Economics Archives

Why Making Things People Want beats Making People Want Things – #adtech_london

John V Willshire on September 12, 2013

My slides from the talk from earlier today at Ad:tech 2013 in London:

It links back to some of the questions raised in the written piece from a couple of weeks ago. It’s nearly two years since I stumbled across the phrase as a galvanising idea for the work I do with clients and agencies here at Smithery, so it’s been great to reinterrogate the notion slighty in the context of some other things. As always, a smattering of economics and maker culture infuses it all.

More Perfect Competition evidence from latest Mary Meeker roundup

John V Willshire on October 19, 2011

The latest Mary Meeker goldmine of stats is out, which you can flick through here on Business Insider. (HT @graemewood).

One chart in particular grabbed my attention:

It reminded me of the Perfect Competition stuff I wrote on feeding the puppy about two years back:

“The advances we are making are pushing us further towards ‘perfect competition’, which is increasingly making it hard for companies (especially retail ones) to generate the profits they used to.”

(full post here)

Perfect Competition has several key market characteristics that bring it about:

Infinite Buyers/Infinite Sellers – Infinite consumers with
the willingness and ability to buy the product at a certain price,
Infinite producers with the willingness and ability to supply the
product at a certain price.
Zero Entry/Exit Barriers – It is relatively easy to enter or exit as a business in a perfectly competitive market.
Perfect Information – Prices and quality of products are assumed to be known to all consumers and producers.
Transactions are Costless – Buyers and sellers incur no costs in making an exchange.
Homogeneous Products – The characteristics of any given market good or service do not vary across suppliers.

In the retail space, the rise of the smartphone is rapidly bringing about a situation where perfect information is available about price & quality of goods in the retail environment…

So although smartphones alone will not bring about classic theoretical perfect competition (where no company is able to make any profit, just enough to keep them going…), it makes it a damn site harder to make decent profits.

So if you’re a retailer facing this problem, what might you do about it?

Play on the other factors, perhaps, and move them to your advantage. Which strays into behavioural economics, which as always is no bad thing, but it naturally strays into some quite Machiavellian ideas, it seems… (five days being exposed to the cash-rinsing exercise that is Vegas was proof of that).

To wit; three mildly evil ideas for shop owners…

Decrease the feeling of “infinite sellers”

If you’ve got a shelf full of products, people are more likely to think “well, they’re still going to be selling them in half an hour, I can shop around”. Keep just two of any product on a shelf, and as soon as one goes through a till, have backroom staff replace it when the customer has left.

Create some Exit Barriers

As people enter the store, hand them a voucher for free home delivery/5% off/free fitting (whatever is relevant) that only lasts 30 minutes, and states ‘only one voucher per customer per day’. Suddenly if they walk across town to another store, the thirty minutes will have lapsed…

Only trade in limited editions

Homogeneity is your enemy; if your competitor offers the same product, here’s nothing to stop people shopping around. So do whatever you can to make your products unique, individual, and only available on your floor. Free gifts, special designs, signed editions… what’s the thing you’re offering that’s stopping the customer walking?

There’s lots more you can think about, of course, but the list of five perfect competition characteristics is a good place to start looking for inspiration.

If you’re mildly evil, that is.

The Blacksmith and The Economist

John V Willshire on June 30, 2011

I’d like to start, as one does, with The Scottish Enlightenment of the 18th Century.

(no, don’t worry, not all of it… just a bit)

The Scottish Enlightenment was an 18th Century intellectual movement, ranging across the fields of philosophy, chemistry, geology, architecture, poetry, engineering, technology, economics, sociology, medicine and history.

The ideas and advances that stemmed from The Scottish Enlightenment helped forge the world as we know it today.

Central to the Enlightenment was what David Hume (philosopher, historian, economist and essayist) called the development of a ‘science of man’.

This merged a scientific study of how humans behave in ancient and primitive cultures with a strong awareness of the determining forces of modernity

Which to us, who’ve been at the heart of an industry savaged by the forces of modernity, surely sounds like something we should undertake. More than ever, we cannot use the beliefs and tools of the immediate past to frame where our future lies.

The opportunity currently described as ‘social media’ shows our desperation perhaps to frame things in familiar, comfortable terms. But it is about far more than another media buy, or channel to be plumbed into the marketing mix.

It is more than new and improved tools, it is more than better measurement and specific targeting.

It is about being human. It is about being part of communities. It is about helping our clients learn to be people again, not brands.

To understand this properly, we have to study how older cultures and businesses worked, the ones that existed before mass media.

Then we must frame this learning what we know about modern technological capabilities. In short, we need our own ‘Enlightenment’. We need our own new ‘science of man’.

So why hasn’t it happened already?

———————————-

To help answer this, I’d like to focus on a key protagonist of the Scottish Enlightenment in particular…

Author of the Wealth of Nations, creator of ‘the invisible hand’ of market forces, Adam Smith.

Smith is considered the father of modern economic thought; his ideas helped powered the the industrial revolution at the time, and without doubt still have a huge bearing on how companies are run today.

What is of particular interest to us, a service industry, is what Smith says in book one of the Wealth of Nations, ‘The Division of Labour’.

The division of labour is a simple yet brilliant description of how to increase the productivity of a business using the same finite resources.

Smith observed that by turning each stage of a business into simple, repetitive tasks, with work being passed along a production line, a factory can produce with maximum efficiency.

For a while, the agency model was a factory in all but name.

We had clear and defined roles, and performed relatively simple repetitive tasks.

The advertising agency would make 30 seconds of film, the media agency would place it, the PR agency would gain extra coverage in the ten or so national papers…

…it was a well oiled, efficient machine.

So what happened?

Smith identified three key features which let the division of labour work; dexterity, time and technology.

Firstly, dexterity referred to the repetitive, simple nature of the work any man or woman would undertake.

If you do the same, simple thing again and again, you become better at it, and quicker at it. Your core craft skills improved, and quickly.

In agencies, whereas once we used to undertake relatively straightforward tasks which we repeated and improved, nowadays every piece of work brings new considerations, untried avenues, experimental opportunities.

Don’t get me wrong; We should always, always try to innovate and improve the things we do.

But everyone must recognise that by trying new things, we lose dexterity; it is hard to be dexterous and accomplished at something you’ve never done before.

The second of Smith’s three things is time. In his example, it was specifically the time it took to pass one phase of the work along to another.

By batch working, it’s better to pass 10,000 items once than pass an item 10,000 times.

Now, the way we used to pass work along in the agency model was very clean, very efficient. Everyone knew their place, performed their roles with the utmost efficiency.

But not now. And not just because every agency is trying to be ‘lead’ or take their place ‘at the top table’.

If you were to divide agencies up into separate entities based on today’s landscape, you wouldn’t see what we have now. The reason that everyone says “social media is our area” is because everyone’s right, it is.

So the clean lines of division are gone, and at best there’s confusion about who does what, and in the worst cases it’s open warfare. In each case, it slows the process down. But even within the walls of a single agency, passing work between departments has slowed.

Ideas are more complex, harder to define and describe, easier to get lost down the wrong track on. The simplicity with which work used to be passed through an agency has also disappeared. In an age characterised by speed, it takes us much longer to get things done.

Finally, Smith’s third essential ingredient for the division of labour to function properly; technology.

Now, we are hardly short of new technology. But Smith was referring to technology that would clearly and precisely help the factory function better.

It could come from the improvements made by the workers themselves; if you’ve ever been in a factory, you’ll have seen the cardboard and strings adjustments made by the workers who realise how to make the machine work better.

Or it could be the original designer of the machine, who on seeing Mark 1 in action will redesign Mark 2 with some extra technological advances.

Or, it may be that the people whom Smith calls “Men of Speculation” (“…whose job it is to do nothing, but observe everything…”) would come along, look at the factory in harness, and spot ways in which technology could improve the process.

Currently, given the marketing model used by clients and the agencies is largely unchanged, technology is not helping improve the process, but confound it.

Each additional piece of technology seemingly serves to confuse further, rather than increase effectiveness.

—————–

What does all this mean?

Well, in a highly competitive industry, where agencies repeatedly try and shave costs from the process, and increase the effectiveness of their factories, the key principles of the division of labour have stopped working nearly as well.

One solution, and one that some clients may find appealing, is to cleanly delineate who does what again; to reset the boundaries, and as much as possible create a pure division of labour.

And there’s perhaps something to be said for it; it may not get you the most groundbreaking work, but it will increase the speed with which it happens.

However… there’s got to be a better way, surely.

Well, here’s the thing… Smith stated that the Division of Labour did NOT work for every industry.

Take this passage…

“The nature of agriculture does not admit of so many subdivisions of labour, nor of so complete a separation of one business from another.”

Which is interesting, because more than ever, it’s harder to draw a complete separation between different parts of the agency world. Smiths continues…

“The ploughman, the harrower, the sower of the seed and the reaper of the corn are often the same. The occasions for those different sorts of labour returning with the different seasons of the year, it is impossible that one man should be constantly employed in any one of them.”

More and more, teams need to be able to follow an idea from beginning to end, rather than just play their one, single, repetitive part and drop out. Finally, Smith says:

“Country workmen are almost everywhere obliged to pay themselves to all the different branches of industry that have so much affinity to one another as to be employed about the same sort of materials”

We are all increasingly “employed about the same sorts of materials”, perhaps that is the truest part of all. The division of labour has fallen foul of the dissolution of boundaries, but that’s because the very nature of the work has changed, because the materials are all the same.

Now think about the language we use to describe the work we do… we nurture ideas, grow communities, seed campaigns, develop relationships…

…because of the very human and organic work we are now doing, we are becoming increasingly agricultural in our approach.

People from all agency backgrounds are “employed about the same sort of materials” nowadays.

The notion of the “materials” we work with is even more interesting than the ‘agricultural’ idea, though.

I believe we can actually take inspiration from another figure of Smith’s time…

…the one man in the community who would create whatever was need by the community from the raw materials of that age; the blacksmith.

The blacksmith lived and worked at the heart of every village.

He would be the provider of vital technology for the village; toolmaker, engineer, armourer, bladesmith, chainmaker, nailmaker, rivetmaker. He would help travellers get where they wanted to go; mend carts and wagons, make wheels and shoe horses, and invent countless designs of horse-drawn gear.

He would even be the horse dealer, vet, dentist, doctor… or undertaker. As his job demanded sharp intellect, numeracy skills and business sense, he would often hold important offices in the village, such as magistrate or church warden. He’d be the person to bring new technologies to the village… more often than not, most village garages were the old Blacksmith forge.

And on a practical level, a smith knew how to keep a fire going all year round, so much so that the community would rely on the smithy’s fire to roast meat and bake bread. The smith was creator and keeper of the fire at the heart of a community.

In short, the blacksmith was the original generalist, a man who would turn his hand and head to any task the community would ask of him.

Through an innate understanding of the raw materials of the age, he would innovate and forge as required. Each task a unique and specific request, a new problem looking for an effective and speedy new solution. This approach would only serve to develop his skills further with every job.

To me, it feels like we have entered a new age of smithery. But the raw materials of our age are not iron and fire, but materials like technology, connectivity, and generosity…

We must approach the modern world as the smithy would; with flexibility of thought and versatility of action.

We must once more embrace each problem we encounter for what it is, not what we wish it to resemble from our experience.

Only like this can we forge and reshape the world to meet our new expectations of it.

Can agencies really do this, though? Let’s bring this full circle to find out, and finish where we started, with the Scottish Enlightenment.

—————————-

Why did the Enlightenment in Scotland happen when it did? It was a result of three things; Education, Religion and Politics.

Two centuries earlier, after the reformation, the Church in Scotland decided that everyone should be able to read the bible. From 1570 onwards, every Parish in Scotland had a school.

By the time the 18th Century comes around, Scotland has the most advanced education system in the world.

Then the Church of Scotland, previously vehemently against any new ideas, started to become more relaxed about them. After all, if you educated all these people, it’s a result of your work that they start coming up with new ideas in the first place.

Finally in 1707, with the act of Union, all Scotland’s tribal politicians upped sticks and left for Westminister. The consequence was that a scholar could promote any school of thought or idea without it being dragged to one side or another of a political debate.

What does this teach us for the agency landscape? Two things.

Well, firstly, think about the power structures; the two most powerful bodies, the politicians and the church, either got out of the way or became free and open to change and new ideas. The people who lead our agencies and agency groups must be willing to hand the destiny of their companies to the scholars, the planners, the thinkers.

The creative, cerebral forces within each agency are the best people to plot their agency.

Secondly, and most importantly, we’ve got to be as fanatical about education as the 16th century Church of Scotland…

Only by making sure that every single last one of our people is fully literate in the tools of the modern age can we hope to build an industry fit for the future.

The Joker, the Phoenix, and the Last Advertising Agency

John V Willshire on March 24, 2010

Have a watch of this: It’s called ‘The Last Advertising Agency’… (thanks to Jamie for the heads up)

A point well made, I think.

And yet there will still be large parts of the industry that rail against things like this.

They don’t understand why people in the industry would wilfully go around denouncing the existing models, as it will just hasten their demise.

Why would you destroy the world in which you work?

To them, it makes as little sense as the Joker did to Batman in The Dark Knight…

“Some men aren’t looking for anything logical, like money. They can’t be bought, bullied, reasoned or negotiated with. Some men just want to watch the world burn”

Here’s the thing though… it’s not a destructive force. It’s quite the opposite.

Every time someone questions ‘the old way of doing things’ (like the ‘power of TV ads’, or the notion of brand awareness, the established rules of campaigns or the objectives set in a brief), they’re not doing it for kicks.

It’s not rebellion, cynicism, or mindless annihilation.

It’s only by burning away the old, redundant thinking that we can find something new, refreshed and powerful.

Kind of like a phoenix…

“A phoenix is a mythical bird that is a fire spirit with a colourful plumage and a tail of gold and scarlet (or purple, blue, and green according to some legends). It has a 500 to 1,000 year life-cycle, near the end of which it builds itself a nest of twigs that then ignites; both nest and bird burn fiercely and are reduced to ashes, from which a new, young phoenix or phoenix egg arises, reborn anew to live again”

Wikipedia

Nobody knows what’s going to rise after the fire.

But if you want to be a part of it, you should be fanning the flames.

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#CMS2010 – three big things, pt II

John V Willshire on March 23, 2010

OK, after part I, here’s part II of ‘what I walked away with after the Guardian Changing Media Summit’…

Part II – It’s all in the game

Now, I’ve talked about different sorts of games quite a lot here on FtP before (for instance, here, there, and there too).

Mainly around the elements of gaming that can be brought into other parts of our lives (scoring, points, rankings, interaction etc).

But despite creating various projects that are bubbling away for clients at the moment, I realised this morning that I’ve not really written anything on here about Social Gaming…

…I know, shock, horror.

So, Social Gaming… here’s a quick definition from SFGate:

“Social games are built to be enjoyed and shared with friends through existing social networks and platforms like the iPhone.”

The key is that they are games made specifically to take advantage of the social toolkit available across various platforms… rather than making the game first, then working out where to put it.

I think the first social game I was probably aware of on Facebook was the ill-fated Scrabulous.

The key thing that made it work was not that it was the most intriguing, taxing gameplay, or amazing graphics, or in depth storylines (which the gaming industry generally holds up to be the drivers of ‘gaming success’), but the fact you could easily play it with the friends you already had on Facebook.

No registering on special, controlled gamer networks, just quick, instant access to games you could play with your friends whenever and wherever you were connected.

Since then, in the last two years the number of games out there, and the number of people playing them, has swelled significantly… currently led of course by FarmVille.

(I hadn’t realised until I read this that FarmVille was a clone of the less successful Farm Town… as Faris would say, Talent Imitates…)

(Monthly Active Users on Facebook, from App Data)

Someone said on the panel that there’s about 200 million people playing social games worldwide, though this report on the BBC suggests that it’s about 300 million.

Whichever stats you believe, it’s undoubtedly true that social gaming is now both big and profitable… in three years, social gaming has become a $1 billion industry.

But hey, maybe it’s too late to start posting about social gaming now…

As Kristian Segerstrale of Playfish said in the ‘Convergence, Creativity, and Commerciality in Gaming‘ panel at CMS2010…

“In five years time, talking about ‘social games’ will be like talking about ‘electric television’. It won’t be relevant; ‘social’ will be embedded in every game”

Meg pointed out (via twitter from a different stream at the conference… oh, this wonderful modern world), that this quote is a riff on this Douglas Adams piece, most notably the part on ‘interactivity’…

“…the reason we suddenly need such a word [interactivity] is that during this century we have for the first time been dominated by non-interactive forms of entertainment: cinema, radio, recorded music and television.

Before they came along all entertainment was interactive: theatre, music, sport – the performers and audience were there together, and even a respectfully silent audience exerted a powerful shaping presence on the unfolding of whatever drama they were there for.

We didn’t need a special word for interactivity in the same way that we don’t (yet) need a special word for people with only one head.”

The one-headed Douglas Adams

From a media point of view though, I think that games are going to become a wholly social experience a lot faster than the other broadcast media experiences…

…as Tom points out in this post here, it’s hard to imagine that the individual media experience (reading a book, watching a TV show) will completely die off in the immediate future.

But games… games are different.

Firstly, in the grand scheme of things, they’re so new.

Which is why a lot of the older people who’ve come to social games like FarmVille and Bejewelled don’t consider themselves ‘gamers‘… when they were younger there was no such thing.

And secondly, games were always something to be played together…

…this quote here eloquently identifies the root of the issue:

“The entire video game industry’s history thus far has been an aberration. It has been a mutant monster only made possible by unconnected computers.

People always play games together. All of you learned to play games with each other. When you were kids, you played tag, tea parties, cops and robbers, what have you.

The single-player game is a strange mutant monster which has only existed for 21 years and is about to go away because it is unnatural and abnormal.”

Raph Koster, 2006

…and now that there’s a place to come together and play games like Facebook… well, why wouldn’t you? Raph again, this time from 2010…

“All games are becoming connected experiences. And it turns out social networks are the glue.”

Why do I think this is important?

Well, marketers and media folk are great (especially in this day and age) at jumping on the bandwagon of ‘the latest craze’. It would be all too easy to dismiss social gaming as just that.

But when the incumbent gaming industry is looking hard at its own games and trying to move quickly to adapt, I think that shows just how deep this rabbit hole goes…

Also on the panel was Josh Atkins, from Lionhead Studios.

They’re what you might traditionally think about when you picture games developers; a bit like a major film studio, they create big budget affairs like the Fable franchise…

Josh had this to say:

“We’re not ‘the dinosaur’, but we’re the Nuclear Powered Aircraft Carrier which doesn’t necessarily change direction as quickly as the other guys.

We’re trying to make our games more connected, more casual… taking the best of the modern age into the console game experience. We want ANYBODY to be able to ‘pick-up-and=play’.”

In short, even the guys in the established games industry are looking at social gaming and thinking ‘whoaa… maybe that’s where everything’s going’.

I think that every game we see created nowadays will have as much sociability built in as possible. And it’s not like TV or film, where all the ‘old’ content will continue to exist and keep that ‘individual experience’ ticking over. People don’t tend to play old versions of games. They play new games. As games become more socially enabled, so will the expectations of all games.

And just think about all the solitary, individual media experiences that will give way to this new, social, game-fuelled world.

(Part III is here)

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Guardian Changing Media Summit – liveblog #CMS2010

John V Willshire on March 18, 2010

So…

I was live blogging, and then I was on a panel, and then of course I started chatting to interesting people (like Nicole and Will) about thoughts and ideas and provocations from the day (rather, I’m afraid, than be in the last session…)…

…which means that yes, there’s a lot of liveblog below, but what I’m now going to do is take all of the stuff below, and the thoughts provoked by conversations this afternoon, and mesh it all together in a wrap-up post. Or three.

YOU CAN FIND THE FIRST OF ‘EM HERE…

——————————–

Mornin’

So, I’m here at the Guardian’s Changing Media Summit, and thought that since I know my way around King’s Place now (top tip – sit near the back, and ask the tech guys if you can plug in your laptop to their power supply, as there aren’t ), I’d do a bit of liveblogging…

We’re welcomed by the BBC’s Rory Cellan-Jones, and into an introduction from The Guardian’s Emily Bell.

It’s been five years since the first CMS. Recently, though, Emily feels she’s been ‘trapped in an echo chamber talking about business models’ for the last year, and it makes her think it’s 2002 all over again…

…which is a good thing, as a lot of the creativity and innovation that categorised that era should hopefully come out of this one too.

She promises a raft of brilliant, interesting perspectives (and from looking at the lineup, she may well be right…)

And now…

Keynote – Jimmy Wales, Wikipedia

Jimmy’s talking about the the way the internet is changing… well, everything.

If you look at the evolution of TV, culture is getting smarter, technology is getting better. The TV evolved through the remote control, the VCR, TIVO. The shows evolved through from the simplicity of ‘I Love Lucy’, to Hill Street Blues, to The Sopranos. Games evolved from Pong, to Doom, to the wonderfully complex games of now.

Wikipedia exists to help manage all the information that exists in a world where culture is getting smarter. It’s ‘free’, as in ‘free speech’, not ‘free beer’… copy, re-edit, distribute, re-use any of the copy that’s on Wikipedia.

Wikipedia is not an archive, it’s an encyclopedia. Not like Youtube, with ‘funny cat videos’, or a restaurant guide for near the Eiffel Tower. This definition helps guide the community to what ‘is’ and ‘isn’t’ Wikipedia.

…but the Encycolpedia is just the beginning. What’s coming..?

A library is MUCH bigger than just the reference section. That’s what Wikia is for…

A free Wiki hosting site for communities to organise information for the things they are interested in. REALLY interested in. Like ‘wookiepedia‘.

Growth for Wikia in the first stages in by and large tracking the growth of Wikipedia.

It’s really interesting to think of it like the way the internet itself started in large, centralised portals, then split more into the things we really were interested in…

…people always want to tailor things down from the ‘big, mass’ offering that would be easier for companies to the supply them with.

On Lostpedia, for example (about, yes, Lost the TV show), fans have written 6,000 articles about the in-depth culture of the show. Wales sees this sort of behaviour replacing a lot of the niche magazine market… because there’s much more intense depth available, for free, on the internet.

“They are far more comprehensive than we could have produced using a top-down publishing model”

Erik Huggers, BBC

Talking about the strategy review, the future of the BBC & the web etc.

There are four parts of the BBC’s Future Media & Technology department; Future Media (who make products), Broadcast & Enterprise (how to stay on air in new & different ways), R&D (innovation and engineering), and the Information & Archives (organising all the BBC’s info).

Predicts that by 2014, all UK households will have access to the internet in the house (“at that point, it truly becomes a third platform for everyone in the UK”).

Funnily enough, the diversification of the BBC is reflecting the same journey that Wikipedia and Wikia are taking… started with one, central thing, but as the technology allows, it spreads into more interesting, niche services.

The vision though, is that everything comes back to just being ‘the BBC’… but it becomes utterly personalised to each individual; whatever they want their BBC to be, it is.

Since 1994, the BBC has not suffered the constraints of space that schedules previously lent them… hence the growth into countless numbers of websites they have created… so the focus of the web presence is seen through the editorial lenses which are the key focus of the BBC moving forward.

It’s good that there’s been an appraisal of how they hone everything they do, given that sites like Celebdaq were still around from 8 years ago…

…yet you feel the pressure of the Murdoch/Conservative lobbying on this speech a little. But the fact remains; the BBC are AMAZING at creating innovative media/technology hybrids, because they’re doing it for ‘public value’, not ‘profit’.

They’ll be moving content into more fluid, smarter apps too, on both phones and on internet connected TVs…

“We’ve been in the ‘TV App’ business for ten years, since the launch of red button… the opportunity tomove that into modern, internet connected applications is fantastic”

“Phone apps, for me, are no different than a browser…”

The focus moving forward; the core five editorial areas, working as equals with the technology guys, to be the one ‘BBC’ that is the ‘past, present and future of the BBC’

Nick Appleyard & Jeremy Silver, Technology Strategy Board

It’s the ‘Digital Britain’ presentation… the TSB are a group set up by the Government to bring all different industry sectors together, so that media businesses, technology and service providers, can all build a viable future together through creating a set of trials.

In short – “why can’t we all just get along..?”

Unfortunately (and ironically), they suffered from a tech hitch, which meant no slides, and no videos. Felt a bit sorry for them, left on stage just to freestyle it.

Keynote Panel Session: The New Economics of Content

Genevieve Shore, Pearson, Mick Buckley, CNBC, (the infamous?) ‘Jonathan from Spotify’, and James Bilefield, Condenast. Emily Bell moderates…

(I’m paraphrasing folk here…)

GS: Experimentation is key; no one person at Pearson is saying ‘this is it, the one model that will take us into the new age’. The challenge is where shall we place our bets. Not what shall we back, but how are we learning, what are we learning, and how will we spread that through the company?

GS: We absolutely believe there is room for paid-for content, and that will be the thing that sustains us moving forwards… clearly there is value in entice an audience, move them around your content, and free is a lever for that. Free is very important, but free is not a business model.

MB: Our strategy is to ensure innovation is driving the existing model, but we’re also using it to migrate into new areas where people want content; finding out what people want, when they want it, and what they’re willing to pay for.

MB: For a ‘news’ channel, the willingness to pay for that content has diminished over time… anyone leading a media organisation has to make sure they’ve built a culture and a structure that allows innovation to happen.

JfS: Freemium model… we believe that free drives paid, and couldn’t quite believe that no-one had cracked it in this area yet. Advertising then makes that ‘free’ environment much more than a ‘free trail’ too. We’ve held back the growth of the product, because before we’ve got sales teams, understanding of how it works in place, we won’t be doing our partners justice.

JfS: On the advertising side, the direct-response side is very well established, but the branding effect isn’t.

JB: We stil very much believe in print, but digital is the highest straegic priority in our business to make sure we’re set for the future. Fundamentally advertising is the core of our business, and we’re working on the new iPad device to work out how to deliver really compelling messages.

JB: I think our legacy business gives us brands, relationships, stature etc… stuff you’d kill for in a business like Spotify. Can we move as fast? No.

GS: The danger was [in old media] people set up ‘digital divisions’, and the two businesses would be separate… but they co-exist, and they have to work together. There are ways in which technology actually allows some very old-style things to happen (example of digital infrastructure of Pearson to provide very cheap learning materials in India).

GS: [Going back to Erik Huggers’ point on the blend of Technology & Editorial] – This is the key for the future of media organisations.

MB: There’s so such thing as wasted time & money in innovation. Innovation isn’t being pushed through media companies, it’s being pulled through… demands from agencies & clients for new solutions, demands from consumers looking for our content in the places they are.

JfS: Helping out the providers of their content (i.e. Record Labels) with marketing, branding, distribution in this space… but don’t take an ‘editorial’ stance on it, leave that for the people who’re really good at it.

Spotify are clearly happy in their space as a platform, with lots still to do in the music space: JfS points out It would be very difficult for ONE of the labels to have their own Spotify (and yet they keep trying, like the Universal thing last year)…

JB: We’re trying to encourage the ‘fail fast’ methodology, using the Wired website to test things, drawing in more blog content, to become the centre of the conversation that happens all around the internet, rather than have one editor as THE voice.

JfS: Even at Spotify, we look at the gaming industry and realise we have to be innovating faster and better…

Interesting; question from the floor on what the BBC role should be:

GS: On a personal level, they offer brilliant stuff, it seems unrecognisable to me that they should NOT try and charge for that.

MB: I love the BBC, personally, and professionally I love competition…

JB: To support the license fee, they should keep it free in the UK, but charge for it outside to keep funding coming in.

GS: There is absolutely room for a public service broadcaster, as some people don’t have the ability to pay for access, but I wouldn’t want to fence the BBC in to a model like PSB in the USA.

JB: We think the evolution will be gradual, we don’t expect paper will stop being one of our major distribution methods in the next ten years, it’s still a great business… but we’re playing and learning as we’re going along, and think the iPad model of subscription + advertising will be the business model moving forwards.

Wrapping up… what about the future; revenue streams, business models etc…

GS: What you’re seeing is content owners and content providers (like Apple) are doing the job that retailers and stores used to do… our relationship with people is now much more direct. We realise that, now we have to make it work

MB: The companies that own a rich reservoir of content realise there’s a big opportunity our there… you will see great products coming out of this

JfS: We definitely feel the music industry can grow in the digital world, there’s much more opportunity for them in the old model. We’re just one of the companies that are helping them find out how (Spotify now employee 160 people, btw…)

Now Important Announcement from Chris at 1GOAL: the movement around this year’s World Cup to give EVERY child in the world access to education.

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Panel: Convergence, Creativity and Commerciality in the gaming sector

Chris Ellis – IGN Entertainment, Peter Edward – Playstation Home, Josh Atkins – Design Director, Lionshead Studios, Kristian Segerstrale – Playfish…

CE: IGN – three things – news & guides on all things gaming (40-45m monthly visitors), distribution of games, and technology to support gaming. NOT a producer of games. View of the world at the moment… most of their business is in advertising stream. Display ads, largely. Most exciting area for them is the virtual goods area…

..they see gaming heading more mainstream… ‘gamers’ and ‘people who play games’ are different. The types of games we play, and where we play them, are changing. The ways we play them will change a lot too (e.g. Microsoft’s Project Natal). Finally, as Wifi just gets bigger, ‘cloud gaming’ will be huge, as will 3D gaming.

PE: On PS3 Home…12 million users worldwide now, after been running for a year. 85% repeat rate (people come back), and average time spent in there is 60 miutes (did I hear that right?).

…advertisers who come into Home have a stable, mature platform on which to create brilliant ideas. Slide of clients – films like Transformers, Start Trek, Arsenal, Disney, Audi, Red Bull…

…and a video of Home. Smooth.

KS: What’s Playfish? Part of Electronic Arts now, changing the way people play games… make them social, rather than solitary. They wanted to evolve the industry… the product is no longer physical and shipped once, it’s digital and updated regularly… not pay lots upfront, but pay little every time

…there is a massive new player base (200 MILLION online game players). Social games are games to play with friends and family, just like games (e,g, board games) always were traditionally played. Shows Pet Society – played by 20 million people per month (twice as big as World of Warcraft).

JA: Lionshead makes big budget console games… we’re not the dinosaur, we’re the Nuclear Powered Aircraft Carrier which doesn’t necessarily change direction as quickly as the other guys. We’re trying to make our games more connected, more casual… taking the best of the modern age into the cosole game experience. Rival of high-end big budget action cinema. We want ANYBODY to be able to ‘pick-up-and=play’.

We’re still working on accessibility – 60% of our players STILL don’t understand half of our features. We’re working towards more simplicity.

Q: how is social gaming going to radicalise gaming?

PE: A lot of people who play social games don’t consider themselves, that’s the key… yet they’re the people expanding out market. Social gaming is phenomenon, it gives us another way of drawing people into our platforms.

KS: What is called ‘social gaming’ is a function of two things – connectivity with your friends, and the ability to create games there. In five years time, talking about ‘social games’ will be like talking about ‘electric television’ – it won’t be relevant, as it social be embedded in every game. Social gaming today is uncovering the fact that we’ve not been able to serve peoples’ gaming needs before.

Q: What’s the best way for brands to get into playing games?

PE: Brands need to dip a toe in the water, and do something. Not the AAA huge expensive game approach, these social platforms allow you to adapt very very quickly.

JA: Make sure the experience itself is entertaining in it’s own right first, before concentrating on the brand element.

KS: You can’t ship a crap product and put a lot of marketing behind it to make it successful in the connected world.

CE: gamers are now ‘entertainment hungry users’… not teenagers in bedrooms, but a much broader, engaged audience.

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Right then, I’m on a panel after lunch (Re-thinking brand building in the digital age: can brands survive and thrive in an online world?”) at some point…

…I may get a chance to see the post-lunch Keynote with Michael Wolff of Newser, but obviously liveblogging through a panel session your on is just a little rude… so there may be radio silence for a bit…

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Well, hi there… I’m back, and in time for the mobile panel too…

Mobile Ubiquity: Portability, convergence and the advent of a multimedia on-demand reality

Steve Pomeroy, MIT, Emma Lloyd, BSkyB, Fraser Nelson, The Spectator, and Mark Selby, Nokia. Moderated by Chris Thorpe, Jageree.

To start, Steve from MIT, is showing us some work…

Ridelink was a way of harnessing the power of the social network to encourage mutual support for drink driving…

They developed an alcohol breathaliser (as a braclet), that told the user if he was too drunk to drive… your friends who’ve nominated themselves as ‘designated drivers’ are identified in the user’s networks, and it identifies who is around to drive the user home… with the default option at the end being a taxi number.

Locast Civic Media – a creation of a web site plue Android app that people can capture, upload, and edit local civic information to a site. Users can work together and use each other’s content to group-edit a full news report. Think of a community forum meets the tiniest CNN rolling-news channel ever.

Nice projects. Now, the rest of the panel…

EL: Mobile now sits at the heart of Sky’s three screen strategy; it is critical for us to offer customers all of our content wherever they are, however they want it. Mobile Entertainment is being driven by the iPhone… the ‘set the Sky-Box when you’re out’ was downloaded 50,000 times on other devices up to the launch of it as an iPhone app, then hit a million a few months after iPhone launch.

FN: We were the first magazine to have our whole content on an app… we learned lessons quickly, because it was a scan of the magazine, and consumers couldn’t understand why they’d done it. The second app which is launching soon has fixed all that, included all the blogs they do. We’re feeling our way, we’re quite opinionated which works well online.

FN: I’ve got a Kindle it home, which increasingly looks like a museum piece… the Spectator want to keep trying things it in this new, exciting space…

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Location. Location? Location!

John V Willshire on March 3, 2010

(picture of Utility’s sign in Brighton… thanks to clever Matt for the clever title)

“…there’s a frood who really knows where his towel is“

…from Hitch-hiker’s Guide to the Galaxy by Douglas Adams

I’m becoming increasingly fascinated by location.

The location of not just people, but of things too (yes, like towels)…

…and of course of messages… the way people and things communicate with each other.

We’re living in a world where everything knows where it is (whatever it is, human or object) in relation to lots of other things.

So I thought it was worth expanding on why, including why it’s probably very important for marketing folks to be thinking about.

How things were

Some background; when I worked in the planning and insight function at Viacom Outdoor, location was very important for us. We were the guys charged with coming up with (occasionally) clever thoughts on why and how advertisers could use Underground & Bus advertising to target the right sorts of people.

We used to refer a lot to ‘recency theory’, as developed by a chap called Erwin Ephron in the US, which basically stated that the most important message you can deliver is the last before someone chooses to do something.

You can see why it would appeal as a theory to folk selling outdoor ad space… six years ago most transactions were still happening on the high street, and as a way to influence decisions posters were a pretty good bet.

Of course, it’s classic advertising; push messaging, reach millions, affect thousands, and hang the wastage…

How things are

Nowadays, of course, we’re no longer buying stuff exclusively on the High Street. In 2009, we spent nearly £50bn online (up 21% year of year). Total retail sales were £287bn, so just under 20p of every pound we spend is online. A fifth.

Which is enough, in combination with the recession, to make sad sights like this an everyday occurance… this is what you see if you visit the site of the former legendary shopping mecca that was the flagship Virgin Megastore on Oxford Street…

But still, there’s remains a fair chunk of money in people’s pockets to be had when they’re out and about, so the need for location targeting is still there, to guide people towards your front door…

…except…

…people aren’t alone when they’re out shopping any more. They’ve got their phone with them… and it’s not an ordinary phone anymore…

Smartphone penetration in the UK was at 15% in Q3 2009 (Nielsen).

Which is of course before we had the iPhone appearing on Orange & Vodafone, a fair few other smartphones appearing on the market, and the Christmas boost.

So it’s got to be around 20% now. Again, a fifth.

And when you look at what they do with these phones, it’s clear that this may well be the ‘year of the mobile’… 10.4m people in Q3 2009 used their phone to access the internet. Up from 8.8m in Q2.

That’s 21% of all mobile users… yep, a fifth, again.

(thanks to Fiona and Mat for the help with stats)

Let’s be honest; the awful browsing experience, combined with stupidly high data charges from the mobile operators, meant the ‘mobile web’ was largely unloved and unused for years.

That’s now significantly changed.

A fifth of people have the technology to access the web on the move, and a fifth of them are.

Yet I don’t think that’s the most important thing about the rise of the smartphone. The interesting thing for me is that smartphones invariably come loaded with GPS… they know exactly where you are.

How things might be

Now, amongst those who have the potential to use location based services on their phone, take-up isn’t huge yet; 3.3m people used location based services in Q3 2009.

But it’s growing fast; there was a 7% increase between Q2 & Q3.

And this is in a country where location based services like Foursquare and Gowalla are still largely waiting for any companies to really engage with the platforms, as I talked about here.

Why would companies engage in services like this?

Well, because people will want them to, and reward the ones who do it well with their custom.

On a very simple retail level, there’s huge advantages for people in being able to hold a device in your hand that tells you about the shopping environment around you…

– find out about the discounts being offered, and even make yourself ‘known’ as a discount hunter and see if anyone wants to attract you with a short-term immediate discount in return for your custom

– check the stock lists of a store, so if you’re after something in particular, you know which shops have it, and at what price

– make personal shopper appointments – if there’s a personal shopped in a clothes store you really trust, you can find out if they’re working

– the map for the ‘fastest route around’ based on the shops you want to visit, where they are, and how big the queues there are currently (or have been in the past)

– find out where there’s a free table in coffee shops or restaurants, and reserve it for a small fee (payable instantly through the phone)

– set up impromptu ‘meeting points’ that you can send to other friends and family members

– remember where your car is in the huge, sprawling car park

…and of course, the possibilities go on and on.

I believe that there will be a location based service around the shopping experience that will cater for just about everyone eventually; young, old, techy or not.

Because at the heart of it, there’s something hugely useful in improving the shopping experience.

Of course, location based services in the shopping environment could simply drive down prices, much as an insurance aggregation site does in that market (I talked about the notion of Perfect Competition earlier this year in this context).

The challenge for us in marketing is to create these things that continue to add value to the retail experience for people; it will be as much a part of the ‘brand experience’ as the store signage or the TV ad.

One day, there will be no excuse for anyone not knowing where their towel is. Or how much it costs, or which shop it’s in, or how long it will take to get there…..

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The Retail Weather Map

John V Willshire on February 19, 2010

This is really nice, I though… a retail weather map, hidden away in the depths of The British Retail Consortium website…

To my mind, it should be slap bang on the front page, but there you go. If you want to find it, it’s here.

It’s updated monthly too. They should turn it into a widget that other people can put on their websites.

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Money was round, then rectangular… now it's Square

John V Willshire on February 17, 2010

I picked up on this before; it’s called Square, it’s from Twitter founder Jack Dorsey, and it’s essentially a little add on for you iPhone that allows you to use it as a credit card payment system.

There’s some more details though, coming via ReadWriteWeb.

It’s theoretically going to work with ANY device that has an audio input jack (yep, just a basic headphone socket), which means if they build a version of the app for other mobile devices, it should work for them too. So they won’t live or die on just being an iPhone add-on.

Cost wise, the unit will cost $1. Yep, $1. Where they’ll earn their money though is through commission; Square will take 2.9% of all transactions (and will donate a cent of each transaction to a charity of your choice).

It’s a really interesting, game changing invention I think… if you read the comments on the ReadWriteWeb post, there are some security issues to be worked through perhaps, but I think it really takes the notion of how we transfer money forward a step.

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COOL = Community, Open, Ownership, Local

John V Willshire on February 4, 2010

David Cushman hass started running a ‘social business innovation’ competition every month over on his blog, you should really go on over and have a read of all the entries and vote…

The one I’m going to vote for though is this, as suggested by Neil Perkin: Local Motors

…rather than me talk about it, you should watch CEO John Rogers talk about it for a few minutes:

Watched it? Inspiring, huh?

I really like the Local Motors premise for making COOL cars…

…designed & developed by their Community…

…all out in the Open (they use Creative Commons licensing to develop open-source car design)…

…creating an Ownership experience that lets people really connect with their car…

…all delivered through Local microfactories that can connect to locally relevant to a community.

It’s exactly the sort of thing I referred to back in the Social Production presentation.

Sure, you can use social technologies to just change the marketing plan.

But the future for companies wanting to engage with people doesn’t lie in chattifying the brand and socialising the media plan…

…it’s in using social technologies to bring you together with your customers in everything that you do.

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