MBS Blog

Contrary to the recessionary trend in the general decline of overall advertising spend, some venues will see an increase. This is particularly true of internet advertising. It reflects the evolution of media enabled by technology, and the ability of companies to precisely target (sounding very military here!!) specific markets efficiently. The bottom line is more advertising bang (effect) for the buck (dollars spent).

The recent news regarding the imminent “death” of the so-called old media outlets such as newspapers, is just the beginning of the story. Next up in the creative destruction process could be other forms of print media, and perhaps television in its current form.

The internet is replacing other forms of media by absorbing, restructuring and repackaging them. Technological innovations…such as the Apple iPhone and other data phones…are allowing the media to be disseminated to a wider audience in a more direct manner. This has opened up new forms of advertising placement which are seeing a shift,  as the article from the Russian Daily,  www.kommersant.com indicates:

Ad Market to Dip in 2009

Demand for advertising will fall 11 percent in 2009, predicts Group M, based on events on November, when all ad deals for next year were placed on hold. According to Group M, the media division of WPP, the world’s largest communications holding, Russian advertisers will cut back their activities in all media except Internet contextual advertising. While total expenditures on advertising in Russia rose 18 percent to 275 billion rubles in 2008, it will fall in 2009 to 244 billion rubles. Group M will publish its report on the coming market within the next few days. 

Projections for Russia are based on countries such as Kazakhstan and Thailand, where the economic crisis began a year or more ago, explained Konstantin Vashentsev, research director for the Maxus agency, part of Group M. He said print and outdoor advertising would be the first to feel the brunt of the crisis. In Thailand, newspapers lost 11 percent of their ad income, and magazines 12 percent, the agency says. Outdoor advertising agencies in Kazakhstan have been forced to lower their prices 30-40 percent. 

The most impressive statistics on the ad market are in the Internet. In spite of Group M expectations of 10-percent growth this year, advertising has increased 55 percent in the first nine months to 4.4-4.5 billion rubles. Outdoor ad operators experienced a 14-percent rise in income, to 33.8-34 billion rubles, in the first three quarters of the year. Russia’s largest television advertiser Video International is also optimistic. It announced yesterday that it had reached an agreement with Reckitt Benckiser, owner of the Calgon, Cillit and Vanish brands and one of Russia’s top ten advertisers (with a budget of over $58.5 million in 2007), for 2009 ad placement.

Technorati Tags: recession, advertising, Video International, Reckitt Benckiser, Calgon, Cillit, Vanish, Kazakhstan, Thailand, Konstantin Vashentsev, Maxus, Ad market, Group M, WPP, Apple iPhone, data phones, Anton Olff, Russian Daily, www.kommersant.com, print media, television, internet, creative destruction process, media, technology, old media, newspapers,

The Age of Anarchy has begun! No…I am not referring to modern terrorism, or the collapse of governments, riots in the streets, or the current “global financial crisis”-though many of these modern events reflect the changes that began in the 20^th century, and are rapidly evolving in the 21^st.  The Age of Anarchy is about the end of the systems and structures that we have known for centuries, if not thousands of years.  

Anarchy is a dirty word. It implies chaos, lack of order, and an uncertain future. As security seeking organisms, we crave a degree of predictability or what we could define as stability in our lives. The question is: when has there ever been a period-other than for short intervals-when this “stability” was the long term norm in any society or civilization? Has the world stayed the same in the last decade? How about in the last twenty years? How about during the lifespan of any individual?

The Age of Anarchy is a measure of the changes that have already occurred, and those that are occurring as you read this. It is:

1.     A rational and self-motivated decoupling of individuals from the current framework-or the matrix of society-into new formations, groups, associations, alliances and relationships. It is not just about the destruction of the old, but rather the overlay of the new on top as new structures are reformed in its wake.  

2.    More creation and destruction of ideas and institutions, and in more rapid fashion.

3.    Flexible power structures that are constantly shifting. These can be governments, corporations, or other “centers” of power. Essentially, the center will never remain static.

4.    Benefits will be more narrowly defined. More importantly, they will be understood or at least available for analysis as transparency will be the byproduct.

5.     Alternative networks will co-exist and in some places, will dominate pre-existing established networks.

6.    The “chaos” will facilitate more ideas, energy, trade, and individual wealth. However, it will also cause greater envy and a backlash from those unable to participate or those on the sidelines…and there are always people who are shut out. This will cause countervailing power structures that will attempt to constrain ‘The Age of Anarchy” in the name of…stability and security.

This is no Francis Fukuyama, “The End of History” thesis . On the contrary-history is just moving on.  

The Age of Anarchy is the collapse of the Old World, its institutions, and the belief systems that were its foundations.

The Age of Anarchy is not some dystopian world full of bomb throwing dreamers…though they will no doubt play a role just as they have in every age…but rather a world where the individual is sovereign, with the power…aided by increasing knowledge and technological power to maintain that sovereignty not by laws, or rights or promises from governments, but by their own means. It is a world where people trade with each other directly, with little interference from intermediaries other than the facilitators who provide the platforms for this evolving trade.

Technology is the means.  The democratization and ever decreasing cost of it, are what is driving “The Age of Anarchy.”

This article from www.cafebabel.com, is an example of how this age is being ushered in, and old structures are rapidly being replaced:

In Europe internet is in, TV is out

Television audiences are diminishing, yet consumers have never been as interested in new content which is switching from one screen to another

TF1, the biggest commercial television channel in France, is having a crisis: the famous eight o’clock news, a veritable institution, has dipped below the symbolic bar of 30% of the market share. For decades, the televised evening news has been THE meeting-point for the large majority of French families. This drop in viewing could just be an anecdote that will be told in better times, but in reality it reveals a change in viewer habits which is well underway. It also hints at related, newer economic models (public revenue).

I watch what I want

Throughout Europe, viewers are faced with a plethora of TV channels. Audiences are diminishing because of the increased division of viewing. We have never before watched so much media, but the trend is now to watch à la carte: I-watch-what-I-want-when-I-want-and-not-what-and-when-it-is-imposed-on-me. So, all the big terrestrial channels are following this trend and proposing or plan to propose online ‘catch up TV’ to allow viewers to watch their favourite programme or series when they choose.

I watch what I want when I want and not what and when it is imposed on me

In the United States, the TiVo system has become very popular. It lets you record programmes and watch them later, even allowing you to flick past the ads. Along the same lines, Video On Demand (VOD) is taking off at great speed throughout Europe, and its catalogues are getting thicker each day. The European Audiovisual Observatory counted no fewer than 250 VOD services in Europe at the end of 2007, one hundred more than the previous year.

TF1 blames Youtube

For the first time in decades, young people are watching less and less television, in favour of the internet (chat, social networking, blogs) and mobile phones. 30% of young people aged eight to fourteen years use the computer at the same time as watching TV. Rather than putting on MTV, you only have to go on Youtube to find music videos. Video broadcast sites have become quite important in the last few years. Youtube, the French-based Dailymotion and co. represent more than a third of the global bandwidth on the web.

In a single year traditional channels have lost 10% of their audience in the 15 to 34 year old age range. Attempts to curb this phenomenon have resulted in the first complaint: TF1 has attacked Dailymotion and Youtube, claiming compensation to the value of 100 million euros. Others have tried to come to agreements, like Canal Plus and Dailymotion. The TF1 group has launched its own online TV service, called Wat TV, to compete with the giants of online video. Another method is Catch up TV: a web site on which the internet surfer can watch TV programmes at any time, in order to adapt to these new media viewing trends.

Tracking viewers

So is the internet the future for TV viewing? In any case, that is the bet that Janus Friis and Niklas Zennstrom are taking. They are famous on the net for having developed Skype and Kazaa, while creating their platform Joost. Joost is an application based on a ‘peer to peer’ system, which allows you to view audiovisual content. The interface allows a high level of interactivity, giving the user the choice of numerous TV programmes and also allowing them to create playlists or even to participate in the programmes by posting comments or voting.

The era of the washing powder company inundating our screens with messages has passed

Interestingly for users, the system allows advertisers to create targeted ads (using the viewing habits and surfing history of the user), and to closely track users (from the moment they see the ad until they go onto the site of the seller). The era of the washing powder company inundating our screens with messages has passed. In the future, they may only be targeting those who are likely to be interested in their product, which will reduce costs and increase the efficiency of their campaigns.

Endless personalisation

Joost merited a huge success since the moment of its launch in May 2007 to the release of its beta version in September 2007. But since then, audiences have not taken off and competitors have emerged: for example,Hulu in August 2007. News Corp and NBC’s Youtube rival (which of course benefits from the content of these shareholders), has targeted audiences which are beginning to strongly attract advertisers. One could also give the example of the combined initiative of Intel and Yahoo to offer new internet applications viewable on your living room TV screen in August 2008. The idea is to display superimposed, personalised widgets over the images on the screen (little windows which deliver information like weather, traffic conditions, TV programmes, and so on).

So, TV as we know it is evolving into a mix of classic television and internet: the interface will resemble that of a traditional TV with more diverse windows of information coming from multiple sources, including a variety of communities which the spectator can join and which can be endlessly personalised.

Anton Olff

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If you want to peer into the future of marketing and advertising, then this article in the U.S. edition of the Wall Street Journal (www.wsj.com) is the vehicle. Although it could be construed that it only reflects a snapshot from an American perspective, the odds are that these modes will be replicated…or perhaps even improved…in emerging markets.

As internet access-particularly broadband-becomes more widespread in Russia, Ukraine for example, then additional avenues for reaching and informing consumers will increase.

Marketing in the World of the Web

Bemes, clouds and MySpace: Welcome to the brave new world of retail.

By TOM HAYES and MICHAEL S. MALONE

Retailers will eventually recover from the consumption tailspin that threatens this holiday season. But quite apart from the recession, there are other, profound changes underway in the retail sector. As the evidence mounts about the power of social networks to reconfigure individual behavior, the crucial question facing industry is: How to leverage this phenomenon into actual profits?

The second generation of Internet (”Web 2.0″) companies such as MySpace, Facebook, Linked/In and YouTube exploded upon the scene three years ago. Today, MySpace and Facebook together have more users than the entire U.S. population; and the online community concept is already becoming a powerful tool for everything from creating customer loyalty, to assistance in product design, to a sounding board for company strategy.

Corporations from IBM to Toyota and Johnson & Johnson have been rushing to establish their own affiliated social networks and bind their customers ever more closely. There isn’t a smart company today that isn’t implementing some kind of online community, wiki or blog strategy.

But companies with millions of members of online communities are now asking: What next? How do we sell them products and services, or mobilize them into massive de facto R&D, manufacturing and sales departments? We have been studying the challenge and have concluded that very few of the traditional techniques of classical marketing (call them Marketing 1.0), or even of eCommerce (Marketing 2.0) will work in the world of social networks. A very different set of tools, concepts and practices is needed. Call it Marketing 3.0. Here are five:

- From loyalty to attention. Before you can win consumer loyalty, you have to capture and reward consumer attention. Old propositions — network television’s tired offer of 22 minutes of canned sitcoms in exchange for eight minutes of untargeted commercials — won’t cut it. Consumers are demanding a better deal.

Some brands are starting to flirt with better exchange rates: Virgin Mobile gives a minute of free phone time for every minute of advertising a customer accepts. Ryan Air recently announced it would offer $15 coach tickets from the U.S. to Europe, subsidized by passenger attention to advertising and in-flight sales pitches.

Smart marketers will of necessity become obsessed with customer attention in the way they once obsessed over customer loyalty. The shrewd brands will create elaborate attention-rewards programs, and incentives to break through the noise and make that critical initial connection.

- From crowds to clouds. Once you get that attention — once you generate heavy traffic to your site, gather a large league of “friends” on MySpace, or spawn a dedicated following on Twitter — how do you monetize the crowd?

Smart brands are turning their crowds into “clouds”: organic, self-forming and often self-governing communities of interest. Companies such as Hewlett-Packard, Frito-Lay and Harley-Davidson use their clouds as feedback loops to get better faster by obtaining good, timely, often brutally honest customer insights. And the members of clouds can become true believers; they don’t just watch your commercials, they make them.

Right now, few companies are emotionally equipped to wring the best benefits of a cloud, because the most valuable voices out there usually belong to the malcontents. In the old model, customer-service departments aimed to placate or jettison disgruntled customers. In the cloud model, the idea is to cultivate and reward them. That’s not an easy transition.

- From places to spaces. Consumers are increasingly organizing themselves into new communities — not just the big generic social communities, but myriad idiosyncratic slices of narrow, passionate interest (i.e., BlackPlanet, Inpowr and MomsCafe).

These new market spaces, or “meganiches,” may seem small, even strange at first. But when they’re efficiently targeted, they can be highly responsive, lucrative and loyal. Well-established meganiche Web sites include Gamefaq.com for video gamers, Dpreview.com for digital photography aficionados, and Howardchui.com dedicated to mobile phone zealots.

With this shift toward self-organization by consumers, national advertising campaigns as we know them will increasingly become a waste of time and money for many companies. The trick for brands is to cohabit social spaces with these consumers. Social media, and its verb form, “friending,” requires entirely new forms of advertising: bottom up instead of top down, personal rather than public, and subtle rather than full frontal.

- From memes to bemes. In the Age of Broadcast, good advertising could occasionally manufacture memes of tremendous social impact. Think of “Where’s the Beef?” or “I can’t believe I ate the whole thing.” If you can’t recall an irresistible or effective turn of phrase of late, it’s because it is exceedingly difficult to spread a meme in today’s fragmented media environment. Marketing 3.0 is now the science of devising and managing directed business memes: call them bemes. Bemes are sent by members of social communities to each other and typically contain a reward or exclusive offer, which, when redeemed, also results in a reward coupon for the sender. This encourages members of social communities to propagate a “viral” ad. One well-documented beme was “The Subservient Chicken” from Burger King.

Brute force marketing won’t work inside social networks. The best online marketing now takes place among people who know and trust each other. Consider how rumors work. Like a rumor, a beme is a bit of useful information that rewards each person who passes it along. Want to be a sensation? Create a beme that consumers willingly accept and share with others.

- From silos to simultaneity. Too many retailers today persist in believing that online shopping is merely a virtual extension of real world shopping. That is a big mistake.

Rather, online and offline need to coexist, and we need to rethink how they relate. For example, to their surprise, companies like BestBuy (which even encourages customers to shop the aisles but buy online from in-store kiosks) and Macy’s are discovering that physical retailing is a perfect way to move units online. That is, the physical world has become the showroom for the virtual realm.

Retailers now must reimagine a world where consumers experience products in stores but ultimately buy them on the Web: Stores are for experiences, the network is for inventories. And what in turn prepares potential customers for what to look for in stores? Online communities.

All of this suggests that Marketing 3.0 is not only different from its predecessors, but actively undermines them. If your marketing program fails to adapt to this new world, it won’t just become irrelevant — it will actually work against you.

Anton Olff

Technorati Tags: marketing, advertising, Wall Street Journal, American perspective, internet, broadband, Russia, Ukraine, MySpace, retail, consumption, social networks, Facebook, Linked/In, Youtube, IBM, Toyota, Johnson & Johnson, R&D, eCommerce, Virgin Mobile, Ryan Aur, Europe, customer loyalty, rewards programs, Hewlett-Packard, Frito-Lay, Harley-Davidson, commercials, social communities, BlackPlanet, Inpowr, MomsCafe, Gamefaq.com, Dpreview.com, Howardchui.com, friending, Burger King, BestBuy, Macys,