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for a need for a) greater participation of property development groups and listed property trusts to consider revamping outdated infrastructure (particularly with New South Wales) with a view of constructively integrating the subletting model that has sustained the industry so far and b)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!”