The Strategy Review

The Intelligent Brand - Part Two

(The Intelligent Brand - Part One is here.)

Think different

System/360 represents a sharp departure from concepts of the past in designing and building computers. [...] This is the beginning of a new generation - not only of computers - but of their application in business, science and government.

Thomas J. Watson, IBM, April 7th 1964

McLuhan has developed a theory that goes like this: The new technologies of the electronic age, notably television, radio, the telephone, and computers, make up a new environment. [...] They radically alter the entire way people use their five senses, the way they react to things, and therefore, their entire lives and the entire society. It doesn't matter what the content of a medium like TV is. 

Tom Wolfe, New York Herald Tribune, 1965

Signals from the 60s

In 1964, two very different events occurred that set the scene for the profound cultural and commercial changes with which we are still in the early stages of coming to terms. 

The rise of data

IBM - which had led business computing since the mid-50s - had made an enormous bet, an investment at the time of $5 billion, to develop the System/360, a revolutionary family of digital computing power, software and peripherals.

The 360 featured six mutually compatible computers and 40 peripherals that could work together. It also actively encouraged and rewarded external developers, anticipating how, in 1981, the company’s PC would kick start - while famously giving Microsoft the opportunity to supply and control DOS, the PC’s own operating system - the software industry that we now take for granted.

Rather than waiting weeks or months for information about the performance of the business, firms were, from here on, able to access increasingly sophisticated and actionable reports in closer and closer to real time, while the established silos between divisions and departments were simultaneously eroded.

The role and value of information about the business - and, over time, some information about the customer - were transformed by data processing and corporate networks during this period. So it was - and indeed still is - so easy to imagine as we plough through The Information Age, that if data is good, more data is even better, and that the global connection of the Internet would simply signal an acceleration into the same vision of the future.

The way information itself behaves and enables value for both business and customer has been fundamentally, yet very subtly, changed by the rapidly shifting context in which it lives and moves. As we’ll come to see, this subsequent networking of the world and all its data has come to demand of firms, not more of the same, but something completely different. 

Network effects

That same year, 1964, Marshall McLuhan, a Canadian former English professor, published Understanding Media, a far-reaching, often opaque, account of the impact of the new media technologies on human beings, their experience and behaviours in modernity. 

McLuhan was lionised by the corporate world, whose leadership, even over half a century ago, were already conscious that the world was running away with them. They were both excited and frightened by his lessons; just as much perhaps by his iconoclastic stance and calm refusal to be disturbed by their struggle to accept the implications of his manifesto.

While McLuhan’s thinking resonates through to today - not least his concept of the “global village” that the connected world creates - his central, most important and still bewildering contention was that “the medium is the message”. Though at the time his primary reference technologies were the television and telephone (with computing something of an aside) his meaning rewards close scrutiny today. 

To restate this argument for our current circumstances, it’s not the content of the Web that matters so much, as the impacts - some profound and obvious, others more subtle - of our very connectedness. This is an environment that carries not merely the comforting familiarity of scores of petabytes of data - it contains and reframes everything it touches. Most of all, it changes us in ways with which we have only just begun to come to terms.

In the light of our current obsession with information - the content of our networks that tends to preoccupy business - McLuhan refocuses us firmly back to the radically changing context for human life and business. We must beware of over-focusing on what flows across these new networks, and pay closer attention to what happens to our world, our lives, our work and our corporations, as a result of our being so completely networked.

To imagine that business can transformatively benefit from digitised information, while ignoring such profound shifts in the shape of our environment, is an entirely understandable yet serious error of thought, with significant inhibiting implications for leadership insight and decisioning.

We are led to re-examine the seismic disruptions that the emergence, in the 1990s, of the World Wide Web introduced. It’s crucial to our project that we pause to understand what was - and what was not - happening here, and when.

Three ages of information

When we cannot imagine what the future may bring, we cannot create markets today for unspecified goods and services in the future. Sometimes investments are made for which there is no future demand and sometimes businesses fail to invest even when there is a demand for their output in future.

Mervyn King, LSE, The End of Alchemy, 2017

Two ages of industrialism

We tend to think and speak of The Information Age as having conclusively arrived with the ubiquity of the World Wide Web. But as it turns out, this future is nothing if not very unevenly distributed. It’s useful here to think in terms of three distinct but overlapping eras. 

The Industrial Age was more or less entirely mechanical, and the overall paradigm changed little when electricity became commonly used from the late 19th century. It’s worth noting that the relationship between corporate management and business information also dates right back to that time.

Powerful innovations in that field - most famously perhaps, the punched-card tabulating machine, invented by Herman Hollerith (later to be a co-founder of IBM in 1911) for the US census of 1890 - were consistently introduced up to the middle of the last century.

In the years following World War Two, electronic computing rapidly entered the market, pioneered in its earliest days by the established powerful US office appliance firms. IBM launched its first electronic computer, the 701, in 1953, and took over the commercial computing market only a year later with the 650. In 1957 the Digital Equipment Corporation, DEC, was founded, and just two years later, IBM’s first transistorised computer, the 7000 series mainframe, was introduced.

The period from roughly 1960 to roughly 2000 spans what we can call the Late Industrial age. This was the era of data processing, where the industrial model of capitalism was extended and enhanced by computing, along with a degree of network penetration. The middle of this period was marked - and its progress dramatically accelerated - by the introduction, again by IBM, of the PC in 1981, and, in parallel, the emergence, further to the invention of ethernet, of the corporate network.

However, the core nature of value creation remained essentially the same. Systemic innovation took the form of incremental improvements. They were rarely, if ever, what we would today call truly “disruptive”.

Lagging the Web

It’s both startling to realise and hard to accept that we are today still in the surprisingly slow process of crossing the long bridge between this Late Industrial period and, heralded by the commercial arrival of the World Wide Web from 1995, the “real” Information Age.

With the arrival and ubiquity of global digital networks, the nature of life, work and trade are being reconfigured. Crucially, the nature, behaviour, role and value of information itself - not merely its massive and always-increasing volume and velocity - are profoundly altered in the Web environment. 

Most of the world’s largest corporations remain rooted, for the most part, at the tail end of the Late Industrial Age. Their digital transformation programmes have, certainly, added plenty of information- and network-enabled efficiencies to their still-industrially-based business models, but have not moved them to the other side of the bridge. 

How can we get our minds around what’s changed, and what matters about those changes?

The difference between these two worlds is hard to easily capture. However, at this early stage, we might ask ourselves why Amazon’s recommendations - with all the information the company holds on us, and despite its immense investments in data and data science - remain so stubbornly dumb, while Uber’s driver map - showing us the location and ETA of our ride - should feel so very smart? 

Is Amazon the mighty digital pioneer, in fact, an Industrial leviathan? And why are Uber’s apparently simple service add-ons still so riveting?

New context, new content

Not another channel

It may seem unnecessary to go back and reexamine the nature of the World Wide Web. In fact, we’re already so accustomed to living, working and trading online, that we miss what’s actually happening, like goldfish asked to explain the water and the bowl we live in.

The Web is a radically different kind of network. To think of it - as we started to in the late 90s - as ‘another channel’, created a mistaken mental model that still haunts us today.

Industrial era networks were linear and content-dependent. Simply put, when you launched a new product, you shipped it to retailers over road and rail channels, and you promoted it over media channels - primarily print and broadcast. 

These channels only went one way at a time: they were the opposite of interactive. They were also passive, we could say “intrinsically empty”, in the sense that, in the absence of trains, planes, automobiles, newspaper articles and advertisements, TV programmes and commercials … there was nothing happening.

However much traffic we sent hurtling down them, the overall dynamic was the same. They each carried a single type of traffic. And the content entirely defined them. Think of a road with no cars, a newspaper with no copy, a TV with nothing on.

To see today’s and tomorrow’s Web as merely a continuous increase - more channels for carrying more stuff - is a profound and critical category error.

Can we usefully think of, for example, YouTube - where so much of the world’s attention and media spend now reside - as just “a lot more channels and a lot more content”, much of which is user-generated? Of course we can’t. And that’s before we recall that it also happens to be the world’s second most-used search engine.

The Web is called “a web” for good reason. Online, when something happens anywhere, it happens everywhere. Just like a spider’s web, every single event creates a signal, a change, a shift. No matter how small or large, it’s this “active and alive” quality of the Web that differentiates it. 

And while the channels of the industrial era were populated and propelled almost entirely by commercial activity, the Web - whether we’re at any point in time providing goods and services and promoting them or not - contains the lives, behaviours and communications of billions of human beings. It’s busy out there! It never stops and it never stops growing. And this vibrant change is happening more, and faster, every day.

This is an entirely discontinuous shift into a radically new market model. We are tasked with understanding, creating and communicating correspondingly new forms of value, for customers whose shifting experiences and expectations are every bit as fluid and fast-moving as the Web itself. Without a shift in vision, we are trapped: transforming and innovating for a Late Industrial marketplace and customer, both of which are slipping rapidly into the past.

Not the new oil

McLuhan urged his bewildered audience of 1960s business leaders to appreciate that the impact of the changing content of media cannot be confused with the changing context. 

Now we understand just how very different this new context of the Web is from the industrial channels that preceded it, we can turn our attention to its content: the surging tide of infinite varieties of information that it carries.

Just as we had framed the impact of broadcast television as being based purely on its programming and the commercials that funded it, we have tended, as we balance uncomfortably between Late Industrialism and the true Information Age, to assume that for business, the Web is all about the data.

While the television programmes, advertisements, trucks and trailers of Industrialism certainly all carry their own intrinsic kinds of value, the popular metaphor of data as “the new oil” is a second category error, one that compromises our thinking and our priorities as we face up to the complexities of digital transformation and innovation.

In a sense, we know we’re in trouble as soon as we recall the Industrial origins of this idea. And yet, while oil - assuming of course that we wish, for now, to use hydrocarbons as a source for energy - arrives with intrinsic value built in, the same is categorically not true of data. 

When we compare data to oil, we’re tacitly promoting and reinforcing the idea that it behaves like the traditional natural and human resources that Industrial corporations captured and acted on to create products. We are also implicitly sustaining the notion that data must surely have some kind of intrinsic scarcity value: that we should therefore be mining it, hoarding it. And that it might somehow run out at some point.

The problematic conclusion, from there, is that the process of creating fresh customer value in this new Web environment derives primarily - as of course it does in Industrialism - from exclusive ownership and exploitation of this precious resource. 

We’ll come to understand that the resulting belief that, somehow, the process of innovative value creation starts with the information and proceeds from there outwards into the market - as it would if we were mining, refining and exploiting natural resources - no longer applies when we move into the Web model.

(The Intelligent Brand - Part Three is here.)

It’s the services, stupid

Behind the accelerating crisis in advertising lie challenging new rules for building, growing and sustaining brands

While the rosé flowed freely at this year’s Cannes Lions, dark and heavy clouds, that have been threatening on the far horizon, suddenly appeared overhead.

It looks, this time, like a perfect storm.

The Information Commissioner’s Office has, finally, landed a direct hit on adtech in the UK, ruling that it’s operating illegally, on the basis of the abuse of consumers’ data protection rights. While the US remains, for now, relatively adtech-friendly, we’ve seen comparable regulatory instances elsewhere in Europe.

P&G has announced the move of its already diminishing ad budget – last year’s spend was $7.1bn, and the plan is to have shrunk it by a further $2bn within 2 years – away from the large agency networks and towards new, small agencies.

This is, as we know, far from an isolated instance. To the contrary, when the world’s biggest advertisers – conservative spenders every one, whose survival and growth depend entirely on the equity of their huge global brands – cast off from the comfort of such decades-old relationships with their equally sprawling global agency partners, something big is happening.

Or, perhaps, something big has already happened.

Underneath these headlines, the rumbles of discontent about, on one side, consumer dissatisfaction with digital advertising and its associated defensive move, adblocking, and on the other, bot fraud and similar models of large-scale skullduggery, roll on.

Fueled in part by the ease and economies afforded by programmatic technologies, the in-house brand agency continues to win friends and gobble up budget from both media and creative agencies.

We have, of course, seen a fair bit of this kind of threat over the past 10 years, since Google and Facebook – no coincidence here – have taken up residence on the front page of almost every brand brief.

And during that time, the debate has flip-flopped – in a post-Internet update of that age-old battle for love, between planning and creative – from the merits of targeting, hypertargeting and retargeting of ads (the “data knows best” argument) to the brand benefits of great creative work. And back again

For those marketers for whom the digital Kool-aid has worn off, who are able to take a long, strategic step back from these cyclical skirmishes, this is no longer a useful fight.

Clearly, the digital revolution, as it has already done so much and so often, is now overturning the role and the rules of brand building, and at a far deeper lever than we have been comfortable admitting.

The context within which advertising has worked so well, one where value between all the key stakeholders – brands, content providers, channels and audiences – has been nicely balanced, has shifted. The idea that advertising has some form of “benevolent utility” for its audience – if only in funding, historically, the shows we love to watch – has lost much of its currency.

And yet the fundamental beliefs and philosophies of old-school, pre-Internet advertising remain stubbornly tough to shift.

On the industry side, a number of almost tautological notions have, until now, staunchly and quite effectively defended the ongoing role and value of advertising. Underpinning them all is the long-held ad metric of the impression, the unit of audience attention that tells us that – if only peripherally – a brand message is received.

Surely billions have by now been invested, not without good reason, in the measurement, the weighing up of impressions achieved, and the plotting of future ones. If creative advertising is an art, this has been the science that has underwritten it.

The arrival of interactive – soon to become digital – media, close to 30 years ago, began to put pressure on the supremacy of the impression.

The global consumerisation of the personal computer, and now the smartphone, alongside an unstoppable flood of enabling software, have moved our audience sharply forward, from being passive passengers in the back of the media plane, to the pilot’s seat in the cockpit. We are – for much of our digital day – actively engaged in managing our experience as highly connected human beings.

Sticking with the flight motif, advertising impressions have had an increasing battle against a headwind of audience attention that is not only quantitatively fragmented across a plethora of channels, but also – and this is important to fully grasp – qualitatively thinned by consumer empowerment. Simply put, consumer media behaviour and expected value have moved significantly away from passive consumption to what we might call “active co-option”.

We no longer just watch stuff. We do stuff.

The answer to advertising’s conundrum is, as it turns out, right in front of our eyes. Looking at the home screens of our smartphones, the apps that we come back to repeatedly are, almost without exception, not those that offer passive watching experiences. They are enabling services. Often basic, labour-saving utilities.

Indeed, Mark Zuckerberg – ingenuously, since it has helped Facebook to sidestep the moral responsibilities and legal liabilities of being a publisher – continues to speak of the company as a utility.

It’s services that consumers from here on use and value. On or offline, a great service now trumps a great product. Every single time.

While the language of advertising value has certainly evolved over the past 10 years, the industry has – and as an advisor, I’ve been along for the whole of this ride – stuck stubbornly to the increasingly flimsy guns of its impressions.

Accepting the new power of the connected consumer, we have sought “engagement” and “experience”. In media terms, though, the measurement of these elusive imperatives – we have yet to successfully get behind the consumer eyeball and into their mind – invariably involves some sort of reduction back to the trusty impression: “one engagement = ten impressions”. Really?

The most pernicious and resilient of all current marketing watchwords, however, is “relevance”, the touchstone of adtech. It’s rarely, if ever, challenged, but this single good intention paves much of the road to the hell of low-impact advertising.

Not that our brand communications should ever be irrelevant. But look closer. Isn’t it in fact the #1 job of advertising to be “irrelevant”? To apply powerful insight and creativity to gently challenge and nudge the disinterested consumer? Persuasion, almost by definition, begins with an assumption that minds need to be changed.

There is an obsession with – at any cost at all – sucking as much data as we can from the environment, to convert it into brand messaging that, in the end, tells these newly powerful consumers that we know who they are … what they’re doing … where they live. Again … Really?

Brand messaging, of course, is certain to retain a central role in effective advertising. But the honest, mutually beneficial value exchange that has, for well over a century, made advertising the staple food of brand building, has been broken.

There’s a stinging paradox here. The digital giants that have so enthusiastically smashed the shop window – the Googles, the Amazons, the Facebooks – have not only taken more or less compete ownership of a brand advertiser’s most precious commodity, quality consumer attention. They have gone on to create the largest and most profitable businesses on the planet. How? By selling that attention back to us, as entirely dominant adtech and ecommerce systems.

How on earth have they done this?

It’s simple. They’ve done it by providing empowering, must-have, day-to-day – even hour-to-hour – services, that billions of consumers just can’t live without.

They’ve created – and continue to create, at pace and scale – entirely new forms of consumer value, digitally-enabled service value.

There’s another, deeper sting in this tale. Those pumped-up, data-nourished, super-relevant impressions – yes, they’re still alive and, sort of, well – that adtech sells back to brands are, given the dispersion and dilution of consumer attention, combined with their irrepressible delight in smart, enabling services – in fact of far less value to brands than their apparently dumb, analogue predecessors.

The cost of their CPM’s is built on a cultural fiction. And we know this, really, from our own experience. Don’t we?

Those perfectly targeted ads, that interrupt our reading of an article on our smartphone, result in a kind of automatic mental blinkering. With a quiet mental “Doh!” we glide over them to the next piece of text … the stuff that we actually wanted to read. Have you ever exclaimed, en passant, “Wow! That advertisement was particularly relevant to me!”? Me neither.

It sounds absurd, but this is not far off what the purveyors of adtech are selling to their brand clients. The idea that a consumer is somehow delighted – at least somewhat flattered – that an ad vaguely corresponds to their previous purchase history or recent web searches. Once again … Really?

Cut to another scene. Before the movie begins in our new, ever-more-luxurious cinemas, we sink into those largely irrelevant, luscious widescreen commercials like a warm bath. Yes. Really.

Enough said.

So. How does advertising begin to repair this damaged value exchange, to rebuild those precious permissions. To become trustworthy again?

It’s not the messages, stupid. It’s the services.

First, marketers must put down their infatuation with consumer attention. Many – surely most – of the digitally-enabled services we treasure are intelligent utilities, ones that remove work and risk for the user. Hard and expensive to build. Very easy and very satisfying to use.

In the hunt for post-digital impressions, in the name of engagement, experience and relevance, most brand advertisers have been playing King Cnut, throwing trillions of unwanted – and yes, often “relevant” – messages against the heaving waves of shrugging consumer indifference and irritation.

Paradoxically, in many sectors it will be the brands that demand the minimum possible amount of our screen time, of our media attention, while removing painful, boring legwork and freeing us from drudgery, that will command the value, the loyalty, even the advocacy of their customers.

The messaging platforms we have built, the data we continue to hoard and sieve through, perhaps – with a little thought – the apps we’ve offered … all of these can, I believe, be retooled in the name of must-have, smart, valuable consumer services. And I can’t think of any industry sectors – and within those, many huge marketing and advertising budgets – that won’t benefit significantly from what I’d argue is an irresistible Copernican shift.

But the precious commodity now – arguably this is the essential must-grasp insight in our debate – is no longer the content that advertisers have, one way or another, sponsored for well over a century. It’s the attention of our cranky, demanding, powerful connected consumer.

Return On (brand) Investment has continued – with all the precision and certainty that digital promised and has never delivered – to be a vexing problem for advertising. A new metric will, I’d argue, prove invaluable as we navigate the new territory of building our brands with services: Return On (consumer) Attention.

As in any court, those courtiers who fail to find ways of usefully serving the queen, will soon enough find themselves headless. To hang onto our heads, we now need to very carefully read the writing that’s now on every screen in the world. And act accordingly.

Advertising As A Service may offer a less than appealing acronym – AaaS, anyone? But when we are finally able to wean ourselves off the tired teat of impression-based brand messaging, and come to accept the more nutritious, brand-building vittles of value-added services, we will be able to say that advertising has, finally, got digital.

The only disruption that really matters now? The structure of the enterprise itself.

Much hand-wringing, and for far too long, about the future of the beleaguered CIO, torn like a pair of Levi's between the two mules of of Keeping The Lights On and enabling - or worse, driving - well ... here insert whatever digital transformation catchphrase that takes your fancy.

Enterprise IT of course has its many faults and failings. But the game of CIO-bashing has to stop now.

The problem that dare not speak its name, the underlying denial in the C-suite that is too often unfairly - explicitly or implicitly - laid at the CIO's door, is that few large enterprises (I'm sorely tempted to say none here) have a clear and confident picture of their required business architecture.

This is interesting, because exactly as we've seen with digital transformation, where business and IT bring highly diverse perspectives to bear, enterprise architecture and IT architecture are each profoundly different at every level. They may ideally overlap of course, but are essentially from different planets.

However they should reflect, enable and speak to each other. And this brings us to the nub of the problem.

For decades, IT had the relative - and often thankless - luxury of supporting and responding to the needs of a slow-changing enterprise that, more or less, knew clearly what it was, what it was here to do, and therefore both strategically and structurally had been able to connect the technology investment with its needs. Until the consumerisation of tech, along with the closely associated arrival of what is, perhaps unfortunately, known as the "SMAC stack", those needs revolved around classic business support functions: record keeping and so on.

For the "keep the lights on" (at all costs and by the way do not EVER f%^k this up ...) folks, to be flatly presented with the challenge of "driving the transformation of the enterprise for the digital future" is a very nasty shock. Not least because real budgets are often not allocated for the shiny stuff, but more importantly because, in isolation, enterprise IT cannot, in any seriousness, be asked to reframe the direction, strategy and, above all from their POV, resulting architecture of the business, in order to convert it into a plausible technical solution set.

The emergence of so-called "shadow IT", where LOB's, for example, define, brief and invest in their own segment of a naturally then-fragmented IT architecture, is not best represented as merely an understandable and commercially-led reaction to the inability of the CIO's team to acknowledge, support and meet their changing needs.

It goes deeper. Shadow IT - alongside this surely-now-out-of-date CIO-bashing - is a potent and tangible symptom of the chronic reticence of leadership (including, where they are still allowed into the war room, CIOs) to take on the direct and urgent challenge of redefining how the enterprise must - strategically as well as operationally - be shaped in order to remain relevant and with a chance of future growth.

This is not THAT difficult a task in itself, surely. So why the delay? Why the denial?

Under these ostensibly common sense challenges, lurks a Pandora's Box of far more disruptive implications that throw into sharp, uncomfortable relief huge questions about the raison d'etre of the entire business, the areas of competition it might feasibly address, its ability to thus continue to satisfy customers, grow shareholder value, and so on. Not to mention the competence of the leadership team itself. A very hot spot, then.

There is a psychological "There Be Dragons" issue facing leadership that cannot be over-dramatised. It's a life or death thing, in many sectors and for many global brand leaders.

Without seeking to end with a fatuous plug, I have directly addressed these issues - with no claim to providing all the answers, but with a confident one to have asked many of the right sort of Big Questions, in my recent short book: "The Liquid Enterprise".

Its goal is simply to point out why the knee-jerk responses of e.g. Digital Transformation, Customer Experience and Innovation programmes, while serving useful immediate purposes of efficiency and cost-saving, in themselves tend to deepen the very denial that pushes back the far larger, existential issues of enterprise purpose, shape and architecture, into the reassuring but still-dangerous background.

The way the enterprise does strategy, and the way its architecture is evolved, hold the combined key to enabling the notorious and increasingly toxic gap between IT and business to be reduced to a point of meaningful alignment.

Anything less? We are, as I like to say, fiddling when we should be burning Rome.

Introducing "The Liquid Enterprise"

I'm pleased to announce the publication of my latest book, The Liquid Enterprise, How The Network is transforming value, what it means for business, and what leadership needs to do about it by Infinite Ideas, Oxford, on the 29th February.

Here is a synopsis and some kind endorsements, and you'll also find a taster for download.

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We know everything. And it tells us nothing.

As the world’s most venerable corporations scramble to keep up with an ever-faster, ever more chaotic market, a profound paradox is emerging at the heart of business strategy. Information – that touchstone of understanding, decision and action – has begun to attack confidence, competitive advantage and growth.

The speed, precision and potential for innovation that the digital revolution has conferred on business is undeniable. And yet we have never felt more distant from the consumer, never felt less sure of what to do next, never felt less confident about the dynamics of the context in which we live and work.

Beneath this brutal conundrum lie disturbing truths about culture, technology and value. Where leadership has relied upon tangible, manageable evidence to guide the enterprise through change to sustainable growth, the chronic turbulence that defines every major market sector demands that we now look to seize advantage from uncertainty itself.

The liquid enterprise throws down the gauntlet to the leaders of tomorrow. It provides a radical rethink of how the new Network Dynamics drive markets, the implications for enterprise and brand, and how we must overturn the principles of traditional business strategy in order to survive and thrive in the unforgiving, chaotic environment that is the market.

Endorsements

The Liquid Enterprise is the first work to take an unflinching look at the unenviable job of transformation leadership, through the eyes of the leader. Taking us far beyond the usual digital platitudes, Michael Bayler once again challenges his readers to discard everything they know, in exchange for an entirely fresh view of strategy that, finally, is fit for today’s and tomorrow’s purpose. - Richard Mosley, Global Vice President of Strategy, Universum, author of Employer Brand Management

Everyone’s talking about change and disruption, but no one seems to have the instructions. Until now. The Liquid Enterpriseexplains exactly what we’ve all been worrying about, why that is, and how to rethink business strategy for a future that demands we constantly transform – or die. - Brian Wong, Founder and CEO, Kiip

The Liquid Enterprise squares up to a Gordian Knot that is the single most important problem facing big businesses today – how to convert the chronic uncertainty that undermines our confidence in the future into our most powerful strategic weapon. Michael Bayler slices through that knot with simplicity, brevity and wit. - Tony Ageh, OBE, BBC Controller

We need a completely new set of rules to navigate such a turbulent world. This easily digested book shows the way. Read, ponder and decide for yourself just how much of our classical management theory is still relevant. - Dr William Webb, CEO Weightless SIG, President of the Institution of Engineering and Technology, 2014–2015

Download Liquid Enterprise taster

Adblocking ... just one symptom of something far bigger

One advantage of being, well, a man of a certain age, is that one has a sense of the trajectory of recent history.

My first serious job was as an assistant at a suburban branch of Our Price records. At the time, even the most corporate of record shop chains were temples of cool. And this is where I began a career in music that carried across some 12 years. Happy days. 

A little logo began appearing on the backs of album covers (CD's took another few years to land) around 1980. "Home Taping Is Killing Music (And It's Illegal)" it said.

This was absurd. The sheer time and effort involved in lovingly compiling cassettes of mixtapes - analogue playlists, early social profiles, if you like - made it an infrequent endeavour undertaken only by the rabid fan or lovestruck swain.

There was no evidence - nor is there today - that anyone suffered more than the noble curator themselves in the practice of this dark art.

But this "sledgehammer to crack a nut" response to what was largely an imagined offence, was also a sign that, after decades of delightful decadence, the music industry was falling under the influence of its new masters ... the lawyers. It had swung decisively from being a giant creative cottage industry to being a machine for - increasingly aggressive - copyright protection.

From open innovation, we could say in today's terms, to closed and hostile patenting.

Ironically, as the music business picks itself up after 20 years of battering by a ruthless information economy, those same dedicated curators would be pursued and lionised by not only the music business, but by the stars themselves. There's nothing more enticing, in these flaky times, than a passionate and influential tastemaker.

And then there was Napster. The love-in bubble burst, and all the majors began trying to sue consumers for piracy. This was as we now know a comprehensive commercial and PR disaster for Big Music.

But what was less easy to take - especially as a former insider of the business - was the whining, hand-wringing and finger-pointing that accompanied all this highly vexatious litigation. This was "Home Taping Is Killing Music" for the big screen. And it was craven nonsense, a tacky costume change from a cackling Scrooge to a cowering Uriah Heep. 

"But look at what you're doing!" "You're hitting your favourite artists where it hurts!" "We can't continue to sign great talent if you continue to cripple the business like this."

This was utter nonsense. And it was embarrassing too.

At the time, and indeed up until 2005, which disc sales peaked and began their steep decline, manufactured music and video too were riding the CD wave all the way to the bank. And the record companies were squeezing buyers for every dollar they could. CD prices were almost criminally high - this was far worse in the UK than the US, by the way.

Many, many suits were also fought by the artists who could afford it, to achieve a fairer share of the royalties that were being hoovered up by the labels.

Alongside this two-sided daylight robbery, not just the artistes (as is their right) but the record companies themselves, flushed with their apparently endless CD rights windfall, rode around in limos, flew first class, and continued to party like it was 1999.

There were of course exceptions. Many are still happily in business today, by the way. Martin Mills of Beggars Banquet doesn't do limos, continues to thrive through good and bad times, and partners with many of our most beloved and enduring talents. And, by the way, they love him.

And who can forget Geoff Travis's 80's dream of a socialist record company collective. That was - and still is - the glorious Rough Trade. Today, probably the best record shops in the world.

Coming back to today, the current flood of concern and dispute about the now-ubiquitous adblocking is showing signs of echoing music's crisis. "Adblocking Is Killing Content!" Or along those sort of lines.

The discourse here is nearly all about lost commercial and consumer value. I recall several years ago - I do hope to his eternal shame - a senior CNN executive seriously and loudly claiming at a high-profile industry event that ad-skipping (a la Tivo et al) is copyright theft.

But this type of "theft" began, if not before, then certainly with the TV remote. The ability of the technology-empowered media consumer (or audience, or indeed citizen) to switch off what they don't wish to see is part and parcel of the modern world.

The debate about relative value will not, in the end, get us anywhere. To suggest that the solution to adblocking is, well, better ads is to miss the point. While not in any fashion denying the power and value of great creative work, it's sadly the wrong tool for the job. To remind music consumers that by illegal file sharing they are - immediately or eventually - thereby missing out on "great content" is also not a valid argument.

And let's not even begin to dream that this is another chapter of the better targeting motif.

Some years ago I was advising a group of the major movie studios' home entertainment divisions on the impacts and implications of digital. What become starkly clear was this ... If only piracy was the most serious problem they had to face. In fact the worst threat to these giants of entertainment was not high profile issues such as the Netflix effect and the increasing truncation of the hallowed release window.

It was, and still is, Facebook, a media environment where consumers could happily mess about sharing their own stories and lives, with nary a movie, an album or, more importantly, a rights exploitation opportunity, in sight. Social media is surely, if nothing else, a savage drain on monetisable attention.

The lens of value will continue to be placed over the adblocking conundrum. But alongside that, if we fail to take into account the radical shift in media power to the audience that digital media has conferred on every stakeholder at the table, we're missing the biggest point of all. 

The file sharing revolution was not, in fact, about fair value. It was, we could say, about unfair power. 

Let's not forget one of the biggest scandals to hit a major media conglomerate in recent years, the Sony root-kit fiasco. The company, as you may recall, was caught covertly installing spyware on any user's PC, using audio and video CD's as vehicles. That speaks of a business model forced into playing dirty in order to regain a power that had already been lost.

Adblocking, no matter how distasteful the players and the practices may currently be, will not go away. In order to find viable commercial solutions, we need to dig deeper, to uncover and accept the real drivers of this unfortunate, but entirely predictable and inevitable, cultural shift.

With a glance back again at the Napster uproar, perhaps we might say that adblocking is the darker instrumental flipside of the unfettered consumer targeting we've been focusing on so hard.

Are consumers, now, targeting brands?

What does Amazon's home invasion mean for brands?

I'm surprised that, apart from the usual sporadic social fizz, Amazon's Dash (+ Wand) and more recent Echo services are not causing household brand directors to roll around on the floor foaming at the mouth. And not in a good way.

Do you see what I see?

The old Game of Thrones between brand, retailer and more recently consumer has played out over more or less a century. And as connectedness and data have arrived front and centre of this benign, bloody war.

Household brands are caught in a nasty pincer movement.

Ruthless retailer on one side, squeezing ever-harder on name brand equity with unavoidable in-store promotion, own-brand competition and - let's face it - a control of key shopper data that is more or less comprehensive.

And connected consumer, only ever a swipe away from the best price. Not to mention the new basket aggregators like MySupermarket.com, stripping away value from everyone, except of course, the shopper.

It's well-established that the traditional split between shopper - going to the shops, in one way or another, and consumer - connecting with the brand in the context of use, typically the home - is disappearing. Douglas Rushkoff has written most coherently about the underlying drivers of this shift in his recent book Present Shock.

As we know, name brands have been trying to push back into the retail space to regain a sliver of power behind the battle lines.

And till recently, the home has been a sort of sanctuary for the beleaguered household brand. Until, at least, the time comes for replenishment. And isn't it replenishment that FMCG marketing is all about? Who'd build a brand that was bought once on a promotion, then only bought again when the dreaded yellow label - the new uber-brand that all value-conscious shoppers - catches the eye to offer 50% off, 2 for 1, or whatever.

Well, that's pretty much where we find ourselves today. And while Amazon's home invasion, with opening salvos like Dash and Echo, may not seem like game over, there's a lot more where that came from.

My friend and colleague Professor William Webb, of Weightless SIG and the IET, made a startling observation recently that stays with me. William is a leading engineer, and as far from being a marketer as you could possibly get.

But when he and I were earlier this year discussing the potential impact of the IoT (Weightless is a leading open standard for object communication, by the way) on the home and in particular on the household brand, he innocently dropped something of a brand grenade on me.

And it merits serious reflection.

"I don't know much about marketing as you know, but surely we're looking at a time not too far away, when most of these brands will be trying to sell themselves directly to intelligent home devices?"

Only an engineer would dare to think, let alone say, such a thing. When irresistible and affordable consumer services become the buyers of commodity household goods - buying them surely on the basis os anything BUT brand - we envision an extraordinary return to a world where brand, advertising, and anything more than the most functional and rudimentary marketing, had no role to play.

A time, in fact, before the Game of Thrones that is household brand marketing and retailing had even begun.

Those of us who care about and value brands need to pay much closer attention. Most consumers are not as sentimental as we may be ... and the machines are getting smarter - and talking among themselves more - every day.

I'm afraid that, while advertising still has a key role to play here, so-called "digital transformation" will not answer this challenge. Retailer and consumers have already reached an unassailable point of power in terms of taking and holding advantage from data. And digital marketing, while the science continues to evolve apace, still lacks the sheer creativity - the art - to win a war where persuasion is no longer in play.

Until we can find alternative angles, it seems to me that these vulnerable brand giants urgently need to accelerate their service innovation programmes. The current Connected Homes projects are generally insufficient in both speed and scope to either outthink or outrun broader, deeper, smarter and above all, more integrated home automation technologies.

Service beats product, more or less every time.

Without an abrupt change in gear, we may soon enough see a dramatic drop, outside emerging markets, at least temporarily, in the potency and presence of many of the world's largest brands.

Food, we could say, for thought.

Revising the language of experience marketing

WHERE'S THE BEEF?

It's now a brand marketing truism that customer experience is key.

But is experience marketing in fact, when we look closer, a tautology, a self-evident truth that tells us about nothing more than itself?

Beyond the obvious imperative of actively avoiding poor brand encounters, and appreciating that service expectations are being driven up every day, what are the meaningful brand benefits of prioritising investment in better customer experience?

How often - or rather how very rarely - do we in fact succeed in making the great leap from "Meh ..." to "Wow!"?

And if it's so self-evident that experience is "a good thing", why do we continue to struggle to put a satisfactory value on it?

Let's dig a little into these questions and see where we end up.

RELEVANCE?

A brand's CX journey typically begins with enabling and delivering customised and / or personalised content, manifesting on website, emails, apps, ecommerce purchases, and let's not forget direct mail.

We evolve from this point, over time and naturally, to focus on context. This moves us to incorporate information about, for example, adjacent media, time and place, a user's social media actions, and so on.

One of the most commonly declared goals here is relevance. And this nebulous concept continues to be held up as a primary KPI, even if, of course, its evaluation and measurement remain elusive.

Who wouldn't choose to be less irrelevant? Again, it's more or less tautological that relevance is an essential quality of any brand encounter. Or is it?

I'm not sure I buy this, at least not without a struggle.

If we focus on outbound brand communications, relevance feels like where you get to when you take media planning to its logical, and in fact not all that exciting conclusion. Do we end up at a point where every piece of communications see is, more or less, about me?

It seems that what we're really talking about here is not so much about delivered value, more about "minimal waste" ... waste of both brand media budget and, that most precious of current commodities, consumer attention.

My challenge, at its root, is this. While relevance is, it seems, central to information-enabled service, the notion of a marketing message or any other kind of brand-driven customer encounter being proportionately more valuable by being "more relevant" to the recipient, i.e. in some way more granular in its focus, is far from convincing.

To place too much emphasis on relevance as a driver of brand communications is to claim that you need hot water to make good coffee. True, but not a useful addition to the argument.

ENGAGEMENT?

Let's turn our attention to engagement.

It's a little like art, in that we can't seem to define it (or still, annoyingly, put a commercial value on it), but we sure know it when we see it.

If a respectable definition is best derived from the current usage of a word, there are in fact two forms of engagement, one for media and one for brands.

Engagement for media is, at its most basic, a flip from quantity of impression to quality of encounter. It's a "retro-metric", which typically describes a combination of consumer time spent vs depth of attention allocated. This is about an encounter that happened in the past.

Where attention, as so often now, is splintered ­- TV on in the corner, kids supposedly on a laptop doing their homework but in fact updating their Facebook page, while texting friends about something that relates to none of the above ­- this is quite useful. Did we get (will we get) the attention we thought we'd get from a campaign or tactic therein?

But when a brand briefs its agency for engagement, it's asking for more than just consumer attention, or even depth thereof. Engagement for a brand usually implies a "two-way" connection with the consumer, also one that extends beyond the actual communication.

Engagement for brands is best viewed as a future-­focused measure of consumer predisposition to participate in contact and communication with brands. When I'm truly engaged with a brand - and let's face it, that's rare today - I'm receptive to further communications, further encounters.

Looked at this way, degrees of brand engagement are, in fact, degrees of intimacy. 

INTIMACY?

Intimacy speaks of a relative warmth of attitude, an attitude of trust, a shared or partially­-shared set of cultural references, and above all, in terms of this discussion, a willingness to, at some future time, prioritise attention paid to the person, object or idea (or brand) in question, above the myriad demands of others. 

Intimacy, in other words, is about a quality of brand><consumer connection that has some continuity to it. This is not, I believe, impacted by relevance, or perhaps only in a negative sense, so far as utter irrelevance - frequently achieved in spades, paradoxically, by some of the most efficiently targeting messaging - is bound to fragment any kind of intimacy.

Relevance, in any kind of direct brand communication with a customer, is table stakes. Engagement is an outcome that is best viewed in terms of a future predisposition of that customer to accept future encounters with the brand. This, in turn, is expressed and ultimately measured I hope, in relative degrees of intimacy.

RECOGNITION?

There's one more step we need to take in correcting the terms of experience marketing, and hopefully equipping us to build more confidently and intelligently going forwards.

What we really appreciate, and continue to value highly in communications from any brand in any medium, is recognition. This manifests as a relatively powerful shared, and above all, meaningfully personal encounter between brand and customer.

It's a two-way phenomenon. The brand sees me, and I see myself in the brand.

SO THIS MEANS?

Many of our most skilled experience strategists and designers emerged from ecommerce, where their impact - on both basket value and, to perhaps a lesser degree these days, brand equity - has been undeniable.

However, these skills, while in themselves critical to the hygiene elements of online experience, rarely provide the value that transforms the way we perceive a brand.

Recognition, in these demanding times, constitutes far more than a "Welcome back, Michael" from a database, a slick journey to execute my purpose, with a cluster of relevant offers cheering, or at least whispering, from the sidelines.

The paradox of brand experience is that it never, in fact, belongs to an individual brand.

It's a very slim sliver of the much larger pizza that is the connected, powerful and rather cranky consumer's experience of everything they touch.

Including, most importantly, their experience of being themselves.

 

 

 

 

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.

 

A look back at a book that still has a little bite to it ...

 

With thanks to the good folks at Salt Digital, here's the first of 3 short videos looking back at my work in digital strategy ... this one focuses on Promiscuous Customers: Invisible Brands, written in 2001 with dear friend and co-conspirator David Stoughton.

5 Unasked Questions About Digital Brand Marketing

Courtesy of my good friends at Digital Doughnut, a 30 minute talk from a recent Digital Leaders event challenging what I see as our most troublesome assumptions that currently inhibit intelligent progress for brand marketers.

We'll put the IoT into IDIoT (if we're not careful)

Who's NOT talking about the Internet of Things?

Who's NOT wondered how to get a piece of the sqillions of bucks that IoT will - and we know that one way or another it's true - generate.

And yet, as with so many techno-cultural shifts (this one's truly tectonic), few of us have a sense of, beyond the undoubtedly enormous IT and telco RFP's that are already starting to fly about, where the value will lie for a) businesses and b) their customers.

This is THE hot spot for IoT. We have to get beyond the bewildered - albeit polite - shrug of the CMO, and the unconvinced shrug of the connected consumer.

We have to know how making dumb objects smart will create fresh, sustainable customer value, and, in the end far more critically, how it will build brands.

I have to say that I wrote about this in great depth (and disccomfort: this was 14 years ago now) with my then-collaborator and long-time friend David Stoughton, in our still-robust manifesto for digital value, Promiscuous Customers: Invisible Brands; we called it "information-based service value" in the book.

The information's now a given of course. But the hunt is now on the elusive  value that configure-once, love-forever customer services will enable and sustain.

Some of us are (once again) thinking about this challenge in great detail. I'll be writing about it in the coming months.

A good - and far too long overdue - reboot to this old blog of mine. Labouring in the mines of agencyland had, as so often happened, dulled the edge of the remains of the brain.

No longer. Let's crack the IoT. It's where digital value REALLY takes off. And this is not, believe me, your mother's marketing.

The Man Machine - M2M drives the future of brand building and loyalty

Ericsson, the leading maker of wireless network equipment, sees as many as 50 billion machines connected by 2020. Only 10 billion or so are likely to be cell phones and tablet computers. The rest will be machines, talking not to us, but to each other. The combined level of robotic chatter on the world's wireless networks... is likely soon to exceed that generated by the sum of all human voice conversations. "Talk to me, one machine said to the other", The New York Times, 29 July 2012

Computer World

Techno-rock legend has it that its iconic fathers, Kraftwerk, had but one telephone in their Dusseldorf base, the gloriously-named Kling Klang studio. The phone’s ringer had been disabled. But the band would pick up the handset once a day, promptly, at 11.00 every morning. And whoever was ringing in would get to speak to them. If not, well, too bad … Maybe catch you tomorrow.

Perhaps the greatest pop concert I’ve seen to date – at the Hammersmith Palais, 1981 – was Kraftwerk when they were on tour supporting their (at the time very quirky) Computer World album. Maybe I’m rose-tinted in my memories from all that time ago, but I’m sure that one by one, as the group left the stage, they left a dummy of each member poised behind the bank of computers that made up their instrumental line-up. And it seemed like the dummies were continuing to operate the computers right, through the encores.

The Kraftwerk message seems to have been: “You find machines fascinating, because you are yourselves machines. But there’s more: the role of machines in creating meaning in human life will keep on increasing, and the traditional divide between you and the machines will continue to become smaller. Just wait.”

And we did wait. And sure enough, the rewiring of the world that we’ve seen over the past 30 years has given birth to an always-on experience of human life that brings together flesh, blood and data in ways that only the cyberpunk authors could have anticipated when the process began.

Just Did It

How brands are built in digital, and indeed the cultural and commercial roles of brands in post-digital culture, versus their traditional roles, are fundamental questions that underpin the slightly more superficial weekly debates we hear in media and marketing.

What do we do with all this data? Do search, social and mobile move advertising forward or fatally hamstring it? Who really owns the brand, when so much equity apparently lives in areas that advertising can’t consistently touch?

And of course, Engagement … what is it? Why does it matter? How, why, when and where should we invest in it? What is it, by the way?

But like great art and porn (great or not so great has never been established I gather …), we sure know Engagement when we see it. And one inspirational heritage brand that has nailed it is Nike, in particular with its Nike+ program of runner engagement and activation. Nike+ has built powerful, shareable automated consumer value with an application whose entire impact depends upon shoe - or more recently, smartphone or watch - talking to network on the runner's behalf. All the user does is configure the service - the application does the rest.

This is M2M – machine to machine – technology applied to consumer branding, the Internet Of Things, brought to life. But what, exactly is going on here. And why is it so important?

At the consumer level, Nike+ takes a notoriously isolated stakeholder, the more or less serious runner, and gives them a platform. This platform takes raw data captured from a chip in the shoe, a wristband, or more recently a smartphone, and turns it into visual, shareable narratives of personal transformation.

Nike+, in fact, enables the kind of empowered self-expression that Marshall McLuhan I believe had in mind when he presciently defined media as “extensions of man”. But looking closer, we see the key lesson to be learned here. While Nike+ continues to build powerful equity and loyalty – indeed Engagement, that word again – among arguably the brand’s most critical stakeholders, the runners on which the brand was built, it does so without a sentimental need for consumer love or validation.

All the user does is configure the service and then … let it roll. The brand adds potent value, does all the heavy data lifting, and pops up at the end of each run with a beautiful story of the new, improved us … which if we want we can share, crow about, or just (as I like to think most runners do) quietly chalk up a little more personal progress with a tip of the hat to Nike.

This Engagement, in other words is built not on love from the consumer. It’s built on a crucial paradox, one that we must get to grips with if we are to continue to build brand equity “Behind The Line” in the VIP area of the connected consumer’s tribal life. This Engagement depends on enabling the consumer to Disengage – from both tiresome task and indeed, at least so it seems, the brand itself. (Note, by the way, that the model has this year been pushed out to other sports where Nike seeks traction, for example golf and basketball. This one's going to run and run.)

Loyalty without awareness

Almost 10 years ago to the day, my friend David Stoughton and I published a book – Promiscuous Customers: Invisible Brands – that took as its departure point the hypothesis that information, in and of itself, does not create value, and in many instances will attack it, both for consumers and brands.

To the contrary, the only information that adds value is that which removes both work and risk - perceived or otherwise - for the consumer.

We began the book with a robust attack on CRM – not the technology itself, but the underlying assumption by marketers that, per se, owning information about a consumer adds value to that relationship.

This, remember, was at a time when loyalty models such as Tesco's Clubcard were starting to make a significant impact, and the apparently promising links between digital consumer data, connected markets, and the World Wide Web were the subject of enormous focus: a hypnotic and apparently self-evident data-driven model was bought into by most of the marketing community.

But we said no. You're wrong.

Much of the second half of Promiscuous Customers was devoted to the future impact of what we called "automated value". Our argument was, and indeed remains so 10 years on, that the sentimental assumption by marketers that empowered, connected consumers generally care enough about their brands to engage in repeated displays of active loyalty over long periods of time is entirely wrong.

Brand loyalty is rarely, if ever, about love - one well-known drinks firm even aspires to "brand adoration" - but about utility. The ascendance of the app has cemented the role of Automated Value at the heart of brand-building: "What can you do for me, that I can't (be bothered to) do for myself?" says the smartphone user.

Getting consumers to disengage

The arrival point for contemporary consumer engagement and loyalty is not, I'm relieved to report, that most trite of consumer gestures, the "Like", nor even the marginally more credible Retweet.

It's the point at which the consumer consigns the immensely hard and complicated work of creating information-based value to a brand application.

We may not get the brand love we crave for this typically offhand commitment... but what we get is worth far, far more.

While paradoxically, the consumer actively engages much less with our brand when they begin to rely upon an application for a particular service (let's stick with Nike+ as an example for now) we need to learn to see this as a marketing positive. They may clock off from the often tiresome active engagements via our website, but don't mistake this cold shift in engagement for a drop in loyalty.

This, in any sector where information plays a significant role, is the lion's share of the future of marketing and brand building.

Returning to Kraftwerk at Kling Klang for a moment, we should I believe accept that the connected consumer’s project of self-creation and –distribution is far too important, too central to meaning, for brands to expect to be able to just “pick up the phone” and get through whenever we feel like it. A further paradox of post-digital brand building is an end to promises of more product or service value, replaced by the need to deliver up-front, consistent “life-value” for the consumer. If it looks like creating more work without major payoff for the new king, we can be sure it’ll just bounce off.

We need to put down our need for love, and get with the unconscious loyalty program. It’s the future. (In fact, it’s already here, it’s just not evenly distributed!)

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

 

The Challenge - for Connected TV - of the Connected Consumer

My friends at the ever-supportive Mediatel published this piece today on the challenge of carrying the smartness - and indeed the profound engagement - of the smartphone across to the new challenge - one facing a lot of different stakeholders - of Smart TV.

The Future of Engagement? Disengagement

This tiggerish little piece published in today's MediaTel's Newsline begins to explore the impact of M2M (Machine-to-Machine) on consumer engagement and loyalty.

Will data finally kill the newspaper star?

Here's my latest column for today's MediaTel's Newsline, an exploration of the - seemingly - profoundly negative implications for quality journalism that derive from personalisation services on one hand, and so-called targeted advertising on the other.

A pretty bleak picture, I'm afraid ... I continue to find that wherever I look, data is clearly not much of a friend to media.

And I can't help but grieve a little - as one must also for the parallel casualties in music, literature and film - for the collapse of "quality for quality's sake" that this trajectory forces on our culture. Would the great journalists of today and yesterday ever have emerged, let alone made a living, in such a punishing climate? Of course not.

Bowling and Pinball ... the ball rolls on!

Very pleased and flattered to see the good old Bowling and Pinball meme that I pushed out in 2007 taken forward into fertile territory by my close friend Peter Sieyes and colleague Rob Malcolm in this very useful piece for Wharton: Knowledge In Action.

It astounds me - in a good way :-) - that the thinking should have such legs ... Though somewhat alarming to imagine my headstone in (I hope) the very distant future: "You know ... the bowling and pinball bloke"!

Here, by the way, are the videos I first used when explaining the model to the great and the good of media and marketing.

The bowling ... and the pinball.

Misconceptions holding back digital, social and mobile marketing

I'm very pleased indeed to have this comprehensive article featured in the July issue of Market Leader.

It combines what I believe to be some of my most incisive observations of the current media and marketing zeitgeist, pointing up the critical conceptual blocks, and providing I hope some meaningful clues for the way forward to credibility, significant brand investment, and of course, growth.

I'll also be speaking around these insights in the coming months, so if there's a slot in an event schedule that might fit the bill, please do let me know.

Download Bayler on Digital Disruption and Value

Download Market Leader cover July 2012

Here also, in a connected vein, is an account of yesterday's panel at Mediatel's excellent Media Playground event, questioning the relative value of data in marketing vs advertising. A hot discussion, too.

More on the "behavioural backlash"

Clearly the subject du jour, consumers' increasing discontent with the new targeting, and the implications for advertisers, are examined again by the excellent Liz Jaques in today's Mediatel Newline.

With astringent thoughts from your humble author for extra zing ...

The new window-smashing French intellectuals ...

For some months now I've been admiring the writing of Frederic Filloux and Jean-Louis Gassee, the French co-authors of The Monday Note.

Today's TMN edition has prompted a rare post in this blog ... Filloux writes a searing yet icily-argued attack on assumptions re Google and Facebook's respective futures in ad revenue terms, using the Do Not Track controversy, and Microsoft's apple-cart-upsetting declarations, as his departure point.

Connected to this, but standalone in terms of its vigour and urgency, is Gassee's equally thoughtful yet brutal body check to what he calls "The $20B Opportunty Mirage" of mobile advertising. I've leave you to read it, but it's bracing stuff.

Overall, their positions (a) that ownership and manipulation of data confer no intrinsic value or entitlement, and (b) that simply pointing to how enormous mobile advertising could/should be consitutes proof of commercial potential, are very much in line with my own views.

They also bring a wealth of evidence to their arguments that make this work credible as well as invigorating reading.

An essential book for students of what's happening

James Gleick's masterful work "The Information" is taking my breath away.

The quality of scholarship combined with the accessibility and the sheer excitement of information's journey from pre-history to present, post-social, day is superb.

Make a point of reading this remarkable book.

"Otherwise Engaged - Branding In A Connected World"

The digital edition of my recent mini-book on engagement is now available to download free of charge here.

Download Otherwise Engaged by Michael Bayler

(If you still feel compelled to own the remarkably expensive printed version, it's available from Amazon here.)

What we talk about when we talk about Engagement

In the light of last week's Facebook IPO, now seems like a very good time to revisit the still-vexatious issue of Engagement.

This article, published today by the excellent MediaTel Newline, attempts to untangle some of the key misconceptions that appear to be holding us back.

A video presentation on branding for startups

I just rediscovered this, a talk I gave for Sun Microsystems a couple of years ago. The video and slides are very well put together, unfortunately the host - who shall remain nameless - inserted himself rather shamelessly into the proceedings ... however, if you jump to 02.18 minutes in, there's some rather good stuff there.

 

A challenge to Big Dada (yes, Dada ...)

With kind permission from the excellent MediaTel Newsline, this is a well-received, rather tiggerish piece I wrote in late April on the true role and value of data for marketers.

The goal was to debunk at least some of the Big Data nonsense, much of which is actually blocking the way forward for what I've come to call "Small Data" and it's crucial future role in creating meaningful consumer value.

The already over-extended notions of "targeting" and so-called "relevance" are also in my sights, I'm afraid. Sorry 'bout that, fanboys ...

Anyway, here is the piece, and I expect to have a second MediaTel article unpicking the conundrum of Engagement online early this week.

Kevin Slavin on how algorithms shape our world

A kind note from a good (and clever) friend ...

A lovely review of The Artist and what it means in a world of 'infinite connectedness' by @michaelbayler bit.ly/ygrGEV

— tom gueterbock (@tomgoot) January 25, 2012

"The Artist" - Fresh air ... or musty nostalgia? A bit of cultural context

 

Having grown up glued to black and white Hollywood masterpieces from the Golden Age every Sunday afternoon - at the time, it was that, football in the street, or homework - The Artist draws on references that are almost every one entirely familiar. And of course, like almost everyone, I love it.

It's funny - in a sneaky, better-than sort of way - to hear about the poor punters who demanded money back when they found the movie is - well, 99% of it - really silent. And all black and white.

Take a little Singin' In the Rain - well, OK, rather a lot of it - throw in the better Astaire and Rogers masterpieces and a generous sprinkle of the Pickfair silent dramas of pre-1929, when as we know The Jazz Singer blew silence away forever, and, aside from the genuinely glorious acting that features in every minute of The Artist (and how good to see the great Malcolm McDowell, in a tasty cameo role that surely he'll treasure more than much of his later work) you've got a good summary of the tone and structure of the movie.

There's been - if only prompted by the Academy Award nominations that the movie has earned - a certain amount of soul-searching Way Out West about THE MEANING of The Artist. At a time when the major studios are scrambling to differentiate their still-potent output from the millions of frat-party fart-lighting and cute kitten clips on offer to the less discerning audience via the usual sources, any film this quiet, this unswashbuckling, this unstarridden, and, well, this small, is going to get folks a-talkin'. And a-worryin'.

It strikes me - not that I know much - that THE POINT of this lovely film is to remind us that magic - and Hollywood was always about magic - only works hand-in-hand with severe restriction. An empowered, choice-spoilt audience with all the magic they'll ever need in the palm of their hand, will paradoxically find magic almost nowhere. (Magic is also about the things that you could never imagine yoursself doing. Not just special effects. It's more about writing, in the end, than CGI.)

But put them (well, me, and many thousands of others, anyway) in front of a black and white, silent film for 100 minutes on a cold, wet afternoon, and The Artist returns magic, along with romance, compassion, tragedy, comedy, pathos, cuteness, in spades.

I keep telling anyone who'll listen - for reasons I'll explain below - that in 1929, 95,000,000 Americans went to the movies every week. Of course, like my Sunday afternoons with Busby Berkeley and friends, they had nothing better to do. As the every-tiggerish Umair Haque pointed out some years ago, before moving on to larger econonomic matters, there was a time when attention was infinitely plentiful, and media - stuff to watch - was rare, to the point of being god-given.

And this - actually rather brief, in the grander scheme - Golden Age of the screen was very much built on the profoundly humble, often mundane, rarely privileged, and perhaps above all, physically grounded lives of its audience.

Which brings me to my conclusion.

Any nostalgia that I felt on seeing The Artist was, in the end, little to do with a hankering for the age of the silent movie - those Sunday afternoons weren't THAT much fun, believe me - and all to do with a pang of the loss of a simpler age in the much more recent past ...

One where our infinite connectedness, power to choose, limitless access to channels for self-expression, and our regal bestowing of attention on media objects on the merest whim (with disenfranchised consumer brands creeping around the edges of Facebook, Twitter and the rest, beckoning and gurning like the dancing dads at your 18th) had not yet made us like cranky, jaded children after far too many sweets, allowed to stay up far too late for our own good.

Is The Artist, therefore, one last longing look back, or a sneak peek forward, with perhaps a promise of happier times for moviemakers, beyond today's gruelling battle for the attention of these spoiled, rather unattractive children?

I'll say it's neither, not for me anyway. It's a glorious example - reminder in fact - of what occasionally happens when storytelling and acting talent is left alone to do what it does well, which is not merely to give us yet another expensive, instantly-forgettable chunk of content (I love blockbusters as well as the next bloke, by the way) but to touch our hearts deeply, with a far smaller, more daring, more caring slice of real magic.

Dedicated to the late Jonathan Cecil, who cared enough to dig out and bring me hard-to-find, connoisseur's books about the great silent movie stars when I was a silly South London boy, and who would have adored - and written far more insightfully and lovingly about - this film. R.I.P.