As the southern hemisphere heads into summer and people flock to the beach it is tempting to think that the global financial crisis [GFC] was a just bump in the road. In some ways it was – at least for Australia. We seemed to have ducked the worst of the GFC. But that perception ignores the major changes that the GFC has produced. One of these changes concerns the way brands discover and talk to their markets. The GFC accelerated the rise of social networking and decline in popularity of mass media to produce a tectonic shift. This shift will have far reaching implications.
This new environment has enabled a quite different approach to growing markets and winning market share. Technology has both facilitated the “fracture” of markets into specialised interest groups and provided the wherewithal to identify and communicate with these groups – in real time. It’s time to get granular!
Stop guessing and start knowing
Not many companies have been able to turn the massive amounts of data that social networks create into profit. This is because they lack the ability or simply do not have the courage to make the steps necessary. In fact, the vast majority of companies have not managed to develop a management structure and marketing strategy that is in line with the fracturing of the market place they play in. Many are still guessing their way through mass media insights and market research based on small sample sizes extrapolated out to the entire population.
This will change very quickly in the coming months. As Hal Varian, the chief economist of Google, recently stated in the McKinsey Quarterly; “I keep saying the sexy job in the next ten years will be statisticians. People think I’m joking, but who would’ve guessed that computer engineers would’ve been the sexy job of the 1990s?”.*
Companies develop far better growth strategies if they choose to focus on granular information – in both identifying and attacking new market segments and in cutting costs.
The concept in practice
The Harvard Business Review recently explored the ramifications of exploring granular data. In that article they discussed how Amazon leverages it’s virtual and low cost supply chain to “efficiently indulge the tastes of narrow customer segments, literally down to the individual buyer, at very low marginal cost”.
The article went on to discuss how the strongest contribution to performance comes, not necessarily from focusing on acquiring overall market share, but identifying and investing in markets with the most vitality. The example they illustrated was that of a construction and services business face near zero growth. The company used granular data to divide its world into geographic, customer and product segments. They quickly discovered that they had very weak market share in the fastest growing market spaces revealing over $10 billion in potential that could be tapped into.
Steps to take
So here is what you need to do:
Accept that a fundamental change in communication is in place and be prepared to adapt.
Allocate budget towards methods and technologies that can gather relevant data.
Use this data to identify new market opportunities, the strongest growth areas will be apparent quickly.
Invest in these new segments and be prepared to ditch low growth market segments.
Develop a method for managing the multiple market segments you may now be playing in.
Life’s a beach
In the good times it’s easy to be complacent as customers come to you easily – like all of those people flocking to the beach this summer. But in the wintery phase the world economy is currently going through understanding the needs and wants of the micro-markets you can have most influence over is a winning strategy – that is easy to scale up when things begin to warm back up.
Now’s the time to get out your microscope and look carefully at the grains of data you have available to you.
A famously controversial American TV personality recently discovered the hard way that more power now rests in the hands of average people than has at any other time in history. Glenn Beck is known for being a very pro-republican commentator on the Fox Network. In this article we will look how some smart thinking and utilising social networks have held him accountable for his words and actions in way not possible until the last couple of years. I will also look at the implications, both negative and positive, for brands and the people who market them.
In the red corner we have…
Mr Beck does not try and hide the fact he is no fan of President Obama. This is fine of course – everyone is entitled to an opinion. The problem is that many people think that his tactics are less than honourable. He has been accused of spreading lies and hatred on many occasions. He is a favourite target of John Stewart’s Daily Show and there are sites all over the internet that claim to expose Beck’s lies.
Within minutes of him saying uttering these words videos of the segment had been distributed over the internet through social networks. Comments began springing up everywhere and it quickly became one of the most viewed video segments – for a day or two. And that may have been as far as it went if it weren’t for a group called The Color of Change.
This group came into existence to inform Black American’s, via the internet, of changes in the political landscape and help get their voices heard. The Color of Change had the idea to set up a special Glenn Beck page, not to expose his lies, but to expose the advertisers who supported his show. They posted a video of some Beck’s most outrageous segments and overlaid the advertisers who were sponsoring the show and asked people to use an online form to express their anger to the advertisers.
Some of Fox’s biggest advertisers soon dropped Beck from their advertising schedule. One even went as far as to stop advertising on the network altogether. Social networks were buzzing every time another advertiser decided to drop Beck. The people had spoken and it was influencing the bottom line of a major international company. Instant democracy in action.
What can be learnt?
Glenn Beck has already made a tearful apology – of sorts. He has always been hugely popular with his audience so it is likely he will bounce back from this after a few weeks of carefully constructed PR. But this example does highlight some very interesting questions…
Should brands pay attention to online campaigns like the one against Beck?
The Beck campaign is really just one example of a much wider trend, that of giving viewers of web content the right to be heard.
Blogs have allowed people to comment on articles for a long time but the issue with this is that only the truly motivated take the time to write a comment. Now that many sites have devised ways of making it very simple to be heard – usually a simple combination of vote up or vote down buttons like the one at the bottom of this article – more people are speaking up. This can only mean that campaigns like this will happen more often and with greater impact.
President Obama even has written some of his speeches based the number of votes on subjects held on the White House web site. And the subjects themselves were written by members of the public.
Companies can no longer hide behind the “official company line” or rely simply on media spend to influence the publics’s thinking on any given subject matter. Ignore social network driven campaigns at your own peril.
What does this say about the collective online community?
The original dream of the World Wide Web was to have information free to all and instantly accessible. This dream still lives on in a growing variety of ways and the online community has taken that philosophy into their lives. They love a movement and will react to a cause.
But beyond this grandiose concept is something far more fundamental. The human race is social in nature and individuals like to make an impact.
In issue 17.06 of Wired magazine an article examined how a massive cultural shift, the author called “The New Socialism”, is taking place. It is the idea that the human race is now congregating and communicating online and – through processes of sharing information, cooperating on small scale events and collaborating on large scale projects – a type of fast paced survival of the fittest idea is taking place. When a concept can grow and mutate at breakneck speed everyone can be exposed to it.
This is not a passing phase. It is an extension of what it means to be human. Empowering the individual to have a voice will always bring about change. That is what democracy is all about.
How can companies use this ‘instant democracy’ to their advantage?
All of this points to huge opportunity for brand managers. The collective opinions of millions of people can be assessed in real time. You no longer need to rely solely expensive software to analyse online conversations and try and gauge intent (bit of a hint here – it’s usually the ones that are angry that take the time to comment at all). Of course that software helps but having a system in place that allows people to vote on any given topic will give you precise real-time information, positive or negative.
This could be used to pinpoint new markets, develop new products conduct market research or even decide on what to speak about. I have recently been involved in developing a system for a client that will enable an audience to communicate and vote on detailed views that, until recently, would have been impossible. And it seems every company has information that is hard to tease out of their market or their stakeholders.
The rise of social platforms are letting us know that people want to be heard. Amazing things can happen if you listen to them.
“With celebrities such as Ashton Kutcher and Oprah Winfrey helping fuel Twitter mania, the micro-blogging website is soaring to stardom around the world, according to Hitwise.
Twitter’s growth in Australia “has been nothing short of phenomenal,” rocketing 1067 per cent since the start of this year, reported Alan Long, research director at the Internet intelligence gathering firm.”
It’s a few years old but still one of the great TED talk.
From the TED website - ”Great design is a never-ending journey of discovery — for which it helps to pack a healthy sense of humor. Sociologist and surfer-turned-designer David Carson walks through a gorgeous (and often quite funny) slide deck of his work and found images.”
Social networking has hit new heights in America. Companies are asking agencies to submit proposals for social networking contracts – over Twitter. Read the whole article
We’re not going to pretend that we know everything about newspapers. Nor are we saying we can somehow magically see into the future. But some things just seem obvious to us. Let us know what you think.
He said that he was ‘mad as hell’ at what he saw as intellectual property theft.
News aggregators like The Huffington Post and Google News recently came under fire from Dean Singleton, the chairman of Associated Press. He said that he was ‘mad as hell’ at what he saw as intellectual property theft. From Mr Singleton’s point of view social networking and search engines are killing the newspaper industry. He sees a future where people pay to log on to their content and other sites pay to link to their articles. Unfortunately for him this attitude is going to put him off side with a large portion of his potential market.
Google CEO Eric Schmidt recently told the Newspaper Association of America that newspapers were very close to committing suicide by alienating their online customers, the fastest growing segment. What’s more a recent study showed that the generation who grew up with Google and Facebook love news aggregators and free news. The study says “Not only are teens not rushing to pay for content but they also struggle to envision in what realm they would need to pay for content…. Ask teens where they find news, and they typically say Yahoo!, Google, AOL or MSN”.
Frankly it sounds like newspapers struggle to understand the opportunities and rules that govern the online world. There is a whole generation that has grown up with the concept of freemium economics. Try to charge them for something they have always had for free and you’ll lose them altogether.
They need to remember that their main customers are advertisers.
Newspapers are in the business of collecting and delivering information. They have to be agnostic and flexible about the method of delivery if they are to avoid being trapped in outdated and inefficient channels. The old model of monetising this information is on the way out. Even the term “newspaper” is starting to sound like a relic. They need to remember that their main customers are advertisers. If they embrace the new mindset and employ direct marketing principles there is a world of new commercial opportunities out there.
Here’s what we think hold the most amount of promise:
1 – More engaging advertising
One of the most difficult transitions for newspapers going online has been understanding how to sell advertising space online. Banners are OK but many of them are just annoying and get ignored.
Newsprint was a simple platform that advertisers could use to get a message out. Online newspapers need to create a new advertising platform. Develop a collection of tools that not only track users behaviour but allow advertisers to sell their products more easily.
Currently many advertisers create landing pages for banner ads. These pages pass on detailed information, get users to sign up or even make a sale.
If the digital arm of a newspaper were to develop easy to manage tools that allowed advertisers to perform these tasks, thus reducing the overall campaign cost and timeframe, advertisers would be over the moon.
Not so long ago we developed an online application for the Herald Sun’s sponsorship of the Melbourne Marathon. This application, utilising RFID technology, allowed each and every runner to see a video of themselves. With a bit more development time could have added targeted advertising to this type of application and created a platform that could be used for multiple events.
It is this type of thinking that advertisers are looking for.
2 – Utilise the Twitternet
Micro-blogging is here to stay. Twitter is currently the market leader in this space but who knows what will happen in the coming years. What’s certain is that 2009 is going to see the tipping point for Twitter. Well worded headlines can easily drive traffic to the source of the news. Again, The New York Times is already doing this. When this article was written the Times had more than 500,000 followers and this number will keep rising.
There are huge opportunities here to increase overall traffic.
There are huge opportunities here to increase overall traffic. Twitter lets people connect with ideas and information, and ideas and information are what news sources are all about.
3 – Realise that the brand is a social centre
Newspapers are brands with a customer base that identifies with it like any other brand. More than ever newspapers need to remember that fact and learn to leverage it. Connecting with local communities and encouraging them to add content.
Currently many online newspapers are concerned about moderating any user generated content and create rules and dedicate resources to achieving that end. An alternative and much better approach is to get other members of that community to vote on comments or images. Sites like ‘Digg’ do this very well. If a user posts an abusive remark it is very quickly voted out of the time line. Recently President Obama launched a website that did just that. Read more about it here.
This influx of user generated content can then be monetised. The Cincinnati Enquirer has a site that does this. CaptureCincinnati.com is a user generated photo sharing site. They have been selling a coffee table book and a DVD of this content and expect it’s popularity to continue to be strong. There could even be the possibility of users ordering photos to make a customised book through the site.
An online community based around a newspaper brand is a fruit ripe for the picking.
An online community based around a newspaper brand is a fruit ripe for the picking. You only have to look at the comments on any news site to see how eager the audience is to get involved.
4 – Personalisation
Some websites get it right but many don’t. Personalisation on the web is huge and is only going to get bigger. Google has a product called ‘iGoogle‘ that let’s you personalise a page. Stuff.co.nz is a news site that lets you order some elements of the page. Underlying these examples is an understanding that the end user has specific interests that they want information about. News site are uniquely positioned to be able to deliver that information in a very targeted way. If they focus on user experience people will flock to their sites.
BBC.co.uk have made an admirable effort with their widgetised home page, taking more than a hint of inspiration from iGoogle. You can drag the sections around, customise them a little, and add more from other areas of the site. However it’s only skin deep. The big leap will be developing this idea to a point where users have control over the whole experience, not just what they find on the home page.
5 – Open up even more
APIs or application programming interfaces are driving the progress of the web, and newspapers need to embrace them. APIs allow third party developers to connect to websites and deliver customised content. I know this sounds counter-intuitive but it is already being done. The New York Times Developer Network allows developers to create applications that deliver their content to the end user.
What The Times has realised, that many other news sources have failed to do, is that what they really have is an information platform – rather than an online newspaper, or even a website. Giving third party developers access to this opens up opportunities to deliver advertisers messages in a more direct way, allowing them to increase the size and value of their user database and cut down the cost of developing their own applications by only partnering with developers that get the formula right.
6 – Change the printed material
The news media industry is in transition, one day printed newspapers will be history. The industry needs to think very carefully about how they structure and deliver printed matter now and in the future. Design is paramount. The customer now has a choice. It’s time to respect that choice.
I think this recent TED talk demonstrates the proposition very well.
The world economy is in state of disarray. As companies fail we can take some small comfort in the fact that these types of events help markets evolve. So what is going to happen to marketing on the internet over the next few years?
Before we dive into that it is worth looking back to other major technological booms and their influence on the marketplace. Electricity and rail were both boom industries when they first hit. They were new and exciting and everybody wanted to get in on the action. in both of these industries there was an initial burst of investment and some people got very rich very quickly. Then the bubble burst, and the many of the companies that had set up to take advantage of these new technologies yet had unsustainable models failed. Standardisation, centralisation and ubiquity followed.
The dot com crash, starting in the year 2000, had much the same effect on internet based business. This has caused the IT industry to mature over the last few years. The economic models are better and there has been a lot of effort devoted to standardisation.
The real difference between the internet based industry and other technological bubbles is that the internet is decentralised by definition. In the case of the dot com crash, the rest of the world’s economy was incredibly buoyant and was able to absorb the impact of that crash. What we are seeing now is that the stage of internet ubiquity is moving incredibly fast. It is most other industries that failing now.
Banking, automotive, retail and media, comprising of print, television and radio are all suffering. These industries are going to have to evolve to survive. It is widely understood that the way the market was interacting with each of these categories was changing, due in large part to the way the market was using the internet. The current environment is only going to speed that process up. In many ways, banking, media, retail, automotive and many other industries were already in trouble. This recession was simply the straw that broke the camels back.
One thing that we do know is that we can’t tell what the world economy is going to look like at the end of this economic slump but it is going to be very very different to what it looks like now; and the internet is going to be at the centre of everything.
Going back to the topic of this article, how is this going to effect internet based marketing? Simple answer; massively.
Over the next few years far more transactions are going to be moving online. With internet’s potential for marketing campaigns to go viral most industries will have to start thinking about sales beyond their own geographic boarders. As a user’s activity can be tracked with far greater accuracy than most conventional media so the definition of what marketing is and the whole advertising industry in general will have to change as well.
There are still a lot of unknown factors about the future of internet marketing. What we do know is that all research suggests that the internet seems to following the famous Moore’s Law. By all estimates it will double in size about every five years. At this rate it will surpass all other media in the very near future.
The future is unmapped, and to many the unknown is terrifying. To others it is the most exciting time to be alive.
Further reading:
Chapter One of ‘E-Marketing’ (Fourth edition) by Judy Strauss, Adel El-Ansary and Raymond Frost
