Tuesday, November 30, 2010
Monday, November 29, 2010
The Analog v Digital War has upped a notch! From The NYT. Print Magazine Ad Mocks Digital Cousin
The ad is meant to highlight print as preferable to digital.
So which is better: a print magazine or its digital version?
The newest ad for the nation’s major magazine publishers, which have been running a promotional campaign to counter perceptions that print is a dying medium, doesn’t side with its newer medium.
“This is not the Internet. Feel free to curl up and settle in,” begins the two-page spread, which features a full-page picture of a woman lounging in a hammock strung between two palm trees. She does not appear to be reading a magazine.
“Magazines don’t blink on and off,” the ad reads. “They don’t show video or deliver ads that pop up out of nowhere. You can’t DVR magazines and you can’t play games on them.”
Previous ads, which have all carried the tagline “Magazines: The Power of Print,” highlighted the strength of the print business. But they did not go as far as to actually assail the Internet.
This new approach may seem somewhat strange coming from an industry that has spent the last few years tearing down the institutional walls between print and online operations.
There is also all the money and resources — tens of millions of dollars each at the largest publishing companies — that they have poured into creating iPad versions and other digital formats of their titles.
But the ad’s chief creator, Michael A. Clinton, president of marketing and publishing director for Hearst Magazines, said the news that magazines are thriving needed attention even if publishing is an increasingly digital business.
“Magazines didn’t have a consumer problem; they had an advertising problem,” he said, stressing that the fundamentals of the business are solid despite the decline in advertising spending that forced many publishers last year to lay off employees and shut down titles.
“We have to be delivering our content in different ways,” he said, “but in a continually digitized world, the interesting thing is the passion people still have for the print product.”
The campaign, which began in March and was designed by Y&R New York, has been a joint effort by Hearst, Time Inc., Condé Nast, Meredith and Wenner Media, all of which have run the ads in their magazines.
The Association of Magazine Media has also thrown its support behind the ads. Formerly known as the Magazine Publishers of America, the group recently changed its name because its leaders wanted a less print-centric title.
The quote at the end says it all. From AdAge. Marketing: A Brand's Best Bet in Social Media Is Randomness
Stay on top of the news, sign up for our free newslettersWhen It Comes to Facebook, Relevance May Be Redefined
To Create Conversation, Simple, Random and Banal May Be a Brand's Best Bets
by Matthew Creamer
Published: November 29, 2010NEW YORK (AdAge.com) -- May 4, as you may or may not know, is National Star Wars Day, a fact recognized by no less august bodies than the Los Angeles City Council and the Church of Jediism, a George Lucas-inspired denomination that counts itself as the fourth-largest church in the United Kingdom. This year the occasion was also marked by the folks at BlackBerry, who updated their corporate Twitter account to read "May the 4th Be With You."
What does BlackBerry have to do with Star Wars? Not much, other than selling an app that turns your Torch or Tour into a faux light saber. But that didn't stop the tweet from being one of the company's most effective -- a phenomenon Brian Wallace, VP-global digital at BlackBerry parent Research In Motion, had to try to explain to colleagues.
--> "I remember getting emails from my peers asking me why we would post such a thing and was this why we created our Twitter channel," he wrote in an email interview. "My response was that this post reached over 150,000 people, 98% of the posts were positive, most tweets made a positive association with our brand, and it drove a 15% increase in our followers. Now what's the value of all that to our company? For the cost of $0.00 we have increased positive brand sentiment, generated a measurable earned-media value and now have 20,000+ more people who I can share product-related information to. Not a bad ROI."Oreo strikes a balance between promotion and chat on Facebook.
Marketing executives all over the world are having experiences not dissimilar to Mr. Wallace's. Relevance has long been a central tenet of effective advertising, but the rise of Facebook and Twitter are forcing a redefinition of the term. As it turns out, many people in social networks don't want to talk about your product, they just want to talk. We've long known that inserting brands into social-media channels requires a conversational touch, but many are surprised by just how conversational. There's increasing evidence that the most-effective kinds of marketing communications on these websites are simple, random, even banal statements or questions driven by the calendar or the whim of a writer that may not have anything to do with the brand in question.
What are you doing this weekend? What is your ideal vacation? What's your favorite movie or book? On Veteran's Day, BlackBerry posted a simple holiday-related message that received nearly 8,000 likes and more than 500 comments, many of which consisted of veterans thanking the brand and posting their PINs, allowing others to contact them via BlackBerry messenger. Reaction to that update far outpaced other recent ones concerned with products or tips.
It's never been particularly easy or cheap to get 8,000 people to do anything for a brand, but Twitter and Facebook may be changing that. "We're so used to advertising and marketing being highly reviewed, high-production-quality creative on which you spend a lot of money and time, and there's a whole flow built on creating and approving it, said Michael Lazerow, CEO of Buddy Media. "All the sudden, a very simple question, like 'What's your favorite movie?' is engaging your customers and that's your creative. People say 'Whoa.'"
With more than 500 million people on Facebook and Twitter closing in on 200 million users, "stream marketing," as Mr. Lazerow describes it, will be crucial. What goes into those ceaseless rivers, alongside updates and content from friends, said Mr. Lazerow, "is some of the most powerful and important creative that we're going to be dealing with." On the part of the writers, that requires a different ability that's far from what's been traditionally needed in marketing. Said Mr. Wallace, "You need to be skilled at understanding how a seemingly random-type message can -- in the end -- contribute to the company brand and/or behavioral objectives."
Mr. Lazerow, whose company makes tools that help brands manage their Facebook presences, estimates that roughly two-thirds of a company's Facebook content should be conversational in nature. The exact ratio, however, depends on what it's trying to achieve. While there's no across-the-board data on how conversational posts compare to promotional ones, he said the evidence is clear. He pointed me to a few different examples on Facebook where those conversational posts produce eight to 12 times the response of more brand-oriented ones. "It's not always about your brand," he said. "It's about why people are there to connect with other people, [gettng them] to connect with you because they like you. The numbers speak for themselves."
Oreo is masterful in handling that balance between promotion and conversation. Consider the responses from several recent questions:
- "Ever try dunking an Oreo cookie with a fork or anything else?" 8,200 likes and 2,300 comments
- "Pick a flavor, any flavor! If you could create a new Oreo cream flavor, what would it be?" 7,100 likes, 12,500 comments
- "Pop quiz: Twist, lick, then..." 6,500 likes, 6,200 comments
In case you're wondering, these numbers aren't far off what posts on Lady Gaga's page might do. Not bad for a 98-year-old cookie brand. Oreo's Facebook fan base has grown by 3 million since late October, giving it over 15 million fans. It's one of three brands, along with Coke and Starbucks, to penetrate a top 25 dominated by celebrities, entertainment properties and Texas Hold Em Poker.
The Kraft cookie's Facebook presence originates from a department at the digital agency 360i, which, with a dozen writers who work off pre-planned editorial calendar, is as organized as any publication and is now bigger than many. That department reaches more than 30 million fans across a long list of brands, including Coca-Cola, JC Penney, Lysol and Jell-O. Those writers typically have experience talking to people on behalf of brands, often as community managers in non-social network settings.
"When you have ad agencies or copywriters writing your Facebook copy, it ends up being promotional in nature and if you're not inspiring feedback no one's going to care," said Sarah Hofstetter, senior VP-emerging media and brand strategy at 360i. "You can only talk about your product so much. Balance that with you're not trying to be their best friend, you're trying to achieve some marketing objective."
For Oreo, as Ms. Hofstetter explains it, those objectives are both fan-base growth and engagement on the page. For other clients, it's a whole different thing. Bravo, for instance, is interested in clicks and views of the videos of its shows. BlackBerry's Mr. Wallace said that success is about getting likes, or shares, or comments. Or maybe the person will click on an ad or post a photo or video he or she took with a BlackBerry.
"In the end it's behavior-based," said Mr. Wallace. "A Facebook fan has no value. Getting a Facebook fan to do something does."
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From The NYT: Mobile Banking in the Emerging World
BERLIN — In Tanzania, a hospital sends money by text message to women in remote areas so they can pay for bus fare to travel for critically needed surgery. In Afghanistan, the government pays its police officers by text message to skirt corrupt middlemen. In Pakistan, the biggest financial network is not a bank, but a unit of Telenor, the Norwegian mobile phone operator.
While storefront bank branches and online banking are ubiquitous in the United States and most developed countries, in less-developed countries only a small fraction of the population is served by banking services.
Mobile banking first appeared in the Philippines in 2001, when two operators, Globe and Smart, introduced their own domestic payment plan. In most mobile banking models, the person sending a payment sends the amount by text to the recipient’s phone number.
The person receiving the payment goes to an authorized local agent, typically a mom-and-pop retailer that also sells prepaid mobile phone cards, and withdraws the cash.
In parts of Latin America, Africa, the Middle East and Asia, more than 90 percent of people typically carry at least one mobile phone, a technological tether that mobile operators are exploiting to become retail bankers to the emerging world.
“Five years ago, there was hype around mobile banking but no real numbers in terms of customers,” said Mung Ki Woo, vice president of electronic payments and transactions at Orange, the wireless unit of France Télécom. “Now we are starting to see significant numbers. I think the potential of mobile banking is huge, going forward.”
Since December 2008, Orange has signed up one million people for its Orange Money mobile banking service in six African countries: Mali, Senegal, Ivory Coast, Madagascar, Kenya and Niger. In Kenya and Tanzania, subsidiaries of the British mobile operator Vodafone now process more international wire transfers than Western Union.
In Kenya, Vodafone has 13 million customers and in Tanzania, six million customers for its mobile banking service, which generated 670 million transactions last year, primarily for domestic or international money transfers, said Peter Cornforth, a Vodafone business development manager for the service, called M-Pesa. Pesa is the Swahili word for money.
In Kenya, coffee growers routinely pay their field workers by text message, and in Tanzania, Vodafone customers pay the national electric utility, Luku, by text. In Dar es Salaam, Tanzania, a rehabilitation hospital called C.C.B.R.T. sends bus fare via texts to women who travel to it for surgery to correct fistula incontinence, a common side effect of childbirth.
“Apart from being a serious new business for operators, these services for the first time are connecting people to critical banking services, and making positive changes” in their lives, said Mr. Cornforth, who is based in London.
Telefónica, the Spanish operator that is a market leader in Latin America, plans to start mobile banking services in four South American countries next year. Globally, the number of mobile banking users is expected to surge more than sixteenfold, to 894 million by 2015 from 55 million in 2009, according to Berg Insight, an industry research firm based in Stockholm.
Almost all of those mobile banking customers — 78 percent, or 697 million people — are in Asia, Africa, the Middle East and Latin America, according to Berg Insight. In Europe and North America, mobile banking remains secondary to personal computer-based Internet banking. Even so, the on-the-go convenience of mobile banking is attracting users in the West.
About 10 percent of U.S. bank consumers use mobile banking, usually to transfer money, make payments or monitor bank accounts, said Teresa A. Epperson, a partner at Mercatus, a Boston company that advises banks and financial institutions. As more U.S. consumers buy smartphones, mobile banking’s market penetration is expected to exceed online banking’s, which currently is about 50 percent, by 2015, Ms. Epperson said.
“This is only going to get bigger, in our opinion,” she said.
The potential is great in Latin America, where only 35 percent of the people have bank accounts, only 19 percent have bank cards but 90 percent have mobile phones, said Pablo Montesano, the head of mobile financial services at Telefónica.
Investors are also beginning to recognize the potential of the technology. In September, a leading maker of mobile banking technology for SIM cards, a French company called Gemalto, bought Trivnet, an Israeli company that makes financial transaction management software for mobile operators, for $40 million.
Only six months earlier, Trivnet had won the contract to supply mobile banking technology in Latin America to Telefónica.
Amit Mattatia, the Trivnet chief executive, said that 10 to 15 operators next year are planning to start large mobile banking operations in big markets in Latin America, the Middle East and India. Citing confidentiality, he declined to identify the operators.
“Because so much of the world is under-banked, consumers want these services very much,” Mr. Mattatia said.
As the cost of a simple mobile phone has fallen below $20 in most of the world, mobile banking is becoming affordable in emerging markets.
“This is now poised to explode in the developing world,” said Philippe Vrignaud, a senior vice president in Singapore for Gemalto.
In Pakistan, where only 14 percent of the people have bank accounts, Telenor introduced mobile banking in November 2008.
The service, called Easypaisa (100 paisa equal a Pakistani rupee), now has 500,000 active users who sent transactions worth a combined 5.5 billion rupees, or $64.1 million, in the first quarter of this year.
Most were domestic money transfers, which are limited to $120 a transfer. Telenor exacts a fee of as much as 5 percent of the transaction.
Easypaisa is available at 11,000 independent retail agents that make up Telnor’s distribution network, which outnumber the 8,300 combined branches of all Pakistani banks.
Within three years, Telenor plans to expand the number of retailers in its network to 36,000.
“This service is about addressing the unmet needs of the consumer,” said Aamir Ibrahim, a vice president and chief strategy officer at Telenor Pakistan. “I think this is suitable for all of our markets everywhere.”
Sunday, November 28, 2010
Instant-gratification is at times overrated. From The Guardian: Daily Mail's message about media success in the long-term
The Daily Mail HQ in Kensington. Ownership matters when it comes to taking the long view. Photograph: Graham Turner for the Guardian
A smiling editor of the Mail Online, Martin Clarke, found himself suddenly applauded at an editors' conference a few days ago. He could claim growth nearing 55% a year, a record 50 million unique visitors in October, the prospect of overtaking the New York Times as the world's biggest newspaper site – plus profitability. Now factor in year-end results for all the Mail group and applaud again. Pretty stunning, smileworthy stuff.
You don't have to like what the Mail says to be duly stunned. You may, indeed, wish to denounce it from the nearest soap box. But you'd be stupid not to trawl through those results and draw some lessons. Pre-tax profits up by 23% to £247m. Profits at Associated News, which covers the national papers, up 54% to £95m. Ad revenues recovering from recession by a clear 7%; circulations – though a little queasy – among the best performers in town. What's not to like?
Stand back, with the benefits of analysts' wisdom, moreover, and the lessons don't finish there. By 2011, on this form, newspaper profits across the entire group will only amount to 34% of the total. In 1996, they were 87%. In short, the move into business-to-business areas and related fields has been a signal success. Newspapers – bar the failure to sell regional titles when the going was good – aren't anywhere near dead: but they survive within a much broader base.
And there's one more lesson to add, a lesson about newspaper ownership. The family Harmsworth, whose ownership of the crucial voting stock in the omnipotent Daily Mail and General Trust gives them the decisive voice in the company's affairs, has often taken stick for investing too much in journalism, keeping staffing ratios too fat, not pushing short-term profitability to the maximum. For, in short, not trying to run all the time when it could afford to stop and think.
But now, in the wake of an almighty crunch, you can look around Europe and search vainly for major newspaper groups with a share price record to rival the Mail. The long view counts. The ability to take that longer view can mean money in the bank. The often despised dynasty principle can deliver the goods – if the dynasty sticks together. It may not be an ownership model that others can easily replicate: but don't fail to count its blessings. More cautious sounds of applause, off.
Thursday, November 25, 2010
Will 2011 finally prove this right? From The Paypers. Micropayments: a new growth opp for media, entertainment?
Micropayments: a new growth opportunity for media and entertainment companies ?
Published: Wednesday 24 November 2010 | 09:43 AM CET, The Paypers
After various attempts to develop efficient strategies for digital content monetization, the “micropayment” model appears to emerge as a key revenue growth opportunity for global media and entertainment (M&E) companies, a recent report notes. Nevertheless, a universal approach to providing micropayment services is not possible, as consumer habits in different countries vary, the same study points out.
The global research conducted by international organisation Ernst & Young and based on various data sources of consumer spending habits in 12 countries, has revealed that there are major disparities in consumers’ free and transactional online behaviour, with cultural spending habits rather than broadband speed being the key element to the success of paid content models. The report identifies the UK, France, Japan and the US as markets where paid online content is most likely to thrive.
Behaviour patterns vary between countries
According to the report, on average, 54 percent of consumers in the 12 countries under review access free online activities, such as online videos and social networks. But behaviour varies widely between countries. For instance, South Korea ranked highest, with 70 percent of internet users accessing free online content, followed by 61 percent in China, 60 percent in India, and the UK and Japan, with 45 percent and 43 percent respectively. With 57 percent, the US was the only non-emerging country among the top five.
Consumer behaviour differences particularly evident in digital music sales
Companies focused on finding an efficient micropayments model to monetize their digital content should also take in consideration indicators such as sales and downloads of digital music, the report has shown. Findings of the research suggest that internet users in the UK, Japan and the US spend considerably more on digital music than users in the other countries in the study, yet they have among the lowest levels of online music penetration.
In the UK, for instance, internet users spent an average of USD 6.30 (GBP 4) on digital music products in 2009 with18 percent of the population using the internet to access digital music, both paid and free, according to Ofcom, the UK independent telecommunications regulator and competition authority for the communication industries. Across the globe, Japan had a high per user spend (USD 10.12) with a relatively low penetration (25 percent), indicating that Japanese are paying for their music content more than in any other country. China has an extremely high penetration (83 percent) with a very low per user spend (USD 0.20).
According to the report, a state of equilibrium has not been reached yet between internet users accessing music online for free and those paying for it. Nevertheless, a sector that seems to have found the right balance is the online gaming industry, which has already developed various paid content business models for social gaming, generating revenues through microtransactions for virtual goods.
Processing costs still a major challenge
The virtual goods industry presents a significant potential of expansion. Findings of the research have shown that in the US, the market is set to reach USD 1.6 billion in 2010. Of that, the social gaming market alone contributed USD 835 million. China has over 105 million gaming users. Their virtual goods sales in 2009 were estimated at USD 2.2 billion.
Nevertheless, in order for the micropayments system to become widely adopted across the M&E industry, processing costs need to decrease, the report outlines. At present, the cost of clearing and settling a payment still amounts to approximately USD 0.20 (12 pence) per transaction, a figure which is significantly high for a payment of USD 1 or less.
The Paypers is the leading independent news source for the global e-payment community, covering all significant news in the online and mobile payments industry, as well as closely related topics. The Paypers provides you need-to-know information about the payment industry: real time news, research, analysis, statistics and various articles. More info? Visit: http://www.thepaypers.com or e-mail: info@thepaypers.com
Tuesday, November 23, 2010
Yet more proof old and new media MUST mix. From MediaLife: For radio, the promise of digital coupons
medialifemagazine.com
Radio
For radio, the promise of digital coupons
By Mike Stern
Nov 22, 2010 - 1:02:19 AM
Radio has long worked as a medium for driving consumers into stores, and quite well. Think of the Pizza Hut spot airing during afternoon drive time, targeting commuters on their way home as they ponder what they’ll be having for dinner.
Zip, off the expressway they go, aiming for the Pizza Hut closest to the house.
Now radio is coming up with a new way to drive consumers into stores, and in a way that merges this very traditional medium with the newest of media, digital couponing, where stations offer listeners deals on advertisers’ products and services.
Example: A coupon, delivered via email, offers $15 off dinner at a local Italian restaurant or 10 percent off on dog grooming services. The offers are sent to a station’s list of dedicated listeners.
It’s the hot new thing in radio, and it comes at a good time. While the economy is coming back, advertisers, local advertisers in particular, are still looking for opportunities that deliver results they can measure directly, in the form of revenue.
Couponing benefits stations in a number of ways.
It’s another stream of revenue, but beyond that it gives the station something else to sell, a new product, so to speak, and the opportunity to sign on businesses that have not advertised in the past. Once they come in on a coupon deal, they’re ripe for up-selling.
“Some of our partners have attributed broadcast buys from new clients to being able to use digital couponing as a conversation starter,” says Dean Pederson, the founder and principle of Dialog, a platform stations can use to execute coupon programs.
Digital coupon offers also strengthen a station’s bond with listeners by giving them chance to save money during tough economic times.
In the last few years digital couponing has seen huge growth, from an estimated 38 million users in 2008 to over 45 million in 2009, or about 14 percent of the U.S. population, according to the Web site Coupons.com.
Further, of those 45 million people, more than 13 million exclusively use digital coupons, eschewing the traditional paper coupons found in newspapers.
What’s new is the increasing use of radio. Much of the early couponing was through online-only vendors.
Radio stations bring to couponing their tremendous reach, which makes the service that much more attractive to businesses deciding whether to sign on.
“As radio stations get involved it could really change the makeup of who interacts with these coupons,” says Jim Nichols, a senior partner at the strategic marketing services group Catalyst SF. “I’ll bet it will broaden the appeal.”
The two primary types of programs stations are getting involved with are deal-of-the-day programs, known as social couponing, and more traditional retail discount programs.
Social couponing originated in Chicago with a company called Groupon, but the model is being widely copied.
The system is fairly simple: Consumers opt in to receive a daily email detailing that day’s deal. But there are two all-important catches that are really at the heart of the deal. The offer is good for one day only, and it’s only good if a minimum number of people sign up for it.
The effect is to set off a user-driven viral campaign as consumers who are interested in the offer reach out to friends to come in, lest they see the deal evaporate.
The consumer then buys the discount coupon online, and the revenue is split 50-50 between the station and the business offering the coupon. The station pays the third-party firms that execute the program.
The advantages for the business are several. It receives the revenue upfront, before it delivers on the good or service, and it gets the benefit of the radio spots promoting the deal, without laying out a penny.
“If we sell one or 1,000 [coupons], there is tremendous value in the promotional spots from the radio station,” explains Dialog’s Pederson.
The best candidates are service businesses where costs are fixed so the extra traffic is all additional revenue.
For businesses selling goods, such as restaurants, Nichols suggests doing the math carefully when crafting an offer. If the average bill at a restaurant is $40, he suggests offering a deal in the range of a coupon for $30 of food for $15 so the additional $10 in spending helps mitigate the cost of the offer.
He also suggests using the program to drive business in non-peak times. “The idea of a marketing technique that could not only fill my restaurant on a slow night but could result in return traffic and has guaranteed revenue is tremendous.”
The other type of digital couponing stations are exploring involves more traditional retailer discounts.
For example the web site Edeals.com recently signed on to provide digital coupons for a number of radio stations, including properties owned by CBS and Journal Broadcasting.
Edeals.com COO Mike Palso says radio stations had been toying with this type of program but hadn’t fully committed. “They had dipped their toe in the water but hadn’t put in the type of time, effort or funding to really get traction.”
Partnering with companies like Edeals.com enables stations to provide listeners with access to discounts from national retailers and local businesses personalized with the station’s branding.
Each station’s page features individual branding, including having demo-appropriate deals featured prominently.
Palso says partnering with companies like his or Dialog really helps stations take full advantage of this opportunity.
“When new technologies comes out we are already testing those things and have it available allowing them to stay right on the edge without having to make a big investment to be there,” he says.
© 2010 Media Life
Saturday, November 20, 2010
Why Twitter matters for media organisations | Alan Rusbridger | Technology | guardian.co.uk
I've lost count of the times people – including a surprising number of colleagues in media companies – roll their eyes at the mention of Twitter. "No time for it," they say. "Inane stuff about what twits are having for breakfast. Nothing to do with the news business."
Well, yes and no. Inanity – yes, sure, plenty of it. But saying that Twitter has got nothing to do with the news business is about as misguided as you could be.
Here, off the top of my head, are 15 things, which Twitter does rather effectively and which should be of the deepest interest to anyone involved in the media at any level.
1) It's an amazing form of distribution
It's a highly effective way of spreading ideas, information and content. Don't be distracted by the 140-character limit. A lot of the best tweets are links. It's instantaneous. Its reach can be immensely far and wide.
Why does this matter? Because we do distribution too. We're now competing with a medium that can do many things incomparably faster than we can. It's back to the battle between scribes and movable type. That matters in journalistic terms. And, if you're trying to charge for content, it matters in business terms. The life expectancy of much exclusive information can now be measured in minutes, if not in seconds. That has profound implications for our economic model, never mind the journalism.
2) It's where things happen first
Not all things. News organisations still break lots of news. But, increasingly, news happens first on Twitter. If you're a regular Twitter user, even if you're in the news business and have access to wires, the chances are that you'll check out many rumours of breaking news on Twitter first. There are millions of human monitors out there who will pick up on the smallest things and who have the same instincts as the agencies — to be the first with the news. As more people join, the better it will get.
3) As a search engine, it rivals Google
Many people still don't quite understand that Twitter is, in some respects, better than Google in finding stuff out. Google is limited to using algorithms to ferret out information in the unlikeliest hidden corners of the web. Twitter goes one stage further – harnessing the mass capabilities of human intelligence to the power of millions in order to find information that is new, valuable, relevant or entertaining.
4) It's a formidable aggregation tool
You set Twitter to search out information on any subject you want and it will often bring you the best information there is. It becomes your personalised news feed. If you are following the most interesting people they will in all likelihood bring you the most interesting information. In other words, it's not simply you searching. You can sit back and let other people you admire or respect go out searching and gathering for you. Again, no news organisation could possibly aim to match, or beat, the combined power of all those worker bees collecting information and disseminating it.
5) It's a great reporting tool
Many of the best reporters are now habitually using Twitter as an aid to find information. This can be simple requests for knowledge which other people already know, have to hand, or can easily find. The so-called wisdom of crowds comes into play: the 'they know more than we do' theory. Or you're simply in a hurry and know that someone out there will know the answer quickly. Or it can be reporters using Twitter to find witnesses to specific events – people who were in the right place at the right time, but would otherwise be hard to find.
6) It's a fantastic form of marketing
You've written your piece or blog. You may well have involved others in the researching of it. Now you can let them all know it's there, so that they come to your site. You alert your community of followers. In marketing speak, it drives traffic and it drives engagement. If they like what they read they'll tell others about it. If they really like it, it will, as they say, 'go viral'. I only have 18,500 followers. But if I get re-tweeted by one of our columnists, Charlie Brooker, I instantly reach a further 200,000. If Guardian Technology pick it up it goes to an audience of 1.6m. If Stephen Fry notices it, it's global.
7) It's a series of common conversations. Or it can be
As well as reading what you've written and spreading the word, people can respond. They can agree or disagree or denounce it. They can blog elsewhere and link to it. There's nothing worse than writing or broadcasting something to no reaction at all. With Twitter you get an instant reaction. It's not transmission, it's communication. It's the ability to share and discuss with scores, or hundreds, or thousands of people in real time. Twitter can be fragmented. It can be the opposite of fragmentation. It's a parallel universe of common conversations.
8) It's more diverse
Traditional media allowed a few voices in. Twitter allows anyone.
9) It changes the tone of writing
A good conversation involves listening as well as talking. You will want to listen as well as talk. You will want to engage and be entertaining. There is, obviously, more brevity on Twitter. There's more humour. More mixing of comment with fact. It's more personal. The elevated platform on which journalists sometimes liked to think they were sitting is kicked away on Twitter. Journalists are fast learners. They start writing differently.
Talking of which…
10) It's a level playing field
A recognised "name" may initially attract followers in reasonable numbers. But if they have nothing interesting to say they will talk into an empty room. The energy in Twitter gathers around people who can say things crisply and entertainingly, even though they may be "unknown." They may speak to a small audience, but if they say interesting things they may well be republished numerous times and the exponential pace of those re-transmissions can, in time, dwarf the audience of the so-called big names. Shock news: sometimes the people formerly known as readers can write snappier headlines and copy than we can.
11) It has different news values
People on Twitter quite often have an entirely different sense of what is and what isn't news. What seems obvious to journalists in terms of the choices we make is quite often markedly different from how others see it – both in terms of the things we choose to cover and the things we ignore. The power of tens of thousands of people articulating those different choices can wash back into newsrooms and affect what editors choose to cover. We can ignore that, of course. But should we?
12) It has a long attention span
The opposite is usually argued – that Twitter is simply a, instant, highly condensed stream of consciousness. The perfect medium for goldfish. But set your Tweetdeck to follow a particular keyword or issue or subject and you may well find that the attention span of Twitterers puts newspapers to shame. They will be ferreting out and aggregating information on the issues that concern them long after the caravan of professional journalists has moved on.
13) It creates communities
Or, rather communities form themselves around particular issues, people, events, artifacts, cultures, ideas, subjects or geographies. They may be temporary communities, or long-terms ones, strong ones or weak ones. But I think they are recognisably communities.
14) It changes notions of authority
Instead of waiting to receive the 'expert' opinions of others – mostly us, journalists — Twitter shifts the balance to so-called 'peer to peer' authority. It's not that Twitterers ignore what we say – on the contrary (see distribution and marketing, above) they are becoming our most effective transmitters and responders. But, equally, we kid ourselves if we think there isn't another force in play here – that a 21-year-old student is quite likely to be more drawn to the opinions and preferences of people who look and talk like her. Or a 31-year-old mother of young toddlers. Or a 41-year-old bloke passionate about politics and the rock music of his youth.
15) It is an agent of change
As this ability of people to combine around issues and to articulate them grows, so it will have increasing effect on people in authority. Companies are already learning to respect, even fear, the power of collaborative media. Increasingly, social media will challenge conventional politics and, for instance, the laws relating to expression and speech.
Now you could write a further list of things that are irritating about the way people use Twitter. It's not good at complexity – though it can link to complexity. It can be frustratingly reductive. It doesn't do what investigative reporters or war correspondents do. It doesn't, of itself, verify facts. It can be distracting, indiscriminate and overwhelming.
Moreover, I'm simply using Twitter as one example of the power of open, or social media. Twitter may go the way of other, now forgotten, flashes in the digital pan. The downside of Twitter also means that the full weight of the world's attention can fall on a single unstable piece of information. But we can be sure that the motivating idea behind these forms of open media isn't going away and that, if we are blind to their capabilities, we will be making a very serious mistake, both in terms of our journalism and the economics of our business.
Fascinating treatise on Twitter.
Friday, November 19, 2010
First read this NYT piece 2 years ago - and the truth it tells still applies: Google Seduces With Utility
Not long ago, someone invited me out to the Googleplex, the nickname for Google’s headquarters in Mountain View, Calif.
The fact is, I already live there. And it’s starting to worry me.
Having grown up in the vapor trail of the ’60s, I learned to be wary of large, centralized organizations, and yet Google, a huge enterprise with a market value of $80 billion, is my ever-present wingman.
My increasingly exclusive relationship with Google started with search, of course, when I switched from Yahoo years ago. Eventually I accepted an invitation to Gmail, with its oodles of storage and very granular search function, and it has oddly become my default database — deep, rich and personal.
I added the company’s calendar because I needed one I could share both inside and outside of work. And then the calendar and e-mail started talking to each other — and to me, I guess — by asking whether I wanted to schedule an event that was mentioned in an incoming message. Although it sort of creeped me out, the answer was yes, which it almost always is when it comes to Google.
Google has begun to crowd out other brands. I was a loyal MapQuest guy, but as Google Maps added features, it seemed cumbersome to go elsewhere. And even something as specific as HopStop, an elegant tool I used to navigate the New York subways, is left behind as Google gets smarter about the difference between the N-R line and the A-C-E.
I’m getting ready for the Oscar season, so I needed to set up some relevant R.S.S. feeds, and Google Reader was handy, so there’s that. It’s easy to update my status under my chat icon while I’m on Gmail, so I tend to update that mood ring with more frequency than my Facebook status. When Google acquired YouTube, it gained another chunk of my mindshare.
And then a few weeks ago, I noticed there was a steady march of new little camera icons on the Gmail chat function. I looked around and saw a colored button at the top of my e-mail page that was a link to Google voice and video chat. I clicked it, hit the download button, and within 20 seconds, I was ready to go.
It’s not the first video chatting that I have done, only the first that actually worked well. Within minutes of downloading, I was talking live on my PC to my 11-year-old daughter on a Mac, a process that in the past would have involved everything short of splitting the atom. Then I told my twins away at college and yes, my mother-in-law about it, and before long we were all chatting away in an easy, friction-free future.
Score another one for the Googleplex.
You could credit Google, the largest ad seller in the world, with being a brilliant marketer and advertiser, but when was the last time you saw an ad, not served up by Google, but about Google? Not very often. That’s largely because Google’s Web platform, in all of its high-functioning glory, is its marketing.
“The most powerful form of advertising is to be exceptional,” said Ranjit Mathoda, an investor and technologist who blogs at Mathoda.com. “Google has created an ecosystem that perpetuates itself by being useful.”
Take video chat. Many other companies would take that kind of quantum leap and shout it from the rooftops, but Google just did a smallish blog post about the new feature and left it at that.
“We do have a philosophy that our products should speak for themselves. We tend not to make a lot of noise,” said Jeff Huber, senior vice president for engineering at Google.
As always with Google, the price point is appealing: zero, if you don’t count the amount of personal data that I am trading for all that utility. With Google, it is always simple, and any engineer will tell you that simple is hard. There had been a lot of talk within Google about creating video chat as a PC-only application, a much easier endeavor for the company, but it would not have been simple for the consumer.
If Google owns me, it’s probably because I am in favor of what works.
“I’m glad to hear it,” said Eric E. Schmidt, the chief executive of Google, who was in New York last week. “We want a little bit of Google in many parts of your life.”
Mission accomplished, at least on my desktop, but I asked Mr. Schmidt if I shouldn’t be worried that I am putting all of my digital eggs in one multicolored, goofy-lettered basket.
“That depends on what you think of our company and our values,” he said. “Do you believe we have good values?”
Mr. Schmidt seems nice enough, but I sometimes wonder if I will come to regret the easier, softer road I have chosen. A record of my surfing lives on its servers for 18 months — not by name, but still. Google continues to insist that my IP address is not me, but a motivated government with a subpoena in hand could find me, lots of me, on Google’s servers.
Most data privacy experts would call me a fool to index my life into any one company so deeply, and diversification in all matters is just common sense.
Mr. Huber countered that I am free to come and go as I wish.
“The nice thing is that we don’t force you to use only our stuff,” he said. “It is not tied tightly together, and the content is all easily exportable. If you feel like we are letting you down, or you don’t like our products or we are failing to innovate, you can pick up and go where you want.”
But with video chat now enabled in my Gmail, how likely am I to click away? Some people worry that Google will take over the world. Through the sins of competence and innovation, the company has quietly and efficiently surrounded me.
“That’s our business model,” Mr. Schmidt said.
E-mail: carr@nytimes.com
My English teacher in HS taught us to keep an "invisible knapsack" of "memorable passages" that talked of "significant human experiences". My knapsack must have zipped open because, for some reason, I just couldn't keep thinking of this piece, which I first came across almost 2 years ago today. Think of it as a truth, or fashion it a philosophy. And keep it in that knapsack.
This post is not so much about Google, as it is about the idea that Google represents - that so long as you remain relevant and useful, you'll have a place in someone's heart. Whether that person is a loved one, a co-worker, a family member, a friend, or - yes - a consumer.
Thursday, November 18, 2010
Fascinating. From FastCompany: The Future of Advertising
Twenty creative directors, planners, media strategists, and account executives from agencies across the country are down on all fours on the floor of a 100-year-old tenement on Manhattan's Lower East Side. They are each staring down at a blank poster-size sheet of paper, contemplating their most abject fears about their careers, their livelihoods, and their future. They have reason to worry. They are, after all, in the business of advertising.
This slight three-story brick building on the edge of Chinatown has been taken over by Hyper Island, a school based in Sweden renowned for producing the most coveted digital talent in the ad industry. That school is located in an old prison on the Baltic Sea, and students are taught that there are no boundaries when it comes to digital marketing.
Last summer, the Swedes at Hyper Island recognized that where there's panic, there's opportunity, and opened this New York branch. Like the many foreigners who settled in this downtown locale before, the school arrived with its own set of promises -- to drag the denizens of Madison Avenue into the 21st century. While its students back in Sweden are "digital natives," these elder New Yorkers are "digital immigrants," who have gathered for three days of hard-core immersion in dealing with the chaos digital technology has wrought on their industry. "Something digital immigrants would do," explains one instructor, "is make a phone call to make sure someone received an email."
Most of the men and women here -- average age: 38 -- have worked at agencies for more than a decade. Such tenure used to be considered an asset, but these days it's more of a liability. They're all well aware that coding is now prized over copywriting and that a résumé that includes Xbox and Google is more desirable than one featuring stints at BBDO or Grey.
Step one of their therapy, of course, is admitting there is a problem. In this room where Swedish pastries litter a couple of Ikea tables, they have been told that their first assignment is to "put [their] digital stinky fish on the table." So each supplicant finds some space on the floor and rolls out that big blank sheet of paper. Eventually, everyone writes something, and after a few minutes, the group gathers in a circle -- a safe space -- where one by one they voice their insecurities. The first person stands up. "I walk around in fear and loathing, dazed and confused," he says. Another confesses, "I'm a person who's petrified to fail." One by one, they exhale the cold fears of an entire industry: "I feel like I'm standing here and there are a thousand baseballs dropping from the sky and I don't know which ones to catch." "I left my cushy job at a global agency. Actually, I didn't leave; I was pushed out." "I kind of feel like the digital world is a gated world. It's wide open, but I don't even know enough to walk in." "This whole 'collaboration, we'll work together as a team' breaking down of the creative director and art director team -- I find it fucking difficult."
Depending on how you look at it, the next 72 hours are either a communal hazing or a primer on today's rules of marketing. Creative teams, the participants are told, now need to behave more like improv actors -- "story building" instead of storytelling -- so they can respond in real time to an unpredictable audience. Marketing actually needs to be useful -- "use-vertising" instead of advertising -- which means that you must think more like a product developer than an entertainer. While campaigns once promised glossy anthemic concepts, perfected before being shipped off to the waiting client, digital is incremental, experimental, continually optimized -- "perpetual beta" -- and never, ever finished. "Digital will fuck you up and the way your agencies are built to make money, staff things, price things," says the instructor. "You guys have to change your DNA, and you're going to have tough decisions." Later, there's an entire lesson on letting go of egos. Throughout the session, instructors remind the novitiates that these new rules are certain to change completely, and soon.
[ CHAOS ]
Like a beetle preserved in amber, the practice of advertising has sat virtually unchanged for the last half-century. Before 1960, ad making was a solitary practice. Copywriters toiled away on words to pitch a product, then handed them off to an art director who translated them into an illustration or photograph. Creative director Bill Bernbach (the B in DDB) changed all that when he recognized that pairing wordsmith and artist could spark genius. That simple move ignited the industry's creative revolution, raising the practice of advertising from sleazy salesmanship to some permutation of art.
The ad business became an assembly line as predictable as Henry Ford's. The client (whose goal was to get the word out about a product) paid an agency's account executive (whose job was to lure the client and then keep him happy), who briefed the brand planner (whose research uncovered the big consumer insight), who briefed the media planner (who decided which channel -- radio, print, outdoor, direct mail, or TV -- to advertise in). Then the copywriter/art director team would pass on its work (a big idea typically represented by storyboards for a 30-second TV commercial) to the producer (who worked with a director and editors to film and edit the commercial). Thanks to the media buyer (whose job was to wine-and-dine media companies to lower the price of TV spots, print pages, or radio slots), the ad would get funneled, like relatively fresh sausage, into some combination of those five mass media, which were anything but equal. TV ruled the world. After all, it not only reached a mass audience but was also the most expensive medium -- and the more the client spent, the more money the ad agency made.
That was then. Over the past few years, because of a combination of Internet disintermediation, recession, and corporate blindness, the assembly line has been obliterated -- economically, organizationally, and culturally. In the ad business, the relatively good life of 2007 is as remote as the whiskey highs of 1962. "Here we go again," moans Andy Nibley, the former CEO of ad agency Marsteller who, over the past decade, has also been the CEO of the digital arms of both Reuters and Universal Music. "First the news business, then the music business, then advertising. Is there any industry I get involved in that doesn't get destroyed by digital technology?"
Thanks to the Internet and digital technology, agencies are finding that the realization of their clients' ultimate fantasy -- the ability to customize a specific message to a specific person at a specific moment -- is within their grasp. It is also one very complex nightmare. After all, digital isn't just one channel. It's a medium that blooms thousands of other mediums. Brad Jakeman, who formerly led advertising at Citigroup and Macy's, says the explosion of platforms like search, geotargeting, the iPad, and mobile apps means fragmented media budgets and fragmented consumer attention. "The irony is that while there have never been more ways to reach consumers, it's never been harder to connect with consumers," explains Jakeman, now chief creative officer at Activision, the gaming company. The death of mass marketing means the end of lazy marketing. At agencies, the new norm is doing exponentially complex work. Think of the 200 Old Spice YouTube videos whipped up by Wieden+Kennedy in 48 hours. "Creating more work for less money is the big paradox," says Matt Howell, president of the Boston agency Modernista.
And the Internet has turned what used to be a controlled, one-way message into a real-time dialogue with millions. "Our power has been matched and, in some categories, rivaled by user influence," says Nick Brien, CEO of Interpublic Group's McCann Worldgroup, who notes that sites such as Engadget and Yelp can make or break a product. The opportunity for marketers is that instead of having to pay for their message to run somewhere, they can "earn" media for free, via consumers spreading YouTube clips, Groupons, and tweets as if they were trying to saturate their networks with photos of their newborn. Says Jon Bond, cofounder of Kirshenbaum Bond Senecal + Partners who left his agency last year to launch a startup: "Marketing in the future is like sex. Only the losers will have to pay for it." But the dark side of a transparent marketplace is that marketers have never had more of an opportunity to rub consumers the wrong way and be publicly skewered. The days of lathering on a brand message that a product may not live up to are long gone.
All of this has made life much more confusing for the client. At a time of shrinking budgets, chief marketing officers don't know where to turn. They have little confidence that old-world agencies know how to navigate the chaos, and they don't know which newcomers to trust. "It's the most treacherous job in corporate America, blamed for everything and credited for nothing," concedes Jakeman, who notes that the average CMO tenure is down to 22 months.
With clients in a tailspin, the very role of agencies is in question. Many CMOs are shunning "agencies of record" relationships -- the plum long-term, retainer-based deals that have been the bread and butter of full-service firms. After an agency review last year, Angelique Krembs, marketing director of PepsiCo's SoBe brand, opted to work with only shops that specialized in digital, PR, or promotional work, excluding all generalist firms. "I didn't see it as us ditching a creative agency. We were going beyond traditional," says Krembs, in words that can hardly be reassuring to the old line. "We realized it was unlikely we'd find everything we wanted in one place." That's apt to become the norm as a generation of senior marketers emerges from the digital side, rather than from classic marketing educations at P&G or General Mills. For example, the recently appointed president of marketing at Sears, David Friedman, was recruited from the digital agency Razorfish.
Squeezed by clients, agencies are also beset by a host of new competitors attacking from every direction. Technology companies have commoditized much of the "art" of that old assembly line. Producing an ad doesn't have to be an expensive multiperson affair these days, given that commercial-quality high-definition video can now be shot on cameras that cost less than $2,000. Consultancies like Accenture and Sapient are branding themselves as digital agencies. Tech titans like Microsoft, IBM, and Google are rolling out tools that replace agency analysis with digital measurements that can predict the best targets for a campaign and quantify its success. Google, arguably the industry's most polarizing frenemy, is helping agencies use its planning and analytics tools, while at the same time automating their media-buying jobs. "With infinite ad inventory on the Internet, you just can't have people do [media planning] anymore," says Dan Salmon, an analyst at BMO Capital Markets who covers advertising and marketing services. "It's now being done by a piece of software."
Technology startups also digitize away agency roles. MediaMath, DataXu, and X + 1 are racing to deliver automated ad-buying platforms; Buildabrand.com [1] has reduced the branding process to an algorithm that produces customized logos in five minutes; Lotame is doing audience data management, which tracks every dollar spent and how it performs. Web 2.0 stars like Facebook and Foursquare are starting to work directly with brands, sometimes cutting agencies out of the conversation entirely.
The attack on the industry is also coming from agency expats. Former Crispin Porter + Bogusky exec John Winsor recently opened Victors & Spoils in Boulder, Colorado. Victors & Spoils has virtually no staff and "operates on the principles of crowdsourcing" -- currently the most vilified term in the agency world. Since its launch last year, Victors & Spoils has lured marketers at General Mills, Oakley, Virgin America, and Harley-Davidson, which just ditched its agency of record of 30 years. "Many agencies are hanging on to this idea that creativity is theirs to own and sell," says Harley CMO Mark-Hans Richer. "[Victors & Spoils] offered a great place to start versus sitting across from a creative who spent weeks crafting the perfect idea and gets upset if you want to change a word." Says Victors & Spoils chief creative officer Evan Fry, who's also a Crispin alum: "I think the new model is scary because all of us in the ad industry want to feel, at least from a creative point of view, that we have something no one else has. So if you're really good at it, you had to go to Creative Circus or Portfolio Center; you had to pay for it. Then you had to toil to get into a good shop. Then you had to get lucky to get on the good briefs. For someone to come out and say, 'We think a lot of people can offer great ideas' means, 'What, I'm not special?' "
For the enterprising client that can see clearly through the chaos, this new world holds promise. Kraft, for instance, has assembled a growing Rolodex of 70 new specialist partners. This isn't some fringe brand -- it's Kraft, the country's largest food marketer, which spends some $1.6 billion on marketing every year. The company is so open to new thinking that it recently hired a startup called GeniusRocket to develop a new campaign for the relaunch of its Athenos Hummus.
GeniusRocket is what an ad agency looks like when it's stripped of Madison Avenue skyscrapers, high-priced creatives on payroll, sushi dinners at Nobu, and two-week shoots at the Viceroy in Santa Monica. The firm is nothing more than a bare-bones website that crowdsources broadcast-ready TV ads from a pool of loosely vetted talent from Poland to Guam. A CMO accustomed to handing over millions of dollars to an agency for a campaign designed around a single spot can now hand GeniusRocket $40,000 -- and get seven spots, each of which will be syndicated on 20 web platforms for tracking, testing, sentiment analysis, and wide distribution. GeniusRocket gleans a 20% to 40% commission, and the rest goes to the creators. "It seemed like an interesting, cost-effective way to get some new creative ideas," says Marshall Hyzdu, the Kraft brand manager who hired GeniusRocket. "We fell in love with one spot.
"For an agency to be on the cutting edge, it must have heavy overhead," Hyzdu points out. "Versus GeniusRocket, which is a lean team focused on new ideas. I wonder if that becomes the new model." That kind of thinking sends shivers through the business. "I've gone to see all the big cheeses at all these big agencies, and the reaction to us tends to be in one of three buckets," says Mark Walsh, GeniusRocket's cofounder and CEO and a proud bottom-feeder. "If the executive is over 57, he says, 'Thank God I'm getting out of this business.' If they're in their forties, they say one of two things: 'You're Satan and you're out to kill me,' or 'You're Satan, but can you help me and not tell anybody?' "
"There's never been a better time to be in advertising," says Aaron Reitkopf, North American CEO of digital agency Profero, referring to the unbound possibilities of digital, "and there's never been a worse time." Reitkopf left his CEO post at Kirshenbaum Bond Senecal + Partners a year ago and spent some time visiting agency heads while figuring out a next step. "At the beginning of our conversations, they would put on a brave face, but once you began to quiz them about the future, the door would close in the office," he says. "They'd look at you and say, 'I can't possibly know what the future looks like.' " There's only one thing everyone agrees on, Reitkopf says, and that's that there is too much excess: too many people, too many of the wrong kinds of people, too much bloat, too much inefficiency. And this in an industry that has laid off more than 160,000 people in the past two years. "Ohhhh," nods Reitkopf, "the carnage is going to be awesome."
[ OPPORTUNITY ]
Surviving that carnage, of course, is the real reason people sign up for Hyper Island's grueling three-day sessions. "You go in there not wanting to admit you're an alcoholic and by day two, you're like, 'I am a little bit of an alcoholic,' " says Kevin Moehlenkamp, chief creative officer of Boston-based Hill Holiday. Moehlenkamp attended the inaugural U.S. class last fall, which was held for the industry's top creative execs. "Before, I was a bit of a creative elitist. I thought digital was just another medium." TBWA\Chiat\Day chief creative officer Rob Schwartz attended that same course. He remembers that the group of top competitors arrived with cautious bravado. "Everyone was arms folded, it was very tense, and there was a lot of nervous laughter," says Schwartz. "The room had a Twitter feed, but 70% of the room didn't know what Twitter was."
Moehlenkamp and Schwartz say Hyper Island pushed them from digital observers to participants. "Before, I felt open to the conversation, but I wasn't in it," says Schwartz, who admits he had even been afraid to blog. "What they teach you is that with digital and social media, either you're on the shore or you jump in. The class gave me the confidence to jump in." The 20-year industry vet started blogging and says he has discovered that data tools -- which creatives have always shunned as an enemy of artistry -- help him stay ahead. Above all, he does not want to be left behind. "My fear was missing out on what could be the next creative revolution," he says. "I was too young for Bernbach. I didn't want to miss out this time."
Many in the business do realize that this moment of unsettling disruption is filled with possibilities. "The headline is, we're on the verge of a creative revolution," says Brian Martin, a consultant who has spent more than 25 years in the industry. Advertising's first creative revolution happened soon after television went mainstream. Digital has reached a similar saturation point. "It's an exciting time, not doom and gloom," says McCann's Brien, who is charged with turning around the atrophying behemoth. "It unleashes creativity." You might even argue that the revolution is the agencies' to lose. "In our business, whenever there's a disruption, our clients need guidance," says Brien's boss, Interpublic Group chairman and CEO Michael Roth.
For three years now, Joe Grimaldi, the longtime chief of IPG-owned Mullen, has been trying to drive change at his agency. Mullen is a Boston-based 40-year-old traditional agency with 550 employees, clients such as Timberland and LendingTree, and a lukewarm reputation for its creative work. Grimaldi decided that his agency had to unlearn its bad habits and develop agile, flexible ones. "We want to be an interdisciplinary company with adaptability built in," says Grimaldi, an Italian immigrant raised in Queens.
Nothing has come easy. "We brought people in from the outside to lead digitally," says Edward Boches, who for years was Mullen's chief creative officer, "but they always tried to change us into a pure digital play. Then the ad types who wanted to do brands and big ideas would say they're jerks who dis us, who think we're dinosaurs." That was only the beginning of the misfires. "In the early days, digital was always an afterthought, so we didn't acknowledge the true cost," says Boches, with his thick-as-chowder Boston accent. "We sold wrong, we neglected to put digital-savvy people in our new business roles. Instead of building digital things that had utility, we approached it from a messaging mind-set and put messaging into the space. It took us a while to realize that project management in the digital space is completely different."
For years, the agency had been located in a palatial mansion outside the city. People were isolated in offices and by long hallways; different disciplines never crossed paths. Last summer, Grimaldi relocated the agency to an open office in downtown Boston. Now, social-media people, creatives, media planners, technologists, and user-experience folks are sprinkled next to one another at modular desks. And Boches has ditched the CCO title for something more nebulous -- chief social-media officer. "It's really hard, to be honest," says Grimaldi, who's trying to get his staff to thrive by having more points of view.
There are signs that Grimaldi is succeeding. Earlier this year, Mullen launched Olympus's new PEN E-PL1 camera following a new mantra: "Everything we launch, we launch for free first." The campaign, which included the first augmented-reality 3-D camera demo, helped increase year-over-year sales by 55%. Mullen had to lay off 100 workers during the recession, but this year, it has hired about twice that after some impressive client wins. The agency recently caught the industry off guard after being awarded the business of two extremely progressive social-media clients, Zappos and JetBlue. Says Marty St. George, JetBlue's SVP of marketing and commercial strategy: "I don't think any of us expected Mullen to win. But we all noticed through its pitch process that you couldn't tell who the creative people were from the media people or the planning people. They all finished each other's sentences, regardless of what we were talking about."
[ MONEY ]
St. George says the most surprising aspect of JetBlue's agency search was how many firms still believed that the key to solving any business problem was the 30-second spot. But maybe he shouldn't have been surprised. Agencies still yearn for the fat 15% commissions they used to score off of a client's media spend, a spend ballooned mostly by television commercials. The industry isn't even close to adjusting to the truism that digital dimes don't replace analog dollars, the very problem that bedevils music labels, publishers, and television networks. Today, agencies really have no clue as to how they should get paid. "We still don't know how to monetize what we do," admits Peter McGuinness, CEO of Gotham, which, like Mullen, is owned by IPG. "We don't monetize ourselves properly, so we don't hit our margins."
In many ways, the end of the rich old model is the agencies' own fault. In the 1980s, agencies decided they could benefit from economies of scale, as well as manage client conflicts of interest, by merging. Not incidentally, this trend also gave the agency owners a way to cash out. The result was an industry centered on four major holding companies: WPP, Omnicom, IPG, and Publicis. But the move has backfired. "Agency leaders were making more money than the clients," says Martin, the industry consultant. "That's when the clients began to realize, 'Gosh, we must be paying them too much.' "
Clients forced the agencies into a service-fee model instead, which is far less lucrative. "It's like lawyers," explains BMO Capital's Salmon. "The fees are based on head count and time spent working." Grimaldi explains why this is so much tougher than the old model. "If a creative team now takes six people instead of two, just think about the burn rate of that room," he says. "Unfortunately, not everything generates as much money as it used to. There are only so many hours you can bill." Now those hours are getting squeezed from every direction. The clients employ procurement officers and cost consultants to negotiate down the fee on everybody in an agency. And given today's hypercompetition, agencies can sink up to $1 million and four months pitching for a new account they might never win. "When the smoke clears," says McGuinness, "we make no money."
Given this madness, the agencies still cling to those expensive TV buys. Bob Garfield, advertising-industry pundit and author of The Chaos Scenario, says, "Agencies have worked out very complex compensation formulas, which are nominally fee based, but if you track compensation against media spend, you will see that the lines are parallel." The less a client spends on media, Garfield continues, the less an agency makes. Some agencies are scrambling to address this by reinventing their compensation structures. "We are paying the price of belonging to an industry that does not know how to protect its own interests," wrote TBWA Worldwide chairman Jean Marie Dru in an Advertising Age manifesto entitled "Endless Pressure on Price Traps Agencies, Clients in Death Spiral." "We are our worst enemies."
Virtually every CEO in the business is now railing for one of two solutions to the problem of, well, not making enough money. First, they want to be financially rewarded for performance, and thanks to all those new data-analytics tools, for the first time ever, their effectiveness can be measured. Says IPG chairman Roth: "We should get higher [compensation] if it works and lower if it doesn't. That's how this industry can return to the profitability level." It's a nice thought, but those tools aren't infallible: While Wieden's innovative Web campaign for P&G's Old Spice garnered tons of publicity, Ad Age speculated that the boost in sales may well have been due to a coupon.
Then there's the industry's biggest fantasy about compensation. "We have to figure out how to get paid for the big idea, and what that idea is worth," says McGuiness. What's a big idea? Something as ubiquitous as MasterCard's "Priceless" campaign that arguably could transform a business. "This is a holdover from 20th-century marketing," says Brian Collins, a former Ogilvy exec who now runs an innovation consultancy. "People who think that way are supremely well equipped to work in a world that no longer exists." Plus, as Garfield points out, "in the whole history of mass advertising, the number of transformative ideas that have created wealth via advertising you can count on one set of fingers and toes." Garfield sees this big-idea payday as the last wish of an industry that's drowning. "In a world where media spend is in inexorable decline, and where advertising per se is an endangered species, [agencies] don't know where to turn," he says. "The realization of the nightmare is under way. And that nightmare is the utter collapse of the business model."
[ ADAPTATION ]
In its fight for survival, the advertising industry is at war with itself. Generalists are competing with specialists. Interactive shops are vying to become full-service agencies, while traditional shops are yearning to become digitally integrated. "The Great Race," as Forrester Research dubbed it in March, drives a more intense competition over an already shrinking pie, and there won't be room for everyone. En route to the center, agencies are chasing one another to the bottom. "I spoke to a high-level CMO the other day," says Profero's Reitkopf. "She said, 'I work with a holding company's promotions company, its social-marketing company, its response-marketing company. Every time we're in the room together, it's fine, but the minute I walk out to get a cup of coffee, someone will follow me and tell me they can do what the other agencies do for cheaper." Adds Harley CMO Richer: "Agency networks supposedly combine all these experts together on your behalf, but it only really happens when the business is at risk of walking out the door. Before then, these creative entities are locked off in separate P&Ls. They're not built to solve clients' problems, they're built to satisfy individual P&Ls."
Publicis Groupe chairman and CEO Maurice Lévy admits this. "Historically," the Frenchman says, "one way to manage a holding company -- which still is the case for other holding companies -- is to stimulate each agency to compete with each other. The stimulation was about rivalry and competition within the same group. They felt that this was the best way to drive growth."
These divisions were exacerbated in the 1990s, when holding companies spun their media departments out of creative agencies into stand-alone companies, creating new entities such as Omnicom's OMD and WPP's Mindshare. The goal was to hold onto a client's media spend even if the client took its creative business elsewhere. But marketers like Johnson & Johnson's Brian Perkins are now begging media and creative shops to bundle back up. "When media and communications planning have become more important than ever," Perkins wrote in Ad Age this year, "why are our media agencies further (physically and philosophically) from the people who create advertising?"
Lévy is aggressively trying to bridge that gap. He recently created Vivaki, which is largely an internal effort to get its media agencies, Starcom MediaVest and Zenith Optimedia, to collaborate with its digital agencies, Digitas and Razorfish. The carrot he's employing is deeply traditional: a change in fiscal incentive structure. While each agency has its own P&L, the pay of top execs also depends on Vivaki's P&L of the combined companies. "In the beginning, it was a really hard pill for me to swallow," says Bob Lord, CEO of Razorfish, which was acquired last year by Publicis. "I built my career at Razorfish being the most aggressive, saying we can do everything for the client. Now it's supposed to be okay to say, 'Well, we are weaker in CRM, and we can learn from Digitas.' That's a hard thing for people to accept."
Of course, the willingness of Lévy and other holding-company CEOs to experiment is based on their continued belief that one-stop shops will outlive and even outpace any disrupter. "We have to be ahead of the curve in all areas," says IPG's Roth (who earned $6.3 million in 2009, down 40% from the year before). "We'll do it by investing in or partnering with these new types of companies and making them part of our offering." In other words, holding companies will ultimately do what they believe they do best: They will chase the next shiny object, hedge their bets with acquisitions, and perhaps make their already monolithic structures even more colossal.
Rosemarie Ryan and Ty Montague have a smaller vision of the future. Until June, the two were the North American copresidents of JWT, the WPP-owned behemoth, armed with a combined 40 years in the business. Then they quit. Montague and Ryan decided to build a new kind of marketing business with no old-world waste and inefficiency. Co, which Montague describes as "a brand studio built for 21st-century CEOs and CMOs," is a tiny group of consultants from the agency, technology, and business-strategy worlds that can "deploy the right team for the right action at the right time for the right outcome."
Its ability to scale up and tackle a wide range of client problems will come from the eclectic network of 44 specialist companies they've lured to play nice with them, from digital agencies like Big Spaceship to crowdsourcing firms like Victors & Spoils to bigger companies like McCann Worldgroup and Horizon Media, the largest U.S. independent media-services company. "We want to be as small as possible and as big as necessary," Montague says. "It's not about scale; it's about scalability. Even though we have only five employees, right now we have 1,500 people we can put against an opportunity." Says Bill Koenigsberg, CEO of Horizon: "Getting a piece of business doesn't mean they have to hire an army. There's a nice elasticity there."
Co's financial model is to be paid a retainer, a flat project fee, or equity, depending on its client; it does not get a cut of what its specialists bill. "We are, by its nature, helping to build businesses that we do not own," says Montague. Since it doesn't own any of those specialists, Co has no vested interest in treating a client's business problem with any particular solution. Its goal is to move from the ghetto of marketing into the world of pure problem solving, so Co plans to work with only clients who promise C-level access beyond the CMO. "The answer can come from marketing, but it can also come from R&D or product innovation or design," Montague says.
Earlier this year, technology observer Clay Shirky argued that "complex societies collapse because, when some stress comes, those societies have become too inflexible to respond." Societies like the Romans and the lowland Mayans fell because further reductions became too uncomfortable for those in power. "Collapse is simply the last remaining method of simplification," writes Shirky. After disintegration, he explains further, the members of a society disperse, experimenting with new ways of doing things. "When the ecosystem stops rewarding complexity," he writes, "it is the people who figure out how to work simply in the present, rather than the people who mastered the complexities of the past, who get to say what happens in the future."
Co may be an example of how the members of this collapsing industry could make it simpler and more logical. "I think all of it [the industry] needs to get smaller to get better again, on some level," says Ryan. Co may or may not succeed, but what makes its model so intriguing is that the company doesn't have to make a big bet on a single possible future. "I don't think anybody can look you in the eye and say, 'This is what the business will look like in 20 years,' " says Ryan. "If they do, they're lying." Co's only plan for growth is that its founders will hire other tiny teams of four or five people. In other words, Co's only growth plan is another pod.
That may be a vision for the industry as a whole. With all the defections of top agency talent over the past year -- Alex Bogusky from Crispin, Gerry Graf from Saatchi, Kevin Roddy from BBH -- it's easy to imagine a new advertising ecosystem of pods built around industry stars who have left their lumbering institutions behind. The holding companies will still exist, but around them could emerge a chaotic pattern of startups, independent talent, and connectors who thrive with minimum overhead. That kind of industry would be a fraction of the size of the current one. It would create opportunities for the most talented and hurt everyone else. It would be harder work, with fewer assistants and fewer million-dollar paydays. But this smaller business would be aloft on its new creative potential rather than sinking under the weight of its past.
[DISCUSS]
Tweet your answer to What is the Future of Advertising? by using the hashtag #adfuture [2] and join the discussion about Madison Avenue. Go to advertwitter.fastcompany.com [3] to read about everyone else's vision of the ad industry.
[4]
fastcompany While there've never been more ways to reach consumers, it's never been harder to connect w/them. #adfuture http://bit.ly/cTeQx2 7 hours ago reply 10+ recent retweets
Wednesday, November 17, 2010
Thursday, November 11, 2010
Seems DOOH is getting serious looks! From DigitalSignageToday.com: HP, Scala tossing rocks in the DS pond
Tech giant HP announced today that it's expanding beyond digital signage displays and getting into digital signage solutions — an announcement that should certainly send at least a ripple or two across the DS pond.
HP today introduced two new media players that will come pre-loaded and pre-configured with Scala content management software, marking the company's first foray into the behind-the-scenes inner workings of digital signage. And Scala also used the opportunity to springboard the announcement of its new QuickStart service.
When Gulliverian companies with international brand recognition like HP, Intel, Microsoft and Cisco start throwing their hats in the ring — as all have done recently — it's bound to be good news for the sector overall.
For companies like those aforementioned to now have divisions or groups focused on digital signage with an executive tasked with leading the charge into the space certainly means something, Scala executive vice president Jeff Porter says.
"It's a pretty big deal for somebody like HP to actually have somebody who's like their 'King of Digital Signage;' it really wasn't on their radar screen before," he said. "They've not had a division or a group that's been focusing on digital signage before, but now they do. It's kind of like digital signage is now coming of age."
That's not the first time someone has opined that digital signage is finally starting to come of age, but with big fish swimming in a relatively little pond, maybe this time it's true?
"(It means) nothing but good, I would say," Porter said. "It's validation of the things that we've been doing for the last 20-some-odd years ... It's really something that I think is pretty amazing."
HP and Scala announced today that the computer company is introducing two new digital signage players — the HP SignagePlayer mp8000s and HP SignagePlayer mp8000r — that will come pre-loaded and pre-configured with Scala content management software. HP describes the players as "low-cost, easy-to-use ... designed for independent retailers and other small to midsize businesses that want to deploy full-featured digital signage at a single location or across a small network."
Bob Rosenberry, HP's manager, Visual Solutions, runs the company's marketing strategies for digital signage and kiosks, and he says that while his company has been supplying displays for about a year, the new players "would be our first entry into solutions."
There are also already numerous digital signage installations around the world where HP was involved as a recumbent IT supplier, he says, but this does mark a new direction for HP in the space.
"This would be our first kind of for-purpose solution," he said. "In a way we've been in the business for a while ... but this is our first for-purpose, developed solution specifically for digital signage, aside from displays."
HP has had an eye on the digital signage space "for a while," and has been ramping up in that solution space, Rosenberry says.
"It's a growing area that really fits into a bunch of our key competencies already," he said. "When you look at the overall scope of HP, with displays, PCs, services, all backed by the global support of the organization, we think digital signage fits well into that."
The new HP players come in two form factors, with the smaller one measuring about 10 by 10 by 2 inches, and the larger about 15 by 13 by 3.5. HP has a special mount that fits the smaller player in comfortably behind the display — Porter showed an example during his interview — and the larger has full plug-in card capability and a graphics card in its more powerful system.
Scala also announced that it was introducing its new Scala QuickStart, supporting the new HP players, beginning in early December. The new QuickStart service offers what Scala is calling "a new and innovative 'zero-configuration' scheme, allowing even entry-level users a way to set up and manage a Scala digital signage network with ease."
Porter gave a brief phone/Web demo of the new service today, showing how even a brand new user could be logged onto the QuickStart system in seconds. Scala intends the new software-as-a-service to be a simple, easy-to-use service that helps make the new HP players workable solutions out of the box for even the least experienced deployer.
"It's a red-letter day in terms of being able to bring digital signage to the masses," Porter said, "and make it super-simple and easy but yet have the full-featured Scala player to back it up."
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