Category Archives: strategy

iMedia Brand Summit 2010 Closing Keynote Talk.

The brand marketers who attended iMedia  2010 were kind enough to vote this the best presentation of the summit. Where I ran videos in the actual presentation you will find pages with the links to the relevant videos on YouTube and, if Steve J hasn’t changed his mind and taken down the iPhone OS 4 / iAd streaming presentation, at Apple.

My thanks once again to:

Ken Mandel of Yahoo and Agatha Yap of McDonalds who recommended me to Ad Tech / iMedia ; Joe at ComScore who provided data; Tom and Jerry (seriously)of MobileNow, the iPhone, iPad & Android app developers in Shanghai for data, insights and magic; Benjamin and Christoph of Wildfire Asia WOM in Singapore and Shanghai for insights, POV and reference leads; Eddie Chau of Brandtology for the topical case study, other great charts and your vision; Josh Sklar of Heresy in Austin, Texas for your insights, the reference links and 15 years of partnership in digital.

It’s all about the Social Graph in action and you guys helped prove it through your excellent input. Again, Thank you all.

There’s a lot happening out there!

View more presentations from Innovize.

How Job Insecurity & Professional Cowardice Made Bud Light Stumble For The First Time Ever.

Ads blamed for Bud Lite sales fall.

A  US Budweiser campaign, “Drinkability”, is being blamed for the first full year sales decline in Bud Lite history. This in a recession when beer sales are often one of few things that go up. A firm of consultants  was  involved. Apparently their recommendations became ad briefs which DDB and Euro anwered by coming up with the “Drinkability” campaign.

Lots of voices are now being heard from all quarters about why this happened and who is at fault.

A Wide Range Of Differing Opinions.

A number of points have been made including:

“Were the spots entertaining? No. Were they loaded with brief-filling, focus group-tested, chest-puffing talking points? Yes.” – Adman blog posting

“Consulting doesn’t boast creative expertise nor does it have any interest in “starting a turf war” with creative agencies.” – A consultancy spokesperson

“…some clients will pay consultants millions to rehash research and refine positioning, but then they pressure agencies to lower costs on the thinking/ideas that positions and builds awareness of a brand and ultimately sell products.” – online comment posting

“Unfortunately, too many people are willing to blindly accept whatever “dictate” trickles down and don’t bother to question the validity of the premise or invest themselves in its integrity. This is a cause for shame in our industry. It opens the door for spectators to broadly crucify agencies and consultants, wastes money, damages brands, and demoralizes everyone involved.” – online comment posting

“Agency creative directors tend to do more damage to brands if left unchecked. They too often develop high concept ads that win awards but do very little to motivate consumers in any way. The examples are endless.” – online comment posting

Others attribute the Bud Lite decline to Anheuser-Busch being bought by InBev.

Then of course there’s the question of whether one can or can’t directly correlate advertising and sales. Well, one can’t have it both ways.

All these points have merit to a greater or lesser degree. However, I think there’s a simpler, deeper issue behind all this.

When you’re scared you tend to make bad decisions.

Let’s face it, those ads are weak. The consultant-driven briefs that Budweiser Marketing pushed on DDB and Euro should have been declined immediately for what they clearly were: weak, lacking compelling beer consumer insights and likely to generate poor advertising harmful to Bud Lite in the competitive context.

Next, the agencies should have proposed better briefs, drawing on what was useful from the consultant reports, avoiding what wasn’t or was clearly going to harm the brand. At that point the Bud clients needed to listen carefully, debate it skillfully and collaborate on agreeing powerful briefs.

The Great Recession is partly to blame, as is unchecked Procurement thinking.

Budget cutbacks and the retrenchment of expensive but experienced ad talent have taken a toll. We seem to be left with scared ad agency people lacking the experience and the faith in their craft, and thus also the confidence in it, to do their jobs bravely and professionally. To say a professional “No” instead of an easy, but ultimately ruinous “Yes”.

Advertising is an industry with a high proportion of people eager to please and who are in fundamentally weak positions relative to their clients. As a result they are thus very vulnerable to being bullied by equally scared, inexperienced or under-qualified marketing staff.

The result of all of this seems to be increasing levels of professional cowardice. Among advertising people, and among Marketers too.

That old Young & Rubicam house ad nails it. The one that shows a spinal column from the neck to the coccyx with the headline, as I recall it:

“This is a backbone. You can’t run a good ad agency without one.”

Actually, you can’t run any good business without one.

(PS, if anyone has a copy or a link to that Y&R ad please link it in the comments below or email me. Tx.)

5 Ways The Ad Industry Stumbled & 5 Ways To Rebuild It, Only Better.

Yes, you got burned. Now come back stronger!

Reading the trade press one would think the ad industry has suddenly and unexpectedly fallen on hard times.

It hasn’t. The current shake-out has been a long time coming.

Here are 5 industry features which combined to cause the collapse:

1. Miguided creativity. Many Creative Directors and their ad agencies shifted their focus and that of their staff, away from their real purpose.

They used to produce marketing communications to engage consumers, build brands and help drive sales for their clients. Now one would be forgiven for thinking that they prefer making ads for each other. Scam ads and festivals of self-congratulation have put this into sharp focus, making marketers question the professionalism and value of the industry.

Why did it happen? Ego, bad HR practices, poor leadership and forgetting the essential role advertising is supposed to fill in the marketing mix.

2. Laziness, Fear, Maybe Arrogance. Continuing to use Transmission Model thinking. ‘Brand advertising’, like 30 second TVCs. The industry failed to embrace the digital media era and become truly consumer/user centric; listening to them and letting them search for and find marketers doing the right things in the right places. Failing to be idea-focused and media-agnostic. Too many ad types tried to stick to what they were comfy with. Digital, direct, sponsorship, PR and events remained 2nd class colleagues in silos; afterthoughts to be briefed only once the Big (all too often TV) idea had been “cracked”, or were left out of the picture altogether;

3. Failing to add & track value. Trying to perpetuate an archaic revenue and overall business model with little or no value-based or performance-linked component in their remuneration. An approach where the value added is not tracked, recognized and as a result often not rewarded either.

4. Failure to invest. Take a good look at the holding company model. While there have been some benefits of size, have they improved what the ad agencies within them actually do? Not really. In fact, the holding companies have become distractions for agency management and hindrances to progressing the craft. This simply because they siphon profits from front-line companies which need the money to retain and train the best people, conduct research and pilot new techniques to add value to clients’ business (see 3. above);

5. Strategic blindness. Earlier, ad agency groups un-bundled media planning and buying from the development and creation of advertising which everyone seemed to believe was their main business. That divorced media strategy from brand communication strategy and handed over the data & analytics too.

More recently the industry failed to recognize the impact of online advertising and social media. Ad industry leaders are now under immense pressure.  Digital is for them a poorly understood rod with which they are now being beaten. Added to that, marketers made major budget cuts during the downturn, reviewed their approach to marketing and are demanding real results (see Value) whilst Procurement has also become a permanent stakeholder at the table (see earlier post Creative Services & The Vicious Cycle of Procurement). All rather challenging for the old school mentality.

Here’s hope for a brighter future.

Now marketer budgets are slowly rising again. The more sophisticated ones pulled back very little anyway, knowing one cannot cost-cut one’s way to market leadership. The problem for most ad companies now will be how to gain, retain and make money on a share of that re-instated spending because the business has changed substantially.

Here are 5 ways the ad industry can make real changes to evolve into a better professional services sector.

1. Focus on adding, and invest in tracking, the value you create. Ask “how will this improve our client’s business results and how will we track how well it does that?” If you can’t prove a clear connection to improved desirability, higher perceived value or better service perceptions, or to lower costs of achieving the same or better sales and branding scores for your client, think again.

2. Return to deeply understanding the target prospects. If you know them deeply – especially their motivations, communication profiles and online behaviour – and better than your clients, you will be able to lead your clients professionally producing work which truly adds value and justifies a decent margin.

3. Charge, and get paid, for Ideas. Marketers need to pay you on the basis of the ideas you create and implement and the impact of those on their marketing KPIs. Paying you on the basis of the media spend behind your ideas is lazy and unprofessional on both sides. Yes, it has been a long standing tradition that clients get free ideas, but as both sides must finally have noticed by now, the world has changed and the old commission model is broken.

4. Embrace Procurement. Procurement is here to stay in contract negotiations, in getting paid each month and in annual or semi-annual performance reviews. Learn from it and make the most of it. Clients want results, so negotiate with them a data-based way to track your performance on appropriate KPIs and make sure they commit to providing the data needed from their side to do this. Learn, and run your own company with the same degree of attention to supplier costs, results, transparency and fat trimming or frankly, you are doomed.

5. Have fewer, better people who are better paid, better equipped and better led. Yes, there is such a thing as critical mass, but you need to be pragmatic and deal with the realities of your business. Size is not everything. Clients want leadership and service from experienced, quality people and will pay for the value they add. If you don’t have sufficiently skilled, motivated, talented people to deliver on that, you will not succeed, let alone prosper.

Get it right and you will keep the business you have, earn bonuses and better payment terms on it, win yet more business and have future clients and talented potential staff banging on your door.

OK, you may be feeling like you’re sitting in a pile of ashes. Rise from them as something a whole lot better. Good luck.

Creative Services & The Vicious Cycle of Procurement

ouroboros_by_Saki_BlackWing

ouroboros by Saki BlackWing

Creative services aren’t generic.

They are unique. They have to be. Without uniqueness they can’t add value. That goes for content like advertising, design, games, on-line worlds and music. It goes for idea based consulting like branding, communications and media strategy and the plans to implement them.

Their uniqueness depends on the backgrounds, experience, inspiration and leadership of the people creating them. They are creations of unique individuals for unique circumstances.

Experience and the ability to produce high quality, unique creative ideas set salaries for those who create them. The less one is prepared to pay, the lower the quality one should expect.

The increasing role of procurement in buying creative and strategy services from advertising, media planning and branding industries may indeed save marketers some money, but can have undesirable consequences.

Not least the loss of the very thing that makes creative services valuable – their unique ability to add value to the procurer’s business.

The result? As procurement drives down the cost of buying those services it will drive down their value. With that will come dissatisfaction with those services, canceling of contracts and the appointment of the next low cost bidder. The vicious cycle will continue and the problem will worsen.

The solution? Innovations in procurement to correctly value creative services. This is easier in the on-line space where accountability is high. Off-line it may take longer.

At the same time the providers of creative services must improve leadership, innovation and accountability to improve their ability to deliver and value what they do.

Finally, both sides must realize they share  the common goal of adding higher value to brands and their owners through superior creative ideas and innovation.

Does Your Company “Immune System” Kill New Ideas?

Macrophages & T lymphocytes by Dennis Kunkel

Macrophages & T lymphocytes by Dennis Kunkel

Innovation is almost always the difference between success and failure.

That difference is between increasing share and margins on the one hand and producing at parity in an over-traded market for negligible profits on the other.

The ability of any company, big or small, to innovate is tied to three things.

The company Leadership

The company Culture

The focus of the Business

Leaders who are outward looking, who send clear signals that they expect and reward innovation, are usually rewarded themselves in two ways.

– They attract smarter, more talented creative people who are much better to work with and;

– Those people have better ideas that make the business more successful.

Company Culture which encourages exploration and differing views, which accepts the occasional mistakes and costs that go with those, is more likely to produce significant innovations and to keep doing so.

A Business Focus on looking for significant changes to alter the landscape of the industry and how it addresses the needs of its customers, instead of fine-tuning small changes over a long period, is more likely to pull the rug out from under its competitors.

None of this is a surprise. Nothing written here is new. So why aren’t more companies doing it, especially now?

One reason is a lack of leaders empowered to do their jobs this way. This is a shareholders and supervisory board problem. If your company is hogtied this way abandon hope; abandon ship.

However, the biggest innovation killer is often harder to fix, more sinister and rooted in the very success of a company.

As businesses grow, they start to believe their own bullshit about why they are doing so well. That in turn starts to form an ideological immune system which reacts against anything unexpected from outside The Company Way. The watch-phrase in those organizations goes something like this:

“No, that’s not how we do things around here.”

Think about your company. Is an ideological immune system becoming part of your culture? If it is, fix it fast if empowered to, or abandon ship if you’re not.

The only time a company can ever condone that statement is when a type two hiring error proposes canceling innovation, abandoning reason and copying what the competition did last season.

Are you going Head-To-Head into Oblivion?

In my previous post I said that perfecting what we already know and do merely drives our industry to parity with thin margins.

Innovation is about doing something different to get the opposite result.

GoogleMicrosoft

Right now we’re all seeing a whole new game where Google and Microsoft are slugging it out on each other’s respective turf. It has the makings of an interesting and long-running drama and the way things are going I’m glad I don’t hold Microsoft stock and I’d think about shorting Google too.

Google pioneered advanced algorithmic search then discovered a pot of gold at the end of the rainbow, called Paid Search.

Microsoft, never known for innovating, had built a very lucrative business on the Windows operating system, which OEMs pay for the privilege of loading onto machines they make and sell. The current incarnation of Windows, Vista, is a bloated, hackable, buggy colossus which chews up hardware resources and user patience. A lesser source of income for Microsoft has been Office. Apart from that pretty much everything Microsoft makes or even touches loses money.

Google Docs

Nobody at Microsoft seemed to pay much attention to Google Docs, essentially a cut-price online competitor to Office. Perhaps they were too busy trying to work out how to build a search engine and make money from it. They even seemed too busy to notice that Google launched their own browser, Chrome. Smart move by Google in case Microsoft does something Balmerian and fiddles with the functionality of Google in a forthcoming IE upgrade.

Bing

Bing launched to muted applause and when everyone in Redmond was able to have a look around and take in the recent developments, they suddenly noticed that Google had announced an operating system – Chrome OS – initially for the hottest, trendiest type of computer, the NetBook. Again, the strategic imperative of Google was clear. If Microsoft tweaks Windows 7 to benefit Bing and inhibit Google a long, drawn-out court process is not going to help Google in the short term. With Chrome OS it was suddenly all too clear that Google had started playing on Microsoft’s turf while Microsoft was trying to learn how to play on Google’s turf. The shock was powerful and the reaction dramatic.

Chrome OS

Of course Microsoft is not the only one who should worry about Chrome. As Nitrozac and Snaggy put it so well in The Joy Of Tech, Apple’s OSX is under threat too. When elephants fight the ants get trampled.

win-mac-chrome-os-fun

Look at the different businesses those two companies have built from. Now consider the imperatives both are working with in going after the other’s territory. To make sense of it and to show you how you can approach innovation in your own business, I’m going to take you back to about the same time that Yahoo lost their way and made Google their search engine.

10 years ago W. Chan Kim and Renée Mauborgne published a superb article in the Harvard Business Review called “Creating New Market Space” which sums this up very well. From there they went on to write their 2004 break-out title “Blue Ocean Strategy”. I’ll leave the bestseller building idioms aside to focus on the insights from their foundation work and use those to show you how to approach innovation for your own organization.

Before I do I need to make one really important point. Innovation is not an individual event. It is very much a team sport and you need to work well with your best and brightest at all levels in your organization to be good at it. Innovation is not the product of an inspired genius in a garret, although Edison loved to paint himself as one while running a large innovation laboratory housing dozens of scientists.

Right, now here are the 6 main ways in which you can seek innovation to build market space for your business.

1. LOOK BEYOND YOUR DEFINED INDUSTRY.

Head to head competition focuses on your rivals within your defined industry. You will keep improving your profits, reducing your costs, trimming your price until you all land up producing pretty much the same thing at the same price. Look across to substitute industries for ways to develop new market space. Look for unoccupied space which represents a real breakthrough in value for your customers. You may find new markets this way or new methods for your current markets. Google Docs. Chrome. Chrome OS. Android too for that matter. To Google this is not tangential adventurism. It is all linked back to their core business – search and providing maximum information of the maximum quality to the maximum number people.

2. LOOK BEYOND YOUR STRATEGIC GROUP.

Most companies going Head to Head focus on their competitive position within their strategic group. A strategic group is made up of companies providing pretty much the same price and performance in what they produce. Look across the other strategic groups in your industry to go and compete with others or create a new strategic segment of your own.

The iPod didn’t merely compete with other MP3 players in taking business away from the Discman and Walkman. Together with iTunes it changed the way people buy music.

Google didn’t stick to competing with Yahoo and whoever was left flailing around in search and online email, they went into being an ASP in the office documents space and into operating systems. That’s quite aside from Google Earth, Picasa and the rest.

3. LOOK BEYOND YOUR CURRENT BUYER GROUP.

Head to Head focuses on providing better service to your current buyer group. Instead, redefine the buyer groups within your industry. Look along the entire chain of purchasers, users and influencers. Look to what each of those really values, then completely re-assess your distribution chain. Question every aspect of the prevailing wisdom in your industry about who can and should be the target customer.

Remember when search was the business every web-user needed and nobody in Yahoo, Alta-Vista, Excite etc could figure out how to make money from? OK, Google came up with paid search. They created buyers. Got the picture?

4. LOOK BEYOND THE ACCEPTED WISDOM OF PRODUCT AND SERVICE  OFFERINGS IN YOUR INDUSTRY.

Head to Head focuses on maximizing the value of product and service offerings within the bounds of your industry. Look across to complimentary products and services that go beyond the bounds of your industry. To get there, pull back and look to the total solution that buyers are looking for around the needs your product or service addresses. This can be something needed which you add in or something undesireable which you engineer out.

Google email pioneered unlimited storage when attachment sizes were getting so big people were deleting old emails in Yahoo and Hotmail to receive new ones. Add Google search and “conversations” and who needs to waste time filing their emails?

5. LOOK BEYOND THE FUNCTIONAL EMOTIONAL-APPEAL FRAMEWORK OF YOUR INDUSTRY.

Head to Head focuses on improving price/performance in line with the functional-emotional orientation. Create new market space by rethinking the functional-emotional orientation of your industry by looking to add or remove emotional drivers or functionality. Think luxury and fashion with much higher margins. Think lower costs/ lower spec practical alternatives with a bigger volume potential.

OK, just for one example, Google Docs for a few bucks versus the buggy slow-loading, easily-crashing bloatware of Microsoft Office.

6. TIME

Going Head to Head focuses on adapting to external trends as they occur. Companies gradually adapt through incremental change. Innovating jumps a big step further. Look to the future and how current trends will play out in the price/performance offers and market structures that will benefit your customers in the future, then jump to that future stage now. Think of the recorded music industry. Think of the lighter, faster Google Chrome browser and the coming lighter, faster Chrome OS for NetBooks which are low on specs but big on convenience and fashion. Now think Microsoft Windows 7 and IE 8 and all the disasters they will entail for light-spec NetBooks.

It’s easy to make excuses. It’s harder to innovate and get results that put your company ahead of the competition. It’s your choice, but I’ll leave you with one last thought – what if your competition is already changing the game on you? What if you are proudly being Microsoft while somewhere in a garage out there, someone is about to pull a Google on you.

Good luck!

Innovation: Perfection Vs Discovery

NASA discovery: Sun is not perfect sphere

NASA discovery: Sun is not perfect sphere

Innovation is not about perfecting what we already know and do. All that does is bring our industry to parity on thin margins. Innovation is about doing the opposite and getting the opposite result.

Innovation is about going out to discover what we do not know, then applying that to our business opportunities in a way which makes our ideas make more money.

There is a natural tendency among managers in times like these  – credit crunch/financial meltdown/global rip-off/call it what you will – to hunker down and play safe.

Fear makes us back away into what we know, expect and feel comfortable with. Of course that means avoiding risk and, as any first year business student knows, risk and reward are positively correlated. So, right now, all but the brave are headed away from opportunities to increase rewards, profits and their own reputations.

Many of these are the same people who will have panicked and sold their shares and properties in a falling market and will now wait too long to buy back in.

On the other hand there are those who always seem to come out of a downturn better off than ever.

The difference comes down to outlook and how you act on it; to whether we are:

Focused on PERFECTION

or

Searching for DISCOVERY

How does those different orientations affect our decisions and the likelihood of a profitable outcome?

Well, when we are judging or feeling judged against PERFECTION we are driven by:

Right and Wrong

Judgement by ourselves and others

Probability and fear of failure

Unwillingness to take risks

Anxiety and ultimately

Frustration

On the other hand when we are searching for DISCOVERY we are motivated by:

Inquiry and creativity

Acceptance (the ability to get over it and grow)

Learning from successes and mistakes

Willingness to take risks

Excitement and

Fascination

Companies like Procter & Gamble have an end-to-end innovation process which starts with the DISCOVERY outlook at the ideation stage and phases it out until it is totally replaced with the PERFECTION outlook as the project passes into the implementation stage.

P&G does not stop there. They also have an Open Innovation approach through which actively seek innovators outside the corporation with whom they can partner or from whom they can license or buy innovations outright.

game_change

In his book Tribes, Seth Godin wrote that:

“Organizations that destroy the status quo, win.”

To do that you can’t stay hung up on perfecting the known. You need to be discovering the new.

If you’re avoiding taking some of the risks involved you’d probably better pray that your competitors are just as reluctant and just as unambitious.

(With thanks to Michael Charles)