Marketing on the Move

AdVoice, Singapore, December 2003 issue

Since it’s that time of the year, let’s use the opportunity to take a bit of a long-term view. Also, it makes this issue last just a little while longer. So what are the most important trends that govern marketing today, and how to answer them?

Savvy Consumers
Consumers are increasingly aware of the advertising techniques used by marketers. According to a study by the British Future Foundation Group, this causes two types of cynicism. First, some good news from one group, older and well-educated consumers: they are on to us, they see through all the tricks of the trade, but they still love us. FFG found that among this group there is still a basic trust in the quality of advertising, and of the goods and services themselves. Younger consumers do not share in this cynicism: they simply lack experience in judging the messages aimed at them.

A second type of cynicism is found among a more diverse group, consisting of top earners and bottom earners. Mostly men, relatively well-educated, they actively resist and mistrust the influence of advertising. The reasons differ. Rich guys think advertising doesn’t apply to them; the poor ones simply think they don’t have the money to pay attention to it.

What to do about it? Approach these groups in a more intelligent way. Make them think, don’t be too obvious. Humour also works well when against cynicism. But not too crude. And never underestimate them.

Outlaws
OK, so youngsters are not cynical about advertising. But do they pay attention to it? Not necessarily, it turned out at the recent ‘What Teens Want’ Conference in New York. They hate to be seen as a target group; don’t like the feeling that they are being targeted at all; their viewing and reading habits change so fast that they are very hard to reach through traditional media; they loathe email and SMS advertising; and they consider relationship management and event marketing definitely uncool.

Well, that clears that up. So how to reach them? Turns out, more than ever it’s all about ‘cool’. At the conference, the term ‘outlaws’ was coined – as far as the Laws of Marketing are concerned, not the Criminal Code, fortunately. The idea that standard patterns do not apply to you is increasingly popular. Approach young consumers like Bonnie and Clyde, appeal to their desires for independence, and you’ll conquer their hearts. A company like Nike for example has understood this very well.

Relevance
One trend applies to all consumers, young and old, rich and poor, male and female. We are being bombarded with messages. I won’t start again about spam since everybody seems to need to say something about it nowadays, but something similar applies to all other media. TV and radio, magazines and billboards, our post boxes, inboxes and our handphone screens, everything around us beams messages at us. There is simply no escape.

As a result, attention spans have reached an historic low, and it’s become increasingly difficult to raise your voice above the fray. Long term effects from overexposure are even more dangerous. People might turn their backs on marketing and advertising, as now threatens to happen with email marketing due to the spam deluge.

Marketing and advertising is increasingly about relevance. Messages that are relevant to the situation in which they are broadcast have a significantly lower irritation threshold, and come across much more efficiently. Targeting is another form of relevance: relevance to the receiver, rather than to the situation. If I am subjected to a message that is within my sphere of interest, whether solicited or unsolicited, chances are I won’t be annoyed. As long as I’m not being called during dinner, that is.

The key to achieving relevance is data. Basing your marketing efforts on databases filled with information about your customers or your consumers becomes increasingly important. It will be the engine that drives your campaigns, finding the people that you need to target, or finding moments, events or situations that are relevant.

Privacy
Which brings us to the most important trend of today’s marketing. As data are ever more important, so is the need to handle them responsibly. As consumers become more savvy, they become more acutely aware of possible abuse. Adding insult to potential injury, media are reaching ever closer to the skin. It is no surprise that spam has caused an outcry that far exceeds previous irritation levels about Direct Mail, or commercial interruptions of television programs.

All these things make the public increasingly aware of their privacy, and the need to guard it jealously. At the same time, the use of personal information goes up, and will keep going up if we don’t want to drown in a sea of noise.

The future is for the marketers who manage to get permission from their consumers to use their information; who use that information to stay relevant to their target groups; and who make it clear that they treat their consumers’ information with all the safeguards it deserves.

I call it the post-spam era.

Out of the Box

AdVoice, Singapore, October 2003 issue

‘Technology is changing our world’ has become the biggest commonplace thinkable. Personally, I think it’s one of the biggest mistakes around. It’s not technology that changes the world – it’s the way it’s being applied.

I still remember my very first brush with the brave new world of IT. It was back in 1975, when one of my college professors explained to us the consequences of Moore’s Law, which was then 10 years old, and the effects of ongoing miniaturization. He stressed the fact that these promising new technologies opened endless vistas of possibilities that would have a profound effect on society, but ended with the historical words: “From now on, the limiting factor of new applications will not be the reach of technology, but our creativeness in finding ways to apply it.”

True even then, this observation has become ever more powerful since. Throughout the last few decades, there has been a dearth of viable new ideas but not of supporting technologies. The notable exception is the crazy five-year period from 1996-2000, otherwise known as the dotcom boom.

What happened during the boom illustrates another pitfall in making technology useful. Indeed, circumstances were ideal for anybody who came up with a cute new gadget, or an Internet-based service. But ideas alone are not enough. They need to be embedded in good designs or sound business models. And more often than not it takes a long time before the mass market adopts them. For instance, a recent study showed the average time from introduction of a new appliance to mass-market acceptation to be eight years.

But once it’s there, things can move fast. Internet, in the form of its predecessor Arpanet, was around since 1969; email was invented in 1971. But only after the development of the Internet browser MOSAIC in 1992, Internet and email really started to take off. It took another four years to gain rollercoaster speed, and we all know where the ride ended – down below, at the exit platform.

Since then, creativity has become an endangered species. Very recently, in an August 2003 interview with Business Week, famous technology guru Nicholas Negroponte said that his worst fears for the future were bad design and de death of innovation.

Negroponte is right. The dotcom bust left lethargy in its wake. Internet and telecom providers are trying to survive while servicing huge debts. They cannot afford anything that involves risk and investing money. Start-ups have gone bust or were gobbled up by large companies who stifled further innovation. Silicon Valley is all but a ghost town.

Case in question: spam. Email is not only the killer application of the Internet; it was also one of its early inventions. But since its inception, nothing much has happened. It hasn’t been improved, no new protocols were invented, just a few nice interfaces. And basically, this lack of innovation brought us spam.

The way email works reflects very much the way Internet was set up. Without a central authority, proper use is pretty much left to the user’s discretion. And that is precisely why spammers can get away with what they do. This is not about proper privacy laws or codes of conduct; this is all about criminal activities like spoofing sender addresses, faking websites, and even sending out worms like Sobig.F to find leaky relay servers.

The present email protocols leave lots of room for abuse of the medium. And there are plenty of people out there who have no qualms using every bit of that room. But there is also a lot of room for improvement of the protocols. Where are the Ray Tomlinsons of this world, who cobbled the whole thing together in five or six hours, back in 1971? Where are the innovators who will bring us the next step forward?

One reason might be worldwide standards. Email is being used by close to a billion people across the globe. Providing services to these people has become big business, with vested interests worth hundreds of billions of dollars. Thinking out of the box is not enough. Also needed is a coalition between a number of large corporations like AOL, Yahoo and Microsoft to agree on implementation. Life has become more complicated for all of us.

But Negroponte has one more lesson for all of us. Is he pessimistic? No, there will be a rebound. But it will not be the same as before. ‘Silicon Valley is certain to play a role, but it won't be the same centre of gravity it was before. In addition, new players will emerge in India, China, and to a lesser degree Latin America.’

Permission Please

AdVoice, Singapore, August 2003 issue

As lawmakers around the world are cutting their teeth on anti-spam legislation, some thorny issues pop up. And the thorniest of them all is: how to hit the really shady stuff, the ones that make false claims, offer dubious merchandise, hide their origins, and border on the fraudulent, without killing off respectable marketing companies?

Currently, both the US Congress and the European Commission are wrestling with this problem. Both consider two approaches: to put constraints on the way people send out unsolicited bulk email; or to forbid unsolicited bulk email altogether.

The first approach is to make it mandatory to include a properly working opt out possibility and an identifiable sender address, and to prohibit the use of false claims or misleading information, or of fake header information such as date or time stamp, ‘spoofed’ sender address or nonexistent or ‘phished’ domain names. The latter is a new danger lurking out there for unsuspecting consumers: links in the email point to a site that looks exactly like a legitimate one, complete with corporate logos and dialogue boxes that ask for your credit card number and other sensitive information.

Both US Congress and the European Commission currently consider such measures. It is a bit of a non-issue since most of these dubious practices are already punishable under traditional anti fraud legislation, but I guess politicians have to be seen doing things when the public cries out. A more serious problem with these measures is their ineffectiveness. They are perfect for catching small fish, but there are too many of those for a prosecutor to make a dent. Meanwhile, the big culprits stay well hidden behind dubious legal structures and offshore shell companies.

The second approach, forbidding unsolicited bulk email, is popularly known as the ‘opt-in’ route. It means that marketers can only mail people in bulk if they received permission to approach them in the first place. But this road too has some big bumps in it.

Firstly, it will have a crippling effect on the Direct Marketing community. Having to seek active permission before you can approach anybody makes life impossible for new entrants. If you have something new to offer, the cost of going out and asking large numbers of people for their permission before you can even try to sell them anything is nothing short of prohibitive.

Even more important is that opt-in will not address the real problem. Spam causes enormous irritation, but that results from a combination of factors, not lack of permission alone. If Mercedes or Nokia decide to mail all of Singapore with a brochure outlining their complete model ranges, I bet I will not hear a single complaint. It will be bulk, untargeted, and without permission. And people will love it.

Mercedes and Nokia make high interest products. But low interest products make the matter even more complicated. Consumers only think of them when they need them. If you ask permission at a time of need, most people will give it. But after fulfilling their need, they’ll just as soon forget about it. And if you are the one they gave permission to and someone else did the fulfilling, chances are you’ll unwittingly send them messages that will cause irritation.

So if opt-in is not the answer, then what is? The answer is: proportionality. Every type of marketing communication has two aspects: it serves the public, and it bothers them. Advertising messages, whether solicited or unsolicited, have an impact on people’s time and their spheres of privacy. It cannot be avoided. But keep it in proportion, and people will not get too irritated. Make it fun, and they’ll even enjoy it.

Proportionality is not an easy criterion. First of all, it means trying to reach only those that are potentially interested. In other words, making a serious effort to target your audience. It also means being careful with the impact of your message. Telephone calls are more intrusive than emails, emails irritate more easily than paper mail.

Thirdly, playing with opt-in vs. opt-out. If your message is part of an ongoing relationship, it only needs an opt-out possibility. But if your message is a ‘cold call’, use an opt-in for the follow up messages. In other words, only bother people again if they actively responded in the first place.

Introducing a sweeping denouncement of anything that’s not an opt-in does not solve the spam issue. Making responsible behaviour mandatory does. It’s just a matter of putting it into a few relevant and maintainable rules.

Power to the People

AdVoice, Singapore, july 2003 issue

With the growing amount of time we spend daily on cleaning up our mailboxes, the Spam debate is raging all over the media. People and organizations from all walks of life are clamouring for some action to end our collective misery. This will probably lead to anti-Spam rules in some form or other in the near future, but in the mean time perhaps it’s useful to look at this from another angle.

In recent years we have seen a proliferation of new media, of which email is only one. Telephones –both mobile and fixed–, the Internet, SMS, MMS, I-mode, the list is getting longer and longer. And all these new media have one thing in common, a thing that completely sets them apart from traditional media like print, radio and TV: they put more power in the hands of the consumer.

Marketers have discovered this too. It has even resulted in a new phenomenon, called Viral Marketing (VM). Viral Marketers enlist consumers in the distribution of their marketing messages. Instead of the usual one-to-many broadcast situation, the result is what we call peer-to-peer messaging. The message spreads in much the same way as a virus does.

VM has become a lot easier with the advent of really simple redistribution methods. Nothing is easier than forwarding an email or an SMS. And as a method for marketing communications, VM has great potential. After all, if you’re able to get people not only to listen to your message but also actively take part in redistributing it, you can be really certain that you caught their attention.

But there are drawbacks too. Peer-to-peer distribution puts a lot of power into the hands of the peers, who are, after all, the actual distributors. Leaving redistribution to others can mean that the message gets modified in the process, sometimes even beyond recognition. If you wonder how bad that can get, just think back of the ‘whisper-game’ that some of us played back at school. One classmate whispers a message to the next one, on to the next, and when you hear the message read back at the other end of the chain, it has nothing to do with the original.

But media like email and SMS have one great advantage: the message is not verbal, but written. Simple forwarding without any modification requires far less effort than rewriting. Especially SMS, with its strictly confined format of text-only and 160 characters is ideally suited for the purpose. Those who doubt that are invited to take a closer look at some of the prize winners at last year’s DMAsia 2002 Awards. Campaigns like ‘God’ and ‘Gorillaz’ reached amazing results using VM tools, raising great awareness and overwhelming response with their respective target groups on relatively low budgets.

SMS is not the only medium that has seen VM applications. A spectacular example using e-cards as a medium is Singapore Airlines’ 1998 Chicago campaign. Traditional promotional methods pulled people towards a website from where they could send e-cards to friends and relatives, extolling the virtues of SIA’s new flight to Chicago. Within eight weeks, 3 million of those card where sent by almost 400,000 people from 200 countries, 70% of which came from viral spreading.

But SMS remains in the lead as the most preferred VM medium. This is attributable to its unrivalled speed and simplicity, not to mention the fact that everybody is always carrying his handphone. MMS adds to this a host of new possibilities, like pictures, videos, and interactive messages. Its use, however, will be impeded until MMS enabled handphones have reached sufficient penetration.

VM is not only relevant to those who are prepared to use it. Even traditional media are subject to power erosion on the part of the broadcasters. In the US, TV can now be received on a device called a Tivo, which enables users to view, stop, rewind and replay the action at any given moment in time, without having to record the programme first. And just over the horizon now is Digital Audio Broadcasting (DAB), which will give radio listeners a host of similar features.

Soon, marketers need to be prepared to cede some of their power to their consumers. The marketing community will have to learn how to do that in a controlled way.

That last bit is absolutely necessary, because by now we all know what can go wrong if you delegate the power of message distribution to large numbers of people without putting controls in place. It is called spam.

Market Research Roadkill

AdVoice, Singapore, June 2003 issue

There is trouble in the Kingdom of Market Research. Profitability is eroding, and in many developed markets response rates are sliding, showing a steady decrease in the general public’s cooperativeness.

In Singapore, things are still relatively well. Being a small market of around S$150 million annually protects it. But information knows no boundaries and since information is the end product of market research, the Singapore market will not be protected forever.

Things should be brighter. The Information Society practically guarantees steady demand growth for information as an established marketing decision support tool. Markets are fragmenting all the time, as are media, and with the rise of Internet and mobile marketing interactivity is on the rise as well. Marketing information is a growth market, and will remain so for a long time to come.

So demand is not the problem. Lack of supply? Hereabouts, scores of agencies offer their services. Every year several new ones join the fray, and amongst the established ones we find all the global players. So we are left to conclude that the supply side does not lack in quantity, but in quality.

Frankly, this doesn’t surprise me. The brisk pace of ICT developments is offset by a complete lethargy in the market research sector. Consumers become better informed all the time, in fact people are if anything experiencing information overload. They become blasé. No wonders that market researchers in mature markets increasingly complain about unwillingness to cooperate.

So will they change their ways? No they won’t. The market research sector strongly reminds me of small animals trying to cross a highway in the night. The oncoming traffic are ICT developments, and in the bright headlights the poor little creatures freeze up, helplessly hoping that they will not be hit when events overtake them.

Does that sound far-fetched? I think not. Take for instance TV ratings research. Virtually every advertised product addresses only part of the population. If you think that is slightly exaggerated, try walking into a supermarket. Countless shampoos, breakfast cereals, the list is endless. Each has its own target group. Advertising campaigns now typically address around ten percent of the population.

So what does that have to do with out-of-date market research methods? Let’s do a little math. The leading Singapore TV ratings provider operates a viewing panel of 750 households, resulting in net usable information for around 700 households.

So now a media planner wants to target his TV ads. Very popular shows will peak at 10 or even 15%. But the majority of spots are grouped around shows in the 5% range. This means that our media planner bases his decisions on a total sample of around 35 households. Within that sample, on average three or four households belong to the target group. The planner of course wants shows that have an above average fit, so he hopes for five or even six viewing households. Significant sample?

You don’t need to be a statistician to realize that hundreds of millions of dollars in expenditure decisions (Singapore’s annual TV advertising expenditure alone is around half a billion) are founded on quicksand like this.

I can practically hear the excuses. ‘We can’t afford larger numbers, research would become too expensive, and clients don’t want to pay such high rates’. And the clincher: ’We’ve always done it that way.’ But ladies and gentlemen highly educated market researchers, look around you; communication is changing so perhaps it’s time that the methods of measuring start changing too! Be creative, find and test new techniques and new concepts. Keep up with developments or face the consequences!

And it can be done. There are plenty of new entrants with new and refreshing concepts. One such example is UK-based BrainJuicer, that dusted up old methods with a combination of creativity and Internet-based technology. The technology consists of intelligent software that generates open questions and instantaneously categorizes the answers, basing the next question on those very answers. Creativity is used to make the interview more attractive. Consequently, BrainJuicer surveys are quick, respondents are well-motivated and both costs and lead-times are spectacularly low.

Despite the recentness of this initiative, established companies have already cast an eye on market research innovation. Two months ago, a big company took a 40% interest in BrainJuicer. But if you think that this was one of the big research agencies waking up from its lethargy, you’re wrong. The investor did not come from the agency side, but from the client side. It was Unilever…

Paradigm Shift

AdVoice, Singapore, May 2003 issue

Lovely expression, Paradigm Shift. Thomas Kuhn, the philosopher of science, invented it. In The Structure of Scientific Revolutions he argued that science is not a steady, cumulative acquisition of knowledge, but instead "a series of peaceful interludes punctuated by intellectually violent revolutions".

Unfortunately, the term has become inextricably linked to dotcom visionaries that preferred shifting paradigms to generating revenues, and subsequently had to leave the scene in disgrace, covered with tar and feathers by disgruntled creditors. That’s unfortunate, because in this era of rapid technological developments, every sensible marketer should take a critical look at his business model from time to time. Take for instance the entertainment industry.

It all started out very simple. Someone climbed on a podium, sang a song or performed an act, and the audience paid him some money. But with the advent of gramophones and film projectors, the world changed drastically. Now copies could be made, and reproduced and sold to as many people as you wished.

The young entertainment industry adapted itself and became rich. But changes keep happening and in the 1970s a new development arrived. Now, oh horror, consumers could make their own copies. Apparently the industry meanwhile had shed its flexibility because this time, the slogan was not ‘adapt and profit’ but ‘resist and prohibit’. Copying equipment had to be outlawed. Legendary is the 1982 US Congress testimony by Jack Valenti, then President of the Motion Picture Association of America: “I say to you that the VCR is to the American film producer and the American public as the Boston strangler is to the woman home alone.”

Fortunately, Congress did not heed Valenti’s stupid advice. Technological progress was given free reign, and the entertainment industry became even richer from selling royalties on sales and rental of MCs and videotapes. And Jack Valenti is still Holloywood’s top lobbyist. This is not a good sign.

And indeed, history repeats itself. Again, new media, new ways to use and new usage moments are enriching our lives. Music and films are downloadable from the Internet and can be enjoyed without loss of quality on PCs, DVD- and MP3-players. But do you think the industry is eager to serve us with new products, new services, and new ways for them to earn money? Forget it!

During the last few decades the entertainment industry has not brought forth one single innovation, not even an attempt. Worse, innovation attempts by industry outsiders have been resisted with every possible means, and with success. Napster and Gnutella are dead and gone, Kazaa is still alive thanks to winning a preliminary court judgment but the jury’s still out on that one.

To some degree I can understand why people try to defend their existing position. But when this culminates in destructive behaviour solely aimed at halting progress, it’s unpalatable.

The entertainment industry has to take a fresh new look at its business paradigm: how to market audio and video content in today’s digital media world, from home audio to MP3, from mobile phone to DVD. Technology will not pose any obstacle: any solution, once accepted, can be built. The only thing for decent content marketers to do is spend some thought on a) what exactly the consumer wants; b) how much they are willing to pay for it; and c) how to fulfil the consumer needs after building in a payment moment.

What do consumers want? Very simple: they want unlimited enjoyment of music or film, either for a limited amount of time (rental) or forever (sales). Do they want to pay for it? Yes, says a recent study by Jupiter Research. Respondents were given the choice between paying US$18 for content without any copying restriction, and US$10 for content with restrictions. An overwhelming majority chose the first option, despite the higher price tag. The same study reports that people familiar with file sharing show more willingness to pay for downloaded content than those who aren’t.

File sharing’s widespread acceptation shows what is technically possible and what consumers want. Studies like Jupiter’s show that they are willing to pay for it. Where are the entertainment marketers that do rather than sue? Is it about time that the industry turns its ear to doers rather than dinosaurs.

Is Jack Valenti for the music lover what Jack the Ripper was for the woman alone? Apparently, the Internet spawns a new breed of serial killers.

Privacy or NUTS

AdVoice, Singapore, April 2003 issue

I am not a Singaporean. I have lived here for some time now and greatly admire the place. For an outsider, it is often difficult to fathom how it works, why things happen or why they don’t happen. Sometimes one might even wonder whether anything spectacular is happening at all.

Take for instance the issue of consumer privacy. Almost everywhere this is an increasingly hot issue, subject to intense public debate. It is driven into two opposing directions by two different developments: spam, the deluge of unwanted and unwarranted messages that floods our mailboxes and our handphones; and the fight against terrorism. Spam causes a public outcry for privacy protection, putting legal restrictions on the use of contact data and other personal information. Terrorism causes governments around the world to become increasingly careful with restrictive legislation on the use of personal data, afraid that they themselves might be limited in their possibilities.

Strangely enough, very little of this debate shows up in Singapore. I find this hard to understand, especially since this country is renowned for both its efficiency and its desire to be at the forefront of any type of development in the Information Society. Where places like Hong Kong and Shanghai already have extensive legislation in place, Singapore has little to show except an IDA guideline issued in 2000 on a single issue (provoked by SingNet’s scanning of 200,000 users’ PCs without asking permission), and a public consultation round organized by the National Trust Council in 2002. That consultation yielded a handful of public comments by virtue of the fact that the deadline was moved by three months, and finally resulted in a Model Data Protection Code intended to become mandatory only for certain online businesses that operate under the TrustSg seal. Oh, and did I mention a Code of Practice with a word or two on privacy, issued by the Direct Marketing Association of Singapore aeons ago and out of print for at least half a decade?

Why is it, I wondered, that Singapore, although aspiring to be an Information Services hub for the region, as yet did not provide its consumers with an exemplary protection regime?

Then two things happened. The first was an article by Creative’s CEO and founder Sim Wong Hoo on a phenomenon he calls NUTS. The acronym stands for No U-Turn Syndrome, a distinctive Singaporean trait. Anywhere in the world you can make a U-turn wherever you wish – unless there is a sign that forbids it. Except for Singapore, where you cannot make a U-turn unless there is a sign that tells you so.

A couple of days later I attended a conference that included a panel discussion on privacy issues in Direct Marketing. One of the panellists was a Singaporean Marketing Manager, who started his contribution with the following words (and I quote literally): ‘In Singapore we are not used to privacy. We all live at a stone's throw from each other. The Government has all the data on us it can possibly want. The Government uses that data for every purpose it wants. I guess privacy just doesn't mean very much to us...’

Who said that privacy was a boring subject? In one masterstroke, a world of cultural insights opened up. Singaporean roads do not need centre barriers to prevent people making U-turns, only the absence of a sign. Marketers in Singapore do not need laws to respect consumer privacy; they will refrain from it by virtue of the absence of rules that say they can.

True, legislation should only be issued insofar necessary and appearances are that it is not needed in this case. But other interests are at stake. Singapore may be an island geographically; it is not an island in the Information Society. Singaporean users too are bombarded by spam that originates from elsewhere. And then there is Singapore’s ‘regional hub’ ambition. Shouldn’t Singapore provide a shining example?

Singapore is in a unique position to showcase a modern system of privacy protection that respects commercial interests. Throughout the last decade, a set of principles has emerged that makes this possible. Indeed, if laid out clearly, privacy protection runs parallel with maintaining satisfactory customer relationships. Not only is this an opportunity for Singapore, it is also in the interest of both consumers and the industry.