creating, innovating, internet

Australia’s digital-fuelled cultural boom: Why established brands and businesses need to close the innovation gap

the above video sets the context for a report released last week by Google and the Boston Consultancy Group, which has some rather interesting findings.  the report’s key findings are that Australia’s media industry is healthy, however it is the Internet that is providing the “shot in the arm” to growth.

it turns out that not only do Australians like their ‘new’ media world, but in said world where our access to, and choice of, media has never been greater, we’re consuming more media than ever before.  so much so in fact that – because we export, essentially, more content than we import – we have a trade surplus in our content that’s worth $24bn to the economy.

the report also identified that whilst ad revenues are still (and will be for a while) predominantly generated offline (93% in 2011), its online revenues that are driving more than 50% growth in the sector.

the report came in the same week that the sparkily titled Commercial Economic Advisory Service of Australia (CEASA to their friends) released it’s retrospective of 2011, reporting that whilst adspend was down, it “wasn’t as bad as previous years” (let it not be said that CEASA can’t find a silver lining in a set of figures).

a 1.4% overall drop was the result of (in descending order) online up 17.5%, outdoor up 3.4%, radio up 0.7% (congrats to them all), 2.6% drop in total TV, 9.2% drop in newspapers, 8.4% decline in mags, and a 20.8% drop in cinema. so both reports point to online as doing not just well, but supporting both ad revenues and the overall economy.

so far so ‘tell me something I didn’t know’ … but the reports struck a chord with a conversation I’ve been having a lot with clients and agency-type people recently.  because the reports only tell a truer picture when you ask WHY it is that online is bucking such a downward trend – and I think that the answer is about innovation.

the engine behind online’s performance is now only marginally about penetration gains and faster infrastructure, and a lot more about the increased utility and capabilities delivered via the internet. its not the internet that’s bucking ad spend trends and fuelling the Australian economy, its what the internet is doing, and more specifically what we can do with the internet that counts.

Facebook and YouTube have now been joined by the likes of Flipboard and Spotify on the Australian media scene, innovations that have come not from the mainstream but from the fringe. and here’s where I see the gap. because its not mainstream media or businesses that are driving this innovation, but new entrants. new entrants spotting an opportunity and innovating into it.

when you think about it, many ‘online’ platforms should have been invented by existing players, yet most weren’t:

the music industry should have invented iTunes

the movie business should have invented NetFlix

the radio industry should have invented Spotify

a magazine publisher should have invented Flipboard

a bank should have invented KickStarter

a dating service should have invented Grindr

and for that matter, a media agency should have invented Facebook

the reason none of those organisations invented the new platform is the same reason the American Railroads went into decline:

“The railroads did not stop growing because the need for passenger and freight transportation declined. That grew. The railroads are in trouble today not because that need was filled by others (cars, trucks, airplanes, and even telephones) but because it was not filled by the railroads themselves. They let others take customers away from them because they assumed themselves to be in the railroad business rather than in the transportation business. The reason they defined their industry incorrectly was that they were railroad oriented instead of transportation oriented; they were product oriented instead of customer oriented…”

source: Marketing Myopia, Theodore Levitt, HBR 1960

Levitt’s question from 1960 is even more pertinent now than it was then. what business are you in? once you’ve answered that you can start innovating around that business, and once you’re inventing stuff that gets shared and talked about, you can stop paying the expensive price of not innovating: buying media.

established players, it strikes me, are the least likely to bridge the innovation gap in their category – we should all we working on plans to change that.

and for those of us in agency land the question is more pertinent than for most … what business are we in? anyone who answers ‘buying media’ or ‘making ads’ should turn the lights off on their way out.


2 thoughts on “Australia’s digital-fuelled cultural boom: Why established brands and businesses need to close the innovation gap

  1. Xikan says:

    Chris, what you said about innovation really struck a cord with me. Innovation is not the icing on the cake, it is fundamentals, and organisations who wants to last in the long run should place innovation at it’s heart.
    But perhaps an established company simply just got too much to lose, and they are no longer hungry for change.
    Look at Disney, they could not produce any blockbusters after The Lion King because they kept on going with the same success path while the technology and audience has moved on. It’s only when they partnered with Pixar, they were able to produce movies that sells. What worked in the past doesn’t alway work in the future, and that is the very struggle we have today with our business and our clients.
    There just seem to be a striking clear pattern here, that existing successful businesses are destined to fail at innovation in the long run. Because often, the focus is on profit and revenue. Questions gets asked often sounds like, “if I do this, how much profit will that make?” When that happens, it leaves room for no error, and it bounds us into the existing way.
    Dig in a bit deeper, innovation needs to be driven from top, because the CEO has to be willing to say, I am going to dedicated certain amount of resource for people to make mistakes and test out new grounds, in order to learn and innovate our business. That’s what Apple was able to do, and what IBM has done so with their business model.
    As for agencies, we need to stop paying attention to billing rankings.

  2. thanks for the comment Xikan. yup I think it’s definitely harder for established players to innovate but as you’ve pointed out the proof is there in the form of market leaders who have… and as for billing rankings – I hear ya!

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