Transformation Design

Transformation Design is a concept that is the theme of Leeland Maschemeyer’s blog. It smashes the old concept of traditional advertising which is associated with the constant inundation of message pollution to consumers. This approach does not engage the consumer, it is quite passive. In fact, traditional advertising has gotten such a poor reputation, that Sao Paolo has banned outdoor advertising. Has advertising gotten to that point where certain practices need to be banned?

Transformation design examines how to improve the consumer experience. From the design of the products/services to the promotion of them, this process ensures a user-centered design. What can be done to further improve the life of the consumer? Here is a take on Green advertising using transformation design. John Grant integrates social responsibility with transformation design to influence and change the consumer’s behavior for sustained change.

An example of both social responsibility and transformation design would be if a business that caters to the outdoors lifestyle could explore having an interactive experience that involves consumer creativity, participation and sharing to better the environment by discouraging littering and encouraging treading lightly on backcountry trails.

Another example of transformation design would be the Dove Beauty Campaign. As young girls and women are being inundated by unrealistic ideals for beauty, self-esteem and beauty issues were becoming increasingly apparent. What can be done to alleviate this? Are only thin young women beautiful? How about women of different sizes and ages? Viral videos, online forums, and thought-provoking ads depicting non-traditional models were shown. When the online forums were formed, an online community emerged as various women and girls supported each other and it engaged participation and sharing. This was designed for discussion and support

Nike has been one of the global leaders for advertising. There will be a 10 km run that will happen globally and is hosted by Nike. By reaching out to people to notify them of the impact that can be made by participating by everyone in the world, it makes this event relevant. By coming up with an idea of getting the community of runners globally together and executing this, Nike has leadership in getting together a global community for a common cause and to donate to charity. Also, this event and more importantly the website positively engages the consumer by facilitating interaction and sharing. The consumer can record their running times, which motivates them to ameliorate their past and current records.  This would result in having the consumer visit the site repeatedly.  Another example would be Nike releasing a viral video campaign to always engage in good sportsmanship. Here is a site.

What examples of transformation design can you come up with? Please share.

What is the future of TV advertising?

With the emergence of internet technologies such as Voice over IP (voIP), Internet Protocol Television (IPTV), and internet, these technologies have enabled the convergence of digital media and entertainment.  Now, entertainment is centered around the consumer by virtue of all programs being on demand. 

The traditional approach to entertainment with TV and Radio is waning.  Consumers want creativity to contribute content, interactivity to engage in social networks, content on demand for their convenience.  According to this survey by IBM, consumers are spending more time on the internet than watching TV.

For example, AT&T offers:
- video and programming (shows, events, etc.) on demand

- searching by title, actor and themes

- picture-in-picture channel surfing capabilites so the user does not miss anything

- guides to customize channels – for example organizing by favorites

- Digitial Video Recorder (DVR) that can record four programs at once

- DVR can record an entire series or individual program.

- Wireless phone or device, and on the internet, can manage the DVR which include selecting programming, saving, deleting previous programming

- Realtime customized weather, traffic, sport scores, stock tickers on TV screen and yellow pages available on the TV screen

Consumers are increasingly being more in control and can choose what and when to watch.   With the DVR devices, this study done by Accenture  illustrates that the number of ads viewed on TV has dropped significantly.  With the user in full control, he/she would filter any content that is not relevant to them (e.g. intrusive ads, irrelevant programming, etc.).  With less ads viewed, there is an increasing need for more accurate metrics.  With the DVR, advertisers would have a more sophisticated method of obtaining information about the consumer by important criteria such as programs watched, frequency, time of day, etc.
The existing advertising agency business model will need to go through a major transformation.   Accenture advocates a change in organizational culture to being able to adapt to the new technologies or be left behind. 
The biggest threat to the existing advertising agency according to Accenture would be search firms.  If they were to develop superior analytic tools, this would lead to a superior understanding of the consumer which is typically the traditional advertising agency’s strength.  Also, media agencies could be endangered by these firms because if the online search firms understand the consumer better, they could target them better.  To magnify the threat, the barrier to entry is quite low. 

The entire value chain which links the advertiser to the consumer and the feedback from the consumer would be lost.  Also, whoever (advertising agency, media agency, online search firms) embraces IPTV, Internet and mobile phone technologies would be advantageous.  By embracing all three, an integrated communications campaign that could launched with rich multimedia.

A study by IBM forecasts a huge increase in advertising on the internet, through IPTV, in-game and mobile advertising.  As both creative and media outlets are being increasingly centered around the consumer, the messaging in ads needs to resonate with an increasingly fractured and niche group. 

The IBM study also states that with the low barriers to entry for ad makers, this would drive down the production and media costs.  The negative effect of this, would be offset by the increased number of ads to be made to address the niche market.  As advertising on convergence technology (Internet, IPTV, mobile multimedia ) increases, the role of geographical targetting for traditional local media (Newspaper and Radio) as well as tradtional national media (TV spots) will begin to blur.  Local media needs to be better at making the message more interactive, and the national media needs to be more relevant to local consumers.  This is where the opportunity lies.

Measuring for impact-based versus impression-based is the new future.   Also, there will be a shift from having a small number of media buying/planning companies that control the buying process to a more open auction-style exchange, where a larger number of smaller companies can purchase media on the increasingly fragmented platforms.  Existing examples include Open Ad , Department of Doing, and Google where there is a movement to outsource some of the traditional advertising agency functions.

The new business model needs to be transformed to adapt to a more open and fragmented consumer market.  The following changes need to occur:

1) Consumer Innovation

2) Business Model Innovation

3) Business Design and Infrastructure Innovation

 

Are some measurements of ROI for web advertising inaccurate?

According to a study made by Starcom, 50% of all clicks on online ads are made by 6% of the total online population.  This small population also referred to as the “heavy clickers”, are heavily skewed towards  the 25-34 age group, and a household income of less than $40,000.  The researchers classified this group as users who spend considerable amounts of time and money online. Gambling/sweepstakes, job searching and gaming sites are places where the heavy clickers frequent. 68% of the total online population can be classified as “non-clickers”. Therefore, when examing the click-through statistics for online ads, these may not be representative of who sees and has an interest in the online ads.

The only criticism I have about the study is it only examines a short time period – July 2007.  Could the study be skewed as a result of seasonality?  Therefore to solidify the results, a longitudinal study would be beneficial. 

This article refers to the Starcom study, and stated that Google, Microsoft and others have shifted from this practice to measuring the number of clicks on ads, to the number of desired actions being taken.  In other words, measuring the extent of interactivity of the consumer to the ads.

Innovation at Google

This blog post summarized a very insightful presentation made by Jonathan Rosenberg, SVP of Product Management and Marketing at Google.  He discussed sixteen principles, some of them go against mainstream thinking.  He mentioned that there were three books which he based the sixteen principles. 

1) “The Long Tail” by Chris Anderson.  The theory was discussed at length in this previous post 

2) “Wikinomics” by Don Tapscott.  Some of the main themes regarding open innovation can be found in this previous post

3) “The Wisdom of Crowds” by James Surowiecki.  This book discusses how under certain conditions and environments, a crowd can actually be smarter than the smartest people in that group. 

The presentation was quite thought-provoking, which makes people question the traditional manner of thinking.

Are companies built to “flip” versus built to last?

 

 

The above link is a concept that defies regular managment practices.

 

The article discusses how companies are increasingly built to sell based on potential to generate instant returns instead of the traditional practice of building sustainable businesses.  The “traditional” business mantra extends to a reason/purpose for the business to exist beyond profit motives.  These core values are embedded as an organizational culture.  According to the author, the traditional business model generates higher long-term returns.   

 

The main catalyst for this new model of businesses being built to “flip” instead of being built to “last” was from Venture Capitalists and from Wall Street.  In fact, the number of VC-backed start-ups more than doubled in the late 90s versus in the 80s.  The author included multiple examples of businesses that were being “flipped” and turned out that these businesses were not sustainable and did not generate the expected returns.  Some examples were during the late 1990’s technology bubble, when technology firms announced their IPOs, valuation of these firms generated unprecendented values.

 

The author mentioned that there were two cases that this model is viable:

 

1)   Leverage creative insight of one individual – e.g. Thomas Edison.  After this person/people created their invention(s), the company’s raison-d’etre waned. If the inventor/inventor(s) decides to leave the firm, their company’s raison-d’etre is history.

 

2) Sell technology to a larger company.  This small company does not need to have either the economy of scope or scale to develop a niche product.  They focus only on their core competency – their product/service.  Other business functions that are essential to the sale of the product/service such as distribution can be adopted by the larger company.

 

The author states that this “Built to flip” model is not sustainable. It devalues the tenet of a business’s raison-d’etre which is to contribute in a sustainable method to the economy. To simply dump a company based only on potential rather than sound financials cannot be sustainable. Markets are self-adjusting and would recognize the lack of substance.

 

Does the selected company built to work? Does it contribute? Is it meaningful – the sense of purpose beyond money?

Are social networking websites such as Facebook beneficial for society?

Click above link for an interesting discussion on the sociological, psychological and economic effects of social networking sites such as Facebook and Myspace.

Humans are social beings.  They need to feel connected and to socialize with one another.  I have recently (last week) joined Facebook, Delicious, Digg and Twitter.  It is quite a powerful tool in that interaction and collaboration can be realized with current and past friends.  Facebook enables the user to keep track of the daily happenings of his/her friends whom maybe geographically dispersed. 

From a sociological perspective,  social networking sites improve social capital which is particularly useful in striking up a conversation or perhaps exchanging ideas from a network of people.  A Michigan State University study has found it beneficial for individuals with low self-esteem and low life satisfaction.  A counterpoint is that bullying and gossip-spreading is made much easier with this tool.  With access to so many people this can act as a magnifier for this negative behavior. 

From a psychological perspective, there are detracters who believe that the ever-increasing popularity of such sites may have a negative effect on face-to-face communications.  Social networking sites enable the user to meet others based on common interests.  Is this psychologically beneficial?  That depends on one’s viewpoint.  Having a network of people with varied interests would be more difficult to achieve than a network with similar interests.

From an economic perspective, it makes it easy economically (websites are free – therefore barriers of entry are very low) by effort (one-click away) to communicate with friends and acquaitances.  From an advertising perspective, it enables the availablility of very targeted campaigns similar to the tactics employed by google with keywords. 

What are your thoughts on the ever-growing number of social networking sites?

Is the “long-tailed theory” flawed?

The above link discusses how the “long-tailed theory” could be wrong.  This theory was created by Chris Anderson, editor of Wired Magazine. He believes that the internet is a medium that enables the consumer with more choice which is fueled by content on demand.  With more choice, means that niche products will have an increasing influence on total sales.  Niche products/services are not normally sold through traditional channels (e.g. brick and mortar operations) due to physical contstraints such as inventory, which leads to a lack in economies of scale to justify the availabilities of those products/services.  However, when all those other niche  products/services are added together, this amounts to a large number.  So significant in fact, that he theorizes that the summation of the number of niche or non-mainstream products will exceed the total amount of mainstream products.

 

A Harvard professor came out with a study last week to refute this theory.  Its quite an interesting read.

What are some new trends in advertising?

The above link is an interview with Kevin Roberts, the CEO of Saatchi and Saatchi and developer of Lovemarks.  http://www.lovemarks.com/

 

The idea behind lovemarks is to understand how brands become inspirational and at the same time foster loyalty and are embraced passionately.  

 

He discusses what he sees as the future of marketing. He feels that brands need to be more empathetic to consumer’s needs. As well as being authentic in the consumer’s eyes.  

 

In the past, the brands had a large share of power.  Then it changed to the retailers such as Wal Mart with the advent of private labels.  Now, it is the consumers have the power with the popularity of social networking websites and blogs.  Both the clients and ad agencies need to transform from being brand/service centric to consumer-centric. 

What do you all think of his ideas of the future?

Is Google making us dumber?

The above link examines how internet users are becoming increasingly distracted and are looking for quick fixes when reading and writing.  Inside the Internet world, convenience is becoming more apparent.  Internet prose is becoming simpler, shorter and more to-the-point.  Text messages eshew complexity and embrace aphorisms. The internet’s influence is also making its presence known in other media, too.  Newspaper and magazines are apparently adapting the short and efficient manner of prose similar to the internet.

 

The author argues that google enables finding information bother quicker and more plentiful, it almost reduces the amount of “thinking” required to be resourceful.  He likens this experience as a metaphor – where a human is like a pancake – spread wide and thin.  In other words, people are increasingly have a wide scope/breadth of knowledge but are lacking in depth.

What do you all think of this article? Please share your comments and discuss.

Is open innovation becoming the norm?

The above link is about how open source innovation is changing the paradigms of how businesses think, and react.

A while back, there was a very insightful article written by Piers Fawkes from Psfk regarding how shielding some market research processes could stiffle innovation.  

 

I think this article expands on that piece written by Piers.  A major benefit derived through open innovation is that the quality of the products that were co-developed by the development community (many of whom were not employees of the companies that were bidding projects via open source) are equal or even exceeded those developed entirely in-house.  

 

Interestingly enough, monetary rewards was not the major motivation for the development community.  It was being able to contribute to a meaningful, yet relevant project and bringing this to reality.  

 

As this becomes an increasingly common practice, will there be a bigger debate between preservation of intellectual property rights versus open innovation?

What do you all think of this conundrum? Please discuss.