The Idiots Guide To Experiential Marketing

In my research endeavors, practical applications and commercial activities, I have come across many forms of marketing which all have their individual jargon, lingo and paradigms. However, nothing intrigues me more than two of the following:

1) Engagement Marketing

2) Experiential Marketing

Now, Engagement Marketing is something I will discuss in detail in an upcoming post, but the focus for this article will be Experiential Marketing.

Recently, I purchased an iPad, and it is ergonomically and economically the best decision I have ever made! I can integrate all my feeds into an intelligent application known as FeedlerRSS which unifies your Google Reader account and all of your favourite feeds in one simple interface which is useful when on the train or travelling in the car.

Nevertherless, back to the topic! Experiential Marketing is something that is not comprehensively defined so I am going to have a shot at it!.

Firstly, it is marketing that focuses on creating experiences with audiences. It evolves from face to face, digital, virtual and social forms of marketing to provide a unique 360-degree perspective on the whole engagement process between consumers and their brands. Whilst it also transgresses into the Engagement Marketing spectrum, Experiential Marketing holds the distinction of creating a fully immersive brand experience by interacting with consumers and bringing the brand 'alive'. Sending an SMS message to a mobile phone is not in essence experiential marketing. What would be experiential marketing would be sending an SMS to accompany a campaign that the brand is undertaking and delivering a unique value-laden experience with that brand through the engagement this relationship yields.

Secondly, Experiential Marketing has philosophical, neurobiological, psychological and sociological theories of the consumer at heart of its campaigns. It invokes a change of mindset by creating a sense and feel of the brand in a consistent, holistic and enriching manner. Its also, like Engagement Marketing, an invitation to be involved with the brand's product or service development architecture. Experiential Marketing also also uses an approach in which logical thought, emotional response and other thought processes are used to provoke an emotional response from the consumer about the goods and services offered to them.

Now, with this foundation in place, its often a lingering conjecture that Experiential Marketing fails at gaining audience 'attention' in the 'service economy' due to the proliferation of distractions such as pop-ups, banners, SPAM email and junk mail. To address these challenges, I propose (with special thanks to Ian McGonniga) the following framework for being succession in the sphere of Experiential Marketing.


- Create Indelible Experiences: This means driving sensory responses with your audience to naturally capture and hold their attention.

- Drive And Engage In The Conversation: Too often, I have seen marketers take a broadcast approach to their messages by creating environments of singularity. The idea here is to ask questions to tell the story, to create that indelible experience mentioned above and listening, engaging and fostering conversation with your audience to build on their experience levels.

- Create Social Destinations: The World Wide Web 2.0 provides brands with a plethora of technologies and platforms to create these destinations. For example, blogs, facebook and twitter feeds coupled with YouTube channels and Flikr are invaluable tools to create whats known as architectures of participation for audiences and consumers. Whilst building these is challenging, the real value to your enterprise will come from maintaining content and conversation on these sites through an experiential focus.

- Facilitate The Backchannel: This is of particular importance as research shows that audiences are most likely to engage in social media with the intention to facilitate and influence the conversation. Its important to be omnipresent and in control of your brand perception by mitigating the negative gossips and positive gossips in any social group.

- Create A Mobile Playground: I am reading a book called Mobile as the 7th Mass Media and its undoubtable that the most persuasive distraction brands compete with during a face to face event is the mobile device. By unifying all communication channels out there, including the mobile phone, its possible to regain audience 'attention'. Its also important to leverage developments in the mashable mobile applications space to keep audiences and consumers interested and immersed in your brands message.

- Immerse Audiences In Virtual Experiences: Second Life is an exemplar of the virtual world and using virtual experiences such as brand simulations are invaluable when it comes to adding the value into your experiential marketing campag

- Always Look To The Future: Emerging technologies will always surface thorough technological development and its important to keep up with the trends.

Therefore, this is a beginners guide to leveraging the tools of experiential marketing. Perhaps after writing this, I realise what Apple was thinking when it developed the iPad and making its platform available to so many developers.

SMS Texting Explodes and Takes Over Voice Calls

I came across a rather interesting article in the Australian Financial Review within the Information Handout which detailed a case study and findings on how individuals are reducing the voice capability of their mobile phones and opting more for the SMS functionality and associated applications.

"For many, mobile phones have become irreplacaceable tools to manage their lives and stay connected to the outside world, their familities and networks of friends online. But increasingly that does not mean talking on them very much".

According to government and industry data from the US, 90% of households there have mobile phones - yet the growth in voice minutes used by consumers has "stagnated". "The number of text messages sent per user increased by nearly 50 percent in the US last year" according to a study by the Wireless Association. This is compounded by the fact that "the amount of data in 2009 across text and email messages, streaming video, music and other services on mobile devices surpassed the amount of voice data in mobile phone calls". This has been solidified by industry wide executives with Dan Hesse, CEO of Sprint Nextel claiming that talking is less than "half of the traffic on mobile networks". Data reinforcing this is evidently clear with the average rate of talking in 2009 being 1.81 minutes opposed to 2.27 minutes in 2008.

With this paradigm shift occuring, Tomi T Ahonen, a media and advertising consultant in his latest book "Mobile as 7th Of The Mass Media" purports that the mobile phone is the first truly personal media, ticking all what he calls the Six M's of movement, moment, me, multi user, money and machines.

So with all of this in place, how can we as consumers capitalise on the enormous benefits that mobile phones now offer with their integrated applications, emails and SMS texting capabilities?

Firstly, I have yet to see, in Australia, full adoption by media companies and brands in the mobile space - adoption meaning integration of mobile phone technologies within their product offering. I think it would be great to have targeted SMS advertising through peer social networks delivered to your mobile phone as an SMS - where you can act on that SMS and get rewarded for reffering products to your peers. This can be solidified by a unique promotion code which is accessible only to recipients of this service. For example - Tarocash, YD and Londsdale are prominent clothing brands which often have massive sales but consumers are not always in the loop. It would be great to have promotions that encourage the texting back to the brand to better target their promotional advertising and discounts. From a brand perspective, this will prompt better loyalty and evangelism amongst a core customer base.

With all this said, I believe we are entering an age of emergence - emergence of the Gen C (for Community). The defining characteristics are well put foreward by virtual technology specialist Ken Thompson on his blog - titled Generation-C Teams make natural Bioteams. Here, Ken Thompson delineates an interesting school of though on how we, as consumers, can leverage the mechanical traits of natural teams in the mobile context - and become more proficient at the art of communication itself.

In conclusion, it will be interesting to see how the mobile phone is embraced in Australia. With the Australian Industry Advertising Board flagging higher investment in social media initiatives across the advertising industry this year. I believe - and this is a view concurrent with industry executives - that the next generation of mobile services will be charged by the data used, not by voice minutes.

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UPDATED @ 28/03/2011: OK - So I must admit that I havent really looked into updating this but hear this. Tomi T Ahonens's ( http://www.tomiahonen.com/ )  book "Mobile As 7th of THE MASS MEDIA: Cellphones,Cammeraphones,iPhone,Smartphone: [ http://mobile7th.futuretext.com/ ]

Well, so far I have read the parts of priority - but the CEO of Flirtomatic in the UK Mark Curtis (who also authored a book called "Distraction: Being Human in a Digital Age ( http://www.amazon.com/Distraction-Being-Human-Digital-Age/dp/0954432746/ref=sr_1_1?ie=UTF8&s=books&qid=1301307292&sr=8-1 )" says that 

"..TOMI AHONEN IS THE MOST THOUGHTFUL COMMENTATOR ON THE MOBILE INDUSTRY HIS THEORY THAT MOBILE IS  NEW MASS MEDIA IS SPOT ON...""

Without making this short edit/update a blog post look like anorther article - just glance over these facts (from the book ; worded ; ) p.s. The data figures are quoted from the book as a reference point as 2007 marked the start of the real mobile 2.0 manifestation. 

• USA cellphones users sent 1 SMS message per day in 2007 [ Now think of the US mobile user base and that was 4 years ago just before iPhones etc 
• Total subscribers worldwide that can be reached by SMS in 2007 was ~3.2 billion
• 1.2 billion users of email in 2007; ###VERSUS###; 2.5 billion users of SMS in 2007

[N:B: These data are sourced from Tomi Ahonen's book (pg.126-127)]

OK OK - All of this data is sending me into a peturbation. ALL I CAN SAY - is all of you who have read this far is to:

1. Please visit my good friends website where I authored an article which basically means that we read short messages almost instinctively : here is the link http://www.bioteams.com/2007/01/22/organisational_teams_thin.html
2. Now - pg128 of Toni Ahonen's book referenced above says that in a youth survey in 2006; 48% if British teenagers sent text messages to someone else, either person-to-person or talking on a phone. Hear this one now; A US Disney survey of 1500 American teens in 2007 found that 28% send text messages from the dinner table. Anyone care to say grace before dinner?

Now, with all this data and the fact that the commercial/business market for SMS is work $107 billion (2007 figure) and growing means that any buddying entrepreneur or established organisation needs to simply a) read this article and b) read point 1 above and c) acknowledge that Generation M for Mobile make "Natural Bioteams" see http://www.bioteams.com/2007/01/31/generation-c_teams_make.html

This is where executive management should start looking at first - how to cultivate a service that provides up-sold products or apps on the phone that assist in the 'behavioural and Intellectual Property issues in the case of Enterprise 2.0 applications.

P.S. I will be writing another article similar to this soon within the MOBILE WEB 2.0 in the NETWORK ECONOMY!

Word Of Mouth Marketing - A Synopsis

I often ask myself these days, and as a matter of fact its quite a lingering thought of mine, on the effectiveness of word of mouth in the marketing domain. Word of mouth can be remarkably effective - think of Coke Zeros launch. However, it can also be remarkably dangerous - for marketers.

Firstly, word of mouth marketing is defined, by Wikipedia as interpersonal communication "which encompasses a variety of subcategories, including buzz, blog, viral, grassroots, cause influencers and social media marketing, as well as ambassador programs, work with consumer-generated media and more, can be highly valued by product marketers. Because of the personal nature of the communications between individuals, it is believed that product information communicated in this way has an added layer of credibility".

According to an interesting article in the BRW written by Leon Gettler titled "Say What You Think", word of mouth is "treasured by marketers". "They know that consumers trust recommendations from friends and family far more than advertising. They also know that turning consumers into advocates for a brand is extremely cost effective, much more so than advertising or direct mail". With this said, its relevant to understand that the effectiveness of the campaign deployed by brands and corporations in their word of mouth marketing initiatives is highly contingent on tapping into their key 'influencers'.

Malcolm Gladwell, in the Tipping Point, outlines that these influences lie within a specific 'context' where "human behaviour is sensitive to and strongly influenced by its environment". Essentially, a tipping point, in any dynamical system, is the threshold level at which momentum for change becomes unstopable. Gladwell, in his context, describes tipping points as a sociological term. More so - "the moment for critical mass". So how is all of this related to word of mouth marketing?

Firstly, Gladwell draws an important distinction in the types of influencers or 'change agents'. He identifies a critical subset known as "Mavens" - who are those type of people that are 'information specialists'. Quoting Gladwell, he claims that Mavens start "word of mouth epidemics due to their knowledge, social skills and ability to communicate". These are the types of people that marketing companies yearn to have, the knowledge worker who is armed with an arsenal of social media tools such as blogs, tweets and pod-casts to disseminate information to a wider audience. They create an organic enthusiasm for the brand.

These types of people, generally create awareness and tick all the boxes of interest, motivation and closing the sale for a brand. However, in an age of technology disruption and competition, how do brands in the first place support their key 'influencers' with the right technologies in the first place?

Todays problem with brands is that they resort to 'broadcast' messaging such as TV ads, direct mail, print advertisements and radio. They rely on these campaigns to trigger their influencers in the non-formal social arena such as gatherings or the pub. These initiatives are centrally controlled, plagued with anonymity, interruptive, individualistic and are all sent via a single channel.

The solution to the problem, at least from my perspective, would be to arm these influencers with the right tools and technologies to potray their message within, across and beyond their social communities (virtual and physical). As web and mobile technologies continue to coalesce and recent trends in social networking perpetually disrupt traditional advertising business models, there is a need to engage influencers with relevant channels and methodologies for their very purpose. Solutions need to drive intimacy with members, engagement with influencers within and across their communities, be trusted and refferal based and all via multi channel messaging.

Imagine, then, if a brand could arm their influencers with these tools, that tick all these and previous boxes, and one that also enables the brand to measure the success of their influencers; it would re define the era of marketing in its own right. With advances in web and mobile phone technologies these days into the spectrum of unified communications, its definately a plausible outlook on the future.

So that was my two cents on word of mouth marketing, and the challenges that commercial enterprises face in the emerging knowledge economy. The communication platforms need to be authentic and credible, one that has a multiplier effect on the quality and quantity of conversations that profilerate around a brands word of mouth marketing campaign.

Book Review: Buy Me - New Ways To Get Customers To Choose Your Product And Ignore The Rest.

Ive just started reading Marshal Cohens book, titled Buy Me: New Ways To Get Customers To Choose Your Product And Ignore The Rest and so far, its been an invaluable tool to my existing kit of marketing books and methodologies.

Cohen is Chief Industry Analyst for the NPD group, specialising in business imperatives for the retail, footware and apparal industries and although it isnt my specific industry of choice; the lessons provided in the book has applications universally in all dimensions of business.

What struck me as the most interesting part of the book was Marshal's assertion of the "New Consumer" in a title known as "The Agre of Thrift". Here, he claims that "consumers are getting used to higher prices and diminished spending power after having been taken to the highest heights of luxury and dropped into the depths of a recession. Although they want to spennd, consumers are trying to be more frugal and more thoughtful". Again, Cohen purports that todays consumer is targeted with "too much information" and it only takes about 5 seconds in the subconscious to attract and engage their mindsets on product information. "Increased access to information is a rather large source of distraction for consumers today" which means that in todays highly integrated and networked age, information needs to be contextually relevant, specific with the right purpose and intention, perhaps facilitated through trusted communities of friends or advocates, like that of my primeval example of the Nike+Ipod community.

Cohen claims that consumers are in whats known as a "consumption coma" and that they brands need to "proceed with the intention of waking up" the consumers from this. He claims that its important to recognise the "growing distractedness" of consumers in the networked economy and important to build a brand capable of recognizing this discrepancy. Like he says, as "consumers are purchasing uner duress, it is critical that [companies] rethink how [they] are designing and marketing [their] products". In order to do this, its important to find a "new trigger that will draw consumers' focus to your retail offerings or your products message" by giving "consumers what they want, when they want it".

To address these challenges, Cohen presents a series of 8 retail rules which delineate the targeted and brand aware consumer of the new millenium.

1.  Less Is More: Companies will be judged in the new economy by their profitablity, not volume, and that size doesnt matter to todays consumers as they will want "what they want, when they want it , and where they want it". The fragmentation of consumers behavioural elements means that "only those businesses that can deliver on or cater to these consumer needs and desires will survive in the new economy".
2.  Core Product Growth: Apparantly, Cohen argues that to increase brand recognition, you can no longer rely on brand loyalty; but instead "identify your single best product and then find natural areas in which to expand the product range".
3. Multi-Tiered Product Offerings: The book argues that "when your tier your prouct offerings, you allow a wide range of consumers to enter into your brand experience" and that "differentiating between the product levels caould be as easy as relabeling or rebranding each respective tier". 
4. Service Means A Whole Lot More: As the economy gains momentum in this integrated age, "service will step in as the second most important element in the value equation of a product purchase". This emphasis extends on meeting the needs of existing customers through unique and innovative ways and targeted new brand referrals through this measure.
5. Exceed Expectations: Its a fundamental business rule from a customer relationship management perspective; but create 'experiences' around your brand so that customers feel that their expectations are being multiplied and valued. In an age of social media, its possible that one bad experience has a multiplier effect in the greater social arena and consumers now have the propensity to "broadcast" messages to a greater audience.
6. Deliver Messages Directly To Consumers: Cohen proclaims that "consumers are your most powerful marketing tool, so arm them with the information [and technologies] they need to effectively communicate your messages to others. Dont rely on the advertisements of third parties to communicate with your consumers and use your own". This dwells deep into the sphere of evangelism marketing which I discussed in another article.
7. Multiple Marketing Messages:  Cohen argues, through his extensive experience in observing and analysing companies marketing plans, that if "companies [aren'] open to potential growth markets or even a new consumer demographic, you can actually do damage to your business - and your bottom line". He imparts that its imperative to "widen your scope" for consumers and this dwells back into having a multi-tiered product base.
8. Offer Distinctive Products: Offer a "cache" of distinctive products and dont be afraid to "evolve your product offerings". This ties in with the multi-tiered product and the 'exceeding expectations' dimension and means that in this new age economy, offering a unique brand architecture is as important as customer loyalty.

So here we have it, the 8 new retail rules for the new economy. Although it pertinently applies well to retail, apparal and footware (Cohens core focus); it also has universal applications in all product and company propositions. So far, Cohens book is offering me invaluable insight into the mechanics of marketing and how to offer your products in a competitive landscape. I am sure, that as I read more, I will understand more. So do keep an eye out for an extended review!

Social Networking Invites Targeted Advertising?

One of my favourite authors in the media commentary space, Neil Shoebridge, writes an excellent article in the BRW titled "where ads turn social" that purports two sides of the story on inserting marketing messages into consumers' interactions on social networking platforms.

Shoebridge alludes to a study by research company Nielsen Online which details that "50% of online users are interacting with companies through such sites". This is a significant portiion of the 9 million Australians using social networking sites and it also shows the trend towards what is known as evangelism marketing.

Evangelism Marketing, defined by Wikipedia is "an advanced form of word of mouth marketing" which leads to the proliferation of customer advocacy communities. These communities on the web are an invaluable tool to deploy targeted marketing initiatives through the right medium within the right context.

This point is exemplified through Shoebridge's assertion that "internet executives say consumers will respond to ads on social networking sites if they are relevant, engaging [and] non-disruptive". Additionally, the study shows that 70% of companies have planned "some form of social media activity this year; up from 40% in 2007 and claims that companies "wholeheartedly engaging in social media will spend 5-20% of their marketing budgets on social media campaigns this year".

However, on the other end of the spectrum is concerns that marketing is often interruptive and non-engaging where marketers broadcast their messages like SPAM email - which is often disregarded by the consumer.
Shoebridge also goes on to assert that "not all media and marketing executives are convinced social networking sites are the next big thing", with the CEO of the world's biggest marketing services company, WPP Group, saying sites such as Facebook were "less commercial phenomena [and] more personal phenomena" Invading these social media with commercial messages might not be the right thing".

My lingering conjecture on the issue is that if a media company or brand were able to find their top brand evangelists, tap into their communication channels and networks and leverage the right information at the right time; these brand advocates would then facilitate the message, through evangelism marketing, to other prospective consumers. This is how Nike's capability was proven with its Nike+Ipod range of products which faciliates conversations amongst key interest holders in the running space and encourages them to advocate the brand to other prospective consumers.

Altogether, the challenges that will arise in the social networking advertising space will be hard to overcome. Personally, I believe that the core challenge will be to create sustaining 'virtual communities' of brand evangelists in the first place and support them with the right technologies to support their evangelist activities.

The Real Effectiveness Of Meeting

In an era of continuous technological change and disruption, the traditional face to face meeting model of the 19th century becomes archaic when compared to the potential benefits realised through effective team meetings in virtual settings.

Writing for the BRW, D'Angelo Fisher claims that often in today's tedious organizations, meetings are held as a 'matter of habit and not because action is required or outcome desired'. This begs the question as to the rationale behind meetings, their operational effectiveness and whether transending physical meetings to the intranet, internal knowledge mangement portals or even SMS texting is an effective way to challenge the status quo.

Fisher proclaims that "government is the meeting junkie's nirvana" and that "rarely is the focus on questioning the meetings culture that pervades business". By saying this, he is imparting that in todays converging world, meetings are more of a capitulation to small talk rather than getting things done - as traditional management texts would call it.

For this very reason - its often without much surprise that meetings "that occur for the sake of it are a drain on time, productivity and morale" and that management of todays organistions need to break the "nexus of meetings".


To counteract this paradigm, management of today's organisations need to break the "nexus of meetings" by contemplating the use of virtually supported technologies that facilitate the purpose of a meeting and keeps it simple stupid. Rarely do complicated face to face meetings result in fruitful activities or organistional imperatives that sustain the business in the first place. For this very reason, its acceptable to assert that the key to the network economy of today is to adopt new technologies in the web and mobile space so as to effectively disseminate information through the right chaneels and right people. Even Fisher agrees that "even mildly interesting information imparted in these meetings be distributed by alternative means, such as email or intranet".

With this in context, we came across an excellent article in the UK Guardian titled "Do We Have To Meet This Way" that identities that "businesses waste an average of 20% of their payroll on bad meetings". Obviously, its important to rub flesh here and there but the new paradigm in meetings will be virtual.

Innovation Required In Convention Marketing

We all know that one of the most utilized, mainstream marketing initiatives to mass promote a range of products, information or services are conventions and exhibitions. The exposure and flow-on effects of these high yield marketing mediums feed positive externalities to the economy. However, given recent economic disruptions which threaten this AUD$17.2bn industry, what lessons can we learn to increase chances of industry renewal in this space?

Writing for the BRW (Mar 6-12), Christine Retschlag and Lynne Blundell in their FOCUS report raise some interesting facts on the cut-throat, swinging nature of the business. Firstly, there is clear assertion from Kevin Doherty, General Manager of Exhibition and Event Association of Australasia that “it is a risky proposition for conferences. If you don’t do your marketing right and don’t get a lot of exhibitors, you can lose a lot of money on one show. It swings hugely. You get the bigger, more popular exhibitions that make a lot of money. You don’t get to hear about the ones that don’t make money”. Secondly, Doherty claims that that there is room for increases in convention/exhibition supply as they continue to struggle with accommodating clients given the capacity constraint currently ensuing the industry.

These issues call for a need for a) greater participation of property development groups and listed property trusts to consider revamping outdated infrastructure (particularly with New South Wales) with a view of constructively integrating the subletting model that has sustained the industry so far and b) pushing for a cohesive national branding for business events initiative that can seamlessly position and communicate unique brand propositions to and across industry partners and strategic marketing alliances – so as to enhance Australia’s position in the complex, competitive global business event ecosystem.

Collective industry and state/federal governments’ responses to these problems have resulted in slow, beauracratic actions such as doing costing and timeframe analysis of upgrading key convention centres such the one in Sydney’s darling harbor and the showground at Homebush Bay. They have also tried to increase tourism and events department budgets for encouraging new activities that could act as a catalyst for ‘strengthening the marketing alliances and partnership with industry’ to achieve some sense of combined, national identity. 

True – these correctional initiatives might be going on the right track, but what guarantee does it provide for industry renewal? For example, what would happen if the results of such extensive planning and were not instrumental for their very purpose?

Perhaps what is needed, to address the promotional problem,  is some kind of experimental marketing initiative that can be deployed with speed and low cost which would aim to increase communication within and across key agents in a given conference alliance/sponsor network. This type of engagement would result in positive referral/word of mouth to other potential sponsors and affiliates in the exhibition/convention space and form this collective and cohesive sense of national identity – another core element missing in Australia’s marketing efforts in the convention space!

Ofcourse – a key problem with any such initiative would be measuring and collecting data on an intuitive interface and channel which could be managed with very little user effort. It must also be able to tap into ‘new media’ channels such as internet instant messaging, short messaging service, and integrating a range of internet sub technologies such as blogs, wikis, forums and social networking platforms.

With the difficulties facing the digital media industry at present on audience measurement and ROI’s on marketing activities, governments should perhaps incentivize the participation of recipients of digital marketing services (such as convention organizers and even the property groups that develop/refurbish the convention spaces) in a process to devise a better, purpose targeted marketing activity driving the right message and enhancing the right image about Australia’s potential in the convention space.

Mainstream Innovations Fail At Delivering Breakthrough Growth

Understandably, innovation improves the productivity of existing work processes by increasing specialization, redesigning processes, and/or investing in new equipment. This enriches society as a whole in the long run – as in total – society can consume no more than it products – the fundamental microeconomic paradigm.

However, we usually associate the term innovation synonymously with employee empowerment, initiative encouragement or risk taking – with an aim of challenging the ensconced ideology of ‘we do it this way because it has always been done this way’. As a result, the term itself is entrenched in a stereotype to the mainstream.

With this in mind, it’s important to distinguish that innovation itself is an umbrella term – housing various subsets that are each inherently distinguished from one another due to their prime focus, or innovation agenda.

Vijay Govindarajan and Chris Trimble’s groundbreaking book 10 Rules for Strategic Innovators: From Idea to Execution manages to outline the defining characteristics of the different subsets of innovation, whilst providing an excellent delineation (backed with case studies) of an emerging discipline, known as strategic innovation.

Essentially, the authors categorize the subsets as follows:

• 
  
  Continuous process improvement involves countless small investments in incremental process innovations. For example, General Electric excelled at this pattern of innovation through its well known Six Sigma program. Another pertinent Australian example would be MLC (National Australia Bank’s wealth management arm) process improvement initiatives in back-end financial planning adviser support to create an integrated value added process architecture to better service their clients (advisers) and drive bottom line economics. However, these incremental initiatives also feed into whats known as process revolutions.
• 
  
  Process revolutions also improve existing business processes, but in major leaps – say 30 percent increase in productivity – through the implementation of major new technologies (e.g. WallMarts RFID ‘smart-tags’ to facilitate inventory and supply chain management and control to drive business efficiencies)

• Product or service innovations are creative new ideas that do not alter established business models. Consumer products companies such as toy and game manufacturers excel in this type of innovation. A good Australian example is the introduction of CFD’s (contracts for a difference) derivatives to mainstream investors using elements of equity and debt financing.

The above three constitute the majority of innovations undertaken by established organizations with expendable resource and capability base– with a view of translating to their triple bottom lines (social, economic and environmental).

However, as explained by a qualitative and thorough review of the effects of organizational aging on growth and innovation entitled “Aging, Obsolescence, and Organizational Innovation”<!--[if !supportFootnotes]-->[1]<!--[endif]-->, organizations progressing through their lifecycle (or aging) improves competence at incremental innovation but damages competence at radical innovation. What it is essentially saying is that “as business[es] ripens, growth inevitable becomes more difficult” and the propensity for propelling growth (organically) eventually decays. So what options does this really leave us?

According to Govindarajan and Trimble, when organizations are faced with such a conundrum, they propose the adaptation of strategic innovations – which fundamentally involves engaging and implementing experimental business models (which they attribute as NewCo with their own set of defining characteristics, Organizational DNA and unique managerial approach) co-evolving with the CoreCo (the organization’s core business) in dynamic synergy through three main competencies: forgetting, borrowing and learning. These initiatives increase the propensity for architectural and business-model breakthroughs with the authors arguing that strategic experiments have the potential to re-engineer an organizations entire end to end lifecycles and deliver breakthrough growth and renewal by creating a NewCo which runs complementary in the innovation cycle to propel CoreCo.

Collectively, strategic experiments revolutionize the definition of a business rather than enhance performance within the proven business definition through product line extensions, geographic expansions or technological improvements by departing from the corporations proven business definition ad its assumption about how businesses succeed.

Footnotes

Jesper B. Sorensen and Toby e. Stuart in the Administrative Science Quarterly 45 (2000): p81-112.

The Peer To Peer Paradox

With all the hype in the media recently about illegal downloading through peer to peer networks, it often emerges that the solution to the problem might very well lie in viewing it through completely different lenses - and encouraging the use of these technologies to tap into peripheral revenue streams which could prove to be profound to artists from all dimensions. 

During a time of “enormous upheaval and transition” as proclaimed by the president and chief executive of Warner Music Australia Ed St John, the music industry, namely, is moving closer to embracing the internet as traditional revenue streams continue to dry up. The internet presents a “kaleidoscope of potential outcomes” for the big four of music business companies (Sony BMG, Universal Music, EMI and Warner Music) through alternate distribution channels underpinned by potentially innovative subscription, community or trusted campaigns.

The need for tapping into these alternative methods of distribution is imperative, with a music industry 2007 report outlining that despite unit sales jumping by 23.4 percent – due to a boom in sales of digital albums and single tracks – wholesales sales tumbled by 9.7 percent to $511.8 million. This is compounded by the fact that the surge in digital music sales did not compensate for the drop in the physical music market – despite the establishment of portals such as iTunes which has boosted the digital music scene.

Further adding to the pressures on incumbent music companies and record labels to radically change their marketing and distribution strategies is the lingering conjecture around legal actions targeted at ISPs which is perpetuating in a cycle of cultural retaliation. One on hand – we have a huge web 2.0 emergence of the peer to peer culture living through open sharing models of distribution and networking and on the other hand we have music industry groups and even the French and British governments pressuring the service providers to shut down websites.

Objectively, looking at the emergent forces at play, it can only be agreed that St John’s outlook on “finding new business models and strategies and creating music related products” will be the only way to tap into peripheral and complementary revenue streams around internet communities and social networks. The demise of one-way broadcast methods of marketing and communication (such as banner advertisements and album press releases) needs to be fundamentally challenged and transgressed by novel, interactive communication modes to build awareness of artists and new products in a way that reaches out to fans to get them involved and engaged.

Empirically – this view is being embraced by Warner Music by integrating traditional marketing mediums with “new media” strategies such as including a two-week internet and mobile phone promotion to drive an extensive online ad campaign and offer exclusive artists tracks through Bigpond or iTunes. This challenges the underlying paradigm to run big ad campaigns, as with plummeting sales and polarizing changes to music preferences with target markets, costs associated with traditional mass marketing campaigns no longer warrant investment on a cost-benefit basis.

With this in mind, it’s obvious that in the current digital music landscape – building and maintain trusted networks of fans is important if music companies were to embrace the emerging social network space. The proliferation of social networks such as Facebook and Myspace has radically changed the marketing landscape with many artists setting up their own ‘fan pages’ or profiles with previews of their latest releases. This fosters a close sense of interaction with fans and creates self-propagating fan communities that are powerful word of effect multipliers for distributing information on any new releases or activities of the artist. These social networks, in turn, drive trusted recommendations within, across and beyond fan and peer community circles. Such platforms for participation enhance the economic value of the music artist in question by creating passionate senses of immediacy and direct relationships which may result in increased fan loyalty to purchase additional merchandise or even enhance the proclivity to propel artist’s sales of live events and special gigs. 

Therefore, in order to really embrace – as Sony BMG executive Thomas Hesse says – “transformation from being a CD company to a multi-revenue stream, multi-business company”, fundamental paradigm shifts in marketing and business strategy to capture peer to peer information flows need to be considered. Innovative campaigns that target the heart of fan communities to drive trusted brand awareness in self-sustaining ways should be at the forefront of marketing strategies for all music companies, record labels and artists alone. One of the authors of a highly recommended book on my wish list titled Net, Blogs and Rock’n’Roll - centered on the dynamics of discoveries we as digital consumers encounter serendipitously – David Jennings writes an excellent review of a unique and novel innovation based on biological and ecological paradigms of social systems and group dynamics which embraces the innovation required in the music industry on his blog titled “Building Swarms of True Fans”.

The strategic underpinning of the community engagement system SwarmTribes which is sponsored by a UK body NESTA integrates the very essence of multi-channel communication which drives these conversations on the internet within and across social networks about the latest trends and fads. Interestingly enough, SwarmTribes is positioning itself as a complete social media engagement marketing platform integrating all channels (SMS, instant messenger, RSS and future web formats) across social networking sites to create vibrant ‘swarm communities’ of fans of bands registered for the program.

Personally, I strongly believe one of the challenges, which resonates to the media industry here in Australia and where I also discuss it extensively in another article Digital Media Stumbles On Audience Measurement , will be transferring this idea of engagement into practice and verifying if the biological communication traits that underpin the engine of the system really brings tangible, bottom line results (either through direct sales or complementary value added revenues) to the bands and labels signed up in an environment where physical and digital sales of music artists is being cannibalized by peer to peer networks and a culture of sharing.   

Digital Media Stumbles On Audience Measurement

The lack of a universal payback and audience tracking metric is strangling the rollout of digital media in Australia. Industry professionals are yearning for a controlled and guided initiative to drive the development of an audience measurement system that truly ‘engages’.

We are all very familiar with the benefits of leveraging and deploying the multitude of digital media tools available freely (and commercially) on the internet for the purpose of fostering word of mouth – advertisings nuclear weapon. For example GeekSquad and SunMicrosystems use externally facing blogs, podcasts and forums to communicate with their developer/employee community and normal customers – gather these feedbacks – and plug it back into their iterative customer intelligence initiatives which drive bottom line results via better product adoption, referral sales, brand loyalty – but most importantly, engagement!

With this in mind, why is it that in Australia, internet and other digital media account for only 20 per cent of Australia’s total media consumption with this medium capturing less than 10 percent of the $12 billion advertising market?

According to Neil Shoebridge, in “Across the digital divide” BRW (Oct25-Nov28 2007), it all comes down to a “lack of robust metrics to measure audiences and return on investment”. He cites a survey aimed at the business community by the Association of National Advertisers (ANA) in the United States which found that more than 60 percent of respondents asserted that their foremost barrier to increase investment in digital marketing is due to “insufficient metrics”, with 51 percent quoting a “lack of organizational support” and 59 percent blaming a “lack of experience in new media”.

Another Fairfax Business Research survey initiative amongst Australian executives with responsibility for online marketing activities – detailed in a flagship BRW Digital Generation edition – resonates with this data. The survey found that 37% of companies measure their return on investment from online advertising – quite a small percentage if you think about it and one that can be directly related to be a function of the 74% of respondents who found tracking the effectiveness of online advertising/marketing to be their biggest business challenge.

Additional data that compounds the ANA dataset are:

·        27% believe educating staff and management as being challenges

·        32% nominate increased costs in paid search advertising 

·        32% and 12% ranked increasing competition for premium advertising space and managing relationships across numerous publishers, agencies and services respectively as barriers

·        24% stating that online /digital advertising had little or no impact on overall sales/revenue (which feeds back intrinsically to the tracking problem)

Naturally, the barriers of organizational support and lack of experience can be overcome as more companies immerse themselves into developing capabilities and research in digital media and leveraging case studies internationally for domain application. However, due to the fragmentation of the media sector and resultant splintering of consumers’ media consumption, the most difficult task facing the industry worldwide would be to develop and endorse a universal audient measurement system for online communities or targeted ‘engagement advertising’ initiatives.

Therefore, the solution to the problem will not be easy! A lot of it will lie in translating the concept of ‘engagement’ into action and building on the most prospective results! There was even a research taskforce setup by the American Association of Advertising Agencies and the ANA which defined the concept of ‘engagement’ as “turning on a prospect to a brand idea enhanced by the surrounding context”. This reveals – as concurred by David Verklin, the New York based chief executive of media agency Carat Americas and a member of the research taskforce mentioned – that “there is agreement about the fact we need to move away from a metric that is based solely on exposure…we need to know how engaged people are with media…but we’re going to have a hard time coming up with a universal standard of engagement across all media”.

So its assumed that – in order to create an industry (even world) standard system of measuring online audiences – media and research companies just might have to cluster and form collaborative and concurrent research and application networks, where the research facility develops and tests in parallel with the application companies (by leveraging their networks and engaging small pilot projects) and building on what results work best. The main players in the Australian digital media market comprise of online classified providers (such as Fairfax, Sensis, PBL, Telstra and Newscorp), online advertising networks (for example Platform Nine, Ad2One, MediaSmart, 3d Interactive, Tempest Media) and online publishers and broadcasters (like Fairfax Media, Ten Network, Google, Prime Media Group, APN News and Media, News Corporation, Fox Interactive Media and News Digital Media).

Despite their inherent cultural and business differences – there should be a collective initiative aimed at driving, what a prominent online advertising executive Harold Mitchell calls, as something which is  “less siloed and more holistic….towards convergence in the same way that media [really]is!”