A version of this piece was published in Marketing in 2008
Last week’s Bellwether report, the IPA’s quarterly survey of marketing budgets, makes pretty depressing reading, with “the rate of decline gathering to a pace not seen since budgets were hit in the immediate aftermath of the 9/11 terrorist attacks”.
As you will have grown used to by now, internet advertising was the only sector to show growth, with search still showing stronger increases than display.
The Bellwether report is so-called because advertising expenditure has been demonstrated to be a leading indicator of economic performance. Because marketing budgets are easy to alter in the short term, unlike other longer term investments (plant, machinery, property) they are vulnerable to being plundered to make up shortfalls in profitability in the wider business.
In some senses this is a logical tactic to adopt – if corporate performance is affected, the share price could slip, and all sorts of unpleasant consequences ensue.
In Jean-Claude Larreche’s book ‘The Momentum Effect’ he divides strategies into two types – momentum and compensatory. Momentum strategies require the organisation to be pulling in one direction. These are powerful and effective, but require a singular determination to align an organisation around the achievement of a single goal.
Compensatory strategy describes a scenario where actions are taken to make up for shortfalls elsewhere in the organisation, rather than to achieve the goals of the business. Sometimes this is legitimate, he argues, because we have to live in the real world. So a manager with a target to make may ‘pull forward’ business from the following year to meet it. He’s going to have to make it up later, but if he doesn’t do this, he may not be in the game later anyway.
The problem occurs when compensatory strategy becomes the dominant type of strategy within an organisation – a company devotes so much energy to maintaining equilibrium that it fails to move forward.
And this is what we see when marketing budgets are cut in tough economic times. It’s of course true that if you see marketing as a cost, you shouldn’t be doing it at all. It should be an investment – and if it pays back, then you should be doing it regardless of the economic climate, both to maintain sales and the health of the brand.
But this is a lot to ask when the share price is already under pressure, so it’s an obvious short-term compensatory strategy to shave marketing budgets even though the negative effects of this might be known, and we’re seeing the impact of this right now on the Bellwether report.
But as we’ve seen, internet advertising – and particularly search – is still making gains.
Internet advertising is often more cost-effective and accountable. This makes it inherently less risky than other forms of media – and in uncertain times it’s not surprising that people are attracted to anything they perceive as more reliable.
And search is (on the face of it) less risky still. Its cost-per-click basis means people regard this as a transfer of business risk away from the advertiser and to the media owner. This risk-transfer has driven the stratospheric growth curve of search, but it is a simplistic model.
Because whilst it’s a hugely valuable marketing tool, search doesn’t create demand. It fulfils it.
So advertisers are right to continue to invest in search during a downturn – after all, it’s more important than ever to be catching every customer. But search depends on other activity to stimulate demand over and above latent levels, and it is this that will be lost as investment slips in other areas.
So if businesses are drawn to spend more on search because of its lower perceived risk, they may find themselves spending still more on this activity to compensate for slower demand.
What might have been a short-term compensation strategy to maintain corporate performance, could become an eroder of efficiency and an inflater of costs – at exactly the time when better performance couldn’t be more important.
Thursday, July 17, 2008
Thursday, July 10, 2008
Reach for the tinfoil beanie - the snoopers are out there!
A version of this piece was published in Marketing in 2008
There are, I am assured, people who walk around wearing tinfoil on their heads because they’re convinced that aliens/the CIA/the government are beaming thoughts into their heads.
They are of course, barking mad.
As, we usually assume, are all the privacy activists who go on about CCTV, oyster cards and cookies.
Two years ago I wrote about AOL, who had in a rather spectacular goof, released data they held on the search behaviour of thousands of users. They claimed it was anonymous – but it took just one day for an enterprising newspaper to track down one searcher’s identity by deducing this from her searches.
The release caused a storm, as it turned out few people were aware just how much data was routinely collected about them.
Most search engines, for instance, keep a history of every search you make, with Google only deleting records over 18 months old. Websites keep logfiles, perhaps never deleting them, of which web pages you’ve visited, what you filled in on forms, what images you view.
And it’s this that’s now got Google into trouble.
Media giant Viacom, who have been in a long term dispute with YouTube over alleged copyright infringement, got a New York judge to order that Google (YouTube’s owner) hand over internet addresses, email accounts and a history of every video ever watched on the site.
The judge, Louis Stanton, dismissed privacy concerns as ‘speculative’.
But the consequence of this is that users of YouTube, which serves over 2.5 billion videos a month to 70m users in the US alone, are now exposed. Their personal media consumption is now something for Viacom to pore over, regardless of whether they had consumed content Viacom owned the copyright for.
And as some observers have pointed out, this would never have happened if Google hadn’t collected the data in the first place.
Meanwhile back in the UK, another, connected, story has resurfaced. I wrote back in February about the BPI’s efforts to get ISPs to spy on their customers on the BPI’s behalf, punish them for infringing the law, and provide evidence to record companies.
The BPI got quite upset about this, calling my observations “quite wrong”, and claiming I’d recycled the information from the Times. They wanted to set the record straight, as they expected this story to run and run.
I had in fact got the information from the BPI’s own website.
But I quite wrongly expected this story to go away. It seemed to me that nobody would be so daft as to think they could build a business by suing their customers.
It seems though, in this I was wrong.
Last week, Virgin Media started sending out letters to customers that the BPI had identified to them, telling them that filesharing copyright files is illegal. Virgin’s view is that they’d resist cutting off consumers, preferring an education campaign.
But at the same time, the BPI sent out letters to the same users, threatening “We don’t want you to face legal action, or risk losing your internet service”.
Though I don’t download music, I do expect my ISP to guard my privacy. Moreover, I don’t think it’s any of their business what I do with my internet connection.
Just as I don’t expect the post office to read my mail or BT to listen to my phone calls, I don’t expect an ISP to snoop on my internet connection without a court order compelling them to.
Carphone Warehouse told the BPI to sling their hook – Charles Dunstone described how the fax machine in his office, unused and forgotten for over a year, ground into life to receive a fax from the BPI requesting their cooperation. Good for him.
At polar opposite ends of the modernity scale, Google and the British Phonographic Institute. One cavalier with our privacy, the other trying to get others to invade it on their behalf. I’m reaching for the tinfoil…
There are, I am assured, people who walk around wearing tinfoil on their heads because they’re convinced that aliens/the CIA/the government are beaming thoughts into their heads.
They are of course, barking mad.
As, we usually assume, are all the privacy activists who go on about CCTV, oyster cards and cookies.
Two years ago I wrote about AOL, who had in a rather spectacular goof, released data they held on the search behaviour of thousands of users. They claimed it was anonymous – but it took just one day for an enterprising newspaper to track down one searcher’s identity by deducing this from her searches.
The release caused a storm, as it turned out few people were aware just how much data was routinely collected about them.
Most search engines, for instance, keep a history of every search you make, with Google only deleting records over 18 months old. Websites keep logfiles, perhaps never deleting them, of which web pages you’ve visited, what you filled in on forms, what images you view.
And it’s this that’s now got Google into trouble.
Media giant Viacom, who have been in a long term dispute with YouTube over alleged copyright infringement, got a New York judge to order that Google (YouTube’s owner) hand over internet addresses, email accounts and a history of every video ever watched on the site.
The judge, Louis Stanton, dismissed privacy concerns as ‘speculative’.
But the consequence of this is that users of YouTube, which serves over 2.5 billion videos a month to 70m users in the US alone, are now exposed. Their personal media consumption is now something for Viacom to pore over, regardless of whether they had consumed content Viacom owned the copyright for.
And as some observers have pointed out, this would never have happened if Google hadn’t collected the data in the first place.
Meanwhile back in the UK, another, connected, story has resurfaced. I wrote back in February about the BPI’s efforts to get ISPs to spy on their customers on the BPI’s behalf, punish them for infringing the law, and provide evidence to record companies.
The BPI got quite upset about this, calling my observations “quite wrong”, and claiming I’d recycled the information from the Times. They wanted to set the record straight, as they expected this story to run and run.
I had in fact got the information from the BPI’s own website.
But I quite wrongly expected this story to go away. It seemed to me that nobody would be so daft as to think they could build a business by suing their customers.
It seems though, in this I was wrong.
Last week, Virgin Media started sending out letters to customers that the BPI had identified to them, telling them that filesharing copyright files is illegal. Virgin’s view is that they’d resist cutting off consumers, preferring an education campaign.
But at the same time, the BPI sent out letters to the same users, threatening “We don’t want you to face legal action, or risk losing your internet service”.
Though I don’t download music, I do expect my ISP to guard my privacy. Moreover, I don’t think it’s any of their business what I do with my internet connection.
Just as I don’t expect the post office to read my mail or BT to listen to my phone calls, I don’t expect an ISP to snoop on my internet connection without a court order compelling them to.
Carphone Warehouse told the BPI to sling their hook – Charles Dunstone described how the fax machine in his office, unused and forgotten for over a year, ground into life to receive a fax from the BPI requesting their cooperation. Good for him.
At polar opposite ends of the modernity scale, Google and the British Phonographic Institute. One cavalier with our privacy, the other trying to get others to invade it on their behalf. I’m reaching for the tinfoil…
Thursday, July 3, 2008
Regulators are out of their depth when it comes to the internet
A version of this piece was published in Marketing in 2008
The media village. It’s a phrase we often use (conscious of its irony) to describe the close-knit and often incestuous community that’s built up around the media and entertainment business in the UK.
It’s a slightly self-deprecating description – perhaps a function of British reserve, a reluctance to trumpet success. But successful it is – responsible for £1bn in exports in 2006, and remarkably (given all the complaints over the level of US-sourced programming) – the UK is a net exporter or television content, with the Office of National Statistics showing a £100m surplus over imports.
This is something to be proud of – after all, US media companies, with their huge domestic markets, have an innate advantage when it comes to funding production. That British companies are more than holding their own is a real achievement – and a reminder of how increasingly international the media markets are.
The web-based media market has no such statistics published about its contribution to the balance of payments – but it’s a pretty safe bet that we’re a net importer, with MSN, Yahoo, Google and AOL mopping up a substantial part of the market in the UK.
The web media market is a truly international one, dominated by a few mostly US companies who have benefited from their huge domestic market size, access to receptive capital markets and little domestic regulation.
But whilst the UK TV industry has evolved to become a sophisticated international business competing on a global stage, it’s notable that regulators and legislators still seem to hark back to the village days.
Andy Burnham, Secretary of State for the Department for Culture, Media and Sport used his speech to the Convergence Think Tank last month to announce that the UK would be rejecting the EU’s directive allowing product placement on TV.
His concern was that product placement ‘contaminates’ programmes, and that "British programming has an integrity that is revered around the world and I don't think we should put that hard-won reputation up for sale."
What’s not clear is whether he thinks this is a commercial argument or a consumerist one.
Consumers need protection, the theory goes, against the exploitation of their attention. There should be a clear line between commercial messages and content, because implied endorsement that placement brings is untransparent and unethical.
Now, in between living the life digital and the life real, I watch TV from time to time – and it’s pretty clear to me that product placement is rife, both in UK and US-sourced programming.
We’re a bit more subtle in the UK (it typically goes under the guise of ‘set dressing’) but in the US they really go for it. Action series ‘24’ has Ford, Cisco and Apple, whilst American Idol has its judges sitting behind large Coca Cola tumblers and the contestants waiting in the Coke lounge.
Cheesy it might be, but nobody died. As viewers, we’re exposed every day to these placements when we watch American imports (although Idol pixellates the glasses), and nobody really minds.
The reality then is that we’re only actually ‘protected’ from product placement if we watch British TV – the rest of the time we’re fair game; and that renders these rules rather pointless.
On the commercial side, it’s surely the responsibility of the executives of these media companies to decide how they manage their reputation – not the culture minister.
So this pronouncement by the culture minister has little effect beyond hamstringing our domestic industry, taking away a source of revenue from them that helps them to compete in the global media market.
The idea that government would stand in the way of business in this way in the US would be unconscionable – Kangaroo would be celebrated; here, it’s referred to the competition authorities.
If we want to have a strong domestic base for our media companies (both in TV and online), regulation is going to have to catch up with the new world order, and see that the real threat both to businesses and consumers is what happens outside the village.
The media village. It’s a phrase we often use (conscious of its irony) to describe the close-knit and often incestuous community that’s built up around the media and entertainment business in the UK.
It’s a slightly self-deprecating description – perhaps a function of British reserve, a reluctance to trumpet success. But successful it is – responsible for £1bn in exports in 2006, and remarkably (given all the complaints over the level of US-sourced programming) – the UK is a net exporter or television content, with the Office of National Statistics showing a £100m surplus over imports.
This is something to be proud of – after all, US media companies, with their huge domestic markets, have an innate advantage when it comes to funding production. That British companies are more than holding their own is a real achievement – and a reminder of how increasingly international the media markets are.
The web-based media market has no such statistics published about its contribution to the balance of payments – but it’s a pretty safe bet that we’re a net importer, with MSN, Yahoo, Google and AOL mopping up a substantial part of the market in the UK.
The web media market is a truly international one, dominated by a few mostly US companies who have benefited from their huge domestic market size, access to receptive capital markets and little domestic regulation.
But whilst the UK TV industry has evolved to become a sophisticated international business competing on a global stage, it’s notable that regulators and legislators still seem to hark back to the village days.
Andy Burnham, Secretary of State for the Department for Culture, Media and Sport used his speech to the Convergence Think Tank last month to announce that the UK would be rejecting the EU’s directive allowing product placement on TV.
His concern was that product placement ‘contaminates’ programmes, and that "British programming has an integrity that is revered around the world and I don't think we should put that hard-won reputation up for sale."
What’s not clear is whether he thinks this is a commercial argument or a consumerist one.
Consumers need protection, the theory goes, against the exploitation of their attention. There should be a clear line between commercial messages and content, because implied endorsement that placement brings is untransparent and unethical.
Now, in between living the life digital and the life real, I watch TV from time to time – and it’s pretty clear to me that product placement is rife, both in UK and US-sourced programming.
We’re a bit more subtle in the UK (it typically goes under the guise of ‘set dressing’) but in the US they really go for it. Action series ‘24’ has Ford, Cisco and Apple, whilst American Idol has its judges sitting behind large Coca Cola tumblers and the contestants waiting in the Coke lounge.
Cheesy it might be, but nobody died. As viewers, we’re exposed every day to these placements when we watch American imports (although Idol pixellates the glasses), and nobody really minds.
The reality then is that we’re only actually ‘protected’ from product placement if we watch British TV – the rest of the time we’re fair game; and that renders these rules rather pointless.
On the commercial side, it’s surely the responsibility of the executives of these media companies to decide how they manage their reputation – not the culture minister.
So this pronouncement by the culture minister has little effect beyond hamstringing our domestic industry, taking away a source of revenue from them that helps them to compete in the global media market.
The idea that government would stand in the way of business in this way in the US would be unconscionable – Kangaroo would be celebrated; here, it’s referred to the competition authorities.
If we want to have a strong domestic base for our media companies (both in TV and online), regulation is going to have to catch up with the new world order, and see that the real threat both to businesses and consumers is what happens outside the village.
Thursday, June 26, 2008
Is marketing still fit for purpose?
A version of this piece was published in Marketing in 2008
Is marketing no longer fit for purpose?
Mass marketing emerged to deal with distance. To bring products from a marketing department in one city to small towns in Idaho and Italy.
Brands were a tool of that process - a ‘wrapper’ for all the rational and emotional attributes of a product that enabled that idea to survive intact when fired in the marketing cannon from Cincinnati to Cassadaga.
In the first place, it was the development of mass media that enabled this communication over distance – initially through newspapers, which followed the growth in literacy under the Victorians.
Before, many products were commodities – sold unbranded by local retailers. Soap (cut from a large bar), butter (bought by the pound).
But having first enabled the creation of brands, mass media evolved to deliver them – networks first of radio stations then of television, syndication, local opt-outs, national reach. The techniques of mass marketing were honed over many years to make it work better, and they were developed in an environment where the tools were limited to broadcast and print.
These were all techniques that were designed to work at a distance, and when consumers had little access to another view than those of the owners of brands and the controllers of media.
But digital has changed that. Digital has rendered distance unimportant. Our friends on Facebook can as easily be in Auckland as Altringham, and teenagers number their friends in the hundreds in these social networks, because they’ve shaken off the bounds of geography.
And we take our friends’ views as seriously as we do professionals. An AOL/Henley Centre survey shows that respondents regard the opinions of other consumers as being just as important as those of experts when considering a purchase.
So our circle is wider, and our attention is divided now between the noise of advertising and the voices of other consumers – and those consumers are becoming more influential as our culture and our economy become digital.
The wrapper we call brand is a thin one. It remains intact only if consumers’ experience of us is consistent with the idea we’ve communicated.
Now, though, our performance is talked about. It’s shared. It’s public (and measured). Ask anyone in financial services, where Moneysupermarket compares their products for consumers, making clear the performance differentials. See how USwitch exposes the differences between utility providers, whilst hundreds of websites have sprung up reviewing and publishing data around schools, consumer electronics, cars, and neighbourhoods.
What has emerged is proximity.
Now, consumers can get close to brands. They can see under the wrapper, without having to buy – know our flaws, our shortcomings, our benefits and our strengths.
So now, we have to do two things.
Engage – listen, support, connect, involve our consumers – both in development of product and delivery of service.
Deliver – do what we say we will, avoiding what Chris Clark at HSBC calls that ‘mind the gap’ moment.
To an uncomfortably large degree, a marketing department isn’t operationally concerned with either of these. It commonly lacks the tools even if it has the will to engage with consumers in any meaningful or sustainable way, and misses the support of the rest of the organisation to deliver on the wishes of consumers – whether that’s HR, operations or finance.
So it’s a challenge that shouldn’t be underestimated for marketing departments. But success here means the wrapper we put round products becomes stronger, more robust. It strengthens brand premium, supports differentiation, promotes loyalty.
Because whilst in the past, distance might have allowed us to get away with a gap between brand promise and product delivery, consumers are close enough to see now.
If marketing yesterday was about conquering distance, today it’s about mastering proximity. And marketing will have to reflect this if it’s going to be fit for purpose tomorrow.
Is marketing no longer fit for purpose?
Mass marketing emerged to deal with distance. To bring products from a marketing department in one city to small towns in Idaho and Italy.
Brands were a tool of that process - a ‘wrapper’ for all the rational and emotional attributes of a product that enabled that idea to survive intact when fired in the marketing cannon from Cincinnati to Cassadaga.
In the first place, it was the development of mass media that enabled this communication over distance – initially through newspapers, which followed the growth in literacy under the Victorians.
Before, many products were commodities – sold unbranded by local retailers. Soap (cut from a large bar), butter (bought by the pound).
But having first enabled the creation of brands, mass media evolved to deliver them – networks first of radio stations then of television, syndication, local opt-outs, national reach. The techniques of mass marketing were honed over many years to make it work better, and they were developed in an environment where the tools were limited to broadcast and print.
These were all techniques that were designed to work at a distance, and when consumers had little access to another view than those of the owners of brands and the controllers of media.
But digital has changed that. Digital has rendered distance unimportant. Our friends on Facebook can as easily be in Auckland as Altringham, and teenagers number their friends in the hundreds in these social networks, because they’ve shaken off the bounds of geography.
And we take our friends’ views as seriously as we do professionals. An AOL/Henley Centre survey shows that respondents regard the opinions of other consumers as being just as important as those of experts when considering a purchase.
So our circle is wider, and our attention is divided now between the noise of advertising and the voices of other consumers – and those consumers are becoming more influential as our culture and our economy become digital.
The wrapper we call brand is a thin one. It remains intact only if consumers’ experience of us is consistent with the idea we’ve communicated.
Now, though, our performance is talked about. It’s shared. It’s public (and measured). Ask anyone in financial services, where Moneysupermarket compares their products for consumers, making clear the performance differentials. See how USwitch exposes the differences between utility providers, whilst hundreds of websites have sprung up reviewing and publishing data around schools, consumer electronics, cars, and neighbourhoods.
What has emerged is proximity.
Now, consumers can get close to brands. They can see under the wrapper, without having to buy – know our flaws, our shortcomings, our benefits and our strengths.
So now, we have to do two things.
Engage – listen, support, connect, involve our consumers – both in development of product and delivery of service.
Deliver – do what we say we will, avoiding what Chris Clark at HSBC calls that ‘mind the gap’ moment.
To an uncomfortably large degree, a marketing department isn’t operationally concerned with either of these. It commonly lacks the tools even if it has the will to engage with consumers in any meaningful or sustainable way, and misses the support of the rest of the organisation to deliver on the wishes of consumers – whether that’s HR, operations or finance.
So it’s a challenge that shouldn’t be underestimated for marketing departments. But success here means the wrapper we put round products becomes stronger, more robust. It strengthens brand premium, supports differentiation, promotes loyalty.
Because whilst in the past, distance might have allowed us to get away with a gap between brand promise and product delivery, consumers are close enough to see now.
If marketing yesterday was about conquering distance, today it’s about mastering proximity. And marketing will have to reflect this if it’s going to be fit for purpose tomorrow.
Thursday, June 19, 2008
What's holding mobile advertising back?
A version of this piece was published in Marketing in 2008
In the digital world as we all know, every year is going to be the year of the mobile. The networks haven’t forgotten the £22 billion spent on 3G licences, and they’d love to see the mobile ad market take off like the web did – growing almost 14,000% since 1998.
With estimates of the current market varying between £10m and £20m, if there’s one thing most people agree, it’s that there’s not a lot to go around.
But with flat-rate data tariffs and usable devices like the iPhone well established, it looks like some of the key obstacles are starting to disappear. Though whilst many observers feel mobile is set to take off at last, their optimism may still be premature.
Because whilst the industry’s focus remains on the high-level reasons why mobile has been slow to take off (consumer understanding, technology uptake) there are five simple hygiene factors that are blocking progress right now – exactly as they blocked progress ten years ago for web advertising. Fix these, and the market could be ready to go – fail to address them, and it’ll be pushing water uphill for the foreseeable future.
First, standardising banner ads. Before the IAB standardised banner sizes for the web, production costs often outstripped media – often making online campaigns uneconomic. Resolving this helped online advertising become a manageable proposition, rather than a production black hole – and mobile really needs to fix this. Although the Mobile Marketing Association published some standards in April, uptake has been very slow, and this area is still confusing and expensive.
Second, audience size. The lack of critical mass in the mobile market continues to be an obstacle, with mobile campaigns remaining too small for many agencies to be able to work on them. On the web, this was cured by networks forming to aggregate media sales into buyably large chunks. In mobile, we’ve seen some progress recently with Nokia forming its own sales network, but the market is still too fragmented and will benefit from further consolidation of sales channels.
Third, pricing. If you’re selling media in mobile you’re not going to like this, and you’ll probably say that I would say this. So here goes anyway. You’re too expensive. Right now, cost per thousands in mobile are absurdly high – supported more by ‘experimentation’ budgets than by real commercial demand. Coupled with high production costs, mobile advertising struggles to be cost-effective – certainly next to the web.
There’s every reason to believe that rates should be high in the future (quality of audience, interaction, location) – but right now there’s no research to justify it, and rates are going to have to come down before they can go up.
Fourth, and this is just the order they spring to mind, third party adserving. It’s hard to overemphasise how important this is. For web advertising it is fundamental to agencies’ ability to do their jobs. It enables them to distribute advertising copy (without needing to check manually that it’s running correctly), to target it at individuals and to measure success.
Without it, web advertising would never have proved the case for its cost-effectiveness to advertisers – and just as fundamentally, agencies would never be able to manage the administration that derives from running billions of banners every month.
But adserving still doesn’t exist in any meaningful sense in mobile. And until it does, mobile advertising will remain a largely manual process – restricted both in scale and transparency.
Finally, surely the easiest to fix. Just as with web advertising ten years ago, delivery is terrible. Campaigns start late, finish late and fail to deliver. Without these basics, the marketing community is never going to take mobile up – no matter how attractive the audience.
There isn’t one of these five factors that couldn’t be fixed. But if the mobile business is going to enjoy the boom it’s been looking forward to for so long, it needs to get the basics right first.
In the digital world as we all know, every year is going to be the year of the mobile. The networks haven’t forgotten the £22 billion spent on 3G licences, and they’d love to see the mobile ad market take off like the web did – growing almost 14,000% since 1998.
With estimates of the current market varying between £10m and £20m, if there’s one thing most people agree, it’s that there’s not a lot to go around.
But with flat-rate data tariffs and usable devices like the iPhone well established, it looks like some of the key obstacles are starting to disappear. Though whilst many observers feel mobile is set to take off at last, their optimism may still be premature.
Because whilst the industry’s focus remains on the high-level reasons why mobile has been slow to take off (consumer understanding, technology uptake) there are five simple hygiene factors that are blocking progress right now – exactly as they blocked progress ten years ago for web advertising. Fix these, and the market could be ready to go – fail to address them, and it’ll be pushing water uphill for the foreseeable future.
First, standardising banner ads. Before the IAB standardised banner sizes for the web, production costs often outstripped media – often making online campaigns uneconomic. Resolving this helped online advertising become a manageable proposition, rather than a production black hole – and mobile really needs to fix this. Although the Mobile Marketing Association published some standards in April, uptake has been very slow, and this area is still confusing and expensive.
Second, audience size. The lack of critical mass in the mobile market continues to be an obstacle, with mobile campaigns remaining too small for many agencies to be able to work on them. On the web, this was cured by networks forming to aggregate media sales into buyably large chunks. In mobile, we’ve seen some progress recently with Nokia forming its own sales network, but the market is still too fragmented and will benefit from further consolidation of sales channels.
Third, pricing. If you’re selling media in mobile you’re not going to like this, and you’ll probably say that I would say this. So here goes anyway. You’re too expensive. Right now, cost per thousands in mobile are absurdly high – supported more by ‘experimentation’ budgets than by real commercial demand. Coupled with high production costs, mobile advertising struggles to be cost-effective – certainly next to the web.
There’s every reason to believe that rates should be high in the future (quality of audience, interaction, location) – but right now there’s no research to justify it, and rates are going to have to come down before they can go up.
Fourth, and this is just the order they spring to mind, third party adserving. It’s hard to overemphasise how important this is. For web advertising it is fundamental to agencies’ ability to do their jobs. It enables them to distribute advertising copy (without needing to check manually that it’s running correctly), to target it at individuals and to measure success.
Without it, web advertising would never have proved the case for its cost-effectiveness to advertisers – and just as fundamentally, agencies would never be able to manage the administration that derives from running billions of banners every month.
But adserving still doesn’t exist in any meaningful sense in mobile. And until it does, mobile advertising will remain a largely manual process – restricted both in scale and transparency.
Finally, surely the easiest to fix. Just as with web advertising ten years ago, delivery is terrible. Campaigns start late, finish late and fail to deliver. Without these basics, the marketing community is never going to take mobile up – no matter how attractive the audience.
There isn’t one of these five factors that couldn’t be fixed. But if the mobile business is going to enjoy the boom it’s been looking forward to for so long, it needs to get the basics right first.
Thursday, June 12, 2008
Will all media be digital eventually?
A version of this piece was published in Marketing in 2008
For the last eleven years, I’ve sought out my respite from the digital maelstrom on a small Greek island.
Just a few years ago, there was no cellphone coverage, getting on the internet required you to dismantle the phone socket, twisting the wires together and holding them in place with sellotape (or band-aid on one occasion), and the one internet café on the island offered two computers sharing one ponderous dialup connection.
It was charming, idiosyncratic, picturesque. After a few days, it was pretty annoying.
But arriving there last week, it’s all change. Instead of upgrading the phone system (still rather antiquated), they’ve gone straight to wifi. Across the island, laptops can be used pretty much anywhere (though the sand remains a problem) and it’s brought the global media village crashing in.
Islanders who have spent their lives getting the papers a day late (a week late in winter) are now keeping facebook profiles. They’re downloading episodes of Lost. They’re video conferencing on Skype. They’re more online than we are.
Their media world has changed beyond recognition, and it’s not been a gradual process.
It was a reminder of what we’ve been through in the last ten years, as email, instant messenger, online shopping, Google, eBay, iPlayer have reshaped our access to information, to media and to each other.
But it was also a reminder that this change continues unabated in lead markets like the UK just as less developed countries catch up.
Last week’s Washington Post carried an interview with Steve Ballmer, Microsoft’s ever ebullient CEO, who predicted that by 2018, all media would be delivered via the internet. “There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”
Of course, we can all see why Microsoft would like it to be so. But how realistic is this?
Already, cinema is transitioning to digital, fundamentally changing the distribution economics of the medium and enabling more choice in cinemas, as well as altering the way advertising can be delivered and targeted.
Internet radio has been around for years, but ironically it’s wireless that’s causing a new surge in popularity as portable internet radios that connect through a domestic wifi network become common.
Viacom is wiring the London Underground for digital advertising, launching cross-track HD projection later this year, and anyone who’s ever visited Japan or South Korea will have seen the explosion in massive digital billboards there.
But it’s print and TV that are the biggest prizes. Ballmer complains that TV is insufficiently interactive (his son plays Xbox games through the night with people around the world, and TV just isn’t that engaging), and that it fails to offer sufficiently personalised content – he’d like to watch his high-school football matches from back in Detroit – he knows they’re videoed, but he’d love to watch them online.
He’s right. The internet is raising the bar; changing consumers’ expectations of what other media will deliver. In time, it will be consumer demand, not technological change, that will make TV an internet delivered medium. Technology is the enabler, but it will be consumers that will decide – and no matter what the current establishment might hope for, TV will be a massively more attractive medium when consumers can control their consumption (as PVRs show).
Which leaves print. Whilst the convenience and indestructability of paper will ensure it’s around for a long time yet, the economics of printing relies on volume. But as electronic media eat away at that volume, offering up-to-date news, searchability and multimedia, there will come a tipping point where it simply becomes uneconomic to use paper.
Even on a small Greek island, the media world now is almost unrecognisable from ten years ago. As Ballmer cautions, it’s not really important whether digital will dominate in 10, 8 or 14 years, the point is that it is inexorably replacing other media as the means of distribution – and that process isn’t slowing down, it’s accelerating.
For the last eleven years, I’ve sought out my respite from the digital maelstrom on a small Greek island.
Just a few years ago, there was no cellphone coverage, getting on the internet required you to dismantle the phone socket, twisting the wires together and holding them in place with sellotape (or band-aid on one occasion), and the one internet café on the island offered two computers sharing one ponderous dialup connection.
It was charming, idiosyncratic, picturesque. After a few days, it was pretty annoying.
But arriving there last week, it’s all change. Instead of upgrading the phone system (still rather antiquated), they’ve gone straight to wifi. Across the island, laptops can be used pretty much anywhere (though the sand remains a problem) and it’s brought the global media village crashing in.
Islanders who have spent their lives getting the papers a day late (a week late in winter) are now keeping facebook profiles. They’re downloading episodes of Lost. They’re video conferencing on Skype. They’re more online than we are.
Their media world has changed beyond recognition, and it’s not been a gradual process.
It was a reminder of what we’ve been through in the last ten years, as email, instant messenger, online shopping, Google, eBay, iPlayer have reshaped our access to information, to media and to each other.
But it was also a reminder that this change continues unabated in lead markets like the UK just as less developed countries catch up.
Last week’s Washington Post carried an interview with Steve Ballmer, Microsoft’s ever ebullient CEO, who predicted that by 2018, all media would be delivered via the internet. “There will be no newspapers, no magazines that are delivered in paper form. Everything gets delivered in an electronic form.”
Of course, we can all see why Microsoft would like it to be so. But how realistic is this?
Already, cinema is transitioning to digital, fundamentally changing the distribution economics of the medium and enabling more choice in cinemas, as well as altering the way advertising can be delivered and targeted.
Internet radio has been around for years, but ironically it’s wireless that’s causing a new surge in popularity as portable internet radios that connect through a domestic wifi network become common.
Viacom is wiring the London Underground for digital advertising, launching cross-track HD projection later this year, and anyone who’s ever visited Japan or South Korea will have seen the explosion in massive digital billboards there.
But it’s print and TV that are the biggest prizes. Ballmer complains that TV is insufficiently interactive (his son plays Xbox games through the night with people around the world, and TV just isn’t that engaging), and that it fails to offer sufficiently personalised content – he’d like to watch his high-school football matches from back in Detroit – he knows they’re videoed, but he’d love to watch them online.
He’s right. The internet is raising the bar; changing consumers’ expectations of what other media will deliver. In time, it will be consumer demand, not technological change, that will make TV an internet delivered medium. Technology is the enabler, but it will be consumers that will decide – and no matter what the current establishment might hope for, TV will be a massively more attractive medium when consumers can control their consumption (as PVRs show).
Which leaves print. Whilst the convenience and indestructability of paper will ensure it’s around for a long time yet, the economics of printing relies on volume. But as electronic media eat away at that volume, offering up-to-date news, searchability and multimedia, there will come a tipping point where it simply becomes uneconomic to use paper.
Even on a small Greek island, the media world now is almost unrecognisable from ten years ago. As Ballmer cautions, it’s not really important whether digital will dominate in 10, 8 or 14 years, the point is that it is inexorably replacing other media as the means of distribution – and that process isn’t slowing down, it’s accelerating.
Thursday, June 5, 2008
Let a thousand communities bloom
A version of this piece was published in Marketing in 2008
Every time disaster strikes a local area, we hear about the “sense of shock in the community” and the “anger in the local community”. “Community leaders” we hear, are pressing for action. So what is this “Community”?
Maybe you live in Albert Square or Coronation Street, and know all the people who live around you. But I don’t (and I suspect most people don’t), and I’m not really aware of a community.
Cynical maybe, but I always suspected this was just a part of the journalist’s lexicon – they’d perhaps spoken to a couple of people on the street, and somehow “community feeling” sounds more authoritative, more rigorously researched than “a bloke in a pub told me”.
People are thrust together in local areas, brought together by economic factors and accidents of birth and it seems to me are unlikely to share interests with one another, except perhaps by chance.
Which is what makes community on the internet such an exciting phenomenon.
Hundreds of millions of people across the globe participate in real communities, online. They may never have met the people they talk to, but these places are often more real and relevant to them than their local community.
Drawn together by interest, people of all ages are taking part.
Stardoll (a site I’ve written about before) is a tween girl website – aimed at 9-13’s and has 60 million registered users – 8 million of who use the site regularly. Like a virtual paper doll, users can buy clothes (using Stardollars of course) for their dolls and dress them as they like, using clothes from DKNY and Sephora as well as Stardoll’s own lines.
Celebrities like Heidi Klum, Hilary Duff and Avril Lavigne all have deals to have lookalike dolls in the site that users can collect, and some fans spend two hours a day on the site.
This is primarily a solo activity amongst younger users, but as they get to 10, they start to use it to chat with each other, and as one user puts it “you can have friends you don’t know, but you’re really close to them”.
Facebook is probably the best known of the community sites, with the Groups function allowing anyone to set up a special-interest group. Most of these are trivial “I think someone should make Ghostbusters 3” type groups, but many are serious and help people to create and maintain real friendships based around hobbies, professional interests and occasional obsessions.
But Facebook causes expands this out to fundraising for charity – letting any user easily set up a means of donating and encouraging others to follow. From political causes like supporting presidential candidates, to Darfur and global warming, sixty thousand people have created these.
These sites aren’t just a feature of the English-speaking world. Cyworld in Korea has over 90% penetration of 16-24’s, and Hi5 is the most popular social network in Thailand, Portugal and Mexico.
These sites have revolutionised the way we communicate – freeing us from the ties of geography that bind us. They have allowed us to make new friends, and to stay in touch with a closeness that would simply never before have been feasible.
They have changed the shape of conversations – users report that when meeting up with people they stay in contact with via social networks, they cut out that ‘so what have you been up to’ phase and get straight into talking – no preamble or catchup necessary – they already know.
If community ever existed before, it was driven by constraint. Whether you lived in a village in the Cotswolds or a town in Idaho, your neighbours were your community, like it or not.
But now you can choose. Whether your friends live next door, or ten thousand miles away, the internet has, perhaps for the first time in history, allowed us to know the people we like, rather than just like the people we know.
Every time disaster strikes a local area, we hear about the “sense of shock in the community” and the “anger in the local community”. “Community leaders” we hear, are pressing for action. So what is this “Community”?
Maybe you live in Albert Square or Coronation Street, and know all the people who live around you. But I don’t (and I suspect most people don’t), and I’m not really aware of a community.
Cynical maybe, but I always suspected this was just a part of the journalist’s lexicon – they’d perhaps spoken to a couple of people on the street, and somehow “community feeling” sounds more authoritative, more rigorously researched than “a bloke in a pub told me”.
People are thrust together in local areas, brought together by economic factors and accidents of birth and it seems to me are unlikely to share interests with one another, except perhaps by chance.
Which is what makes community on the internet such an exciting phenomenon.
Hundreds of millions of people across the globe participate in real communities, online. They may never have met the people they talk to, but these places are often more real and relevant to them than their local community.
Drawn together by interest, people of all ages are taking part.
Stardoll (a site I’ve written about before) is a tween girl website – aimed at 9-13’s and has 60 million registered users – 8 million of who use the site regularly. Like a virtual paper doll, users can buy clothes (using Stardollars of course) for their dolls and dress them as they like, using clothes from DKNY and Sephora as well as Stardoll’s own lines.
Celebrities like Heidi Klum, Hilary Duff and Avril Lavigne all have deals to have lookalike dolls in the site that users can collect, and some fans spend two hours a day on the site.
This is primarily a solo activity amongst younger users, but as they get to 10, they start to use it to chat with each other, and as one user puts it “you can have friends you don’t know, but you’re really close to them”.
Facebook is probably the best known of the community sites, with the Groups function allowing anyone to set up a special-interest group. Most of these are trivial “I think someone should make Ghostbusters 3” type groups, but many are serious and help people to create and maintain real friendships based around hobbies, professional interests and occasional obsessions.
But Facebook causes expands this out to fundraising for charity – letting any user easily set up a means of donating and encouraging others to follow. From political causes like supporting presidential candidates, to Darfur and global warming, sixty thousand people have created these.
These sites aren’t just a feature of the English-speaking world. Cyworld in Korea has over 90% penetration of 16-24’s, and Hi5 is the most popular social network in Thailand, Portugal and Mexico.
These sites have revolutionised the way we communicate – freeing us from the ties of geography that bind us. They have allowed us to make new friends, and to stay in touch with a closeness that would simply never before have been feasible.
They have changed the shape of conversations – users report that when meeting up with people they stay in contact with via social networks, they cut out that ‘so what have you been up to’ phase and get straight into talking – no preamble or catchup necessary – they already know.
If community ever existed before, it was driven by constraint. Whether you lived in a village in the Cotswolds or a town in Idaho, your neighbours were your community, like it or not.
But now you can choose. Whether your friends live next door, or ten thousand miles away, the internet has, perhaps for the first time in history, allowed us to know the people we like, rather than just like the people we know.
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