The Strategy Review

When data matters ... and when it doesn't

A little history

Some years back, I found myself advising clients that the consumer relationship is built at the interface, not in the database. Owning data “about” an individual was far from synonymous with having any kind of relationship with them.

That’s still true. Marketing's history with data has been a discourse between the vigorous claims of evangelists and a consistent failure, in almost all cases, to deliver the transformational value that, today, is still held out as being just around the corner.

It is not, however, just a matter of time. There is no circumstantial inhibitor; nothing technical, cultural or commercial is holding us back, except a long-standing, still-robust misconception, which we'll explore here.

A halo effect

When Peppers and Rogers became the anointed apostles of one-to-one marketing some 20 years ago, advertising as the key mechanism for building brands was already beginning to struggle. At the same time direct mail which, with the new databases as its foundation, soon morphed into the rather more interesting direct marketing, emerged as a compelling, many-birds-with-one- stone solution for marketers and agencies, whose power in their respective marketplaces had waned.

The customer relationship - then a startlingly new entity - soon came to be viewed as an essential molecule of business value. And data about the customer made up the atoms. A kind of alchemy emerged, one where this "rare earth" began to be energetically explored as a source of new marketing gold.

At the time, just possessing a correct address and phone number for an individual consumer was considered a significant victory. This was because the relative scarcity of accurate data combined with a fresh and invigorating sense of new marketing opportunity to bestow on that data a magical halo.

And that halo has never quite been shaken off, despite data's genuinely disappointing service record since those heady days.

A toxic tautology

This is not to claim that some of today's most remarkable businesses have not been built firmly on green fields of data: this is very far from a Luddite rant. And it is not to claim, equally, that the exhilarating citizen power that we have seen surge up, most notably during the Arab Spring, has not been founded on a new-found access and transparency.

But the magical promise of a marketing future blessed by data has in fact been built on a tautology. The blunt, too rarely-challenged assumption at its core is that data, in itself, has intrinsic value.

And in the early days, this was true, if its relative scarcity and novelty are factored in. But now both scarcity and novelty have gone, leaving us with just an infinite ocean of bits.

Those who hold onto the idea of the intrinsic value of data in the current context will be the most fervent, unquestioning advocates of Big Data.

But look closely at data in situ. Without a meaningful context, without a relevant hypothesis, without "work to do", it's nothing at all. Except, perhaps, the exhaust fumes of an ever-accelerating connected world, that may enable us to deduce by proxy "what just happened".

But it's the engine that matters, not the fumes.

When data delivers

Let me leave you with a case of where, how and, in particular, when and why data can create powerful, sustainable, defensible value. I think it gives us an excellent paradigm with which to go forward.

What Bloomberg, after we take away the brand, the mayor and its established dominance in its field, does is this. It buys data, does things to it, combines it with other data, and then - and this is the piece we need to get hold of - moves it to an optimal point in space and time, where it creates remarkable value. In Bloomberg's case, this point is of course a stock or share transaction.

Here's my point. The role and value of data remain entirely unrealised - not even remotely latent - until the time and place at which it enables a valuable transaction of some sort. It's from the value of such transactions, not from the data itself, that we can calculate where, when, why, how, and of course how much, we should be investing in our so-called data strategies.

Which are not, in the end, about the data: big, small or medium.

Out Of Home advertising is ready for primetime ... if it steers the right course

MUSIC LESSONS

That unique, powerful cultural layer called music was sideswiped some 20 years ago by the ruthless velocity of the network, and - no matter whose fault it was in the end - its commercial value was crushed, and the business was slammed down to a fraction of its previous majesty and swagger.

While the cultural reach and depth of music itself remains, well, robust, the industry is unlikely ever to recover. I know this from up-close personal experience: my own career began in music, and I'll never forget the feeling of it.

The record shops I started out working in as a clerk, and eventually a buyer - now rarely seen at all - were temples of culture and of cool. Vinyl - the touch and smell of it; the size and physical presence of an album; the sense of profound personal discovery upon dropping the needle onto a record; the way a perfect pop song would weave its way into an entire summer.

This was Meaning of the highest order. And while the ghosts of that period still lurk around us, and once in a while step forward to remind us of exactly why, and just how much, music matters to us in a way that nothing else can touch, the wonder of music itself, along with its industry, will never be the same.

We recapture the magic, most obviously, in a live performance. There's a reason why concerts and festivals resurged so visibly over the past 10 years: we're now spoiled for choice.

But what happened to recorded music? If I could, I'd write a book about it. Because that's what it needs and deserves. Maybe later.

For now, and for the purposes of this argument, I think all we need to understand is that when the network hit music, it became ... Content. It became, as the word itself suggests, "contained", boxed in and commoditised, in a way than records and CD's, with all their perfect packaging, never did.

Music became a file, an MP3 or whatever. Online music distributors - and let's not make the mistake of claiming that they don't create entirely new, significant forms of value - are today a kind of Ikea experience. If you want to know where the new temples of culture and cool are ... just pop into an Apple Store.

As OOH goes digital, with an eye-watering investment in new infrastructure, and as its owners seek to realise the revenues and profits that this bold step forward demands, there are important lessons about culture, about meaning, and above all, about value, that can be learned from the recent history of the music industry, as it has battled to get off the back foot onto which digital has so abruptly shoved it.

THE MAGIC OF OUT OF HOME

I believe that OOH, done right, is advertising at its most pure and punchy. At its courageous, unashamedly interruptive, impactful best.

We have, for a moment or two, sometimes a few minutes, access to the richest and most exclusive attention of our audience. We have an expansive canvas on which to paint fresh, simple stories that refresh and reframe not just the way our audience perceives a product, but the way they experience a space, a period of time, a journey or a delay.

Stories have to be told, until very recently without recourse to either video or audio, using a few words and a single picture. The work needs to sell with either a momentary glance, or with a minute of two of fixed attention. The response is binary, a mental "yes" or "no" ... I get it. Or I don't.

The value exchange between advertisement and audience in OOH is unique. Think - or if you have time, please read - about the history of Jean-Claude Decaux's vision, and the innovative passion that still drives the JCD business.

I had the good fortune to dine with one of the founder's sons, Jean-Francois, now the Co-CEO of JCD, at the FEPE Congress in Budapest recently. This is, it seems to me, a media business built on relentlessly balancing and delivering value for not just brand and media owner, but equally for citizen and consumer. Utility of quality street furniture is combined with slick, attractive and entertaining creative.

This is advertising with an active, meaningful role to play: not merely in commerce, but also in culture and society.

In other words, JC Decaux, surely the most recognised brand in OOH in Europe, is an enterprise with a clear and unusual degree of purpose. And they're far from the only ones.

THE FORK IN THE ROAD TO GROWTH

The overall OOH share of brand advertising is growing. I'm not sure of the exact figures, but while OOH has languished at round 4-5% of global spend till recently, it's pushing steadily towards double figures. I believe the industry's target of 10% share can realistically be achieved by around 2020.

Naturally, the impact of digital on OOH's ambitions and fortunes is strategically significant and fundamental. From the point of view of both efficiency and creativity, we can all see the effects everywhere we look.

Clients - brands and their agencies - are clearly reassured by the new capabilities DOOH affords. Superior campaign scale and integration, the unquestionable impacts of quality video and audio, unprecedented volume and sophistication of data for planning and buying. We'll see the degree to which an integration with the programmatic which now drives so much online advertising is achievable - it's not as simple as we'd imagine.

And of course ... ROI. Like everyone else in advertising, OOH is struggling to push out from under the heel of evidence of provable campaign value. On the brand side, procurement rules the roost. 

And here's where I have a genuine concern.

In focusing all of its investment and its discourse on the value of digital, I suspect that OOH could fall into a trap that catches so many of the industries that are exposed to the often-destructive power of the data.

Measurement is not to be mistaken for value. Just as the number of downloads of an MP3 (legal or otherwise) tells only a fraction of the story of the power of a song, so in OOH to double down on digital and expect it to drive long term growth is to miss the brutal reality of business on the network.

I'm not sure how OOH impressions are typically evaluated. But I'm pretty sure that, the magic I talked about earlier notwithstanding, even the most astonishing OOH work punches well below its weight. The definition of an accountant as someone who knows the price of everything and the value of nothing comes to mind here.

The data is only a part of the solution. The unmatched creative canvas that OOH affords its clients is in danger of being obscured, even sidelined by an entirely appropriate rush to digital.

THE WAY FORWARD

While the boot heel of aggressive measurement will remain a central problem for advertising for the foreseeable future, I know from direct professional experience that the global brands with whom I've worked for over 10 years on strategic programmes of digital marketing transformation, are already realising that the efficiency that digital offers can become an internally focused block to creativity, and thus to growth.

No one else is going to confer on Out Of Home advertising the value it deserves, and must demand from brands and the agencies that represent them, if the promise of sustainable industry growth is to be delivered. While digital transformation has the potential to get an practitioner, whatever the sector, off the back foot, it's the unique cultural and commercial impact of OOH that needs attention.

Digital is critical. Now and for the immediate future. But it's not the destination. It's the new departure point. The new journey of OOH, I believe, runs through Digitally-Driven Efficiency ... to Creatively-Driven Growth.

 

 

 

 

 

What Does Digital Transformation Really Mean?

DIGITAL IS ... AN ADJECTIVE

… which is why the question "What Is Digital" so often leads nowhere. We need to get some nouns into the discourse! 

Here we focus on understanding digital transformation through the complementary lenses of digital culture and digital business. 

Having set the scene, we move on to the overall strategic imperatives of every enterprise transformation. We then map the three sequential stages of transformation that summarise the enterprise journey.

Simply put, the question we’re asking here is “What problem are we solving for the enterprise?”

REFRAMING THE CHALLENGE

Digital Culture

Digital culture is not, at its roots, about networks and smartphones. It’s a societal condition, now effectively global, that is driven by the systemic and technologically-enabled shift of power from institutions and corporations to individuals and groups.

It began, and continues to evolve, along the narrative of the ongoing Consumerisation of Technology, a quite recent phenomenon that was born in the 1980’s, at the intersection of the PC revolution and early forms of interactive entertainment technology such as the karaoke machine and the (analogue) video game.

The key dynamic here is that of the increasing agency of the individual: there’s a direct line between these origins in so-called “multimedia”, and today’s empowered, connected consumer.

Digital Business

Digital business is not best understood merely in terms of software, networks and devices: these are of course key enabling components.

It’s the impacts of these ever-changing technologies that matter: this is above all about meeting the challenge of the consistent acceleration of market clock speed, which has been set in motion (in digital culture) by the migration of billions of end consumers onto global networks.

It’s this radical shift in the locus of value onto networks that has seeded and enabled the unprecedented growth of the most powerful and disruptive brands in history.

When we talk about “the Uber effect” (whether as threat, opportunity or both) we are, consciously or otherwise, referring to explosions of disruptive market power through network value innovation.

This is driven, above all, by Network Velocity.

Digital Transformation

Digital culture and business combine to frame the essential strategic context for transformation. This is about a programme of change to reconnect the enterprise with the market, and align its functions around the end customer.

For the C-suite, there are three “prime” transformation imperatives:

• Acceleration – the paramount challenge is a managed shift from corporate, then to customer, then to network speed;
• Adaptation – the ability of the entire enterprise to flex and react quickly (at micro and macro levels) to opportunity and threat;
• Automation – the systematic and focused encoding into software of any and all functions that are susceptible, increasing speed and quality, while reducing cost.

These three prime activities combine to define the boundaries of any truly strategic digital transformation programme.

GETTING TRANSFORMATION WRONG

Two common misconceptions tend to block the enterprise from genuinely strategic transformation programmes, delay the instigation of productive work, and suck up important budgets.

It’s correct, to a degree, to focus on customer experience: this is not itself transformative, it’s at best incremental.

While UX/CX work is important, if made the core of a strategic programme, it diverts attention and spend from the deeper interventions while over-emphasising touch points and interfaces;

Equally common is a focus on data over value, linked to an assumption that information is the key to faster, more accurate end customer insights, and a deeper and more sustainable relationship.

Of course, this is an important consideration, but as with the interface problem does not in itself support a differentiated, meaningful brand><customer relationship.

THE TRUE JOURNEY OF TRANSFORMATION

It’s recommended for initial analysis and planning purposes to view digital transformation as travelling across three distinct and logical stages:

1. Efficiency – streamlining and cost-cutting in business processes, where most enterprises have focused to date, and many get stuck;
2. Integration – the reorganisation of enterprise products, people and processes (overall, its philosophy and culture) around the end customer (meaning the external market environment);
3. Migration – most challenging and disruptive, the shift in the enterprise’s model of value creation and distribution onto the network.

We immediately recognise that the most admired and highly-valued innovators – from Google, Facebook and Amazon, through to the ubiquitous Uber and AirBnB – have already jumped straight to the third stage: their models fully leverage network speed and scale.

They dominate in an entirely new, albeit recognisable, form of cultural and commercial power.

This is Network Agency. Network Agency is, above all, the prize towards which all enterprise programmes of digital transformation must, in the end, aspire.