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