Low friction brands

We used to wonder about the future of advertising in brand marketing – now we are wondering about the future of brands themselves.

In his book about the tech giants of the 20-teens, The Four, Scott Galloway casts Google and Amazon as threatening the very existence of traditional consumer brands:

The insights into consumer behavior Google gleans from 3.5 billion queries each day make this horseman the executioner of traditional brands and media. Your new favorite brand is what Google returns to you in .0000005 second.

Galloway is nothing if not a master of the pithy line – but he backs up his argument with data:

the cost of customer acquisition continues to rise as consumers’ loyalty to brands erodes. You have to keep reacquiring them. In 2004, 47 percent of affluent consumers could name a favorite retail brand; six years later that number dropped to 28 percent. That makes pure e-commerce play increasingly dangerous. Nobody wants to be at the mercy of Google and disloyal consumers.

Of the thirteen firms that have outperformed the S&P five years in a row (yes, there’s just thirteen), only one of them is a consumer brand—Under Armour. Note: it will be off next year’s list. […] Amazon, armed with infinite capital provided by eager investors, is leading a war on brands to starch the margin from brands and deliver it back to the consumer. Death, for brands, has a name … Alexa.

There is supporting evidence for this view in the synchronised slump of Publicis and Unilever shares. The brand-media-advertising complex is looking shakier by the passing week.

At the consumer end of things, take a look at the rise of new consumer tech firms, described in a New York Times article this week – The Hidden Player Spurring a Wave of Cheap Consumer Devices: Amazon.

When you sit in an Uber in Brighton or a Didi in Beijing you will see evidence of this – $20 dash-cameras, car gadgets, at least two smartphones – all costing in total less than the ridiculously high-end luxury UX and glass luxury that might be your iPhone X.

Because of its scale and relative lack of interest in profit – the manufacturers and the consumer are connected by Amazon without it feeling or acting like a middleman in the transaction.

Allen Fung, a general manager at Sunvalley, which owns several upstart consumer tech brands explains that this isn’t about cheap, low quality tech:

It’s not a race to the bottom,” Mr. Fung said. “Sellers are forced to create better products at lower pricing, and sellers who aren’t able to do that just get weeded out.”

Competing and winning on Amazon means more than just cheap though – good customer service is essential part of the equation.

Mr. Fung recently spent a couple of hours providing an in-depth look at how he manages his company’s brands on Amazon. To win a certain product category — portable chargers, say, or children’s night lights — the company is obsessive about monitoring customer feedback, including the rate at which its products are returned. Sunvalley recently hired a team of customer service agents to respond to complaints. It has also hired industrial designers to improve the look of its devices — which also helps it stand out from other commodity devices on Amazon’s results page.

I find these brands, such as Anker to be ones that only really come into my consciousness when I’m looking for something on Amazon. They carry little cachet or style but with their reviews to back them up they are like cousins of the Amazons Basics range – as cheap as it gets but definitely reliable.

Perhaps we can call these low-friction brands, or the children of Amazon. The brand is built in the substance not the surface of their offer. the friction is low, because the investment in “brand” is limited to a logo, a name and a focused customer experience from purchase to product to support.

They are cutting out advertising and branding costs to lower cost and increase value to the consumer. Low-cost used to mean poor quality and zero customer service – because of the power of transparent reviews on Amazon, low-cost means a complete focus on what customers actually want.

Is this a new mode of branding, a utilitarian subset, or a glimpse of a future where brands are what Google Home or Amazon’s Alexa tell you are the best for whatever you need in that moment?

 

 

 

Disinformation content production

Russian disinformation factories of Russia follow the Buzzfeed content model, according to the ever-insightful digital strategist, Rob Blackie. They throw themes and formats at the wall and see what sticks, to paraphrase his jargon free interpretation of the approach.

Buzzfeed doesn’t care whether listicles or explainers are there internet’s sharing drug of choice this week, it’s editors go where the attention signals take them. Similarly, when trying to exacerbate divisions in Europe or the US, online disinformation teams in St Petersburg try out whatever offensive, divisive content they can in all sorts of formats and then do more of the things that work – work at stirring discord in rivals’ societies that is.

Competing for attention is as much the domain of intelligence agencies as news startups these days. Although backing from the Kremlin or alt-right hedge fund owners solves the business model side of the equation for dezinformatsiya peddlers. Buzzfeed has to rely on markets rather than ideologues to keep the lights on.

Buzzfeed blues

A couple of years ago my advice for an organisation completing for attention online was “copy Buzzfeed“. Buzzfeed understands the nature of the web – that you can’t predict what content succeed, but you can run as many experiments as you like and build on successes earlier and faster if you give credits access to the right data.

The editorial content model at Buzzfeed still works – but the company is having to dial down its aversion to advertising in order to make money, even as the digital add market is getting tougher. It’s also cutting 100 jobs this week.

So copy Buzzfeed’s data-supported content approach, but find another business model? That would seem to be the right approach.

Brand marketing: From media to capability 

The facades of empires always look most impressive just before they fall.

The same goes for industrial giants and even whole industries.

The Roman Empire didn’t disappear. Neither did the British. But the centre of power in the world shifted, first chaotically, confusingly and then all of a sudden when the fog of revolution cleared.

Newspapers haven’t disappeared. Record labels haven’t disappeared. But there was a storm of change, a half-decade or so of intense uncertainty in each industry as it was ravaged by digital disruption. And then… new power structures and new masters emerged.

Media companies won’t disappear either, but their place at the centre of the brand marketing system is ending.

To Google and Facebook the advertising revenues, away from the media owners, at an expanding an inexorable rate. To automation and in-house teams and consultancies go the muscle and the influence once held by the media buying agencies.

Image result for scott galloway google and facebook advertising revenue chart

Image: Scott Galloway/L2Insights

The CMO’s closest advisor ten years ago, maybe even five, would have worked for a media agency. Now, it could be a chief digital officer, a management consultant, a creative technologist, even an author or similar species of seer.

The new order has yet to emerge, but the days of the media agency as the centre of the brand marketing system is ending.

Little by little. Then all at once.

The levers that improve the fortunes of a brand – its awareness among target consumers, their proclivity for it at the right moment – are more complex now because consumers are changing their media habits and the way they find and buy things they want. The big lever you used to pull was called media.

Now, as things move faster and more unpredictably, brands want the tech and the know-how to be closer to home, something they can call on in the moment, without a day rate or delays. In-house.

What makes the difference in a global brand marketing organisation isn’t the ability to pull the trigger on media – it’s the capabilities to think and act at the speed of the digital consumer. Capability – from technical and data know-how to a digital mindset – more than media muscle alone, is what will set leading brands apart in the coming decade.

Marketing, then, is moving from media to capability as its focus.

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Keep on moving

Maybe we need to stop thinking of change as something that needs to be managed, an awkward event that comes along every few years and upsets everyone who was getting on just nicely as they were.

But how? I wrote some things about this for CMO.com. Part of the answer lies with data that helps people quickly understand, communicate and display the value of their work:

Reframing and offering data that helps our people explain their value and their status within the organisation could act as an antidote to less useful ways of expressing status—presenteeism (“I am here all the time and super busy”) and attachment to a particular job title or role that may not be useful after the next wave of change hits.

In Cal Newport’s Deep Work, he describes how email and other always-on busy-work can act as a replacement for really valuable work in organisations where the value of what someone does is hard to measure or express:

Busyness as Proxy for Productivity: In the absence of clear indicators of what it means to be productive and valuable in their jobs, many knowledge workers turn back toward an industrial indicator of productivity: doing lots of stuff in a visible manner. This mind-set provides another explanation for the popularity of many depth-destroying behaviours. If you send and answer e-mails at all hours, if you schedule and attend meetings constantly, if you weigh in on instant message systems like Hall within seconds when someone poses a new question, or if you roam your open office bouncing ideas off all whom you encounter—all of these behaviours make you seem busy in a public manner. If you’re using busyness as a proxy for productivity, then these behaviours can seem crucial for convincing yourself and others that you’re doing your job well.?

Could it be that the mystery of the productivity gap – the lag between companies investing in technology and workers’ output increasing – can be explained by email and messaging apps allowing appear-to-be-busy-work while simultaneously tempting us with distractions and ludic loops in social media and games that erode our ability to do the work that would really make us happy and our organisations more successful? Whilst it is too simple to think solely in these terms, there would seem to be a case for further investigation.

With productivity seeming to be an economic and management mystery, perhaps using data to measure value to the individual and the value that the individual creates would help change behaviours. Not to spot where shirking – accidental or otherwise – is happening, but to inspire and reward behaviours that are more useful.

Horowitz on culture

Ben Horowitz has posted a video of his talk on culture change on the A16Z blog. He gets straight to the heart of the matter: Everyone says culture is important, but in terms of advice very few have “more than the platitude” to offer people running companies about what they should do to shape or change their culture.

This is doubly frustrating as a strategist. Strategy is hard, hard work – mis-used, half-used or abused as a discipline, the downtrodden strategist can find themselves at the end of their quest to discover, define and action-plan the hell out of a plan, only to be met with a wry smile from a senior stakeholder and the invocation of Peter Drucker’s observation that “culture eats strategy for breakfast”.

I’ve always held the definition of culture to be “how we get things done around here”. Ben’s working definition is similar but a little more useful in describing what a particular culture is: the collective behaviour of an organisation. Or, as he puts it “What do people do when you aren’t there to give them direction?”

He has some easy questions to test what your culture really is (rather than what the business plan says it is)…

  • Does your company get back to people quickly when they call?
  • Are decisions made using data or intuition more often?
  • Do people turn up on time to things?
  • Are you careful when you are spending company money?
  • Do you always tell the truth to each other, to clients and suppliers?

It’s a useful way of thinking about culture. In getting down to what works in changing culture, Horowitz takes inspiration from the “only successful slave revolution in human history” – the Haitian Revolution of the late 18th and early 19th century). Most cultures of slavery relied on a culture of fear

The four rules are:

  1. Keep what works.
  2. Create shocking rules.
  3. Incorporate people from other cultures at high levels in the organisation.
  4. Make decisions that demonstrate priorities.

These mostly make sense to me – a mix of pragmatism and taking action to affect changes in how people behave. It’s about what you do and what you demonstrate to be important and effective behaviours that make the difference.

I recommend watching the whole presentation. Apart from being useful and fascinating, it’s a masterclass in engaging storytelling and presenting.

Cognitive diversity

I wrote a piece for Huffington Post about the concept of cognitive diversity, and why we should take it seriously in business and wider society. It’s had a good response and I hope to write more on the topic. I was grateful for the chance to pull together my thoughts on the topic and I think there’s more to be said and explored.

Here’s an excerpt:

Leaders need to stop thinking about this as a wellness issue and wrap it in the broader strategic imperative of developing cognitive diversity. A culture that is more accepting of mental health opens up the idea that we need a mix of ways of thinking in our organisations. The same commercial argument that supports diverse gender, ethnicity, age and sexuality stands for accepting people with different kinds of brains and different ways of thinking.

Consider the greater prevalence of people on the Asperger or autism spectrums in technology companies. These companies have embraced difference as a strength and other business would do well to follow suit.

Digital is turning business models on their head, ripping up the play books for whole industries and organisations know they need to innovate. Innovation requires new ways of thinking and a fight against the mediocrity and conformity of groupthink.

For the full post, please visit Huffington Post.

Newspapers and digital transformation

  When Christina Scott, CIO at The Financial Times spoke at Dots 2015 I introduced her with a joke that she was one of the top five CIOs according to an industry journal – number three in fact, so she might want to try harder. I recalled this earlier this year when she was awarded CIO of the Year at the Women in IT Awards 2016 – an incredible achievement, and one earned in large part by her digital transformation efforts. As Information Age put it: 

When Scott joined the Financial Times almost four years ago, technology was not in a good place at the 127-year-old newspaper. Not only was it criticised for not delivering on its goals, it was seen as being subservient – or, at least, a blocker – to the business.

But when she joins News UK – publisher of The Sun and The Times – as its new chief technology officer later this year, she will leave behind an organisation where technology is now seen by stakeholders and the CEO as an important partner to the FT’s success.

Changing how technology is viewed by a business so positively requires more than just delivering solid IT projects – Scott has, in particular, transformed how the FT approaches data – but a complete, organisation-wide cultural change

I’d highly recommend taking a look at the slides and notes of her talk – there’s also audio of her talk on the Brilliant Noise podcast feed. I learned a great deal from working with the FT and from Christina’s talk. Recently I finished a book she mentions, Turn the Ship Around!, a book on devolving leadership and change by a US Navy nuclear submarine commander – I also highly recommend.

What makes Christina’s Dots talk useful and interesting is just how candid she is about how tricky change can be, even in an organisation like the FT, admired for its efforts in digital. For newspapers – which, like the music industry have been one of those sectors to feel the full force of digital disruption over the past 15 years or so – digital transformation isn’t just about getting the right tech in place – it’s about changing the culture. 

I was lucky enough to see how the FT was transforming on the inside. At Brilliant Noise in our strategic consultancy team we designed a programme for FT staff called FT Digital Campus, helping executives in the business think about how digital was affecting them at personal, team and organisational levels. It was working with the company’s excellent learning and development teams and Christina’s strategy team that we honed the idea of the digital mindset – which I spoke about at Learnfest 2015 last year (slides here). 

Often in the past, I’ve seen IT leaders cast as the conservatives, the blockers to change – but leaders like Christina show that it’s not about your job title, it’s about attitude, ability and a will to change organisations for the better. 

Pace: Buzzfeed’s competitive advantage

For the past year or so I have been giving talks for students on Google’s Squared programme (and its sibling-programme Squared Online) about the digital landscape. My talk covers a brief history of the internet, the evolution of media, changing customer behaviours and how media and brands are adapting.

Buzzfeed‘s my primary example of a media company that understands how content works on the web – and that gives brands many clues about how they should think about digital. As a case study Buzzfeed is useful not just because it is so successful, but because it is open about its approach, tools and strategy which is unparalleled.

“Why are they so open?,” one student asked me the other week. “Can’t people just go out there and copy them?”

Fair question. There are two answers:

First, Buzzfeed talks about its strategy actually has a strategy. As Richard Rumelt wrote in Good Strategy/Bad Strategy:

The first natural advantage of good strategy arises because other organizations often don’t have one. And because they don’t expect you to have one either.

The reason many media organisations won’t share their strategy for digital, for their business, is that they don’t really have one. They are concerned with preservation of old business models. Even companies with strong digital capabilities are essentially concerned with creating digital versions of their old businesses (“Wouldn’t it be great if TV worked on the web?”, “Wouldn’t it be great if advertising worked just as well online?”).

The second answer is that Buzzfeed doesn’t need to keep its strategy a secret. Sure, it may not share its code or spreadsheets, but its success doesn’t rely on being the only company ever to understand how to do this – it is about executing at scale faster than anyone else. (And then selling, most likely.)

I’ve seen evidence of this openness and pace very clearly three times in the last year or so.

1. The Andreesen Horowitz investment. While a lot of business media ran snide stories about the high valuation of a website that specialises in vacuous listicles and cat pictures, canny commentators pointed out that the Buzzfeed press release made better reading than the coverage and detailed where the investment would go – video, commercialisation and other interesting areas that would build an ambitious web media company.

2. The POUND announcement. A while back it shared details of its POUND technology which allows Buzzfeed teams to understand how content is spreading across different channels and optimise its efforts accordingly. (Spoiler alert – Facebook delivers volume, but isn’t the whole story of how things go viral.)

3. Embracing Facebook Instant Articles. Buzzfeed used the occasion of its supporting Facebook to re-articulate its business model (see below) in an incredibly compelling and clear way.

Reading the Facebook announcement about Instant Articles last year, it seemed the  quotes from traditional media partners were given through gritted teeth. They knew that they had to work with Facebook to keep reaching the massive audiences there.

Buzzfeed the other hand, really wants to work with Facebook on this because they understand the web as it is. It was the only native web media who was a partner for the launch of Instant Articles, as Adam Tinworth noted.

In a blog post called “Making content for the way people consume media today” (which could itself be a fair summation of the company’s content strategy) Buzzfeed’s publisher, Dao Nguyen and chief of staff, Ashley McCollum, talk about their approach and why Instant Articles fit perfectly with it. They call out four reasons the company is “thrilled” to be working with Facebook:

  1. Good experience for the user.
  2. Data and insights. They can still get the data insights they need for their editorial and
  3. A great business. Facebook helped them build ad units that would work for their “big story unit” approach.

The article also presents a new visualisaton of the company’s business model – the Network Integrated Media Company.

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This isn’t theory for Buzzfeed – it’s what the company is building its core business around. Incumbent media may look at this as an ideal state, something for the digital teams, something to pilot or test – none of which will present a signficant challenge to Buzzfeed’s rapidly building knowledge and capabilities.

So, while smart folks elsewhere will try to use this, while observers like myself will continue to exhort others to “copy Buzzfeed”, most won’t be able to overcome inertia and entropy in their organisations. Buzzfeed meanwhile will be miles down the road ahead of them.