Change Marketing, Yes We Can (presentation)

I don't know about you, but for years now I've had the feeling there's something wrong in the land of marketing.  After all, we all read that the world has changed. That media consumption has changed.  Consumer behaviour has evolved.  That brands aren't trusted.  That mass media are dead. 

But at the same time the basic principles of marketing as I learned them in business school have remained the same.  While the media have changed, the majority of marketing initiatives are still about "shouting and selling" rather than actually engaging with a customer and gaining his respect.

I believe this has to stop and that is why – today – in Helsinki I gave a presentation which called upon the marketers in the room to stop the madness. 

To stop talking about what the brand wanted to say, and start focusing on what we, the customers wanted to hear.  To stop shouting at us, and start engaging us.  To start building a lifelong reputation, instead of trying to be a “one night brand” merely focused on quarterly campaigns.  In short, to help start a revolution that would change the essence of marketing itself.

The experience was unnerving.  After all,  it was the first time I have ever been that explicit.  Calling for a revolution is something you don’t do every day.  And in a country as advanced as Finland, there is of course the chance that no one would rise to the occasion.

But they did.  In fact, many people came up to me with the message that I was articulating what they were thinking.  Others also came up with suggestions on how to make the presentation better.  Areas I had missed and that could be included.

So with the Finnish digital marketing world on my side, I’ve decided it is now time to challenge the world.  Or better, I should say “we”, because my business partner Stefan Kolle has been at the heart of the new marketing model we propose in the presentation below.  A marketing reality which lets go of the “product push” mentality, and focuses on relevance, engagement and reputation.

Change Marketing v01

About the presentation

This presentation offers a digital perspective on life, as the audience at the event (Twitter: #Fword) was active in digital. But our view is larger than that.  That is why we will be applying the concept of  relevance, engagement and reputation to every aspect of the marketing mix.  From ROI to innovation.  From television to Twitter.

It also is an “open source project”.  Even though at Futurelab we can consider ourselves a bit ahead of the curve, reality is that we don’t know every detail on how the future of marketing will look either.  But we do believe that if we all work together, we can work it out.  So I would like to call on you to contribute.  We will shortly be launching a Ning community where all fellow revolutionaries can unite and discuss.  But until then I suggest you use the comment section below.

Because as the man said: Change Marketing.  Yes, We Can.

The Seven Tips for Agency Survival

If advertising is so effective, why are CNN, airport billboards and business magazines free from ads in which agencies promote themselves to business audiences?  I always ask this question "tongue in cheek", but lately the cheekiness is waning.  Ad-effectiveness is plummeting all-round and both brand owners and consumers are nearing the point where indifference turns into annoyance.

That's why I jotted down some tips on what ad and media agencies could do to break out of their downward spiral.  In this, I benefit from ignorance as I've mainly worked on the client side, yet do claim some authority based on the nine-digits I've helped spend (waste?) in the past.

If you feel my under-nuanced, over-generalising, rhetorical approach misses the point, please use the comment section below.  The only way to turn the tide in the agency world, is to start having the painful conversations in the open.  Trying to ruffle a few feathers is my first contribution to get the talking started.  Because remember ... I do love you  :-x

TIP 1: TAKE THE LEAD IN ROI CONVERSATIONS RATHER THAN UNDERGOING THEM

In less than 3 years, agencies will find themselves facing marketing effectiveness specialists asking questions about the campaigns they were involved in.  As these consultants will probably come from outside the industry (c.q. McKinsey, Bain or even us) they will not be interested in a cosy chat about the "message of the brand" or the "creative award that has been won".  Instead, they will zoom in on the money the agency made, or lost, for its client. 

They will field very precise questions like: Why did you recommend to up-weight prime-time 30 second ads in urban areas when the data shows this has negligible impact on actual sales?  Or: Why did you focus this POP campaign on family values as a brand driver when it is clear that value for money is what really moves people to purchase?  They will come armed with data from the next generation media and message optimisers, which already today can identify the initiatives that made money for the brand and even predict those that never will.  And if you haven't got your answers straight, they will really go to work on you.  As an agency, the choice is therefore simple. Take the lead in measuring and managing ROI yourself and be ready for the conversation, or prepare to be the lamb three years from now.  After all, the data they will use then, is being collected today.

TIP 2: DIFFERENTIATE YOURSELF

Here's a challenge. Look at any list of major international agencies and tell me in one word how each truly differentiates itself in the marketplace.  If you can get beyond half a dozen unique value propositions, I want to talk to you 'cause I ain't seein' them.  Everyone has large networks, everyone is creative, everyone has the best people and everyone has a bunch of awards on their wall.  Now look at this from a client's perspective. Here's an industry which claims to advise brands on how to differentiate themselves in the market place, yet can't get beyond bland whiter than white rethoric itself.  Rather than chase every budget-dollar through a middle-of-the-road positioning, agencies should clearly state what they are about and live by it.  Clients should be made to love the agency brand or hate it, yet not even contemplate the commodity purchasing indifference they display today.  After all, if you can't make your own agency stand out in the crowd, how do you expect your customers to ever take you seriously if you claim you can do it for them?

TIP 3: STOP ADVERTISING, START COMMUNICATING

By a cynic, the advertising industry could be summed up as a machine which is commissioned to blast inconspicuous consumers with as many commercial messages as possible, whether they want them or not.  Then, once a year, it gets together to celebrate the team which has come up with the least intrusive, or even funny way of doing so, and highlights their achievement to the world as a sign of its professionalism.  While exaggerated, I am seeing a rapid rise in the number of people embracing this view, and to pre-empt spinning out of control, agencies must let go of their addiction to channel-centric communication planning, and focus on what matters to the end-consumer.  They need to start recommending initiatives which are rooted in respect, insight and passion.  Messages need to be relevant and incite people to say "tell me more" rather than reach for the adzapper.  I realise this is a brutal step to take in a world where commission structures, industry habits, politics and people's beliefs have been formed by 30 years of info-blasting.  Yet when facing the dilemma between walking a difficult path or staying on the route to irrelevance, I know which one I'd choose.

TIP 4: LEARN ABOUT THE STUFF THAT REALLY WORKS

As an ex-shopkeeper, I've built and managed stores from Killarney in Ireland to Kazachstan and I can tell you one thing, there's no medium on the planet that can rival retail and shop-staff.  Yet most regular agencies haven't got a clue on how to manage the point-of-experience.  The world has massively moved online, yet I still meet senior strategists who've never even visited Second Life or wrote a blogpost.  NPS and WOM are the "technique du jour", yet only very few people I know really understand what they mean.  Agencies need to make sure that everyone in the agency's employ truly update their knowledge on the new media, creative and business landscape.  If your people aren't tinkering with alternative media, branded storytelling, retail and the techniques that really matter, encourage them, force them and if they can't do it, replace them.  There is no reason to believe the current rate of change will not continue, so the communication game three years from now will look even more different than the way it does today.  In my book, the time to upgrade your capabilities is when you still have some money in the bank to pay for it.

TIP 5: CHALLENGE THE INDUSTRY ORTHODOXIES

In addition to understanding the new realities, agencies should actively challenge the industry orthodoxies that have stopped making sense (or are close to doing so).  In customer centric communication planning, it is non-sensical to separate media and creative.  In a world where ROI rules, the lingering habit to link an agency's reward to the amount of "money spent" is simply archaic.  With all the computer power and data flying around, media-buying by now could be as automated as buying shares on Nasdaq, yet everyone's still waiting for "industry entrant" Google to make the first move.  Looking at the way the advertising industry operates, it is easy to spot dozens of inconsistencies with the way the world is going.  Agencies that want to succeed in tomorrow's market place need to resist the temptation to go along with the industry politics and actively start breaking bad habits.  Silo-bashing will be a rough ride in the beginning, yet will eventually prepare them for a world which will prove unforgiving for those who haven't evolved.

TIP 6: IF IT HAS NO MEANING, STOP DOING IT

To paraphrase D. Ogilvy, most agency work still treats my wife as a moron and lacks any truly "BIG" idea.  In short, it's ineffective and meaningless.  And while I understand that it's often the client who waters down the boldness, the challenge I put is to fight back harder.  The way the market is going only those agencies who really add to their client's bottom line in the long run will be the ones that survive, being average is a guaranteed path to irrelevance.  If you're truly passionate about what you do, connect your ideas to the brand's bottom line and have the facts to back them up, you have every right to speak your mind and be firm about it.  Going along with the flow of mediocrity will not only devalue the perception of your agency, it will also make your brightest people leave.  Be bold, be confident and if the facts back you, be prepared to stand your ground.  And if committee-ship risks you producing vanilla, remember Ogilvy's words that he would never let an account get so big he couldn't afford to lose it.  Frightened agencies are lackies.

TIP 7: IF YOU DON'T WANT TO OR CAN'T IMPLEMENT THE ABOVE, HARVEST AND START OVER

There is no law against harvesting a brand name, and perhaps that's the way some of the established houses in advertising should go.  Even if the middle-of the-road market will be shrinking, there's still money to be made.  As long as the forces of conservatism are at work, having a clearly "conversative" positioning can be very effective (oh yes, but that relates to point 2 :-)  Some groups already seem to be going this way.  Publicis is eagerly shopping for new boutiques, Carat has got great outfits like Isobar, who say the opposite of what some of the more traditional Carat media execs are actually doing.  Betting on two horses is perhaps the wisest route if your a big player, and harvesting is part of that game.  Still, as a person reading this article, the question I dare ask is whether you prefer to be part of the agency that evolves to the next level, or the one that will get harvested.  If you're agency is already on the path I described, I applaud you and wish you all the best.  If it isn't, join the conversation to change the industry.  Or better, drive it ...

The 7 Secrets of a Good Marketing Budget

By now you should be close to having all of your top-line budgets approved and be heavily into the detail of spending the marketing funds you've just been entrusted with.  Yet before you rush off to fill the pockets of agency wizards and media-moguls, I'd like to stir things up a bit.  For this post, I have come up with 7 budget recommendations against which to benchmark your decisions.

While the exact % split is indicative, I'd be interested in how many of you agree this is the way to go (and if you don't want to comment publicly, feel free to drop me a mail).

Here we go :-)

Spend 10% on aligning the people in your organisation to your strategy
Even though you think you have explained it, most employees around you are oblivious to the brand strategy you have developed.  At the same time, they are expected to deliver on the promises you make in your marketing initiatives.  As marketer it is your job to ensure they are capable of doing so.  This means you need to get involved in employee communication, people development and alignment workshops and initiatives.  Most HR departments won't be able to do or pay for this by themselves.  So join forces and if required "take the lead".

Focus 10% on research yet shed the orthodoxies to focus on metrics that matter
These days it's perfectly possible to predict the impact of GRPs bought on the sales of the brand.  To truly understand what drives consumers, rather than make guesses based on focus groups and surveys.  To measure the impact of customer satisfaction on word-of-mouth and future sales.  To connect your marketing initiatives to your bottom line.  Yet the number of companies that do so remains embarrassingly low.  Break out of the research orthodoxies and focus your budget on metrics that allow you to make more money and differentiate your business.  De-clutter your life and get rid of all the rest.

Allocate 10% to boldly go where no marketer has gone before
We all know that the existing marketing model is out the window, yet no one knows where it's going to land. The only sensible thing you can do in this situation is experiment.  Try new things and see what happens.  Explore branded content, do in-game advertising, launch a blog, go into Second Life, open a flagship store.  You didn't join the marketing profession to rehash the same media-mix each year, so use the opportunity to break new ground.  And if for financial or political reasons you cannot go it alone, join a lab or consortium with non-competing brands.  The important thing is to start.

Take 15% to spread your online media across the long tail
As online marketing budgets grow, most advertisers will flock to the same media.  This will reduce effectiveness and drive prices through the roof.   You need to break the mould and spread your investment over an as wide, yet relevant net of digital media as possible.  Most media buyers and even some advertising groups won't like this.  After all, existing commission structures and some people's creative skills aren't really structured for truly "unbundled" advertising.  Still, there is no other option.  In the world of the long tail, even Yahoo is only a "blip".  So put your foot down, and if required renegotiate your agency compensation package (let's be honest on a 1-2% buying commision, no one can do a decent job).

Focus 45% of your spend on traditional media, yet break with your GRP addiction
With all the unconventional moves above, I'm not saying you should stop doing traditional media.  Still, the big step to take is to let go of the illusion that media planning based on GRPs actually has any value (and yes, we've got the numbers to back this statement).  With some planning and research it is quite do-able to cut 20 to 50% of your traditional media budget without affecting your sales line.  This should fund a lot of the actions I described above, and allow you to focus your traditional spend where it really matters.  And if you have some left, remember that the real action is in customer service, sales support and point-of-sales.  Any penny you can save should go there.

Keep 10% in reserve for when the next YouTube comes along
Don't spend it all.  While even before the internet I've been a strong proponent of keeping back some money to make agressive moves when opportunities arise, these days this is more important than ever.  This time last year no one would have imagined YouTube to be what it is today, yet chances are a similar "something" will crop up in 2007.  When it does, you want to have the funds to move fast and hard, so you can be first to leverage whatever the new medium will be.

So, does this look like your 2007 budget?

Is There a Formula for Word-of-Mouth?

According to the Marketing Science Institute, there may be.  They just published a working paper  on how companies can encourage the diffusion and adoption of new products by creating positive buzz and avoiding negative one.

I think this is a great idea. While word-of-mouth is one of the key drivers for any brand, to date I've seen very little metrics or models to actually manage it. This is important as WOM typically gets lumped into the corner of marketing communications, while it involves every aspect of customer anticipation and satisfaction. MSI is - at least to my knowledge - the first to have a solid go at this.

To make a long story short, MSI states that Word-of-Mouth (WOM) is a function of originality (O) and usefulness (U). The more original a proposition or message is, the more likely people are to talk about it. Product usefulness, in turn, determines whether the things people talk about are positive or negative.

No rocket science here, yet it gets interesting when you consider that "usefulness" acts as a multiplier. In other words, if your agency comes to you with a highly original idea, you better be sure that people think both the idea and the product it promotes are considered as "useful" or you may get lot's of WOM, yet going in the wrong direction.

Refining the Formula?

As I - presumptiously - feel there are still a few things missing in the MSI formula, I want to have a go at refining it. The two variables I'd like to introduce are (S)eed and (C)redibility. This would make the formula look like this:

 WOM = O x U x SC

O = Originality      U = Usefulness      S = Seed      C = Credibility

 “Seed” covers the amount of initial locations you can seed your message (i.e. the number of customers you have, the number of bloggers you reach, …). If you are an Apple, you can seed a message in thousands of places. If you're Alain Thys (i.e. me), you're already happy if you can attract the interest of two or three fellow bloggers.

"Credibility" determines the relative value of these seed locations. In other words, if those two or three bloggers I would happen to attract are named Kawasaki, Godin or Peters, the exponential value of their reputation can have major impact on the WOM I generate.

Whether this formula actually yields any sensible numbers, I don't know. Still, I think that by looking at the components of WOM and individually managing each of them, brands can make a step towards actually going with the flow, rather than frantically try to control it.

What Do You Think?

So, what do you think? Can we capture WOM in a formula (should we?) or has our European heatwave gone to my head ?

Afterthought: only for formula and number lovers

For those who are really interested, I'm still trying to add in a few additional parameters, which include:

• The benefit of communicating.  In the world of WOM, the act of passing on a message should add something to both the speaker and the listener.  Does it make the speaker appear "in the know"? Does the listener "learn something"?  Does it make conversation more interesting?  The simple fact of being "talk-worthy" in your message should have an impact on the degree in which it is passed on.
• Refining the concept of usefulness. Usefulness as it stands today is one variable, yet perceived and actual usefulness can vary by individual in the equation (i.e. if your early adopters love it, yet the mainstream doesn't know what to do with it, you're limited in your impact).
• Introducing the notion of time. WOM may evolve over time, both in intensity (when originality wears off) and in direction (i.e. that great new car may become a nuisance when it starts breaking down after a few years).  The formula currently doesn't reflect this, yet in my opinion should.

Stop Communicating All Those Benefits ...

In communication they always claim that less is more.  And this little gem on what would happen if the iPod got the Microsoft treatment definitely proves the point.  Yet how far do you cut back?  When you have 100 features to communicate, where do you focus?

Our first temptation to get around this problem is often to simply communicate all the benefits we can think of … the more the merrier.  I remember sales training sessions where we spent half a day looking at flipcharts, trying to come up with yet another reason why customers should buy our product.

The only problem with this approach is information indigestion, leading your customer to simply “tune out”. 

Some get around this by focusing only the benefits that make their product or service compare favorably to its nearest alternative, yet this is clearly still just a half-way solution.

A concept I really like a lot is to focus on what Anderson, et al. call “resonating focus”.  Here you work on the assumption that who ever is buying is both smart and pressed for time.  As a result you focus your message completely on “the one or two points of difference (and perhaps a point of parity) whose improvements will deliver the greatest value to the customer for the foreseeable future.”  

In short, you only focus your communication on what is most worthwhile to remember when considering your offer.  And while the authors only claim this is relevant for business markets, I would say it works for most of us consumers as well. 

The only tricky part is to really understand what matters to your customer.  Which gets us back to the iPod example at the start of this post.  

 
PS.  A big thank you to Professor Horst Bender for pointing me to this concept.