One of the presentations from Steve Sammartino, Planning and Integration Director at Grey, talked about how digital was changing business forever. He presented an overview of some of the insights from the 2012 results from the Eye on Australia research which is now in its 21st year.
I’ve outlined the key take outs and some of the examples he used in his great presentation. Many of the examples Steve talked about is similar to what Scott Stratten, author of UnMarketing writes about but it is great to get an Australian perspective that is backed up by research.
Media Fragmentation is Real
Fragmentation of media, specifically TV, will mean that it will be harder and more expensive to reach specific audiences. People can go online and subscribe to the discovery channel all today. The moment this happens the days of buying eyeballs are over forever. Whilst we could all argue that the pros and cons of people not being exposed to broader messages and becoming more insular, the implications are that building brand channels will become more important in the future.
In fact, it is expected to be so important, that is quite feasible that brands might spend over $2 million to buy a brand channel in the future.
In using the example of coffee, it was mentioned how the marketing of coffee has changed from being about 43 beans to being much more. Coffee has become so much more important. These days there is so much knowledge and emotion about coffee.
A coffee channel could be created by someone who is brilliant about coffee. They could blog about the best beans, how to make coffee, which machines are better and where to get the best coffee and allow other people with similar interests to interact. By building up this asset, in about 5-10 years from now, Nestle or another larger coffee manufacturer may spend $2m to buy a brand channel just like this.
Fundamentally, we are moving away from the idiot box to the smart box where we want to interact. We need to start how we can build a brand channel that people want to interact with. You need to start with a brand brand channel other wise you are going to have to buy one.
Moving from Interruption Marketing to Permission Marketing
We need to be mindful of not spamming people in a social network. It doesn’t make any sense. We need to consider how you would talk in the analogue world and apply it in the digital work.
We are now using technology to facilitate conversation. The web is essentially human because it is still run by humans so has an interesting way of working things out.
Imagine if a brand just walked up to you and asked you if you liked cornflakes. How would you feel? You need to move beyond selling and asking these questions and be part of the conversation.
There has been a lot of noise about the social graph, however the social graph is not the answer, it’s our interest graph.
The key is to think of about a person’s layer of interest. How you can operate one layer outside of what you sell? For example, if you think of a cereal brand, it could be about nutrition or health or something else.
The Key Issue is We Can All Make Things
Consumers know that company’s can make most most stuff pretty well. Now everyone can make everything. We can all make stuff. Either that or it is outsourced.
People are not interested in what the brand makes and how it does it, they are interested in what the brand stands for and how it will augment our lifestyle. We need to be thinking about how can we augment people’s lifestyles. Its all about what our brand or company augments what people want out of life.
Smart Phones Technology Has Changed Our Lives
Australia have the highest penetration of iphones out of any country in the world. We are rapid technology adopters. If you think about why this is so, you will notice that our smartphones keep us connected. They allow us to talk. They talk back (with Siri). They are connected to Google. You can search on them. They know where we are located to the nearest meter as well as the longitude and the latitude or where we are. They know how hot it is, when it is going to rain and what the temperature is outside. This technology is in our pocket. It’s almost part of our bodies. It’s really important to us.
Our adoption of smart phones is proof to us that this revolution we are going through is a legitimate one.
Now everyone has the power to say something and be heard. If technology is becoming more human, brands need to think about how they can be more human.
Showing Leadership is Very Important.
People want to know how can a brand lead us into the future. What we need to do today is preemptive story telling. Brands need to tell a picture of they can augment our lifestyle. This is where we are going. Now we live in an audience environment, now we live in a crowd-source environment, and we can go to YouTube.
Brands need to say this is where we want to go. Tell us how to do it. Help us shape our brand strategy and ask people how they can do that.
This is a major shift because in the past, brands talked to consumers. Many don’t trust their consumers and don’t ask them.
The benefits of asking is they get a sense of ownership. They get to see the message. They want to feel part of the brand. It’s not about selling something, its about being part of the tribe.
The key for brands and business is to be involved. Brands need to become more human. They have to have an opinion because the revolution is human.
Apps are the Next Revolution
Apps are the next evolution in software. The app needs to actually interact with the consumer. For example, there is a surfing app that lets you put in conditions when you like to surf (think temperature, wave height, high tide, water temperature, days you like to surf) and notifies you when those perfect conditions are there.
The app interacts with each person differently depending on the data you out into it. People want apps to change with them.
We need to be thinking about how do we design something that changes based on how someone interacts with it. Don’t think about how my app can work on a small screen, think about how you make an app that changes with you.
We Need to Have Mobile Commerce.
When we build websites now, we need to think about how things work on mobile – even to the point of thinking of starting with the mobile version first and then gong out to how it works on a larger screen. We need to have mobile commerce solutions and think small screen out. This is because it is the phone that people touch 50 times a day. This is a personal thing.
We need to think about websites being about So Lo Mo meaning is it Social, is it Local and is it Mobile. We can also add Me to the term so it becomes about “me.”
We need to think about how does my app or digital deliver that to the people I want to talk to. Apps are really a me software.
Consumers are Uninspired By Whats Happening In Retail
Over 51% of consumers don’t have a favorite retailer. Ten years ago 80% had a favorite retailer. This is a big change and what is driving it that all consumers ever see are red and white tickets flagging the word “sale.” Some genius thought pricing was the main thing driving sales in retail.
The issue is that if price is what you are selling on, I can get it cheaper every single time on the web and I don’t have to fight through traffic or pay for parking and I don’t have to forget my umbrella and get caught in the rain. People are uninspired with retail and they know they have been getting a raw deal for a long time. Their first port of call will be online unless its fresh produce.
If you are selling online, think about how you can hack the system. People are starting to hack the retail system because they are so uninspired and so unhappy. All you need to do is look at Groupon and Scoupon and group buying sites.
A perfect example of this was a lady in London who wanted a new Ford Focus. She set up a website looking for other people who also wanted to buy a Ford Focus. She aggregated 30 other Ford Focus buyers and worked out a deal so they got the best price possible.
The Next Millennium is Where Customers Have All the Power.
People are hating the retail system. The Eye on Australia research revealed is that 75% of consumers are unhappy with the power that Coles and Woolworth have got.
They see the power as anti-trust. The only reason the ACCC hasn’t got hold of it is because they are two of the 10 biggest companies in Australia and our superannuation relies on it. Its an absolute monopoly power that the Government is just letting happen.
Its even getting to the point where food security becomes an issue. If we take an example of milk, everyone is enjoying their $1 or $2 milk. Terrific – that’s great. However, in five years from now, you will be drinking milk from China because their won’t be a dairy industry. You think that farmer wants to get up and milk cows and do that stuff at 5am in the morning to make no money and get into debt just so we can fill Coles and Woolworths shelves.
The Supply Chain Is Breaking Down
The supply chain is getting broken down because of the retail power. This is not a good thing. Consumers know it. They know because they buy their groceries for $150 per week, then$160 per week and then $170 per week. They know their prices are going up. Sure there is a couple of loss leaders in there but consumers are not getting tricked.
Suppliers need to go hard against Coles and Woolworths because they are going head up against the supplier. This is because for most manufacturers, their biggest customer is also their biggest competitor. So the people you are selling to are making the same products you make and they are trying to put you out of business.
The question then becomes how can FMCG players get together and aggregate to serve the retail system. How can you hack the system in a digital world? Consumers are asking for it. In fact, 75% of them are saying that they don’t like Coles and Woolworths and don’t trust them. So the opportunity is there to take it.
We Will Be Wearing The Web
We are kind of already wearing the web because of our smart phones, however reason we will be wearing the web is because transmitter microchips are getting cheaper. If we think about the cost of memory it has become cheaper and cheaper. In the year 2000, 1Gb of memory was worth $13, now in 2012 its worth 0.3 of 1 cent. RFIDs, microchip sensors are going to be in everything from what we wear to what we do and even on our cereal packets.
We will be able to know whats in our fridge & cupboard and if we know what’s in our regular shopping list we can auto generate a shopping list. That’s the opportunity for everyone in retail. They need to work out a system to use that with a smart phone so they can deliver a product straight to the home. That’s where we are going.
We will be wearing the web. We already know that Nike can track how far you run.
Why hasn’t MBF or Medibank or one of these health insurers said terrific, if you run 10kms in a month, we can give you a discount at the end of the year on your health insurance. This is because we know that cardio health is one of the biggest reasons why people drop of the perch and we know because it costs us a lot of money. If you are fitter then you will be lower risk and we will reward you. That’s a mash up that we can be doing.
We Need to Reinvent
There are lots of ideas where we can mash up technology. Its not about inventing the technology, its about taking the seed of the ideas and putting them together.
We need to re-invent. If you think about what has already occurred. The Yellow Pages is dead – no one reads it.
If Yellow Pages were smart they should have said you know, we need to be in the search business. Google is now the new Yellow Pages. The problem is that the Yellow Pages were in love with the infrastructure.
What about music stores? How many music stores do we see now? These days if you see one, you feel sorry for it.
We are going through a 1 in 200 year shift. This is akin to the industrial revolution right now. we need to now be in love with our infrastructure but be in love with our customers. Fall in love with our customers. We need to fall in love with what we can do and embrace the fact that there is going to be a change.
There is going to be a disruption and we can be the beneficiaries of this disruption. Remember:
- iTunes became the music industry
- Google became the Yellow Pages
- Wikipedia became Encyclopedia Britannica.
We need to think about how can we reinvent tour brand taking the technology and how we can love our customers rather than our infrastructure. If we do that, then we will do pretty well.
You can grab a PDF of the research summary from the Eye on Australia website.