…because I believe brands should only invest in marketing
communications through existing users of their brand

 

From media scarcity to abundance

People don’t consume advertising.  They really don’t.  Sometimes an ad is great enough to attain the
position of demandable content; YouTube fame then beckons.  For a while. 
But all in all we don’t consume advertising.  We consume content; and to get to that
content, we consume media.

The most significant trend in our industry – a trend
discussed by Rory Sutherland during a presentation to an IPA Outdoor conference
in 2007 (see note 1) – is a shift from media (and therefore content) scarcity
to media (and therefore content) abundance. 
Media channel fragmentation, in conjunction with technology-driven
control over content creation, distribution and consumption has created a new
paradigm.

In his Excellence Diploma submission in 2007 Faris Yakob
described how this new paradigm is already here, “it’s just not evenly
distributed … young people today [as opposed to the ‘passive massive’] have
grown up with digital media, and so they have an intrinsically participatory
relationship with ideas” (see note 2); and by implication with brands.  Brands are, or should be, participatory.

 

 

 

 

The business of creating collateral that adds value to
brands, from top; Pot Noodle the Musical, Innocent Bobble Hats, Honda Live Ad,
Eurostar’s Somerstown and Nike’s Human Race

The importance of collateral

Creating a participatory relationship with brands is
encouraging brands to go play (see left). 
It’s why the BBC built the iPlayer. 
It’s why Mother created a musical for Pot Noodle (see note 3).  It’s why Innocent put bobble hats made by the
WI on their bottles.  It’s why Honda made
a live ad.  It’s why O2 branded a
dome.  It’s why Walkers are asking for
help creating a new flavour of crisp. 
It’s why Eurostar funded Somerstown (see note 4).  It’s why Ben and Jerry’s had a party on
Clapham Common.  It’s why Nike encouraged
to us run against the clock, then each other, then the world.  It’s why Contagious Magazine exists.

It’s also why clients demand big ideas and brand platforms;
and why agencies went media-neutral and 360 degree.  It’s why all of us look for new, interesting,
engaging and involving ways for the brands upon which we work to communicate.  We’re in the business of creating collateral
that adds value to brands; investing today to generate cash flows tomorrow
through the creation of brand equity (see note 5).

Ultimately we’re responding to a climate of media abundance
by encouraging consumers to participate in our brands’ ideas.  The incentive to do so comes in the form of
added value for customers; value which – as the examples above demonstrate –
comes in the form of ‘collateral’: ancillary items or experiences created
through the marketing function that add value to our consumption or
appreciation of a brand.

Distribution of brand categories across product vs service
axis and short vs long term consumption cycle axis.  Not all categories shown. 

A framework for collateral creation

Let’s return to our model of retention as a starting point;
with the aim of making existing customers not want to defect, but rather
generate word of mouth which in turn drives acquisition of new customers and
ultimately profits and growth.

How can we go about systematically creating collateral which
we can deploy to existing customers with the ultimate aim of growth?  We first need to appreciate that not all
products and therefore brands are created equal.  Where a brand is best placed to deploy
content – and therefore the most appropriate collateral to create – depends, I
believe, on two factors (see above and note 6). 
Firstly, whether you offer a product (generally tangible) or a service
(generally intangible), and secondly how often your brand is consumed (see note
7).

Short-term products

Products consumed in the short term (eg FMCG) typically have
less opportunity to create and maintain relationships through tangible customer
databases.  They rely instead on panel
data to monitor penetration rates and share of customer.

Collateral created for products consumed in the short-term (is
primarily deployed through consumer touch points such as packaging (eg
Radiohead’s packaging for it’s ‘In Rainbows’ album (see note 8), co-creation
(eg Nokia’s Concept Lounge – see note 9), branded retail environments (eg
Niketown or Glaceau vitamin water’s pop-up shop) as well as through experiences
(eg Innocent’s Fruitstock).

Short-term product collateral: From top; Innocent
Fruitstock, Radiohead’s ‘In Rainbows’ album, Nokia’s Concept Lounge and
Niketown

Long-term products

Products purchased and consumed over the longer term (eg
motors) have the double dilemma of being purchased infrequently and – because
no ongoing financial relationship exists – of not necessarily having sustained
contact with a customer once they do purchase. 
It’s for this reason that customer identification processes such as
product registration (eg in the case of many technology products) are often
prevalent.

The collateral primarily created for long-term products are
deployed therefore through consumer touch points such as clubs (especially in
high-interest categories eg Mini2.com – see note 10), branded retail
experiences (eg the Apple store), and product customisation (eg the Electrolux
DesignLab (see note 11).

Long-term product collateral: From top; The Apple Store and
Electrolux’s DesignLab

Short-term services

Short-term service-orientated brands (eg airlines) are, by
virtue of being in the service sector, often in the position to collect
substantial information about their customers. 
Online retailers know the purchase history and online behaviour of
customers and can make recommendations for future purchases accordingly.  Amazon’s accuracy in knowing what I may wish
to read next never ceases to amaze me. 
Google knows more about me than my mother does.

Collateral created for short-term services are primarily
therefore often in the form of ongoing transaction-based consumer touch points
of clubs (eg Tesco’s Clubcard), and rewards (eg British Airways’ Gold and other
cards).

Short-term service collateral: From top; Tesco Clubcard and
British Airways’ Executive Club

Long-term services

Long-term service brands which include – amongst many others
– mobile phone network operators (see note 12) and utilities have the duel
virtues of being a service with an ongoing financial relationship.  These brands are arguably the most
experienced in the creation and deployment of collateral for their customers
(see left).

Rewards (eg the previously mentioned O2 ‘World that revolves
around you’ campaign) and experiences (the mobile networks are all over this
with the O2 and Orange Wednesdays) are both opportunities keenly deployed to
minimise defections (increase loyalty) and ideally increase ARPU.

It is brands in this quadrant which are most likely to
benefit from shift-inertia.  We (half)
joke that it is more common to get divorced than change your bank account, but
its essence reinforces the central belief of this essay – that it makes no
logical sense to invest marketing time and money in a group who not only
generate zero profit for a brand now, but who are unlikely to switch to doing
so in the near future.

Long-term service collateral: From top; The O2 and Orange
Wednesdays

creating collatoral however isn't enough – once you have it you have to tell people about it…  more on that tomorrow…

Notes

1. Rory Sutherland. 
Adapted from notes taken at Delivering the Landmark Creative Campaign –
a speech to the IPA Outdoor’s Seeing Digital Conference.

2. Faris Yakob.  I
believe the children are the future. 
Essay submission for IPA Excellence Diploma class of 2007.

3. There’s a great report which includes interviews of some
of the people behind the development of musical at http://news.bbc.co.uk/1/hi/entertainment/7539377.stm

4. Interestingly the film was made without any overt
Eurostar branding, something Marketing Director Greg Nugent refers to as
‘Unbranded Content’ – for more see: http://www.brandrepublic.com/InDepth/Analysis/808432/Close-Up-Live-Issue—Mother-Eurostar-abandoned-branding-embrace-feature-film/

5. Peter Fisk in his book Marketing Genius defines Brand
Equity as “the sum of future cash flows driven by the investments of today”.

6. I find these two axes the best way to map consumer touch
points with the aim of identifying where the most appropriate points of for the
deployment of collateral.  Other axis
were explored – specifically an axis that differentiated between contractual
versus one-off transactions with a brand versus regular and occasional
consumption.  However being able to
separate regular versus occasional contractual relationships proved to be less
useful to me that a clean split of tangible products versus intangible
services.  This isn’t to say that there
are alternative ways to map the touch points, indeed many planners will wish to
play with alternatives depending on their own, or their agency’s, specific
point of view.

7. Note that aggregator brands (such as moneysupermarket or
uswitch) are ‘trending’ many brands left and down; left towards the
shorter-term – ie changing supplier more often (especially in the utilities
sector) and downwards through the commoditisation of historically service
brands (for example in the telecoms sector.

8. The addition of packaging (as opposed to download only)
increased the retail value of Radiohead’s recent ‘In Rainbows’ album more than
nine-fold…  When originally released in
October 2007 as download only – unpackaged – the value was determined by
consumers; they could choose their own purchase price – the average price
chosen to pay was £3.88 (source: http://www.whatpricedidyouchoose.com).  At the start of December 2007 the same
content was released in the form of a three-format discbox (source: http://www.inrainbows.com/Store/index3.htm).  The asking price for a product valued at
£3.88 with packaging?  …£40.00.  Value goes both ways.

9. For more on Nokia’s concept lounge see: http://www.thesedays.com/conceptlounge/

10. Mini2 is an online hub for all things Mini maintained by
its online members.  For more visit: http://www.mini2.com/

11. The Electrolux Design Lab is an annual global design
competition open to design students who are invited to present ideas for home
appliances.  For more visit: http://www.electrolux.com/designlab/

12. Note that I’m referring to contract only in this
instance, PAYG would be significantly shorter term and more product-focussed

tomorrow: transaction planning – because creating collatoral isn't enough
Wednesday: why we need a new force of agency