Agency Deals - how the industry has failed to grasp the digital opportunity

The media industry has been through a lot recently. Assailed by digital, hunted by procurement, squeezed by the recession, media agencies have had their fair share of these problems; but a new development in recent months spells the end for the model. And far from seizing on the opportunity digital presents to reinvent their business, the industry seems bent on applying a discredited system to the new world too.

To understand why, we need to turn the clock back.

When the great schism between media and creative agencies occurred twenty years ago, the key sales proposition of the newly created media agencies was value. They focused on screwing down rates, and delivering them with cheaper staff.

And on the client side, fuelled by media auditors, procurement were given renewed focus on this newly accountable sector.

The media guys were making big promises, and getting paid less for them. Somebody had to pay, and media owners stepped up to the plate. Agency deals were honed and sharpened, and the market shifted around to accommodate their power.

Broadly an agency deal works like this. An amount of money, or a level of share is granted to a media owner. In return, an amount of media value is granted. The agency then divides this up amongst its clients.

But that division isn’t even. And it isn’t everything.

Some clients get more than others. For every client who’s getting pricing below the average, there has to be another who’s overpaying (or two smaller ones). Even matching clients’ complementary requirements to balance the books isn’t enough, with a rumoured £300m overtraded last year in TV alone.

But the agency tries not to give it all away. If they don’t commit the whole dealbase, they can keep the difference – substantial sums that make up for the uneconomic fees their clients pay.

So why do clients wear this?

For some, being able to report a cheap fee to the board is enough; they’d prefer it if the agency was making money on the side. Others calculate that because they’ve made heavy demands in their appointment negotiation, they’re on the benefit side of the deal book, and therefore ahead on the game. Some are simply being mercilessly exploited.

So even though advertisers get media to fit the agency’s deal rather than their marketing objectives, enough will wear it to make it work, and this has enabled agencies over the years to respond to procurement pressure by steadily reducing their fees.

What’s changed?

Two things.

First, fees have hit a new low. One global media account is rumoured to have changed hands recently for 0.5%. Nobody on the board of that client is asking what they get for that amount, but the answer is simple. They get junior people. Simple media solutions, stacked high and looking cheap. Agencies’ hope that by defining the service tightly, they can make extra by charging for out of scope work. But inexperienced staff don’t know how to spot business development opportunities, and the out of scope rarely appears. And of course there’s the slush fund in the media dealbase to subsidize the fee.

And here’s the final nail in the coffin. Big advertisers have started to abandon the media pitch, instead auctioning the media to lowest bidder. In effect, these advertisers have twigged that the multi-round auction process will cause agencies to cannibalise the slush fund until there’s nothing left.

A few pioneers see digital as the way out of this mess. By focusing on value outputs rather than cost inputs, both advertisers and agencies benefit. But on both sides, many have simply imported the old model. 

Rock bottom fees. No out of scope work. No subsidisation from the deal base. Dumbed down staffing. What’s left for the media industry, and what’s left for GSK’s last-to-the-party media review?

The business of conversation on Twitter

‘Just setting up my twttr’, the first status update on Twitter was sent March 21st 2006 by co-founder Jack Dorsey; 130 years separated it from the first successful telephone call when Bell called “Mr. Watson, come here, I want to see you” and Watson heard each word distinctly, though history doesn’t note how irritated he probably felt.

At first glance, I’m struck by the banality of both the statements; hardly ‘one giant leap for a man’. But whilst Twitter is often criticised for the trivial nature of its content, people forget that the vast majority of phone calls are of the ‘get some milk on the way home’ variety; hardly changing the world.

So the microblogging site that gives you just 140 characters to share your deepest thoughts is four years old.  It’s been hacked by the Iranian Cyber Army, turned down both Google and Facebook as suitors and launched a thousand croissants.

It’s one of the most talked about brands on the internet; all this without turning a bean in profit.

We don’t care about that.  We hear lots about Ashton Kutcher and Stephen ‘I’m stuck in a lift’ Fry on Twitter, and those celebrity brands have certainly found value in connecting directly with their fanbase.  Astronauts tweet from space, babies from the womb.  But beyond those individuals, the question on marketers’ lips is, has business found a way of making money from Twitter?

Mostly, as with Facebook, business activity on Twitter is unfocused, lacks a clear reason for being there, and most importantly, a benefit for customers.  But there are a few exceptions, from big businesses to small, where enterprising people are connecting to consumers for their mutual gain.

Dell has booked $3m in revenue and gained substantially in awareness of its outlet store.  With over 80 Dell-branded Twitter accounts, the company uses the channel for customer service, distributing coupons and exclusive offers to customers regionally.

Best Buy adopted Twitter broadly across its organisation, launching its Twelpforce service with employees encouraged to answer technical queries from consumers in the channel.  They’re not paid to do this, but employees sign up via Best Buy’s own interface and follow a well-crafted set of social media guidelines created by the company.

Hundreds of customer queries are answered every day with typical issues being product recommendations and customer support; ‘If the blue light stays on, it's likely a camera software driver issue with light levels. #twelpforce’, ‘#twelpforce Is there a specific refrigerator you have in mind, most doors will come off’.
Jetblue in the US use it to ‘break down the artificial barriers between customers and the individuals who work at companies’, and report that when customers are better informed about delays and other problems, their treatment of front line staff improves.

KogiBBQ in Los Angeles, a mobile vendor of Korean/Mexican fusion food (you can’t make this stuff up) uses Twitter to let it 58,000 loyal fans know when and where its trucks will be.  So if you’re in the market for a stinky leprechaun burrito (there’s no explanation of the Irish content) you need to know the ‘Alibi room grill is fixed!! Come on back and grab some gruba!!’

What distinguishes these successful brands is their eagerness to connect with consumers.  The overwhelming majority of conversations are about them, rather than with them; and they flourish by being a part of the conversation rather than being a broadcaster.

It speaks volumes about their openness, and puts a human face on the corporation.

And mass marketers who dismiss the traffic volume as irrelevant are missing one important thing.  Both Bing and Google index Twitter; and the recency of the content drives it right up the results.  So when consumers search for your brand, you’d better hope the conversation’s good.

The death of serendipity?

A version of this was published in marketing magazine in Feb 2009; this piece looks at how the internet threatens to paint us into an intellectual corner.  Eli Pariser of MoveOn also speaks about this at TED in 2011 (no link published yet).

 

In a 1754 letter, the writer Horace Walpole coined the term ‘serendipity’ – a word he derived from an old Persian tale, ‘The Three Princes of Serendip’.  In the story, the protagonists always benefited from unplanned discoveries, and these seemingly random occurrences ultimately enabled them to fulfil their mission.

Early in the development of the web, the capacity of the internet to surprise and divert us was recognised with the phrase ‘web-surfing’ - following links through the internet that led to places the reader had never anticipated when starting their mouse-journey.

And although web-surfing rarely created the sort of benefits the three princes sought (wealth, kingdoms, marriage to beautiful princesses etc.), the web was seen as a force that opened up our horizons – exposed us to new thinking, concepts and ideologies.  But now, there’s an increasing concern that far from expanding our horizons, digital media in general are making our worlds smaller.

In the analogue age, the shortage of bandwidth meant few TV channels – so ideas competed for exposure, and we had little choice but to see them.  Now, we can watch the God Channel, the Wine Channel, the Gay Network on Sky, and never be exposed to atheists, real ale fans or Jeremy Clarkson.

On the internet, collaborative filtering means we passively influence others when we do things online.  We can shop at Amazon, and be shown other books purchased by people who bought the book we’re interested in, and listen to Last.FM where similar listening profiles will suggest tracks we might like.  In this way, our choice of music and books is swayed by people whose consumption patterns indicate they’re like us.

Social networking has added another dimension to this, enabling us to hang out with people who share our views, rather than merely people who share our geographic location.  Now, we can hang out with others who believe in reincarnation, UFOs, homeopathy or banking, and never trouble ourselves with views that run contrary to our own.

Increasingly it seems, digital media perform a reductive role in our lives – patting us on the back and telling us we’re right, and keeping anything unsettlingly different away from us.

Just as it’s said that the Queen believes the world smells of fresh paint and the national anthem’s playing everywhere, we’re constantly presented with a worldview that induces complacency. 

The world looks comfortable, unchallenging and familiar, and it appeals to what sociologists call homophily – the ‘birds of a feather’ tendency of people to cluster around things that are common to them.

Isn’t this good though?  Isn’t it great that if we like Aretha Franklin we could discover Etta James?

Undoubtedly.  But we’re never going to hear Bach’s double violin concerto, or the Dead Kennedys. 

Which makes a new development on LibraryThing.com interesting – this website for people to catalogue and share their libraries recently launched the ‘unsuggester’ – a tool they describe as ‘the worst recommendation tool ever’.  It uses statistical analysis of users’ libraries to determine the books least likely to exist in the same collection – type in Immanuel Kant’s ‘Critique of Pure Reason’, and it suggests ‘Confessions of a Shopaholic’; enter ‘Henry Kissenger’ and you get ‘Terry Pratchett’.

Unsuggester is fun, but it tries to address a serious issue.

When we launch new products, we challenge behaviour patterns.  When we try to attract new customers, we’re asking them to do something different.  If the effect of homophily is to fuel people’s insularity and build resistance against change, then in the future it will be harder to talk to people unbidden, more difficult to create new relationships.

As marketers, homophily can reinforce our brand relationships.  But it can also stand in the way of new ones, and addressing this might just benefit from some serendipity.

If we can believe the numbers, change is accelerating

This article was first published in Marketing magazine.

This is the one hundredth column I’ve written for Marketing. 100 is an important number in western culture – we follow the FTSE 100, the Billboard 100, we review after the first 100 days and we can never forget Haircut 100.

So this week I’m going to look at some of the numbers that tell us a little about how digital has taken our world by storm. The Web is 6555 days old today, counting from when Tim Berners-Lee and Robert Cailliau submitted their WorldWideWeb: Proposal for a Hypertext Project – the first use of the WWW term, and even for someone like me who lives and breathes this stuff, some of the figures are staggering.

Then, the internet was a purely text-based environment. But Berners-Lee and Cailliau’s idea of marrying it with hypertext caused a revolution. And despite British Telecom’s failed attempt to enforce a patent in 2002 on hyperlinks, the web has become perhaps the single biggest force for change since the invention of walking.

Every possible permutation of 3 character .com domains has been registered. The BBC has 43 different translations of its website, Facebook has 63.

Worldwide, 74 billion searches are made each month, and the size of the index held by search engines continues to grow apace. In 2001, searching for "search engine optimisation” threw up 12,300 results in Google. That number today is 77.8 million – an increase of 632,420%.

The average monthly number of searches per searcher in the UK is 124 - the same as the average number of cups of tea per Briton per month. And although those results are delivered in the blink of an eye, so far this year according to worldometers.com, users have spent 24 trillion hours waiting for web pages to download.

Perhaps it was worth the wait. In the US, 1 of every 8 couples getting married last year met over the internet.

Proof though that the internet is not immune from external fiscal factors came with the creation of President Bush’s economic stimulus plan, which involved sending cheques of up to $1200 to taxpayers. It was widely reported as having created a 30% boost in internet pornography revenues, which currently run at $3075 per second (or 0.18% of global GDP).

30% of internet users have made a purchase (and possibly had their identity stolen) from spam emails. A recent study also showed that less than one in one million spam emails actually lead to sale – which explains why there are so many of them.

After years stuck in your computer, mobile is becoming a serious force in digital. The number of text messages sent and received every day exceeds the world’s population, and A SIM-free mobile phone sells on eBay every 17 seconds – part of the 1.3 billion handsets that are expected to be sold this year.

Ray Kurzweil’s Law of Accelerating Returns describes the exponential growth of change in technological progress. He believes Moore’s Law (the processing power available for a dollar doubles every two years) can be applied to our broader experience of technology. Let’s consider; agriculture appeared 12,000 years ago. The first cities appeared 6,000 years ago, printing 532 years ago, TV 80 years ago, the internet 18 years ago.

If he’s right, half the change we’ve experienced since the internet started occurred in the last two years, and the next 18 years will see 362 years’ worth of change.

So our power to predict the future, to plan our businesses and understand our consumers, is increasingly threatened by this acceleration. And the voices that say they now understand digital are the most dangerous of all, because if they understood it yesterday, things are different today.

The Queen takes Buckingham Palace online

This article was first published in marketing magazine.

The good folk of Google UK are steam cleaning the red carpet and practising their curtseys ahead of a visit by royal neighbours, the Queen and the Duke of Edinburgh, this week.

According to Buckingham Palace “the Queen has always kept up to date with the latest technology” although when conferring an honorary knighthood on Bill Gates two years ago, Her Royal Highness let on that she hadn’t yet used a computer.

This hasn’t stopped the house of Windsor’s technological advances though. Last year she became Google’s first royal client, launching her YouTube channel, whose production team she will be meeting when she visits.

Viewers can see videos of this year’s blackcurrant harvest at Sandringham, and catch up on Swan Upping news (fascinating interview with the Queen’s Swan Marker), whilst revisiting old favorites like the 1957 Christmas Broadcast (a million views so far).

Remarkably – if you’re a bit bah-humbug about this sort of thing – it’s pretty popular stuff. The channel exceeded the US President’s White House channel’s daily viewing figures, with nearly 400,000 people visiting it in its first two days, and it continues to trounce Queen Rania of Jordan’s channel with more than twice as many subscribers.

To date the Royal Channel has notched up over 22,000 subscribers, making it the 18th most popular on YouTube, and joining an array of other new media ventures from what HRH calls ‘the firm’, including a podcast of the Christmas Broadcast, a website and an ecommerce venture selling tickets online for visits to royal residences and galleries.

Odd though it might seem for an operation that surrounds itself with people who dress in 19th century outfits, the Royal Family are no strangers to technology. Back in 1980, Prince Philip was at the centre of one of the earliest hacking controversies, when his email account was accessed by two journalists.

So how much of her time does the Queen really spend online? What would a peek at her digital media diary look like?

It is reported that the Queen mastered emailing in the last couple of years and now has a Blackberry so that she can keep in contact with the family while on the move. The Duke of York, the most tech savvy of her heirs, also suggested that her senior aides be equipped with Blackberrys too. And William bought her an iPod two years ago, on which she reportedly stores the Last Night of the Proms.

Last year’s Christmas message was uploaded onto You Tube almost 50 years to the day that her message was broadcast for the first time on TV. Perhaps presciently, the theme of the 1957 speech was technology: “I very much hope that this new medium will make my Christmas message more personal and direct”.

So whilst many would have thought the Queen more silver salver than silver surfer, there’s no doubting The Firm’s determination to reach out using whatever tools come to hand.

The death of deference, particularly in the mainstream media, means the royals share a common objective with politicians, companies and celebrities, to get a message across to the public without editorial interference.

It’s hardly the stream of consciousness ramblings that we’re used to from the blogosphere, but professionally-produced content albeit with a slightly homemade feel. Video captions look like they were produced at home, but there’s a clear strategy here. Show the royals in action – visiting troops, supporting community development, helping charities.

No video footage of junior ranks falling out of Mahiki here – it’s all hard-working nobles, designed to build confidence in the monarchy as a solid, practical and valuable part of UK plc.

Google are used to visits from CEOs who don’t get digital but are keen for the association. But as Googlers stand by their beanbags to show the Queen around, they’ll be welcoming a business that’s seized the web with both hands.

Affiliates at Christmas

This article was first published in marketing magazine.

Last week, I wrote about how marketers can prepare their search activity for Christmas. Whilst search campaigns for the holiday season have been in planning for some time now, there’s still a lot that can be achieved in the short time that’s left before the slimming season takes over.

So assuming that search is all sorted now, this week we’re going to look at affiliate marketing. Unlike search, there aren’t many different strategies needed at Christmas – rather it’s the intensity of competition that demands merchants up their game.

Weakness on the high street is leading more retailers to focus effort and investment on their internet plays, and this fourth quarter is likely to see some of the most intense rivalry yet, as merchants compete for customers’ hard-earned cash.

I’m going to look at three actions that are specific to the season, and at elements of good practice that simply become more important as competition peaks.

First, content affiliates – who run websites with content designed to draw in traffic mostly sourced from natural search. Most will be optimising their sites for Christmas right now so those merchants that can provide them with copy, product ideas and creative in good time will stand more chance of being featured prominently.

Secondly, some affiliates specialise in Christmas – creating sites and search campaigns aimed directly at consumers looking for seasonal goods. Your existing year-round affiliate relationships may not include these outlets, and it’s useful to review coverage at this time of year to ensure you’re represented here.

These specialists look to get their sites up and running three months in advance of the season’s peak in order to maximise coverage within the search engines’ natural listings. But many will still be finalising sites over the next couple of weeks – so there’s still time to get materials out to them.

As ever with affiliate marketing this is about effective communication. The offer to affiliates itself is one thing, but building a direct relationship with affiliate partners stimulates lower churn and better prominence, as well as useful intelligence about what affiliates are looking for to drive their businesses.

You wouldn’t manage a sales force through email alone, and affiliates are no different. They have their own goals, marketplace dynamics and challenges to their businesses – a dialogue with them not only enables them to work more effectively on your behalf, it enables you to shape your offer around what they need – keeping you ahead of the competition.

Third, as with search, if you can capture data and good practice around seasonal activity, this becomes a vital resource for future campaigns. Key actions can be recorded and used to build a process which can be applied repeatedly, benefiting from the ongoing accumulation of experience.

And you won’t have to wait until Christmas to apply it. Half term, Valentine’s Day, financial year end, Easter – all present seasonal opportunities which affiliates cluster around, and all therefore present an opportunity to dust off your model on a regular basis.

Affiliate marketing is a burgeoning sector which is becoming increasingly complex as it grows in value as a route to market. The competitive peak around Christmas will test merchants’ capabilities in managing this channel, and a good performance here will provide solid experience for the year.

Affiliate marketing was a £3 billion market in 2007, and it’s still growing fast as consumers increasingly turn to the web for purchases in the tightening economy. Christmas 2008 will be the biggest yet – and there’s little time left to grab a piece of the action.

Planning search for Christmas

This article was first published in marketing magazine

If you’ve got children, you’ll know the degree of forward planning that goes into Christmas. Mine started early lobbying (landscape analysis, benchmarking) in August, and by mid-September, their campaign had moved into a fully active phase.

Goals had been established, and broad strategies to achieve them put in place. Without being consciously aware of it, I’ve already got high spontaneous recall scores for ‘Lego Secret Agent Truck’, and ‘ponies’ (my daughter has audacious goals, and I’m not sure it’d go in the garage).

On the other side of the fence, retailers have been working away for months preparing their offerings. Christmas store designs were signed off months ago, and bets made about winning lines for the season.

But online, (with some notable exceptions) few retailers pay as much attention to Christmas planning as they do offline. This is particularly true in search – a key channel as the shopping season swings into action. So this week I’m going to look at three of the most important things you can do to get set for Q4 – there are plenty more, but space as ever is at a premium.

First, what happened last time? Smart search advertisers create separate campaigns for Christmas. This allows full control over seasonal inventory, facilitates independent measurement and creates a module that can easily be amended and re-used each year.

If your search team did this last year, you’ve got segregated performance data to go back to and see what worked and what didn’t, and this is the starting point for planning 2008. If they didn’t (and you still plan to be around next year), now’s the time to get this set up – you’ll thank yourself in 2009.

Analysis of historic data will help forecasting and ensure that the seasonal opportunity is maximised. Additional seasonal traffic, plus increased competition can push up CPC levels, so don’t miss out on sales by running out of budget.

This is easier said than done – after all competitor activity can drive up your volumes too, and to avoid being caught out you need to keep an ear to the ground.

So making sufficient funds available is vital to avoid disappearing from the search results just when there’s a spike in interest in your product or sector. But as ever, just being there isn’t enough.

Copy is always hugely influential on effectiveness, and at Christmas your advertising and product offering may be quite different to the rest of the year. This needs to be reflected in the integration of seasonal offers into ad creative messaging and the testing of different offers to maximise clickthrough and conversion. So test special offers, price reductions, free delivery and gift wrapping – but make sure your landing pages reiterate the offer.

This is one of the commonest mistakes. When you put a sign in the shop window saying ‘free giftwrap’, think how many consumers nevertheless ask whether you do free giftwrap before making a purchase. They don’t wait until after they’ve bought, instead they seek reassurance before they buy.

So by using the homepage to repeat the offer that’s brought them in, you’re offering the reassurance that the assistant gives in-store.

Finally, technology. Using an XML product feed as part of a search marketing platform allows stock availability to be used as a dynamic control in your search campaign. So when an item goes out of stock, keywords can be paused - minimising wasted clicks and ensuring budget is diverted to best sellers or available products.

Christmas is a time when spikes in demand can play havoc with inventory control, and the application of technologies like this can improve customers’ experience of a retailer, whilst also enhancing the effectiveness of its advertising budget.

I hope my kids get what they want this Christmas, and if they do, it’ll be in no small part down to their clear objectives, consistent strategy, and the groundwork they put in early on. They’re already halfway through their campaign - what chance do I stand?

Integrated agency: rather missing the point...

This article was first published in marketing magazine


What does integration mean?

It’s a word we’re hearing a lot at the moment, and as you might expect, there are a lot of agendas in play here.

Back in the early eighties when direct marketing agencies started springing up all over the place, the integration argument was a hot topic – “how”, asked marketers then, “can I integrate my brand and direct activity?”

These marketers were concerned principally with media leverage and creative consistency, and the agency networks responded by acquiring DM agencies. But as marketers have discovered, there’s a difference between acquisition and integration – and plenty of DM agencies still exist separately, even within networks.

But does this mean the work isn’t integrated? Of course not. Many marketers have found that so-called ‘integrated’ agencies might be convenient, but they sacrifice focus and expertise to achieve this.

Think of the Swiss Army knife. It’s not a very good screwdriver - the corkscrew is painful to use and even the knife isn’t the best knife you can use. But you can put it in your pocket, and it’s useful for lightweight general occasions – though you won’t use it if you’ve got serious work to do.

Right now, this argument’s being rehashed in digital media, where the agency networks tell us they’re upping their game, “putting digital at the heart of the organisation”.

They point to dozens of studies that show that TV and press influence response rates to digital advertising, and stress the convenience of one call for busy marketers.

But to be effective in this space, an agency needs to combine triple-A standard display, search, SEO, affiliate marketing, technology and data practises.

Search and affiliate marketing may deliver some of the same outcomes as media, but they’re planned, traded and managed in completely different ways, using different tools and different skills.

SEO is principally a technical discipline, although objective-setting and measurement align it to marketing.

Even media is a different kettle of fish online. Trading uses different models, with agency deals a disadvantage particularly in the current market. Smart agencies are using workflow and knowledge management tools, whilst most agencies still use excel spreadsheets for planning. Media exchanges and auctions are on the horizon, and technology plays a central role in effectiveness.

Finally, data is critical. Sophisticated data models are the key tool here, analysing the interdependency between the different digital channels, the influence of offline, and driving investment based on real customer responses in real time.

If none of these skills look like those of the average traditional media planner or buyer, it’s because they’re not. The networks failed to anticipate their clients’ demands for digital expertise, and are now engaged in an unseemly rush to build capability - but they’re missing two key ingredients.

First, the real challenge of integration is between the different digital channels. Combining digital with offline is relatively straightforward – integrating digital channels requires skills most traditional agencies simply don’t have. So their claimed advantage lies in the easy bit.

And there’s a bigger challenge.

For many brands, the internet is fast becoming the dominant channel for consumers – it’s where they hear about products, buy or make decisions to purchase, and crucially, where we as marketers can hear what they have to say about us.

As this shift happens, it will become the core of marketing activity – sales, advertising, market research and customer service, putting digital at the heart of strategy and making offline media a downstream activity.

So all this focus on integrating the media aspects of digital and offline activity is missing both the real challenge and the real opportunity. This isn’t about administrative convenience. It’s about the challenge of integrating digital’s many complex aspects, and the opportunity of moving marketing itself from a broadcast past to a future that reflects consumers’ new relationship with brands.

Cross media deals, and the absence of the free lunch

A version of this piece was published in Marketing in 2008


As economic belts tighten, advertisers are looking with renewed vigour at getting the best from their media deals. Since the last recession, online has become a major medium – expected to overtake TV this year – and budgets are now substantial.

Encouraged by some agencies, advertisers are looking more closely at how cross-media dealing might create greater pricing efficiencies (procurement speak for cheaper) as increasingly, media groups own properties which span both the traditional and the digital worlds.

But amidst all this hype about synergies and leverage there are some real bear-traps for the unwary here, and some agendas that aren’t altogether straightforward…

Let’s look first at some of the bear-traps.

First, this isn’t a big market opportunity. There’s actually little crossover between the Top 10 traditional media operators and the top 10 in digital – the top ranking traditional media owner in traffic terms is the Daily Mail in July, and that scrapes in at number 10.

The online display market is dominated by the big portals – MSN, Yahoo and AOL, the smallest of which delivers twice the audience of the Mail’s site. Sky might be a 500lb gorilla in the TV market, but it’s at number 14 online. And this raises a further consideration.

When a media owner is selected to meet planning criteria arrived at for the offline property, there’s often a mismatch online. The Telegraph’s audience online is much younger, Channel 4’s is more upmarket and most of the Guardian’s audience is in the US. So plans created for one medium can struggle to translate effectively to the other.

Then there’s measurement. Whilst TV is traded in share and ratings, online is traded in impressions, clicks and outcomes.  Smart operators have been using rating points in online for years – it’s a useful way of creating a point of comparison across media, as well as a sense of the scale of a campaign against the audience size. But the danger here is that the tail comes to wag the dog, as lowest common denominator traditional media metrics can replace more business-centric outcome measures in setting objectives.

Of course, there are positives. Editorial teams can be more effectively motivated, and publishers are often more willing to integrate commercial messages into their content. But of course if it’s just running creative on radio and online that you want, arguably that’s possible without a cross-media deal – your online and offline agencies should work together to make this happen for you; it’s their job. And of course if they do, you’re not constrained to using just the properties of that particular media group – you can do anything you like (almost like media planning really).

Where it really gets sticky though is when you try to account for the value. Both agencies and media owners can get into a media version of find the lady – a great price on one medium concealing poor value in others.

This is particularly the case if the agency creating the deal isn’t particularly expert in one of the media channels – they’re keen to show their openness to using that channel (usually digital) but wouldn’t know a good deal if it jumped up and bit them on the nose.

Worse though, since auditors are often employed on a single medium, these deals are often removed from the audit altogether. So a press audit might omit a deal because it has a substantial online component – and it might be tempting for an agency to load the pricing up on that deal in order to demonstrate deeper discounts on that media owner on the parts of their business that are subject to scrutiny.

Heaven forefend, and I’m sure that never happens.

We all want value for money. But as the economic weather gets wetter, it’s wise to remember that nowhere is the free lunch more elusive than in media.

Chrome represents the start of the new browser wars

A version of this piece was published in Marketing in 2008


The only billionaire I know collects earthmoving equipment. A visit to his house could well involve digging huge holes in the grounds, or filling them in – for him it’s a contemplative process, and a chance to indulge the engineer in him.

I couldn’t help thinking of him when I read Google’s latest announcement – the launch of their own web browser. Google Chrome will compete in what’s beginning to look once more like an interesting market.

The earliest popular web browser was Netscape’s Mosaic, which burst on to the scene in 1994. Within a year, Microsoft had launched Internet Explorer 1.0 which it distributed for free, and the first browser war was under way. By 1997 it was all over and Microsoft’s Internet Explorer began its domination of the sector – leveraging the software giant’s huge distribution strength.

And it’s not until recently that anyone’s been able to challenge this.

Two things have changed since 1997 that have made this possible. The emergence of the open source software movement (where communities of developers cooperate to create software for the common good) challenged the supremacy of big software companies.

Linux in operating systems. Apache in web servers, MySQL in databases, PHP in web programming – these open source projects now dominate the web’s architecture, changing the business model fundamentally for giants like Microsoft, Sun, and IBM. But it isn’t just software for IT people – this has impacted on consumers too, as the not-for-profit Mozilla Foundation’s Firefox browser has reached 20% market share.

According to NetApplications.com, Internet Explorer has fallen from 80% to 72% in the last 18 months, with almost all of this going to Firefox.

And if you install the Firefox browser on your computer, you’ll see a clue to what else has changed. Because integrated into the toolbar in Firefox is a search panel, which provides listings from Google.

Almost all of Mozilla’s income derives from this search panel – their deal with Google helped them earn $61m in 2006 (the last published accounts), since when their market share has rocketed.

Google know that loyalty to their brand is low. Web users will use what’s to hand – it’s why distribution is critical to the search giant’s success, and it’s why Microsoft’s first move as they launched into battle with Google for the search market was to build Windows Live search into Internet Explorer.

The official Google blog is pretty lukewarm about the new browser – “The web gets better with more options and innovations – Chrome is another option”. Hardly a ringing endorsement.

But one thing Chrome does do is tell Google what people are looking at – reporting back your surfing behaviour. It will add more suction to the data hoover that is Google and that may unsettle some.

But the real point of Chrome is a bigger one. The browser is the window not just onto the web, but on to all of the applications that reside there, from online storage (YoStore) to photo-sharing (flickr), word processing, spreadsheets (Google Docs). In the future, it’s believed, most computing power will reside online – accessed through a browser with little stored locally on our computers.

So browsers are a critical battleground for control of access to the future of computing and the internet, and Chrome’s features are designed to target this.

So whilst there’s little on the face of it that consumers can’t currently get from IE or Firefox, Chrome represents a more fundamental shift in direction. And because it’s open source, the development resource going into Chrome will boost progress of Firefox too.

Google are wealthy, and have a history of launching dozens of software plays and little history of making money out of them. But Chrome isn’t just a rich man’s hobby. It’s a sign that massive change is on the way for how we use the internet – a change that’s set to come at Microsoft’s cost.

Shilling your friends the facebook way

A version of this piece was published in Marketing in 2008


A few years ago, I gathered with a group of friends in the living room of a house in Wandsworth. We’d all known each other for years, and we’d convened to hear a sales pitch from Jim for his new business.

Brian had been part of this group of friends since university, everyone knew he was struggling a bit with his income (or lack of it), and he seemed genuinely excited at the prospects this new venture offered.

When he got out his sales materials, we naturally took the piss – but it was good-natured, and we listened to what he had to say. Ten minutes in, and it became clear that what Brian had his hands on was a classic pyramid selling scheme.

He’d never come across one before, and the genius of it swept him up – statistics not being his strong point, he’d not figured out the unsustainability of the plan. His mates gave him a verbal kicking, first for being a mug, then for trying to sell them a pup. Then alcohol became involved, and the story got a bit fuzzier after that.

Brian still cringes whenever the subject is raised (and all his friends know it’s a dead cert when they need to play a joker). But the taboo that was broken was that of pitching your friends.

It’s what makes Facebook’s Social Ads an uncomfortable concept for many people.

Social Ads usually appear in a user’s newsfeed, and allow advertisers to target ads based on other users’ actions within the Facebook network. So if one of your friends bought something through a Facebook application, the system would tell all your friends.

Its first iteration, Beacon, wasn’t opt-in, and caused a storm amongst users, who were surprised to see themselves endorsing all sorts of products. Last month a class action lawsuit was launched by nineteen Facebook users who felt the programme abused their privacy, sharing details of their purchasing habits without their authorisation.

But whilst privacy is undoubtedly important to these users, it’s really just the legal weapon they’re wielding against the company. I can’t help thinking that what’s more hurtful is the abuse of friendship it creates.

So I’m not sure why anyone would opt in to this scheme (perhaps people are more exhibitionist than I think, or think their purchasing habits are more interesting to their friends than I do). But the new Engagement Ads launched last month by the site are nonetheless built on this assumption.

The film, Tropic Thunder, has already trialled the system – running a trailer for the movie that allowed consumers to leave comments about the movie – and other advertisers are already signed up to the programme.

Whilst these are softer, engagement (as the title implies) based concepts, they’re nevertheless making Facebook’s users into (albeit willing) tools of the marketing game.

This isn’t an impossible circle to square, but it’s one that demands great sensitivity and humour – because unless users are aware and happy to participate in a marketing venture of this sort, it will build resentment if they start to feel used – whilst their friends, who are on the receiving end of all this puff will start to see them as what casinos call a ‘shill’ – a player paid by the house to pose as a punter, to get games going and move them up.

And it’s the friends’ views that ultimately will count.

Selling picks and shovels to the goldrush

A version of this piece was published in Marketing in 2008


I was at a conference the other day, where one of the speakers said that the average consumer has more information at her fingertips today than the CIA did ten years ago. I suspect neither the speaker nor I is in any position to judge the accuracy of this, but there’s a truth in it nevertheless, that consumers are nowadays better informed than they have ever been.

Since 1997, the CIA themselves have published their World Factbook online – the authoritative source for data like the land area of Azerbaijan (86,600 square km) and contextual information (it’s slightly smaller than Maine).

The CIA were part of a flood of content-owners who started to make available their information on the early web – from governments to libraries, academics to companies. Now, ordinary people could research anything from Greek mythology to the demographics of UK voting, for which they would previously have needed access to a specialist library (even if one existed nearby).

So a body of knowledge emerged online that enabled research and decision-making. But the sheer volume of information made it difficult to navigate, and so the next stage of the web’s evolution came about with the development of sites which sought to make sense of all this complexity.

The most well-known, Google, launched in 1998 and quickly transformed users’ ability to find their way through the mountain of online knowledge. Price comparison sites developed to help shoppers compare retailers, aggregators launched to put financial products side by side, and other sites like UpMyStreet combined publicly-available data on local property, schools and crime to present users with a picture of their neighbourhood.

All these sites aimed to make sense of what was out there, but in their own way. Each is rightly obsessed with what its consumers want, but broadly provides one way of finding it – like visiting a library, but having to ask the librarian for everything.

Recently though, this thinking has been challenged by a number of sites which allow users to build their own tools.

Facebook was amongst the first, publishing an API (a software ‘key’ that tells developers how to create applications that will integrate with the site). Within weeks thousands had been written, creating a wide range of new features and games for facebook users, and making facebook one of the most popular sites on the web, overtaking its key rival MySpace earlier this year.

Ning isn’t a social network, it’s a site that lets you build your own social network. Public or private, you can build a network for anything you like; a group ski trip, where everyone can post their pictures, videos and comments and stay in touch; an internal company network for employees to share information; a project network for people in different locations to coordinate on a common venture.

Ning puts its social network creation tools in the hands of users, and lets them get on with deciding what to do with it.

And in search, Yahoo has just launched a new service it calls BOSS - Build Your Own Search Service. The toolkit enables users and businesses to create their own search engine – customising the output to their own needs, combining it with other data sources like the user’s own preferences to produce search results that are specific to that site. A travel agent could use the tool to put results from searching their site next to Yahoo results, so a user has more options and doesn’t need to leave the site.

There’s an old adage – that selling picks and shovels to miners on the goldrush was more profitable than being a miner yourself. Mark Zuckerberg, facebook’s founder, clearly appreciated this, and he’s part of a trend that’s subtly altering the architecture of the web, as more and more sites open up the engine room that drives them, allowing a flood to creativity to surge in – and moving the emphasis from informing to equipping consumers.

Luxury goods are struggling to get online

A version of this piece was published in Marketing in 2008


16% of the world now connects to the internet via broadband. But this small group represent 78% of the world’s earnings.

This single fact lies behind the extraordinary growth we’ve seen in online retail over the past ten years. In 2006 total online retail spend grew by 33.4%, 13 times faster than the retail sector, and online clothing sales alone expanded over 40% in that year. According to the ONS, by 2007, 70% of UK web users had bought online.

But as the market has changed beyond recognition for categories like books, music, consumer electronics and insurance, one group of brands as lagged behind – resisting the trend to sell direct, and often discouraging the listing of its products with online retailers.

Concerned that the web didn’t offer brands the quality environment they require to sustain their premium positioning, many luxury brands have steered clear of selling on the web – some electing instead to have ‘brand experience’ sites. Despite this, according to the Luxury Institute, most luxury brand websites are poorly designed and constructed, with MyDeco’s founder Brent Hoberman noting that many make extensive use of Flash animation, making them all but invisible to search engines.

When Tyler Brûlé did the rounds of super-premium brands as he worked on the development of the Monocle magazine/website, he expected to find dazzling on-brand websites and web-savvy marketing directors – “how wrong I was”, he told Luxury Briefing.

Over 9.5 million people worldwide have assets of over $1m, and the luxury goods market is outperforming many markets – growing at over 20% a year in the UK. And since these people are much more likely to be heavy web users, it’s not surprising that the online luxury goods market is expected to grow rapidly – doubling in the next three years.

In Japan, Ledbury Research report that 39% of high earners have purchased an item online at over £1,000, with 28% in the US and 26% in the UK.

For the last eight years, Net-a-Porter.com has been mining this seam, successfully creating a market for high fashion online. The site cleverly reinvents the experiential qualities of boutique shopping through the quality of its editorial – a Vogue where you can buy the clothes, and its pioneering same-day delivery and beautiful packaging have helped to make shopping online exciting for its customers.

Sites like Net-a-porter, Myprestigium, CoutureLab and new UK startup iconicchic.com are filling the void left by the big brands’ reluctance to engage in the online space, and are providing stiff competition for the high street-based retailers as these businesses develop their online offering too.

High end high street fashion retailers Browns and Matches both have online retail operations, whilst Harvey Nichols sells accessories and Harrods has a pretty comprehensive online offering everything from cocktail dresses to confectionery.

These guys aren’t threatened by designers selling direct to the consumer online. If customers can be bothered to wait for the bloated flash-based sites to launch, they’ll rarely find anything to buy, with only around 30% of luxury brands selling online.

But even those who do e-retail merely give the impression they don’t understand either retail or the web. Prada sells online in 15 countries, but has a site built entirely in flash. Gucci’s site is similarly flash-based, whilst Armani has a tiny link on its homepage to ‘shop online’ – clicking on which has no effect (one wonders if anyone’s monitoring sales).

But a few labels are taking on the challenge. Louis Vuitton’s site is elegantly designed and still functional, Paul Smith’s lo-fi but effective.

It’s remarkable that despite the vastness of the market, and the success of retailers in the space, these two are amongst the very small number of luxury labels who are making a serious attempt at ecommerce.

The luxury market online is in its infancy. But since both online and luxury tend to be recession-resistant, we could be seeing a lot more soon.

The avatars are taking over the asylum

A version of this piece was published in Marketing in 2008


Over the last few years, the web has come alive with avatars. The word comes from Hindu mythology, where it describes a spirit coming down to earth; and on Second Life, World of Warcraft and dozens of other online worlds, people use these digital representations of themselves to interact with each other.

But digital being digital, these avatars don’t have to look like you, or even look human. Entire subcultures have emerged for non-human avatars, with their own art, literature and websites.

Furries – anthropomorphic animals with human characteristics, Weres (people who claim – mostly spiritually – to be lycanthropes) and Otherkins (elves, ETs, dragons and other fantasy characters) abound, and have even attracted academic interest.

The University of California (there’s nothing surprising in this sentence) looked at the sexual aspects of furry culture, which is certainly evident in Second Life, where things can get quite, well, hairy.

All this might seem pretty bizarre to the average resident of Tunbridge Wells, not to mention the rest of us, and we might have been able to remain comfortably insulated from this other world carrying on somewhere behind our computer screens.

But avatars are set to break out from the games, worlds and chatrooms they live in, and they could be coming to a website or a TV near you.

Second Life and IBM recently announced a collaboration to bring portability to avatars, allowing them to be transported between games and sites, like characters from Eastenders popping up on Coronation Street.

The idea’s already been pioneered by Weblins.com, who have created a social avatar community that’s spreading across the web. Installing a piece of software on your computer, you get an avatar which you can customise to your preference – man, woman, character from Horton Hears a Who – it’s up to you.

Whenever you visit a website, you’ll see your avatar standing at the bottom of the screen – alongside all the avatars of other people visiting the same site. You can wave to them, wousle them (a bit like poking in facebook), chat to them – the idea is to make visiting a website a social phenomenon, rather than a solo one, and it’s revealing.

The average level of conversation is just as banal as most chat rooms, but if you’ve got a website it could be a valuable tool for talking to customers – when was the last time you could hang out in a website and watch others?

And it’s not just the web that’s seeing avatars shaking off the ties that bind them.

On the Nintendo Wii, players can personalise their Mii – their avatar on the game console. But by selecting the right options, they can set it free to wander around. Since Wii can be connected to the internet, this means your character can start turning up in the audience of your friends’ games – when they’re playing tennis, there you are in the crowd. Importantly though, you’re not controlling this – your Mii goes off to find things to do when you’re not playing the game.

As far as I can tell, nobody’s yet figured out what the point of this is, other than curiosity value.

But its significance is clear. We have no sense of shared experience with the web. With TV, we are conscious of the fact that others are watching the same things we watch, because people talk about what they saw on telly the night before. But online there’s no equivalent water cooler moment – and it’s hard to conceive the number of people who see what you see.

But Weblins and Mii gives you a little of that sense – somehow putting a face to the audience, and an idea of their existence.

The rise of social networking whilst rapid has nevertheless been constrained to individual sites. Portable avatars could change that, embedding social activity into every site, and creating an awareness of others in cyberspace that we take for granted in the real world.

It'll take more than good search to beat Google

A version of this piece was published in Marketing in 2008



The story of David and Goliath has attracted people over the generations, for its tale of hope for the small guy, for triumph in adversity, overcoming the odds. Hannibal, the Cartheginian commander, is remembered not just for that terrible film with Oliver Reed, but amongst military tacticians for his victory at Cannae where he destroyed a Roman army which massively outnumbered him.

This celebration of the underdog reflects our need for heroes, but also our desire to control and check the powerful.

So the launch last week of Cuil (pronounced ‘cool’) a new search engine from some ex-Google staff is interesting not just because of what it is, but what it says about the incumbent.

What it is, is impressive. Cuil claims to index three times as many sites as Google, using an algorithm that looks not at popularity (the number and quality of links pointing to a site) but at context – examining the context in which the searcher’s keywords sit in a page in order to understand better the relevance to a search.

If you look at search in purely rational terms, the user is only looking in reality for one result, not thousands. But Google’s claim to index billions of pages, and then its practice of presenting thousands of them to the searcher, give the illusion of breadth and choice – regardless of whether they find the thing they’re looking for. This is a powerful proposition, and it’s one the Cuil clearly have in mind when they promote themselves as listing three times as many pages as Google.

There’s another noteworthy feature of Cuil – their attitude to privacy. Coming hot on the heels with Google’s experience with a US court demanding they hand over all the viewing data for every user on YouTube, privacy is a weak spot in Google’s armour. Google hang on to the search data of every user for eighteen months – a fact that unsettles privacy campaigners, particularly after AOL’s disastrous public release of thousands of searchers’ data two years ago.

Cuil keeps no data from its users’ searches, and it makes a point of this. They keep no log files, IP addresses or personally identifiable information – as they put it, “Your search history is your business, not ours”.

The search results themselves seem promising – an interesting and different layout to Google’s, with three columns of text and pictures. A sliding box to the right allows the searcher to drill into different categories – so a search for Orange brings up the mobile phone company as first listing, but categories allow you to focus your search into Orange County, California, Orange Sodas or Citrus fruit.

This is smart and useful, because the engine is making a reasonable fist of differentiating between fruit and phones – for which it needs to understand context. It doesn’t always get this right – Sky TV comes first in the listings for a search for ‘sky’, but there’s a Virgin Media logo next to the listing.

So Cuil’s interface is a useful improvement on Google’s. But good search and a useful interface isn’t enough.

A quick look at Google’s Q2 results (which despite disappointment in the markets were still 39% up on the previous year) shows that 31% of their revenues come from partner sites – other websites which carry the Google search box.

Distribution is the key to Google’s massive success – most sites take Google’s AdSense program, and Google pay big money to them; $1.47billion out of the $1.66bn they earned that quarter.

So Google’s success in gaining distribution is down to two key things. The monetisation they drive from each search is better than their competitors, and their ability to model and predict this is better – so they can cut better deals for distribution partners, with stronger guarantees.

This is the barrier to entry for Cuil. It isn’t just the quality of their product – it’s their ability to drive distribution that will determine ultimate success. So Cuil is an interesting launch, but the chances of it launching that single stone that strikes the giant between the eyes are pretty slim.

Politics online is more than WebCameron

A version of this piece was published in Marketing in 2008


As conditions in the economy tighten, oil prices rise and pressure mounts on the Government, thoughts are turning to the next election. By law it has to take place by June 2010, and whilst convention usually puts an election earlier, the current climate could persuade Gordon Brown to take it up to the wire.

But the marketing of politicians and parties is changing, and recent events as the 2008 Democratic Party nomination battle in the US unfolded have shown how both voters and politicians are using digital media more to drive the political agenda.

The Pew Internet and American Life project funds academic research into how Americans use digital media, and a newly-released study has shown a massive growth in voter usage.


According to the report, 46% of Americans have used the internet, email or text messaging to get news about the campaign, share their views and mobilize others.

The internet has impacted on three important areas which have shifted the ground on which the election machine rolls, and in all of them, Barack Obama has been the first mover.

From the start, Obama was at a disadvantage. His campaign had less media access, particularly early on, and it was going to be a challenge to get his story out to people – especially without the editing and editorializing that can so affect a candidate’s message.

Obama’s solution was to go direct. More than any other candidate, he appealed directly to the voter, through blogs and podcasts – reaching out without the interference of the media, and making a point of it – “it is because the internet is a neutral platform that I can put out this podcast without having to go through any corporate media middleman” he wrote.

If Howard Dean had pioneered the political blog in 2004, Obama took campaigning 2.0, using facebook, flickr and YouTube. And Americans responded. 35% watched online political videos in 2008 – almost three times the number in 2004.

But it wasn’t just what Obama used, it was how he used it. Sign up to Hilary Clinton’s Twitter, and you’d start to receive her tweets. Sign up to Obama’s, and within minutes he signed up to yours. Now nobody thinks he’s reading these thousands of (being twitter, mostly mundane) thoughts, but it’s good netiquette – and to users of twitter that just meant he got it.

Just as Clinton’s was a conventional ‘top down’ campaign, Obama’s was a grassroots movement. There are over 500 Obama groups on Facebook, one of the biggest being ‘One Million Strong for Barack’, started the day he announced his candidacy. Within an hour, it had 100 members, a week 10,000 and within a month 278,000 members.

This grassroots dimension was reflected in the two candidates’ approach to fundraising too. Whilst Clinton pitched Hollywood and New York for the deep-pocketed donors that were the traditional sustenance of politicians, Obama’s campaign worked the other end of the scale.

Without Obama hosting a single fundraiser, his campaign raised $55m in February alone – 80% of it online. But the real difference was the size of the donations – over 90% being less than $200. Far from soliciting big donations from a few individuals, Obama’s campaign recognized the ability the web gave them to aggregate millions of small donors, together outrunning anything Clinton could achieve with her big-hitter donors.

In the past, politicians here have made lipservice to the web. Webcameron, untended facebook profiles, uninvolving websites. It may be that politicians still believe the internet is a young people’s medium – and since fewer young people vote (60% of 16-24s against 86% of over 65s last time) it’s not so important.

But the age demographic of the internet has flattened, and the web itself has become a force for voters to involve themselves – in the same way they’ve made themselves heard as consumers.

Obama’s ability to capitalize on the new medium was a decisive factor in his victory. In the next year or so, it could provide just such a surprise here.

Strategy and the short term

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.

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…

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.

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.