers as consumers will a proportion of their work will be undertaken increasingly be seen (and treated) as within these networks, in the battle for ‘friends of’ rather than ‘consumers of’ a consumers’ advocacy and collaboration. brand; the primary role of the marketer

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therefore will be to win friends, become exposures to a particular execution. part of the network, listen and respond to Across all media, consumers will become the feedback as well provide an influential accustomed to choosing when to receive role. For both conversational and word-of- marketing messages, enabling marketers to mouth marketing to succeed, authenticity is deliver highly relevant or time-specific content. critical, as any backlash can be much more damaging. But the potential for an From research to debate organisation to connect and engage will be Consumer contact via social networks will valuable – not just from a marketing not replace all traditional forms of market perspective, but also product development. research. However, we predict that certain areas of research – particularly NPD, brand Things happen even more quickly strategy or deliberative research – will move Vast social networks enable stories to spread from a selective consultation towards more quickly than via traditional word of unconstrained debate within social networks, mouth. Just as social networks have given where the initial ideas or agendas are ‘seeded’ rise to countless overnight successes, they but not controlled by researchers. This will will also be increasingly responsible for the represent a significant handover of power. rapid deaths, of brands that do not deliver As consumers’ allegiances to their what they promise. In this environment, favoured brands will be of increasing poor consumer experiences or negative cor- importance, we believe that the best research porate practices quickly become consumers’ incentives will often be a stake in the brand truths, and even those corporations with the (emotional or actual) rather than £30 in an highest PR spend will find it impossible to envelope or a voucher from Amazon. shape the agenda. Blurring ‘virtual’ and ‘real’ Consumers shape the media plan Finally, there is much debate about Web 2.0 The growth of personal web spaces means and its impact for media owners and that consumers will increasingly become not advertisers alike. Already its impact is being just participants in marketing activity, but felt as content and applications are being also media owners in their own right. Our developed to offer greater user control. research showed that key authors can However, many of the discussions remain generate considerable visitor traffic. These limited to the ‘web’, ‘PC’ and ‘virtual’ key authors, by providing content that is behaviour. Over time, we feel this consumed by others, effectively become delineation of the ‘virtual’ and ‘real’ will fall; millions of super-fragmented distribution along with the distinction between different outlets for media planners. Furthermore, as media platforms. consumers become more confident and savvy, Users talk about ‘chatting with friends’ and spend a greater amount of time in personal rather than say they are using an online spaces that they regard as their territory, they social network – they talk about the real, will increasingly become schedulers and emotional need and behaviour in the same editors of their marketing experiences. way as ‘real’ connectivity and expression. When consumers are equipped with the Equally, the internet will become increasingly tools to control what they consume, when pervasive and accessible anywhere, with they consume it and for how long, a degree web-based applications and browsers for of ad avoidance is inevitable. everything. Ultimately, social networking However, a number of opportunities also will be life itself.❦ arise. Essential’s 2006 research into PVR behaviour reveals that viewers with PVRs This paper is published in full by the MRS and do not avoid advertising per se, rather they is available online at www.warc.com. actively elect to watch ads they believe to be relevant, new or entertaining, deciding for [email protected] themselves the optimum number of [email protected]

Market Leader Spring 2008 51 Walshe.qxd 2/28/2008 16:50 Page 52

BRAND VALUE PETER WALSHE

What price a strong brand?

By PETER WALSHE

As the world of brands becomes TRUSTED BRAND is a that a brand that has forged a strong ever more cluttered and treasured asset, prized by its and enduring relationship with con- A owners and envied by its sumers should provide a financial competitive, the marketer’s task competitors. Companies are bought advantage to the company. of building and maintaining strong and sold for vast sums of money, above brands becomes increasingly and beyond the value of factories, Demonstrating brand value difficult. Senior management patents and processes, on the strength of their brands. But when one Demonstrating a causal relationship wants concrete evidence of return company pays a premium to acquire a between consumer affection and sales on marketing investment. Yet the stable of brands from another, what is it results for a specific brand is not easy. challenge of demonstrating a really paying for? What proof do we Not everyone who buys a brand feels have that strong brands really provide a strong loyalty towards it; some peo- brand’s true value is complex. financial benefit to shareholders and ple may purchase a brand because it’s What proof do we have that brand owners? on sale or because it’s the only one strong brands really provide a Brands are valuable to companies available. Further, many factors financial benefit to brand owners because they are valuable to con- external to a brand will affect its sales sumers. People will pay more for a performance, including business and shareholders? branded product than a generic one, logistics and competitive activity, as and more for a favoured brand than well as wider social and economic alternatives. It seems obvious, then, trends. However, in spite of these Peter Walshe is Global Brand Director at complexities, we can now demon- Millward Brown. strate that, all things being equal,

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stronger brands do outperform Figure 1 Brand equity map weaker brands. To do this, we first summarise the strength of each brand’s relationship Market share 9% Market share 15% with consumers using two key measures: presence and voltage. Share change +5% Share change +3% Volatility 1.1 Volatility 0.4 1. Presence is a measure of how many people know about a brand and understand what it has to offer. Market share 8% A brand with a high level of pres- Market share 3% ence will enter a buyer’s considera- Share change -4% Share change -4% tion set more easily than a brand Volatility 1.5 Volatility 1.6 with low presence. 2. Voltage is a relative measure of how efficiently a brand converts -- Voltage + Presence + people from presence to higher levels of attitudinal loyalty. Because Source: Millward Brown analysis of third-party market share databased on 369 cases. higher levels of loyalty are associated with increased probability of purchase, a brand with a high volt- but these brands are less likely to grow including some that are beyond the age score is positioned well to grow and are actually much more likely to influence of marketers, can affect a its share of sales in the category. lose share than their stronger counter- brand’s performance. parts. Brands in this quadrant are often But where marketing does have By plotting brands (369 in this described as being past their prime. influence, it can play a pivotal role in example) according to their values on The brands in the upper-left shaping a brand’s future. For example, presence and voltage we created a map quadrant tend to be more volatile than consider the now well-known revitali- of brand equity, and used the four the brands on the right-hand side sation story of Marks & Spencer. The quadrants to define four groups of of the map. Many do gain share, chain was suffering from declining brands. Figure 1 shows the average but a fair number decline. The brands sales as shoppers deserted it in favour scores by quadrant on three key in this region, which include the likes of trendier alternatives. Management metrics: market value share at the time of Pret A Manger, H&M, Zara and recognised the need to refresh of the survey confirms the relationship Tom Tom, run the risk that, as they the stores and revitalise product lines, between consumer attitudes and struggle to grow their footprint, they but also realised that M&S enjoyed the relative size of brands in their may move away from the branding a substantial reservoir of consumer sectors; year-on-year percentage share formula that made them successful. goodwill. The IPA award-winning growth describes how well brands These brands are also vulnerable to campaign ‘Your M&S’ tapped in to attract new customers (or sell more to competitive actions, such as aggressive that goodwill, reminding people of existing customers); and volatility – pricing and the introduction of what they loved about M&S and the degree of variation in share year ‘me-too’ product offerings. drawing shoppers back to the stores. on year – measures the stability of The brands in the lower left-hand Customer visits increased by 19 brand income. corner, which have both low presence million over the previous year. Food In comparing these metrics across and low voltage, face a high failure rate. and general merchandise sales rose by the groups, you can see that brands in Among this group, a high percentage 10%. As a result, the share price the upper-right quadrant tend to of brands lose more than 5% of their of M&S rose more than 60%, dominate their product categories, share year on year, with an average loss confounding experts who had predicted with high market shares, good growth overall of 4%. it would never rise again. prospects and low volatility. Brands It is important to emphasise that, such as Coke, Nike and McDonald’s while these numbers represent the are included in this group. By con- average performance of each group Strong brands influence trast, brands in the lower-right quad- of brands, there were exceptions shareholder value rant, which have strong presence but in each quadrant. Therefore, while The M&S example notwithstanding, weaker voltage, tend to lose share year presence and voltage may describe we know that brand sales and compa- on year. The size of their market a brand’s potential, they do not ny share price cannot always be direct- shares helps to reduce their volatility, dictate its future. A number of factors, ly linked. Business efficiency, market

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attributes, and brands that scored Figure 2 Average share price, January 2006 especially well on the statement ‘I have a higher opinion of it than others’ commanded a median price advantage of 11%. $3,280 $1,810 The dimensions of esteem will vary from brand to brand and sector to sector, but the net effect will be the same: the consumers who care about getting the right brand will pay more for a brand if they can be convinced that it offers key advantages over others. Not applicable $1,230 Estimating total brand value By focusing on the strength of a

-- Voltage + Presence + brand’s relationship with the con- Benchmark: $1,000 in the S&P 500 Index, made in 1998, would have yielded a sumers who believe brands are worth shareholder return of $1,310 in 2005. paying more for, it is possible to put a value on the current and future contribution that branding makes to a com- growth and investor confidence have Commanding a price pany’s bottom line. The BrandZ Top an important influence on share price premium 100 Most Powerful Brands ranking, as well. Brands that are already widely known produced by Millward Brown But we have observed that companies need to find other ways to grow. Most Optimor, does this by combining data that own stronger brands do tend to marketers focus on trying to increase from BrandZ, the quantitative brand outperform the market as a whole. their volume share, either by convinc- equity survey, with publicly available Again using presence and voltage, we ing existing customers to buy more, or financial data from sources such as created three portfolios of brands, each enticing new customers away from Bloomberg and Datamonitor. containing between 16 and 40 compa- competitors. However, you would do The BrandZ Top 100 ranks brands nies. The share price performance of well to remember that not all prospec- according to the present value, in these portfolios was then tracked from tive buyers are of equal value. In every dollars, of all future earnings they are 1998 to 2005. sector, there are people who are more expected to generate. Key to the Figure 2 shows that an investment interested in a good price than the calculation of each brand’s value is the in the companies with stronger ‘right’ brand. While consumers in this determination of the ‘Brand brands would have returned far more group are easy to sway with promo- Contribution’, defined as the portion than an investment in a market index tional pricing, they may not be worth of intangible earnings attributable to fund – $1,000 invested in 1998 would the effort, because they are more easi- the value of the brand name itself. have yielded a shareholder return of ly persuaded to switch away by some Developed using data from BrandZ, $1,310 by 2005 on average. other brand. the Brand Contribution score repre- It is equally important to note that Another way to extract value from a sents the share of a brand’s income that companies that owned the strong but brand, which is sometimes over- comes from its most committed lesser-known brands (those in the looked, is to identify and target the consumers. People who choose prod- upper-left quadrant) outperformed customers who pay attention to ucts based on price rather than brand the companies with the high-pres- brands and perceive real differences are excluded, as are those who buy a ence, high-voltage brands. among them. This group is likely to brand without having a strong attitudi- This could have been due to the pay a premium price for a brand if nal bond to it. Luxury goods, like Louis fact that lesser-known brands enjoy they think it is better than others. A Vuitton, Porsche and Chanel, typically one simple advantage over more recent analysis of 209 consumer pack- have the highest Brand Contribution of established ones: they can grow sim- aged goods brands in the US found the brands measured for the Top 100. ply by making themselves known to that consumer esteem was the key To reflect the fact that bigger, more people. underpinning of a brand’s ability to stronger brands tend to have more In some market sectors, this command a price premium. stable income streams, loyalty data can result in a significant increase Respondents were asked to associate from BrandZ is used again to adjust in business. brands with a number of general the discount rate of future earnings.

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A brand earnings multiple is created by combining a brand’s loyalty profile Brands in different places on the brand equity with data on market valuations, as well as the brand’s risk and growth poten- map need different types of activity to thrive tial. Among the brands with the highest short-term growth potential in the and grow. Understanding where your brand’s 2007 rankings are Google, Starbucks strengths and weaknesses are will help inform and Porsche. decisions on strategy and tactics by which to What next? grow brand value All the analysis presented here serves to illustrate the financial benefits to the company provided by strong weaknesses are will help inform that can train current loyal cus- brands. Brands do add value to the decisions on strategy and tactics by tomers to buy the brand on a deal. company, but to maximise that value, which to grow brand value. A far safer and ultimately more you must navigate through an increas- 2. Check business basics – when a profitable strategy is to focus on less ingly complex maze of brand-building brand deviates from its core brand price-sensitive shoppers, who can be activities. No one route will be right strengths, selling more or less than convinced your brand is better than for all brands; in fact, the most effec- its equity might suggest, there may others and worth paying more for. tive actions will differ for each brand be a structural issue that deserves according to its sector and context. more investigation. Pricing may be Strong brands are built on the basis There are three points, however, that out of sync with buyer expectations of sound business practice and a great can be considered by every brand. or distribution may be limiting brand experience. When solid funda- sales, for example. mentals are accompanied by a clear, 1. Understand underlying brand 3. Don’t sell yourself short – the seg- compelling brand proposition and a equities – brands in different mentation of potential customers strong sense of momentum, a brand is places on the brand equity map on the basis of their predisposition likely to increase both sales and need different types of activity to towards brands can guide the shareholder value. ❦ thrive and grow. Understanding targeting of acquisition strategies. where your brand’s strengths and Avoid relying on price promotions [email protected] Top. Advice.

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Market Leader Spring 2008 55 Hoban.qxd 2/27/2008 15:44 Page 56

INTERVIEW MIKE HOBAN A champion of ‘behind- the-line’ marketing

Judie Lannon interviews JUDIE LANNON: Let’s begin by talking shaping how I think of marketing and MIKE HOBAN, customer about how you got into marketing. Was it what I think is important. by luck or by judgement? and brand marketing director JL: What would you say are the most of Scottish Widows, about his MIKE HOBAN: I got into marketing important insights that you gained from completely by chance. I finished these people? experience of bringing university in June 1987, the day after marketing to life in side a the general election and the plan was MH: The most critical insight for me that I was going to work for a was about the customer. If you get it successful financial services Member of Parliament. But he lost right for the customer and you put organisation. his seat in that election, so I was sud- the customer at the heart of the denly looking for a job. decision, you’ll always get it right for I went to Rank Hovis McDougall the business and for the shareholders. and various other companies, and A profound insight that I had from ended up on the marketing team at Eva Eisenschimmel, when we worked RHM purely by chance. at British Airways together, was the importance of everyone in the JL: Everybody has the experience of organisation acknowledging and finding a mentor or, possibly, several acting on that principle. This is people who you know immediately have absolutely essential in service something to teach you and will figure organisations. So it’s not just the in your future. How did that happen marketers who need to be customer with you? focused, it’s not just the front-line people but everyone all through the MH: I have been very lucky because organisation. Certainly this was true in every job that I’ve done I’ve with BA when I worked there. worked for someone who is Marketers talk a lot about above- really good. the-line and below-the-line but we In fact, I’ve now made a conscious don’t talk so much about behind-the- effort to take a long look at the per- line. I’m a big advocate of behind- son that I’m going to work for and I the-line marketing – what I think of take as many references about them as internal marketing. We may spend as they take of me. a lot of time talking to customers but Right at the beginning I worked for then we tend to let HR or some kind Michael Reyner who was one of the of problems department deal with brightest people at RHM and is now internal issues. But that’s not the a partner at McKinsey. When I same as marketing to your people and worked in consultancy, I worked with getting them aligned behind a Peter Grender, who taught me a lot. promise. HR people can’t do that. When I worked at Jacobs, I worked I say to my staff that in a service with Graham Bishop, who’s now runs organisation, your brand tells people his own consultancy. why you’re better than competitors. So throughout my career I’ve Your brand makes a promise to people worked with a large number of peo- and the advertising tells people what ple who have been very influential in that promise is. But it’s the people

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I’m a big advocate of behind-the-line marketing – what I think of as internal marketing. We spend a lot of time talking to customers but then we tend to let HR deal with internal issues. But that’s not the same as marketing to your people and getting them aligned behind a promise. HR people can’t do that

throughout the organisation who a company recognition scheme that that actually the marketer’s job is very deliver that promise. And if those operates at the highest level. Our easy. We go and make ads and all of people get it right then the customers directors choose people every quarter that activity is in our control. But will reward you. But marketers don’t who have excelled in delivering the what they do is really hard. spend nearly enough time on behind- company promise. Most people call this They have to actually deliver the the-line marketing. delivering the brand proposition, but promise and they’ll all have a role to we call it the company promise. play in delivering that promise. JL: How do you do it at Scottish Widows? I think one of the things that Of course people go to work to What is your approach to ‘behind-the- happens in marketing is that people earn a living but everybody wants to line’ marketing? hide behind the clichés. When I do more than simply earn a living, no worked with Graham Bishop at matter where you are in the organisa- MH: The first thing to do is change WHSmith, I learned something really tion. Thinking of your job as keeping the language. We don’t talk about important from him: we can intellec- a promise to customers brings alive to brands and propositions. Instead, we tualise to each other what marketing is the staff at all levels the role that they talk about promises, and we talk about but obviously if the people on play in making sure the customer about customers and the experience the shop floor don’t get it, it ain’t experience is a good one. they have with us. And the second going to happen. thing is that we have created an JL: You have to have a particular internal engagement team, which is JL: The word promise is very powerful, company structure that helps you to solely focused on how we get the isn’t it – by conveying both responsibility, operate in this way and it sounds like message to our people: how do we even duty, it goes further and deeper your structure may be a bit different train, how do we give them the skills than ‘brand proposition’. It makes the from that of other companies. What is it and techniques and resources they relationship with customers that much in the structure that supports the way need to deliver the promise that we more personal. you want to work? make in our advertising. I feel we've been very innovative in this respect. MH: Yes exactly. One of the things that MH: I don’t think I know of another Even to the extent that we’ve introduced we try to get across to our people is organisation that has a brand management

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was in consultancy. So obviously I’ve seen how quite a few different kinds of companies operate. Also when I talk to other people in financial services and tell them about what we are doing and why we’re doing it, nobody I know has anything like it. This phrase behind-the-line marketing is not a widely used phrase because it’s not a widely practised activity.

JL: You’ve been talking about how the company has to have a structure that supports what you are doing. But it also has to have a sympathetic management and culture. What are the features of the Scottish Widows’ culture that support what you want to do as a marketer?

MH: It’s actually very important indeed. When I joined Scottish Widows what was clear to me was that it’s a famous company that’s highly respected, but there wasn’t a clarity about what made it better and different. The main thing that I found when I joined the company was that they are nice people, fundamentally nice people. And I don’t know exactly where that comes from – perhaps, in part, because it used to be a mutual organisation rather than a private company. Also Edinburgh is a lovely place to work and there’s a sort of Scottish prudence and civility about the atmosphere. Also maybe it’s because the company is in the pensions and investment and insurance area, which tends to be more long term, more thoughtful, more cautious. team that are as specifically focused on people in it – a small number of We have built the brand around the internal audience as we are. There people but a massively effective and that fundamental cultural insight: that are those who have internal communi- influential team. this is a nice company that does cations departments, but they’re often things prudently, with integrity and situated in the HR function. And as JL: You sound like you’re familiar with a does things over the long term. That such they are usually about spreading lot of different kinds of organisations. makes it really easy for us to talk to the HR news. Or, an internal Where does this experience come from? people about promises because it’s a communications division will sit phrase that increasingly rings true. within the corporate communications MH: I’ve worked for British Airways, One of the things that I’m really division. But you then find that and when I was in consultancy I proud of with Scottish Widows – and corporate communications organisa- worked with people like Vodafone. I know this sounds a bit sanctimo- tions tend to be outwardly focused Also I’ve worked for Retail nious – is that we live in a world rather than inwardly focused. When I Reconstruction in Newcastle, I where most things are orchestrated joined Scottish Widows, we created worked for WHSmith and I’ve around consumption and debt. But that function and it’s now got four worked with other retailers when I actually what Scottish Widows is

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about is it encourages people to save. can make a difference to the organisa- As a marketer in an And we make our money from people tion. And that’s what people need to saving and investing. think about. It isn’t enough simply to organisation like So if there’s a set of pearly gates at be intellectually correct, you have to the end of this journey, being able to go further and think about how to mine you need to say you’ve helped people save for a invade the rest of the organisation. comfortable retirement is quite a nice You need to demonstrate how you realise that people thing to say that you’ve done. add value to the organisation. skills and the ability So I think that’s where the JL: You have a valuable property in the marketer’s role is hard in any type of to network, Widow, which seems to have been running service organisation. It’s not actually a long time. in doing the marketing, it’s getting persuade, even others to appreciate the value of MH: Yes we have been very much marketing in organisations that are to argue and helped by the presence of the not marketing-led and where other Scottish Widow herself. This is an functions have more power. stand up for what enormously powerful brand icon that people understand and love. There JL: It sounds like you’re really talking you believe in, isn’t another brand in financial about the need for different personality are as important services that has an icon that is held types in service organisations – stronger, in such esteem. So that gives us more extrovert personalities, prepared to as technical a tremendous advantage. The take on a big advocacy role. company’s been around since 1712 marketing skills but the Widow’s only been around for MH: What you need to do as a 20 years, which is considered to be a marketer in an organisation like mine long time but not that long really. is to realise that people skills and Whenever we do research, the ability to network, to produce, The thing that I’m proudest of is customers bring it up and it seems to to cajole, to persuade, even to argue that I love what I do and I get paid convey a really strong message – a and stand up for what you believe for doing something I really enjoy. It message customers like to hear. So in, are as important as technical doesn’t seem fair when you look at much marketing communication marketing skills. some of the jobs that other people consists of messages that organisa- A lot of marketers come in believ- have to do. I suppose it’s not really tions want to push and are rarely ing that as long as they’ve got the pride, it’s more that I feel really lucky built on things the customers want to right answer then they’ll win through, that I’ve managed to do that. see and hear and believe. So for and actually you need to take people everything we do now, I always ask, is with you through organisations that JL: Finally let me ask you about advice. If this something that customers want are not marketing-led. It’s a lot easier somebody who just joined a service com- to hear or is it something that we if you work for a Unilever or P&G or pany asked you what are the three most want to say? Because if they don’t Heinz or Mars – the whole company important things he or she should do, want to hear it, they won’t. is marketing-focused so they are all what advice would you give? on your side to begin with. JL: Introducing new ways or working in a MH: The first is understand the business company usually brings with it certain JL: Thinking about your career so far, model, understand that marketing resistances or difficulties. What problems what would you say was the single thing isn’t just about colours and fonts and have you encountered? that you’re most proud of and what in type sizes. It’s about connecting the your career do you wish you’d done dif- business with its customers and MH: I would say that the biggest ferently? their needs. difficulty anyone in non-fmcg marketing The second is build a network, get faces is that so much of the business is MH: The thing that I wish I’d done to know the accountant, get to know really out of your control. In a retail differently was not to have burnt so the HR people, make them your organisation the buyers are in control. many bridges. Sometimes because I’ve friends and make them your allies. In an airline the customer services been passionate about what I do, I And the third is be a champion for people are in control, in financial haven’t always taken people with me. what you’re doing, make sure that other services the actuaries and accountants But I don’t have many regrets at all. people understand how marketing adds are in control. I’ve moved around a lot but that value to that organisation.❦ As a marketer you have to be an has given me an invaluable insight advocate and a champion for how you into things. [email protected]

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RESEARCH BRIEF CMO SUMMIT

Marketing in a private equity environment

This is an edited version of the Spencer Stuart CMO Summit held in the US, Summer 2007

Private equity firms and their SPENCER STUART survey the American Marketing Association, portfolio companies have become of senior-level marketing and these executives discussed the role of a significant force in many A general management executives, the marketing function in a portfolio carried out in 2007, found that 86% of company, and the career and leadership industries, consolidating the world’s top business executives considerations for marketing leaders. businesses, shifting industry who have never worked in a private economics and competing for top equity environment would consider a Private equity today: talent. Indeed, as the influence of private equity role today. There may be more opportunities the growth imperative private equity has increased, firms for these senior-level marketers. The private equity model of the and their portfolio companies are As the traditional view of private 1980s and 1990s relied on financial attracting leaders from among equity firms as solely focused on cost engineering and sharp cost-cutting to the ranks of the world’s top management gives way to a model that create value. In the past several years, is mainly focused on growth, the however, as investments in private business executives marketing function is playing a more equity have soared and funds face central role in the success of private increased competition and higher equity ventures. prices for deals, it has become more Spencer Stuart brought together a difficult to create value in these tradi- panel of US private equity leaders tional ways. Today, private equity cre- together with consumer goods ates value through profitable revenue marketing leaders to discuss the reali- growth – by leveraging marketing and ties of marketing in a private equity innovation, panellists said. environment. Hosted by Spencer We’re at an all-time high, from my Stuart, Advertising Age magazine and perspective, in terms of the kinds of

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multiples that lenders are willing to If anything, private equity owners feel like you are defending your lend times cash flow, so there’s some want to invest in marketing. They business against many corporate thin air out there. As a result, the are going to cut costs. They’re going demands. You can lose a little focus. types of company that private equity to find cost opportunities generally in A CMO who is in a private equity firms are acquiring now are not the operations, and they’re going to put environment can concentrate on his types of company that were necessarily that money back into the top-line long-term strategy and on growth. distressed like they were in the 80s. growth. That’s innovation, technology It can be harder to grow in a public They don’t have the cost- investment and marketing. company because a long-term management issues.’ CMO, Travelocity look might be the end of the CMO, Burger King next quarter. For senior-level marketers, a private CEO, Honeywell Consumer Growth is the key to valuation these equity role can provide an opportunity Products Group days. The financing is a given. to make a significant difference in the Getting the cost structure right is a business, something that can be more To what extent does the focus on given. The only way you’re going to difficult in a large organisation. results impact the kind of marketing differentiate yourself in the deal initiatives portfolio companies pursue? process is to acquire a company and be The portfolio companies I work with Panellists discussed how their able to finance it – or on the back are thirsty for the best practices of organisations approach spending on end, to sell it and make money – is by industry. The CMOs who are advertising. Private equity, they said, achieving superior profitable growth. exposed to the practices that are in does not have an aversion to advertising Senior Executive, investment firm widespread use today at $20 billion – even to traditional media channels companies, $100 billion companies or that may be less measurable – if the This imperative to profitably grow $180 billion companies are very value to the business and the brand revenue has implications for market- much in demand at $100 million, can be demonstrated. ing, elevating the influence of the $500 million and $1 billion portfolio While private equity has an inherent marketing function in identifying new companies. I could see us implementing bias towards the more measurable opportunities for growth, setting something like the Net Promoter media, marketers can demonstrate the appropriate pricing and effectively Score, for example, across the 28 value of traditional media advertising managing relationships with the most companies in our portfolio in the through the use of more sophisticated profitable customers. span of two months, and start to get econometrics models. monthly feedback on our ability to I’ve been involved with private track, retain and refer our best Private equity understands measura- equity since 1992 and I can tell you customers. The ability to quickly put ble ROI. When we propose spending it’s nothing like it was 15 years ago. a new idea into practice makes it a several million dollars more on dis- The importance of marketing and its very fun environment in which tribution channels that are highly role in figuring out how the company to work. measurable, and we can prove that is going to either evolve the business COO, investment firm on a variable basis it’s going to be model or continue to run a business positive, they’re very open to adding for growth is becoming more and It is the ability to act quickly and to money to the spigot, as long as you more important. focus the organisation’s efforts on can show it continuously remains Senior Executive, investment firm results that appeals to many senior profitable on a variable basis. executives, panellists said. Without the CMO, Travelocity pressure of having to meet quarterly Marketing: friend or foe financial targets, portfolio companies With a reputation as hard-nosed cost are freed to invest in intermediate- The ‘dark side’ of private cutters, private equity, many assume, term strategies that build towards an equity would take a dim view on spending on ultimate exit, which could include a Even as private equity has grown as an marketing, particularly on such initia- sale of the business or an initial public attractive opportunity for executives, tives as brand advertising that may be offering. it may not be for everyone. Portfolio less measurable. But panellists said companies typically have high levels of that – far from putting marketing on Within private equity, the laser focus debt, requiring constant attention to the chopping block – the private equity that you get on your business is cash flow, spending levels, debt repay- firms they have worked with are more tremendous. With big companies, ment and financial targets. Portfolio than willing to spend on marketing there are so many other things companies often lack the human and initiatives that benefit the business. pulling at you that you can sometimes financial resources of large, public

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companies, requiring the leaders of fewer resources. As one respondent put understand the fundamentals of the deal. these companies to wear multiple hats. it, ‘You don’t have time to test the Marketers should strive to understand Finally, despite all the attention market, but you can’t be wrong.’ whether there are structural barriers private equity receives, not every A struggling or unsuccessful portfolio that would prevent the executive team private equity venture is successful; company can be a function of an from being able to operate and grow and a struggling portfolio company inappropriate capital structure on the the business. can be a very difficult place to be, business. As a result of the debt load, there panellists cautioned. can be little room for a misstep Once you understand the inner workings in product launches, marketing and pricing. of the capital structure, you should do all It is important for you to remember of your normal due diligence in terms of as you are presented with opportunities If you make a misstep, you will spend an a brand’s prospects and ability to grow, from private equity, that there aren’t inordinate amount of time in meetings and then do your own arithmetic around many symposiums that invite average with bankers explaining what you’re the valuation to understand what your portfolio or private equity managers going to do about it. That can be a very equity position could potentially be worth. to speak. That’s because most of them serious drain on management time. It also CMO, Burger King underperform. Not every private can affect the amount of cash flow that is equity deal that comes along is a bag available to reinvest in the business – in And while it may not come of money about to fall off the back of the brand and new products – or to retire naturally, marketers need to be a truck for you. There are a lot of debt. It’s not a very fun environment. fluent in the vocabulary of private deals out there that disappoint and MD, private equity firm equity and how the financial that don’t deliver the value creation. engineering works. CMO, Burger King Private equity leaders expect that Improving your chances serious candidates for portfolio com- In the Spencer Stuart survey, 41% How can marketers considering a pany roles will ask questions about of respondents said the pressure on senior role at a portfolio company how much of the equity is allocated to marketing is greater in private equity improve their odds of joining a the management team, as well as the firms compared with a public company. successful venture? Careful due firm’s expectations about the compa- Among the reasons executives gave for diligence about the portfolio company’s ny’s performance. Firms also are look- this view was the ‘results or out’ pres- strategy and financial position and the ing to align executive compensation sure, the significant debt load and focus private equity firm are essential, panel- with the economics of the owners. on short-term cash flow, and relatively lists said. First, it is critically important to

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If you are overly concerned about The onus is on the executive team to company in the future; 86% of respon- your current compensation or bonus push for a plan that provides incentives dents to our survey of marketing exec- package as opposed to making sure broadly. ‘I don’t think you’re going to find utives said they were ‘likely’ or ‘very that you’re compensated fairly private equity firms proactively trying to likely’ to join a private equity backed overall, that’s probably not going look for a democratic distribution of company in the future, citing the to play well. stock’ was a widely endorsed view. entrepreneurial opportunity and the MD, private equity firm Beyond compensation, marketers ability to make a real difference in the should consider whether they believe company’s success. Wise marketing management leaders their work style and preferences are a While private equity represents an also will consider how compensation and good match for the culture and style of attractive opportunity for many senior incentives for the rest of the organisation private equity. marketing leaders, marketing execu- are aligned with the performance of tives considering a portfolio company the company. Successful marketers in private equity role should understand the financial The Travelocity management team environments are the people who can structure of the deal, the opportunity made it a point to ensure that key people deliver results through their marketing. for growth and whether they are well throughout the organisation had a stake in They’re confident that as they wake up suited for the challenges of private the company’s success. every day, no matter what business equity. they’re thrown in, they can drive How do you motivate companies of demand, they can drive market share, About Spencer Stuart 10,000 employees when there’s no they can drive price and they can Spencer Stuart is one of the world’s leading longer a stock price to watch? The great effectively make the decisions about the executive search firms. It is the advisor thing is we’ve been putting a lot of marketing spend. of choice among top companies seeking thought into incentives programmes for COO, investment firm guidance and counsel on senior marketing not just three or ten executives, but sev- leadership needs. Clients include eral hundred executives. If you think FTSE Eurofirst 300, private equity and about it, in a consumer company, every Conclusions pre-IPO companies across a broad range of employee matters. Despite the risks and unique pressures, industries. For further information, please CMO, Travelocity executives with private equity portfolio contact Jonathan Harper or Frank Birkel, companies overwhelmingly indicated co-leaders of the European Marketing that they would join another portfolio Officer Practice.❦

employee matters. Despite the risks and unique pressures, industries. For further information, please CMO, Travelocity executives with private equity portfolio contact Jonathan Harper or Frank Birkel, companies overwhelmingly indicated co-leaders of the European Marketing that-ARKETINGINTHE%RAOF they would join another portfolio Officer Practice.❦ !CCOUNTABILITY h4HIS¬REPORT¬CAN¬MAKE¬A¬STRONG¬CLAIM¬TO¬BE¬THE¬MOST¬IMPORTANT¬ CONTRIBUTION¬TO¬UNDERSTANDING¬ADVERTISING¬EFFECTIVENESS¬OF¬RECENT¬YEARSv 3IMON¬-ARQUIS¬n¬4HE¬'UARDIAN¬

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Market Leader Spring 2008 63 Speaker’s Corner - Melsom.qxd 2/28/2008 11:20 Page 64

SPEAKER’S CORNER ANDREW MELSOM

A quick bluffer’s guide to digital

HERE ARE MANY new words and phrases being used to describe developments on the internet and You must be ready at all emerging digital technologies. Many ofT them sound very silly – Gif, Java and Favicon, times to engage in line-for- for example – but we must never surrender to the whims and fancies of the technophobes. You must line dialogue with the best be ready at all times to engage in line-for-line dialogue with the best of them and completely of them and completely fool them into thinking that you know where it’s at digitally … right? fool them into thinking that It’s the equivalent of sitting at a piano and then you know where it's at, ANDREW playing the opening bars of ‘Crocodile Rock’ (but only the opening bars) and then being able digitally … right? MELSOM to walk away nonchalantly, leaving stunned society wondering in your wake. Conscientious poetry offers a selection pseuds will know what I mean: ‘They fuck you of opening lines up, your mum and dad/They may not mean to, and was used as a derogatory term by the users but they do/They fill you with the faults they of DOS and UNIX and text-based computer to get you started had/And add some extra, just for you’ … heav- systems to describe the former minority who ens, brilliant! But does he know the rest of it? were reaching out for Windows and Apple in any digital Does he even know who wrote it? Macintosh operating systems as an endemic conversation. Now you need to be able to get along with method of day-to-day computer usage. everyone at the digital party. There’s stuff you After that, good know, but other stuff you should appear to know so here’s how you can get the conversation started; ‘In China they like to Baidu things …’ luck, you’re on there’s a brief explanation in each case. It will Google only has 25.9% market share of the your own. only get you so far and, for a few milliseconds, search engine market in China according to the you will be fascinating. If you time it right and research firm Analysis. Baidu.com leads the move on, you will leave behind the possibility China search engine market with 60.1% and that your audience will have known, if briefly, a Yahoo! is third with 9.6% (about the same % guru. Some opening gambits ... share that it has in the UK). There are now 210 million people on line in China, only 5 million behind the US, with 40% of China’s new users ‘It’s a good job those guys at Yahoo have got coming from rural areas. Blue Lithium …’ This does not mean that the Yahoo! people have got some good stuff in and they want to share it. ‘That Philip Zimmermann’s at it again ...’ Yahoo! has acquired Blue Lithium in a $300 million Philip Zimmermann was the creator of deal – an ad network that reaches 120 million users Pretty Good Privacy (PGP).This was designed a month and that uses behavioural targeting to as a human rights tool, and was published free match ads to users on about 1000 websites. This on the internet in 1991. It quickly spread has enabled Yahoo! to more accurately target cus- worldwide as being the most widely used tomers for its advertisers, particularly DM ones. email encryption software in the world. The US Government conducted a three-year investigation into PGP as it held that its own export ‘Well do you know what WIMP actually means?’ restrictions for cryptographic software were You could be showing your age but, digitally, it violated. They dropped their case in 1996. means: Windows, Icon, Menu, Pointing (device), Zimmermann has now developed Zfone, which enables encrypted and secure telephony Andrew Melsom is Managing Director of Agency Insight. over the internet.

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SPEAKER’S CORNER ANDREW MELSOM

Favourite online brands in 2007 of UK internet visits to all categories increased to 2.01% in December. The social networking website accounted for 1 in every 50 UK internet UK top ten visits in December of 2007, with its market share 1. Google peaking on Christmas Day. Marketers struggle to 2. bbc.co.uk ‘factor out’ social networking in determining 3. eBay internet usage and calculating the value of adver- 4. Streetmap tising audiences and the potential worth of 5. Friends Reunited online customers – in other words, to understand 6. Nectar who the online worthless wastrels are. 7. Tiscali As the social networks’ market share increases, 8. TimesOnline so now has their capacity to deliver traffic to 9. Topshop other websites. Social networks accounted for 10. yell.com 7.04% of upstream traffic to all categories in December 2007; facebook.com, bebo.com and Source: YouGov myspace.com were all included in the top ten individual URLs sending traffic to other web- US top ten sites. Here is how to be even more annoying 1. Google with some predictions for 2008 and beyond ... 2. Yahoo! 3. MSN Windows Live 4. Microsoft ‘Trust me, despite the recession, Beijing 5. AOL Media Network will bring about a surge in online spending 6. Fox Interactive Media in 2008 …’ 7. eBay In the US, a combination of the election and 8. YouTube the Beijing Olympics will bring about a spike 9. Wikipedia in online spending according to emarketer. 10. Apple Although the growth rate of online will mature, and growth will reduce to under 30% Source: Nielsen Online, NetView in 2007 for the first time since 2004. In 2008 growth will surge to 29% before declining to 18% in 2009. ‘The growth of MMORPG, globally, I mean … wow!’ The acronym stands for Massively Multiplayer "I don’t know what will actually happen, Online Role Playing Game. Make sure you learn but the presidential election will be won this much. Blizzard Entertainment, Inc. has said or lost on YouTube …" that its subscribers for World of Warcraft, its One of the candidates will be embarrassed by award-winning role-playing game, have continued something that will be multiplied out to to climb – recently passing 10 million people millions on YouTube. It will either be a worldwide. World of Warcraft now hosts more poorly made argument, a poor performance than 2 million subscribers in Europe, more than in a debate or they will physically fall over. 2.5 million in North America, and approximately The event will be one of the deciding factors 5.5 million in Asia. of the election.

‘Can you name the top five video-virals in the ‘The Cybermen will return ....’ last year, in the right order with their agencies?’ Completely emotionless and dastardly race Maybe this one is a bit easier, and it is a good of creatures made up from spare metal and ice breaker. The chances are your audience will plastic and who first appeared on Dr Who in get one of them, but not all. The agency 1966, thus pre-dating the invention of the GoViral reported to the Financial Times that World Wide Web by 24 years. They returned in they rank: (1) Cadbury’s Gorilla: Fallon (2) 1986 to capture Earth since their own planet, Smirnoff – Green Tea Party: JWT (3) Ray-Ban Mondas, had run out of power. It went bad for Catch Sunglasses: Cutwater (4) Blentec – Will it them when they got their sums wrong and, blend? (i-phone in the blender): no agency (5) during a transfer of energy from Earth to Bom chicka wah wah: BBH. Mondas, there was an overload that effectively blew up their planet. But it is a widely accepted view that they will return. ❦ ‘Did you know that Facebook now accounts for 1 in 50 UK web visits ?’ According to Hitwise, Facebook’s market share [email protected]

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