Opportunities for PR and brand communications from 2017 onwards

2016 has been a watershed year in the western world. Political forces that were simmering, but previously untapped manifested themselves in populist victories. Political norms that were common currency for the past two decades have been brought into question and there will be societal impacts and changes in consumer tastes.

Businesses are being buffeted by these changes. In the case of the UK; supply chains will be re-engineered over the next two years to address the country’s departure from the European economic bloc. Most companies that I have spoken to are working on the assumption of the hardest Brexit:

  • No trade agreement with the EU
  • No customs union with the EU
  • No passporting for services such as banking
  • No agreement on storage of EU or US personal data in the UK
  • No free movement of EU talent
  • Problems with the WTO as countries look to settle scores like ownership of the Falkland Islands and Gibraltar

This presents communications teams with opportunities and challenges:

  • There will be new regulatory and legal environments for companies to navigate
  • Corporate and social responsibility programmes will need to be recalibrated
  • There will be change management as jobs are moved abroad and facilities closed
  • Brands will have to work smarter with less
  • Consumer data based systems will need to be redesigned to meet the new legal and country boundaries imposed upon it
  • UK businesses will need to prepare for permanent handicap on their profits

There is also a wave of change for consumer businesses. Whole categories of products – carbonated drinks, cereals and spreads are losing market share to substitute products. This is hitting the large FMCG (fast-moving consumer goods) brands including:

  • Unilever
  • Coca-Cola
  • General Mills
  • Nestle
  • Kelloggs

Consumer brands have looked to counteract this in a number of ways:

  • Putting their spend where it will do the best work by using zero-based budgeting (ZBB)
  • Restructuring brand architectures – moving away from preventing brand damage through brand extension to brand consolidation to maximise the benefit of marketing spend. Coca-Cola is a prime example of this
  • Brand architecture will create a tension in the organisation. On the one hand the societal norm will be for local brands rather than global, on the other you have the corporate desire to cut and simplify to maintain margins. Whilst some companies may kill brands, others may sell them on to local companies, which will then try to squeeze as much value out of the brand equity as they can
  • Move away from micro-targeting to ‘smart’ mass-marketing – the key exponent of this is Byron Sharp at the Ehrenberg-Bass Institute at the University of South Australia

Opportunities in terms of new products that communications agencies can offer

  • Internal communications programme – site shutdown or company shutdown as a product
  • CSR audit as product
  • CRM (customer relationship management) audit as product

Focus on clients based on their strategic intent if they are implementing ZBB, here’s a quick guide I did earlier this year.

Businesses have six paths to growth
Zero-Based Budgeting

Path versus agency discipline
Zero-Based Budgeting

If your client programme lies in parts of the spectrum where you won’t benefit, then as an agency you have a few choices:

  • Identify and grow your business within other brands of a clients business
  • Look at rivals for opportunities
  • Treat the current business as a cash cow

A second aspect of risk analysis is brand consolidation. There is not much that an agency can do with the change in brand architecture like Coca-Cola. The clients are likely to cut costs.

A clearer source of risk will be ‘local gems’ this is a consumer brand that is only sold in one country (it may be known under a different name in other countries). These brands are likely to be closed down or sold on, particularly if they are in declining growth sectors such as margarine spreads, cereals or carbonated drinks.

If you have only started planning about looking for replacement brands in your portfolio, it may already be too late. Best case scenario is that the brand is bought by a local FMCG company.

Looking at previous brand sales like Radion washing powder as an example the acquirers will not support it with significant marketing spend. Instead, they will look to maximise their investment by mining existing brand loyalty and awareness.  Depending on the product category and the target audience will depend on how fast inevitable brand decline will be.

Either way it is not a particularly attractive piece of business or large or medium-sized agencies. An incumbent agency will have to repitch for the work as it will fall outside the purview of existing contracts and business relationships.

Advertising agencies have a head start in terms of their planners having a clear grip on what Sharp’s concept of smart mass marketing means for their discipline. PR agencies need to articulate this and reflect it in their account planning. They are still struggling to get to grips with social and are championing concepts like ‘micro-influencers’; that don’t fit into Sharp’s world view. They are effectively burning client respect.

PR agencies need to think much more in terms of programme audience reach and repetition for audiences, rather than the current focus on influence.

Links of the day | 在网上找到

Suddenly, Corporate Values Might Come With A High Price – Paul Holmes on corporate and social responsibility in a populist political environment

U.S. wearables market is doing much worse than expected | TechCrunch – no consumer use case

Baidu Plans $1 Billion IPO for Video-Streaming Site iQiyi.com – WSJ – (paywall) value nominally at $5bn

WeChat Update: Add Stickers To Your Pics

Merry Christmas

Have a happy and restful Christmas

Muji Xmas

Why Amazon wins?

Much has been written about how Amazon has:

  • Amazing data and uses it as a way to try and better understand intent
  • It has access to large amounts of capital so it can scale internationally and defeat local e-tailing champions
  • Amazing logistics foot print to satisfy consumer needs quickly

But one of the biggest factors in Amazon’s success is the quality of competition that it often faces.

Let me give you an example that happened to me this week. I have kept the vendor’s name anonymous because they are no worse than many other e-tailers – and they make damn fine iPhone cases.

I got an iPhone 7 Plus when the phone first came out and ordered a protective case from my usual preferred case manufacturer. I ordered direct because Amazon hadn’t got it in stock at the time. The supplier sent me two cases instead of one – probably an order fulfilment error.

I then get an email from this week:

Keep your Pixel and Pixel XL protected and pristine. XXXX Certified XXXX Protection

Protect your Google Pixel and Google Pixel XL with XXXX Certified XXXX Protection.

Commute with Confidence with our Commuter Series or choose Rugged Daily Defence with our Defender Series.

Shop Google Pixel Shop Google Pixel XL

Let’s think about this for a moment. They have me buying a cover for an iPhone 7 Plus. The average consumer replaces their phone probably on a two to three year cycle

Citigroup estimates the phone-replacement cycle will stretch to 29 months for the first half of 2016, up from 28 months in the fourth quarter of 2015 and the typical range of 24 to 26 months seen during the two prior years.

(Wall Street Journal – Americans Keep Their Cellphones Longer)

They have a number of pieces of information about me:

  • Date of purchase
  • Model of phone that I purchased a case for
  • Colour combination that I selected
  • Gender (based on my title)
  • Address
  • Email

They will also know information about the phone model itself since they make an Apple certified product:

  • Dimensions
  • Date of release

They also know based on previous Apple launches that this handset is likely to be in the product line for two years, one year as the flag ship product and the next as a cheaper line.

So why did they decide to send me the Google Pixel email?

I can think of three likely hypothesises:

  1. The company’s email marketers don’t have access to information that could be used for targeting – good for privacy, not so good for successful email marketing campaigns
  2. The email marketers had the data but didn’t bother to use it – poor work
  3. The email marketers viewed the Pixel as a much buy device and considered me a likely purchaser – their opinion would be at odds with reviews of the Pixel

Using Occam’s razor the answer is likely to be one or two. It’s not that hard for Amazon to win with competition like this.

Five for Friday | 五日(星期五)

This week has been all about 2017. Internal team planning, planning for client activity and receiving forecasts from various different organisations

Marketing Week’s Mark Ritson on the important things coming out of 2016

Inspiration for a successful 2017 – Kantar Worldpanel – good for consumer marketers

James Whatley and Marshall Manson at Ogilvy

JWT’s annual 100 trends

Future Today Institute

Links of the day | 在网上找到

Congressional group says backdoor laws would do more harm than good – The Verge – smarter approach to cryptography than many politicians

Apple Extends Discounts on USB-C Adapters and Accessories Until March 31 – Mac Rumors – the MacBook Pro disaster continues

The Methbot operation | Whiteops – video ad fraud business worth $3-5m/day (PDF)

Vine Update – Medium – Vine becomes a feature

Things that made my day last week

The order on things being written and posted on this blog has been scrambled up a bit and I ended up spent some time in Madrid with nothing to show for it as my SD card from my camera disappeared – but the Hotel Ritz is nice and the Museo Naval is well worth a visit.

Red Bull and Jason Paul put together a film with Munich Airport that owes as much to Harold Lloyd as the cool of free running

I was stunned by the simplicity of Benedetto Bufalino’s ready-mix concrete truck as disco ball. This wasn’t for a brand but a crazy piece of art

With a lack of an iPod, I have been listening to Monki’s bootleg bundle a lot. I can also recommend her mix for the Fabric Live series

I haven’t bothered with football videos over the past year, but this one from Nike shows why they do so well. Great concept and storytelling

Maurice Lévy sent Publicis Groupe employees his last Christmas message as CEO

Links of the day | 在网上找到

Apple Explores Dual-SIM Capability in iPhones, Patent Filing Reveals – Slashdot – I’d have been more surprised if they didn’t look at it

Luxury Daily – Unwed, digitally savvy millennials affecting luxury jewellery business – and the luxury digital devices generally look hideous

Tencent: Inside China’s ‘killer app’ factory | FT – (paywall)

China e-sports industry entering golden age, says IDC | DigiTimes – (paywall)

Men, Please Stop Manthreading | Gizmodo – errr no, this isn’t a gender issue despite the weak rationale

WSJ City – US Businesses Reconsider UK and EU Investment – interesting reading; serious implications for agencies who act as a hub or work on global briefs

As Brexit approaches, signs of a gathering economic storm for Britain – The Washington Post – “I can’t see any circumstance in which we’re going to get a good deal,” he said, noting the E.U.’s incentive to deter future defections by driving a hard bargain with Britain. “The U.K. is going to come out of this very badly. The impact hasn’t even started yet.” 

The Sunk Cost Fallacy and the Future of Silicon Valley — The Information – an oblique criticism of Silicon Valley no longer being known for ‘hard’ innovation (paywall)

Freedom of Press Foundation Asks Canon, Nikon, and Other Camera Manufacturers to Sell Encrypted Cameras | WIRED – another issue is that cameras are more likely consumer electronics than computers – firmware updates are often not used and cameras have a long life

Harvard Business Review – whiteboard videos on Facebook – apparently successful tactics with roughly 100,000 views per video

Protecting the Apple iWatch Standby screenshot as a trademark Device in China? Sorry not possible. – too complex to be protected as a trademark: WTF

Finding New Ways To Be Fearless | Media Post – content before channel – interesting take I would see them as having equal footing

Lessons from the Kingston Smith’s annual agency profitably survey | Chris Merrington | Pulse | LinkedIn – The top 30 independent digital agencies’ margin declined to 4.9%. 30% of them are making a loss

China, new economies driving ad market growth: GroupM | Advertising | Campaign Asia – China continues to exceed expectations, with GroupM China revising upwards its initial forecast of 6.6 percent growth to 7.8 percent. This contrasts with the Magna report, released yesterday by IPG Mediabrands, which initially forecast China’s ad market growth at 8.4 percent and revised it down to 7.2 percent

Major cut in EU migrants risks long-term damage to UK economy – report | The Guardian – and this all doesn’t seem to be taking into account automation and foreign competition reducing demand…

Case study: 3 years, 5M WeChat followers, and 300M RMB valuation – Uncle Tongdao, a WeChat Official Account about astrology just had an exit at a RMB 300 million valuation – character licensing. LINE (Brown and Cony) and WeChat are the platforms for the new Hello Kitty or Mickey Mouse

Will Hong Kong’s OOCL be eaten up by the world’s biggest container lines? | Hongkong Business – expect further consolidation, Hamburg Sud has been acquired by Mearsk.

MacBook Pro Launch: Perplexing | MondayNote – quite shocking review by Jean-Louis Gassée of his experience with the new MacBook Pro – less than 5 hours of battery life, buggy peripherals and software glitches don’t inspire confidence

Outside the London bubble

A quick trip north provided me with a couple of consumer insights from outside the London bubble.

Business winners

Discount supermarkets – last time I was in Aldi and Lidl they started featuring brands we’d recognise like Kelloggs cereals. This time there has been a move away from recognised brands.

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Instead, there has been a drive on premium private label products at discount retailers. Consumers have been primed by the likes of Sainsbury’s, Tesco’s Finest and Marks & Spencers. Specially Selected is Aldi’s take on premium private label.

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It is largely indistinguishable from other supermarket premium offerings.  Shoulder surfing at the checkout allowed me to see premium products sprinkled throughout other people’s trolleys.

Private cab consolidation – Delta Cars was one of a number of private hire cab companies in the Merseyside area. Taking a leaf out of Uber’s book, they now have their own app.
delta

They also have scale and muscle, a number of prominent out-of-home display sites were covered with ads for their app and looking for new drivers. In an area of high unemployment there was a veritable war for ‘talent’.

Secondhand phone shops – in Birkenhead town centre there were four resellers of pre-owned mobile phones. iPhones seemed to do well mainly because they were built to last. Feature phones commanded a premium in comparison to what you got for the the money in a smartphone.

zanco fly

These shops also sold really small Chinese-OEM branded GSM phones.  A quick Google shows that they are used by prisoners because they can be hidden on, or in their body.
Untitled

Entrepreneurs have made this connection obvious by branding their device HMP – complete with a crown. British prisons are known by the suffix HMP. For instance, HMP Pentonville.

These secondhand stores also seemed to do a decent trade in pre-owned DVD and to a lesser extent Blu-Ray discs. My Dad didn’t know any people at work who had Netflix. I am going to bring the Apple TV back  one time, just to see how they get on with it.

Bargain and close-out stores – B&M and Home Bargains are two local brands that have a mix of discounted products from close out DVDs and packaged consumer goods. They often have special pack sizes for items like breakfast cereal. They move away from the Poundland format however also selling electronics goods since they are not restricted to the £1 price. These stores seemed to have the most foot traffic of any I’d seen.

Pound Bakery versus McDonalds. The Pound Bakery and Pound Cafe provide Greggs-type fodder. The interiors are bright but comfortable. They seem to have stolen at least some foot traffic from the local McDonalds.

Secondhand clothing – just off the main shopping area was a shop that bought  clothing by weight. It was sorted through – a select few items going on to be sold for vintage, the rest going to be sold abroad or recycled for industrial rags. Trade had been particularly brisk as people wanted money for Christmas. In general, the quality of the haul was disappointing as overseas buyers were not interested in H&M or Primark.

Business losers

Petrol stations – there was surprisingly little night time traffic. Consumers are reining in non-essential journeys. Which then begs the question is M&S Food’s move on to the garage forecourt a wise move? This also had implications for night life since people were going out less.

Cultural winners

  • Can’t pay, won’t pay – other people’s misery seemed to be popular entertainment.
  • Shopping television – in particular Idealworld seemed to be a popular back drop instead of talk radio. Talk radio was thought to be ‘too angry’ since Brexit

 

Links of the day | 在网上找到

YouGov | The risk of Britain being attacked by another country in the next 30 years; Websites used/ trusted – website data is interesting but I bet the self reporting percentages aren’t backed up by observed behaviour

AI Winter Isn’t Coming – Despite plenty of hype and frantic investment, a leading artificial intelligence expert says hardware advances will keep AI breakthroughs coming

Perfecting Cross-Pollination | HBR – research on more than 17,000 patents suggests that the financial value of the innovations resulting from such cross-pollination is lower, on average, than the value of those that come out of more conventional, siloed approaches. In other words, as the distance between the team members’ fields or disciplines increases, the overall quality of their innovations falls. But my research also suggests that the breakthroughs that do arise from such multidisciplinary work, though extremely rare, are frequently of unusually high value—superior to the best innovations achieved by conventional approaches

OONI – urandom.pcap: Belarus (finally) bans Tor – double edged sword. On one hand good for a government that wants oversight like Investigatory Powers act; on the other Tor users flag themselves interesting by their use of it. I would expect an MP driven ban in the UK at some point

Europe Presses American Tech Companies to Tackle Hate Speech – The New York Times – only 40 percent of material flagged as possible hate speech online (albeit in a relatively small sample of 600 posts, videos and other online material) had been reviewed by the Silicon Valley companies within 24 hours. Of those 600 postings, just over a quarter was eventually taken down

Vice Media Forms Alliance With Guardian Newspaper | Variety – interesting move in terms of media

Tour guides accuse South Korean departmental store of exploiting expatriates | SCMP – interesting given who Chinese shoppers are overwhelming large parts of central Seoul

Apple (AAPL) is opening up a bit on the state of its AI research — Quartz – still governed by Apple’s focus on computing power per watt

Above Avalon: Milking the iPhone – interesting analysis

Mr. Robot Killed the Hollywood Hacker | MIT Technology Review – a certain amount of conceit as the author is a sci-fi writer, but a great read

iPhone Camera Quality: Flickr Data Shows How Insanely Popular It Is | BGR – interesting that Flickr skews towards iPhone users

The UK’s Investigatory Powers Act allows the State to tell lies in court • The Register – Section 56(1)(b) creates a legally guaranteed ability – nay, duty – to lie about even the potential for State hacking to take place, and to tell juries a wholly fictitious story about the true origins of hacked material used against defendants in order to secure criminal convictions. This is incredibly dangerous. Even if you know that the story being told in court is false, you and your legal representatives are now banned from being able to question those falsehoods and cast doubt upon the prosecution story. 

Potentially, you could be legally bound to go along with lies told in court about your communications – lies told by people whose sole task is to weave a story that will get you sent to prison or fined thousands of pounds.

Let’s Face It: Smartwatches Are Dead | Variety – interesting that Variety covered this. Apple is king of a market that is at best immature, at worst dead in the water. Of course all this could change in an instant with a compelling use case from a killer app – rather like Apple’s LaserWriter and Aldus’ PageMaker software

VIDEO: Embattled LeEco Sued in HK as Bills Pile Up | Young’s China Business – fascinating rise and probable fall.

Tokyo Thrift special: ‘It’s a Sony’ exhibit shows off decades of decadent design – The Verge – basically a love letter to Sony’s product design and obsession for engineering

Things that made my day last week

A much delayed post on the things that most caught my eye last week

Porsche want to stop the peculiarly British mangling of their name

Creative agency ZAK created a parody of 1980s toy advert as a comment on the political upsets of 2016

A Polish ad, that schools John Lewis on how to make the signature Christmas ad

Japan’s love for acid house, from adverts to anime | Dazed Digital – some of this is nuts, but in a good way

FCB Seoul used ASMR to emphasise the experience of eating the Ritz crackers

My 10 most popular (trafficked) blog posts of 2016

These are the ten most trafficked posts that I wrote in 2016, in reverse order:

Links of the day | 在网上找到

Creative Hub – Facebook – great ad examples

‘Millennials’ is a useless term | Jed Hallam | Pulse | LinkedIn – interesting that this had to be written. Whatever happened to tribes?

No Price Like Home: Big Spenders Reappear in China — The Fashion Law – sales picking up in Mainland China

The taxi unicorn’s new clothes | FT Alphaville – is sadly symptomatic of the emperor’s new clothes groupthink dominating the sector. Though it does explain the sector’s obsession with popularising the idea that public transport can be done away with. (Less investment in public transport will lead to fewer competitively priced alternatives, empowering the Uber monopoly in the long run)

The Eurodollar Market: It All Starts Here | Zero Hedge – this is what keeps the UK afloat

2017: just where is it all going?

We are entering a period of turbulence in much of the world and I suspect that there are going to be more changes over the coming years.

Smart watches still won’t be as big as fitness trackers. Fitness trackers will peak.

  • Smart watches are struggling for a reason to purchase. Apple’s Watch 2 was the product that they should have realised the first time around. It was fixing the bugs in the first version. But there is still no reason to purchase
  • Android Wear supporters seem to have laid off on development. Huawei Watches are now available for half the list price. Lenovo has laid its Android Wear ambitions aside.
  • Fitness trackers seem to have done a very good job at reaching health fanatics. However the market will soon become driven by replacement devices. There is a constant tension between buying a cheap device which requires low amounts of purchase consideration versus moderately expensive devices that competes agains the smartphone doing the job. It is interesting that Jawbone could not find a buyer and Pebble was sold to Fitbit

If there is a common content format and a rise in content (beyond brand marketing) then VR could take off (and hammer TV sales in the process – at least in single user situations. I still think that VR googles could act as a TV substitute for single person households, shared living and student dorms. When content is time-shifted or binge streamed you can get by without a TV tuner.

The key driver would be the high cost of housing. If you are a hipster living in a small bedsit, having a large TV is a waste of your precious space.

The ‘next billion’ smartphone users in the developing world won’t get their handsets as fast as everyone thinks. Why?

  • Much of the supply will come from small no-name brands. These brands currently are on razor thin margins. Smartphone manufacturers are being shaken out
  • Razor thin margins are crushing key component manufacturers, those that are left will prioritise big customers first
  • The Hanjin Shipping meltdown will hit small suppliers with valuable cashflow tied up in containers that can’t move. Hanjin is expected to precipitate failure in other shipping businesses as the industry still has massive over-capacity and financial institutions will be less interested in helping out distressed businesses. Mearsk’s acquisition of Hamburg Sud is a further sign of this
  • Increasing nationalism in key markets like Indonesia and India is requiring local investment in production lines and component sourcing. This will take the focus away from addressing other markets and likely temporarily rise manufacturing costs
  • Declining economic outlook in mature markets including China, the US and EU will affect the capital available to fund speedy expansion

Leaks about Uber’s finances and rising interest rates are likely to drive increased scrutiny of Silicon Valley businesses. Uber’s finances sound eerily like the investment money pits prevalent.

Media investment is going to pour into the Alt-Right at a VC level. Its been a void that they’ve left up to now. Given that many of the markets that they’ve tried to disrupt are going nowhere, expect Breitbart and Co. to start seeing VC funded competition.