The first part of this post is a blog-post by a close friend of mine who was intrigued by a media owner friend who seemed confident that their in-house creative services department would help them bag big business and subsequently could turn into a viable revenue stream. Famous last words? Read on and please do comment.
Your new creative agency - the media owner
I was having lunch the other day with a media owner. He was asking me for some people he could hire for starting an in-house creative department. A few things emerged from that conversation:
1. Clients just don’t seem to have the budgets to pay for new creatives or a medium specific execution (say a print ad that needs to be reworked for OOH). They are the ones asking if the media owner could do the production too.
2. A lot of his clients are new to advertising, and to the medium. He’s growing the long-tail.
3. He wants to move beyond media budgets i.e. Increase wallet share from the client (media+creative).
4. Consolidate the media budget & throw in the creative execution for free - particularly for large MNC clients who don’t have in-market specific creatives.
5. Media agencies are increasingly coming to him with content/integration/production ideas as part of the media buy.
5. The media owner has most of the production talent in-house, though they are mostly involved in putting out his product into the market.
6. Other media owners already have established in-house creative teams/agencies. So this model clearly works.
When I asked him about the consumer strategy, brand-fit, execution details etc - he was fairly confident that it could be worked out. He wasn’t really seeing spectacular commercials coming out into the market anyway.
My recommendation to him was to just have a roster of freelance creative talent whom his company can tap upon, depending on the projects. Saves the media owner from the hassles of managing a department & the associated costs. I did refer him to a friend of mine, a suit, working in a creative agency, for being the go-to person he could hire on a full-time basis to do project management.
And I left the lunch thinking that we media agencies haven’t quite leveraged the media owners fully enough yet.
PS: There’s no such thing as a creative agency & non-creative agency.
My two bits...
I believe you had the misfortune of sharing a meal with an extremely myopic media owner who rather than concentrating his/her resources on doing what this person's employer does best - regaling the customer; seems to want to adopt all the inefficiencies of a system that's struggling to bear its own weight under the guise of expanding their business.
The very reason our industry is unwell is that it has itself blindly chosen to believe what it does best - amplify a point of differentiation for a brand or create one when none-exists; rather than look to see what and how we could mechanize/streamline operations that do not need 'talent' anymore. It is these inefficiencies that have us pinned to the wall, inefficiencies that clients have indirectly demanded of us and we have willingly obliged for a few dollars more. Now these very clients (or their superiors) need some (and for some that amount is significant) of that money back, not because they 'need it' but because it could be put to better use elsewhere. That, however, is a debate we could have on your previous post on 'free services', a debate we can well address in part here.
What we have effectively done is fail to see the crest of that virtual wave of growth and lose ourselves in the belief that every service we provide is essentially labour intense – where intensity was either measured in junior bodies or an equivalent senior body. You know that as well as I do, we all have managed offices. That merely shifted the inefficiency, from many to a few. Take the erstwhile full-service agency. If it had not added inefficiencies in bulking up its “creative thought factory” and ignored efficiencies that the relatively “mechanized” delivery system for creative elements – media had to offer, we would never have had a ‘media agency’. Clients pushed back on inefficiencies and the powers that be hived off the part they thought would help win them the war. Then it all went astray. The creative agency neither rid itself of labour intensive inefficiencies nor rid itself of its addiction for easy money and the media agency went the same route as the creative agency of yore – merrily adding the same inefficiencies to its lean operations without addressing the growing and unnecessary call for more and better differentiation of services. Advertisers are equally to blame. The market, you will agree, if full of one too many undifferentiated products. Products that have manufactured differentiation from dental-health-aided-nirvana to interview-winning-fairness-creams. Don’t take my word for it, just ask the likes of WalMart et al. The fact remains that there are massive induced and inbred inefficiencies in the system that need to be addressed before we find more inefficient solutions looking for a fresh problem. It is not to our credit that we’re “starved of talent good enough to make a difference” but it is a shame that despite a growing, educated workforce, talent seems to want to avoid an industry that makes it exert more animal effort to do better what he/she is already doing rather than change the tool-kit itself.
So what services would we see going “mechanical”? That debate I’ll reserve for a few days more. However I will leave readers with some keywords. Buying, auction, early-bird, knowledge (not information), placement, google (or search engine), automation, planning, monitoring, staffing, cross industry savings.
Coming back to the media owner, what sense would it make for them to add a labour intensive, thankless process to their operations to help make up for a forward-team’s inefficiencies? How long is it before the same demands are made of the media owner by the advertiser as those they make of their creative agency? It is their programming and customer marketing teams that are their forward teams. If these forward-teams can’t regale the customer (and attract eyeballs) anymore they’d better start looking for someone who can!
In-house creative departments are best reserved for advertisers on the margins, advertisers who either know that their product/service isn’t differentiated enough to warrant “forced creative solutions” or seem only to want to pinch an extra penny today only to throw it away tomorrow.
So yes, your media owner friend doesn’t know that his/her ship’s sinking, and if it isn’t this hole will surely sink it.
Saturday, July 31, 2010
Monday, July 19, 2010
Why a Google-world gives me comfort...
"Having heard the strategy for Android based phones first hand, I can tell you why this is a very flawed perspective. The telecom analyst, Jack Gold's perspective comes close to the company philosophy. As they did with many of their web products, this is just a beta launch. You should see some great products coming out close '10 Christmas shopping season. "
Cost is about the carrier
Industry analyst Jack Gold of J. Gold Associates agreed that potential customers would do well to think about the long-term costs before snapping up the latest and greatest mobile device.
"What customers and users need to be thinking about is that the service plan cost is all about the carrier, not the device," Gold said
Google's revenue model is not the same as that of Apple. The models are poles apart.
Apple extorts 30% or more of your monthly bill's value from the carrier - it's a fixed sum mostly and may also feature an ADDITIONAL variable revenue stream. You never get to see that even though you've paid a massive premium for the phone. Lock-in periods ensure that they recover the cost of the phone entirely and then some more. What the networks hate even more is that while Apple uses the phones which the networks bleed over for selling content over the itunes platform they never get to see that revenue. All they get is the passthrough cost of using the network bandwidth - which is a commodity now - and may soon be free. And given that most iphones are wifi ready and with wifi being ubiquitous even their bandwidth usage seems to be dropping. So for a network, selling iphones is increasingly a not-so-necessary evil. Every network is rooting for an iphone killer - which is a matter of time.
Now for google's model. Google has made it's millions riding the ad-funded content route. They make advertisers pay top-dollar to reach google customers. Google ostensibly reaches many many more people than apple's products do - including those who use apple's products. For google every new venture is an experiment towards perfecting their $30+billion ad-revenue model. They have no interest whatsoever in making money from hardware. And hardware too is becoming a commodity - any detractors might just want to observe the number of and sophistication (which is a term that conjures up different meanings for each person) of the smaller brands in the market. Yes, it's important for google to get a wider footing in the mobile market with a GREAT device which, like Sachin rightly pointed out, is probably a few months away. The Droid's mew avataar is expected anytime soon. As is a slew of WinMo7 phones. Rumours have it that Sony is about to cave in to the Android OS. LG's on the bandwagon, Samsung is joining in. Nokia will cave in eventually when Symbian crumbles. (3% of the mobile phones - smartphones; sold globally account for 35% of the profit. These figures are expected to read 10% and 55% in 2012. Nokia has close to zero% share of that market). Google is testing the market with phone after phone - all using the Android platform, which arguably, is FAR superior to the iphone's OS. And google may one day give a ad-supported ad-sponsored phone away for free (or almost), while agreeing to share the spoils of the ad-revenue with the operator and the device manufacturer. It's a thought, nothing's impossible.
Content, is another ball-game altogether. Admittedly google is struggling to aggregate content which users would like to pay for. Apps, for one, music and e-commerce applications come next. The rest are small-potatoes. Apple still leads the pack because of the itunes store. However we all know that with content being platform agnostic, people are finding alternate routes to sate their hunger for content. Google's now beginning to sell movies, music and serial episodes on YouTube - this began a few weeks ago. YouTube has more visitors than itunes will ever have. Major label and studio owners are quite keen on harnessing the strength of YouTube and one would want to watch that space keenly. What's more, Google is working with TV manufacturers and processor manufacturers to sell TV sets that're always-on, cloud computing devices. Winter 2010 may see the first such TV's hit the shelves. Then google has a shot at the global TV ad market!
As for developer delight - well Apple makes you jump hoops before agreeing to have your app featured on itunes. I guess Sandeep would be able to shed more light on this bit.
I'd still bet on a Google-world. The cloud is real and they're the cloud - or most of it, at least :-)
Cost is about the carrier
Industry analyst Jack Gold of J. Gold Associates agreed that potential customers would do well to think about the long-term costs before snapping up the latest and greatest mobile device.
"What customers and users need to be thinking about is that the service plan cost is all about the carrier, not the device," Gold said
Google's revenue model is not the same as that of Apple. The models are poles apart.
Apple extorts 30% or more of your monthly bill's value from the carrier - it's a fixed sum mostly and may also feature an ADDITIONAL variable revenue stream. You never get to see that even though you've paid a massive premium for the phone. Lock-in periods ensure that they recover the cost of the phone entirely and then some more. What the networks hate even more is that while Apple uses the phones which the networks bleed over for selling content over the itunes platform they never get to see that revenue. All they get is the passthrough cost of using the network bandwidth - which is a commodity now - and may soon be free. And given that most iphones are wifi ready and with wifi being ubiquitous even their bandwidth usage seems to be dropping. So for a network, selling iphones is increasingly a not-so-necessary evil. Every network is rooting for an iphone killer - which is a matter of time.
Now for google's model. Google has made it's millions riding the ad-funded content route. They make advertisers pay top-dollar to reach google customers. Google ostensibly reaches many many more people than apple's products do - including those who use apple's products. For google every new venture is an experiment towards perfecting their $30+billion ad-revenue model. They have no interest whatsoever in making money from hardware. And hardware too is becoming a commodity - any detractors might just want to observe the number of and sophistication (which is a term that conjures up different meanings for each person) of the smaller brands in the market. Yes, it's important for google to get a wider footing in the mobile market with a GREAT device which, like Sachin rightly pointed out, is probably a few months away. The Droid's mew avataar is expected anytime soon. As is a slew of WinMo7 phones. Rumours have it that Sony is about to cave in to the Android OS. LG's on the bandwagon, Samsung is joining in. Nokia will cave in eventually when Symbian crumbles. (3% of the mobile phones - smartphones; sold globally account for 35% of the profit. These figures are expected to read 10% and 55% in 2012. Nokia has close to zero% share of that market). Google is testing the market with phone after phone - all using the Android platform, which arguably, is FAR superior to the iphone's OS. And google may one day give a ad-supported ad-sponsored phone away for free (or almost), while agreeing to share the spoils of the ad-revenue with the operator and the device manufacturer. It's a thought, nothing's impossible.
Content, is another ball-game altogether. Admittedly google is struggling to aggregate content which users would like to pay for. Apps, for one, music and e-commerce applications come next. The rest are small-potatoes. Apple still leads the pack because of the itunes store. However we all know that with content being platform agnostic, people are finding alternate routes to sate their hunger for content. Google's now beginning to sell movies, music and serial episodes on YouTube - this began a few weeks ago. YouTube has more visitors than itunes will ever have. Major label and studio owners are quite keen on harnessing the strength of YouTube and one would want to watch that space keenly. What's more, Google is working with TV manufacturers and processor manufacturers to sell TV sets that're always-on, cloud computing devices. Winter 2010 may see the first such TV's hit the shelves. Then google has a shot at the global TV ad market!
As for developer delight - well Apple makes you jump hoops before agreeing to have your app featured on itunes. I guess Sandeep would be able to shed more light on this bit.
I'd still bet on a Google-world. The cloud is real and they're the cloud - or most of it, at least :-)
Now all I hope is that they don't play "net-neutrality surrender-monkey" and disappoint us all. Google, please don't do that, we wouldn't want to love you any less.
Cheers!
Cheers!
The psychology of a recruiter
The greatest ironies of the Indian education system - one that so beautifully and painstakingly explains game theory to us using the Cournot Nash theory and what-have-you; is that it effortlessly plays candidates into the hands of wily recruiters. Recruiters know our strength is academic knowledge and that our game-plan would be to steer interview accordingly, so why would a recruiter not drive the conversation down the road of business practice and current events - which is subject matter the recruiter is comfortable with? And then why is it that we're given so much to do academically that there is precious little time left to pursue extra-curricular reading and learning? By God the world needs more doer-managers and fewer management theory-spewing lemmings.
Sunday, July 18, 2010
Is Apple mortal after all?
One of the enduring mysteries of medieval France revolves around whether the French queen, Marie Antoinette, ever actually utter the phrase, "Let them eat cake"? Another enduring mystery of our times seems to revolve around whether the Czar of the technology design world Steve Jobs, famously retorted to a customer "either hold the phone a different way or buy a case!"
Apple, after long denying the "Antennagate" phenomenon finally, bowed to public pressure applied by legions of fans who usually explain away every Apple design flaw gratefully as the "price of genius" and/or "the price of being given the opportunity of owning an Apple product".
That it took no less than a visibly weakened Steve Jobs to address public and admit that he was "stunned and upset and embarrassed" to learn about the iPhone's design flaw that in his words "is not unique to the iPhone4" and in the same breath claim that "this has been blown so out of proportion that it's incredible", seems to bely the triviality of the issue. Mr. Jobs, you wouldn't have handed out $29 x 3 million worth of cases ($87,000,000 + transaction costs) if you sincerely believed that "we're not feeling right now that we have a giant problem we need to fix". You're an incredibly smart businessman, probably the brightest ever, so we don't quite believe you when you say it's a "small matter" and you "aren't worried" about it.
Apple also claims that the main problem is actually with the software on board the phone that shows a stronger signal when the reception is not actually that strong. Does the software do this by itself? Or was it designed to show a signal stronger than the actual signal reception capability of the phone? That we'll never know. Signal strength is a critical USP for many a phone manufacturer. Yes, maybe all phone manufacturers resort to dialing up 'signal strength' and then maybe none of them do that. The point is Apple wasn't "that sort of a company" to start with. A dialed up signal display isn't an inadvertent flaw, Mr. Jobs - and maybe it was done knowing well that the phone's new antenna design wasn't performing quite as well as Apple expected it to? Because now that you mentioned it, we (commoners) can't help but think that way.
The crux of the matter is that like Toyota, Apple took its time to admit to the presence of a problem or let's say admit to a consumer perception of a problem when none may have existed (or if it did exist it didn't warrant a global media frenzy). The fallout from this episode is that Apple now seems to be very mortal after all. It's products have shortcomings and defects (serious or not) which its legions of die-hard fans and new-found fans are finally coming to admit - in public. Is this a sign that Apple's customer base has grown far beyond the numbers that qualify as a "cult"? Has the Apple fan-base been contaminated by "ordinary mortals" drawn to its admittedly fashionable and oh-so-sexy persona? Does this new legion of not-so-forgiving consumers/fans spell further trouble for Apple? Was Apple meant to cater to these "masses"?
Apple's success lies in making and marketing fabulously designed products that perform almost as admirably or not as another functional brand in the market, to a customer base that can well afford the equally fabulous price-premium Apple demands as a membership to an elitist club that is second to none. Few humans can deny that an Apple product does not stir desire in them. Suddenly more than a few humans could afford to join 'the club' - Apple's ambitions made it so. The problem - for Apple, is that these new-kids-on-the-block aren't as price insensitive as the 'fanboys' are and neither are they as forgiving of "minor issues common to all phones that have been blown so out of proportion". This a new breed of consumer, a breed VERY different from the one that made Apple a boutique technology player.
Apple must carefully consider its ambitions and and match its own attitude and delivery with the expectations of the new consumers their ambition will attract. The consumers that made Apple the uber-successful company it is today are the "common lot" and not the 'fanboys'. Mr. Jobs and his company would do well to spend more time understanding the inhabitants of this new territory of the market they have occupied and possibly change either their approach to product design and/or quality management, or their approach to tackling problems when they crop-up. Like Toyota did, Apple must not believe it is immortal, even if they say they aren't, because when they say "we aren't perfect" they should sound like they mean what they're saying and are saying what they mean.
Apple, after long denying the "Antennagate" phenomenon finally, bowed to public pressure applied by legions of fans who usually explain away every Apple design flaw gratefully as the "price of genius" and/or "the price of being given the opportunity of owning an Apple product".
That it took no less than a visibly weakened Steve Jobs to address public and admit that he was "stunned and upset and embarrassed" to learn about the iPhone's design flaw that in his words "is not unique to the iPhone4" and in the same breath claim that "this has been blown so out of proportion that it's incredible", seems to bely the triviality of the issue. Mr. Jobs, you wouldn't have handed out $29 x 3 million worth of cases ($87,000,000 + transaction costs) if you sincerely believed that "we're not feeling right now that we have a giant problem we need to fix". You're an incredibly smart businessman, probably the brightest ever, so we don't quite believe you when you say it's a "small matter" and you "aren't worried" about it.
Apple also claims that the main problem is actually with the software on board the phone that shows a stronger signal when the reception is not actually that strong. Does the software do this by itself? Or was it designed to show a signal stronger than the actual signal reception capability of the phone? That we'll never know. Signal strength is a critical USP for many a phone manufacturer. Yes, maybe all phone manufacturers resort to dialing up 'signal strength' and then maybe none of them do that. The point is Apple wasn't "that sort of a company" to start with. A dialed up signal display isn't an inadvertent flaw, Mr. Jobs - and maybe it was done knowing well that the phone's new antenna design wasn't performing quite as well as Apple expected it to? Because now that you mentioned it, we (commoners) can't help but think that way.
The crux of the matter is that like Toyota, Apple took its time to admit to the presence of a problem or let's say admit to a consumer perception of a problem when none may have existed (or if it did exist it didn't warrant a global media frenzy). The fallout from this episode is that Apple now seems to be very mortal after all. It's products have shortcomings and defects (serious or not) which its legions of die-hard fans and new-found fans are finally coming to admit - in public. Is this a sign that Apple's customer base has grown far beyond the numbers that qualify as a "cult"? Has the Apple fan-base been contaminated by "ordinary mortals" drawn to its admittedly fashionable and oh-so-sexy persona? Does this new legion of not-so-forgiving consumers/fans spell further trouble for Apple? Was Apple meant to cater to these "masses"?
Apple's success lies in making and marketing fabulously designed products that perform almost as admirably or not as another functional brand in the market, to a customer base that can well afford the equally fabulous price-premium Apple demands as a membership to an elitist club that is second to none. Few humans can deny that an Apple product does not stir desire in them. Suddenly more than a few humans could afford to join 'the club' - Apple's ambitions made it so. The problem - for Apple, is that these new-kids-on-the-block aren't as price insensitive as the 'fanboys' are and neither are they as forgiving of "minor issues common to all phones that have been blown so out of proportion". This a new breed of consumer, a breed VERY different from the one that made Apple a boutique technology player.
Apple must carefully consider its ambitions and and match its own attitude and delivery with the expectations of the new consumers their ambition will attract. The consumers that made Apple the uber-successful company it is today are the "common lot" and not the 'fanboys'. Mr. Jobs and his company would do well to spend more time understanding the inhabitants of this new territory of the market they have occupied and possibly change either their approach to product design and/or quality management, or their approach to tackling problems when they crop-up. Like Toyota did, Apple must not believe it is immortal, even if they say they aren't, because when they say "we aren't perfect" they should sound like they mean what they're saying and are saying what they mean.
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