HOW TO PARTNER WITH STARTUPS 11|2017 PUBLISHED BY MediaCom is “The Content + Connections Agency”. We work on behalf of our clients to leverage their brands’ systems of communications across paid, owned and earned channels to deliver a step change in their business outcomes. MediaCom is one of the world’s leading media communications specialists, with billings near US$33 billion (source: RECMA June 2017). We employ 7,000 people in 125 offices across 100 countries. Our global client roster includes Dell, P&G, PSA, Shell and Universal. MediaCom is a member of WPP, the world’s largest marketing communications services group, and part of GroupM, WPP’s consolidated media investment management arm. MANY THANKS TO KEY CONTRIBUTORS JUSTIN CROSS Head of BLINK_innovation, MediaCom UK LIAM BRENNAN Digital Director, MediaCom EWAN GILLESPIE Technology Partnerships, MediaCom DAVE KNOX Managing Director, WPP Ventures 2 BLINK _Innovation INTRODUCTION THERE IS AN EMERGING SPECIALISM IN MARKETING AND IT’S CALLED INNOVATION Of course, to label innovation as a product or service specialism is an oxymoron; innovation happens every day, and it can be created by everyone in an organisation. But ad-hoc innovation is no longer enough; Voice, artificial intelligence, and evolutions in all marketers should be looking at improving transport, retailer and consumer technology, their innovation pipeline. Programmes can for example, alongside the advent of virtual and include working with startups on pilot projects augmented reality worlds, are just the start of the and proof of concepts, hackathons for disruptive potential change. change, and open innovation platforms and accelerator partnerships. Technology is changing the way brands market to consumers and digital marketing is evolving into The difference between innovation that should Technology-Enabled Marketing. The same rigour happen every day and these new programmes is of research and development once applied to structural and procedural: being organised about product development now needs to be applied to innovation and operationalising innovation will the way we market and sell. ensure that real and scalable change will happen across your business. This guide to the innovation ecosystem aims to demystify marketing innovation and the This matters because the average life expectancy digital ecosystem and explain how established for large companies is dropping. According to brands can create a best-in-class Technology Innosight, in 1958 US corporations in the S&P Marketing practice. 500 stayed in the index for an average of 61 years. By 2011 that had dropped to just 18 years, It’s based on the experiences of MediaCom’s and continues to decline with a prediction of 14 BLINK_innovation team, which is helping brands years by 2026. By contrast, companies that place leverage new technology and startups to deliver technology at the heart of their businesses are smaller, faster, results-driven experimentation to achieving exponential growth. reinvent their core businesses and transform their competitive advantage. The destabilisation of established players has caused many corporates to question their business practices and become concerned that they are not designed to respond to this type of threat or take advantage of the opportunity. They now recognise that the innovation gap between a company that effectively harnesses technological change and one that doesn’t need to be closed if they are to survive. This realisation is responsible for the rise of an innovation and business transformation agenda. Marketing is at the centre of this challenge HANNAH MIRZA because digital platforms have become the new Global Head of Media Partnerships, MediaCom storefront and the one that consumers are most likely to interface with. With who and how they connect is in a constant state of flux. 3 BLINK_Innovation WHY YOU NEED A RESEARCH AND DEVELOPMENT APPROACH TO MARKETING INNOVATION (AND HOW TO GET ONE) Brands can only solve a problem if they recognise they have one. But for many companies, the problem is not recognising that their core business has changed due to digital disruption. It’s not even investing in research and development solutions at a product level. The problem is recognising that marketing, In new businesses built on technology, failure creative and media – the tools through which is encouraged, but only so long as it enables they persuade and enable consumers to buy their the company to transition quickly and pivot products and services – are all facing the same in a new direction. In established companies, level of disruption and all need to innovate. adopting this culture of ‘failure as learning’ is often harder to overcome. Jeremiah Owyang’s report “The Corporate Innovation Imperative” found that 78.9% of For many brands, it’s no longer sufficient to plan companies have a dedicated innovation team, for minor variations. But they can overcome such but marketing rarely forms part of the remit. concerns about innovation by putting as much This creates a gap in innovation that is rigour into the research and development of new business critical and marketing solutions as they do the research and needs to be solved. development of core goods and services. For marketers, innovation has often been rooted Many companies have in the 80/20 rule or the Real innovation also recognised that they 70/20/10 approach. don’t need to have all the This is where the majority is daunting, answers alone. The way of activity plays safe by forward is a model where focusing on whatever is and comes with open innovation becomes known to work, while 20% culturally accepted. or 10% of the investment a risk of failure. One where they engage is used to experiment. startups, scaleups and the established internet giants As a media agency, we in new and divergent ways. work across clients and brands across multiple verticals, many This white paper offers a guide to the ecosystem of whom have different expectations of what of innovation and outlines some practical it means to experiment. For some, marketing steps you can take to establish an innovation innovation means trialling new things that have programme that works. It’s about building an never been done before. For others, it means approach rooted in real business problems and making minor variations to what they are tangible outcomes, not just lots of nice trips to already doing. Silicon Valley and Tel Aviv for employee personal development. Unfortunately, most companies tend to play it safe. They are happy to be ‘fast followers’, not For corporations, it’s no longer a case of asking primary risk takers. And that’s understandable ‘should I work with marketing startups?’, but more because real innovation is daunting and comes ‘when should I work with them and how can I with a risk of failure. make sure I am as successful as possible?’. 4 BLINK_Innovation UNDERSTANDING THE ECOSYSTEM 1 STARTUPS, SCALEUPS AND UNICORNS As marketers, you’ve learnt our industry’s vernacular. Concepts such as reach, frequency and ROMI will all be part of your everyday language. The world of innovation has its own language though, which you can recap on page 19. And if you want to be able to talk to venture capitalists, accelerators, incubators, and angel investors, you’ll need to understand it. Innovation and the technology revolution have and many employees at Google, Facebook and become synonymous with startup ecosystems. other tech giants either came from startups or are The proliferation of cheap, accessible hardware leaving to form them. and software has enabled anyone of any age to invent their own careers and companies. All these risk-taking entrepreneurs are hoping for the same thing: they want to build a business And there are countless success stories – that becomes a Unicorn (a startup with a market like the Instagram team of 13 staff who sold to valuation of $1Billion plus). The allure of being the Facebook for $1B, or Kiip creator Brian Wong, next Uber, Airbnb, WeWork, Spotify or Pinterest is who started out at 19, has raised the 30M in too tempting. venture capital funding for a product inspired while travelling. It all fuels the idea that anyone Inevitably, marketing startups come and go can succeed. quickly. Many creators underestimate the market conditions required to break through, and it’s an But not all startups are created equal. unforgiving ecosystem. According to CBInsight, Importantly, small businesses, even ones startups typically die after raising $1.3 million. that are technology enabled, face the same challenges entrepreneurs have always had. Success is reliant on being better, faster, different, easier to work with, relevant to consumers or just plain luckier than your Being agile means being competitive set. able to respond rapidly to It’s great having an idea, but it won’t be successful if it can be quickly replicated innovation shifts. and improved by your rivals. Facebook is infamous for taking the best parts of other companies’ business plans and executing them better as well as making them accessible to a larger user base. The best startups have the agility and talent to survive a cluttered ecosystem, and this is what differentiates them from established companies. Being agile means being able to respond rapidly to innovation shifts in a market – a skill that many larger companies can only dream of. Startups also attract the latest hot talent. It’s hard to find the right combination of business insight, tech knowledge and entrepreneurial spirit 5 BLINK_Innovation How to Approach this Brave New World If you are a corporate wanting to work with startups, it’s important not be dazzled by the bright lights and determination of the entrepreneurs you meet. They might have a bold belief in their own pathway to success, and it can be both inspiring and rewarding to speak with them, but that doesn’t mean you should lose sensibility about doing real business.