The Strategy Review

Google, Apple, Facebook ... and the future of the content industry

A single shared obsession

The business models and ambitions of the giant – and despite their sheer size, power and visibility, often unfathomable – technology firms that stand guard at the borders of the consumer’s online experience, Google (including YouTube), Apple and Facebook, need careful scrutiny and differentiation, in order for us to understand the threats and opportunities they separately and together represent.

One thing before we look at them individually. All three of the businesses – and the same goes for their many associated products and services – are distinguished by their obsession with consumer value, consumer control, and consumer power.

The value they command in their respective market spaces, along with the significant compromises and loyalty they demand quid pro quo of their users, all sit firmly upon this revolutionary imperative.

Each of them drives their users – often compromising, sometimes even destroying previous commercial value chains in the process – to the very heart of the value bulls-eye. Before, consumers languished at the right hand of the value chain, at the disposal of product and service providers, as and when they decided to bestow their outputs on the market. Now, connected, empowered and increasingly “flattered” customers sit at the control panel of a remarkable spider’s web of influence and information. And nothing at all will ever be the same.

This relentless, dramatic shift of value, control and power, from enormous traditional business concerns over to connected consumers, sets the foundation for all of the contextual and competitive changes that content marketers are now facing in the online market.

Nevertheless, outside this powerful unifying mantra among these businesses, each of them has an entirely different vision and strategic agenda that must inform our respective approaches to them as partners, as routes to market, and, all too often, as competitors for the highly valuable, elusive attention of the online audience.

Apple

Apple is not, primarily, a consumer technology firm.

Well, of course it is, but the reasons for Apple’s remarkable ascendance to become effectively the most valuable company in the world, do not primarily lie in its ability to engineer, time and again, a world-beating ergonomic experience in devices that continue to dominate – in both sales and sheer imagination – the consumer electronics market.

Apple is, or has been to date in its growth period under the consummate marketer and brand guru, Steve Jobs RIP, a brand marketing company.

And what it markets – manifested in, but to be understood as distinct from, its family of devices and cohesive, fully-integrated vertical ecosystem – is nothing short of “your perfect digital life”. It is legendary by now that converts to Apple find it almost impossible – even when forced to do so by, for example, corporate policy – to revert to other operating systems. Why is that? It’s not just about great design.

Here’s the key insight.

Irrespective of content – and this is absolutely key to grasp: no matter what task the Apple user is performing, whatever communications they’re sharing, no matter what content they might be consuming, the Apple experience in and of itself is transformational for its tens of millions of passionate users, in terms of, for example, a sense of identity, a feeling of flow, a comfortable control, an intrinsic aesthetic pleasure, above all, a genuine and profound joy in their connected life.

Apple, in other words, exists to provide an extraordinary experiential mirror for its customers, that continually reflects back to them an idealised vision of themselves, their lives and their worlds.

This, for now, exclusive hold over so many millions of consumers’ optimal online experience, is the root of the success of Apple’s iOS/iTunes walled garden ecosystem, now boasting some 250m accounts worldwide.

It’s also the basis of their startling, rather sudden ability to call the shots to the world’s biggest entertainment firms.

And this is how they’re able to inject a highly significant dimension of extra “Apple value” into the hitherto simple experience of selecting, buying or renting, and watching a home video.

More so than perhaps any other brand – and yet with a certain appealing balance, given that the passionate user experiences an unrivalled sense of control – Apple truly owns the customer relationship.

Google

Google is, for many people, The Web. But behind the juggernaut lies a business that is great at some things and not so great at others. For every successful Google start-up there are dozens of failures, big and small.

We need to bear this in mind in our approach to them, to avoid the knee-jerk assumption that the company is all-powerful in online matters.

This isn’t the place to get into Google’s numbers … in a sense, their sheer scale masks the strategic truth about the business.

It has, for example, more or less single-handedly gutted the traditional advertising business by taking a huge proportion of online consumer attention by the scruff of the neck, at source, by creating the killer search engine. But despite its potential to kill entire categories, this is perhaps the only area where Google’s formidable ability to both destroy and reconstruct industries and sectors has fully manifested.

A key thing to remember about its two key entities – both of which are ad-led – the web search business and YouTube, is that they are above all on-ramps to experiences of some form, portals, if you like, to discovery, to relevance and to reassurance.

This gives Google remarkable power in an online environment that is, today, hardly navigable without the appropriate maps and guides. (How often do we hunt down URL’s for sites we seek? Almost never … we either link from another document, or we search, mostly via Google.)

However, this also means that Google increasingly depends, not just as a competitor against other search engines, but far more broadly in the war for consumer attention that it fights with its two giant competitors, not just on its ability to help us find stuff at all, but – under increasing pressure – to help us find The Right Stuff.

In other words, not just search results – lists of more or less options – but the actual experiences that await consumers once they clear Google’s on-ramp and are onto the highway, are critical to the company’s strength of position going forwards.

Another way to understand this is as follows.

Google’s declared mission is, to paraphrase, to give us mastery over the world’s information. Now, we’re spoiled for information: the search results that used to delight us just for being there at all, begin to irritate us, and we begin calling for deeper, more substantial value. It is, in fact, what lies behind the search result that interests us.

So, even though Google’s search business is not intrinsically concerned with or geared towards what comes after the search (for a start, it’s not what they get paid for … more than one person has pointed out that Google doesn’t in fact find and aggregate information that’s relevant to consumers, but finds and aggregates consumers that are relevant to the brands that fund it), the company is forced into becoming much more of an experience business.

Interesting? Yes. For a number of reasons.

Hold the ticker-tape for just now, but we begin to understand, at least superficially, why the company continues to explore and invest aggressively around the edges of its search business (the company’s acquisitions in 2011 alone cost it some $40bn), and also why YouTube has suddenly begun to find content of longer form and higher quality of such interest. And the company is clearly utterly determined to get Google TV front and centre in tomorrow’s media landscape.

Let’s look at this from yet another angle. Apple and Facebook, individually and together don’t only exercise phenomenal influence over both range and quality of online experience, but are increasingly able, albeit to a degree standing on Google’s shoulders, to support consumers in finding, evaluating and sharing high quality entertainment experiences. They are, therefore, increasingly able to compete in new and quite compelling ways, on Google’s home turf of search and discovery.

Facebook is perhaps the most potentially destructive force in this case, one of the key reasons for Google’s focus on its Google+ social network, alongside its recent and controversial integration of services (read consumer data …) under one universal scheme.

If Google is, like the three other giants, playing for a dominant share of the experience pie, it needs to move rapidly and convincingly beyond vanilla search-and-result on the one hand, and LOLcats cuteness in YouTube on the other.

We can’t jump straight from here to the all-too-common “Great! They need us more than we need them!” assumption.

But we can, quite reassuringly, see a significant fit for the world’s highest quality long-form content alongside the world’s biggest information company, as it seeks to move convincingly – let’s not forget, in the face of very, very persuasive and aggressive competition from Apple and Facebook – into the broader and very competitive arena of rich, profound consumer experience.

A concern here, certainly, remains Google’s core revenue model. As long as it remains almost entirely advertiser-driven, the company has little intrinsic interest in sustaining or enhancing the value – market pricing or perceived – of our product.

We are thus in danger of being left a vehicle for another purpose altogether … a premium reward for the consumer attention that is to be sold on – still at commodity prices for now – to Google’s own customers, brands who, like Google itself, still have insufficient grasp of entertainment to be considered true long-term partners.

Facebook

If Google is, for many consumers, The Web, then Facebook is what they do with it. Staying away from its current valuation and IPO (happening at the time of writing) the company pulls in by far the highest volume of quality consumer attention in the world.

This is the reason for Facebook’s truly explosive commercial success, the fascination with its valuation, but above all, its profoundly disruptive effect on the media market, including the giant incumbent, Google itself.

And the key underlying driver of all the above, that propel the business forward? Its users – 50% of whom, so now 500,000,000 – use Facebook every day remember – both create and consume Facebook’s content (if that’s still the right word for such a biblical torrent of incredibly diverse material).

It’s also essential that we appreciate that, just as with Google and Apple, consumers’ motivations are not simply to consume content. The driver of social media behaviour among connected consumers is above all self-expression. It’s our stories, first and foremost, that we tell on Facebook and the content of Big Media is sometimes, sometimes not “co-opted for this higher purpose”.

When consumers take on the role of tellers of their own stories, and the platform itself takes care of assembly, distribution and – above all – the precious feedback that Facebook delivers (its dynamic is far more about the Like and the Comments than it is about the publishing), the value of professional content of any kind, while not disappearing, is radically shifted into a new and quite unfamiliar context.

What is being shared on Facebook, therefore, is not primarily our content, or indeed anything of direct commercial relevance. It’s billions of personal narratives of consumer identity, that may or may not feature references or links to our product.

It’s also for this reason that the value exchange that has underpinned consumers’ (admittedly dwindling) willingness to consume ad spots in the context of linear media, is broken, and in the age of social, brands are obliged to retread their budgets, to take into account what’s being called “engagement”. If I’m producing what I see as compelling content for myself and my personal tribe, advertisers play – at least for now – little tangible role in its creation, promotion and distribution, and thus my willingness to tolerate – let alone appreciate – interruptive messaging is, understandably, sharply reduced.

(Impressive though they may be in isolation, when stacked against the volume and depth of consumer attention it commands, and compared to how other forms of media are valued and monetised, Facebook’s revenues at the time of writing could be seen as pitiful.)

So – perhaps more than the other two giants – Facebook’s revolutionary dynamics and its resulting extraordinary upending of culture, commerce and consumer power, represent a powerful threat to traditional media and indeed to many of the web’s huge incumbents, that must first be looked right in the eye in order to establish where and how defensive imperatives and offensive opportunities can be found, balanced and exploited.

Specifically from the home video perspective, Facebook is the least passive, richest and most vibrant online environment currently in play. As such, we need, I’d argue, to approach this entirely new continent as first and foremost a foreign territory: one with enormous riches indeed, but also with close to a billion empowered, spoiled inhabitants whose goodwill and possible custom we must negotiate for with care.

Beads and tomahawks are not enough to conquer Facebook. As with Apple and Google, its potential as a mere content distribution channel is far outweighed by the alternative – many of them actively movie-hostile – forms of consumer value on offer.

If we can grasp and align with these, appreciating that in Facebook, far more than any other media channel, the consumer truly is king, we can begin to leverage this titanic new player while still in relative infancy.

Nothing about Amazon? Ah ... That's for another day! And it's a big, big story.

Posted with Blogsy

Can digital build brands? An essay on the coming shift to Engagement-based marketing

A troubled history

Stephen King's brief, urgent paper, "What Is A Brand?" was produced 40 years ago at the dawn of the seventies.

Even then, branding was struggling for its seat at the high table of commerce:

I wonder whether all top management are involved deeply enough in the nature of their brands. Do they realize fully enough that it is from the success of brands rather than as products that the profits will come? Do they fully understand the nature of brands? Do they set company objectives in terms of brand positioning or simply in financial terms?  

The answer – then, and perhaps all the more so now – is an emphatic “No”.

Now the unforgiving context within which marketing and advertising must operate, along with a number of questionable assumptions that have come to prevail, have forced branding’s role and value even further into the background.

One of the least satisfying developments since digital advertising has so radically disrupted the industry, is the current demand for ROI at every turn. This has pushed brand managers into a position so defensive that they can often only point to e-commerce conversions to justify investment in anything digital, other than perhaps the most meat-and-potatoes search program.

The assumption seems to be that the lion’s share of brand building is still best achieved by blanket messaging via above the line advertising, and that digital investment sits – as it perhaps always has since its inception – further down the pipe, alongside direct marketing and retail.

Such developments, given particularly that the balance sheets of many of the world's biggest businesses continue to list brand equity as a dominant line, are surely an immense concern.

At a time when swathes of quality consumer attention are lavished on social and smartphone, can we seriously continue to imagine that brand equity – like royalty at a rugby international – watches from comfort and safety in a warm hospitality box, while every other significant aspect of the connected consumer’s life, including our own products and services, is kicked vigorously around the chilly playing field of digital?

No. Brands, for better or worse, are being actively, constantly and irresistibly constructed and deconstructed in digital. We are fascinated and bewildered by capricious shifts in the tribal sentiments of connected consumers: utter indifference to our most exquisite, flattering siren calls one moment, and the next, their inexplicable rush to engage en masse, triggered by an apparently tiny flutter of influence in a corner we never knew existed.

We have to date gained no convincing idea of how to play under the ever-shifting goal posts of 21^st century marketing. Certainly the performance of advertising in digital – while spend increases every year, the bulk of the investment is still in the “defensive”, hygiene-factor area of search – continues to vex all but the most dedicated of advocates.

Here we revisit and review this important element of Stephen King's substantial legacy, the argument for advertising’s key role as architect and builder of the brand equity that translates as preference and premium prices, through the unsentimental lens of post-digital culture and commerce. 

An evolving role

… whatever people might wish to call the process of creating a property that combines tangible and intangible attributes, can be symbolized in a trademark that creates influence and value if properly managed … Well, that is branding by any other name.

                                                                                                     Rita Clifton, Chairman and CEO, Interbrand

Adaptation is, as it happens, part and parcel of branding's story. Stephen King wrote in terms of its “waves”, or evolutions, within the broader history of marketing.

He wrote about branding very much as a defensive imperative, first used by consumer product manufacturers to push back against the wholesalers that dominated consumer product marketing from the late Victorian era, and second – starting in the 1950's – against the retail chains whose dominance of brands' channels to market, alongside their aggressive own-brand programs, created a game of cat and mouse that continues today. 

The latter in particular challenged manufacturers to investigate sources of value, beyond the product itself, to sustain both preference and margin.

So Mr King completed his paper by pointing to the need for advertising to build and sustain new forms of ownable added value around the consumer brand.

First, we can recognise that in the 1970s it may well have a different role from the past. Added values and their effects on profits will become more important … Secondly, we can improve our methods of setting advertising’s objectives, by thinking of them in terms of the advertising’s contribution to the added values of the brand … And thirdly, we can recognize that advertising itself is a totality … If we try to produce it by the atomistic approach, we will end up with a sort of Identikit brand … (which) will never come to life.

As we read his words, we have feelings of both familiarity and regret. His argument could live very comfortably in any seminar in 2012, but what have – indeed since long before they were written – always been common sense marketing rules to live by, remain curiously, stubbornly peripheral to current marketing practice.

Nevertheless, we also realise that a large element of the historic role performed by branding, before we arrive at the generally accepted creation and attribution of added value, has in sharp contrast been defense against an ever-threatening – and ever mutating – diminishment of perceived value.

If wholesale and retail have been the source of such threats to date, has digital introduced a new player?

Shifts in power

Branding has always been just as much about power as about value. This is even more evident, at a time when connected consumers are still in the early stages of flexing newfound powers of “mass self-expression”[1], co-created meaning, identity and belonging, and their own tribally-based, direct influence over which ideas attain currency, and which fade away to nothing.

These are the kinds of cultural tasks of search and selection that brands have performed for us until recently. Do they still deserve their rather exalted position? Because viewed through a lens of global connectedness, brands are (until we intervene … whether and if so, how we do so is the subject of our enquiry) merely “yet more ideas” floating among a cast of literally billions.

As Umair Haque, the economist and media theorist, has correctly pointed out[2] from 10 years ago, where media, pre-digital, were scarce and thus highly valued, and consumer attention was plentiful, now media are overwhelmingly everywhere and consumer attention is the new gold.

We see a dramatic shift in power here, one that overturns the brand communications apple cart once and for all.

It's the power of the connected consumer that sets the scene for branding's next, “third wave” challenge. Along Stephen King’s branding timeline, first wholesalers and then retailers have historically set the challenges that great advertising has met, time and again, shoring up meaning and value not only around products and services, but crucially, within consumers’ own daily lives.

We now have a third protagonist, globally connected consumers themselves.

And while the battle for control of meaning and value remains the focus, we are today severely handicapped not only by earthquakes on our playing field and goal posts that never stop moving: we now learn that our star player is injured and may never return to top form.

The moving goal posts

Advertising, brand-building’s primary weapon of mass communication, is today in trouble. At its root, uncertainties about its role and value boil down not to its effects – arguably more measurable than ever before – but to a growing doubt about what it’s actually for. The strident insistence on ROI at every turn, points in the end not to questions about what is achieved in any given campaign or tactic therein, but about what it’s worth. Not so much what are we doing or how, more why.

We’re reminded of the familiar description of an accountant as one who know the price of everything but the value of nothing. Measurability per se is, at least in digital channels, not a challenge. To the contrary, it’s the struggle for advertisers to reach some post-digital equivalent of the impression, of familiar, trusted reach and frequency, that underpins this crisis.

While ad spend remains stable for now, there's an emerging sense among brand owners that, even when bullseyes are consistently hit, they're shooting at the wrong targets. That somehow, the game has moved on.

I think this is close to the truth. Consumer presence and consumer attention have – a key and rarely-acknowledged legacy of the digital revolution – become uncoupled. The implicit value exchange that has underpinned advertising's very successful partnership with media is fractured, when formerly precious content is commoditized by sheer volume and choice.

Why else would we be hearing incessantly about the challenge of "engagement"? Behind all the talk about this still-elusive concept, is the sense that while the consumer eyeball may still drift over the messaging, the mind is elsewhere, “otherwise engaged”.

The fragmentation that so concerns advertising and the media that serve it, is happening just as much within a single consumer’s field of attention, as it is amongst a brand's target audience. And attention is a zero sum game.

So what has happened to cause this? And if branding is, as we noted above, concerned with building associations around products and arrives, then how, in this age of consumer empowerment and tribalism, are these often far richer and more plentiful associations being built. And perhaps more vexing, by whom?

Macromedia and Micromedia

Think of today's powerhouse brands. Coke, Mercedes, and the remaining handful of other great legacy brands were built, and continue to thrive, on the back of enormous advertising budgets. They are, in fact, entirely constructs of media. Ever since its rightly-famous “1984” campaign, Apple has marched in that number too. Steve Jobs was in many ways an advertising man more than a technologist. But do we feel that the Apple brand resides in advertising? Or is its victorious brand nourished by some other, deeper source?

Think now of the 21st century barbarians at the gate. Google, Amazon, Facebook, and Twitter are representative. For their billions of daily users, life without these brands is unthinkable. And yet, Facebook only began to advertise in September 2012, and Google only some 2 years previous to that, launching its now-won Chrome browser war against Explorer and Firefox.

Without contradicting Stephen King’s core premises, the new powerhouse brands of the digital age are clearly being built without any direct dependence on the media and advertising system.

This, perhaps, is not big news for most of us. But where does this leave the FMCG brands whose products and services are not, as the technology giants are, hardwired into daily consumer culture? How are they to argue their way over the threshold into the party?

It helps if here we divide media into two constructs. Visualize them as two separate circles, like you’d see in a Venn diagram. Consumers and brands map across both, but as we’ll see, the power of advertising – digital or otherwise – to create and distribute brand meaning and value in both is highly restricted.

Let's call these circles “Macromedia” and “Micromedia”. Big TV, Big Web, and Big Advertising are all largely moored in Macromedia. It's corporate, it's about big stakes, big budgets and big risk. But these days, it also has a fair amount of nose pressed up against the window of Micromedia.

Micromedia is that personal, “me and mine”, tribal zone of intimacy that is the most fascinating and troublesome consequence of the connecting of consumers.

If Macromedia is about the heft and swagger of Big Media, Micromedia's ruler is the powerful, often ruthless consumer (increasingly a troubling word, in terms of its assumptions). If Macromedia is about consumption of media by consumers, Micromedia is about self-expression by consumers to each other and, in some instances, back to our brands.

We have to now largely acted as if Micromedia were a new, younger, subordinate territory within Macromedia. We have thus assumed that plain vanilla digital advertising would, as traditional advertising has done so well in the past in Macromedia, build brands and drive purchasing in Micromedia. But this is where the “digital is just another channel” school of thought has failed so crucially.

In Macromedia, digital is indeed “just another channel”. But in Micromedia, the very fabric of the environment is digital, and furthermore the primary dynamic, the prevalent flow, is not from industry to consumer, but quite the reverse: outbound consumer self-expression and co-creation. These are the “extensions of man” that McLuhan wrote about so cryptically back in 1964, finally come to life in social and mobile, with transformational results.

This is I believe why the consumption-based advertising that has always ridden, with enormous success of course, on the tails of content, has struggled so frustratingly in Micromedia. Advertising in Facebook and mobile remain at the time of writing profoundly unconvincing in terms of both consumer acceptance and brand acceptance.

We have long talked about above, below and through The Line. I call this new challenge “Behind The Line”, the line of course being the far-from-permeable membrane that separates Macro- and Micromedia.

The technology giants that have ridden the web to commercial dominance have without exception done so by establishing a strong base in Micromedia, by empowering our already power-hungry self-expressing, co-creating connected consumer. While they do advertise, they sustain their brand equity above all by further empowering their customer Behind The Line.

Note, by the way, what happens when any – and it doesn’t matter how dominant they may have been – of the new powerhouses steps out of line (another Line to worry about here, perhaps!). Netflix (pricing), Facebook (trust and data), Apple (maps) and plenty more have felt the freezing breath of the hostile consumer tribe when their exhilarating new power is diminished or threatened even slightly.

A brand built in Micromedia is thus a still a house built on sand, that shifts along with the restless, capricious moods and desires of the globally connected consumer. Even a luxurious palace like Apple’s is intensely, incessantly vulnerable. So perhaps we should be careful what we wish for.

Experience and Expectation

While we may now understand a little more about the constructs and dynamics that make up Digital The Culture, as opposed to Digital The Channel, the question remains, if we are to build brands in digital, what must change?

I’m still myself in the early stages of developing planning frameworks that bring Macromedia and Micromedia together to enable true “Behind The Line” brand communications.

It’s my belief, however, that branding in the post-digital era demands we move far beyond messaging, to take on the active management and optimization of consumer experience across all key touchpoints, right along the entire product lifecycle.

I also belief as a consequence that brand equity can be viewed and ultimately valued as a sort of snapshot in time of the sum of goodwill and otherwise that such experiences engender in what is, remember, a globally connected, highly tribal consumer.

Brand building, which has till recently lived almost exclusively in advertising, has been primarily a brand-controlled system of linear, almost entirely one-way “Promise and Delivery”. In the digital age, a new and, for now, chaotic dynamic has come into play, disrupting a lot of what we knew before, challenging all the rules and roles of marketing.

In contrast to the regimented lines of Promise and Delivery, we have in Micromedia a corresponding but very hard to reach cycle of consumer Experience and Expectation. Our brand Experiences – good, bad, indifferent – drive our brand Expectations (and also, note, our own brand Expressions via social to our hundreds, thousands or millions of networked cohorts). And round again of course.

But what matters most here is that the cycle is driven not by brands, but by consumers in tribes. Advertising (digital or otherwise makes no real difference) holds little sway here. To revisit McLuhan, the medium is in this case not just the message, it’s also the product or service itself. There is no time, in digital, between the Promise and the Delivery. Indeed, there is no longer effective difference between them: what we say and what we then do are held up for public scrutiny

So the dynamic between Experience and Expectation, how that plays out across the network, and how in turn we choose to invest in engaging the attention of the consumer, will I suggest be the future of brand building in digital. Advertising’s more precise role has yet to unfold, but clearly whether it’s digital or not, branding’s traditional vehicle has, in Micromedia, a secondary role.

If digital is indeed to build brands, and one way or another we must find out how, my last point is that less focus on Return On Investment, and more focus on improving the powerful consumer’s Return On Attention, would be an excellent departure point.

With this imperative in mind, I’ll leave you with a final, wise thought from The King.

How to measure advertising and its effect is not terribly hard if you work out in advance what sort of response you are trying to get, because the basic question then is: Are we getting that response?

 

---

[1] Manuel Castells, Communications Power

[2] Umair Haque blog, Bubble Generation