Marketing Geek

Brand theories

2010-08-13T08:46:00.000-07:00

A few weeks ago a colleague of mine inquired about the newest thinking of how to build brands in today’s world, either for the relaunch of old brands or for the introduction of complete new brands. This very simple but important question puzzled me a bit and I realized quickly that I did not have a fast and good answer.

Over the last weeks I explored the latest trends, books, and thinking to provide a more comprehensive and powerful answer. I am not done yet but in this quest I learned a few things that seemed relevant:

Any recent brand literature and concepts focus stronger than ever in the past on the design element of the brand building equation. It’s not just the success of a design oriented brand like Apple but as well the need to reinvent and differentiate new brands in a very commoditized environment (e.g. Method and their uniquely designed bottles)
Some of the more popular recently published brand books link the definition of new or relaunched brands to classical defined archetypes (relying on Jung’s thinking about archetypes). A brand can only be successful if it is clearly identified and linked to one of the many archetypes that human beings relating to. Brands are more than ever devices that tell stories, both about themselves and the consumer buying and using the brand.
A lot of trade marketing articles talk about the power of consumers to launch brands but most of these articles forget that there is still always an original brand inventor who came up with the brand concept. It seems that the power of consumers are more relevant in designing the right communication architecture that any brand needs to be successfully launched, nurtured, and set up for long-term growth than in the conceptual launch phase of a brand.
There is a recent trend to bring in more scientific ways of understanding the impact and purpose of brands for the unconscious part of consumer’s minds. Behavioral economics and Neuro-Science have brought a fresh wave of methodologies and experiments to increase the success of newly and relaunched brands. We can expect more from these academically driven disciplines.

Today’s “practice” of brand launch and building seems to follow less two or three predefined proven concepts than a broad array of barely tested methods. This practice has entered an almost playful test ground for many different ways without one best approach. This is probably good news for all of us. I predict the discipline and practice of brand launches to oscillate stronger and stronger between heavily scientific and thoroughly tested ways (in which behavioral economics and neuro-science might play a growing role) and the power of a simple huge brand concept that was born and developed in the lonely brain of a smart person.

Network Sourcing

2010-07-29T01:26:00.000-07:00

Over the last two years crowd sourcing has been a hot topic for a lot of marketing agencies, either positive in case of gathering more interesting ideas from a wide range of free-lancing type talent, or negative in case of clients who avoid paying high fees to agencies by using crowd-sourcing tools to get free ideas.

Interestingly enough, most marketing organizations have misunderstood and misused the concept of crowd sourcing. Instead of using the underlying philosophy and related tools to leverage the internal resources that are quite often spread across tens or hundreds of offices, they perceive it either as a cost efficient way to collect ideas or as a revenue threatening danger utilized by clients. The real power of crowd sourcing can be leveraged when it is understood as network-sourcing to truly build a globally connected organization. This requires a few ingredients:

Put a clear brief, tight timeline, and a democratic evaluation system in the center of the network sourcing assignment that is distributed to a manageable number of people in the organization’s network. More is not always better.
Balance the drive for great ideas with the benefit of utilizing network sourcing as a tool to virtually bring together a normally poorly connected network of physically separated offices. Network-sourcing is both about idea generation and building a connected organization.
Celebrate the winning ideas in a public forum to show the power of the marketing agency as an exciting virtual network that is better than just the sum of all the different global locations
Slowly learn of how this “Closed loop network” can be opened up to some external players without diminishing the focus on the integrating powers of the network-sourcing

The principles of crowd-sourcing will become increasingly a strong approach of how to join large marketing organizations together against one common challenge and brief without the high travel and communication costs and frictions that we have been used to.

Decision Making

2010-06-30T20:25:00.000-07:00

People who have followed this blog over the last years know my passion for understanding of how consumers make decision. That’s why it’s nice to see that Stuart Elliott from the New York Times shows interest and respect for some of the work that I am part. Read his comments in today’s New York Times.

Cannes 2010

2010-06-28T14:15:00.000-07:00

This year’s largest Marketing and Advertising festival in Cannes was once again well visited and showed the largest amounts of submissions from all over the world than ever before. The Cannes festival demonstrated an interesting mix of the usual stereotypical behaviors of people in the industry - young marketers partying hard until the early mornings, scam ads that will never die, and huge egos that can barely walk- with inspiring moments of dialog and presentations from people like Spike Jones who said when asked how much he would need to be paid for a trip to New Zealand: “If you have a good idea, I will sleep on your couch”.

The event allowed for a few interesting observations:

Marketers are hungry to learn: Every single seminar was packed with a minimum numbers of 800 visitors. Marketers, young and old, really come to Cannes to see what their peers have to say and hopefully go back to your respective work areas with some true insights and learning. The hunger for structural solutions of how to deal with our complex marketing world and the interest in big personalities ensured that the seminars were the center piece of Cannes, not necessarily the award shows.
The majority of agencies are still confused: I saw a few agency presentations; most of them have not developed their unique point of view on the industry over the last years. Worse, quite a few agencies seem to be totally lost in a mixture of thought fragments like “Technology is great”, “The consumer wants immediate gratification”, to “The idea still wins” without a comprehensive world view of how their agency is attacking today’s challenges. If I were a client, I would be worried.
The creative quality is very strong: Walking around on the lower level of the palais and studying the different lion’s winner, one has to admit that there is a lot of outstanding, smart, and well produced work, independent of category. It’s exiting and sometimes humbling to see the wealth of great ideas and concepts from all over the world.

The largest gathering of marketers anywhere in the world is always a special, weird, and relevant place to experience. Cannes is definitely an event that one can make jokes about with a lot of good reasons but it remains a powerful and important experience that everyone in our industry should witness at least once.

Cognitive surplus

2010-06-08T09:00:00.000-07:00

This months WIRED magazine has a short but enlightening discussion between Daniel Pink (WIRED contributing editor and author of “Drive: The surprising truth about what motivates us”) and Clay Shirky (author of the upcoming book “Cognitive Surplus: Creativity and Generosity in a connected Age”). They discuss the concept of “Cognitive Surplus” that occurs when people stop being passive media consumer and start creating things that benefit the community and/or their personal lives. Both believe that the ever rising TV consumption hinders people on expressing themselves in any kind of creative form that would beneficial for their communities and themselves. While their arguments and thinking is not necessarily new, their framing of the opportunity is fascinating.

Shirky builds the connection between the positively used free time (when people stop watching as much TV) as a vast reservoir of life changing power and people’s intrinsic motivation of creating things. He claims that most people are not motivated by external factors (e.g. money) but by internal factors that drive their own personal satisfaction. People like putting puzzles together in their free time but if you start paying them, they quickly loose interest.

The cognitive surplus exists if one connects the creatively usable free time of lots of people and put them to use for either something valuable or just enjoyable. Pink and Shirky like to use Wikipedia or Linux as one of the best examples that used cognitive surplus in a positive manner. All of Wikipedia’s work represents over 100 million hours of human labor which seems at first glance a lot but not if you consider that someone born in 1960 will have watched already 50,000 hours of TV alone.

I am not as optimistic as Pink and Shirky in regards to a perceived trends of people moving from passively absorbing to actively engaging but the opportunities to not just create more cognitive surplus but using it, too, is a demanding and challenging one. Every for profit organization has latent “cognitive surplus” that could be utilized, not only for the company’s benefit but for the employees benefit, too. Successful companies in the future will rely strongly on allowing for “cognitive surplus” by providing space and connecting people’s individual “cognitive surplus”. This is not a zero sum game, it’s a one plus game.

The Impression Economy

2010-05-31T10:59:00.000-07:00

Over the last years, the decline of the print business forced the emergence of new business models to align journalist compensations with the brutal truth of their poor publication’s financial situation. An emerging trend seems to be the alignment of journalist’s payments with traffic to their published articles, thereby establishing a very transparent performance metrics system that is rather unusual for large scale organizations and highly educated employees. The number of impressions that a particular article generates determines the compensation that the journalist is receiving. This will definitely lower the average pay for journalists and motivate them to produce primarily traffic generating articles. And it could seriously threaten longer research centric articles and pieces.

But this posting is not trying to engage in the already very heated and difficult discussion but rather explore of how this “Impression economy” (that might be soon the dominant business model in journalism) could have impact on other industries and influence their business models. At minimum this “Impressions economy” could be adapted within the marketing and media industry and for parts of any retail based business that requires physical or virtual traffic.

The key factors of how successful this “Impression Economy” could be will rely on two critical elements:

Impression is a rather crude metrics that does not account for the quality of impression. Recent engagement studies try to better understand the different impact of various impressions on consumers and readers. A high engagement impression could have a value of 10 or 20 low engagement impressions. Any expansion of the Impression economy will require smarter, easier, and scalable metrics systems that connect impression with engagement without creating too much complexity. The beauty of impressions is its real time simplicity that can’t be lost.
Any seemingly inefficient industry where overall business performance could benefit from a better linkeage of individual versus collective performance and thereby reward high performing employees while reducing they pay for lower performing ones. Journalists were the first to hit by the downward pressure of their compensation because of the high cost pressure on newsrooms and publications. They were perceived as highly inefficient organizations with little to no accountability or smart performance measures. Robert Murdoch famously complained about the fact that every Wall Street article will be reviewed and edited by over 8 journalists before final publications (This has now changed since he bought the newspaper but I have not been able to find the new “improved” number).

One nightmare scenario of the “Impression Economy: is that the middle class of well but not very high paid earners could disappear, since only a few people have the talent or luck to attract a high volume of impressions, most people’s impression would play at the end of the long tail and therefore they would only earn a small compensation.

Compensation would not look anymore like a organizational pyramid but like a wine decanter with a few high earners while 95% of all earners would earn close to minimum wages in this “Impression economy”. The optimist would suggest that there will be a rise of “Impression co-operations” that would allow a broader base of people to earn a decent living. The “Impression Economy” might not expand beyond the realm of journalism but we better be ready to understand its underlying mechanics and consequences.

Application Marketing

2010-05-16T17:42:00.000-07:00

Applications are currently the hottest marketing device that brand marketers and agencies are discussing at their still exsiting business luncheons and dinners. They love discuss what kind of iPhone application should a particular brand develop? Or don’t we need to launch a widget that will be heavily used by our core customer group and which can then be leveraged as the biggest word-to-mouth vehicle since “The Blair Witch project”?

I think this whole discussion misses the most critical and insightful point. In most cases it is less about developing new applications than transforming the majority of all other marketing vehicles and programs into something that closer resembles an application. What does this mean?

The definition of an application (grounded in the software world) goes like: “An application is a computer software designed to help the user to perform singular or multiple related specific tasks”. Translating this into the marketing universe I suggest a few additional elements of what defines “application-ness”, what makes an application an application:

Control: The application allows the consumer to have full control of when to use the application. The usage is always determined by the consumer not the brand or the schedule of a media company
Interactivity: There is some level of interaction between user and application that does not lead necessarily to any level of personalization but it allows to millions of different usage paths between consumer and application
Service: Most importantly the application provides a perceived service benefit to the consumer (yes, the vacuum cleaner or a mixer is an application).
Ease of use: The application is making something easier that was previously more difficult, it can relate to one or many tasks, it can make something much more or just slightly easier.

I believe that today’s marketer’s job is much more about making every marketing interaction and program, from TV spot to Display banner or Search term, more application like. This job is more important than creating new isolated applications for in most cases just Apple’s large world of devices. A TV spot that can live outside of a programmed TV schedule and that provides some longer lasting opportunities of interactivity or a display ad that does not lead to the usual microsite but that has some level of targeted interactivity integrates components of application-ness. Ultimately the best modern marketing will become more and more like a service to the consumer that makes something just easier, more interesting, more entertaining, in short: more like an application.

Agency consolidations?

2010-05-09T17:08:00.000-07:00

The 10 years before the early 2000ies showed a strong move towards agency consolidation in the marketing services industry. But the last 10 years don’t seem to repeat the trend; it seems that the level of consolidation in the marketing services has reached its peak. The largest ten global agencies still account for probably at best 20% of overall agency fees, and depending on the math maybe as low as 10%. Why did this consolidation trend stop? Here are my hypotheses:

While agencies looked more and more internally over the last 10 years, they did not realize that new players moved into their territory and took away a decent amount of their revenue (e.g. Google.).
Most agencies have not figured out how to keep an innovative and creative company culture while growing towards a large organization. It seems that most agency offices reaching more than 1,500 people experience a quality decline. Size and innovation appear to be a difficult marriage in the universe of agencies.
A lot of service marketing organizations started to fragment their offerings into multiple different independent profit centers, denying their organization any scale benefit. Suddenly their focus turned more into infighting between the different profit centers instead of concentrating on performance and innovation improvements on a large scale.
Quite a few talented creative minds got tired of their large organizations and started their own agencies. They were able to gain the business of large brands and companies, since most agencies did not develop any stickiness to their clients beyond the sexiness of the last TV commercial.

I don’t see any reverse in this stopped movement towards a more consolidated agency space, since most agency leaders don’t’ spend sufficient time on developing the right strategies to turn scale into a true competitive advantage, in both increased efficiency (with a strong focus on cost management) and an improved effectiveness (with a strong focus on strategic and creative quality). This will not change until creative and strategic marketers take the “scale benefits” discussion away from financial engineers and develop their own approach of how to leverage the size of an agency as a true benefit to their clients.

The value of strategy

2010-04-25T11:40:00.000-07:00

I just started reading the book “The lords of strategy” by Walter Kiechel, who is the former Editorial Director of the Harvard Business Review. I have not yet finished the book but it’s a worthwhile read. Kiechel explains the origins of business strategy and the increasing importance of strategy in most corporations over the last 50 years. One can dislike the book’ strong focus on business consultants and their ever changing strategy memes (From “Just-in-time” to “Re-engineering”) but companies have significantly increased their strategic intelligence over the last years. And yes, business consultancies like BCG or McKinsey were critical to enable this positive change.

The more surprising is that it seems that most advertising agencies don’t pursue consistently a strategy of their own. It seems a lot of agencies live in a strategic vacuum that manifests itself in three different organizational life forms with different levels of strategic blindness:

Service clients and make them happy. These agencies don’t see the need for their own strategic plan. Their belief is the satisfaction of their clients is sufficient for long term survival
Satisfy the visionary ego of the key agency leader. These agencies don’t have a strategic outline beyond the eye sight of the charismatic company leader. A well researched and defined company plan with a three to five year horizon would assume that the leader does not intuitively understand and accordingly change the company’s structure for long-term success. Surely, he or she does not, but no one dares to tell him or her.
Deliver profit to the agency’s holding company. While the ultimate goal of any business organization is to deliver profit for its shareholder and benefits for its stakeholder, a lot of people confuse the result of making profit with a strategically defined plan and purpose. Generating long-term profit is the outcome of a well design strategy, not a strategy by itself.

Not surprisingly I believe that agencies that ignore the importance of strategic intelligence and the benefits of a well designed strategic plan will have only a short window of success. The need for strategic planning for any agency should answer at minimum the following questions:

How is your serviced market changing over the next three to five years? What are the key implications for your current business model and competitive positioning?
How would you describe the current and the desired state of your organization?
What are the key strategic bets that your company will focus on to get you to your desired organizational capabilities and offerings?
How are you going to measure your progress against the strategic plan?

Business strategy is a much less complex field than most marketers believe. It just requires a good understanding of the key market trends, the analytical and intuitive understanding of the core and essence of the own organization, and the courage to put down a stake for the future. And it can be as insightful, creative, and entertaining as creating a 30 seconds TV spot or a iPad application.

Closed and open systems

2010-04-18T17:05:00.001-07:00

Apple’s absolute stunning success over the last few years has spurred in some circles a heated discussion about the benefits of a closed versus an open system approach for enterprises. A closed system can be described as a tightly regulated and controlled universe of services that are primarily communicating with its own system element while prohibiting the connection with outside partners (or making it extremely difficult or expensive). Apple and Microsoft are probably some of the most prominent examples of a closed system where as Facebook and any open source application (e.g. Linux, Wikipedia) represent best-in-class open systems.

Some people would argue that the best performing systems want to be open (and potentially even free), other people would argue that only closed systems are performing at the most innovative and user friendly level. The discussion seems to be less empirical driven than a question of philosophy and belief systems. If one objectively looks at the success and failures of open versus closed system, one has to acknowledge that we have extremely successful open and extremely successful closed systems and companies.

But who is following the right strategy, closed or open systems? It’s a tougher discussion (and maybe the wrong question) than one might assume. Just last week, Tim O’Reilly’s and John Battelle’s open letter to Apple to join the open forum of the Web 2.0 principles confirm that this becomes a fundamental and more heated discussion of right or wrong, of being good versus evil, or being progress versus hampering innovation.

But looking at the reality of all companies, one has to conclude that all commercially viable companies need some sort of closeness to protect their competitive advantage and monetize their services. But at the same time every company needs some degree of openness to fuel its own growth and innovation. It seems that it is more a question of degree between closeness and openness than a black and white decision. While Facebook might be 90% open and 10% closed and Apple 99% closed and 1% open, each company’s strategy and business model relies more on the right position within this ever shifting changing continuum of closeness and openness than making a dogmatic decision. A company can be successful by being either much closed or very open. The key criteria for its success seems to be how the company is utilizing the intrinsic structure and benefits of either a closed or open system, not a decision for or against either one of them.

In the future we will not see a clear winner between companies who are pursuing open or closed systems. There will be a co-existence of both models in which the smartest company of how to leverage the differences of these systems is winning, independent of its decision of being open or closed.

Berlin or Stockholm?

2010-04-02T19:51:00.001-07:00

A lot of cities around the globe would love to become one of the hotbeds of innovation and creativity for the digital world. San Francisco and Silicon Valley have been long established in North America, Bangalore in India has had a strong reputation for the last decade, Shanghai has made huge strides over the last 5 years, now Sao Paulo and Buenos Aires are trying to get some well deserved recognition for digital expertise and innovation.

Good old Europe has been always more fragmented with almost every European capital claiming to be on the forefront of digital brilliance. Realistically there are currently two cities that are thriving for this European lead position: Berlin and Stockholm. It’s less an outright competition than the moderately passionate debate by citizens of both cities over dinner tables and bar stools. Both cities have the advantages of large numbers of educated young people with entrepreneurial drive, Berlin has the advantage of lower living expenses and a significantly larger domestic population, Stockholm had an early start in focusing on digital services and products, and has the advantage of high affinity for anything English and American.

The key hurdle for a true lead position in the digital arena is the emergence of one true global digital company that changes consumer behavior in most countries. It is not a coincidence that Silicon Valley has such dominant role due to the fact that almost any leading digital company has been started there: Yahoo!, Google, Facebook, Twitter, and now we have to count even Apple as part of the digital 800 pound gorilla family. Can Berlin or Stockholm generate a company that is as groundbreaking as these firms or are they going to solely focus on being digital service innovators who work with these large players as their center of universe?

The good thing is that innovation is not a zero sum game. That’s why it’s not Berlin or Stockholm? It’s hopefully Berlin and Stockholm.

Web 2.0 meets "Deconstruction"

2010-03-22T05:03:00.000-07:00

Studying literary theory in the eighties or early nineties one could not escape the intellectual brilliance and confusion that the literary theory of “Deconstruction” brought to the discourse at most European and North American Universities. Reading and rereading books by thinkers like Derrida, Lyotard, or Foucault was the challenging main stable of anyone who wanted to participate in a new understanding of old and new texts within the academic discourse. Their claim of the death of authorship, their fight against a (or any) dominant narrative, and their endless dissection of short elements of any texts taught an unique way of reading and thinking.

The mid nineties seem to signal the slow decline of this particular branch of literary theory. But over the last year the sudden and strong critique of many social elements of the Web 2.0 universe (nicely summarized in Sunday’s New York Times article by Michiko Kakutani), could give one the impression that the success of Web 2.0 turned Deconstruction from a literary theory into a way of life of the modern Internet user. This life is defined by:

The loss of any regards for original authorship: Everything is borrowed, reused, repurpose, rewritten, recreated, sometimes with the clear reference to the original version, more often without any regards to it. The original has died, now everything is just the endless copy without necessary reference to the original and without acknowledging its character as a copy (Philosophers like Derrida called this a “Simulacrum”)
Any central narrative has been lost: The Internet allows not just the accelerated speed of any news but it empowers an endless stream of smaller and smaller stories (e.g. cat chasing its own tail, Spitzer explaining his affairs, Democrats passing the Health Care bill) without necessary any broader significance or prioritization. Neil Postman meets Jean Baudrillard.
Any text has the same authoritative value: The article by a Nobel or Pulitzer price winning author has the same authority, reach, frequency, and influence than a blog entry or tweet by a celebrity with a large followership. The quality of one’s craftsmanship seems to be less important than the loudness of someone’s megaphone.

It’s sometimes difficult to realize that one uses the same critical arguments to analyze the negative aspects of Web 2.0 that conservatives have used against Deconstruction 20 years ago. But it seems to me that it’s critically important to be conscious about the positive and negative impact of the Web 2.0 Discourse than just blindly following every dimension of it. Enlightenment was always about being conscious about the supposedly given truths in a particular time. And today, the positive impact of Web 2.0 has become a dogma. But anyone who has truly understood the theory of deconstruction realizes that the deconstructive analysis of the main narrative in any given time (here the Web 2.0 universe in which the literary theory of deconstruction is being transferred into a life philosophy) is part of correctly applying this theory.

Content, Context, and even Network

2010-03-14T18:41:00.000-07:00

Working in any large marketing organization can be sometimes a bit confusing and disorienting. I like to explain to industry newcomers that any marketer in a large organization moves in two different dominant spheres: Content and Context. Content is the creation of something valuable, either in the strategic, creative, analytical or technical space whereas Context is the ability to move this creation through the internal machinery of any marketing organization, either on the client or the service side. Content is about the differentiating creation of something that will help achieve the marketer’s goal, content resides in the political sphere that can decide the success or failure of a content initiative or project.

There is definitely a parallel to Max Weber’s differentiation of three types of authority: Institutional authority and power (e.g. someone is the CMO or leader of a particular organization, formally announced and empowered), technical power (e.g. superior knowledge of a particular area that is critical for an organization), and charismatic power (e.g. the influence of someone by his or her pure personality and presence in a particular situation). Max Weber’s three different authority and power spheres are different than “Content” and “Context” but they can be useful in understanding certain organizational situations, too.

Back to the “Content” and “Context” dichotomy: It seems to me that almost each marketing personality has either a stronger tendency to be content or a context person. It’s rare to see that someone has a balanced portfolio of talents and skills across both domains. And in sum any successful marketing organization needs a healthy balance between experts and leaders in both spaces.

But over the last years I have noticed a new element that needs to be included in the understanding of any marketing organization: The Network, the incessant, never ending, and (mostly) purposeless build out of virtual connections between the marketer and “readers” or “followers”. At first glance it seems to be the same as the context sphere but it’s fundamentally different. Whereas context refers to the skill of analyzing, understanding, and acting strategically within an organization, the network component refers to the reach and frequency that someone is “connecting” with other human beings without ever truly engaging with them. It could be called the Paris Hilton or Aston Kutcher effect. Without having ever created anything meaningful or interesting they both became masters of the Network game which has morphed into a non-purpose driven sphere, where the number of paparazzi followers, mentioning in gossip publications, or the numbers of Twitter followers have become the leading indicator of someone’s network power. They don’t really care about the context or content sphere, since they don’t want to achieve anything beyond fame (=powerful network position) as a value by itself.

Now, marketers, and quite often brands, try to enter this “Network” game without generating interesting and relevant content but by creating as many networkconnections as possible. I don’t’ mind the emergence of this network component but it seems to devaluate the content focus that most marketers should have. It’s more important to create something relevant than having a large network power that is impressive in its vastness but meaningless.

The endless testing

2010-03-07T18:16:00.000-08:00

Google’s Search algorithm is one of the most fascinating analytical initiatives (or should I call it a project) that exist in our field today. Enough books and articles have been written about it that linger between unveiling its inner workings and increasing the cloud of its secrecy. The weekly meetings of all of Google’s critical Search Engineers in the never ending attempt of improving the quality of its search results are probably one of the most interesting meetings, close in importance and impact on people’s daily lives to the president’s weekly “Mood of the nation” briefings and discussions.

One of the more intriguing elements of this weekly meeting and for me the foundation of Google’s long lasting superiority resides in the changed philosophy of how to do testing. Its core principle is that every search query is part of at least one test (more likely multiple) there is no separation anymore between non-tested activities and the usual small percentage of separated space of testing. Wired editor Steven Levy describes it well in this month’s WIRED:

“”There are so many changes to measure that Google has discarded the traditional scientific nostrum that only one experiment should be conducted at a time. ‘On most Google queries, you are actually in multiple control or experimental groups simultaneously’ says search quality engineer Patrick Riley. Then he corrects himself. ‘Essentially,” he says, ‘all the queries are involved in some test’. In other words, just about every time you search on Google, you are a lab rat.”

It’s a fascinating detour from most marketers more conservative testing philosophy where testing only happens in a well shielded space. I am curious to see how we could translate this Google approach of 100% covered, constant, and multiple testing to other marketing activities.

The Adolescence in Digital Measurement

2010-02-27T17:55:00.000-08:00

Browsing through some of the most recent books about Web Analytics I could not stop realizing that we are still in the early stages of understanding consumer’s behavior in the digital world. Most analytical approaches are continuing to focus primarily on traditional website metrics: Unique visitors, Bounce rates, etc. It feels like Web Analytics have stalled in understanding consumer behavior on individual websites and have failed to push themselves into a larger digital universe, that include any digital medium, from the web to mobile to ebooks, and in best case even beyond the digital sphere.

Some of these books are attempting to understand “Engagement” and suggest different ways of build the right engagement metric. But in most cases it is just a compilation of traditional website metrics. Most marketers are still trying to understand consumers in a channel centric and specific way, whereas consumers have long moved beyond the separation of all the different media, communication, and sales channels. They consume and interact with brands and services first, with channels last.

Quite often this fallacy can be explained by the fact that we look at things that can be measured instead of asking ourselves what should be measured. The vast and immediate access to data and metrics are not just overloading our systems to decipher anything meaningful, they are hindering us as well to really identify of what should be measured.

The biggest strategies of moving the digital metrics discussion to a next level should be:

Move beyond metrics that are only relevant for one channel to metrics that are relevant and actionable across multiple channels.
Realize that website metrics are only a very small portion of all relevant metrics. It’s more productive to go broad than going too soon very deep.
Set not only standards of how to measure certain things but more importantly understanding what is a “good” and what is a “bad” value in certain metric category. I have seen so many marketers who look a comprehensive metrics sheet and can only utter “interesting”, since there is no context to evaluate these figures.
Don’t overemphasize “Real-Time” metrics that give everyone an illusion of constantly optimize every single marketing output. Yes, it is important to build a learning organism and mechanism but it’s not the most important action to deploy it in “real-time” manner (which means actually a delay of a few seconds, minutes, or hours) as extracting the right recommendations from the analyzed metrics. We focus too often on the optimization of the very small variable (e.g. blue or red color in a banner) versus understanding the truly big variable (e.g. Invest in paid search or in DRTV).

It’s still early in the world of “Digital Metrics”. We are at best an excited and curious young adult, at worst an overeager, naïve, and overly aggressive teenager.

Fuzzy problems

2010-02-08T16:10:00.000-08:00

While rereading a 10 years old book by Tom Kelley, describing the success ingredients of his design firm IDEO (one of the most innovative firms over the last 30), I encountered the description of one of the most common problems that he and his team are facing within the design practice: Fuzziness. Kelley described it as encountering a fuzzy instead of a clearly defined problem which seems to be the cause of many failed design solutions, or in our world marketing programs. Quite often challenges that we are trying to solve were never clearly defined, they remained fuzzy despite (or because of) the team’s anxious eagerness to work on a solution. It becomes very obvious while watching the numerous commercials during the Super Bowl on Sunday.

This famous and unique media property (the most expensive not just in the US but in the world) is the same visual location in time (CBS between 6.30 and 9pm EST) but the problems that these different brands are trying (or sometimes pretending) to solve is very different from each other. My guess is that most marketers could not describe succinctly of what their presence in the Super Bowl is trying to attack or solve as a problem. It seems that this is driven by a few factors:

Pressure of mainstream spending behavior - Everyone else likes to be on the Super Bowl, so let’s do it, too. They all can’t be wrong.
Immediate solution focus - Let’s start working on the solution now, we are already behind schedule
The misunderstood power of reach – the brand can reach as many people as nowhere else without realizing (or admitting) that most of the brands advertised are at best only for 10% of the US population.

Too often we love to work as fast as possible on a solution without spending the time, energy, and intelligence to understand the problem. The enemy in our marketing discipline is more often the eagerness to create something interesting without the focus and filter of understanding and defining the problem.

Fuzzy problems are expensive. Most problems can be scored on a scale between 0 and 1. At 0 one does not even realize that there is a problem, at 1 the problem is clearly defined and understood. Everything in-between is a higher and lower degree of fuzziness. The Marketer’s obligation is to get as closely possible to 1 and not stop already when they have barely moved above 0. It might be a good exercise for any marketer to judge in any given project where one is on this 0 to 1 problem fuzziness scale. My bet is that we would be surprised of how low we would score very often our clear understanding of the problem, all translating into a high degree of fuzziness. And fuzziness is expensive.

Digital Margin

2010-02-04T16:08:00.000-08:00

Over the last weeks I traveled to South Africa and a few European countries to meet with colleagues and some local industry experts, all with the goal to better understand how marketing agencies are dealing with the accelerating influence of digital marketing. Independent of how brands are spending their marketing investments, from less than 2% in South Africa to over 30% in the UK on digital and mobile activities, a lot of the marketers on the service side of our discipline are asking the question of how they can truly make a decent margin on digital work. The question has moved from how much they should invest in the build out of their digital capabilities into the challenge of how to make money with it.

The large agency holding companies (IPG, WPP, Omnicom, Publicis) report EBITA numbers of between 6% on the low end and 15% on the high end. It’s very difficult to find out the profit margins of the various pure digital agencies within the holding companies, so one has to rely on estimates and insights derived from industry experts. There definitely seems to be a challenge for larger traditional agencies to make decent margins on their digital work. After discussing this with a few knowledgeable marketers some explanations rise to the top:

Scale: Even most pure digital players had a difficult time to create a decent margin until they reached a sufficient size to not just recoup initial investments but have the expertise and size to monetize on their offering. Size does matter. Interestingly enough smaller very specialized boutique agencies can make good money, too, due to low overhead cost and flexible delivery mechanisms. But most small digital departments within a large marketing offering have huge trouble to generate a positive short or medium term ROI on their personnel and infrastructure expenses.
Premium versus Discount pricing: A lot of the large marketing service firms know that they have to expand their digital offering. Therefore they are willing to discount their digital work to enter this fast growing discipline. After winning the work (by buying it through cut throat prices) they often realize that they can not deliver the work with sufficient quality while simultaneously loosing money. It takes take them much longer than ever envisioned to build a profitable digital practice, and quite a few of them still have not achieved it.
Lack of paid search capability: A lot of the marketing service firms have either still not realized that paid search is almost 2/3 of all digital spend, or they lack the internal media planning expertise to build it out in a smart manner. They are victims of the separation of creative and media offerings in the 80ies and 90ies. For a lot of these companies it might be too late to ever regain the lost territory.
Resource allocation: The haste of hiring digital talent leaves quite a few large marketing service players with too much unbillable or incorrectly hired expertise that drags down any profitability. It’s very challenging for traditional marketers to identify and attract the right digital personnel that can build a well oiled delivery machine while creating brilliantly engaging and business building digital programs.

While a lot of marketers at service firms talk about the urgent need to expand the digital side of their business, they are flying blind in how to make it happen without eroding their good margin from their more traditional core business. It will be interesting to observe of who is able to make this transition to not only great but profitable digital work.

The right size of social networks

2010-01-25T18:36:00.001-08:00

Clive Thomson has once again a brilliant article in the current edition of WIRED. He argues that there are only really two right sizes for a social network, either one has a few hundred followers with an intimate felling of closeness and real conversation, or one has a few hundred thousand followers where no real dialog is occurring but where the owner of the social network uses it as a broadcast medium to spread his or her wisdom. The (usual) death zone is in the middle where one does not have the scale of a true broad cast medium but where the social circle is too large to have a real dialog between people who think of themselves as a circle of friends.

A lot of marketers think that social networks are the Holy Grail for relevant and targeted marketing but they fail to realize that social networks are “just” another communication channel with its own dynamic, its own advantages and disadvantages. Thomson’s POV is an extremely important insight for brand managers who try to use social networks for non-broadcast marketing purposes. One can either use a large number of social network owners to proliferate a certain message in a more dialog oriented manner or one can utilize one big social network apostle with a large following in a much more one-to-many based approach that resample much more a traditional TV commercial.

Not only the medium is the message but the largeness (or smallness) of the medium and its distribution is the message, too.

Millennial managers

2010-01-16T14:50:00.000-08:00

Last week’s Sunday’s New York Times had a long article about the redesign of business school’s curriculum over the last years by incorporating critical theory into is obligatory learning study plan. It’s not a surprise that executive managers have realized that teaching pure business theory and practice is not sufficient to develop great managers. Critical thinking, either taught in the legal or the humanities field, is becoming a more and more essential element of any management executive’s mental skill set. Whoever learned to read and understand literary theorist like Derrida or Foucault or the legal intricacies of some critical landmark decisions will not be easily intimidated by complex business and marketing problems.

Additionally the ten year anniversary of the Time Warner/AOL merger demonstrates once more that human beings behave just too often as pure followers who don’t stop and question the basic assumptions, processes, and behaviors that seem normal in all organizations. Understanding critical theory can help anyone to be more conscious and reflective within any discussion.

On the other hand critical thinking in its extreme form can be an impediment of thriving in any organizations. Young managers in the US (the famous Millennials ) seem to have more challenges to merge the necessary critical thinking with a team player behavior that can require following decisions by a superior that contradict the critical thought process of the young manager. But most profit oriented organization can not function as a democratic structure with equal voting rights, they rely and require a certain hierarchical structure and command chain. The dilemma arrives when young managers don’t know when to apply their critical thinking skills and fight for the related thought results, and when to follow the directions of a more experienced and senior manager.

This growing dilemma in most marketing organizations with a higher percentage of millennial managers requires a few explorations:

Every significant decision requires the application of critical thinking. The critical thinking should be consciously utilized within the rules and confines of the particular business discourse and outside of the discourse. It seems challenging for a lot of young managers to realize when one argues within and when outside the terminology, rules, and logic of a particular discourse and organization.
Critical thinking is not a genetic disposition but the result of continuous studying and learning. It is rooted in information and insight based curiosity and skepticism that behaves like a never ending stress test of any available options.
It is important to respect the chain of command in a particular organization. At the same time any organization should provide sufficient space that any young manager can voice his or her thought process, observations, and objections. But as long as the decision does not call for illegal actions, is unethical, or discriminates anyone, the ultimate decision (after hopefully a sufficient long period of discussion and potential disagreement) should be supported by the involved team members. This seems to be a given but it is a bigger challenge than expected.

The balance between the appropriate application and articulation of critical thinking and team player behavior is more fragile than most of us believe. It will be interesting to see how the young generation will cope with the simultaneous development of stronger and smarter critical thinking while developing a team behavior that makes any organization stronger.

Mobile Marketing in 2010

2010-01-09T18:33:00.000-08:00

Like every year over the last five years, marketers predict 2010 as the breakthrough year for mobile marketing. Honestly I don’t care if 2010 is the year of mobile marketing or not, more important are the long term trends that definitely will increase the importance of the mobile device in any smart marketing solution.

A few observations seem relevant to me:

Most researchers predict a roughly four fold increase of spend in mobile marketing in North America by 2015 whereas the overall marketing spend will increase by 10-20%, depending on research source. The overall mobile spend will be still only be around 5% of TV spend but it is getting significant. Now it’s the time for marketer to get their brains and hearts around the importance of mobile marketing
Currently most of the mobile marketing spend is put against display media, SMS, and application build, only less than 20% against search. This will change dramatically with the decline of SMS marketing and a strong push into mobile search. Some researchers are predicting that more than 70% of overall mobile marketing investment will move in this Google dominated investment area. This will force marketers to be even smarter in regards to organic and paid search.
The definition of the mobile device will change dramatically. It’s currently limited to cell- and smart phones, but one could envision that a fully connected Apple tablet is more a mobile device than a laptop. The changing definition of a “mobile device” will put mobile marketing even further into the ongoing marketing planning discourse between agency and brand manager.
Location based intelligence and marketing will increase rapidly over the next years. This will fundamentally improve search results, display advertising, and outbound direct marketing, all centered on the mobile device. One can envision the day when a consumer prefers to search for something on his or her mobile device due to the highly improved results versus using his or her computer.
Most North American marketers know that the US is one of the less sophisticated cell- and smart phone markets in the world (despite the iPhone). But most of them have not yet established the right learning mechanisms to mine new trends and insights from Asia, Latam, or even Europe. Whoever does this right will have a competitive advantage in how to successfully leverage mobile marketing.

It does not really matter if 2010 is the year of mobile marketing, it does matter that we all take it seriously, try to better understand it, experiment with it, and integrate it with a real purpose into any marketing solution.

ArtScience Marketing

2009-12-20T15:19:00.000-08:00

This week AdAge published an article of Jamie Shuttleworth and me, outlining our thoughts of how to fundamentally change the marketing process of organizations. We are calling it ArtScience Marketing. Most of the comments on AdAge are positive, a few of them even very insightful. We were fortunate enough that the article became one of the top emailed articles on AdAge this week. It seems the topic of how to change not just the outcome of marketing but the process is a highly relevant topic that has been neglected for quite some time.

Selecting an agency

2009-12-08T11:30:00.001-08:00

Working in an agency I have the utmost pleasure in witnessing marketing organizations in selecting their right agency partner. It’s always amazing to experience the month long process of meeting with the potential clients, sharing your team’s thinking and finally as the big reveal presenting the creative solution that in most cases will never meet the eyes of a consumer. It seems that quite a few marketers are confused about how to choose the best agency.

I believe that a client buys three fundamental elements when deciding to give an agency the “Agency of Record” status:

A certain philosophy, attitude, and point of view on marketing in its present and future form. Most agencies have a different take on marketing, less in how they talk and present themselves, more in how they act and show their own unspoken rules and believe systems.
A particular marketing process of how the agency creates the ultimate marketing solution. Most agencies have a very similar five step process from discovery to ultimate creation but the actual process, lived daily in back and forth between agency and client, will unveil significant differences beyond the high level process chart. The process is often the most unappreciated element in a pitch process but it becomes critical in building a successful client/agency relationship.
A unique team with its own talents, capabilities, and chemistry. It is important to know the team that will actually work on the business but as (sometimes even) more important are the senior agency leaders who are not only ultimately responsible for the success or failure of the agencies work but who are creating the unique agency culture and deciding on the level of talent in the agency, too.

It would be more productive for both parties involved, if both key teams would spend more time together before making a final decision, both on assigned task (e.g. real life business/marketing problem) and on unscripted discussions that truly show the thinking of the agency team. I am always surprised that companies are willing to make multi-million dollar decisions with large long-term implications after spending sometimes not more than 4 or 5 hours with the agency contenders.

The relevance of "Bauhaus"

2009-11-29T11:04:00.000-08:00

New York’s MOMA has currently an interesting exhibition of the “Bauhaus” schools, focused on its most important years from 1919 until the early thirties. The “Bauhaus” school of design, architecture, and much more has had a huge influence of a lot of art forms over the last 90 years. Rereading some of its core principles in a few recently published articles (from Artforum to the New York Times to the New Yorker), I was amazed by the absolute contemporariness of its ideas.

One of the Bauhaus core principles is the end of separation of the “Werkmeister” (the skilled craft expert with a deep understanding of materials and production techniques, who ultimately produces the art piece) and the “Formmeister” (the conceptual expert who comes up with the idea and the concept of the art). The Bauhaus thinkers detested this separation between the highly regarded thinker and concepter (Formmeister) versus the more hands-on, poorer paid executer of someone’s ideas and concepts (Werkmeister). This separation of form and production/technology hindered the creation of true art concepts according to the Bauhaus school of thoughts. Bauhaus had even its own course for any new students called “Vorkurs” (Pre-Course) with the focus of dissolving the distinction between these two masters. In 1923 it was called “Art and Technology: A new Unity”. This principle could not have more relevance for today’s marketing discourse, it might even worthwhile to design a new marketing centric “Vorkurs” for most marketing organizations.

A few months ago I wrote about the trend that successful digital organizations integrate the technologist/producer closer into the traditionally defined creative team of the copy writer and art director. It seems that the Bauhaus founders understood the danger of being too alienated to the ultimate means of creation. Interestingly enough, most famous painters have always closely held control of the production of their master pieces, even in cases where they delegate some of their executional work to students who work in their atelier.

And in today’s marketing world, technology (as the ultimate way of production of marketing programs) is becoming more and more central to any marketing idea. To complicate this Bauhaus principle which I fully support, we can witness a strong commodization and outsourcing of production technologies and work, primarily due to lower labor costs and more repetitive and non differentiating production cycles (who wants to create and quality ensure a simple Web Banner?).

The reasonable way forward of combining the Bauhaus principle with today’s reality of cost pressure is the separation of innovative technology and production ways that should be closely held as part of a newly created marketing team, including the “Werkmeister”, from the repetitive way of mass produced elements of a marketing program that does not require neither the attention of the “Formmeister” nor the “Werkmeister”.

Misunderstood Social Media

2009-11-23T06:48:00.000-08:00

Over the last months I have read quite a few white papers from agencies that postulate the rise of Social Media Marketing and the decline of TV advertising. Two of these white papers were “Fluent” from Razorfish and “Insights that Incite” from DDB. I have a lot of respect for both agencies, especially for Razorfish’s annual publication about the state of Digital Marketing. I was not surprised that both white papers make an argument that Social Media is becoming more important because consumers value and trust recommendations by “Friends and Family” more and more while the trust and belief in TV advertising is on decline.

Both papers present proprietary research that supposedly supports this point of view. Unfortunately none of the published data points validate this hypothesis in any kind of form. Razorfish “Fluent” does not show any single relevant data point or any strong more holistic research evidence that support the hypothesis that Social Media Marketing is becoming more important at the expense of TV advertising (it shows other interesting data points though). DDB’s white paper inserts a chart about channel preference that clearly does not support the outlined point view (Page 4). The chart from Nielsen’s Global Online Consumer survey compares channel importance from 2007 to 2009. The chart merely reflects that TV remains the 5^th most important influence source whereas recommendations by friends and family remain the most important. The author did not explain that the overall increased baseline of channel importance across all of them except for print has increased roughly the same percentage points since 2007.

I don’t assume that it is a malicious misleading representation of research data but a blind spot behavior by believing so strongly in a particular point of view that any data seem to confirm your own hypothesis. More importantly I believe that both arguments miss a critical element in the discussion of the importance of Social Media and related Marketing activities. The “channel” recommendations by friends and family were always one or the most important influencer in purchase or usage decisions. There might be slight increase in importance over the last decade but the true disruptive factor is that nowadays marketer can observe in real time these recommendations by friends and family. Before, marketers did not know what occurred in this channel (except by asking consumers), now one can not just observe but also try to intersect or stimulate a certain behavior in these previously private moments of making a recommendation. The key disruptive factor is that previously CLOSED networks of friends and family are becoming nowadays OPEN networks with all its benefits (for marketers) and drawbacks (privacy concerns). This is the real change, not the sudden importance of recommendations by friends and family.

I always applaud meaningful proprietary research within the agency community, but if it does not clearly support your own hypothesis than it might be wiser to rethink the original hypothesis and formulate a new data driven one. Both paper’s argument that Social Media Marketing is becoming more and more important is correct, but both white papers have misread the reason for its increased power.

Marketing the Kindle

2009-11-15T12:21:00.001-08:00

I am a big fan of Amazon’s Kindle. And I definitely believe that the future of ePublishing is a bright and interesting one. Lately I am trying to conceptualize the first relevant Kindle marketing application for some of our clients but this initiative will be addressed in another post. This post describes an interesting encounter I had this week.

On a flight back from New York on Tuesday this week I was sitting next to a well dressed business person. We started talking; he was clearly an articulate and smart professional, working for a large consulting company. We discussed all the benefits of traveling with a Kindle, the version differences between the Kindle 1.0 and 2.0, and more Kindle related small talk. After a while we both took out our Kindles and started reading. Normally I like to know what people are reading, it might trigger a question and a renewed conversation. And it always adds to the character of a person that you are sitting next to.

But it is impossible to do this character-book association game with the Kindle, so I just asked politely what he was reading. He replied that he was immersed in Laurence Lessig’s last book (Lessig is one of the smartest open source thinker around), since he was interested in the limitation and disadvantages of copyright legislation. I expressed my admiration for Lessig and we continued reading both our Kindles. After a while he got up to go to the bathroom but he left his Kindle on his tray, facing my seat. Just looking at the open page on his Kindle, and reading a few sentences, it was easy to decipher that this was not one of Lessig’s book but a book about adolescent vampires and their challenging love lives (most likely one of the Twilight series). When he returned to his seat I was polite enough not to start a conversation about the challenges of blood thirsty vampires in sun trenched places like Arizona.

This episode triggered a brief research project over the last days. I was looking for differences in genre and “sophistication” of physically versus electronically sold books at Amazon. My hypothesis is that people feel freer to buy more books that don’t have any social currency value when they can buy a book electronically versus buying it in its physical form. The Kindle killed the signaling effect of intellectually challenging books, so quite a few people might think that they don’t have to pretend anymore. Unfortunately I was not able to get quantitative data validating or refuting my hypothesis but a brief survey in a circle of friends and colleagues confirmed my thinking. It is less about reading fewer intellectually challenging books but more about buying and enjoying books that have less perceived social value.

I will not claim that the Kindle is a culture destroying device, it rather spurred me to a new marketing idea that Amazon could use: “Kindle – Only you know what you are reading”. It could give a big boost for trashy novels of all genres.

Marketing in South Africa

2009-11-01T12:58:00.000-08:00

Spending a few days in Johannesburg, South Africa, this week, I was intrigued by three core observations that I was able to make, mostly through discussions with brand marketers, advertising colleagues, and trade journalists:

The quality of the strategic thinking of the senior marketers that I met parallels the top marketing countries in the world. South Africa can be proud of having outstanding strategic thinkers in its marketing communities. The key hurdles of elevating the sophistication of the marketing discourse even further in the right direction seem to be twofold: The lack of trusted and cost-efficient accessible marketing data and insufficient and reliable Internet bandwidth. Both issues should be addressed by the countries leading marketing organizations, since a lack of improvement could seriously hamper South Africa’s currently advanced place as a top marketing leader.
The lack of sufficient and consistently strong Internet bandwidth hampers quite a few marketing innovations. Using the Internet in South Africa reminded me of 2002 or 2003 in North America due to its slow Internet connection. One, used to today’s high Broadband penetration in North America and Europe, easily forgets how dramatically different the Internet usage with slow speed is. The government spends rightfully quite a lot of investments on physical roads in preparation of the 2010 Soccer World cup. But one needs to ask if there is sufficient investment into Internet bandwidth. Should the government spend an available $100 million for an additional road or for extended Internet bandwidth? There are quite a few good arguments that Internet connections could provide a better investment choice to increase the wealth of a nation and spur development for the underprivileged than an incremental physical road.
South Africa could become a great test market for piloting and prototyping brands and product solutions for a market that has two highly diverse income segments: 20% of the population as part of the upper middle class with a good income base and the rest of the population with a significantly lower income level, any strong and large middle class is lacking. South Africa has roughly 45-50 million inhabitants with less than 5 million taxpayers. It has a similar population structure as China or India but on a much smaller scale. The challenges of successfully promoting a brand with the need for such a significant brand stretch could be well experimented and piloted in South Africa with all the key results extrapolated to some of the largest nations of the world.

South Africa seems to sometimes struggle with finding its identity within the global marketing community, but there is much to be proud of and more opportunities than most believe. South Africa remains a fascinating creatively talented and increasingly strategic deep marketing community that should be on the radar of every curious marketer. It’s not just the upcoming 2010 World Cup that should motivate a visit.

Monetizing Data Intelligence

2009-10-18T16:48:00.000-07:00

We always knew that Credit Card Companies were very sophisticated in utilizing consumer data to be smart in new card member acquisition and monetizing them as ongoing members. But even I was surprised to read in the latest Fortune magazine that Ken Chenault, CEO of American Express, mentioned the utilization of card member data as one of their most promising revenue streams in the near future:

“Another area that we feel strongly about is that we have information we can use in very effective ways for a range of partners. So, for example, what might be surprising is that the Darden restaurant (Red Lobster, Olive Garden, LongHorn Steakhouse, and other brands) relies on us to help with site selection for its restaurants. We believe that our information, which h we use in our own business and marketing, can be used by retailers, restaurateurs, and other corporations to improve their business, and that’s an increasing focus for us.”

Most interesting is that companies like Amex are not just utilizing their own data to improve their own business but that they are more and more experimenting in building an incremental revenue source. Over the next few years, most companies with data volume that is representative enough to draw meaningful conclusions will attempt to monetize their data intelligence.

Data Intelligence becomes a vehicle for revenue growth by selling smart intelligence to other parties. Quite a few retailers tried to pursue a similar path by packaging intelligence from their frequent shopper programs and attempting to sell it to manufacturers. There are some success stories (e.g. Tesco), and some stories of failure with such an approach (e.g. Safeway). The three most likely industries to pursue such a path are:

Retailers (selling intelligence to manufacturers)
Financial players (selling intelligence to card issuers and merchants)
Travel companies (selling intelligence to non- competitive travel partners).

Everyone playing in this field of building an incremental revenue stream by utilizing proprietary consumer data will be smart in analyzing the up- and downsides of such a move. A retailer might be more interested in leveraging consumer intelligence in attracting incremental trade dollars from the manufactures instead of attempting to sell data driven marketing programs. The pay-back could be much larger.

Strategic vacuum

2009-10-11T05:57:00.000-07:00

Following over the last months in more detail what large marketing agencies and service providers are communicating as their longer term strategy, I am more and more astonished by the apparent vacuum for longer term strategies and plans. It seems that the global recession further increased the obsessive short term focus of marketing organizations. My best guestimate based on discussions within the industry and reading through published material is that close to 90% of marketing agencies and service providers don’t have a meaningful and integrated vision, strategy, and execution focus with a time horizon of three to five years.

It seems that the exclusive focus of marketing agencies in today’s difficult economic times are only twofold:

Meet and satisfy needs and demands of existing clients
Win new clients at any prize.

Any other critical elements for longer term success, like talent recruiting and development or the development of proprietary intellectual ideas, products, or methodologies that are scalable, are totally neglected.

I come to believe stronger than ever before that only the outline of a simple but powerful company strategy answering a few critical questions can ensure that a marketing firm is not only satisfying current daily client needs but works on building an organization with true future potential. My short list includes

1. What is happening in the market you are trying to serve (Revenue developments by market and marketing functions; key client and market trends)?

2. What is the brutally honest assessment of your own marketing organization (SWOT-Analysis, Revenue and Profit trends, top market growth areas versus own ability to monetize them)?

3. What is the purpose and vision of your company for the next three to five years?

4. What are the key strategic bets that your organization will focus on?

5. How is the execution of the strategy ensured, monitored, and improved?

The 90% of marketing firms who are not answering these questions will be very likely in significant trouble. Only focusing on servicing and winning clients is not sufficient for long term success, it is just green fees to participate in the market place. And clients who are contemplating the strength of their current agency partners should ask the executive management of their partners to present their answers to these five questions. Their answers is significantly more important and a better indicator of future success of their partnership than the creative quality of one online banner or the music selection in one TV commercial.

Unfortunately a lot of clients focus on minor creative execution elements of their agency partners instead of inquiring about their partner’s ability to position their organization for long-term success through a simple and meaningful strategy.

Reinvented TV commercials

2009-10-04T18:03:00.000-07:00

The whole discussion about the death of TV commercials is missing several points. First, looking at any of the media research companies predictions for the next three to five years, one will realize that total TV viewership will slightly increase in North America (and even more globally), especially amongst young people. Second, TV viewership is shifting from the four networks to cable and from live to time-shifted. But even the time shifted total TV viewer hours will not be more than 20% of total viewing behavior in three to five years. Third, TV commercials will find more distribution channels than just the TV screen in the living room. A longer version can find its way on any of the Online video channels, or a modified version can be placed on any of the mobile applications, etc. TV commercials will not have just one format but multiple with channel specific versions and interpretations.

But the wrongly proclaimed decline of TV should not hinder marketers to entertain serious discussions about the changed role and design of most TV commercials. I predict a few major shifts of how TV commercial are designed and utilized:

More and more TV commercials will play on the humors side of communication, since it will promise a higher breakthrough rate than most other forms of 30 seconds entertainment. Commercials will be more entertainment oriented, since consumers can shift and ignore them as never before.
TV commercials will stronger embrace a smart communication of product benefits. A good example is the TV commercials for the iPhone applications versus the majority of all car commercials that shows a car driving on a street, either at night in a cool urban setting or during a beautiful day on the countryside.
TV commercials will become more “Call to Action” oriented. It is not at all about the traditional “Direct Response TV” make-up but rather about a clear drive for a particular action. This action will go beyond the call to visit a website or calling a particular phone number, it can entail a requested social behavior, a request to submit an idea, etc.
Any TV commercial will be more a brand and product film that gets transformed into a TV commercial, a Mobile phone spot, a Web spot, etc. The essence of it will be the same but its artistic and commercial application vastly different depending on the particular channel.

TV commercials are not dying but their structure will change dramatically over the next few years. The first ever commercial aired in 1941, and it will live on for much longer than most of us expect.

The rise of the "Prosumer"

2009-09-20T17:12:00.000-07:00

The term “Prosumer” was first mentioned (or created) in 1980 by Alvin Toffler in his book “The Third Wave”, describing the phenomena that consumers are not just merely consumers but becoming producers, too. Tapscott and Williams picked up this concept in their recent book “Wikinomics” and expanded its usage to include a growing numbers of consumers who are enabled to become producers, all driven by technologies that facilitate the cost efficient exchange of information, the mass-production of personalized products and services, and the immediate contribution and improvement in any kind of open source projects.

It seems to me that brands and their underlying business models are falling into three different categories of dealing and interacting with the “Prosumer” concept:

Brands like Wikipedia or Firefox that can only exist through Prosumers. Their whole business model relies on the contribution of consumers.
Brands like Lego, Haagen-Dazs or Addidas who allow the incorporation of Prosumers behavior in two ways: either as contribution to their own product design and creation process (e.g. Haagen Dazs’ ice cream flavor competition) or as the opportunity to personalize their own version of the brand’s product (e.g. Addidas customized shoes).
Brands like Pepsi or Frito-Lay that open up very slightly their brand control to allow consumers to create TV spots or naming rights, all rather on the fringe of their brand experience.

This third group of brands is definitely the vast majority. One could argue that these brands don’t really embrace the concept of “Prosumers” but merely pretend to take them serious by allowing them to influence non-core elements of their brand experience.

My prediction is that the rise of the Prosumer will continue and influence a larger percentage of a company marketing activity. But there will be always a large role for brands which apply strong control and an iron fist in designing its brand experience (e.g. Apple). They might allow the Prosumer to play in a well limited way but the core of its brand experience will be centrally defined and designed.

Any marketer needs to find the right long-term path within these three different strategic options of integrating strongly or lightly the Prosumer, all in alignment of what makes a particular brand successful. But no brand can ignore the Prosumer anymore.

Under- and Over-theorized

2009-09-12T20:16:00.000-07:00

Reading a quote from the very likely next prime minister of Canada, Michael Ignatieff, reminds me of a dilemma that most marketing executives are not able to escape: Ignatieff says that his transition from intellectual professor and writer to a politician fighting for majorities included a very important element of moving to a state of being “Under-theorized”. He is expressing the belief that a politician needs less critically reflected and elaborated theories but rather a drive for faster decisive actions that are less theory bound. He says that his current political career is more about “you have got to show fight” than the ability for deep pensive intellectual concepts.

Executive marketers, at least the good ones, are continuously oscillating back and forth between the stages of “Under-theorized” and “Over-theorized”, always mindful of the dangers of both zones. It is extremely difficult to remain in the right space of “right-theorized”.

Unfortunately I believe that the majority of executive marketers are constantly in the zone of “Under-theorized”. There is a profound lack of theoretical foundations that can be the guidepost of marketing decisions, giving marketers and marketing organizations a framework in which it can act and breathe without constant micro-management.

Some of the most recent relevant theories that executive marketers should attempt to dive into are:

Behavioral economics: The theory and science of understanding of how human beings are making decisions as not purely rational driven individuals. Human beings never act purely rational, the border zone between rational and emotional decision drivers is much murkier than most theories assume.
Brand engagement theories in a Digital world: The purchase and engagement paths of today’s consumer are getting more and more difficult to understand without a clear foundation of how they interact within their individual and fragmented worlds. Every brand needs a theoretical foundation of how consumers are making purchase, usage, and advocacy decisions in its particular category.
Integrated Marketing: The understanding of how different media channels, moments, and messages work together to achieve a particular marketing goal is getting more and more critical and complex to understand, shape, and predict.

Maybe the character of being “right-theorized” could become an additional requirement of being a successful senior marketing executive in any organization.

Dictatorship of opinions

2009-09-06T13:35:00.000-07:00

Any marketer faces daily the same question over and over: “What is your opinion on X?” My unscientific observational research over the last months leads me to the conclusion that everyone has always an opinion on everything. I rarely experience the moment of silence when the asked marketer pauses for a few seconds and says quietly but confident: “I don’t know, I don’t have an opinion.” I call this phenomenon of constant and never ending opinions “The dictatorship of opinion.”

It has all the symptoms of a dictatorship:

There is a clear behavioral norm. When asked for your opinion, you better have one, independent if you have any knowledge, insight, or anything meaningful to utter.
There are clear sanctions for refusing to follow the norm: Marketers who don’t have a lot of opinions will be slowly excluded from any meaningful discourse, any important discussion or any executive position. The definition of an executive marketer includes the capability of expressing endless opinions with a emotional mood continuum from presidential to passionate. Most important is the sole utterance of opinions, the quality of the expressed opinion is secondary.
Expressing opinions is a self feeding mechanism: Every expressed opinion as part of a marketing discussion will generate up to 10 additional opinions. It is less relevant if these uttered opinions bare any connection to the first mentioned opinion, it is all about feeding the monster that can get reignited with the simple question: “And you, what is your opinion?”

Sometimes we test the abilities of very talkative children to hold silence for five, ten, or fifteen minutes, just to demonstrate that silence can be a refreshing and meaningful space between human beings. What would I give for a group of marketers that would try not to express an opinion for a few hours? Yes, it could be a torturous experience for any marketer, me included.

The principle of "Good enough"

2009-08-31T07:28:00.000-07:00

Robert Capps has a close to brilliant article in this month’s Wired Magazine, writing about the phenomena of things and services that don’t strive to be perfect but just good enough. It’s the old but highly relevant story of creating value stories instead of striving for perfection. His examples are covering a wide area: From traditional phone to Skype, from high end video cameras to the Flip, from military jets to drones, from books to the Kindle, from the traditional television to Hulu and from computers to netbooks.

Why is the principle of “Good enough” so successful? A few reasons:

Over- Engineering: A lot of consumers never use all the functionalities that a particular product or services offers. In most usage occasions they only use a fraction of the overall offering. Today’s consumers have realized the myth of over-engineered products and are willing to get for a “Good enough” alternative.
Accessibility beats Complexity. For a lot of consumer it’s more important to have an easy to use and ready available product or service, instead of spending a lot of time and energy to unlock all the different potential functions that a product might have.
Value = Low price + sufficient quality. Consumers are more price conscious than a few years ago, so they are thinking twice before making a high price tag purchase decision. These “Good enough” products lower the threshold for a purchase, and they still provide good quality.

It seems that there is a strong parallel to today’s approach of designing marketing programs. The programs that require a huge amount of money and time will be more and more replaced by a larger number of quickly developed and quality wise sufficiently produced programs. These programs will cost only around 10% of the previously large scale generated programs, enabling a brand to launch 10 of these programs to the same prize. And these programs will be less placed in highly paid media locations but in the brands owned (e.g. Website, Store, Packaging) or brand earned (e.g. Social Media, Buzz) spaces.

It would be an interesting research exercise to count the number of all marketing programs that a particular brand is launching in 2009 versus 2005 or 2000. My hypothesis is that most brands have a significant higher number of programs with a dramatically reduced expense number per program. The principle of “Good enough” will enter the marketer’s vocabulary faster than we can say ‘Web 2.0”.

The Value of Culture

2009-08-24T18:28:00.000-07:00

Two very separate articles that I read recently reminded me of how culture in organizations, either in corporations or in high schools, are a much more important determinant of long-term success than most other elements.

Friend and colleague Dominic Whittles referred me to this highly interesting posting by Zeus Jones. He writes about the major advantages of a web-based community enabled through the ever growing numbers of web applications and endless cost reduction of anything Internet. But he makes a strong argument for the importance of organizations that are connected through physical proximity, stronger formal commitment (=employment), and other intangible benefits of a traditional organization. It all comes down to one critical differentiator: Culture.

Successful organizations are using their culture as one, maybe even the most critical, competitive and strategic asset, especially in industries where talent is the domineering factor over high capital intensive investments. It is surprising that not more companies are spending more intellectual brain power and time against understanding and leveraging their culture.

The second article is from the WIRED magazine in which Daniel Roth writes about the attempts of improving the educational level in high schools. He quotes Alex Grodd who surprised recently a high minded conference of do-gooders that the critical factors of increasing the skills of high school students is to make “Nerds” cool. Every child in school wants to belong to the cool tribe, and as long as the athletic quarterback cliché dominates the standards of “coolness”, we are going to fight upstream against a children value system that values Brett Favre over Bill Gates. Our efforts should be stronger focused on making geeky and smart behavior cool. Maybe the government or well endowed educational organizations can fund a few Hollywood movies that can help of transforming “geekness” into coolness.

Both articles demonstrate the importance of culture and its intrinsic value and derived behavioral paradigms that either drives people and their organizations to success, or not.

R&D in Marketing organizations?

2009-08-17T17:55:00.000-07:00

The slowly ending recession in North America can’t hide the fact that the last year has dramatically changed consumer’s behavior and therefore all marketing efforts by any marketing organizations. Any projection in regards to Marketing Spend in North America over the next few years assumes an overall spend decline which will hurt especially agencies very hard, independent of how fast the recovery is coming. Marketing Investments are a declining category in North America.

A declining category should always bring up the critical question: How much do we invest in R&D to steal market share in our declining category? Surprisingly, most marketing organizations don’t even enter this discussion. They are not used to be thinking about client non-specific R&D, very different from any software company that spends between 2 and 10% of their revenue against R&D, not to mention Drug companies who are spending on average 12% on R&D. Even large service organizations like IBM or Accenture have a separate R&D Budget by department that can reach close to 4% of overall fee revenue.

Why do marketing organizations don’t think R&D? A few reasons:

Most marketers are living only by solving the problem right now in front of them. Probably more than 90% of marketing organizations don’t have a three year plan that would justify and explain the value of any R&D investments. The thinking and planning in every shorter time frames hurts any serious R&D discussion.
Agencies are used to be working only on client specific challenges and tasks. It is a very foreign concept to invest against something that no client has asked for. The concept of scale and impact beyond one single client is a rather unusual one that most agencies are not able to understand. Similar, brand marketers in large organizations associate R&D with the product department, not with initiatives within the marketing team.
The major advertising holding companies don’t ask for real innovation from their agencies, they demand a good profit. Some of the holding companies are trying to encourage R&D projects on a holding level but it is extremely difficult to develop something unique and competitively worthwhile for them, since the entities in the holding companies are often far away from a particular client need. And good R&D is always driven by attempting to solve a particular very well understood need that can be identified across multiple clients.

I believe the weakening of marketing organization will only be accelerated by not understanding the value of R&D projects. Any marketing executive should ask “Where are the key areas that we should put R&D projects against?” and “How much should we be spending on R&D?” Most likely we will never reach R&D investments in even single digit percentages of revenue but any marketing organization can define three to five projects that could pay significant dividend in case of a success.

Today’s young talent will demand such thinking, they are not interested in just executing against a narrowly defined work scope. A R&D budget is not just a bet onto the future to create a competitive advantage but it could be the best retention tool for outstanding talent, too.

Decision Calculus

2009-08-09T12:04:00.000-07:00

Pradeep Kumar, practice head for “Marketing Mix Modeling” at Draftfcb and colleague of mine, referred me to a very interesting and surprisingly old article about “Decision Calculus” by John Little. “Decision calculus” describes a methodology that combines statistical analysis with expert opinion to solve a particular problem, primarily in marketing. John Little introduced this concept first in 1970 when he tried to develop an approach to get managers more involved in analytically derived decision making. The AMA dictionary defines “Decision calculus” as…:

“…the quantitative models of a process that are calibrated by examining subjective judgments about outcomes of the process (e.g., market share or sales of a firm) under a variety of hypothetical scenarios (e.g., advertising spending level, promotion expenditures). Once the model linking process outcomes to marketing decision variables has been calibrated, it is possible to derive an optimal marketing recommendation”.

Over the last 40 years, these attempts to stronger formalize the expertise and human knowledge of managers into analytically derived decision has had as many supporters as opponents. I think that something is lost in this quite often heated debate. Pradeep Kumar says it best when he says: “Understanding is more important than predicting”.

The underlying genesis of “Decision Calculus” resides in the desire to not necessarily create the most perfect analytical model but to build model based processes and systems that get used more often. Too often statisticians try to build more and more perfect mathematical models that are then used by analytical ignorant managers to the detriment of smart decisions in a fast changing business environment. The better approach might be to invest more time in building potentially less complex models but incorporating the user’s expertise on the path of solving a particular problem. The question of how much do I need to invest in marketing programs for a particular new product launch could be dealt with purely academically and mathematically by using the most sophisticated analytics. Or it can combine analytically derived insights with the heuristically based and incorporated insights of the expert and ultimately budget responsible marketing manager.

Over the last years data visualization has been the key application to “democratize” data. Now, we might be at the point of “democratizing” more complex statistical models. Visualization only get us so far, since marketers can use dashboards and visualized models without understanding the real foundation and strong limitations that any analytical derived model has. The concept of “Decision Calculus” continues to show tremendous promise, even 40 years after its birth. We will need to continue utilizing and expanding it in real life situations to improve its impact and define better rules for its successful application.

Creator or Observer?

2009-08-02T18:58:00.000-07:00

This year the artist community is celebrating the 40^th anniversary of John Lennons’ and Yoko Ono’s performance piece “In Bed” which is probably one of the most well known artistic expressions of a particular life philosophy. In a recent discussion about her artistic mindset and drive for this kind of work Yoko Ono simply says: “I am not an observer, I am creator.”

Her statement, strongly implying a clear separation between both activities, contradicts the more common understanding that one most be an observer to be a creator. I rather like her absolute statement because it reflects a truth about most business organizations that splits heavily between functions that are primarily observers and functions that are primarily creators. In the agency world, most markers consider the creative unit the “creators”, more advanced agencies might include the “strategic planners” in this camp of Yoko Ono.

Marketing organizations that will survive and drive will have already understood that the key for true long-term success is in turning every department into “creators”. Observing is important but the value generation resides in creating things, independent if you are a creative, a data analyst or a media planner. In world class marketing organizations, everyone is a creator, just in a different way. The organization’s value resides in commercial creation on as many levels as possible.

While “In Bed” seems at first glance to stress the importance of observing, it ultimately celebrates the power of creation. And not just for Yoko Ono, but for anyone who has seen the piece or has experienced it through different media. Realizing this is a good way to celebrate its 40^th anniversary.

Conceptual consumption

2009-07-26T17:13:00.001-07:00

Rob Walker’s column in today’s New York Times Magazine uses the example of the retail chain “Lululemon” to expand on the concept “conceptual consumption” that Dan Ariely and Michael Norton recently coined as a new technical term. Lululemon is one of the brand examples where the actual product usage is going further and further away from its original core product benefit, in this case practicing Yoga in the appropriate clothes. Lululemon’s product are bought increasingly by consumers who have never done Yoga and who have no intention of every practicing, they are buying into a particular life style and attitude that the brand represents.

This notion is not a truly new concept. The whole SUV category lived for a long time on consumers who never really needed the functional benefits of a SUV but who wanted to be part of a particular life style, being the Hummer as its most extreme representation. Another good example is Nike’s extension of its running shoe usage beyond real running. Most Nike’s running shoes will never experience a speed of over 3mph, but they carry the emotional benefit of the “Just do it” potential.

But Dan Ariely and Michael Norton still have a relevant new idea that warrants attention. Their compelling distinction between physical and conceptual consumption reveals instances where consumers are willing to trade off negative physical consumption aspects with a higher perceived conceptual consumption. Most marketers heavily used distinction between rational and emotional benefits of a particular product or service does not seem to be necessarily wrong but Ariely’s work suggests a deeper understanding of consumer’s behavior. Any brand manager needs to realize that the rational and a large part of the emotional benefits of a brand remain on the physical level of consumption. Ariely and Norton demonstrate how our understanding of the interaction between physical and conceptual consumption are critical to understand consumer and a particular brand in their lives.

Lululemon is in the good position to provide comfortable and attractive clothing while offering a conceptual consumption aspect that ensures premium prices. The high price for a Hummer as part of its conceptual consumption worked only as long (despite all its clearly physical/functional deficits) as it was able to allow the consumer to experience its conceptual values. When the conceptual context and surplus of the Hummer brand started to disappear, its functional failures in non-war like situation became too apparent.

Behavioral economists like Ariely and their concepts will increasingly influence the field of marketing. We should be welcoming it.

Marketing School of thoughts?

2009-07-18T18:32:00.000-07:00

A few weeks of vacation in old Europe enabled to me to catch up with some non-marketing centric reading and thinking that was not solely driven by urgent client needs or very urgent New Business concepts. One thing that struck me as a result of my random reading behavior was the observation that so many disciplines have different “Schools” of thoughts, like in Design (e.g. Bauhaus), in psychology (e.g. the Freudian school), or in economics (e.g. the Chicago School). Additionally the visit to two outstanding exhibitions, the “Blaue Reiter” in Baden-Baden, Germany, and the amazing Van Gough landscape exhibition in Basel, Switzerland, strengthened this particular observation, since the group called “Blaue Reiter” had very specific beliefs and ideas, expressed in their famous manifesto “The Blue Rider Almanac” from 1911. Van Gough was drifting back and forth between different affiliations to various schools within expressionism before his mental state did not allow anymore for a constant commitment to a particular group or abstract concept of common beliefs.

Why is there a total lack of different “schools” in marketing, especially in the domain of marketing agencies and brand marketing departments? It seems that there are few reasons:

Marketing service provider are too scared on missing out on client opportunities if they would adhere too strict to a particular set of paradigms that could be read in a manifesto. It’s easier to chameleon like adjust to particular clients needs and tell them “I will be what you want me to be”
Brand marketers most often don’t have the intellectual freedom and time to pursue the development of a particular school. It’s too hard to write down, improve, and practice strong beliefs in today’s time of daily pressure and sales goals. The brand for which the marketer works is the hero, not a potential school of thought.
The academic community of marketers doesn’t seem to have the impact and influence of creating leading “School of thoughts” that people in the marketing practice would follow. It seems to be easier to work on more specialized topics, transformed into specific research papers, than defining a very broad point of view towards the marketing universe.

And still, I would not be surprised if we will see in the next five years a stronger effort of different groups, especially in the marketing agency and academic community to create a particular “school”, all with the goal of setting down principles and believes that can guide them and their followers. Today’s ever more complex marketing discourse screams for a holistic and simpler view of things, all expressed in a concise document. One needs a powerful Manifesto that generates strong following to create a “School of Marketing”. But the group “The Blue rider” has shown how a few strong personalities can create something permanent that is still considered a school almost hundred years after its creation.

Efficiency

2009-07-11T19:32:00.000-07:00

Please check out a brief article of mine that AdAge published this week:

http://adage.com/cmostrategy/article?article_id=137830

Owning Recovery

2009-06-19T13:49:00.000-07:00

Please check out an interesting point of view that I developed jointly with my colleague and friend Jamie Shuttleworth: http://finance.yahoo.com/news/Draftfcb-Crafts-13-iw-15550589.html

The Cannes Festival

2009-06-15T19:01:00.000-07:00

In a few days the most famous Cannes Advertising festival will start. Reading this week’s trade press one can find out that the number of participants has dropped from over 10,000 to roughly 6,000, the submissions have decreased by over 20%. Most reviewers identify three main reasons for the decline of participations and submission:

Recession and tremendous cost pressure on any marketing department, on both the client and the agency side
Decline of the importance of TV which was traditionally the most exciting marketing channel for the awards review and celebration
The unappealing and boring nature of reviewing digital, retail, or out of home work in a 2 minutes case study.

While all of these reasons are relevant most trade journalists seem to forget two other explanations that will have a longer term impact if “Cannes” does not change:

There is new breed of data and planning oriented marketers who just don’t care about the Cannes festival. And they make up more and more of the marketing crowd on the service and the brand sides. They love creative work but they can consume it in the local museum or art gallery. They dream of going to the TED conference or building an iPhone application or a data visualization tool that gets them significantly more exposure and learning opportunities than schmoozing at the Gutter bar past midnight.
The Cannes festival remains primarily a passive consumption oriented event that looses its appeal to truly creative individuals. These species want to not just look at other work but interact with it and co-create something of value. It is interesting that every marketer talks about the consumer’s control of brands but the “Cannes Festival” brand is in very tight and strong hands of the organizer. The “Burning Man” Festival exudes exactly the opposite paradigm with ongoing success; here the creative individual observes and creates.

The Cannes Festival will continue to exist and marketers will continue to participate at it. But it might be time to fundamentally rethink its core structure and not just redesign its periphery.

Creative and Productive?

2009-06-07T18:35:00.001-07:00

Mark McGurl just published the book “The Program Era”, describing the influence of “Creative Writing Programs” for the North American literary scene. He comes to the conclusion that the tremendous proliferation of these college programs has positively influenced the quantity and quality of books over the last 50 years. It might be difficult to teach “Writing a great novel” but these workshops seem to have been successful in providing a thoughtful space and training grounds for millions of aspiring writers. The majority of them will never publish a novel but it most likely makes them more productive creative, independent of the form of creative expression in which the participants of these programs ultimately major - from journalism to copy writers to researchers. The written word remains in the center of their professional lives, and these workshops made them better with it.

It seems to me that “Creative Writing Programs” tackle with one of the biggest tensions for professional marketing teams: Productivity and Creativity. Both appear as strong opposites but a marketer in charge of a large organization needs to fuse both of them, attempting to answer the question: How can one be more creative AND more productive? McGurl demonstrates that the “Creative Writing Programs” are exactly in the center of enabling the joined up space between Creativity and Productivity.

The success of most marketing teams resides in mirroring a similar working style. Their structure encourages creativity while ensuring a high level of productivity. Looking at a lot of artists who have been extremely creative and productive, one can decipher one similar pattern: They all found their own very individual way of marrying creativity and productivity, if it was working simultaneously on 10 different pieces of art or by setting aside every day three hours of writing from 7 to 10 am or by transforming the ideas of a large group of followers into one piece of brilliant research analysis (Think “House”), etc. There are as many ways of creating the right joint space for simultaneously more creativity and more productivity as there are marketers

Smart marketing organizations realize that every member of the team has his or her own mode of joining up creativity and productivity. The primary role of this organization is to create space for that many individual variations of doing both while ensuring that all these individual efforts are aimed for a common goal. Productivity and Creativity do not need to be at odds with each other. The individual marketer just needs to identify what works for him or herself. And live in an organization that respects individual working styles while maintaining a clearly communicated and transparent framework of jointly owned goals.

The Value of a CMO?

2009-05-26T20:13:00.000-07:00

The last years there have been quite a few discussions about the true value of a CEO. The related research work tries to understand the casual correlation between the performance of a CEO and a company performance. As Harris Collingwood describes in this month’s "The Atlantic" the majority of researchers argue that there is not a strong correlation between both factors, unless the CEO is performing very poorly. It seems that leadership (and CEO’s performance) matters sometimes but not very often. Even Jack Welch agreed (half seriously) that in the early and mid 90ies a German shepherd could have managed.GE successfully.

This whole debate brings up the question: How important is the CMO for the health of a brand and the success of a company’s marketing? I am not aware of any research that tries to tackle this issue, so I have to satisfy my curiosity with a few thoughts and hypothesis.

It seems to me that the key job of a CMO is focused on four core tasks:

Brand steward: Position a brand competitively in its category with a clear understanding of what the brand stands for (and what not)
Budget Owner: Decide how most effectively (short and long-term) to spend the overall marketing budget across all channels, consumer segments, product portfolio, and regions
Consumer Advocate: Understand the core target and consumer of the brand
Marketing Innovator: Innovate against all dimensions of marketing, from price to product to communication, etc.

Surprisingly quite a few CMOs don’t really change anything in any of the four above described dimensions while being in their position. Often, they continue the previous marketing investment strategy with slightly modified creative, they barely gain a deep understanding of the brand’s consumer, and they limit the marketing innovation in small areas with low risk that does not fundamentally change the brand’s success or failure.

Therefore my hypothesis is that the performance of most CMO’s has an even lower casual correlation to the company performance than the activities of a particular CEO. CMO’s have due to the scope of their jobs less impact on a company’s performance, and they change significantly less than one would expect

But there are always exceptions, and these exceptions are the reason why our industry continues to be exciting. And quite often, the true CMO is the highly involved and brand centric CEO like Steve Jobs at Apple.

The ambitious "Seed"

2009-05-16T18:05:00.000-07:00

This week I had the chance to meet Adam Bly, founder and editor of Seed magazine. I was pretty impressed with his thinking about Seed and all the related ventures around the magazine that he is currently developing with his team. I was especially intrigued that Ben Fry, an early pioneer of data visualization, joined Seed magazine and is pursing now his interests as part of the Seed Media Group. It is very encouraging that some magazines realize that great content is highly desired, independent of its distribution form. And Seed is one of the few magazines that continues to hire extremely talented individuals to increase the quality of its thinking and work.

Additionally the Seed magazine team seems to leverage its expertise around “Seeing everything through the lenses of science” to offer services that traditionally consulting companies or advertising agencies would do (e.g. building interactive websites, designing visualization applications). The magazine is really stretching itself not just onto new distribution formats but morphing itself into a modern Media Services company that ignores the traditional boundaries of publishers. The magazine might remain the center but the periphery of this center could become more important than the magazine itself.

Seed’s core agenda is definitely highly ambitious. Here is an excerpt form his corporate website, describing its core principles:

· “Science is transforming our global culture and conversation unlike ever before, shaping markets, informing policy, inspiring the arts and deepening our understanding of who we are, where we come from and where we're heading.

· The pursuit and impact of science is borderless.

· Science is a powerful tool for solving global problems, from climate change to clean water to poverty and development.

· Science affects every single person on the planet.

· Widespread science literacy is essential in the 21st century.”

It is admirable to pursue such an ambitious agenda and to do this with quite some success over the last four years. Beyond that, Seed might function for us as an early indicator of new developments that have high relevance for our thinking and working in marketing.

Data dictatorship

2009-05-10T17:19:00.000-07:00

Douglas Bowman, a former Google employee, now with Twitter, got some notoriety over the last months (The NY Times calls it a “commotion in the technology blogosphere”) by challenging Google’s reliance on testing every single design element in a lab like environment. His main argument is that the constant testing of every single smallest design element through consumer feedback (in Google’s case comparing click-through rates across different versions of a design element) paralyzes a company and hinders any true design or product break-through.

The concept of any end product understood as the sum of thousands small and thoroughly consumer tested elements is becoming an increasingly important paradigm, especially with a lot of Web Design projects. Bowman’s criticism shows a rift between two fundamentally different philosophies that have relevance beyond just Web Designers:

One that relies on the belief that everything is a never ending beta version that needs constant refinement and optimization by attempting to incorporate real-time or near-real time consumer feedback. A product or service is an endless feedback loop, not designed by a brilliant single mind or a group of smart designers but by the wisdom of the crowds. It is the ultimate expression of an ego-less design approach
The other relies on the supremacy of human brilliance. The belief is here that there are brilliant minds that can see a product and service on a more holistic level and therefore achieve a level of innovation and breakthrough that no smartly leveraged crowd can ever achieve. It is the ultimate expression of the human genius which seems to be responsible for most major breakthroughs.

It is difficult for me to declare here a winning theory or approach; both seem to have its merits. The first one (call it “Consumer centric optimization”) seems to be more relevant if one wants to improve smaller feature items in a product, the second one (call it “Mind derived innovation”) more promising if one wants to design and launch a totally breakthrough product.

No form of dictatorship has ever survived for ever, and data dictatorship will loose at the end, too. We should thank Bowman to shed some light on the limitations of a pure data and science driven process that almost seems to be wary of the human mind and its creativity. So, give him some traffic on his blog at http://stopdesign.com.

Geospatial marketing

2009-05-06T19:05:00.000-07:00

Fellow blogger and smart interactive marketer Scott Johnson has a nice brief post about the opportunities of marketing applications within the geospatial science, referencing a research project by Penn State University. The opportunities of utilizing location smart applications for marketing opportunities will grow significantly over the next years.

I am especially curious of their usage within malls and retail stores. Aisle 15 at Kmart will be a new usable location reference point for any consumer. A consumer’s location (ever changing) will become an increasingly important attribute for segmenting, targeting, and customizing a particular marketing message. Its aggregated usage across a significant number of similar minded consumers could even influence new product ideas and innovations. Key players will be the usual suspects like Google, Apple, a few dominant telco provicers, and hopefully some new companies that no one knows yet.

Consumer Segmentation?

2009-04-30T18:47:00.000-07:00

Two weeks ago I published an article with the title “The death of Consumer Segmentation?” in AdAge. I argued primarily that quite a few marketers don’t balance sufficiently their focus between an increasing sophisticated consumer segmentation approach and the enablement of self-segmentation by consumers. A lot of marketers are wasting investment dollars by trying to micro-segment their consumers in smaller and smaller clusters without realizing that today’s consumer are tougher and tougher to be identified within one particular stable segment for a longer period of time.

The article got quite a few reactions, a lot of positive comments but also a significant amount of negative comments. The negative comments focused on three main areas:

The title of the article was misleading, since the article itself did not postulate the end of consumer segmentation but rather some of its limitations. My reply is that the question mark in the title was a true question mark. The answer to the question: “Is Consumer Segmentation dead” is “No, but…”. It’s amazing how many marketers fall into a knee-jerk reaction of defending their age long efforts in consumer segmentation work without reflecting sufficiently on its limitations in today’s world.
I supposedly misunderstood what Consumer Segmentation is trying to do. I don’t think that this correct. I did not argue against building Consumer Clusters based on similar geo-demographic, attitudinal, needs-based, psychographic, or behavioral dimensions to better design segment specific products or services or even tailor communication against these segments. I did argue against the tremendous expense into huge database solutions that allow for targeted communication against smaller and smaller consumer clusters without immediate application. I did not speak against behavioral targeting that builds real-time or near-real time insights that can be leveraged against the needs of a particular consumer. But this approach has less to do with consumer segmentation and more with executing 1:1 marketing based on individual, non-aggregated consumer behavior.
Some comments claimed that I have not done any real consumer segmentation in my professional life. I am always amused that the blogosphere is a favorite domain of disrespectful and unprofessional comments. I always believed that the loudness of one’s voice (which is in the blogosphere equals the usage of insulting and derogatory terms) has an inverse correlation to the soundness of the argument. The first segmentation project in which I participated was one for a large automotive brand in the early 90ies, later on I was fortunate enough to co-lead the Lufthansa Miles & More program for which we did regular member segmentations against a member base of close to 10 million members. All together I was able to witness or lead over 50 segmentation projects, some very successful, some wrongly designed, some with moderate impact. I definitely learned quite a bit over the years. And I am still learning.

The role and function of consumer segmentation will continue to be an interesting one in our marketing discipline. Consumer segmentation is not dead, but its usage and its application will continue to change dramatically. And it will be more and more challenged by consumers who defy any true segmentation methodology and who prefer to self-segment themselves.

SEM misperceptions

2009-04-23T05:47:00.000-07:00

Please read one of my articles that got published today at Marketingdaily about the frequent misperceptions of SEM.

Getting the message out

2009-04-13T15:25:00.000-07:00

In yesterday’s NYT Magazine Virigina Hefferman described Obama’s administration as the “YouTube Presidency”: Why? His administration is at least (or maybe even more) focused on communicating its goals and controlling its image by bypassing wherever possible the traditional political journalists. The administration is attempting to communicate as much as possible directly to the public. It distributes vehemently Obama’s own produced video footage on YouTube, the government websites, embedded in the ongoing campaign emails, etc. It focuses more on this strategic shift to “non-traditional” communication vehicles than on influencing the normally so influential White House Press Corps.

It seems to me that what the White House Press Corps is for Obama is for most brands nowadays the TV networks and cable stations. Clearly one needs to address the demands of great TV spots but equal (or maybe even more) weight has to be put against the creation and distribution of visual content in any other accessible (and possibly free) medium. Not too many people might see Obama’s press conference on CNN, or C-Span but easily a few million people might watch a well shot and designed Obama clip on YouTube and other websites.

It is less about necessarily trying to control the brand message outside of the journalistic realm but to utilize every “free” communication channel to populate it with well created and relevant material. Brands can learn a lot from Obama’s ongoing campaign and attempt to have a more direct and unfiltered access to the public. His administration uses usually four major communication channels:

Its own Government and campaign websites
A well managed and constantly updated presence on social networking sites
Regular outbound messages via eMail, textmessage, etc to the millions in Obama’s campaign database
The distribution of well produced videos on YouTube and other well visited video sites.

This focus on unfiltered and better controlled communication definitely helps Obama. And it can help any brand. Visual brand messages will less and less be only contained to the TV medium; it will proliferate to any visual outlet. Brands might spend more money on the production of these material but they will save on the costs for placement on traditional media.

Behavioral Targeting within Social Media

2009-04-10T11:20:00.000-07:00

In a very recent meeting with Paul Banas (check out his very well written blog at www.insightbuzz.com ) we discussed the latest trends and concepts within the Web Analytics space. In the midst of the discussion we came upon the synergy of using the methodologies of Behavioral Targeting in the Analysis of User Generated Content (UGC). Huayin Wang, one of the truly innovative minds in this space, described the concept of this application as a four step process and methodology. He suggests calling this kind of approach “Micro Analytics”, where one performs analysis on an individual level-type data versus “Macro Analytics” where one is looking purely at aggregated data elements:

Treat UGC as the raw gold of data information. Find the right methodology to score the individual UGC pieces by relevance and relationship to each other. This kind of quantitative exercise will enable one to decipher patterns within the large universe of UGC, either on Flickr, YouTube, on blogs, etc.
Identify the right UGC content clusters to understand marketing opportunities. This will enable one to isolate potential opinion leaders within a certain content grouping as well as unveil unleveraged perception spaces for a particular brand.
Build a persuasion platform that uses the different attributes of each UGC element for an interactive program, all based on the principles of behavioral targeting.
Analyze the modified UGC landscape after a sufficient period of time to understand if the interactive marketing program has created any positive impact for the brand.

Over the last year the whole Web Analytics space has moved so fast from the pure measuring of Web Metrics into a much more complex and interesting area of mining and influencing the ever increasing and changing landscape of consumer intentions, either in form of UCG, Search Behavior, or expressed written opinions.

I expect that this sub domain “Social Media Analysis” within Web Analytics will get further attraction and go beyond purely trend and insights reporting. The core challenge will be of how to combine Behavioral Targeting principles within Social Media Analysis to create successful marketing programs.

Information or what?

2009-04-06T08:06:00.000-07:00

For some strange reason I was looking up the etymology of the word “Information”. It surprised me. Let’s quote Wikipedia:

“ The English word was apparently derived by adding the common "noun of action" ending "-ation" to the earlier verb to ‘inform’, in the sense of to give form to the mind, to discipline, instruct, teach. ‘Inform’ itself comes (via French) from the Latin verb ‘informare’, to give form to, to form an idea of. Furthermore, Latin itself already even contained the word ‘information’ meaning concept or idea, but the extent to which this may have influenced the development of the word information in English is unclear.

As a final note, the ancient Greek word for form was ‘eidos’, and this word was famously used in a technical philosophical sense by Plato (and later Aristotle) to denote the ideal identity or essence of something. ‘Eidos’ can also be associated with thought, proposition or even concept.”

“Information = Giving form to the mind, to discipline, instruct, teach.” It seems that our daily usage and understanding of the word “Information” likes to forget that “Information” has a strong sense of personal subjectivity. It implies a conscious act of the mind that transforms a piece of observed data into something that we call “Information”.

Be aware of the traveling distance between data and information. It’s much longer, tedious, and dangerous than most of us believe.

Strategic Efficiency

2009-03-29T18:25:00.000-07:00

Over the last years accountability has been a dominant topic in most marketing discussions. But over the last 12 months of ever deteriorating economical situation the discussion around “Efficiency” has gotten more attention. The pressure to cut costs is as strong as rarely before. Therefore more and more marketing organizations, on the client as well as on the agency side, are discussing of how to reconfigure their marketing processes with one goal in mind: reducing costs.

Most of these cost cutting activities are hastily designed and miss the bigger picture of redefining the business. In today’s NY Times Steve Lohr writes about the changes in management thinking and strategies in the lens of today’s crises:

“The sharp downturn will force companies to go beyond simple cost-cutting to take a hard look at the economics of their business. Most companies are actually bundles of three different businesses: Infrastructure management, product and service development and commercialization, and customer relations.”

Translating these three areas of activities into the marketing field, we could conclude that we have the following three core domains of value generation in most communications centric marketing organizations:

Production: Creating of all executional elements of marketing programs
Idea and Strategy: Generating the right data driven and consumer-centric ideas
Client Management: Managing all the relationships with clients and 3^rd parties.

It would be a good exercise for any marketer to dissect their organizations, processes, and value generation into these three components. It would enable them to find out how they can truly redefine of where they generate the real value of their organizations and where they are wasting time, money, and resources. It is not all about non-strategic cost cutting but about reconfiguring the business model of marketing around production, ideas and strategies, and client management. It is amazing of how many old bad behaviors und unnecessary tasks have survived over the last 20 good years within marketing. And most marketing organizations, both on the client and on the agency side, react by just reducing headcount without analyzing deeply of how they work. It’s time to redefine where and how a marketing organization can truly generate value.

Our business will continue to focus on accountability and how to build the most impactful marketing programs. But the need for efficient marketing will rather increase over the next years. And the so called good old times will not come back. This recession will continue to change dramatically our field. It’s a time of opportunity for marketers who are willing to be brutally honest with how and what they do.

Empirical emotions

2009-03-22T18:04:00.000-07:00

Jonah Lehrer’s second book “How we decide” got rightfully a very good review in today’s New York Times. Lehrer is bringing a different perspective into the discussion of behavioral economists who have been successful in showing that the previous axiom of most economists “The human being makes rational decisions in any kind of economical context (e.g. buying, investing)” is wrong. He focuses on the driving forces of how we make decisions.

His strongest points in the book are when he explains through a detailed description of the brain and dopamine neurons that “the activity of our dopamine neurons demonstrates that feelings aren’t simply reflections of hard-wired animal instincts…Instead, human emotions are rooted in the predictions of highly flexible brain cells, which are constantly adjusting their connections to reflect reality…Our emotions are deeply empirical.”

Lehrer brings a fresh and interesting dimension of the old discussion between emotional and rational motivators in human beings. This has high relevance for designing and understanding any kind of marketing. Both, the behavioral economists and Lehrer’s school of thoughts demonstrate that there is no such clean distinction between the rational and the emotional. Both are much more interdependent and relying on each other than most of us had assumed.

Lehrer’s insights deepen our knowledge of how great marketing could work in the intersection and tension between rational and emotional. Marketers will have a tougher time to say that a program should be just more rational or emotional. Most decisions of human beings are occurring in the grey area between both.

Raw data now

2009-03-16T18:32:00.000-07:00

Last month Tim Berners-Lee, one of the leading pioneers in everything Internet, gave a great talk about the next stages of the Web, all centered on data. Now it’s available at Ted.com.

His main points were:

The first phase of the Web was publishing and sharing information and content, now we will start publishing and sharing data.
Transparency is just the first step of unlocking data and reframing its usage. But transparency by itself is not enough to change the dynamics of how we use data in a meaningful way.
Putting linked data on the web is a critical aspect of the next stage of the web. Data becomes meaningful through its relationships to other data, by itself in isolation it is close to meaningless.
Sharing raw data is more important than waiting to finalize a beautiful presentation layer for data. Too many companies and government institutions wait too long to publish their data because they have not yet finalized the last stages of visualizing and interpreting the raw data. Berners-Lee told the crowd to repeat the slogan: “Raw data now!”

Once again Ted.com has shown to be a place for finding great presentations.

A billion people

2009-03-14T19:01:00.000-07:00

In last week’s Fortune magazine Muhtar Kent from Coco-Cola made a very interesting observation, trying to explain his optimism despite all the brutally negative comments about our global economy. He says that one billion people will enter the middle class between now and 2020 and an additional one billion people will get urbanized. He quotes this fact as a tremendous positive impact that will accelerate our economy and global well being despite all the negative signs about today’s trouble.

I haven’t been able to verify the fact but it sounds pretty reasonable. We tend to forget that over the last 20 years we were able to lower the percentage of extremely poor people on this planet (income of $1 per day) from over 30% to around 20%.

Warren Buffet sounds similar optimistic. Over the last days he has said that 2009 and potentially 2010 will be difficult years but that his overall feeling is still optimistic about the economic future of the United States. He continues to believe that the US has the most enterprising and innovative culture in the world. The worst in our recession is definitely not yet over but it’s healthy to get for once in a while a broader perspective with a larger timeframe as Kent is trying to do.

The Private and the public

2009-03-10T05:11:00.001-07:00

Lately the topic of “Privacy” has gotten again more attention. Facebook’s recently announced and then reversed change of its privacy policy has generated a lot of chatter in the blogosphere. It seems that there are two different points of views that prevail in this discussion. One is that personal information should be protected as much as possible since personal information belong to a private space of a person and should be protected by all means (dominant thought in most European countries). The other point of view is that industries should self regulate themselves to a large degree, since every other attempt of protecting privacy will hinder innovation and increase the level of unnecessary bureaucracy (dominant thought in the US).

Some of the smarter discussions around this topic notice that there seems to be a significant difference between the attitude of younger and older people. Younger people seem to be much more comfortable in sharing personal information (think Facebook), whereas older people are much more reluctant to share this kind of information. The heated discussion seem to follow pretty strictly these different age groups.

One of the smartest contribution to this topic is Kevin Kelly’stalk from 2007 where he outlines the argument that the core of the issue is not the questions of private versus public space. He observes/predicts a fundamental shift of the meaning and purpose of private and public space. Private becomes public when the benefit of transparency (transformation of the private into the public) outweighs the downside of entering the public. He argues that the ultimate development of one Internet machine in the cloud, containing all relevant public and personal information, will be an uniquely public space without the traditional borders between private and public. This virtual space will have conquered previously private defined areas, but with such tremendous benefits that there is no reason to complain. Transparency and its benefits will outweigh privacy concerns.

One might disagree with Kevin Kelly but his reasoning demonstrates that the discussion of privacy is not as simple as it seems. It entails a more in-depth dialogue about the kind of technology based and enabled society we will be (or want to have) in ten or twenty years

What is the story with Microtransactions?

2009-03-04T18:37:00.000-08:00

During the initial boom years of the Internet at the end of the last and beginning of this century Micro-Transactions were a big topic. Then this concept went asleep for a few years, now the iPhone, Kindle, and the discussion of how to save newspapers brought it back into the center of interesting business models. Maybe it’s just a coincidence that Amazon announced today its new Kindle application for the iPhone and iTouch? Or this announcement might even further heat up this discussion.

There are a few reasons why microtransactions are getting more attention than a few years ago:

The concept of “free economy” has taken strong place in today’s world in which huge players like Google establish themselves as major forces. Microtransactions are closer to a free economy than most other business models. Consumers got used to receive a lot of things for free which limited their willingness to buy larger items. But it will not hinder them to buy items for a small amount of money. The huge iTunes success with a $0.99 price tag per song versus widely available free music downloads proves the collaboration between business models centered around “free” and microtransactions.
Today’s world of recession and consumer hesitation of buying large ticket items might further accelerate the acceptance of microtransactions. I know that a $13 price tag for a monthly Kindle subscription for a New York Times is not a true microtransaction but it is definitely a significant cost savings versus a $40 fee for a monthly paper-based home delivery. The borders between a traditional microtransaction and a just cost efficient monthly subscription fee might get more and more blurry.
Even industries like computer games might move closer to a smaller transaction model instead of a sticker price of $40-$60 per game. Microtransactions will enable brands to move from a infrequent large transaction relationship to a more ongoing subscription like relationship. This could significantly enlarge a loyal and stable customer base for a lot brands.

I don’t think that the verdict, success or failure, of business models around microtransactions is settled yet. It’s more likely that this concept will just enrich the current business universe with one more particular flavor. And this is an enjoyable one

Relevant Recession metrics

2009-02-23T16:21:00.001-08:00

One could make quite a fortune by understanding and utilizing the right metrics that would indicate when the US economy has finally reached bottom, the moment in time when it would show again some decent growth numbers. I have a suspicion that we don’t consider the right metrics that we need to follow (beyond Consumer Confidence and other long established indicators) to understand this turning point. Consumers have fundamentally changed their consumption behavior, therefore the underlying metrics need to be adjusted, too.

Let’s take car sales. We always assume that US car sales have to reach sooner than later a positive upswing. Currently people don’t buy too many cars anymore but they will buy again after their cars are getting older and less reliable. In 2006 (the best car sales year ever) almost 17 million cars were sold in the US, last year it was much lower, this year will be even worse. So, we are all waiting for the sales curve to move upwards again. Why? Because we expect the future to behave like the past, at least sometime in the future.

But when we look at an interesting metric from Japan, we might realize that we are looking at the wrong thing. Yesterday New York Times writes in article about the mentality changes of Japanes consumers:

“A survey last year by the business daily Nikkei found that only 25 percent of Japanese men in their 20s wanted a car, down from 48 percent in 2000.”

This means that no one in Japan expects that the annual car sales will ever reach again the good numbers from a few years ago. It is irrelevant to look at total car sales from the past but it is more important to understand consumers’ intent in today’s world.

We should probably spend more time and energy to truly understand consumer intent metrics and compare them over time. It’s easier for a consumer to report his intent (despite all the bias of self reported data) in a particular category than an overall judgment of confidence in the economy of his personal situation. I am curious if any research company looked at “New car purchase intent” behavior by age group over the last 10 years and was able to correlate it to actual sales figures.

Black and white swans

2009-02-19T07:16:00.000-08:00

Nassim Nicholas Taleb, author of “Fooled by Randomness” and the more popular but less technical “The Black Swan”, gets a great deal of attention and press/media coverage over the last 6 months, mainly because people think that he predicted the current financial disaster. I think he deserves all the attention but there are quite a few misperceptions that touch onto our marketing data field:

He did not predict the current financial mess but he was prepared for it. And he probably made some money with it. But there is a huge difference between “predicting” and “being prepared”.
He warns strongly against a blind arrogance and trust into predictive data models but he is still using them to attempt to understand the world around him. It’s a big difference between not using data models and being realistic about their limitations and shortcomings
He is extremely weary about believing that the past holds the key to understanding our future. But he is still studying the past, less to predict the future but more to understand human behavior and market dynamics.
He is a big Karl Popper fan. That’s why he is using data to falsify theories not to verify them. This is a big fundamental difference that is difficult for most marketers to grasp. A particular data set is helping us in two ways: Inspiring new hypothesis and falsifying existing ones. But it does not hinder any decisive action but it puts one’s decision into a realistic framework of probabilities and size of a particular outcome that we hope to achieve with our decision.

Taleb is a very smart and fascinating writer but he seems to be more misunderstood than most authors.

Interactive Manifesto

2009-02-12T18:42:00.000-08:00

Randall Rothenberg from the Interactive Advertising Bureau wrote a pretty interesting piece about the winning principles of interactive marketing and its current hurdles.

I don’t agree necessarily with everything he wrote but he has some interesting arguments, like:

While the principles of direct marketing are critical for good interactive work, most direct marketers ignore the aesthetics of communication which provides true long term value to a brand.
A lot of interactive marketers are only interested in optimizing the results of their programs without understanding the “why”. This limitation of knowledge curiosity hampers the growth of interactive
He observes that a lot of digital agencies are named after inanimate objects or nonsense words whereas traditional agencies are named after human beings. This reflects a certain depersonalization of advertising that endangers responsible long-term marketing.
Along with RG/A’s Bob Greenberg he argues for a third member of the creative team: the creative technologist.

It’s worthwhile to read the whole piece.

Reverse Specialization?

2009-02-11T18:48:00.000-08:00

Over the last 500 years we have further specialized every single human activity to create more and more distinct areas of expertise. This specialization has helped us to have doctors who only focus on fixing up knees or bakers who are experts in cup cakes. This would have been unthinkable 50 years ago. This focus on specialization enabled an enormous amount of progress, it created wealth for a big majority of mankind.

But are we now entering a reverse specialization due to the continuing digitalization of our world and all available information? Are Google and other digital information aggregators a mean to recreate some of the notions of an “universal man” of the Renaissance who knows more than just a very tiny field of expertise?

People are becoming nowadays more experts in health related issues when they face a health issue. They will search a lot of information before they agree to a knee operation. They will acquire a wealth of knowledge that would have been unthinkable 10 years ago. Or they will become cup cake experts if they plan a their daughter's birthday party to ensure the organic quality of all the baked ingredients.

I don’t think that we will reverse the specialization trend but we are witnessing a parallel trend that motivates and enables people to acquire a more general knowledge beyond their professional area of expertise. This will not great another Da Vinci but it will create more information enabled human beings. It democratizes the possibility of being a “universal man”.

Bill Gates and his first annual Foundation letter

2009-01-31T15:53:00.000-08:00

Last Monday Bill Gates published his first Foundation’s Annual Letter, inspired by Warren Buffett’s annual letter to the Berkshire shareholders. I think it’s an absolutely must read for any marketer for the following reason:

He outlines the big vision and principles of his foundation, while diving into the few separate focus areas, almost always starting with a number based challenge against which he outlines a measurable goal for the foundation. His foundation for example is aiming to cut down the 10 million children deaths in half within the next 20 years. I would love to see that marketers write their annual marketing plans that clearly and number centric, always balancing the need for a big vision and the urge for implementing concrete projects
He has an ambitious and honest tone that educates, inspires, and directs anyone reading the annual letter. It must have been quite some work to put it together. But it would be great if big brands or companies could have a scaled down version of their marketing strategies and brands once per year. Their marketing organizations and external partners would know much more about core priorities and strategies that would make everyone a better marketers
He tries to be as transparent as possible. Most marketers still don’t pursue sufficiently today’s necessity of transparency. It’s less sharing trade secrets than spreading the right message within your own organization and beyond. It’s the only way of how to change things in today’s world of 24/7 information and stimuli.

I am curious to read his next letter in January 2010

What about the Semantic Web?

2009-01-26T18:57:00.000-08:00

The discussion and hype about the Semantic Web has significantly decreased over the last 6 or 12 months after the recession has hit North America. Semantic Web has been defined in 1999 by Tim Berners-Lee:

“I have a dream for the Web [in which computers] become capable of analyzing all the data on the Web – the content, links, and transactions between people and computers. A ‘Semantic Web’, which should make this possible, has yet to emerge, but when it does, the day-to-day mechanisms of trade, bureaucracy and our daily lives will be handled by machines talking to machines. The "intelligence agents"people have touted for ages will finally materialize.”

Despite its ambitious and visionary notion I believe that the Semantic Web will see more investments and progress over the next five years than most people believe. Why?

There are quite a few Silicon Valley start-ups who are focusing on this space, probably more than even before
Computer and Processing Power is getting cheaper, faster, and more powerful than ever
Most important though: The increasing amount of Information (it is doubling every 3 years) will need new ways of organization. Human beings will be too challenged to use this vast universe of information in any meaningful way.

The interesting part for marketers will be to find different forms of monetizing the Semantic Web. At the beginning only parts of the Web will migrate into the Semantic Web structure which will be the playground for figuring out how to make money.

Maybe we should bet on the first brand that will pay marketing dollars to be on the Semantic Web? Or on the company that will be the major driving force in building the Semantic Web? Most likely it will not be Google or any currently widely know company.

Narrative Medicine

2009-01-18T12:56:00.000-08:00

I always believed that mastering the understanding and telling of stories is in the center of democratizing data. It truly helps to make data accessible to a wide range of marketers. It seems that an increasing number of disciplines are discovering the power of understanding and telling stories as a way to diagnose problems and communicate them.

A great indication for this phenomenon is a recent ad from Columbia University advertising a “MS in Narrative Medicine”. It says:

‘”The care of sick unfolds in stories. The effective practice of healthcare requires the narrative competence to recognize, absorb, interpret, and act on stories and experiences of others. Medicine practiced with narrative competence is a model for humane and effective healthcare. Columbia's new MS in Narrative Medicine seeks to fortify clinical practice and training with narrative skills in order to strengthen the overarching goals of medicine, public health, and social justice, as well as the intimate, interpersonal experiences of clinical encounter”.

I love the four phase methodology of “Recognize, absorb, interpret, and act on” stories. We marketers probably need a fifth elements whch is to “Tell the story”. It’s an encouraging sign that even medicine tries to uncover stories and use the “Story” metaphor and methodology as a more holistic approach to understanding people, here patients, in our case consumers.

Accountability in a Recession

2009-01-14T09:12:00.000-08:00

You might be interested in an article that I just got published in this week’s AdAge. Accountability is get even more important in today’s tough time.

Ponzi scheme

2009-01-09T11:33:00.001-08:00

Tim O’Reilly just published probably the most interesting Posting in this very young year. He quotes two economical experts who describe the current financial crises as an imbalance between true real wealth and fictional financial wealth. They argue that the true reason for the current crises is that financial assets outgrew the natural growth and the real assets on our globe. O’Reilly is even approaching one of the greatest heresies in today’s society: There might be no endless growth anymore.

Erhard Eppler, a German thinker and politician very popular in the 80ies, differentiated already back then between qualitative and quantitative growth. Not every growth is good. If people get sicker, the more money is spent on medical expenses which are shown as economical growth. The focus should be more on qualitative growth that reflects people’s quality of life.

Interestingly enough, it comes down to measuring the right things. It seems we are still measuring the wrong things (=quantitative growth) instead of establishing metrics that have real meaning (=qualitative growth). Since we are measuring the wrong outcome, we are focusing on the wrong thing. It could be an interesting exercise to develop a metrics system focusing on how marketing creates qualitative growth for the targeted consumer.

Growth Expectations

2009-01-06T06:13:00.001-08:00

The last few weeks I spent in good old Europe which enabled me to experience the different expectations and attitudes of societies in today’s tough economical climate. It showed me that expectations for economical growth differ more vastly by country than most people believe.

Last week the prime time news show in Germany had two separate reports about the retail environment in Germany and the US within 10 minutes. First, the news show reported an assessment of the holiday season in Germany with an overall very upbeat tone. It showed a few retail experts that estimated a flat to slightly negative sales growth over the previous holiday season. It quoted one retail executive who expressed strong satisfaction with the season and its rather surprising success (only slightly negative growth or even flat!).

A few minutes later a report about the US retail season showed a very different picture with a completely different tonality. The reporter mentioned the expectation of a 2% sales decline for the holiday season in the US and portrayed an absolutely abysmal picture for US retailers. The report stressed how devastated US retailers are and how US consumers stopped shopping over the last months.

How can a 1% difference between sales growth in Germany and US over the holiday season justify such different reports? Cultural differences! Germans are not as growth oriented as Americans. For most Europeans no or slow growth does not equal complete disaster for failure while most Americans can not imagine an economy that does not grow substantially. This attitudes explains the stronger willingness of Americans to go into debt to maintain a strong growth rate whereas most Europeans don’t value growth itself that much to put aside all other values.

Economists are currently predicting the long-term GDP growth downwards and are expecting a more normal annual average growth of around 3%. But most Economists are not taking in consideration the different mind sets of consumer expectations in regards to growth that is influencing the actual growth by country. It would be interesting to quantify more scientifically the different growth expectations by country and compare it with the actual growth rates.

Observations in Rome

2008-12-18T06:25:00.000-08:00

Last week I spent a few days in Rome with clients and colleagues of mine from all over the world. It was not surprising that most European marketers are talking about the effects of the financial meltdown and its impact on consumer behavior. Our discussion did not just focus on the reduced consumer spending in most European countries and the projected small to negative GDP growth projection for 2009 but it expanded to the key issue of understanding how consumer’s mindset has changed and is still changing.

No one pretended to have all the answers, but I heard a few interesting observations:

Consumer’s values and their attitudes towards shopping are changing dramatically. It’s not being positively perceived anymore to purchase a lot of badge value brand names. This behavior is replaced by a new admiration for being frugal and smart about spending which is becoming a new badge of honor. Trend researchers have called this the new “Frugalista” mindset. This consumer will still spend money but only with a clear quality and value mindset. And this individual is proud of being frugal.
The topic of Green products and initiatives are not disappearing as we have seen in all other previous recessions. The Consumers’ focus on Green is here to stay despite all the financial constraints and worries. And this seems to be true on a global level, even in China and India. The value “Green” becomes an intrinsic quality element of any kind of product and service. Consumers are not willing to trade off anymore price and green, they are expecting good value products with Green qualities.
Marketers are focusing significantly stronger on In-Store Marketing activities and the competitive fight in the “last mile” of interaction between consumer and sales person, independent if the brand is being sold in a telecommunications store or a grocery. This trend will probably further accelerate over the next few years since marketers will see a higher ROI than marketing investments in early sales funnel activities.

Consumer Insights and trends are becoming more and more global, especially when events are so global that they are affecting consumers worldwide in a similar manner.

Students in a Recession

2008-12-04T11:20:00.000-08:00

Yesterday I had the pleasure to talk about my work at the Medill School of Northwestern University in Chicago. It’s always good to see that there are a lot of young students eager to enter the marketing universe, especially in these tough economic times.

I learned a few things:

After presenting some of my more recent Web Analytics initiatives one Medill professor asked a very smart question: “How much do you think on a scale of 1 to 100 have we mastered Web Analytics as a discipline?” After thinking for a few seconds I said “20”. There is still so much to be learned and understood within Interactive Marketing and how to measure the impact of Online Programs. We still don’t have even a standard and simple way of measuring Unique Visitors to Websites. There are a lot of siloed approaches across a wide range of very different companies (e.g. Microsoft, Digitas) to advance Web Analytics but it still feels like an open green field.
The Medill school is doing a lot of work around “Integrated Marketing”. My argument that we do need a new theory of “Integrated Marketing” found some interested listeners. My observations is that over the last ten years our discipline has put “Integrated Marketing” in the center of our thinking but our progress is much less that we all assume. My plead to the students was to enter the field with fresh thinking, new methodologies, and out-of-the-box views, so our marketing discipline can make some real progress over the next years in building a new theory of “Integrated Marketing”.
I was positively surprised that most analytical minded students in the audience understood that analytics needs to center around building data driven stories, and not the most complex algorithms. The modeling and analytical work is just a tool to tell the smart and insightful story but not the centerpiece of our work. But you still need to know how to build a multivariate regression analysis and much more.

Despite the rough economy, it’s a great time to be a marketer and innovate of how brands interact with consumers and how consumers build and change brands.

3 Screens Intelligence

2008-11-30T17:27:00.000-08:00

A lot of marketers write about the convergence and synergies between the three main consumer screens: TV, computer, and mobile. I think there is time to develop a deeper understanding of consumer’s behavior and their usage pattern across these three screens. I don’t know of any major research initiative that tries to uncover the key trends across these three screens. One of the key obstacles seems to be that there are not too many neutral players in this ever changing consumption and interaction world of the three screens. Traditional marketing service companies prefer consumer’s usage of the TV, the phone companies would like to focus on the mobile device, and tech companies try to center around the laptop usage.

Any research tackling this issue should focus on a few key questions:

What are the daily usage patterns across these three screens and what are the major usage occasions throughout a day and during a week?
How strong are the screen replacement behavior patterns and how often are consumers using screens simultaneously?
How do consumers predict their three screen behavior for the next three to five years?
What are the price sensitivities around the three screens and the consumers’ willingness to pay more for incremental or exclusive content?

If you know of any meaningful research projects or published results and insights in regards to the three screens and consumers interaction with all three, please feel free to comment.

Reasons to blog

2008-11-23T08:54:00.000-08:00

A good friend of mine sent met last week the link to an interesting Indian blog by Bhupendra Khanal. He put my blog as one of the top 5 blogs to follow. His assessment of my blog writing as “lazy” and “not well marketed” was very interesting. Bhupendra absolutely right; he motivated me to think again about my reasons for blogging and my audience. Here are a few thoughts:

I am somewhat of an unusual blogger due to my less frequent postings. My writing is more self than audience focused. Marketinggeek is for me a constant motivation to push my thinking, reworking it, and then putting it into words. It’s less about engaging with a large audience than about working on some marketing issues by myself and than publishing it. This is the reason why I don’t spend too much time on marketing the blog. Therefore I don’t care too much about my Blog ranking.
It seems that a large amount of reader blog comments (especially in the US) are nasty and mean spirited. I will never understand why readers post comments about the stupidity of the blog that they are reading: No one forces them to read it. I don’t want to waste my team in getting drawn into this vicious cycle of responding to negative comments. It might drive traffic and stronger blog community but I consider it unproductive and irrelevant.
I estimate that half of my audiences are colleagues from my company. Thjs blog helps to start conversations with my colleagues whenever I meet them. It’s unbelievable powerful tool in a company with almost 10,000 employees. It creates a sense of loose community and transparent sharing of thinking that could not be created otherwise.
Today’s New York Times has a good article by Sharon Otterman about a movement called “Slow Blog”. She quotes Todd Sieling, a technology consultant from Vancouover who published a “Slow Blog Manifesto” in 2006: “Slow Blogging is a rejection of immediacy. It is an affirmation that not all things worth reading are written quickly”. It seems that the fast pace of Blogging that we have seen two or three years ago moves stronger into the Twitter world. I will definitely stay stronger in the blogger world of 2005 and 2006.

There are a lot of different reasons to blog. It might be time to outline a smart taxonomy of blogs, not by interests or disciplines but by inherent blog characteristics and blogger intentions.

Binary Thinking

2008-11-09T18:27:00.001-08:00

Barack Obama’s win last week and all the related discussion about a “Post-Racial” era in America made me think that we might enter the end of binary thinking. The fascinating element about Barack Obama is that he is not easily classified in binary terms, especially in regards to his race, upbringing and personal history. He is less the one or the other but more a continuum of a lot of different things. He is black and white, he is American but he grew up in foreign countries, he is a guy from Chicago but he only moved to Chicago in his twenties, he is an elitist and intellectual but he was a community organizer, too.

Most the data analysts I am working with are used to think and to model in binary terms. It’s either 1 or 0, you are either in segment 1 or in segment 2, the campaign has either worked or not. The root of this approach resides in the long tradition of philosophy of dualism and binaries. It’s tough to move beyond it, especially for mathematically trained brains who believe that everything can be reduced to a 1and 0 formula, as any computer program is proof of.

But life is rarely truly binary, and the models that we are building should attempt to reflect this life more accurate by moving beyond a simple binary structure. It’s often more useful to think less in opposites than in a continuum of elements, less in strong colors than in shades of something. Things are rarely true of false but more often a bit truer or a bit more false.

Someone doesn't like "Mad Men"

2008-11-06T18:42:00.001-08:00

In the current edition of “Artforum” Greil Marcus writes a pretty critical piece about the TV show “Mad Men”. It’s a rare exception in the sea of extremely positive reviews of the show. Unfortunately it’s not accessible free online, so you need to try to read it wherever you can get a hard copy. It’s worth a read.

Marcus’ key point is that there is strong emptiness in the TV show below the surface of outstanding actors and 1960ies furniture. It’s close to the emptiness of today’s ambiguous and mostly self ironic and self referential promotion of products and services in today’s advertising world. The advertising of the 1960 were much more naïve but honest in their belief to improve people’s life. Unfortunately advertising plays only a minor role in the "Mad Men".

Channel Economics

2008-11-04T10:09:00.000-08:00

Mediaweek just published the following article from Scott Johnson and me: Channel economics. Scott Johnson is one of the smartest and strategic thinking marketer in our industry, so it was fun to collaborate with him on this article.

The fallacy of analytical arrogance

2008-11-02T17:23:00.000-08:00

The new book “Numerati” by Stephen Baker is one of the many recently published books that claim a new age of data and analytical driven wisdom across numerous disciplines that enters everyday lives to an increasing extent.

One of the more interesting quotes in the book is the sentence “We turn you into math” explaining the ever expanding attempts of understanding human behavior by analyzing vast amounts of data. I believe that the real challenge is though in uncovering something new and insightful that will change human behavior. A lot of the published examples, not just in this book, talk about something interesting but without any meaningful derived actions besides some slightly optimized marketing programs.

We are encountering the danger that analytics becomes a discipline of churning through vast amounts of data while turning up only mildly interesting insights. “We turn you into math” expresses the unjustified arrogance that more and more analytical minded experts start to believe in. There is no reason to feel that.

Volatility

2008-10-29T18:59:00.000-07:00

Looking at some news over the last days, one might realize that the concept of “Volatility” has reached a new height of popularity. The stock market shows a daily up and down of stock value as rarely before. The polls for the upcoming election show a dramatic move over the last three or four weeks than is rather unusual. Sarah Palin’s perception has changed from the savior of John McCain’s campaign to a negative asset within a few weeks. And some consumer goods companies report a dramatic shift of consumer’s purchase behavior, ranging from sometimes up to 50% decline over the previous year.

What’s happening? Voters, Stock Holders, and Consumers are changing their minds and their behavior in such a rapid manner that is unprecedented. People seem to become more uprooted and undecided. The underlying elements of this change are:

Accelerated Speed of any shared information leading to a more rapid herd behavior
Overall Lost of Trust in and Loyalty to most institutions and companies
Decline of behavioral rituals that gives a structural foundation to people’s lives

This reflects a huge challenge for marketers. Successful marketing is becoming a more and more a vast changing and adapting discipline that barely keep us with fast changing sentiments of consumers. It is getting more difficult to maintain a long-term and sustainable marketing advantage. One might celebrate last week’s successful marketing while already thinking of what to launch next week.

We will be obligated to find a few new marketing rules in this new society and consumer world of volatility. The previous rules of loyalty and highly established behavioral patterns are disappearing.

ArtScience II

2008-10-20T15:38:00.000-07:00

Just posted a few more thoughts on ArtScience on my company's corporate blog. Check out at http://www.draftfcbblog.com/default.aspx

Progress in Marketing?

2008-10-13T06:48:00.000-07:00

Most disciplines like to talk about the progress that their discourse has taken over a long period of time, from biology to politics to education. Most disciplines that move between academics and commercial application are very focused on progressing its insights, theories, and applications.

The discipline marketing seems to be a very different animal, not too many marketers talk about progress.It might be helpful to separate three different forms within the marketing discipline:

The academic world of marketing
The commercial word of marketing
The output of marketing

First, marketing academics would claim that its discipline made significant advancements over the last decades. Probably rightful so, we have seen emerging the theory of brands, the deeper understanding of consumers, the theory and practice of pricing, the more insightful analysis of the retail space, etc. Academics continue to make the marketing discipline more rigorous, more insightful and more empirically based.

Second, it’s much more difficult to assess any progress in the commercial world of marketing. The industry itself has grown substantially over the last decades and with this financial growth its sophistication, too. But it would be far fetched to identify any substantial progress beyond strong diversification and expansion. The emergence of more and more channels and targeted marketing programs are less about progress, and more about maximizing profits in a capitalist society.

Third, the output of marketing: From creative to pricing to new products. I would argue that it is inappropriate to talk about progress. The consumer facing output of marketing is closer linked to art objects, though with commercial intent. No one would talk about progress in art over the last decades or centuries. Modern art objects have incorporated older art objects but there has not been a objective degree of progress. It’s not about progress towards any particular point but understanding, learning, “borrowing”, and reassembling of previous art forms and expressions into something new and unique. Or sometimes it is about rejecting the past and its norms but always with full understanding of the past.

Unfortunately I have too often observed that there is ignorance within the marketing community towards previous marketing expressions and work. A lot of marketers are less educated and not alt all interested in understanding the previous generation of marketing work. While new marketing ideas should be grounded in the work of previous marketers, they mostly celebrate its historical ignorance. It’s not about a plea for progress in marketing but an urge to be smart and historically grounded in our marketing discipline.

artscience

2008-10-10T18:13:00.000-07:00

I just started the book “ArtScience –Creativity in the post-Google Generation” by David Edwards. It is based on the theory that a lot of innovations are generated in the intersection of art and science. Edwards started “Le Laboratoire”, a so called artscience center in Paris. I really like the concept that there is a small tribe of artscientists who are pushing the limits of art and science into a new discipline. I recommend reading it, it's very applicable for our business.

Being smart in a recession

2008-09-29T15:52:00.000-07:00

It’s tough to write anything meaningful or entertaining after such a rough day for the US economy but sometimes daily swings at Wall Street do not reflect the reality. At least by now no one can deny that we are in recession, despite the fact that this not yet official for the statistician in the department of commerce. Give them another 10 or 12 months and they will confirm it.

There have been quite a few articles from AdAge to the WSJ about the implications for marketers, mostly focused on the same two elements:

Keep spending, since brands who continue to spend can gain market share from weaker competitors
Include a strong value message in your communication, since consumers are much more price sensitive than before

I think most of these articles and discussions are missing a few critical insights that should drive marketing in a recession:

Recession varies significantly by geography and by consumer segment. Marketers should use the recession to accelerate their insights about these differences and build more targeted and relevant marketing programs
In times of recession smart, entertaining, and relevant marketing can become a refuge for the stress and nervousness of most consumers. It does not mean that every brand has to produce an escapist 90 minutes movie but a brand can become a relief point for all the bad news from the real world. It’s not a coincidence that the Olympics had some of its best TV ratings ever.
Most brands don’t adapt their websites and ecommerce offerings to reflect a recession mind set. This weeks New York Times magazine includes a simultaneously hilarious and sad article of how financial companies have not modified the communication from their web sites to reflect the current financial situation or their own perilous state.
There is not better time to diligently understand the impact of all marketing spend by a brand. It amazes me that so many brands are still clueless about the impact of their marketing dollars and the lack of any kind of intelligence of how to optimize their marketing investments. Only spending on SEM because it’s directly measurable does not mean it is the best investment strategy.

Recession hurts and puts a lot of stress on most marketers but it should force us to be smarter and more insightful.

Teaching in Marketing

2008-09-24T08:21:00.000-07:00

A lot of marketers forget to stay teachers during their career. It’s critical that more executives in our discipline teach the younger colleagues in both fundamentals of marketing as well as helping younger people to truly innovate and disrupt our marketing discourse. It seems that a lot of marketing executives are just trying to survive another day, either on the client side through the pressure of daily sales performance or on the services side through the grind of ever more demanding clients. The overall business pressure is increasing, especially in today’s time of recession and financial uncertainty, which seems to leave less time for any true teaching. But good teaching in marketing is a critical necessity that will ensure the survival and strategic competitiveness of any corporation.

What is good teaching today in any marketing organization? A few elements come to mind:

Good teaching is not about seeing the world the way that everyone does. Teaching is about training younger colleagues in being “Counterintuitive”. It is about taking a different perspective on an issue or challenge than anyone else. It is about challenging the status quo and general consensus.
Good teaching is about helping younger colleagues to push their own expertise to another level. It is about not being satisfied with the first attempt that they are sharing with you but motivating them to try it a few times more until they have really put their teeth into their work.
Good teaching is about sharing your own ideas or thoughts, the book insights you might have discovered, the observations that you have done. It’s about sharing knowledge and information transparency, it’s not about secrecy and hording of knowledge in your office and mind.
Good teaching is about not taking yourself too seriously. If you can’t show younger colleagues that our profession is more than just a bunch of billable hours or an endless array of meetings, than you are not teaching the right thing.

Every marketing executive should consider themselves a teacher of our discipline. Teaching will truly determine the future of our discipline

Corporate Blog

2008-09-23T08:29:00.000-07:00

My company Draftfcb will soon launch its Corporate blog (www.draftfcblog.com). I will be a regular contributor and I will refer you to it whenever I am posting something worthwhile. It is challenging to keep a corporate blog truly interesting but it is worthwhile to try.

Zagat for Colleges

2008-09-22T06:45:00.000-07:00

One might think that most interesting consumer driven rating and recommendation web projects have been already invented or initiated but then you hear about “Unigo”. It is a website that tries to help families and college applicants with their college decision by combining the impressions, ratings, and recommendations of current students at all relevant colleges across North America.

Unigo will be officially launched for a broader audience in a few weeks but its concept shows significant promise. Studying it might help us to further understand how product and services purchase decision can be influenced in today’s universe where Online peer review is highly influential.

The importance of location

2008-09-18T06:19:00.000-07:00

Richard Florida just published his newest book “Who is your city”, a follow up to his book “The rise of the creative class”. His key argument is that people underestimate the importance of their decision where to live. His book outlines that the living decision is as critical and important as the decisions about your partner and your profession. This theory is primarily based on the fact that despite the flattening of the world there is an ever increasing clustering of talent in a few mega cities and areas around the globe. And each of these mega cities has its own focus and flavor which should determine one’s living decision.

Information Arbitrage

2008-09-15T14:26:00.000-07:00

Arbitrage has been a widely used term in the financial world, describing the practice of taking advantages of price differences in different markets. It is all about striking a combination of matching deals that capitalize upon the imbalance.

Today’s marketing universe has its own arbitrage phenomena that lately has been written about more often, for example Bill Tancer mentions it in his book “Click”. I am suggesting calling this phenomena “Information arbitrage”. Information arbitrage is occurring when a marketer takes advantages for his own brand over other brands due to one of three potential arbitrage situations: More Information, Better understood Information, Better used Information. It is all about capitalizing on an imbalance related to the availability and usage of data.

More Information refers the pure fact that one marketer might had more information than the rest of the category. Better understood information refers to a marketer’s situation when his analytical horsepower and intellectual capital is just better than the rest of the industry and allows him to uncover previously hidden insights. Better used information refers to the fact when a marketer allows the whole brand organization to have easy and meaningful access to information that allows for more and better insights driven decisions than the rest of the category.

Information arbitrage can be one of today’s most critical competitive advantages for any marketer.

Information without Meaning

2008-09-12T07:55:00.001-07:00

Neil Postman might have written about the Post-Information world but this week’s fall of United’s share price shows something different. What happened? United’s share price fell by over 70% due to an incorrectly picked up story from 2002 about United’s bankruptcy filing. Yesterday Michael Oneal from the Chicago Tribune sheds some light of what happened and how old information resurfaced as new and highly viewed news.

“Tribune Co. said the story had received a "single visit" about 1 a.m. Eastern time Sunday but because traffic was so light to the site's business section at that hour, one click constituted "most viewed" status. Consequently, a new link was placed in the list of "most viewed" stories on the business page and the Google search crawler picked it up.

Google, in its own version of events published Wednesday on a company blog, said the problem began with the Sun Sentinel site. The site had given the United story no date stamp, the blog explained, so the search crawler looked for the only date available — the one that appears on every page of the site next to the Sun Sentinel masthead.

"The article failed to include a standard newspaper article dateline," the Google blog said. "but the Sun-Sentinel page had a fresh date above the article on the top of the page of 'September 7, 2008' [Eastern]."

What happened next is not in dispute. Traffic started to flow to the story from Google and eventually a Florida-based financial information company picked it up and posted it to the Bloomberg news service. United's stock plunged in response.”

We definitely don’t live in a Post-Information world but in a world that is dominated by meaningless information. And sometimes the lack of meaning and context leads to the strangest behavior.

Digital Intimacy

2008-09-08T18:47:00.000-07:00

This Sunday’s New York Times Magazine has an outstanding article from Clive Thompson, who is writing about the impacts of the vast proliferation of Online Social Connection applications (e.g. Facebook and Twitter) on the social life of young people. He describes the tension between the growing networks of virtual friends, the feeling of connectedness to as many people as never before, and the constant story telling of people about their own life in a non-private but small circle environment.

It feels like a world that combines absolute transparency, self created reality shows without any breaks, and the urge to constantly describe you in a compelling manner. We all seem to become story tellers for our own small community of friends without any separation between On-and Offline, between relevant or irrelevant events, between private or public experiences. Most of us marketers have not yet full grasp the implications of this phenomenon for our marketing discipline. I will try to blog about this in the near future in more detail.

Digging in soil

2008-09-04T18:23:00.000-07:00

Michel Houellebecq, one of France’s most famous authors, had an interesting piece in the September edition of Artforum. He writes about his compatriot and fellow writer Alain Robbe-Grillet and dissects his dislike of Robbe-Grillet’s novels. In his analysis Houellebecq includes a brief description of pedology, the study of soil, since both authors went to the same prestigious French school of agronomic engineering (one of France’s grande ecole).

Houellebecq writes: “The reigning method of pedology since its inception is soil cutting. It involves digging a vertical trench into the ground, its depth varying depending on the soil in question (generally, one continues down to rock stratum). Once the trench is made, what does one do? Well one observes.” What I love about his description is the similarity between the methodology of “soil cutting” and observations of consumer behavior. The key question remains how deep one is cutting and how one is observing. Digging in the wrong spot will only unveil the wrong dirt. And the absence of a theory of soil will lead to nothing or to just dirt, too.

Observations without meaning

2008-09-03T06:21:00.000-07:00

A lot of consumer research is commissioned by marketers to find out what consumers are really thinking, feeling, and desiring. Too often it is forgotten that research does not tell you anything new or original. It can only verify or falsify an existing theory. Research without a concept, without a clear question or theory is nothing than a compilation of experimental facts, devoid of meaning. The French thinker Auguste Comte prefers to call it “empiricism emptied of meaning”.

Any market research needs a theory that guides its work. Too often marketers expect that research projects provide answers. But theories and concepts provide answers while research can only assess their level of correctness and truthfulness. Observations are important but they only gain meaning within the boundaries of a theory. Einstein summarizes it well when he says “It is theory, and only theory, that decides what must be observed.” More marketers should study the basics of sociology and social theory to make marketing research truly productive and meaningful.

Why Traders are more like Consumers than you think

2008-09-02T10:54:00.000-07:00

One of my favorite business journalists, James Surowiecki from the The New Yorker, published last week a very insightful piece about the frazzled American Investor and his irrational behavior of trading more in uncertain times than in good times. Surowiecki writes about the increasing volatility on the US Stock market with a lot of days over the last few months where the S&P 500 Index has gone up or down by more than 2%. The main reasons are according to Surowiecki...

“Herding” - Investors follow other investors and they seem to do it more in difficult times
The dominance of quantitative-trading strategies which explicitly ride the herd effect. These trading models are based on other traders behavior, so if a lot of traders behave similar, than the model follows the overall market movement
Investor’s desire to maximize potential gains – every sign of stock market volatility shows a window of opportunity which leads to higher volatility
The Job of traders is to trade, so don’t be surprised if self confident traders trade, especially in times of uncertainty.

Surowiecki’s analysis and explanation reminds me again that the jobs of economists and marketers are more similar than most people believe. Both professions are deeply rooted in trying to understand human behavior and their often irrational activities. While marketers are trying to understand consumer’s purchase decision in the times of recession, Wall Street economist are attempting to explain trading behavior in days of irrational stock market performance.

And traders and consumers are more alike than different. Traders and Consumers buy products and services based on all available information and existing emotions, then they keep them, use them, or sell them. All this is a good reason to have more exchange and learning across both disciplines. Marketing departments should definitely hire more economically trained minds. It would be good for our industry.

Olympic Games - the value of a viewer

2008-08-26T18:58:00.000-07:00

This week we have seen a lot of articles about NBC’s huge success with the Olympic Games. It’s a bit difficult to get all the final and consistent numbers but it seems that NBC have had close to 300 million TV viewers and almost 100 Million Online viewers for their Olympic coverage. In total NBC got $1 Billion TV Advertising revenue but only a bit over $10million Online Revenue. So, what does this mean in terms of monetized viewers in the TV versus Online world? NBC got $3 for a TV viewer while it received only $0.1 for an Online viewer, that is a 30:1 value ratio.

Why? Is the TV viewer 30 times more profitable for the advertiser? Is advertising to the TV viewer so much more impactful? No, the economic value difference can’t be explained by the different potential impact for advertisers but by the simple economic balance between demand and supply. There is a much tighter relationship between demand for TV spots and supply than with the demand and supply for Online advertising. Why? Because marketers still haven’t figured out the true value of viewers in both these channels, so the majority sticks with what they are used to. And this is TV. And it might get them some tickets from NBC or the media companies to some of the more interesting Olympic events. But to be fair we can't forget that there is objectively a much higher supply for Online space than for TV spots. Both these factors drive the tremendous value difference, not any ROI driven intelligence.

Traffic explained

2008-08-25T19:00:00.000-07:00

There have been lately quite a few books that try to explain human behavior not as an expression of rational decisions but as a reflection of irrational but explainable patterns and decisions (e.g. “Nudge”, “Predictably Irrational”).

The book “Traffic” by Tom Vanderbilt falls into a similar category, he tries to explain human behavior around the phenomena of traffic. One of my favorite examples is the empirically derived observation that vehicles that see a cyclists wearing a helmet tend to pass closer than we they see a cyclist without a helmet. There are a few potential explanations:

Passing drivers may have read the helmet as a sign that there as less risk for the cyclist if they hit him
The helmet might have dehumanized the rider
Drivers read the helmet as a symbol of a more capable and predictable cyclist

Key Insight is that the helmet changed the behavior of passing drivers. What I love about this is that the scientist and psychologist Ian Walker set up this research project by mounting his Trek bicycle with an ultrasonic distance sensor and drove the same streets with different distances from the edge of the road, sometimes even dressed as a woman. He pursued all this effort to find out how his behavior and “personality” changed the behavior of passing drivers.

This example just shows again that we marketers are still not innovative enough in setting up consumer studies to truly understand consumer behavior. Innovative scientists seem to be much more creative than most researchers in the marketing discipline. Vanderbilt’s book includes many more such fascinating research projects. It's worthwhile to read and it might motivate some of us to develop more interesting marketing research projects.

Austria without Mozart or Sacher

2008-08-19T13:52:00.000-07:00

The first stop of a brief trip through Europe in Vienna showed me once more that marketing wisdoms, challenges, and relevant strategies continue to differ strongly from country to country. It seems that smaller countries like Austria with approximately 8 million inhabitants remain in a different stage of our marketing disciplines:

The media fragmentation is still not as wide spread as in larger countries like UK or the US. It is still possible to reach 50% of the national consumer audience with one newspaper or one TV channel
Austrian Marketers have not yet shifted as many marketing dollars to Online Marketing as countries like UK where brands spend more money on interactive solutions than on television. Currently only 3% of Austrian marketing spend is being invested Online.
Geographic marketing intelligence and clustering is not as relevant as in larger countries due to a much more homogenous and less diverse geographic composition.

Some of the Austrian marketers that I met mentioned that their country continues to lag by 3-5 years in comparison to the more marketing pioneers countries like the US or UK (excluding mobile marketing). But smaller countries like Austria remain hotbeds for very creative solutions that deserve strongly our attention.

US headquartered marketing services firms and US centric brands can’t forget that any marketing solution needs to incorporate country specifics, especially in a more diverse and difficult to assess global landscape where countries can be on different marketing maturity cycles. India might lag in a lot of areas but its consumers are more centered and dependent on mobile than the US consumer, Austria might be slow on the Media Fragmentation curve but it has some very innovative retail solutions and customer relationship programs that are world class.

The world might be flat but there are still a lot of different colors and shapes of flatness.

Liberal arts and Marketing in China

2008-08-14T19:09:00.000-07:00

This week Saul Gitlin, an intimate expert of the Chinese marketing world, made a very interesting observation when we talked about the state of the marketing discipline in China. He outlined how the low value and poor perception of studying liberal arts in China might contribute to the slower growth of marketing in this large country. This lack of excitement for liberal arts amongst young people could significantly decrease the pool of talented and well trained creative thinkers that the marketing discipline needs so desperate.

Saul and I discussed a few strong similarities between liberal arts and marketing:

Absorbing written words (Books or Consumer research) to build a meaningful interpretation
The interlude between intense research and free flowing brainstorming to come up either with an interesting academic hypothesis or with a compelling strategic idea
Quick understanding of different universes, either the worlds of literary figures or of real consumers
Importance of intellectual curiosity to be successful in either disciplines

I will try to find some more concrete number over the next weeks to find a number correlation (percentage of beginning liberal arts student in China versus other countries as part of all beginning students) that might help us to validate Saul’s and my thinking.

Marketing Industry Score

2008-08-12T18:41:00.001-07:00

Over the last week I have probably watched too much Olympics but I got fascinated by a New York Times Analysis of how much the swimming world records have improved over the last decade, in absolute reductions of seconds as well as percentage wise. It shows a dramatic improvement in speed cause by various factors, including improved pool design and faster swimsuits.

It occurred to me that we have nothing similar in our industry, nothing to truly understand if our marketing work has become better, more efficient, or more effective, just anything that could compare work over time. Is it only because the results of our work are tough to quantify? Or is it because our industry has such a strong aversion against measuring itself? Maybe it’s time to put the top 10 marketing indices and scores together and see how we have performed over the last 20 years. And at least we don’t have to wear swim suits that take almost 30 minutes to get into…

Marketing and applied statistics

2008-08-09T18:36:00.000-07:00

Today’s New York Times front page article about the attempt of various economists to predict the level of over or undervaluation of homes in different markets brings up a good questions: Is the marketing discipline just behind and resistant in accepting and using statistical methodologies to understand the inner-workings of its discipline or is the impact of marketing just more complex and difficult than understanding the value of real estate properties?

Over the last years I have seen more senior marketing executives acknowledge the importance of statistics and data modeling work but for a majority of them it’s still very difficult to grasp the application of analytics to their daily work with brands, clients, and marketing challenges.

It’s a long road to travel for our marketing discipline while Google and others are already building much faster roads. And they will charge us for traveling on it…

Airline Marketing as true Service?

2008-08-06T18:57:00.000-07:00

There have been written enough pieces about the dismal state of the North American Airline industry, from unacceptable service to never ending delays or just pure chaos at check in, boarding, or luggage claim. I don’t want to tell my own personal story of distress or disappointment but rather raise the question, how should anyone market an US airline in today’s world (let’s exclude Southwest and JetBlue who are the outliers in this industry). An industry with extremely low expectations by its consumers and an ever increasing and ongoing passenger frustration?

There seem to be three conceptual options that airlines could follow in their communication approach:

Ignore the reality of today’s travelers and just continue to communicate the traditional messages of travel excitement, supposedly great service, and some either non-existing or irrelevant service upgrades
Get straight to the point, be honest about all current shortcomings (the average age of a US airline plane is more than 17 years old and will have more technical problems than a new airplane), admit mistakes and be totally transparent and clear about what the airline is planning to do to address at least some of the problems
Don’t market anymore at all in any mass media and reinvest all marketing communication dollars into service improvements either pre-flight or during the flight.

Interestingly enough all airlines are following option 1, no one has the courage to either pursue the full honest approach of option 2 or the marketing budget reallocation strategy of option 3. I think it’s very worthwhile to consider a combination of option 2 and 3. Then an airline would be brutally honest about the current state and the planned improvements and use cost efficient online communication (emails and corporate blogs) to spread the word to its core audience. I think airline marketers forget too often that the most valuable and profitable travelers are reading the business sections of newspapers and portals and are well aware of the real problems. They don’t want to be communicated to but they want to be informed. With this strategy marketing would become a much more efficient and honest information application without spin and would be transformed into a true service function for travelers. What a change.

It always amazes me how little courage we witness in our marketing industry, even in categories that are under tremendous pressure and fight for survival.

Sales signs everywhere

2008-08-04T18:50:00.000-07:00

Over the week-end I went leisurely strolling around in a few of Chicago’s main shopping areas, from downtown to Lincoln Park to Lake View. I haven’t done this in quite a while, but I was able to make one interesting observation:

Every store has a sales sign at the front of its store, either in the window display ore on standing poles in front of the door or just anywhere where walking traffic could see it. The interesting fact is that there is no correlation between these sales signs and actual sales occurring in the stores. There is not even a meaningful connection between the size or the power of the traffic enticing message with the actual size of the sales (measured either in percentages of items on sale or the size of price reductions on a few items). In some of the store there we not even one single item on sale. After further reviewing the sales signs in front of the store I was able to decipher that the sales sign referred to an upcoming sales sign in a few weeks (e.g. Northface).

It shouldn’t surprise us that store managers are putting up sales signs to entice walking traffic to enter the store, especially in today’s times of a recession. I would love to see a research project that measures the impact of these sales signs on increased traffic (versus stores without a sales sign) and its impact on changed basket mix of consumers who enter a store with a sales sign (versus stores without a sales sign). I believe that for some stores the increased traffic due to sales sign is balanced out due to the negative impact of shopping basket value and margin. Consumers who enter a store with a sales sign expect to primarily buy items on sales and not regular priced items.

I think this could be a fascinating data capture and analytical project with clear implications of how to best use sales signs in trade areas with heavy walking traffic. Now I just have to find a retailer who would give green light to such a project…

Insight about Insights

2008-08-02T12:30:00.000-07:00

In last week’s “The New Yorker” Jonah Lehrer has a fascinating article about “Why good ideas come us when they do?”. His key finding is that one needs to alternate between very strong concentration of solving a particular problem and forgetting about the problem. Most good ideas and insights are occurring when one least expect it, it’s happening when you distract yourself away from the problem after spending sufficient time on trying to solve it. It’s the right balance between conscious hard work and giving freedom and space to the unconscious to come up with ideas that are beyond the conscious limits of one’s mind.

I am curious how many marketing organizations and marketer try to create a work environment that actually leverages this insight of how create insights. I am sure that many.