The relevance of "Bauhaus"

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

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

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

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

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

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

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.