It’s hard to explain to someone who didn’t live through it how transformation technology has been. When I was a child a computer was something mysterious. My Dad has managed to work his way up from the shop floor of the shipyard where he worked and into the planning office.
One evening he broad home some computer paper. I was fascinated by the the way the paper hinged on perforations and had tear off side edges that allowed it to be pulled through the printer with plastic sprockets connecting through holes in the paper.
My Dad used to compile and print off work orders using an ICL mainframe computer that was timeshared by all the shipyards that were part of British Shipbuilders.
I used the paper for years for notes and my childhood drawings. It didn’t make me a computer whiz. I never had a computer when I was at school. My school didn’t have a computer lab. I got to use Windows machines a few times in a regional computer labs. I still use what I learned in Excel spreadsheets now.
My experience with computers started with work and eventually bought my own secondhand Mac. Cut and paste completely changed the way I wrote. I got to use internal email working for Corning and internet connectivity when I went to university. One of my friends had a CompuServe account and I was there when he first met his Mexican wife on an online chatroom, years before Tinder.
Leaving college I set up a Yahoo! email address. I only needed to check my email address once a week, which was fortunate as internet access was expensive. I used to go to Liverpool’s cyber cafe with a friend every Saturday and showed him how to use the internet. I would bring any messages that I needed to send pre-written on a floppy disk that also held my CV.
That is a world away from the technology we enjoy now, where we are enveloped by smartphones and constant connectivity. In some ways the rate of change feels as if it has slowed down compared to the last few decades.
Techmeme Ride Home by Techmeme on Apple Podcasts – nice summary of the biggest stories in the tech sector on a 15 minute podcast. Techmeme started as a tech focused news aggregator, but this Techmeme ride home podcast is really handy to listen to on my commute.
FK Twigs x Spike Jonze
HomePod — Welcome Home by Spike Jonze — Apple – FKA Twigs dances along in a mind bending video that’s part LSD trip and part old time Hollywood musical. Just a shame that its advertising the Apple HomePod. More related content here.
Stephen Hawking Voice Generator (play/download) ― LingoJam – kind of like the Speak n Spell you had when you were a kid but more adaptable. Hawking came to view his voice generator as part of his personality. When it was glitching out at the end of its natural life, a tremendous effort was put into replicating its sound for Hawking. The story in itself says a lot about how we relate to technology.
Let’s Go Twitter – I haven’t watched a film at the cinema in a while so am probably way late to this creative. I ended up being really confused by this advert. Visually, its a feast for the eyes, but still confusing. I love Twitter but good lord do they honestly think that advertising will solve what they seem to have diagnosed as a UX issue in on boarding for a new account?
Supermarket chain REWE empowered shoppers to choose the sugar content of its own-brand chocolate pudding. During the campaign, REWE distributed puddings that had 20%, 30%, and 40% less sugar alongside its original formula; the favorite formula (30% won!) will be permanently available for sale at the supermarket. Of course, one could say that there is a bias in the survey design, but this idea of co-creation and a transparent discussion about sugar is a welcome change. via Trendwatching.
Sometimes the most straightforward posts take the longest to write. When I started on this one last week the big question in the minds of people who watch the big advertising conglomerates is are WPP numbers a company problem or an industry problem?
WPP is looking to simplify its structure with a view to becoming a more agile and transparent business from a client perspective.
Or as it was put in the New York Times
WPP plans to accelerate a programme to simplify the business by aligning digital systems, platforms and capabilities to provide bespoke teams for its clients as opposed to the different agencies that currently compete with each other to win contracts.
Other conglomerates, notably Publicis had already started on this path when it started realigning the group under the ‘Power of One’ vision. WPP is bigger with a fuller offering and wider range of specialisms than many of its peers, no one can be under the illusion about the size of this undertaking.
Let’s talk about the tectonic plates shifting around beneath the feet of ALL the large advertising and marketing combines:
Interpublic Group (IPG)
Omnicom
Havas
Publicis
WPP
Dentsu
The tectonic plates are:
The Four
Amazon
The decline of brand marketing
The new competition
The Four
The Four is a label that Professor Scott Galloway put on Apple, Amazon, Google and Facebook. All of whom he considered to be monopolists that created value for their shareholders by putting the ‘real world economy through a shredder.
In this case I would swap out Amazon and Apple for Alibaba and Tencent, but the allusion to a quartet of horsemen portending a digital apocalypse is a useful allegory for the advertising and marketing sector. Amazon deserves a section of its own later.
Galloway’s predictions of their destructive power led to an accurate prediction of WPP’s share price tumble this week. (see the video below)
Correlation does not prove causality however — it doesn’t mean that he got the right numbers for the right reasons.
Depending whom you believe Facebook and Google are responsible for 90 percent of online advertising growth outside of China. This represents a massive concentration of media power. It has implications for the creative and planning functions of an agency. Google and Facebook also run much of the advertising technology that purchase are made on. This has decimated much of the advertising technology sector and made it harder to differentiate media planning and buying based on the technology stack.
L2 came up with this research last year based on Google and Facebook revenue targets. If they hit their numbers they would be treating around 14,193 jobs. But it would mean that the corresponding projected number of jobs lost in the advertising industry would be roughly the equivalent of every man and woman around the world employed at vehicle maker Nissan. And that’s just 2017.
L2’s calculations don’t take into account China where the advertising industry has been digitising at a much faster rate than in the west with the bulk of growth going to companies controlled by Tencent or Alibaba.
Given that most of the agencies within WPP and its peers operate on a billable hour model; this represents a considerable potential loss of value. Since the number of people directly equates to revenue.
The consolidation of online media also means that many clients will look to take back control of their media planning and buying process. The argument goes something along the lines of ‘a consolidated media landscape allows for consolidated buying by a global media trading desk due to the inherent simplicity in suppliers. The data comes from the inhouse data management platform and the media vendor (Facebook, Google, Tencent or Alibaba)‘.
The always on creative needed to fuel this process is also being increasing done in inhouse studios, in partnership with their creative agencies as a kind of hybrid model.
This is what Marc Pritchard meant when he talked about taking back control of Procter & Gamble’s marketing as part of a process to save $1.2bn by 2021. In the latest financial results, WPP claimed that their media buying margins had not suffered – only creative had.
Amazon
At the time of written Jeff Bezos is worth about 112 billion dollars, or just under double the annual defence budget of the UK for 2018. Amazon impacts the advertising and marketing industry in multiple ways.
It is starting to become a big player in online advertising in its own right. I think it would be fair to say that this competition to Google is welcome for the marketing conglomerates judging by Sir Martin Sorrell’s commentary on the likes of CNBC.
Amazon has decimated the high street. Toys R Us, Borders Group, Tower Records, Radio Shack, Maplins are just some of the names which have disappeared. It took a good number of years for people to realise that retailers are locked in a zero sum game when Amazon competes against them. Amazon has unique access to exceptionally cheap capital via its shareholders. There have been companies who have beaten it back like Alibaba’s Taobao and TMall in China. But the company has built up a huge amount of retail power and decimated brands that would have been advertising agency clients.
Amazon has become the default search engine for buying things. This has already displaced up to 20 percent of Google searches depending on whom you believe. It also means that they can place imitation goods and private label goods against branded products.
Amazon has got great data. Amazon has data at the centre of its business what consumers like, what they don’t like, what sells well on marketplace resellers. This has driven a number of the product decisions:
Increasing customer basket sizes
Expanding into new areas by screwing over marketplace resellers
Focusing their efforts on private label products which directly impacts branded products across categories. Amazon Basics is the most obvious private label to consumers, but there are many more where the link isn’t so obvious
Depending on your brand category the answer may be:
Owning your own retail chain like Apple or LVMH’s DFS Group
Direct sales and subscription services have piqued the interest of FMCG brands like Dollar Shave Club
All of this impacts the advertising sector. For more information on the power of Amazon, I can recommend Scott Galloway’s The Four.
The decline of brand marketing
The relative decline of brand marketing has been driven by a number of factors, some of these factors are good and some aren’t.
Let’s talk about the good reasons first of all.
‘Performance marketing’ driving customers directly to a sale has been transformed by the rise of modern online advertising techniques including search advertising and retargeting. Retailers can zero in on intent to a much greater degree than shopping television or direct response print adverts ever could. Google and social media have turned into reputation platforms which then displayed below-the-line spend from the likes of public relations agencies. This was happening at a time when journalist employed by publications have declined; implying a natural progression
At least some consumers can’t be reached through traditional media channels with sufficient frequency for brand advertising. Social media, online video and banner ads make sense as part of an omnichannel approach
The bad reasons:
The focus on ROI rather than profits has meant that a balance longer term brand building and shorter term sales has fallen out of kilter. Marketing then becomes a reductive process. To use a farming analogy; its like moving from arable farming with crop rotation to slash and burn. This is particularly noticeable in the way private equity management has affected fast moving consumer brands under its control. Zero-based budgeting is seen as a source of cost cutting rather than ensuring the efficient and effective use of marketing resources
Digital first strategies – for many marketers this has meant a move from media-neutral, let the communications problem define the channels used to a digital dogma. I make my living with digital media, but I recognise the flexibility required in thinking to deliver an effective strategy
It isn’t about one approach over another but finding balance that works for sales now and in the future.
The new competition
The rise of digital advertising has seen business services expand ways that we couldn’t predict. Advertising agencies like Ogilvy understood the potential for digital early on. Consultancies were focused on systems integration and the use of technologies to change business functions. As they became interconnected internally and externally; the progression into marketing made sense.
A reduction in creative budgets caused marketing agencies to move into areas like service design. Consultancies have looked to inject creativity into their values and skills set by mirroring the kind of acquisition strategy that built the marketing conglomerates.
In the meantime technology companies, notably Adobe have treated marketing like any other business function with a sale conducted at the c-suite level just like Oracle or similar. In many respects this move is understandable as companies use a data management platform (DMP) to derive audience insights and improve their digital marketing. This isn’t vastly different from historic data warehousing and data mining applications.
The enterprise software companies allow large companies to do internally what they have previously asked media agencies to do.
WSJ City | Five signals sent by China’s Anbang takeover – Reining in big spenders (spending capital abroad in an untargeted manner), reduction of systemic financial risk, concern over complex short-term high-yielding wealth products
Opinion | The Tyranny of Convenience – The New York Times – Americans say they prize competition, a proliferation of choices, the little guy. Yet our taste for convenience begets more convenience, through a combination of the economics of scale and the power of habit. The easier it is to use Amazon, the more powerful Amazon becomes — and thus the easier it becomes to use Amazon. Convenience and monopoly seem to be natural bedfellows. – great article by Tim Wu
Burson Cohn & Wolfe – SixtySecondView – like any other business merger the focus will keep the eye off the ball at a time when the PR industry is seeing exceptionally low growth rates. I have friends and former colleagues on both sides of this in both Asia and Europe; so I hope it works out well.
Smart homes and vegetable peelers — Benedict Evans – interesting starting point, but I think that there should be a second layer. Can the intelligence be local (like lighting sensors based on movement and presence in office buildings) or does it need cloud computing? Why can’t smart lightbulbs be at the edge rather than in the cloud. Why does a Nest thermostat need to be in the cloud?
Samsung says it’s going to stop pumping out features and start making devices good instead – BGR – “We developed mobile phones earlier than China, and we were obsessed with being the world’s first and industry’s first rather than thinking about how this innovation would be meaningful to consumers,” Koh said. “Being the first turns out to be meaningless today, and our strategy is to launch something that consumers believe meaningful and valuable at a right time.” – this reads like a slap in the face to Huawei’s approach on innovation and features
A cheap facsimile of the classic Nokia 8110 managed to upstage the launch of of a range of premium Android phones at MWC. Nostalgia is powerful, but I don’t think what’s going on here. I could see the Nokia 8110 as a weekend phone allowing consumers to wind down at the weekend and go cold turkey on the app economy.
I think that the Nokia 8110 shows that the model of a single form factor based on common reference designs is broken. Apple managed to elevate the build quality of all smartphones as contract manufacturers moved towards an armada of CNC machines and advanced manufacturing. But in the process, the common designs, common components and new baseline in product integrity has homogenised and commoditised Android handsets to such a decree that only scale and advertising budgets are differentiators. More related content here.
Hong Kong cinematic sound tracks
Amazing selection of music from the sound tracks of classic kung fu movies over at Shaolin Chamber 36.
Roni Size
Roni Size talks about the music that influenced him. There is a lot of old school breaks that would be familiar to the breakdancing scene in his list of influential works. He also talks about the seminal film Wild Style and its influential soundtrack.
Frank Herbert
Frank Herbert talks about creating the science fiction epic Dune. Dune is an amazing piece of work and hearing Herbert talk about the origins of Dune makes that work even more impressive if that was possible.
Xinyuan Wang
digitalethnography | Field Note Painting Booklet – done by Xinyuan Wang, a UCL social anthroplogist in a lower tier Chinese city. Ms Wang wrote a really good monograph on social media in industrial China. She captures a moment in time that is invaluable for marketers looking at China and trying to understand the mobile environment.
Why the iPhone Is Losing Out to Chinese Devices in Asia – WSJ – Xiaomi has an edge in many markets because it can customize for each country while Apple creates the same products for everyone, said Jai Mani, Xiaomi’s product manager for India. – the rise of Chinese devices in Asia are picking up the kind of clients that Apple doesn’t want. More related content here.
Secret HSBC memo turns heat on Topshop boss Philip Green | News | The Sunday Times – this makes a lot of sense, even more so than when Green started discussions two years ago. From a historic point of view HSBC helped KS Li and his counterparts buy out many of the then British owned conglomerates in colonial Hong Kong of the 1970s. It seems natural to have them help find Chinese buyers for his British interests. Hong Kong’s Hutchison owns mobile network (including shops) 3. It also owns Super Drug through its Watson’s subsidiary. House of Fraser also has a Chinese owner. Topshop trades on the UK being cool and trendy a la Rimmel’s iconic “Get the London look” – Brexit diminishes it with its xenophobic inward look. Domestic sales still outweigh overseas sales, I can understand why he wants out, especially if the business is leveraged
Assembly of ‘Aibo’ Robot Dog (1) | NIKKEI XTECH – Nikkei have a unique take on the teardown; working with a Sony engineer to document the process of assembling the latest generation of Aibo robotic dog. It quickly comes across where your money goes as it is fiendishly complicated to build
