Ideas Made Well

2011 is more difficult to predict than almost any other year in history, with the economic situation continuing its hold on the minds of governments all over the world. The natural human reaction of consumers is to reflect this feeling of uncertainty and pursue survival rather then expansion modes of living.

But in many parts of the world, some consumers are spending more than ever. The Chinese economy continues to boom, the Middle East is showing strong signs of recovery; even the UK has made giant leaps since the low point of 2008. Austerity measures to be introduced in 2011 in much of Europe and the continuing complications in the US will surely make it hard work in 2011 for the ‘established’ economy, even if the new economy continues to grow. With all that in mind, here are some random predictions for the year ahead.

1. The global economy will continue to grow and the internet will grow as a sales channel. (a two year-old could have predicted that, I hear you say).

2. Traditional retail will show significant growth as finally companies wake up to the fact that the internet, when used correctly, boosts – rather than replaces – shop revenues. Web sales have only just broken through the 10% of all sales barrier and increasingly the evidence suggests that when people use both web and retail together, the size of sale (the basket value), is considerably larger.

3. Trust will become ever more important as a desired consumer value. There is more information available than ever before and each day this level of information gets bigger and bigger. With so much to navigate, consumers want easier and quicker ways to access information. Quality will override quantity.

4. Creativity in communications agencies will become more and more important. Creativity has the power to cut through unlike anything else.

5. Reality shows will increase in popularity but the ‘freak show’ elements will diminish. Reality shows work when people can identify themselves amongst the contestants – they become as tribal as supporting a football club.

6. Sepp Blatter will resign.

7. It will snow heavily next December and Britain will shut down for several days.

8. More and more CEOs will recognise that adopting a greener, more energy efficient policy actually saves them money and makes them look good.

9. The value of differentiation will once again show itself as a primary driver of value.

10. Kate Middleton will become the most photographed person in the world and if you are looking for a new business idea that is going to make money next year, then set up ‘Kate Middleton’s Clothes company’ with a lightning quick production facility to sell whatever she was wearing last week.

Happy New Year

It’s easy to moan about the quality of the Christmas lights – in London, the moans have been getting stronger each year as the famous Oxford Street and Regent Street lights have consistently failed to add any cheer. By handing over power to the likes of Disney, the costs have been passed on, but the impact has been weakened to such a point that they are probably doing more harm than good.

Yet this contrasts with creative skills, particularly in the area of lighting and projections, that are the envy of the world. Search YouTube for lighting projections and many UK examples rise to the top, the latest being the recent event by Ralph Lauren on Bond Street – just a stone’s throw from the turgid red ribbons adorning the sky above Oxford Street.

http://4d.ralphlauren.co.uk/&ab=int_111110_HP_LIGHTSHOW_SEENOW

Go to pretty much any music show and you will be dazzled by the lights in a way that simply wasn’t possible a few years ago. Interactive displays pop up pretty much everywhere, and yet what could be a shining beacon of British creativity – the lights in the busiest shopping street in Europe at the busiest time of hte year – makes do with a homage to the 1970s and the latest marketing campaign for a movie blockbuster (they hope).

With such a huge amount of tourist traffic, surely someone in a position of power can see the benefit of dazzling visitors rather than underwhelming them?

It’s incredible that so many big brands have yet to make the link between physical and digital retail. John Lewis has done it to a certain extent, at least creating a relatively seamless shopping experience between the two channels. Argos too should be applauded for adding some interrelationship between its retail offer and online capability.
Yet few others have overcome the intense competition that appears to exist within many large companies. It’s retail versus online – each loves it when the other screws up. Bonuses tend to reward sales in a particular channel, so the end result is that the channels are in competition with each other. This is madness and probably explains why most retailers embrace the potential of digital commerce with the enthusiasm of a 14-year-old being made to visit a distant relative.

Some retailers are doing more than just sticking a computer on the sales floor with a note on it saying customers can use it. The Adidas miCoach programme, for instance, mixes in-store testing with online data capture, and there’s an app as well.
New Look has built a community via its website to use as a barometer for its clothing range, with information gathered influencing what’s sold in the future. Asda has gone one stage further with its Chosen By You initiative, which has led to more than 1,000 new or modified products in its own-brand range. Such examples are few and far between and, in many cases, restricted to partial integration for a campaign period.
The true prize is when retail and digital work together in a way that totally integrates what each channel can offer the consumer. It’s what they expect. As should every MD in the land. Yet it’s not happening.
The explosion of social media has led to a massive increase in word-of-mouth marketing as a marketing tool and, according to a recent report by word-of-mouth consultancy the Keller Fay Group, the UK is well ahead of the US in this respect. Yet this marketing tool is predominantly used by consumers rather than marketers. Consumers have always had a predisposition to recommend products or services that they like (and slag off the ones they don’t).
These conversations are happening in spite of brands’ medieval approach to making their offer a seamless one, which recognises the interdependence between the physical and virtual worlds. Unravelling the current bonus structure is an essential step. When that happens, the floodgates will surely open to the overall benefit of all retailers.

According to a report by Boston Consulting Group, the UK has the largest online economy in the world, contributing 7.2% of all the money sloshing around the UK economy. What’s more, for every pound we import using online, we export £2.80, in sharp contrast to the comparative figure offline, where we export just 90p worth for every pound we import.

What’s even more impressive about these figures are that our broadband infrastructure is not the best by any means – only just over 50% of the country has the capability to connect to fibre optic cable, which enables far quicker and more reliable internet connectivity and without subsidy from the government, it just doesn’t add up for private companies to push that figure much beyond 60%. Digging up roads is an expensive business. Yet, these latest figures suggest there is a huge potential benefit to the economy if the infrastructure were improved so any sane government would make that investment, wouldn’t they?

Part of the problem, beyond the cuts announced last week, is that there are still some people who don’t get digital. At a big travel trade conference last week, the keynote speech ended in the blindingly obvious statement – “Make no mistake about it, the internet is here to stay”.

Even if this speech was made in 2000, those would have been the words of a dinosaur, but to say it in 2010…!!

So quite how we are number 1 is a bit of a mystery, and is testament to those people, who have fully embraced the potential of online. What it also tells us, is that the potential for further growth is massive. If I was the government, I would stop approving major road infrastructure projects and put all that money into digging up roads.

There was an astonishing reaction to Gap’s new logo this week, that caused Gap to issue a statement saying “We love our new look but if you have any suggestions, send them in”, which in itself then caused even more reaction (most of it extremely negative) with people understandably questioning whether Gap is in control of its brand. The perception that the new logo ‘cheapened’ the clothes was clearly a worry to Gap’s management and the new logo was hastily replaced by the old logo on its Facebook page.

What went wrong? The new logo is undoubtedly more modern and uses colour in a more sophisticated way, but at a stroke the brand clearly lost some of its essence. Gap has never been the most exciting retailer in the world but has built an enviable reputation for reliability and dependability. The old logo symbolised this – a classic dependable design. Did the brief ask for something more up to date, that was more in tune with today’s customer? Probably. And did the new design deliver on this? Yes. But take away the classic dependability of Gap and you are left with not a lot.

There is a very clear lesson for any brand out there thinking of doing something revolutionary… Consider dropping the r, and instead opt for something evolutionary. Keeping your brand up to date is a lot easier if you do it in stages and then you can avoid the following:
“Hi Bruce- we’ve got a great new logo that’s a huge improvement from the one done 20 years ago under the previous management”
“Isn’t that going to cost a fortune to roll out all at once?”
“It will but it’ll be worth it – think of all the PR we’ll get”
“Do consumers like it?”
“My wife thought it would appeal to the younger generation and we’ll launch it on all that social media stuff like Facebook and Twitter, so they’ll get a sneaky peak before we put it on all our stores. Kids love it when they are involved”
“What’s wrong with the old logo?”
“What’s right with it you mean? It’s old-fashioned – as the agency said – it’s out of touch with the way people live their lives today”
“I’m not sure Frank”
“Trust me on this”

A few days later….
“Hi Bruce. Thanks for your emails. We have had some negative reaction to the new logo, so we’ve taken it off the Facebook page. I’ve run out of budget to get another logo designed so we’re going down the crowdsourcing route. If consumers think that they are suddenly design geniuses, we’ll let them design it for us for free.”
“Frank – you’re fired”

Lots has been written about the Coalition government reneging on certain policies that were supposedly all part of the acceptance that the UK was ready to go green, and was prepared to pay a price for doing so. In the new period of austerity this assumption has been questioned and found wanting. The energy companies offer ‘green’ tariffs that include greener energy sourcing and some carbon offsetting, but these cost 20% more than a standard tariff. Needless to say, the number of people on these types of tariffs is small – effectively you are giving a charitable donation or paying a voluntary tax to support greener energy.

Such noble actions though are not being supported by companies like BP, who put a measly 5% of their exploration budget into greener forms of energy. So it’s all a bit of a sham.

Zurich, the pensions company, claims its Environmental Opportunities Fund will invest in ‘companies and institutions that actively enhance the global environment and community’, yet almost a sixth of the fund is in oil companies’ shares.

The ‘planet’s first low-carbon restaurant’, Otarian, opened in London a few weeks ago, and despite a proper and intense marketing programme has failed to attract much custom – at least in its Wardour Street branch. No meat is sold in Otarian, so it was always going to be a niche offer – yet I suspect they didn’t expect it to be quite so niche.

There was a revealing story in the Guardian about how ‘locally sourced’ Devon products in Tesco, produced within a stone’s throw of the store, were travelling hundreds of miles to a central distribution centre and then hundreds of miles back again, making the ‘local’ claim a bit redundant. Factually true, but implying a green benefit that doesn’t actually exist.

As a nation we have become much better at recycling things, using fewer plastic bags and using low-energy light bulbs. We all feel like we are doing our bit to save the planet, therefore we don’t feel too guilty about doing the bad things, when there is little perceived option. An amusing response to Prince Charles’s sustainability project, confusingly called Start, has received a fair amount of cynicism – “Its all very well for him to eat organic foods, when all he has to do is order his butler to go and get some vegetables from his massive garden. If you live in a council estate watching every penny, its totally different”.

This all begs the question – has the green agenda lost its way? Lots of individuals and lots of companies all doing a tiny bit, but lots of smoke and mirrors at the same time. As Tony Hayward, the deposed CEO of BP, found out, ‘smoke and mirrors’ is not an easy strategy to defend. Only when companies (and governments) put authenticity as a prerequisite in their green strategies, will we see consumers begin to trust those companies, and then in turn it will give those companies the confidence to go beyond paying lip-service to the green agenda.

At the moment though it feels like a real mess.

Milliband vs Milliband is a weird contest isn’t it? Both seem very capable and as politicians go, Mrs Milliband should feel very proud that she has produced two such high achievers. But many people feel that it is slightly strange that two siblings should be set against each other in a leadership contest such as this. Surely they would have had a private chat and worked out which one should be leader, before voting actually started?Or leave it to the public to decide – a phrase aptly used by Big Brother.

Such internal competition though is prevalent in any large company. Not between brothers but between their corporate equivalent – different departments. This has been the case for a very long time. Accounts vs Marketing, Marketing vs Sale, Sales vs Commercial are all good, often highly productive battles that produce good results for many companies. It’s when individual departments start to fight among themselves, that it can start to go horribly wrong. So left of centre vs right of centre is a good debate. Brother vs brother somehow isn’t.

Yet this is precisely what is happening in many companies. The brothers in question are retail and digital.

It cannot make sense for people working in retail to want digital to perform badly or vice versa. Yet that is exactly what is happening within many organisations. The people working in a particular channel are each bonussed on outperforming the other channels and outperforming their historic performance. The reality is that digital channels are growing at a far faster rate than retail, yet retail is still dominant in most sectors.

The real objective should be to optimise how the different channels work together, so that consumer needs are best met, which in turn will lead to more business for the company. Most specialist agencies reinforce this insanity but this can’t continue. In the end, consumers dictate day to day strategy and they don’t do illogicality for prolonged periods. Enlightened companies are now recognising this and adapting accordingly, but it is quite frightening how many aren’t.

When Thomas Cook demanded a £1m upfront fee for the right to buy their media, it was a sign that at least one client had become fed up with the lack of transparency in how media agencies got remunerated for their services. Media agencies were strangely quiet in the ensuing debate, keen to keep their covert agency deals under wraps. But many others leapt in to chastise Thomas Cook for their approach, which admittedly is not a brilliant long-term solution. Rather like the Indian restaurants that double their prices and then offer a 50% discount, this type of arrangement does little to enhance trust.

Many other agencies then resurrected the condemnation of the payment by time methodology and sought to push the contribution of their agency to the overall success of the business. In theory this appears like a fairer way to establish a correlation between input and output. Yet few agencies want a basic fee that doesn’t even cover its costs and hence the potential for payment by results is normally only ever applied to the ‘profit element’ of an agency’s fee.

Putting aside the complexity of working out the specific extra contribution delivered by the agency in terms of isolating it verses any other factors, there are a whole host of questions that are begged. Why is the contribution of one agency greater than the marketing people, who briefed, oversaw and sold the campaign internally ?
Why is an agency’s contribution better than another agency, who didn’t get the job (and the fees) – if the agency managed to help lift sales by 10%, who is to say that another agency might have lifted them by 20%?

If an agency is genuinely part of a team of agencies, who worked in an integrated fashion, this makes isolating the contribution of one agency over the others even harder and probably not in a client’s interests.
The chances are that you would spend more time arguing the toss over who did what and quantifying the effect than you would ‘doing the doing‘.

A better approach is for clients to ask what they want out of an agency. What motivates an agency? What is the best way to achieve getting the most out of an agency? An accurate analysis of this is unlikely to result in a strong correlation between money and performance. True, agencies hate getting ripped off … just like clients. So avoiding any mutual ripping off is important. The way that agencies grow is by getting more and more business – by doing great work that works. That is a far more satisfying way to make money rather than fleecing a client.

Two key principles shine out.
1. Transparency. Only with an open approach to remuneration, will both sides trust each other.

2. Fairness. It is in the client’s interests to motivate agencies and it is in agencies’ interests to do great work. This is only really possible if agencies are allowed to make a reasonable margin.

The way that you obtain the best insights about an age group is rarely through research – it is often through experience. A stag do is sort of a mixture of the two. Research groups are never that much fun for the participants – whereas stag dos (like one in Antwerp) clearly are fun. A lot of fun. As well as being highly instructive… So here are the insights gleaned from a bunch of 35-55 year olds after a two-night celebration of Damian Schnabel’s forthcoming nuptials.

1. Travel arrangements go wrong , even if the train booking is handled by an experienced travel booker. When travelling in a group of 20 though, any mistake on the ticket (like the wrong date) means that any chance of catching the scheduled train disappears.

2. This age group can turn on the charm however, meaning that it is possible to rectify things with a very nice Eurostar booking clerk (or customer interface manager or whatever they are called).

3. 35-55 year olds also don’t panic very much, as there was a remarkable absence of stress caused by the news that we had the wrong tickets. Instead, plan B was quietly hatched for a night in London. One reason for the lack of panic was probably more to do with the fact that there were no other halves there as much as age and maturity.

4. The conversational breadth of 35-55 year old men is extremely broad, ranging from the obvious (cars, women, beer) to the much less obvious. Apparently the UK eats far more pork (proportionately at least) than any other nation on earth. According to one stag , pork is in everything from rissoles to beefburgers (which he rapidly corrected to hamburgers) and you would need every digit on your body to count the number of everyday foodstuffs containing a bit of pig. Gardening is not a big topic of conversation for this age group, but for people outside London who have access to an allotment, there is a macho pride in the size of the vegetables grown. Such is the productivity of courgette plants, that courgettes may one day rival pork as a constituent of food products if allotments continue to increase in popularity.

5. People in Newcastle are different from normal human beings. They will talk to absolutely anyone, have no concept of the word ‘embarrassing’ and their ‘How to survive a day’s drinking from breakfast to the wee small hours’ guide involves not eating anything until dinner.

6. It is harder to herd 20 mature males than it is to herd 20 of any other demographic, except perhaps for cats.

7. Many people have karaoke skills in advance of their own perception. Many also have skills below their perception ……

8. The mankini is not a great invention, but it does create an incredible amount of interest, whether it be on a Eurostar train, a bar, a club or outside a club – when having just been ejected from the club.

As to insights pertainto Antwerp:
• The Belgians eat a lot of waffles and there isn’t a supply shortage of waffle shops or McDonald’s
• In the north of Belgium, including Antwerp, their loathing of the French is surprising extreme
• Their musical taste is 20 years out of date, just like it was many years ago – it’s just a different 20 years.
• The chips in McDonald’s over there are far more potatoey than the chips you get over here
• Hotels are cheap in Antwerp, but a ‘£25 a night in the middle of summer deal’ genuinely IS too good to be true
• Hiring an Antwerpian belly-dancer over the internet is very high risk and may end up in disappointment

So, if anyone out there has any briefs with a male 35-55 target (or that are based in Antwerp) then you know where to come.

When you read the headlines from the Deloitte report into post-recession US, you would think the right solution for brands would be to adopt aggressive pricing strategies. 79% of US shoppers believe that they have become “smarter shoppers” in the last 2 years, and 60% claim to have become more price conscious, utilising vouchers and coupons to a greater extent than previously.

However, there is a more interesting statistic from the same report – 75% believe that the financial crisis had caused them to realise which brands were important to them and which brands are less important to them.

This explains why the discounters have been doing well but also why the robust brands are doing well at the same time. The brands in the middle – the ones without a distinctive set of values – are the ones getting squeezed. Let’s hope that the natural instinct of consolidation in times of uncertainty doesn’t cause those brands to wither and die. This is a time for putting your best foot forward.