The Strategy Review

Careful with that axe Eugene - customer value revisited

David Stoughton of ValueKinetics writes:

Wonderful, really, how recessions demand that we focus. Wonderful and, unless we're really careful, destructive. Business is being forced to take stock in a way that it hasn't done for years; the downturn at the turn of the century was a cakewalk by comparison, for most anyway.

Potentially one of the most destructive features of the new focus on cost is management belief that value is a zero sum game. That to conserve the returns, or limit the losses, to shareholders some things have to go - staff, product development, services. If the interests of other stakeholders suffer, so be it.

I don't deny the need for austerity, but those managers need to be very, very, careful. Careful about their brand equity, careful about knowledge walking out the door with the employees, careful about falling behind the competition and, above all, careful with the loyalty of their customers.

This recession is proving steep and deep, we don't yet know how long it will last. Few managers have seen one like it before, but there are people who can tell them; the old war stories are being trotted out as a rapid primer. They should think hard first though, there is real danger in behaving as though this recession were like the last big one. The underlying rate of change is faster, competition is fiercer, and markets and consumers are more demanding. Businesses can't just go below decks, batten down the hatches and wait for the storm to pass - many of those who do will be shipwrecked by the time it's over.

It's those consumers I want to focus on here. I haven't detected among them the kind of patience required to wait until business comes out of its shell; politely to stop the merry-go-round of their own activities while managers tinker in the engine room. Conspicuous consumption may be out, but the round of social interaction and media reprocessing goes on - perhaps even a little more madly.

Generation Y and is coming of age, and its successors are not far behind. They bring with them a native ability to use communication platforms and social media that drives a constant swirl of change; an always-on dialogue that simultaneously changes tastes, behaviours and expectations. And they are educating up. Many in Generation X and even older are adopting some of the habits, if not the mindset, of those younger than them. That is where danger lies for business, things move fast in this environment. Already behind before the downturn, companies could find themselves off the playing field by the time they emerge from their reverie. So, a good time then to review what creates value for this demanding generation.

Three prime dimensions of customer value

Amid all the marketing jargon and the competing claims made during price wars, it's distressingly easy to oversimplify what creates value for customers by focusing on narrowly defined benefits. Such analysis tends to miss many of the distinctions that count and, as a result, concentrate on too narrow a set of attributes to be useful. So, without trying to be comprehensive here, I propose to explore three different perspectives.

Functional value

This is the best known realm of customer value. Its focus is twofold. One aspect is fitness for purpose. Does it do what it says on the tin - is it really in fact a good mousetrap at all? How does it compare with other mousetraps?

So for a hotel, for instance, attributes of this form of value will concentrate on the size of room, quality of bed, quietness when it counts, facilities such as reception, dining and bar provision, the decor and, of course, service quality.

The second focus is on relative price. Is this offer, on these terms, good value compared to others?

Thorough value studies of this kind allow companies to draw value curves that show customers' perception of performance against expectation for different segments, benchmark against key competitors, and differentiate themselves by varying the mix of features at which they propose to excel. When aggregated performance scores are compared against relative price for all key products in the market, relative price/performance and strategic positioning can be determined and, if necessary, adjusted.

First developed in detail in the 1980's as part of the quality movement, this is an important toolkit that is regularly forgotten and, as regularly, rediscovered. Just last year, Harvard Business Review published an article trumpeting the launch of a new strategic tool, which turned out to be price/performance scoring in an, essentially, unchanged form. It's basic and should never be disregarded. But in these times, good performance on functional terms is seldom a differentiator. Most functional value niches in most markets are occupied, and Lean Management, coupled with Six Sigma and other quality tools, has ensured that most basic products and services are competitive at their price point, and that they do broadly what it says on the tin. Other insights into customer value are needed if we are to get a real grasp, especially when customer demand is driving the market.

Social value

Many products and services are drawn into the social whirlwind, either as signifiers or as grist to the mill. There are, once again, two critical aspects of value here. The first is belonging, and concerns potential use in proclaiming identification or individuality. Establishing membership of the tribe or group is a key task in social interaction. Beyond membership comes distinction, often through minor variations in the customisation of the same product. Members of a tribe want to be, as the hawkers in the streets of Mumbai have it, "same, same, but different". So the ability to customise can be important.

Attributes of the product or service that enable these forms of signalling are critical value drivers. Once a product or service is adopted by a tribe it is likely to become exclusive within that tribe. This is a winner-takes-all competition, but only within niche markets. Tribes must also differentiate from each other, so adoption by one may lead to rejection by others.

The other key aspect of social value is self-esteem; the ability to display, or to produce, things that either reflect an enhanced me back to myself through the approbation of others, or enable me to gain a measure of renown amongst peers. The inherent reflexivity of modern identity lends huge value to those things that enable me to evoke positive feedback from others. If my display also leads to a real increase in social standing among my peers that value is redoubled.

The problem for brands with these forms of value is that, unlike functional value, they are hard to measure and not inherently controllable, though they may be influenced. Not knowing how to measure or control them, nor even how to get defensive customers to take notice, is not an excuse for not evaluating these attributes as best we can. The rewards for success are so high, and the pickings so meagre if no-one takes notice, that it is insane not to focus on this dimension of value if it is at all relevant.  

Experience value

No, not the promotional "experiences" that are the latest fad of marketers determined to prove they're "in touch". I'm talking about the form and tone of the interactions the customer has with the company, its partners or distributors, throughout the buying cycle; from first contact with its marketing to upgrade, renewal or defection.

Only recently have most companies paid real attention to this aspect of customer value, and performance is very patchy - differing in quality, not just between companies, but for different channels and services within the same company. True, some companies have made huge progress in measuring and managing the impact of company process and employee behaviour on customer acquisition and retention. Then again, so often, even among the best practitioners, marketing is left to run free, bombarding customers with inappropriate and ill-timed communications that undo much of the patient work being done elsewhere

Let's get very clear about one thing, unlike social value, experience value is measurable, at least in its impacts, and it is controllable. But leveraging it requires a very different, cross-functional, management style that many find too hard to manage. Well here's the killer for them, unlike functional value, experience value is a differentiator. If you're not measuring and managing this you're losing the race. To do  so well requires considerable sophistication, because the attributes that matter change at each stage of the buying cycle, and for each channel of customer contact. I'm not even going to attempt to enumerate the variables here, they are necessarily unique to the product, channel and service mix.

Measure and manage the relevant dimensions

Clearly the balance of importance between these value dimensions will vary from sector to sector and across different categories of product and service. I doubt that the social value attributes of baked beans make a huge amount of difference - but then, on second thoughts, I can imagine circumstances in which they might. Equally the relative importance of experience will depend heavily on how much contact there actually is. As usual discretion is needed when choosing where to expend the effort.

I stress them all here because, as capital dries up and losses mount, managements have started to swing the axe. Important contributors to value are going, along with the dead wood. If companies don't know what's valuable and what's not, and if they fail to preserve the ability to respond to changes in expectation, they risk their very ability to survive, What it takes to flourish now is very different from what it took in the seventies and eighties. Lose sight of that and you might well lose your business, and get cursed to boot by those very shareholders your actions are trying to protect.

Intelligent Life - fabulous dunny fodder

Just looked into the Spring edition of The Economist's lifestyle rag Intelligent Life.

Having eyed the title suspiciously on the news stands for a year or so - let's face it the name's a worry - I find it's actually the richest mag reading I've had for an awfully long time.

There's a rack in the downstairs loo - where I hide from my children when the female sturm + drang becomes inbearable. This is where you'll find IL and me of a weekend.

[Posted with iBlogger from my iPhone]

Trust, post-crunch

David Stoughton of ValueKinetics writes:

Listening to to the radio I hear yet another banker go through the motions of a ritual mea culpa and then, quite suddenly, switch gear into a vigorous defence of huge salary differentials and astronomical bonuses. His interview finished on a stridently defiant note, "regulators should understand that they change the way we do business at their peril".

Add mine to the 1,000 million voices asking the same question. What is it about bankers? Which part of "The party's over!" don't they understand. But I don't speak from motives of revenge or even protest, I am genuinely puzzled - in fact I've been puzzled by the bankers for a long time now.

It's not just the bankers, but their disgrace starkly exposes the increasing abuse of trust that has crept over businesses, and governments of all stripes, for years. Financial services are an easy target now and, because they highlight the issues so starkly, they offer a good way into the maze.

Economists, even the classical kind, emphasise the importance of trust to successful economies. Any analysis of what makes for success in developing countries will always highlight the need for property laws, including protection for IP, for trusted financial institutions, and for low levels of corruption.

Behavioural economists go further, they point out that it's not just a reliable institutional structure that counts; trust is also necessary between individuals. Peter Lunn in his book, Basic Instincts (Marshall Cavendish, 2008) highlights some of the behavioural patterns displayed between people when high levels of uncertainty are involved. In particular I was struck by  the YUCKI (You Can Keep It) instinct that comes into play when unfairness is suspected.

Trust is, as Rory Sutherland of Ogilvy has pointed out, what we are compelled to do when we don't know enough to ask sensible questions. Trust enables us to take the plunge, buy the new gizmo and, yes, take out a pension. Absent trust the whole shebang falls apart. Digitally enabled business increases our dependency on this basic trust. We no longer see the white's of the salesman's eyes; we are forced in the end to assume that basic honesty prevails.

You can argue - I have many times - that the wealth of information the internet provides, peer communication,  price comparison and rating services, and a host of other new capabilities, make for better informed and less gullible customers. And, yes, there is some truth in this, but at bottom it depends on a trusted financial intermediary, the credit card company or bank. If trust in the intermediary is eroded no amount of information helps.

More generally, those behavioural economists have only pointed out an obvious, but often overlooked, fact. If the playing field is perceived to be tilted too far in favour of one player, the YUCKI instinct takes over and other side stops playing.

What we really have now is an economic system teetering on the brink. Absent trust the whole house of cards comes down. We've all put up with years of up-selling, cross-selling and arbitrary changes of price and conditions. In the feeding frenzy of financial services we've also, mostly, ignored its dark underbelly when it showed - pension mis-selling, intermittent collapses, ponzi schemes. Somehow we were all suckered into going along with it. The vast rewards being garnered at our expense seemed acceptable when we were living it up too. No longer though, the imbalance of the playing field is now obvious to all.

It would be a mistake to think it was all just the bankers, many businesses got drawn into the web. Government too got in on the act, encouraging a mountain of debt and giving tax breaks to the scam merchants who were concocting these deals. Unsurprisingly, when governments prop up the bankers, citizens start to wonder which side they are on; and it doesn't stop there. In the UK the government has been shovelling public debt over to private business and individuals as fast as they could - think PPP or student loans. For the most part the account for deferred spending and unfunded profligacy remains a time-bomb to be settled by future generatons, but the most dodgy of these schemes, the London Underground PPP for instance, have already collapsed leaving users of the services and local tax payers to foot the bill. Where's the balance there?

Well, the music stopped! And of course bankers and governements want to see it return to the status quo ante, they were having such a good time. But we need to ask not just whether this is possible, but whether it is wise. Will people be willing to go back to be the docile playthings government and banks have come to expect? If banks won't become safe, dull, but trustworthy, guardians of our money; if governments won't limit their spending to today's revenue, in short if balance is not seen to be restored, will stability return? Or will we all continue saying "You Can Keep It" while the wheels continue to come off the economy?

CRM redux

The Meaning of CRM

Getting stuck in the data

What’s our intent when we talk about a CRM strategy or tactic?

Stripping away the marketing speak, we tend to mean a communications approach that enables us to get closer to a desirable consumer.

At its most basic level, we often mean some form of direct marketing that will produce significant, unmediated and measurable response from the consumer.

Straight away we begin to sense a discomfort here … how can data – as in data alone - really get us closer to our consumer?

We commonly confuse the goals associated with a CRM-based activity, with the processes involved in getting and using the appropriate data.

In its purest sense, a CRM strategy – as distinct from a DM strategy - is nothing more than an approach to (a) acquiring, managing and activating data. “Why, when, how and where” do we collect that data, and equally, (b) “why, when, how and where” do we exploit or activate that data.

Here’s the problem then, or at least, a big problem … why do we so often speak of “CRM” when we mean, for example, DM, email marketing, response (commonly at retail) marketing and so on?

I think this happens because we still believe that it is the data that represents the most important component of any direct-to-consumer communications programme.

A little history

CRM went big time when American consultants and authors Don Peppers and Martha Rogers began promoting the – actually very cogent – set of ideas based around what was called “1:1 Marketing”.

At the time, the early-mid 90’s, when technology and marketing were just getting into the dance that has led, via the web and so forth, to today’s technology-led and accountability-driven marketing environment, Direct Marketing or Direct Response – most commonly taking the form of the now-dreaded Direct Mail – had taken on the torch of marketing impact.

This was a time when advertising effectiveness was just beginning to come under scrutiny. The crunching recession of the very early 90’s had forced marketers to sing – in terms of hard impact at the tills rather than just groovy creative and positive brand equity – for their budgets.

This new and rather magical database technology (Dunn Humby, for example, had around this time begun to work with Tesco on the development of the loyalty concept that launched in 1995 as the Clubcard) gave marketers a fresh and pretty credible Rosetta Stone with which to counter finance directors’ raids on their power and spend.

Database firms such as Siebel (in close collaboration and occasionally competition with the big ERP firms such as SAP, Oracle, PeopleSoft and Baan) caught the attention of the boards of the global brands. And at this time, the question of a CRM strategy (in the sense of “What are we doing about consumer data and its place in our overall marketing and communications strategies) of course made almost perfect sense. It was naturally a no-brainer that the more insight we have into the consumer, the smarter we should be able to market.

Big Marketing breathed a huge sigh of relief. The mystique of the new magic technology (this was after all an era where, at least in the US, the new CxO on the block was the CIO …), the need for new raisons d’êtres for marketing departments and their still-enormous spends, and, on the supply side, the powerful need for agencies to demonstrate that they were both (a) keeping up with the Joneses and (b) able to provide measurable consumer responses that could also connect with real sales, combined to create a huge groundswell of support for, and investment in, customer databases.

The focus of CRM during this period was very much on the data. Through the 90’s and into the Internet crash of 2000-2001, few marketers and no agencies would question the validity of investment in the gathering, warehousing (including all forms of manipulation), and – often to the extent of “customer relationship abuse” – the application of that data to attempt to drive increased product sales via the stimulation of direct response.

It didn’t hurt that global leaders such as Tesco were able to attribute their juggernaut success to their CRM programmes. The Clubcard – and its dozens of imitators – paid consumers for their loyalty (if we can honestly call it loyalty), and in the fuss we forgot that the bigger CRM promise – that of personalised and customised “one-at-a time” consumer propositions and experiences – never really materialised. How many of us have gazed at a Clubcard statement and wondered “How do they know that about me?” Not many.

Enter the World Wide Web. Many vague or plain non-existent web marketing strategies were justified and fed by CRM arguments and budgets across the Millennium. The Internet, it was argued, was the perfect direct marketing channel. And let’s remember it was hailed as a 2-way brand><consumer dialogue channel that would complement the data that was being gathered and create a “perfect storm” of marketing precision and accountability.

Getting real

Enough history. Has this data dream come true? Not anywhere to the extent that we had hoped a decade ago.

In truth, the terabytes of data collected never left the warehouse. Not to say that consumers don’t like getting special offers from time to time, nor that all this data was not providing value to all players. Far from it … a CRM programme remains to this day a key plank in the marketing platform of a any substantial business.

There’s no denying the logic – though perhaps it’s become more than a little tautological – that optimising relationships with consumers and the centering of marketing strategy around that tricky beast we call the consumer, are both “a good thing”. But these truths don’t solve our problem do they?

How data matters … and doesn’t matter

The “brand memory bank”

Think for a minute about human relationships. What if we had no memory of what I’d said to you yesterday or, at least in general form, say last month. What if each time a company met an established customer, they had no memory of what had happened in the course of previous encounters? A relationship would be ludicrous. In fact, we can go further, and say that a customer database is the brand’s memory bank, that enables us to makes sense of the basic building blocks of the consumer relationship. It is the sine qua non of the relationship.

Think now about fathers at junior school events, obsessed with capturing on digital video every detail of their kids’ participation in a nativity play. They seem, don’t they, both intensely engaged and yet entirely removed from the experience of this quite intimate and moving family event. These guys are sacrificing the experience for the data, the rich, meaningful encounter for the capturing of the memory.

We return to this key CRM fact: the relationship is built not in the database, but at the interface. The database is fundamental to the maintenance and growth of a better-than-nonsensical consumer relationship. But the content of the relationship – the emotional experience if you like of our nativity play – is where fertile marketing and brand-building opportunities truly lie.

How memory can erode the quality of a relationship

Typically the most squirming moments during the otherwise moving and memorable experience of a wedding occur during the best man’s speech (closely followed and sometimes surpassed in squirminess by the bride’s father). Both of these speeches are fuelled by what we assume to be a powerful depth and range of memories regarding, respectively, bride and groom. The best man is commonly a close (from bachelor days) friend of the groom, and the bride’s father we expect to have an entire attic full of happy memories of his daughter’s life to date. But as we all know (and there are exceptions to this … rare ones) one man’s happy memories are another person’s never-to-be-repeated indiscretions.

Taking this metaphor back to consumer data … Whatever data we may own, and however much of it … it’s how it’s used that makes the difference. Information is not synonymous with access permissions or with brand loyalty, and needs to be used with enormous care and circumspection.

When we think, therefore, about “CRM strategies”, are we making the mistake of thinking that our brand memory bank is synonymous with the relationship with our customers? Do we assume that any consumer data collection strategy and any email marketing campaign must intrinsically be “a good thing” because, well … because it’s data, and “because it’s there”?

Behave! The importance of Brand Etiquette

Postcards from the edge

A now-notorious example of CRM zeal attacking consumer experience and loyalty goes back to a US hotel group, whose management, freshly-converted to 1:1, made all guest-facing staff learn the names of all guests, and address them by name whenever and wherever they encountered them on the premises.

Makes sense, and sounds kinda nice eh? Until you stagger along to breakfast far too early on the second day of your boozy sales conference, to be brutalised by the insistence of people in cheap suits who you’ve never seen before, on loudly greeting you by name in the corridor, in the elevators, and at the breakfast table. From Breakfast at Tiffany’s, to Kafka’s Metamorphosis, before you can say “too much information”.

The late Evelyn Waugh loved meeting friends at The Ritz on Piccadilly, in particular enjoying the fact that, whoever manned the cloakroom, he would always, with no fuss or intrusion, with a gentle “Thank you, sir” be returned the correct hat upon exiting.

One afternoon, he left the hotel with the usual warm feeling of satisfaction at having been yet again discreetly recognised and accurately rehatted, when he felt a slight irritation in the scalp area. Removing the hat and glancing inside the crown, he found tucked inside the band a tiny piece of card. Closer inspection revealed the source of his previous satisfaction, at the same time ruining it forever. For there in tiny print was the single, damning word: “Florid”.

Learning to dance …

The challenge of CRM is no longer what it was in the 80’s and early 90’s. Not only is best practice in data collection and exploitation both assumed and increasingly restricted by regulatory boundaries. It is in the balancing of brand objectives with a corresponding degree of consumer insight – both tribal and individual – that the consumer relationship is nurtured and grown.

A CRM strategy therefore needs to viewed in 2009 as the establishment and application of a set of Rules of Engagement, a book of Brand Etiquette, that (a) guides the brand in how to behave when in proximity to the consumer, and (b) ensures that the database is developed and used intelligently in support of the relevant brand objectives.

The rules of engagement

We need to remember here that the rules for a premium brand are utterly different from those relating to, for example, an e-commerce retailer … for example, Amazon’s almost daily email communications to shoppers, their “relevance” notwithstanding, would be entirely inappropriate and indeed brand erosive for a premium luggage brand.

So, what are useful, applicable guidelines for managing degrees of brand intimacy between a desirable consumer and a premium brand? These suggestions are there to be both challenged and built on, but here’s a start:

1.    It’s never just about the data … If in doubt, ask yourself: “What would I do if I already had every piece of consumer data I could wish for? How would that influence my direct communication strategy? Who are we talking to? What about? What is the specific outcome we seek for the brand?
2.    Never launch a direct communications programme with a desirable consumer set with the sole objective of either harvesting or activating consumer contacts;
3.    Every direct, personal communication with the consumer must always contain some form of intrinsic value: fishing for opportunities for the brand, without considering the individual consumer, will almost always dilute brand equity;
4.    The voice of the brand must be entirely consistent across all direct communications, irrespective of campaign or message content;
5.    Brand objectives – both strategic and campaign-based, must be realistically and demonstrably supported by the communication;
6.    Be especially careful when developing the direct-to-consumer component of a larger above the line campaign … Your strategy (a) must align with - and not cut across - the campaign objectives, and (b) should also be able to live or die on its own marketing merits, not “just because …”;
7.    Remember that premium brands stand or fall by their cache, so direct response tactics based solely on price promotions – while not denying the noble goal of driving extra sales within the quarter – are to be handled with great care;
8.    Opportunities to capture and warehouse fresh and unique consumer data that is relevant to each individual consumer’s taste, preferences and attitude to the brand are rare, and far more valuable than simple “name + mobile + email” trawls: remember, it’s the intelligence of the content that creates the value in the relationship;
9.    Speaking of intelligence, it’s always better to invest in making the direct strategy as smart as possible: the brand memory really comes into its own when it contains accurate and carefully analysed data on unique brand><consumer moments – so ask yourself, “What are the unique consumer experiences and/or preferences that my brand needs to (a) harvest and (b) activate to further our unique brand objectives?” This is perhaps as close as we’ll come to realising the term “CRM strategy”: which brand-specific data, and why, how, when and where to harvest and activate it?
10.    When it comes to metrics, it’s too easy to go back to the data, if only because of course data capture is so easy to quantify: this, above all, is the game of direct to consumer communications, but we’re still working out the appropriate metrics for that!
11.    Response-based marketing should be about more than a brief exchange … How do you feel when someone asks how you are and then turns away before you have a chance to properly answer? So we need to plot the entire journey of the dialogue with the consumer before we can assume our tactical planning’s complete.
12.    Basic data hygiene factors are of course essential – a misspelt name or address or other unnecessary error is often fatal to any consumer warmth and trust … however this important work must always be done behind the scenes: this is just housekeeping, not entertaining!

Conclusions and further concerns

I hope this brief walk through CRM principles, history and Rules of Engagement for the premium brand has begun to set the scene for confident, consistent and brand-growing strategies and tactics.

Direct-to-consumer communications have moved on from being the zany, tech-based exception in the marketer’s toolkit to being – deliberately or otherwise, a constant.

We could argue, as we move from 30-second spot via targeting through to the more advanced forms of behavioural that the very Intimacy we seek to create and foster with our most valuable consumers is more thrust upon us by today’s marketing context, than it is initiated or controlled by us.

Consumers now expect – if they see us attempting to make direct contact – an extraordinary (to us, but not to them …) degree of precision and subtlety.

At a more prosaic level, compare the “browser-rage” of today, when we’re for example forced to re-enter data that we already provided to the same company a month ago, to the now-extinct patience and tolerance we had in the brand><consumer dialogue even 5 years ago.

Think about our powerful – and immediately brand-erosive – discomfort with the (let’s face it, really only mildly dissociative …) experience of the Bangalore call centre: 10 years ago, we would have been delighting at the sheer access to service this type of experience represented.

The usage of customer data has remained a commercial constant ever since there was a relationship with the customer to be had. In a sense, the technology has only held out the promise of extending the familiarity of the pint of milk from the corner shop to companies and their customers across the globe.

But it’s the seismic and ever-accelerating changes in the cultural and commercial context, that now make smart and careful use of data an entry-level imperative for marketers. I often say that we need to view digital as more of an inbound channel of consumer insight than an outbound brand messaging channel. Our customers have their noses pressed up against our window … how then do we respond to that certainly golden but very double-edged opportunity for Intimacy?

A look back at digital

Setting the context for the new debate

A critical piece of work in the unfolding set of new insights that inform the way we view the impact of the new media on culture, identity and of course commerce, is Mediated, by the US academic Thomas Zengotita, published in 2005.

The book – and this approach is a part of its genius – opens with a tale from the theatre. Students (our writer among them) in a method class, NYC 1963, are told as they warm up for a class, that John Kennedy has been assassinated. They assume – gloriously – that this is a game, nothing but a cue for an improvisation exercise, a classroom trick. Each student commences to evolve their own (unique, from the gut, utterly authentic) acted reaction to the fake tragedy for the no-doubt-soon-to-appear method guru whose approval – indeed whose attention of any kind – they crave.

They weep, gesticulate, freeze, frown. Snatches of practice script are tossed around. Each is in their own world. The assassination has been created for each of them, a command performance to set the scene for their own special performances.

But no: it’s true of course. Kennedy, it turns out, has died. And the gritty realities of their method preparations are shown up for what they are. The distorted, self-obsessed faces of children in the bathroom mirror, thrown into excruciating, shameful relief by, well, the real reality.

You at once get – as I did – the point. In a world where the media now form, contain, deliver, explain, validate and embellish – but most all define – so much of our lives, we’re told that the only performance that really matters any more … is our own. We have slipped from the stalls to the stage, we find ourselves suddenly behind the microphone, in front of the camera. And giving, it goes without saying, the performance of our lives.

The rest of this well-written, very readable book explores, details and proves the point. From teen queen in the high school playground, through the falls and rises of our many heroes, and why pop stars still matter so much … to the cosmetic surgery operating room, our mediated life is shown to us in riveting, living colour.

The implications for the future of culture, media – indeed human experience itself – are big. The author writes of “flattered” media consumers – those whose own mediated performance is not simply a partial replacement of time with TV, stereo or browser: it is now the most meaningful piece of their entirely reflexive life experience.

MySpace users, YouTube fans, passionate IM-ers, constant SMS-ers, are no longer “consuming content” except in the most generic sense. They are – every day – selecting, assembling and representing out to the network an entirely new persona: “The Distributed Me”.

They co-opt images and sounds snatched from Big Media. Note that these are referential borrowings, made not for the purposes of inbound entertainment, but to be used as outbound qualifiers for the way I wish to present myself today. The tribe – my social network near and far – I hope feeds back to me, builds on today’s “Me Hypothesis”, creating a reflexive pendulum of the most compelling, immersive (and, worryingly, exclusive) media experience you can imagine.

So, it’s their show, with Big Media second to the table. If, as we’re beginning to see, interruptive forms of media cut fatally across the bows of the networked consumer’s fantastic, flattered, voyage, where next for the producer, the rights owner and most of all, the advertiser?

Is digital media just about technology?

Media is in one way or another about the consumer from here on, in that the consumer, as opposed to the media industries, determines and captures – and in quite a few compelling instances as we saw above, creates and distributes – the value.

To assume, as has largely been done to date without too severe a penalty, that the Internet is “just another channel”, that digital media and marketing are simply the previous models, but with added technology, is to fatally miss the point. All media, to speak of, are digital, and all modern marketing – the exceptions being more or less marginal – depends on digital technology. In this sense, the technology angle is tautological, and adds nothing to our understanding beyond the obvious.

No. There’s something both bigger and more subtle in play here. Consumers … well they just don’t consume the way they used to, when it comes to media. The primary attribute of today’s affluent consumers’ media behaviour is not merely their usage of various digital channels and devices. It’s their “empowered elusiveness”. Their infinite power to choose, to put it simply.

This power enables consumers to select and control – in fact, to own – their media experience, to a degree unprecedented in the now-receding Age of Television. That previous lack of control – consumers’ dependency on the careful, corporately determined scheduling of content by the media owner, the model of appointment-based viewing – was indeed what enabled advertisers to enter the equation, as the gatekeepers of the consumer’s access to entertainment.

This is important background for our discussion: we assume that this commercial control of consumers’ media access and choice is the rule … in fact, it’s the exception. Only since TV really took off in the 50’s have advertisers held their powerful chokehold on media experience. It was the very limitations of broadcast technology, its peculiar combination of kludged systems and highly sophisticated compromises, that created the gap that advertising so completely filled, till the affluent networked m-consumer took back control.

“Brought to you by Brand X” used to really mean something, till consumer choice came along. Ads were an integral part of the entertainment equation, as opposed to the nose-against-the window image we have of them today, in a world of TiVo, the EPG, search, ad-blocking, and as we are seeing today, consumer-created media value.

So, the consumer in control. But with what? Well, with better technology really, constantly evolving tools that enable them to skip ads, personalise and trim content back to the bare minimum they need.

Need … in order to achieve what for themselves, exactly?

The concept of Return on Attention

I’d argue it’s the media experiences, not just on- but also off-line, that deliver adequately against the godlike expectations consumers now have, that are being initially sought and then managed here.

Let’s call this brutal measure Return on Attention.

My argument here is that, where the consumer controls the game and holds the ball, Return on Investment for advertising brands at the tail end of the Age of Television, is more or less completely predicated on the delivery, again and again, of Return on Attention.

We on the brand side may not be able yet to exactly define what does and does not meet the benchmark, but we all acknowledge that the m-consumer knows, almost in an instant, how, where and when to allocate - and equally when and why to withdraw - this priceless bargaining chip at the table of media – their focused attention to the content, the brands, the experiences we hopefully throw into their path.

Can mass media expect to support Return on Attention for this uniquely flattered and jealous new god in our marketing landscape?

We do know that mass media can continue to fill in the background – a sort of perpetual chorus line to the new digital superstars – in the form of the half-listened to radio, the always-on but patchily attended-to TV in the corner (remember when TV was “the new hearth”?) the looming, vaguely-noted billboard, the hardly-ever-even-scanned newspaper and magazine ads.

Note also that digital has its own mass plays, the largely derided and often ill-used banner ad, and of course (ironically constructed out of the gold dust of the CRM database …) the email marketing drop. And worst of all, we have the awful gibbering of spam.

Moving forward - advertising found

What to do? When media exposure is apparently driven and controlled by the tribal actions of consumers themselves, is any pretence at control and measurement of advertising now pointless?

Above all, advertising has been about brand awareness. In the post-Internet world, it isn’t any more: it’s about consumer intimacy.

This doesn’t of course mean that we don’t need people to continue to be aware of our brands. But we do need to move beyond counting impressions – eyeballs if you like – to creating and managing intimacy, by which we mean here a disposition to positively engage with our brand by consumers.

Three things about the way we approach advertising change fundamentally as a result of all this.

First of all, our focus needs to be dragged from the past – how well did the campaign do in terms of impressions? – to the future – how likely is this or that important consumer group to re-engage with our brand, based on what we’ve learned about them.

We can combine two critical marketing communications disciplines here – media planning and relationship management – to create a new and useful hybrid discipline called “Relationship Planning”.
Indeed, it’s conceivable that the valuation of a big brand will shortly be calculated – with refreshingly cold precision – by aggregating global “consumer futures” of intent to engage, either by purchasing a product or just allowing the brand into their closely (digitally) guarded field of attention.

Secondly, we need to radically extend our view of media-based advertising as being primarily an outbound, “brand>consumer” activity, to include a new and powerful inbound dimension.

Why? Because in our 21st century pinball machine model of media, the most critical messages are no longer those the brand attempts to disseminate to its audiences, but a) those exchanged about the brand and/or its desired area of influence between tribal consumers, and b) those messages that come back to the brand from the consumer.

The most powerful – and yet to be fully felt – impact of networked digital media on brand marketing is the opportunity – the imperative – to observe the marketplace in which our brands must exist, receive and make sense of the inbound intelligence we need, and rapidly respond with fresh, relevant propositions.

Thirdly, and most controversially for the media status quo, we move from buying our media in the bowling alley – to “earning our media” in the pinball machine.

Bought media, in this age of priceless, endangered consumer attention and tribal impact, has to fight at least twice as hard for its impact.

First to acquire the inventory where its messages will live and then to cut through the other messaging noise in the same channel, to make some sort of impression.

Earned media – where the brand/ball magically hits a sweet spot among a series of tribal bumpers and a huge wave of media activity – buzz if you must – is created and driven across networks, has dual benefits, in these tough times.

Costing in general a fraction of bought, and coming with its relevance and cut-through installed as standard.

Why? Because it’s largely “by consumer for consumers”.

Getting "Behind The Line" - the new marketing

Global advertising spend is predicted to exceed $700bn within 3 years. But there’s unrest among the big spenders: they know that their most valuable communications targets are decreasingly accessible to mass techniques , while increasingly concealed behind personal and tribal “firewalls” of digitally-managed preferences . The affluent modern consumer controls the game of media.

The scene is complicated further by the rapid “tribalising” of the networked consumer. Increasingly the most important cultural influencers in the lives of consumers are not state, church or any other recognised authority – they are … each other. So digital tools and media, far from being new and open channels for marketers, help active tribes of consumers form barriers – firewalls – of taste and relevance around themselves that filter and block almost all unwanted communications.

How did brand communications become “unwanted”?

Traditionally, advertisers have been concerned with eyeballs. The key metrics of Reach (number of key consumers touched by brand messaging) and Frequency (number of times per consumer such impacts have occurred) until very recently dominated marketing ROI .

And in a commercial and cultural context – The Golden Age of TV – where media were scarce (think of the Morecambe and Wise Xmas show’s legendary command of audience figures) and attention was plentiful, this performed more than adequately.

But the crucial impact of the digital revolution, in media and marketing terms, has been the dramatic reversal of this comfortable equation: while media (think YouTube and the rest) are now more than plentiful, consumer attention has become not just cripplingly scarce – it’s become arguably the single most value commodity in the world.

The result of this accelerating realisation, is that the world’s biggest advertisers are looking hard at ways to move their enormous investments out of traditional brand communications, and into places where the consumer attention is more plentiful, and genuine ROI – in the form of authentic engagement with valuable consumers – is both achievable and measurable.

In other words … how do you get “behind the line”?

This challenge is best met in the user-led tribal environments that loom so large in today’s online consumer culture: blogs, forums, wikis and social media sites.

The most advanced marcomms thinking is also waking up to the – previously heretical – realisation that intelligently-treated inbound spontaneous messaging from the consumer (and also among and between consumers in tribes) is ultimately of far more commercial value, than unwanted outbound brand messaging.

Most fundamentally, the thinking of brand advertisers must move beyond focusing on the successes or failures of the past (“retro-metrics” of previous campaigns) to the future, planning not just communications, but product and service offerings that will meet the capricious consumer where their declared and now understood intentions tell us they’re heading: the future.

From value chain to eco-system

Introduction

As a digital sort of person, my first head-on exposure to Big TV was at 2007’s MIPTV, which, despite the undeniably clunky strapline of “Capture Content”, is one of the world’s great media marketplaces. Surely – with MySpace, YouTube, adtech in furious growth, user-generated content and so forth - this would be the year of digital here? Right?

Well, not really.

At MIPTV, you realise the sheer bulk of the television business. The hives of the really big players – BBC, Rai Italia, obviously the US firms – were buzzing with deal-making. There’s real money made here, and a sense of professional purpose. In sharp contrast, the technology stands – many of which have products that have been spoken of as revolutionising the media business in the relevant trades – were quiet, the buzz of sharp-end kit and techno-chat occasionally, but only rarely, breaking through the roar of billions of TV dollars rubbing together. IPTV, UGC, to DRM or not to … these questions, outside of often well-attended and even hotly-debated conference sessions, don’t really dent this other, bigger thing. This is partly because – plus ca change – the technologists still struggle to speak media, and the mediacrats – after 10 years of web culture - still struggle to see what the techno-fuss is about.

And yet. And yet. Behind these busy and business-as-usual scenes, Big TV, Big Media and, critically, Big Brands were evidently deeply worried. It’s the not so much the media, it’s the consumers, you see. They just won’t listen any more.

With all this money still swilling, surging around TV, and with the (admittedly rare, these days) heavily-feted and analysed emergence of a “Sopranos” here or an exquisite period drama there, there’s a swell of feeling – most painful in the case of the big fmcg advertisers, who stand or fall by their media – that an ever-stronger undertow of failure attends all this familiar and still-vigorous capturing of content.
To get a feeling of just how far panic can take the media industry as it strives to soothe the ever-more-strident “are we nearly there?” questions of its till-now loyal brand sponsors, read on.

Don’t touch that dial …

A NY Times article in the summer of 2006 reported on a patent application for a new kind of television set and digital video recorder, filed by a unit of Royal Philips Electronics at the United States Patent and Trademark Office. The Times stated that "the design appears to threaten the inalienable right to channel-surf during commercials or fast-forward through ads in programs you've taped."

The Times' summary of the patent was as follows: " ... the patent application revealed that the proposed design would uphold the right to avoid commercials, but only for those who paid a fee. Those disinclined to pay would be prevented from changing channels during commercials. If the viewer tried to circumvent the system by recording the program and skipping the ads during playback, the new, improved recorder would detect when a commercial segment was being displayed and disable the fast-forward button for the duration. As a business proposition, the concept appears dead on arrival: what consumer would voluntarily buy a television designed to charge fees for using it?"

So in a nutshell, the patent would prevent people using the new device from changing channels during a live viewing and using the fast-forward button during a recorded playback.

Who could imagine that such a solution – outside of a kind of modern “Through the Looking Glass”, set in media purgatory – could be take even half-seriously by the industry, let alone today’s unsentimental, promiscuous media consumer? The answer of course is, precisely the type of person who sees today’s 2.0 revolution – sweeping through Big Music, gnawing into Big Media, frightening Big Brand and in our time, turning all of commerce firmly on its head – as purely a technologically driven phenomenon.

The real revolution

Many of us remember “the unbundling of the package holiday”, a quiet but still-rolling revolution in the structure and purchasing of millions of family summer getaways, which took hold in the early 90’s, took off in the very early stages of the consumer uptake of the web, and reached a plateau with the success of the Expedia’s, Opodo’s and Last Minute’s, in parallel with the cheap flights (again, extending now into both long-haul and business-class), that we now expect as standard.

This phenomenon was an early sign of the information earthquake to come. The previously tight – a virtual cartel – value chain of the big holiday firms started to unravel. Fragments – an extra or optional activity or trip at the destination, for example – began to break ranks and offer themselves, increasingly for direct purchase, to the holidaymaker. The hitherto unbreakable marriages between flight and hotel, car and local rental office, and most strikingly, brochure and ultimate experience, frayed and separated.

What happened? Like a wolf delighted to find itself among a blind flock of compliant sheep, information got into the package holiday value chain – first with internal systems, then with increasingly networked customer service platforms, finally with the web – and pulled them apart, to create … what?

To create, in fact, an early version of the wild frontier of consumer-dominated eco-systems that now so vex the strategist, the CxO, the analyst. We happily asset-strip the travel business of its juiciest goodies at commodity prices, spend less where we are able, spend most where we really care. Oh, and if we’re not sure about something on the other side of the world, we consult, not our agent, we talk to … each other.

Think TripAdvisor. Or a thousand other opinion sites.

The double bind of technological and social progress

The rolling thunder of fragmenting and collapsing industry value chains is already heard in the music industry – formerly a very inefficient value chain, become a frighteningly effective eco-system, where any pretexts of corporate control have been dropped in dismay – and as I sketched above, media and advertising. Other sectors will fall according to their relative susceptibility to deconstruction (and, we hope, reconstruction) by information. Retail of course has long been under siege from the big e-commerce and auction players.

But what needs most critically to be grasped here is that The Information is only one half – and in isolation, a relatively powerless half – of the real 2.0 revolution. Consumers themselves have come to like, to love, and most of all to expect, the control conferred by the tools that the most successful service providers are offering them. What is Expedia, after all, but a dashboard into the otherwise hopelessly un-navigable travel industry eco-system?

As consumers pick up and use these tools – from travel recommendation right across (like it or not) to file-sharing, not only are they driving Darwinian survival or destruction into every space they touch (more tools used means more tools built, after all). They are changing – and there’s no going back here – their behaviour, their culture, you might argue, the way they think, the ways they’re wired. This (virtuous? Too early to say) cycle of empowering toolkit and empowered consumer is the engine of the real 2.0 revolution.

What this means for the future

To wrap up, what distinguishes a true 2.0 business is not primarily its use of new technologies. It’s simply the degree of consumer participation in the determination, creation and distribution of new value. Where before the lines between factory gate, retailer and living room were as clear and firm as you could wish, this new consumer – empowered (by pervasive information services), connected (to a plethora of interest-driven tribes) and most of all, powerfully “me-centric” (no more languishing at the end of the value chain for these people – it’s a circle today, with the consumer bang in the middle), is so very determined to take control of value, to raise the service bar, and to keep doing so.

A very real revolution, after all.