Reinventing Marketing

It’s a year since I wrote a post suggesting that Google was a ‘slow mo train crash unfolding’.

Google grew popular (and rich) by helping individuals use information as a tool in their own hands, and by basing its business model on volunteered information – information that individuals willingly provided (the search term) because of the value they got back (search results).

Online stalking – or online behavioural targeting – is the opposite of this. It’s got nothing to do with helping individuals use information as a tool in their own hands (‘relevance’ is a term used by advertisers to create response uplift and is largely bogus in this context). And it’s the exact opposite of the volunteered approach exemplified by search: behavioural targeting is (as I said then) “murky and underhand” giving individuals less control, not more.

Google grew trust and revenues by acting first and foremost as an information service to indviduals (and, as a byproduct) a marketing service to suppliers. But now it has swtiched its mindset and business model to become just another mechanism to deliver audiences to advertisers.

What made Google great has been jettisoned; the trust it had with the public is in terminal decline and from now on its problems can only mount.

Three straws in the wind:

• A senior executive explaining why he has left Google, disillusioned.
• Googles row with the EU over its privacy policy
• The tricks it used to bypass iPhone users’ security – prompting new privacy investigations by regulators

In  my old blog I described the trajectory of brand in decline like this: “Instead of commanding the benefit of the doubt in the court of public opinion, suspicion and hostility grows amongst politicians, regulators and the media. Yesterday, the brand could do no wrong. Now it’s as if it can’t do anything right.

“Innovators begin to take their great ideas elsewhere. Brilliant staff leave for brighter opportunities; it becomes harder to attract and retain good people. And almost imperceptibly – and crucially – how the leadership team spends its time and attention begins to shift from ‘seizing opportunities’ to firefighting: fending off criticisms and coping with problems.”

All the signs are that this is exactly what’s happening at Google.

I’m still trying to get my head around the implications of the new draft EU data protection regulations. One thing is puzzling me in particular – big changes to the definitions of ‘consent’ and ‘personal data’ that could, in my reading anyway, effectively ban current approaches to behavioural targeting.

The draft effectively rules out current notions of implied consent to things like data sharing by redefining consent as “any freely given specific, informed and explicit indication” of the consumer’s wishes “either by a statement or by a clear affirmative action”.

Meanwhile the draft also changes the definition of personal data to include anything that “directly or indirectly” identifies a person “in particular by reference to an identification number, location data, online identifier …”.

Today’s behavioural targeting industry rests on two things. Privacy policies which create implied consent to individuals’ data being shared – plus the defence that this data is not ‘personal data’ because it is pseudonymous e.g. using an IP address instead. From what I can see, these two changes to the law would  blow this status quo out the water.

It’s interesting to see that in Facebook’s statement to potential IPO investors it warns that “laws and regulations that govern the use of names and likenesses in connection with advertising and marketing activities is unsettled and developments in this area could affect the manner in which we design our products, as well as our terms of use.”

It then goes on to say that “a  number of proposals are pending before federal, state, and foreign legislative and regulatory bodies” [including the EU] on this front and that they could “subject us to claims or other remedies, including fines or demands that we modify or cease existing business practices”.

Is this a good thing or a bad thing?

I think it’s good. There’s a deeply embedded mindset in marketing that data is a tool in the hands of the company, that the more customer data you can get the better, and that if you can harvest it it’s yours to do what you like with (subject to pesky laws and regulations). This mindset is toxic and kills trust.

The future lies with information, including data, as a tool in the hands of individuals, with individuals voluntarily sharing this data with organisations because they can trust the organisation to keep it secure, respect the individual’s privacy, and use it to add value.

The first approach is the low road of value extraction and adversarial relationships; the second approach is the high road of value creation and win-win relationships.

No doubt the behavioural targeting industry will lobby frantically against these proposals, replete with multiple scare stories about ‘stifling internet innovation’. For marketers generally however, if the gist of these proposals survive the lobbying process, it will probably be a blessing in disguise.

Remember the days when there people were debating about bricks or clicks? Looking back, it’s quite astonishing to see just how fast the rush into ‘bricks and clicks’ has been. For brands like John Lewis and Next nowadays, online is now their big growth opportunity.

It goes without saying, then, that getting multi-channel right is fast becoming a matter of survival. Customers increasingly expect to be able to jump seamlessly from one channel to another, and if you can get it right, it this can bring significant benefits to the brand too. That’s not just about reputation and service. Switching channels from physical to online can also be a great way to reduce costs.

Given the operational nightmares of achieving this, it’s not surprising that so many companies are tearing their hair out trying to do it – as they must. But, returning to the theme of ‘five ways of squander efforts in 2012’ there is another crucial way in which this focus on multi-channel actually misses the point. If you see multi-channel retailing or service as just another sales funnel except with more streams within it, you risk overlooking the real driver of this consumer behaviour.

The channel hopping we see nowadays is actually just a surface manifestation of an even bigger trend with implications that reach oh so much further: consumers’ increasingly impatient quest for the information and advice they need to make better decisions.

This quest is not just about which touchpoints consumers use. It’s about the nature of value itself. Tools, services or businesses that help me make, and implement, better decisions are a real source of value in their own right (if I can make a better decision, it will lead me to a better product or service anyway). But the places to look for decision support, and the processes used to get decision support are completely different to those that make up the traditional ‘customer journey’.

The rapidly emerging market for the tools, services and businesses that help individuals make and implement better decisions – and yes, it is a market in its own right – has one crucial characteristic. This is the sort of market that changes the ways all other markets work. It transforms their dynamics, and brands that fail to adjust to it risk being sidelined whether they go multi-channel or not.

I’ve just finished writing a feature for Marketing magazine about customer and brand engagement. It’s fascinating to see how a word enters the lexicon and spreads so that soon, everyone is using it. It’s not only consumers who have a herding tendency (as Mark Earls) would put it. It’s marketers too.

Thinking about it, it struck me there are quite a few trends out there where the herd instinct has kicked in. Trends always have their own grains of truth. Sometimes they’re big and important. But at the same time, they may not be the biggest or most important thing to focus on. Sometimes they can be a distraction.

Herd-driven trends are always dangerous because, once the herd logic takes hold – “we have to do this because everyone else is doing it. Perhaps they’re seeing something in it that we can’t” – it gets remarkably easy to waste a lot of time, effort and money.

So, over the next week, I will take a quick look at five market and marketing trends where a healthy dose of skepticism and caution may be in order.

Big Data

The volumes of digital data now being collected are growing exponentially. The potential uses of this data are growing fast too. That’s an incontestable fact. The bandwagon bit is the assumption that accumulating and crunching ever larger amounts of data will really help marketers solve the problems they face relating to relevance, targeting, value and so on.

It can help … to a point. But because it’s all statistical it can never translate to the personal.  It doesn’t help create a trust-based data sharing relationship with customers. It just reinforces the same trajectory of the last 50 years, of organizations colleting more and more data about their customers and making guesses (on the basis of so-called predictive algorithms) about what they want or what they might do next. And that’s a road to nowhere.

The really big challenge now facing marketing and marketers is that of information logistics – of getting exactly the right bits of information to and from exactly the right people in the right form at the right time. This takes us in the opposite direction of Big Data to very, very small data. With information logistics, it’s the 99.999% of the data that you discard and ignore that creates the real value, because now you are only dealing with what’s necessary to create and deliver value.

My prediction for 2012 and 2013: lots of people are going to spend an awful lot of time and money on Big Data and looking back, they will wish they hadn’t.

Tomorrow: Multi-channel

You can’t go long in marketing nowadays without someone pointing out the critical importance of data.

There’s an awful lot of fuss right now about so-called ‘big data’, for example. In my view, big data is not such a big deal and I’ll tell you why in a future blog. The really important development is the emergence of the consumer as a data manager.

For 50 years marketing has worked on the assumption that marketers collect data about their customers, and then use this data to gain insights and market to their target audiences. But as consumers become active participants in data management and sharing ‘the rules of the game’ are being rewritten.

I’ve been trying to map the types and sources of data that are becoming available in this new data sharing environment. They boil down to:

• Attributes of myself, which can often be verified by a third party (e.g. I have a driving license; I have this credit rating)
• Information I gather from ‘the world out there’ (not strictly personal information, but the specific sets of information I gather and find useful say an awful lot about me)
• Information about my interactions and transactions gathered about me by other parties – and which could be released back to the individual as per the UK’s midata programme.
• ‘Personal informatics’ – i.e. information I gather about my own life, using new tools to gather, store and analyze that information. This is the whole arena of ‘the quantified self’.
• Information I create and receive via peer-to-peer information sharing
• Volunteered information. This is information that sits ‘hidden’ in my head until I articulate and express it – for example my beliefs, current priorities, preferences or future plans and intentions. It may also include specific combinations taken from the above which I decide I want to share with someone – a combination of data about one of my personas, for example.

Bringing it all together is personal data stores which help me gather, store, manage, analyse and share this data. They help create a seventh ‘curated’ layer of personal data: derived analyses, unique combinations etc.

I explore the implications of these emerging streams and sources of data in this review. Any thoughts/comments much appreciated!

Alan Mitchell

Could it be that the very way marketers think about marketing blinds them to certain market opportunities (and threats)?

If you think (for example) that marketing is about changing and influencing consumer purchasing decisions, you are not going to look for, or see, a new market of decision support services emerge – a market for services that actually transforms the way consumers make these decisions.

I’ve been looking into the origins of this invisible market, how it connects with the ways current markets work, and why it’s emerging now. The really big question is still to come however: how should marketers respond?

I have just started reading Persuasive Advertising by J Scott Armstrong – an academic’s attempt to collate, sift and review all the available evidence about what works in advertising and what doesn’t.

One piece of data strikes me as very interesting. Armstrong reviewed public opinion surveys of advertising from the 1930s onwards, comparing responses to questions like “how believable/truthful/informative are ads?”.

Apparently, positive attitudes towards advertising reached their peak during the mid-1950s, when ‘pro’ attitudes reached eight on a nine point scale. However, ratings fell to three by the 1970s and have bobbed around that score ever since.

I can’t help wondering if this has something to do with marketers and advertising agencies especially abandoning their belief in ‘demonstrable product superiority’ in favour of much more fancy (and mostly vacuous) theories about how to press consumers’ emotional buttons, press their unconscious triggers, and so on.

As I’ve pointed out elsewhere, consumers didn’t necessarily respond to the pursuit of demonstrable product superiority in the ways marketers hoped. But abandoning the quest may have had much more damaging effects, such as a catastrophic loss of trust.

Hmmm.

Sensible article by McKinsey on customer engagement

“Over the past two years, that evolution [the difficulty of "influencing customers by relying solely on one-way, push advertising"] has only accelerated. More and more consumers are using digital video recorders to fast-forward through TV commercials and are consuming video content on Web sites such as YouTube and on mobile devices. Billboards alongside train lines and bus routes struggle to capture the attention of people absorbed by the screens of their smartphones. Meanwhile, today’s more empowered, critical, demanding, and price-sensitive customers are turning in ever-growing numbers to social networks, blogs, online review forums, and other channels to quench their thirst for objective advice about products and to identify brands that seem to care about forming relationships with them. Individuals even are posting their own commercials on YouTube. In short, the avenues (or touch points) customers use to interact with companies have continued to multiply.

“The problem for many companies is that the very things that make push marketing effective—tight, relatively centralized operational control over a well-defined set of channels and touch points—hold it back in the era of engagement.”

This is spot on. The rest of the article focuses on the organisational challenge of engaging customers, through the customer journey, across multiple different touchpoints.

But there is one thing missing from this article and it’s pretty crucial.

In a world of push, you don’t have to worry about what the customer wants from ‘the engagement’ because you are simply shoving stuff at them: ‘impressions’ on ‘eyeballs’.

In a world of genuine engagement, the customer’s ROI on the engagement is the critical metric – because “if I don’t get the returns I want from this engagement I won’t bother investing my time, attention and energy”.

We’re just at the foothills of understanding, never mind organising operations around, this shift of focus to customer ROI. This shift in metrics follows the shift in process, as night follows day.

I’ve just come across the House of Commons Public Administration Select Committee’s report on Government’s use of IT. Entitled “recipe for rip-offs: time for a new approach” it covers lots of things but one in particular struck my eye.

Here are its conclusions on the specific issue of Personal Data Ownership.

“Giving control of personal data to the individual has the potential to improve data quality while reducing both costs and risks. Individuals are used to controlling their own data with private sector companies, such as Amazon and with utility companies.

“Moving to a model where the citizen maintains their own personal data with an independent, trusted provider and then can choose whether to authorise the sharing of that information with other organisations is an ambitious vision that will need to be trialled extensively. We also recognise that there may be legal constraints and concerns about privacy which could act as a barrier to implementing such a radical reform. We therefore recommend that the Government, working with the Information Commissioner, review potential barriers to the personal data model and explore the ways in which this model could best be developed.”

This is more evidence of the paradigm shift that’s now under way, not only in the relatively narrow confines of customer/personal data but in marketing itself.

Our current data status quo is as follows:

• Organisations collect data about their customers (transactions, behaviours etc)
• This data is then under the control of the organisation, to be used in pursuit of the organisation’s purposes.
• The individual/customer remains a passive ‘subject’ of data gathering activities and ‘target’ of resulting marketing actions.

It’s all one-way. Unilateral.

Looking to the future, things will look very different.

• Individuals will collect data about themselves, including their interactions and transactions with organisations.
• Individuals will then control this data, deciding who they want to share it with, for what purposes.
• Under this scenario, individuals are no longer ‘targets’ but active agents, participants in the process of communication and value creation.

It’s two way. Mutual. Either a win-win partnership of some form or other, or not really worth investing in. And this applies to the customer/company relationship as a whole, not just data.

Letting go of the one-way unilateral approach to marketing is a big shift in terms of both mindset and practical day-to-day operations. Managing this shift is becoming the decisive challenge for marketers.

I’ve spent the last few weeks helping the
Department of Business, Innovation and Skills (BIS) get its mydata project off
the ground – fascinating stuff.

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