ADVERTISING AGENCIES FACING THE DIGITAL REVOLUTION


What challenges does the digital economy present to brand communicati...
Table of Contents


I. INTRODUCTION                                                                     3

II. CHARACTERIS...
I. Introduction


The world economy has been facing serious challenges based on the adaptation to both
globalization and t...
technologies on the economy. Among others, we will observe how the emergence of Internet
has transformed the way people ac...
the emergence of digital technologies offers to brand communications. At last, this project will
criticize the status quo ...
According to the Long Tail theory, the first driver of change is the democratization of production
tools. Thanks to the de...
The three drivers of change that C. Anderson presents in his theory of the Long Tail allow us to
better understand how the...
Always Right, there were two reasons why in the past people did not produce content: (1)
because of the lack of necessary ...
R. Williams (2001, p.46) once wrote in his book Culture and Society, “there are no masses;
there are only ways of seeing p...
observing how the emergence of the digital economy is revolutionizing traditional medias, and
how it radically changes peo...
According to a study from the media agency Carat, while the time spent with traditional medias
(analogue television, radio...
There is less big content that everybody finds interesting. Blockbusters have less success than
before because people have...
platforms, and portable music players. If television remains a bridge between the old and the
young generations, the old g...
2.4. Self-determined media usage


As the permanent access to content drives to more freedom of choice, people do not tole...
The objective for brands was to be louder than their competitors, by buying more space and
more visibility in traditional ...
In fact, the impact of the changes in the media landscape on brand communications is well
commented in the debate that tak...
2. The emergence of new forms of marketing

Companies are not willing to lose that much and increasingly turn to more dire...
from Tim Bradshaw in the Financial Times, “I can’t think of many other industries where the
fundamental process of produci...
A. Bogusky and J. Winsor (2009, p. 25) argue that “word-of-mouth can actually be shut off by
using traditional advertising...
toolbox used by “the marketing people” in the marketing department is outdated, and modern
marketing is a management philo...
consumers want and need to be touched individually by companies. Moreover, according to A.
Bogusky and J. Winsor (2009, p....
your brand, make sure they’ve got everything they need, to share with their friends, and to
spread the word for your brand...
4.2. Methodology


This thesis is based on a deep analysis of the brand communication and advertising industries,
combinin...
III. Evaluation of strategic opportunities



A. Redefining brand communications for the digital age




1. Enhancing Crea...
demonstrates that there is no getting away from the need for being creative to attract
audiences, even for largest compani...
The easier step for brands to create discontinuity is to encourage change and innovation in their
own communications. Adve...
it is packaging, retail presence, website content, PR programs or employees themselves, every
point of interaction between...
In addition to packaging, everything that affects the customer journey should be taken care of
by brands and perceived as ...
Figures and numbers confirm the need for brands to build digital experiences that have
coherence and relevance with their ...
the launch of Nike+, Nike Plus runners have logged in total more than 100 million miles. The
success of this platform is l...
Technology is increasingly enabling new types of experiences between brands and consumers,
and it provides brands with opp...
and art fairs, in consumers’ minds. However, the association in consumers’ minds could be
more or less evident, and the ef...
impressions, and has been featured in almost every single newspaper in the USA. J-M Dru
(2010) even explains in an intervi...
communications makes that their brands are progressively transforming themselves into a
media.


There are many new connec...
Some of the best brands today are already becoming the places, the spaces, and the
experiences that people choose to spend...
Storytelling is extremely important in the creation of a brand identity. The best brand stories,
and the most easily recog...
symbolises brand expertise, synonym of quality and effectiveness over the decades. In the
other part, a brand like Innocen...
Finally, the Pedigree brand recently changed its vision from being a dog-food producer to a
dog-loving company. The compan...
that they stop thinking in terms of control and start to open themselves to customers. On this
regard, A.G. Lafley, CEO of...
user, which can purchase them instantly using a unique Design ID code on the Nike ID website.
See Appendix 2.6.


The powe...
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Advertising agencies facing the digital revolution

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Result of my researches on how the digital impacts and challenges the world of brand communications, and specifically the role of advertising agencies

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  • Hi all, I have now enabled download of the file automatically / easier and quicker than relying on me emailing it to you individually! Best.
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  • Hi Nicola, i'm doing a research on how the digital revolution impacts advocacy groups. Can you please send me a copy on marigae@yahoo.fr.

    Thanks a lot
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  • Hi Nicolas! Very nice report! In line with all the other ppl, could you send me a copy to mrd12001@student.mdh.se? We will use it for our master thesis, thanks in advance ;)
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  • Hi Nicolas, your thesis is very relevant for a research assignment, is it possible to have it email to olivia.s.fitch@gmail.com. Cheers.
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  • Hi Nicolas - I would like a copy of your report. Many thanks in advance. Peter, pbe@pbe.dk
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Transcript of "Advertising agencies facing the digital revolution"

  1. 1. ADVERTISING AGENCIES FACING THE DIGITAL REVOLUTION What challenges does the digital economy present to brand communications, and what are its implications on the role of traditional advertising agencies? Nicolas Jayr MSc Business Administration Semester 3: Master thesis Tuesday 1st June 2010 Words: 30,285
  2. 2. Table of Contents I. INTRODUCTION 3 II. CHARACTERISTICS OF THE DIGITAL REVOLUTION 5 A. THE EMERGENCE OF DIGITAL AND THE INTERNET ECONOMY IN THE BUSINESS DEBATE 5 1. DEMOCRATIZATION OF CONTENT CREATION, DISTRIBUTION AND ACCESS 5 2. A REVOLUTION IN MEDIAS AND A RADICAL CHANGE IN PEOPLE’S MEDIA BEHAVIOUR 10 B. CHALLENGES AND DEBATES REGARDING THE FUTURE OF BRAND COMMUNICATIONS 14 1. THE END OF ADVERTISING AS WE KNOW IT? 14 2. THE EMERGENCE OF NEW FORMS OF MARKETING 17 3. DEBATES AROUND CONSUMER-CENTRIC AND RELATIONSHIP MARKETING 19 4. OBJECTIVE AND METHODOLOGY 22 III. EVALUATION OF STRATEGIC OPPORTUNITIES 24 A. REDEFINING BRAND COMMUNICATIONS FOR THE DIGITAL AGE 24 1. ENHANCING CREATIVITY AND DIFFERENTIATION 24 2. TAKING CARE OF THE BRAND EXPERIENCE 26 3. SHIFTING FROM ADVERTISING TOWARD BRAND CONTENT 31 4. CHANGING THE VIEW ON MEDIA 33 5. THE POWER OF STORYTELLING 35 B. ENGAGING CONSUMERS IN THE DIGITAL WORLD 38 1. BRANDS SHOULD LET CONSUMERS TAKE THE OWNERSHIP OF THEIR BRANDS 38 2. BUILDING THE ROAD TO SUCCESS: ENGAGE AND CONVERT CONSUMERS 43 3. THE OPPORTUNITIES OF SOCIAL MEDIA STRATEGIES TO FOSTER CONSUMERS’ ENGAGEMENT 49 C. WHICH ROLE FOR ADVERTISING AGENCIES? 54 1. INDUSTRY BACKGROUND 55 2. DIFFERENT MODELS ARE EMERGING 60 3. THE QUEST FOR THE IDEAL MODEL 62 IV. DISCUSSIONS AND FINDINGS 64 A. ADAPTING THE ORGANIZATION TO THE PATH OF DIGITAL 64 1. CHANGING THE CREATIVE DEVELOPMENT PROCESS FROM STATIC TO DYNAMIC 65 2. ENHANCE COLLABORATION BETWEEN DISCIPLINES 67 3. PLANNING AND MANAGING FOR THE REAL-TIME ENVIRONMENT 69 B. OPENING THE ORGANIZATION TO EXTERNAL COLLABORATION 71 1. APPROACHING OPEN-INNOVATION IN THE COMMUNICATION INDUSTRY 71 2. IMPLEMENTING AN OPEN INNOVATION MODEL TO GENERATE CREATIVE IDEAS 74 3. IMPLEMENTING AN OPEN INNOVATION MODEL TO THE PRODUCTION OF CREATIVE IDEAS 75 C. MANAGING THE CHANGE 78 1. ESTABLISHING A SENSE OF URGENCY 78 2. CREATING A VISION 79 3. FOSTER EXCHANGE AND COLLABORATION ACROSS THE ORGANIZATION 80 VI. CONCLUSION 81 BIBLIOGRAPHY 85 APPENDIX 92 INTERVIEWS 107 2
  3. 3. I. Introduction The world economy has been facing serious challenges based on the adaptation to both globalization and the emergence of digital technologies. In addition to these two drivers of change, global businesses have been facing since 2008 one of the most important economic crisis in the history of modern capitalism. With the economic recession in one hand and the emergence of digital technologies in the other hand, the industry of advertising and communications has been facing a critical period of challenge and reinvention. The recession has been forcing companies to reduce massively their advertising expenditures while the increasing acceptation of digital technologies and interactive platforms by consumers transformed the operational system of advertising. While global audiences have been migrating toward new media platforms, the fragmentation of medias and the empowerment of consumers have been among the numerous drivers of change that challenged the effectiveness of traditional advertising, which in return has been encouraging companies to benefit from the recession to rethink and reassess their overall communication strategies. Likewise, changing environments require new practices, and new circumstances challenge established principles. This project will examine how traditional advertising models are resulting ineffective to face the profound challenges that the digital revolution present to brand communications. Moreover, this project will analyze how the model of advertising agencies itself is being questioned and threatened by this new environment. Advertising is operating in such shifting contexts that some affirmations in this project could seem outdated, or irrelevant. One of the major challenges faced in this project has been that the contemporary industry of communications is in constant evolution and in radical reconfiguration. Starting to write about this project, a number of emergent trends already indicated further restructuring and reorganization in an industry that was already adapting to globalization, changing regulations and ever-evolving audiences. The observation of the changing environment around brand communications will be the main focus of the first part of this project. The emergence of the digital revolution will be discussed through the review of different theories and discourses questioning the impact of digital 3
  4. 4. technologies on the economy. Among others, we will observe how the emergence of Internet has transformed the way people access to content and information, which in return has radically changed the way people behave with media and with communications. Finally we will present how this new landscape is challenging the way brands communicate and in which measure it threatens the traditional advertising model. The second part will examine how brands should communicate in order to respond to the challenges of the digital revolution and will highlight the new (and old) communication strategies that brands should embrace to build on future growth. We will successively present how by enhancing creativity, physical and digital experiences, brand content and promoting a different approach of media, companies could successfully develop brand communications adapted to the digital age. We will then try to understand why companies should let customers have an important role on the construction of their brands, and present different strategies that, using among others customization, open-innovation platforms, and social medias strategies, could successfully increase the engagement of consumers. Finally, having defined what would make brand communications successful in the digital environment, we will understand how the role of advertising agencies is being challenged. We will then observe how advertising agencies have been transforming themselves to respond to the challenge and observe that two strategic models have been emerging: integration and external growth. The third part will finally evaluate different opportunities to transform the advertising agencies’ model and adapt its internal organization to the path of digital. We will demonstrate how by changing the creative development process from static to dynamic, by enhancing the collaboration between internal disciplines and by planning and managing for the real-time environment, advertising agencies could build a sustainable organization adapted to the speed of culture. This paper will also propose a model for external collaboration and present how advertising agencies could benefit from opening their organization to customers and external collaborators. Finally, we will propose a framework for agencies’ managers that could help them to successfully implement the change in their organization. The aim of this project is to demonstrate that the radical transformation caused by the emergence of digital technologies and by the change in consumers’ behaviors is challenging the traditional model of brand communications. This project intends to present the change that happens to the industry as a source of strategic opportunities and it will try to emphasize on the benefits rather than on the risks provided by this changing landscape. While many predict the challenges provided by the digital revolution, this project rather present the opportunities that 4
  5. 5. the emergence of digital technologies offers to brand communications. At last, this project will criticize the status quo demonstrated by many advertising agencies and will highlight the character of urgency in the communication industry. II. Characteristics of the Digital Revolution A. The emergence of digital and the Internet economy in the business debate The review of different theories in the recent managerial, business and economical debates enables us to understand the implications that the development of the Internet and the democratization of personal computing have had on the uses and habits of individuals. The environment in which brands communicate has radically changed, and we have assisted to the emergence of new behaviours with the raise of the Internet economy. We are going to discuss these points in the following part, by observing first how the digital economy enabled the democratization of content creation, distribution and access, and generated a radical transformation of the media landscape. Moreover, we will observe how different authors consider that the new digital landscape is encouraging collaboration and external innovation within organizations, and finally, we will try to identify how this new environment challenges the future of brand communications. 1. Democratization of content creation, distribution and access The emergence of the digital economy and its influence on our culture and economy is discussed in the work many authors. In their book Wikinomics, D. Tapscott and A. D. Williams (2006, p.3) explain how thanks to the Internet revolution “billions of connected individuals can now actively participate in innovation, wealth creation, and social development in ways we once only dreamed of.” In this regard, C. Anderson (2006) draws a clear overview of the possibilities that the digital revolution presents to our society in his book The Long Tail. He develops the Long Tail theory, which has become a classical framework of the influence of digital in our economy. C. Anderson (2006) develops the analysis of three driving forces that explain how the cost of reaching niches has reduced, which in return enables the democratization of content creation, distribution, and access. 5
  6. 6. According to the Long Tail theory, the first driver of change is the democratization of production tools. Thanks to the developments in personal computing technologies, everything from printing press to film and music production is now in the hands of anyone. According to C. Anderson (2006, p. 54), “the power of the PC means that the ranks of ‘producers’ – individuals which can now do what just a few years ago only professionals could do – have swelled a thousandfold.” Empowered with technological tools, people are given the opportunity to produce content, from short movies to albums, and to publish their thoughts to the world very easily. D. Tapscott (2009, p. 90) argues in his book Growing Up Digital: “consumers are taking the next step and are becoming producers, co creating products and services with companies.” As a result of this revolution, the universe of content available has spread and there is a huge increase in the number of producers. The second force, according to the Long Tail theory, is cutting the democratization of distribution, which is cutting the costs of consumption. C. Anderson (2006, p.55) explains: “the PC made everyone a producer or publisher, but it was the Internet that made everyone a distributor.” The Internet makes it easier and cheaper for anyone to reach more people. Indeed, the power of this driver of change is changing many businesses. While distributors such as Wal- Mart and Carrefour spent years setting up some of the world’s most sophisticated supply chains to offer massive variety of products at low prices to millions of customers around the world, it takes today few seconds for anybody to reach an equivalent potential market simply with a listing on eBay or Amazon. As a consequence, efficient digital economics are leading to new markets and marketplaces, which have no physical restrictions, and which strongly challenge traditional markets. The third force, finally, is the connection between supply and demand, which introduces consumers to these new available goods on the digital world. According to C. Anderson (2006, p.56), “this can take the form of anything from Google’s wisdom-of-crowds search to iTunes’ recommendations, along with word-of-mouth, from blogs to customer reviews.” The emergence and the development of many social websites and personal blogs made that customers are directly playing the role of sales force and replacing traditional channels of communication. Besides, the most useful recommendations often come from other consumers because their incentives are better aligned with our own. This is a very important point for brand communications and we will come back to this point later in this research. 6
  7. 7. The three drivers of change that C. Anderson presents in his theory of the Long Tail allow us to better understand how the Internet is challenging our economy by enabling people to access to an almost unlimited choice. Moreover, because it has become easier and faster to find and search for information, it has a direct effect of encouraging us to search further outside the world we already know. Indeed, consumers’ tastes happen to be, collectively, far more diverse that what marketers have tried to suggest. The explosion of technologies that connect consumers is driving demand for niches products, which in return, creates a new and different economy of culture. Karl Marx was perhaps the original prophet of this new economy. In the German Ideology (1845-1847), K. Marx explained: “labour - forced, unspontaneous and waged work – would be superseded by self-activity.” Eventually, there would be a time, he wrote, when “material production leaves every person surplus time for other activities.” This is exactly what seems to happen with the consequences of the digital economy, which is transforming our societies. In his book The Digital Economy, D. Tapscott (1996) introduces the term “prosumption” to describe how the gap between producers and consumers is reducing, while Doc Searls (2000) calls this a shift from consumerism to participative “producerism”: “The ‘consumer economy’ is a producer-controlled system in which consumers are nothing more than energy sources that metabolize “content” into cash. This is the absolutely corrupted result of the absolute power held by producers over consumers since producers won the Industrial Revolution. (…) Apple is giving consumers tools that make them producers. This practice radically transforms both the marketplace and the economy that thrives on it.” In their book, The Pro-Am Revolution: how enthusiasts are changing our economy and society, C. Leadbeater and P. Miller (2004) describe the rise of “amateurs who work to professional standards.” They explain: “the twentieth century was shaped by large hierarchical organisations with professionals at the top. Pro-Arms are creating new, distributed organisational models that will be innovative, adaptive and low cost.” This emergence of new customers and new amateurs is transforming the way companies are building products, managing organizations, and develop their communication. The emergence of producers and the access to distribution platforms makes that the content available has spread. Indeed, according to M. Zorn (2009) in his presentation The Audience is 7
  8. 8. Always Right, there were two reasons why in the past people did not produce content: (1) because of the lack of necessary tools, and (2) because of the lack of talent. Thanks to the emergence of new technologies, everyone has now access to the tools to produce and distribute easily information and content. The consequence of that evolution, according to C. Anderson (2006 p. 63), is that we are assisting to a shift in the mentality of people “from being passive consumers to active producers”. This theorization of the digital society encounters some critics. Among them, A. Keen, in his article The Cult of the Amateur (2006) criticizes the emergence of producerism and explains how it presents real threats to our culture and talents. “The Web 2.0 (…) worships the creative amateur: the self-taught filmmaker, the dorm-room musician, the unpublished writer. It suggests that everyone – even the most poorly educated and inarticulate amongst us – can and should use digital media to express and realize themselves.” A. Keen insists, “No more Mozarts`, no more Picassos, no more Hemingways, (…) if you democratize media, you democratize talent.” D. Tapscott and A. D. Williams (2006, p. 272) criticize A. Keen approach and consider it “equivalent to saying that democracy is bad for the average citizen, because the average individual is a poor judge of his or her own interests.” Therefore, the increase of information and content makes that people live in a world of abundant choice. In such context, Mass Culture tends to be less relevant that it was and we could rather consider that this environment is turning culture into millions of different micro cultures that co-exist and interact between each other. C. Anderson (2006, p. 184) calls it a shift from a “mass culture” to a “massively parallel culture”. Each of us belongs to different tribes simultaneously, sometimes overlapping, and sometimes not. We share common interests with our colleagues and families but not all of them, and we all have particular tastes and likes that make us different. In fact, what the digital revolution underlines, according to V. Postrel (2003, p. 52), is nothing more than a reflection of the diversity inherent to any population distribution: “Every aspect of human identity, from size, shape, and colour to sexual proclivities and intellectual gifts, comes in a wide range. Most of us cluster somewhere in the middle of most statistical distributions. But there are lots of bell curves, and pretty much everyone is on a tail of at least one of them. We may collect strange memorabilia or read esoteric books, hold unusual religious beliefs of wear odd-sized shoes, suffer rare diseases or enjoy obscure movies.” 8
  9. 9. R. Williams (2001, p.46) once wrote in his book Culture and Society, “there are no masses; there are only ways of seeing people as masses.” C. Anderson (2006, p. 185) demonstrates us that the resulting rise of niche culture is reshaping the social landscape, “in other words, we’re leaving the water cooler era, when most of us listened, watched, and read from the same, relatively small pool of mostly hit content. And we’re entering the micro-culture era, when we’re all into different things”. As a consequence, there is less space for traditional mass media and “popular” content, and this impacts on people’s consumption and behaviour. This change in culture and the emergence of technologies present challenges to the traditional relationship between brands and consumers. Empowered with technologies, people are not only consumers for brands but they now take on many new and different roles. D. Armano (2009), SVP at the agency Edelman, explains in his blog that people can be at the same time customers, producers, participants, users, multipliers, and they even can take part of brand communities. See Figure 1.1. Figure 1.1. Don’t call them consumers anymore. Source: D. Armano (2009) Consumers are changing their behaviours and the access to more content and information has changed their media habits. This is what we are going to observe in the following lines, by 9
  10. 10. observing how the emergence of the digital economy is revolutionizing traditional medias, and how it radically changes people’s media behaviour. 2. A revolution in medias and a radical change in people’s media behaviour As we could observe, the digital economy is enabling people to access to an unlimited access to content, and as a consequence, it is radically changing the way people behave with content, information and media. According to R. Murdoch, Global CEO of News Corporation (2006), “technology is shifting the power away from the editors, the publishers, the establishment, the media elite,” and this power tends to be more and more in hands of people. A. Keen (2007) insists: “traditional ‘elitist’ media is being destroyed by digital technologies. Newspapers are in freefall. (…) The iPod is undermining the multibillion-dollar music industry.” “We must address the old saw that new media don’t destroy old media. Radio didn’t kill newspapers; television didn’t kill radio, and so on. That is true… so far. But some new medias are so disruptive that they force older media to change themselves radically in order to stay in business. Those that decide to circle the wagons and refuse to change, refuse to reinvent themselves, are almost certainly going to struggle to survive.” J. Cappo (2003, p. 72) As we can see, researches demonstrate how the emergence of the Internet is challenging the traditional model of medias. In his presentation The Audience Is Always Right, M. Zorn (2009) argues that the emergence of the digital ecosystem has changed people’s media behaviour regarding four dimensions: fragmentation, individualization, volatility and self-determination of their media usage. In the following lines, we are going to have a further look on each of these four different characteristics and undertake a deep analysis of their consequences. 2.1. Fragmented media usage We could observe thanks to the theory of the Long Tail that people are surrounded by content. The development of new digital technologies makes that they have now the choice between a multitude of media possibilities to access to content. As a consequence, audiences are becoming fragmented and people are spending more time with more media differently. 10
  11. 11. According to a study from the media agency Carat, while the time spent with traditional medias (analogue television, radio and newspapers) is decreasing, the time spent with new medias (Internet, video games, digital television) is growing. Still, according to the survey, this trend is supposed to increase over the next ten years. See Appendix 1.1. Moreover, according to a study on the evolution of media habits from IBM (2007), personal PC time now rivals TV time, with 71% of respondents using the Internet more than two hours per day for personal use, versus 48% spending equivalent time watching TV. Furthermore, people spend their time with media differently regarding the generations. The new generations are not using the same mediums and the same platforms than the old generations. According to a study from Nielsen Media (2009), the new generations are adopting more quickly new media platforms and usages than the old generations, which keep a strong attachment to traditional media formats, such as newspapers, books, magazines and broadcast television. See Appendix 1.2. Therefore, while broadcast TV remains the dominant channel and keeps attracting generations, the emergence of digital television is enabling consumers to access much more channels than ever before. Referring to Nielsen Media (2008), US homes have access in average to more than 100 TV channels. As a consequence, even if a couple of big channels remain dominant, the competition for audience’s attention is becoming increasingly challenging for traditional channels. Moreover, the weekly time per channel is dropping, which means that the major TV networks are struggling to keep attracting their audiences. 2.2. Individual media usage Digital platforms enable people to access information and content on their own terms and schedules, whenever and wherever they are. According to R. Halton, quoted in an article from G. Mann (2007), “consumers will be looking to consume content in their on terms, and in forms and shapes and platforms that suit their needs.” As a consequence, traditional media channels need to adapt their offering to keep attracting audiences that are increasingly adopting individual media behaviours and customizing their media experiences in terms of what, when, and how. - What? 11
  12. 12. There is less big content that everybody finds interesting. Blockbusters have less success than before because people have access to a profusion of cultural content and to exactly what interests them on the digital world. This is particularly relevant regarding the music industry. In 2009, the best-selling artist in the industry was Taylor Swift, with her album Fearless, that sold 3.2 millions albums, while in 1999, the Backstreet Boys and their album Millennium sold 40 millions CDs, according to a research from Warner Music (2010). According to T. Hunt (2009, p.12), “people are buying more music than ever, but because of the added ability to discover new artists as well as the ability for more artists to emerge via various online channels, people have more choices and they are making them.” The tendency is also reflected on television shows, as according to Nielsen Media Research (2007), the best TV audience in the US in 2006 attracted less than 30% of the audience, while it reached more than 60% in the 1960s. See Appendix 1.3. - When? There is no longer a set time when people consume media because content has become available at any time for consumers. An event, broadcasted live on TV, can be accessed at the same time through different TV channels and content platforms over the Internet. The main consequence is that old medias are losing their ‘distribution advantage’ over consumers who are gaining more control. As a consequence, prime time shows are dropping on the principal broadcast networks, while audiences migrate to other channels and digital contents. According to a survey from Nielsen Media Research, the percentage of US homes tuned to one of the three biggest broadcast networks, ABC, CBS and NBC, in prime time, has dropped to less than 30% while it was superior to 60% in the early 1970s. See Appendix 1.4. Audiences are migrating to other sources of content, and it is simply becoming more and more complicated for broadcasters to dictate when certain shows have to be watched or heard. Besides, there will always be demand for live television and radio, for example to deliver breaking news and to relay live events, such as sport events and awards ceremonies, but the drive toward more consumer control will increasingly continue. - How? There are fewer devices that most people prefer using because content has become accessible through many different devices. D. Tapscott (2009) explains that the generations born in a digital environment are very easy adopters of technologies. As a consequence, these generations access to media with new devices such as mobile phones, laptops, video game 12
  13. 13. platforms, and portable music players. If television remains a bridge between the old and the young generations, the old generations remain attached to traditional sources of information, such as newspapers, magazines and books. In fact, the proliferation of media devices makes that the same content is becoming accessible through many different screens and platforms. C. Anderson (2006, p. 220), in The Long Tail, provides a relevant example: “today, you can get CSI on broadcast TV, video-on-demand, iTunes download, DVD (purchase or rent), and TiVo season pass, and watch it on any device from a plasma screen to a Sony PSP.” Likewise, for some radio shows, which you can get via terrestrial broadcast (real time and delayed), satellite broadcast, Web streaming, and podcast. In fact, to reach the biggest potential market, brands are now obliged to broadcast content across the multiple distribution channels that are available to consumers. 2.3. Volatile media usage Consumers use media in spontaneous ways. The convergence of medias and devices is driving to a permanent availability and access of every kind of content from different platforms and devices. As a consequence, people can decide at any time to switch between a media and another, and this is particularly applicable for the young generations. D. Tapscott (2009, p. 3) explains: “young people are using technology in ways you could never imagine. Instead of passively watching television, the ‘Net Geners’ are actively participating in the distribution of entertainment and information”. These new generations of consumers switch between different medias, access the Web on their mobile phones, laptops, and watch TV at the same time. D. Tapscott (2009, p.70) insists on the importance of multi-tasking for this generation: “while TV was the signature medium of the boomer generation, the Net Generation doesn’t just watch TV, they listen to it while they are chatting with friends and navigating the Web”. Some researches tend to confirm this trend. According to a survey from Ofcom Research (2008), more than 80% of the 16-19 years old in the UK use another media while watching TV at the same time. Older generations have a more “monolithic” approach of media, as only 40% of them are used to consume two or plus medias at the same time. See Appendix 1.5. Furthermore, static and slow media devices are being replaced with more dynamic and fast media tools. In addition, new technologies and platforms, such as RSS feeds and Twitter are allowing people to receive real-time interactive information, which increase the volatility of their media behaviour. 13
  14. 14. 2.4. Self-determined media usage As the permanent access to content drives to more freedom of choice, people do not tolerate intrusive content anymore. Besides, consumers are given the tools to avoid or block content they don’t want to watch, and as they are given the choice, people skip content they are not willing to spend time with, which is generally the case with advertising commercials. Furthermore, the multiplication of media platforms makes that consumers are constantly exposed to advertising messages. According to a study from M. Story and S. French (2004), children from 3 to 11 years old are exposed to 40.000 advertising messages every year. As a consequence, new generations of consumers develop a strong sense of immunity towards advertising messages, which make commercials increasingly ineffective. In addition, people generally see advertising commercials as an interruption into their programs. If that happens, there are chances that people will switch the channel and access to another content that interest them. The abundance of choice and access makes that people are increasingly self-determinate with their media consumption. Commercials no longer reach them between two different programs, because they no longer have a passive behaviour. In fact, consumers are increasingly having more control on how they view, interact, and filter both content and advertising in a multichannel and multi devices world where they shift their attention away from linear TV. This evolution in people’s media behaviour has strong consequences in the way brands must communicate to attract their attention. Indeed, we will discuss in the following part how this new context presents challenges and debates regarding the future of brand communications. B. Challenges and debates regarding the future of brand communications 1. The end of advertising as we know it? Since the Mass-Media era, most brands were used to one very simple advertising model that consisted in buying visibility in Mass media and repeating the same message to target groups. 14
  15. 15. The objective for brands was to be louder than their competitors, by buying more space and more visibility in traditional medias. Traditional channels had a major role and were very powerful because they were the one supposed to attract and retain audiences. According to the famous statement from Patrick Le Lay, former CEO of TF1 (2004), “there are many ways to speak about TV, but in a business perspective, let’s be realistic: at the basis, TF1’s job is helping Coca-Cola, for example, to sell its product. What we sell to Coca-Cola is available human brain time.”1 Empowered by digital technologies and surrounded by an abundant choice, consumers are not part of this game anymore, which means that the traditional advertising model of targeting and repeating messages on traditional medias is not effective anymore. According to a research from Mc Kinsey (2004), it was projected that by 2010, the return on investment of advertising on broadcast television would be barely one-third as effective as it was in 1990. C. Anderson (2006, p.225) insists on the decrease of advertising on broadcast television thanks to “rising costs, falling viewership, ever-proliferating ad clutter, and viewers’ TiVo-fuelled power to zip through commercials.” Behind the decrease of effectiveness of traditional advertising, the entire operating system of marketing is fundamentally being threatened. According to M. Zorn (2009), “it is becoming irrelevant to send a message to many in the hope of persuading a few.” The complexity of the digital media landscape has disrupted the ability to easily enforce the attention of consumers and it becomes more complicated to catch consumers’ attention using traditional advertising methods. S. Godin (2007), in his book Permission Marketing, calls it interruption marketing, which he describes as the following: “the key to each and every ad is to interrupt what the viewers are doing in order to get them to think about something else.” Interruption marketing is losing ground and it is not effective anymore for brands to interrupt consumers with advertising messages they don’t want to watch. J-M Dru, CEO of TBWA/Worldwide (2010) insists that unadapted commercials will never reach consumers: “they will simply pass it or ignore it.” This new context presents important changes for brand communications and invite brands to challenge the traditional advertising model based on the sender-receiver model and on repetition. 1 French quote: « Il y a beaucoup de façons de parler de la télévision, mais dans une perspective business, soyons réaliste: à la base, le métier de TF1, c'est d'aider Coca-Cola, par exemple, à vendre son produit. Ce que nous vendons à Coca-Cola, c'est du temps de cerveau humain disponible. 15
  16. 16. In fact, the impact of the changes in the media landscape on brand communications is well commented in the debate that takes place in the advertising industry. Business leaders and agencies’ “gurus” are conscious of the potentially huge consequences that the digital landscape can have on the future of the advertising industry. J-M Dru (2009) insists in the fact that the emergence of the digital economy announces “the end of repetitive advertising,” while F. Rodes Vila, Chief Executive of Havas argues in an article from the Financial Times (2009) that the old metaphors of ‘campaign, target and launch’ no longer apply: “the model that started with world war two was based on control in a few hands: very few media, two or three relevant brands in each sector and a few agencies. We are (now) facing a very different panorama, which is much more democratic, much more social, much more interesting, but much more complicated for marketers.” The idea of ‘advertising’s death’ is present in several major debates. According to J. Stengel (2007), former Global Marketing Officer at Procter & Gamble, “the old model of telling and selling, is dead.” A. Ries and L. Ries (2002) both argue that the future for brands is in public relations and not in advertising, while S. Zyman (2000) warns about the end of marketing, as we know it. In these books, when death is mentioned, it describes more the idea of a transformation than an end. However, both authors underline the unprecedented level of change that happens in the industry. Brand communications after traditional advertising is also the topic of other books. J. Jaffe (2005) insists for example on the emergence of viral marketing, gaming, on-demand viewing, long-form content and other ‘new marketing’, while M.L. Galician (2004) focus on Internet advertising, video gaming and product placement and S. Donaton (2004) presents the synergies that exist between entertainment and advertising through product placement. As we can see, many authors are challenging the effectiveness of traditional advertising. Moreover, according to F. Perez-Latre (2009), mass-media advertising is also suffering from accountability problems, as many clients, advertising practitioners and researchers are complaining about the inability to determine the return on investment from advertising spending. Advertising’s lack of effectiveness is an important subject of research in the recent literature, as the works of W. Fletcher (2008) and C. Volmer (2008) tend to demonstrate it. Therefore, according to R. Briggs and G. Stuart (2006), as much as 37 per cent of overall advertising expenditures are considered by marketers as complete waste. 16
  17. 17. 2. The emergence of new forms of marketing Companies are not willing to lose that much and increasingly turn to more direct ways of communicating with consumers. However, the appeal of mass media advertising remains strong, as traditional media still accounts for the greatest share of advertising expenditure, according to numbers from Advertising Age (2010). The share of market of digital advertising grew to 12,6% in 2009 from 10,5% in 2008, surpassing magazines for the first time, and will keep growing in share to an expected 13,9% this year, and 17,1% in 2012, according to data from Zenith Optimedia (2010). Magazines’ share of worldwide ad spending felt to 10,3% in 2009 from 11,6% in 2008 and is expected to fell to 9,6% this year, and 8,6% in 2012. According to the report, “Television spend felt 6,7% in 2009, but its market share has increased from 38,1% to 39,4%. (…) We expect it to continue to increase its share over the rest of our forecast period, reaching 40,5% in 2012, thanks to the rise of the developing markets, where television is generally a much more dominant medium than in developed markets.” See Figure 1.2. Figure 1.2. 2009 U.S. revenue by discipline for 800-plus agencies in report. Source: Advertising Age. 2010. These numbers tend to illustrate the rapid path of change that the communication industry is observing. The emergence of the digital economy seems to have had many implications in the way brands communicate. However, more than a simple impact, the digital landscape possibly brings a true revolution to marketing and advertising. According to J. Farrell (2009), in an article 17
  18. 18. from Tim Bradshaw in the Financial Times, “I can’t think of many other industries where the fundamental process of producing the product hasn’t changed for 40 years.” Some observations of the business world today make us understand that some of the most influent companies in the world, such as Google, Starbucks, Amazon and Facebook are being built today almost without help of traditional advertising. Moreover, according to a ranking from the magazine Brand Channels (2010), these are amongst the most popular brands in the world according to consumers. The best brands are being intensely creative in getting their message out and have evolved from the traditional advertising model. According to an article from Business Week (2005), “many of the biggest and most established brands, from Coke to Marlboro, achieved their global heft decades ago by helping pioneer the 30-second TV commercial. But it is a different world now. The monolithic TV networks have splintered into scores of cable channels, and mass-market publications have given way to special interest magazines aimed at smaller groups.” In this fragmented world, this new generation of brands has amassed huge global value with little help of traditional advertising. Brands such as Zara and Starbucks have discovered new ways of captivate and intrigue customers. Zara, for example, has never run a single advertising campaign. This does not prevent the Spanish company, according to D. Arnold and G. D’Andrea (2003) to be one of the most successful fashion companies in the world and to launch almost 10.000 new designs each year in more than 1.000 shops worldwide. In fact, the company innovated so much by dramatically reducing the time between design inspiration and in-store product that it stays months in advance of its competitors. Furthermore, the strategy of Zara includes launching stores in the most prestigious streets of the world’s capitals, which ensures that people are aware of its new stores, without having to invest in advertising. This example illustrates that traditional advertising is not necessarily an obligatory path for brands to engage and entertain people in an environment of choice. In this regard, A. Bogusky and J. Winsor, in their book Baked In (2009, p. 26) insist on the fact that “the old concept of how a brand works must be called into question.” According to S. Pestridge (2008), Nike UK marketing director, a brand like Nike does not need advertising because “advertising is all about achieving awareness.” Instead, Nike needs “to find new ways to become part of people’s lives.” 18
  19. 19. A. Bogusky and J. Winsor (2009, p. 25) argue that “word-of-mouth can actually be shut off by using traditional advertising.” The example of Starbucks, with products – coffee and shops – that are its unique marketing tools, tend to demonstrate that the company would probably have failed to know the same success if it had used advertising. Starbucks did not advertise, at least not in the conventional way we think about advertising, but succeeded in attracting and retaining customers from the entire world thanks to an innovative and unique concept. The brands that most consumers prefer today are brands that almost do not invest in traditional advertising. That means that both traditional brand communications are becoming less effective and the digital economy is presenting serious challenges to the way brands should communicate. As a consequence, according to S. Berman & al. (2006), many of the skills and capabilities that were the basis of success for advertising in the past need now refinement, transformation and redefinition. Therefore, we will try to respond to these challenges in the next part and present solutions on how companies should communicate in the digital environment. However, before that, we will observe why some debates have emerged around consumer-centric and relationship marketing in the literature, and finally present the concept of permission marketing and analyse in which measure it can bring a clear path to build on the future of brand communications. 3. Debates around consumer-centric and relationship marketing The actual debate regarding the effects of the digital economy on brand communications places consumers in a central role. In fact, the fundamental shift that the digital economy presents to brand communications seems to be the promise of a different relationship between brands and consumers. As underlined by Stephanie Bouchet (2010, Interview n2), the focus of communications is shifting from a one-to-many relationship to a one-to-one relationship, much more personal and individualized. The angle of relationship is becoming increasingly important in marketing, and the notion of relationship marketing is gaining influence in the actual debate on the evolution of brand communications. According to B. Ivens (2008, p.5), “the classical idea of marketing as a 19
  20. 20. toolbox used by “the marketing people” in the marketing department is outdated, and modern marketing is a management philosophy the whole company needs to embrace and adopt”. E. Josserand (2008) outlined during his course Client-Oriented Organization, that the marketing concept has evolved from a focus on product orientation, in the early 1950s, to a focus on customer orientation, since the beginning of the 1990s. The illustration of Bruhn (2000)’s theory of the evolution of the marketing concept is relevant to detail on this point. See Figure 1.4. Figure 1.4. The Evolution of the marketing concept. Source: Bruhn, 2000. B. Ivens (2008, p.6) insists: “the modern idea of marketing is a management concept and a philosophy of how to maintain a company’s competitiveness, which means understanding consumers and creating value.” In such context, some business thinkers such as R. McKenna (1992) have tried to rethink the real nature of brands. According to McKenna, branding is no longer important and powerful brands have more chance to succeed by building a powerful distribution infrastructure rather than wasting efforts on branding. Conversely, in the book Disruption Live, compiled by J-M. Dru (2000), D. Hackworthy criticizes the belief that the future of marketing is a one-to-one relationship, describing it as too “conventional.” Hackworthy rather defends the idea of branding and the power of traditional mass medias. However, with the emergence of digital technologies, we understand that 20
  21. 21. consumers want and need to be touched individually by companies. Moreover, according to A. Bogusky and J. Winsor (2009, p. 29), “consumers demand to be involved with companies.” An angle of personal relationship is becoming essential in communications today, and the traditional advertising model based on repetition fails to provide it. In his book Permission Marketing, S. Godin (2000) proposes a new framework for communications, based on the idea that permission marketing should replace interruption marketing. S. Godin describes powerful advertising as anticipated, personal and relevant. In his opinion, permission marketing guarantees that consumers pay attention to the marketing message because they will be volunteers to be marketed to. In their book The One to One Future, D. Peppers and M. Rogers (1993) already proposed a radical rethinking of the way marketers should treat their customers. Indeed, their argument is that companies could increase their profits by selling more things to fewer customers. These theories elevate the notions of relationship and consumer loyalty. In other words, both authors encourage companies to focus on increasing sales to a smaller percentage of existing customers, rather than trying to find new ones. S. Godin (2007, p. 38) insists on this direction: “Getting a new customer is expensive. It takes money to get his attention and it takes continuing effort to educate him.” Indeed, D. Peppers and M. Rogers (2001, p. 35) argue: “instead of focusing on how to maximize the number of new customers, the focus should be on keeping customers longer and getting far more money each of them over time.” Retaining consumers is demanding and it needs from brands that they take a very personal approach. Stephanie Bouchet (2010, see interview 2) insists: “because people are over exposed to a lot of messaging, they need to be touched emotionally, which means that it is also becoming challenging for brands. They need to find ways and moments during the day when people will become more receptive that anything else.” According to S. Godin (2007, p. 21), Permission Marketing “encourages consumers to participate in a long-term, interactive marketing campaign in which they are rewarded in some way for paying attention to increasingly relevant messages.” As a consequence, it seems to represent the right answer to customer’s need for attention. The permission marketing theory encourages brands to take especially care of their loyal customers. This is important, according to S. Bouchet (2010, see interview 2), because, as she explains: “you really need to nurture that base of people that are very emotionally attached to 21
  22. 22. your brand, make sure they’ve got everything they need, to share with their friends, and to spread the word for your brands.” We will observe in the second part of this project how brands could benefit from the development of digital technologies to develop new types of relationships with their consumers. 4. Objective and methodology 4.1. Objective of this project The observation of the changing environment around brand communications has been the main focus of the first part of this project. We discussed the emergence of a digital revolution through the review different theories and discourses questioning the impact of digital technologies on the economy. We could present how the emergence of the Internet and mobile phones have transformed the way people access to content and information, which in return has encouraged audiences to migrate towards new media platforms. The emergence of this new environment is presenting important challenges for brand communications. In fact, the development of new media platforms and the fragmentation of media has dramatically reduced the influence of traditional advertising and it becomes almost irrelevant to communicate using traditional marketing methods, which are increasingly failing in delivering results. This context is presenting serious threats to the role and mission of advertising agencies, which traditional role is being challenged and questioned. Advertising agencies have been used for decades to a model of repetition that is not responding anymore to the requirements of the digital age. The main question that comes to mind is whether brands need advertising agencies anymore, and how advertising agencies could still provide brands with benefits and value. We will try to respond to these different questions by first, presenting how brands should communicate in the digital age. We will also develop strategic advises to engage brands with consumers through different methods, such as customization, content creation, brand experiences and social media strategies. Presenting the best methods for brands to communicate in an environment challenged by the digital will help us to understand how the mission and the role of advertising agencies are progressively changing, transforming the traditional advertising agency into an interactive creative agency. 22
  23. 23. 4.2. Methodology This thesis is based on a deep analysis of the brand communication and advertising industries, combining quantitative as well as qualitative types of research, such as questionnaires, semi- structured interviews, and observation. I have been conducting my research based on a post- positivistic methodological approach, meaning that the reality described in this thesis is considered socially constructed rather than objectively determined. In social scientist terms, that translates into not emphasizing gathering of facts and measure how often certain patterns occurs, but rather to appreciate the different constructions and meanings that people place upon their experience (Easterby-Smith et al., 1991). The other basic methodology transition for conducting research is Positivism, which in contrast is an approach to the creation of knowledge through research which emphasizes the model of natural science: the scientist adopts the position of objective researcher, who collects facts about the social world and then builds up an explanation of social life by arranging such facts in a chain of causality (Finch, 1986). The post-positivistic approach that deals with understanding the subjectivity of social phenomena mostly requires a qualitative approach (juxtaposed to positivism, which is more closely associated with quantitative method of analysis). Interviews have been one of the primary data sources for the research and a semi-structured interview style was chosen in most cases. During the preparation of this project, I had the chance to interview successively Jean-Marie Dru, Chairman of TBWA/Worldwide, Nicolas Bordas, CEO of TBWA/France, Guillaume Pannaud, President of TBWA/Paris, Philippe Simonet, Vice-President of TBWA/Paris, Cesar Croze, Executive Director at TBWA/Paris, Ed Palmer, Head of Account Management at TBWA/London, Franck Perrier, Founder and CEO of Idaos, and finally Stephanie Bouchet, Founder of the marketing consultancy Rouge Frog. Three of these interviews have been recorded, transcribed and are available for the reader in the Appendix section. 23
  24. 24. III. Evaluation of strategic opportunities A. Redefining brand communications for the digital age 1. Enhancing Creativity and differentiation We could define in the first part the debate that happens in the business literature regarding the implications and the challenges that the emergence of digital technologies present to brand communications. As we could observe, people are increasingly in control of their media experience as they can access constantly to information, content and entertainment. In addition, people increasingly have the ability to skip things that are not valuable in their media environment, such as brand advertising. In that context, brand communications need not only to attract and retain the attention of customers, but also to give a reason for consumers to include advertising in their media experience. The first point is that brand communications need to be more creative and entertaining to seduce consumers. Creativity has always been an essential factor in the success of brand communications, as D. Ogilvy (1963) already advocated in his book Confessions of an Advertising Man: “if it doesn’t sell, it isn’t creative.” However, brands should understand that their audiences are not captive anymore and that they need as a consequence to be entertained. J-M Dru (2009) explains it in the following words: “if you don’t entertain and engage people, they will simply ignore you.” In the new media landscape emerged from the establishment of digital technologies, safe advertising is becoming increasingly invisible. Creativity in brand communications is becoming essential in every product category and every communication discipline. Even large companies such as Procter & Gamble and Unilever understand the need to be more creative in their communications, while both have been awarded with a Grand Prix at the Cannes International Advertising Festival in 2007. For decades, these companies had no reputation of being creative and winning creative awards. Instead, J-M Dru (2009) explains in the article Big is Beautiful that “people were making fun of these big unwieldy clients with their big traditional agencies.” The fact that both P&G and Unilever have been awarded the same year the most prestigious prize in advertising 24
  25. 25. demonstrates that there is no getting away from the need for being creative to attract audiences, even for largest companies. Creativity, innovation and a risk approach needs to be enhanced within every single brand communications. Therefore, during my internship at TBWA, I could observe that the main philosophical guidance of the agency was to enhance creativity through a concept called Disruption. J-M Dru (1996, p. 54) defines the concept in the following terms: “Disruption is about finding the strategic idea that breaks and overturns a convention in the marketplace, and then makes it possible to reach a new vision or to give new substance to an existing vision.” The idea of disruption, he insists, is about “displacing limits, breaking the rules, challenging the conventions and turning them on their heads to unearth something entirely new.” The belief of disruption is that brands that truly outperform markets and have success do so by breaking the existing conventions in their market. Disruption means breaking the conventions in brand communications but also in product marketing and innovation. The best example that comes to mind to illustrate disruption does not come from business or brand communications but from sport. In 1968, in Mexico, Dick Fosbury shocked the Olympic world by high-jumping upside down, instead of following the standard paradigm and jumping stomach first over the bar. Fosbury won the Olympic gold and broke the Olympic record, but more importantly, he radically changed the rules of his sport, having tried something that no one had never tried before. Disruption is behind the success of many brands, such as Apple, who changed its vision from being a computer company to become a provider of tools for creative minds. As a result, Apple embraced different paths from its original computing industry, such as the music and the mobile phone industry, with the success that we can appreciate today. This philosophy encourages brands to enhance creativity, innovation, and change in every aspect of their business, not only communications. It takes risks and courage to do things differently from its competitions. Businesses are often uncomfortable with the idea of discontinuity, and change is generally seen as a threat. As Steinbeck once said, “it is the nature of man, as he grows old, to protect himself against change, particularly change for the better.” It is natural for companies as for individuals to be reactive against change; however, the success of companies often comes with embracing change. Successful companies generally see change as an opportunity and a force not to be feared but to be welcomed and exploited. 25
  26. 26. The easier step for brands to create discontinuity is to encourage change and innovation in their own communications. Advertising should be the main source of creativity and disruption for brands. By fully embracing disruption, not only communications would become more attractive for consumers, but they would also reinforce the uniqueness of the brand positioning. While many companies pretend that they are doing it, the majority of brand communications remain ineffective because they are not creative enough to attract customers. 2. Taking care of the brand experience The objective of brand communications is to encourage people to buy products and services from a given company. Traditional advertising is generally perceived as an important factor in the consumers’ decision. However, people do not judge brands on their advertising but on the quality of the experience that they deliver. According to E. Josserand (2009), during his course Client-oriented organizations, “brands generate expectations that are both rational and emotional,” and these expectations must be enhanced by the physical and digital experiences that people maintain with the brands that surround them. 2.1. Characteristics and promise of the physical brand experience Every aspect of the physical experience plays a role in the perception of a brand. In the Experience Economy, B. Joseph Pine and James H. Gilmore (1999, p.34) explain: “When a person buy a service, he purchases a set of intangible activities carried out on his behalf. But when he buys an experience, he pays to spend time enjoying a series of memorable events that a company stages – as in a theatrical play – to engage him in a personal way.” According to U. Okonkwo (2007, p. 9-10), “every brand possesses the characteristics of identity, promise, value and differentiation.” These are the features that enable the relationship between a consumer and a brand. Consumers expect the promise and the delivery of an experience with the brands they use. As a consequence, companies should make use of emotions and create feelings to enhance their experience with consumers. Everything a brand does and offers to its consumers should be embraced as a way to enhance the brand experience, through its story and its values. Whether 26
  27. 27. it is packaging, retail presence, website content, PR programs or employees themselves, every point of interaction between consumers and the brand should be enhanced with creativity to deliver a unique experience to consumers. Packaging is for example a very important part of the brand’s perception for consumers and it is a critical aspect of the brand identity. According to K. Newman (2009), “whether your brand is aimed at luxury, specialty or mass consumers, ignore packaging’s power to define your brand is at your own peril.” In addition, for many products, packaging is the first point of contact that exists between consumers and the brand. It plays a critical role in appealing and seducing consumers. Even for companies where packaging does not represent an important part of the buying decision, packaging can bring additional value and is an opportunity to express brand’s vision and values. This is the case of Apple, which uses packaging as an opportunity to express its values of creativity and tell a story about the brand. See Appendix 2.1. According to L. Clow (2009), in an article in the blog Media Arts and Disruption, “the experience of buying an Apple product, and discover it through its packaging tells as much of a story about the brand than a TV commercial,” while L. Bix, quoted in an article from P. Mortensen (2005) explains: “Apple has an understanding others don’t have that there’s an interface between people and the packages that happens before you even reach the product.” Packaging brings a real additional value in the experience of buying an Apple product, and demonstrates the desire of the company to deliver a beautiful and compelling product. Another company that embraces packaging design as a creative added value to strengthen its brand experience is Coca Cola, which enhances collaborations with designers and constantly creates new limited editions of its bottles. Among recent examples, Coca Cola developed collaborations with the designers Roberto Cavalli, Sonia Rykiel and Karl Hagerfeld, and created a limited edition for the celebration of Selfridges’ 100th birthday. See Appendix 2.2. Nike also gives importance to packaging, and its concept Nike “Stadium,” for example, won the Cannes Lions Promotion Award in 2007. Nike Stadium consisted in a limited number of Nike shoeboxes that looked like a stadium, with a printed sheet of a stadium, which created the feeling of hearing the crowd while opening the box. See Appendix 2.3. These different creative packaging experiences both provide value for consumers and provide additional opportunities for brands to build and develop on a truly relevant brand story. 27
  28. 28. In addition to packaging, everything that affects the customer journey should be taken care of by brands and perceived as additional opportunities to express the brand story. Every brand should wonder what kind of experiences should customers have with everything that surrounds its products and services. Therefore, one of the most important experiences in buying a product is the retail experience. Apple is relevant again to illustrate the importance of retail in the brand experience. According to L. Clow (2009), Media Arts Director at TBWA and the man behind Apple commercials, “the Apple Store is probably the best ad Apple has never done.” Apple Stores are audio-video experiences where consumers can interact with the products, discuss with passionate kids at the Genius Bar, and assist to lessons where employees teach and explain how to use the products, and where films are shown to engage, inform, tell stories and sometimes entertain. With the Apple Stores, the experience of buying an Apple product is truly aligned with the brand’s story, its products, and its vision of enhancing creativity. It is essential to align the experience of buying a product with the positioning of a brand. Both need to be aligned in order to offer a coherent brand experience to consumers. This is what Nestle did to upgrade its Nespresso coffee system to a luxury brand, and build it as a premium brand comparable to Gucci, Louis Vuitton, or Bang & Olufsen. While its commercials promote “the ultimate coffee experience,” Nespresso opened high luxury flagship stores in stellar environments, such as the Champs-Elysees in Paris, to align the experience of buying the product, and become one of the most elite brands in consumers’ mind. Both examples from Apple and Nespresso demonstrate how building a relevant brand story requires taking care of every physical point of interaction between the brand and its potential customers in order to deliver a coherent brand experience. However, while consumers are spending more time on-line, digital experiences are becoming increasingly important points of interaction between brands and consumers. 2.2. The digital experience makes the difference We could observe in the first part how both the emergence of new technologies and the increasing acceptation of digital platforms were reshaping the way people accessed to content and information. In this new media landscape, consumers also access to brands’ information and content through different channels, which means that brands have digital experiences. 28
  29. 29. Figures and numbers confirm the need for brands to build digital experiences that have coherence and relevance with their physical experience. In fact, according to a study from Razorfish (2009), 65% of consumers have had a digital experience that changed their opinion about a brand. 96% of them report that digital experiences influenced whether or not they purchased a product or service from a brand. (Details of the survey can be found on Appendix 2.4.) In fact, in today’s media landscape, a company’s digital presence is increasingly becoming the only experience that potential customers may ever have with a company. The digital landscape is increasingly becoming the first place of contact between consumers and brands. Still, according to the survey from the digital agency Razorfish (2009), 97% of consumers have searched for a brand online, 77% have watched a commercial on YouTube, 68% have read a corporate blog, 65% have already played a branded, browser-based game, and 73% have posted a product or brand review on a site like Amazon, Facebook or Twitter. Before making a purchase, consumers often access to information about the products and services that interest them, and select and compare relevant articles and commentaries, through the Internet, that help make their decision. Greenberg explains, according from an article by W. Berger (2009), “the most important interaction between consumer and brand tends to happen in the digital space - often starting with a Google search that leads to a company Web site. What happens when people arrive at that site may very well determinate the survival of a brand.” Developing a coherent and relevant brand experience on-line is becoming extremely important and companies need to evolve their corporate websites into dynamic 24/7, 365 days online experiences. Indeed, consumers praise brands online such as Nike, Apple and Spotify because they succeed in delivering their brand promise in the digital environment. These brands offer truly effective and inspiring online experiences that engage and entertain consumers. One of the best examples of on-line experience is Nike+, a digital driven offering that combines the products and services of Nike and Apple. Created in 2006, Nike + is an easy tool for consumers to track and share their training progress. Performance results can be uploaded to a personalized Nike+ account, where people can review their progress, connect with other runners, and download training workout created by world famous coaches. The result is a digital experience that delivers Nike’s brand attributes of performance and innovation, in a relevant and unique way. According to B. Morrissey (2009) in an article in Advertising Age, since 29
  30. 30. the launch of Nike+, Nike Plus runners have logged in total more than 100 million miles. The success of this platform is little coincidence with the fact that Nike increased its running shoe market share from 48% in 2006 to 61% in 2008. Many companies fail to understand the needs and desires of their consumers online. Entertainment and value are two very important factors of decision for consumers in the digital landscape. Brands should not only conceive websites to promote their products and services, but also imagine these interfaces as interesting and attracting experiences that incite consumers to spend time with the brand. Moreover, the emergence of mobile technologies and digital applications provides new valuable opportunities for brands to engage their consumers. IKEA, for example, used the benefits of augmented reality2 to enhance its consumers’ experience by providing a valuable interface that enable customers to imagine how their IKEA furniture’s would fit into their home. Its agency Ogilvy One created a very simple mobile application that displays different pieces of furniture that customers can select. By simply taking a picture, aiming the camera of their phone at the area of the room where the furniture might be placed, customers could see how the furniture would fit in their place. See Appendix 2.5. This application is a great example of applying the unique attributes of mobile technologies to a very specific customer situation. This innovation brings a real additional value for consumers and enhances the brand and products experience. In the case of IKEA, the digital experience is combined with a real customer need in the physical world, and provides answers. An example from McDonalds presents another innovative interactive experience that combines the physical and digital worlds to engage and entertain consumers. In Stockholm, McDonalds created an interactive outdoor game, combining a traditional outdoor format (4x3) with Bluetooth and digital technologies. Products from McDonald’s scrolled on the digital billboard, and consumers simply had to catch one of them with their cell-phone camera, go to the nearest McDonald’s, and show the picture of the product to get one for free.3 Consumers were willing to play an interactive outdoor game and be rewarded with a present, while it drove attractiveness and frequentation to the brand. 2 Augmented Reality, according to the Financial Times (2010), “deals with a combination of real- world and computer-generated data, and generates for the user a view that combine the real scene viewed by the user and a virtual scene generated by the computing machine.” 3 Watch the video case study: http://www.youtube.com/watch?v=CIzLd8zRwXw&feature=player_embedded#! 30
  31. 31. Technology is increasingly enabling new types of experiences between brands and consumers, and it provides brands with opportunities to add value and fun to their communications. According to a report from DM2PRO and Quattro Wireless (2010), almost one-half of marketers created a mobile application in 2009, while most are planning to invest in one in the following months. Brands should use mobile and digital technologies as opportunities to create compelling interactive experiences that reflect the core values of the brand and complement its physical experience. 3. Shifting from advertising toward brand content The role of advertising agencies, according to C. Croze (2009, see Interview 1) is “to advice companies in order to build great brands’ stories and produce communication ideas.” In a media landscape where there has never been as much information and content competing for people’s attention, brands’ stories need much more substance to attract and retain consumers’ attention. Moreover, as we could observe in the first part, safe advertising is increasingly being ignored and its effectiveness has dramatically reduced. Building brand stories in this new environment requires more than simple advertising commercials. Brands need to capture the attention of consumers and for that they need to produce content that is interesting and entertaining enough to compete with the content that people use to spend time with. The role of brand communications, and as a consequence the role of advertising agencies, should shift from focusing on producing advertising commercials to producing brand content. J. Hicks (2009) the CEO of the agency Crispin Porter + Bogusky insists: “the agency’s job is to create content so valuable and useful that consumers wouldn’t want to live without it”. Brand content is different from branded content. J-M Dru (2010) explains in his article Brand Content that in the case of branded content, “the brand participates in pre-existing editorial content” while in the case of brand content, “the brand creates its own content.” Branded content has always been part of brand communication strategies, through sponsorships, ambassador programs or public relations. Companies have always tried to find ways to associate their brands with the power and prestige of famous competitions, ceremonies, artists, 31
  32. 32. and art fairs, in consumers’ minds. However, the association in consumers’ minds could be more or less evident, and the effectiveness of sponsorships can legitimately be discussed. Brand content is different because it enables brands to play directly an editorial role that can raise the interest of an audience. As it happens for consumers, the emergence of digital technologies is empowering brands to produce, distribute and share content. Besides, contrarily to the belief that media providers only should create content and information because of a supposed neutrality and independence, brands have a real legitimacy to create content, as illustrated by the words of P. Somarriba, former advertising director of Benetton, that J-M Dru (2010) quotes in his article Brand Content: “People believe that media are by definition independent. As a consequence, this freedom would guarantee the quality of the content they create. This reasoning is not justified. In fact, the media are profit-making businesses with commercial constraints that brands don’t have, because brands’ resources come from other activities.” The search for new experiences for consumers should encourage brands to engage resources in the creation of content. Brands have access to financial resources that traditional medias don’t have, which enable them to invest in media projects financially inaccessible to traditional media providers. This is even truer for international companies that have the ability to connect with audiences in a worldwide scale. The challenge for brands with brand content is that they are not only competing with other brands but also with all kind of content producers (television producers, movies directors, entertainment conglomerates) to catch audiences’ attention. Some recent examples prove that brands can perfectly fit the challenge. To demonstrate its willingness to embrace the spirit of sport, rivalry and competition, Gatorade decided to stage rematches of classic games between some of the biggest sport rivalries in the US. The first episode of Gatorade Replay staged the re-match between the Easton and Phillipsburg College teams in a one-hour documentary showing the return of the original players, coaches and cheerleaders, fifteen years after one of the most memorable game in history between the two teams, which ended with a dramatic tie. This idea of re-staging memorable games attracted audiences around the world and helped to build a great story around the Gatorade brand. The first episode of Replay, according to J. Hunt (2009), sold 13,000 tickets out in only 90 minutes, received over 130 million worth of media 32
  33. 33. impressions, and has been featured in almost every single newspaper in the USA. J-M Dru (2010) even explains in an interview with France 24 that Gatorade and TBWA received requests from the major studios to turn the documentary into a feature film or a longer series. The success of Replay demonstrates that brands and advertising agencies can produce content that both results attractive for people and provides brands with great benefits. Brand content responds to a real customer need, which is to live new and different experiences while being entertained. In addition, brand content helps to legitimate a positioning and demonstrates the commitment of a brand with its values. 4. Changing the view on media The emergence of brand content such as Gatorade Replay tends to illustrate how brand communication ideas should enhance creativity both in the idea and in the form. The need for brand content implies that agencies should focus not only on developing innovative creative ideas, but also on finding how to deploy these ideas across multiple channels and platforms in the most creative format. The development of different types of brand content challenges the traditional idea of media. In the case of Gatorade, the company did not use media in order to broadcast its message because the message of the brand itself was the media. For decades, brands have used media in a strictly limited sense: they paid to leverage a mass media channel and display their advertising messages. This vision of media was relevant while audiences spent their time on a few limited mass-medias. However, the migration of audiences towards new media platforms has transformed this model and forces companies to change the vision of media. Media is not only a way for brands to target and address messages to consumers, it is also the way that people are engaging with the world around them. According to L. Clow (2009), “media is just any space that exists between a brand and the audience.” The Inventor of the idea of Media Arts at TBWA explains: “everything a brand does that connect to the consumer is media.” Brands should use their communication strategies as opportunities to develop new intersections with their customers, whether it is through the creation of physical and digital experiences. In addition, marketers must understand that the revolution of digital 33
  34. 34. communications makes that their brands are progressively transforming themselves into a media. There are many new connection possibilities between brands and consumers. The digital revolution has created a whole new universe of media possibilities that enrich the possibilities of advertising, as represented by this picture, taken from an article from Tim Bradshaw, in the Financial Times (2009). See Figure 2.1. Figure 2.1. Advertising, 1980 / 2009. Source: Financial Times, August 28th, 2009 Brands have more opportunities than ever to build their communications strategies and to become part of their consumers’ lives. Indeed, this ever-evolving choice in the media possibilities reassesses the notion of medias. Brands should stop thinking about buying time and buying space in audiences’ lives as they have been used to do for decades with the previous model of advertising, mainly based on a few mass medias. Instead, brands should rather think and act like media companies, and create time and spaces that attract audiences and provide them with a valuable reason to live and engage with the brand experience. 34
  35. 35. Some of the best brands today are already becoming the places, the spaces, and the experiences that people choose to spend time with. Brands like Apple, Starbucks, and Nike are brands that are shaping their brands to transform themselves into a medium through which people can experience their lives. Trevor Edwards, Vice President of Global Brand Management at Nike explains, in an article from L. Story, in the New York Times (2007): “we are not in the business of keeping the media companies alive. We are in the business of connecting with consumers.” The best ways for brands to connect with consumers is to create their own points of interaction and their own interactive channels. Brands must shift their attitude from being media neutral to become media passionate. The digital revolution provides brands with unique opportunities to become the medias of their consumers, and increasingly, brands should choose to develop media concepts and platforms that use the benefits of technology to bring the brand closer to its audience. When Coca Cola creates the “FIFA World Cup Celebration radio”, an on-demand personalized radio in collaboration with Goom Radio, it expresses its desire to place celebration at the heart of its communication strategy and it does it by inviting its consumers to celebrate the World Cup with Coca Cola Radio, a live and interactive media, that creates value and interaction with consumers. 5. The power of storytelling We already discussed that the role of brand communications is to build great brand stories. These are the emotional links that connect consumers with the meaning of brand. R. Schank (1990), once said: “human beings are not made to understand logic, but stories.” This is the reason why, as N. Bordas explains in his book L’Idée qui tue (2009, p. 99), parables are so important in religions and books like the Bible or the Koran. Great stories play with emotions in order to be easier to commit to memory. They can be funny, sad, true, or dreamt, but great stories always play with emotions in order to capture the attention of audiences. To exist, ideas need to convince. This is the reason why politicians are among the greatest storytellers because they know how to convince audiences. Barack Obama and John McCain are also respected and successful authors. 35
  36. 36. Storytelling is extremely important in the creation of a brand identity. The best brand stories, and the most easily recognizable, come from very simple ideas that capture a relevant emotional universe around brands’ values. Many people associate Nike with the idea of “Just Do It”, while unconsciously, consumers believe in the “refreshing” effect of a Pepsi. When Adidas claims that “Impossible is Nothing”, it states clearly and firmly its vision that everything is possible. Great visions are unique. Brands such as Nike, Virgin, Danone, Google have all visions of their very own that make them unique. Brand visions must reflect a very unique positioning. J-M Dru (1996, p. 99) explains in Disruption that brands need to own something because “that is the only way for a vision to be effective and stand the test of time.” Nike represents the belief of surpassing oneself. “Just Do It” is the idea that embodies this vision. “Don’t Make Evil,” the motto of new Internet giant Google, encourages innovation and progress for the good of people. All of these visions are special and determinate a very specific vision inherent to the brand. Jean-Marie Dru, in Disruption (1996, p. 100), gives a framework for finding relevant inspirational sources to define a company’s savoir-faire and mission. The following outline is adapted from the original one, and updated with recent examples: Product Performance Product Category Brand Expertise Inspiration Source Brand Meaning Company Know-How Company Role The BMW brand represents the product performance in the automobile industry, in addition to a special care regarding design and aesthetics. Nintendo created a whole new product category in the gaming industry when launching the Nintendo Wii, which revolutionized the way we think and conceive gaming into a more interactive, fun, and participative experience. While other actors such as Sony PlayStation and Xbox are focusing more on graphics and processing power, Nintendo represents and owns a different product category. The Michelin brand 36
  37. 37. symbolises brand expertise, synonym of quality and effectiveness over the decades. In the other part, a brand like Innocent embodies a different brand meaning, around the respect of nature and the quality of its components. Hermes represents a company’s know-how, savoir- faire and an expertise that seems unquestioned in consumers’ minds. Finally, the recent turn- around of the brand Pepsi, which encourages and rewards consumers to realise charity projects, through its platform Pepsi Refresh4, is an excellent example of a company that embodies a role in the society. All these cases are relevant examples of the importance for brands to have a powerful story and a relevant positioning that makes the brand different and unique. Strong brands ideas give a meaning and relevance to the company. In addition, brand ideas are also a great management tool internally. J.M. Goumnu, J.F. Gagne and E. Josserand (2005) develop this idea in their book Manager par la marque (Managing through the brand). Brand visions are not only effective in consumers’ minds but they also galvanize people internally. Brands need a vision, a belief system, an attitude and a view on the world that is shared by the entire organization, internally and externally. More than simple guidelines, a brand vision is a definite set of values. According to J-M Dru (2010), “when a company has a strong culture, everyone in that organization not only supports decisions made by the CEO – but could have made the same decision in his ore her place.” E. Josserand (2008) insisted in his course Client-Oriented Organization that the brand is a promise that is first delivered by employees. That reinforces the necessity for all employees to share a common vision and the same beliefs. Thanks to Steve Jobs’ vision, Apple owns a culture of creativity and innovation that makes it unique. TBWA created for Apple the motto “Think Different”, and it happened that this was much more than an advertising slogan. In fact, it went directly at the heart of the company and transformed its way of thinking. Apple embraced internally this idea that it was not simply a computer maker, but the provider of tools for creative people. As a result, Apple launched new devices, such as iTunes, the iPod, the iPhone, and now the iPad, which have been radical new departures for Apple, but that were simply in line with this culture. 4 Pepsi launched the Refresh Project, a grants scheme providing millions of dollars to fund good ideas that make the world a better place. Pepsi has up to $1.3 million in Refresh grants to give out every month, ranging from $5,000 through to $250,000. www.refresheverything.com 37
  38. 38. Finally, the Pedigree brand recently changed its vision from being a dog-food producer to a dog-loving company. The company fully embraced this idea, and now employees come to their office with their dogs, the brand launched adoption drive initiatives in multiple countries, and tries to embrace this positioning in every of its actions. Such examples, from Apple and Pedigree, demonstrate the importance of having strong brand visions. When brands embrace a clear vision, then every action of the brand, internally and externally, and then every communication initiative remain honest with the idea of the brand. Strong brand ideas are necessary in order to maintain a clear positioning and strong values in the mind of consumers. This is the necessary condition to the next phase: engaging consumers in the digital world. B. Engaging consumers in the digital world 1. Brands should let consumers take the ownership of their brands 1.1. Enhance customization and personalized consumption The emergence of digital technologies has enabled brands to engage a personalized dialogue and a concrete relationship with their consumers. Thus, we could observe in the first part of this project that consumers are increasingly demanding to take a role in the creation of their products. When consumers are given the opportunity to shape and influence the construction of their brands, companies develop more chances to increase their customers’ loyalty. Consumers love their own creations and with the increasing development of digital platforms, they are demanding to have a word in the creation of the products they will become loyal to. People want to find their identity through their purchases, and consumption is a massive tool of identification. According to J. Brewer and F. Trentman (2007, p. 42), “consumption is an act of discovering and cultivating the shelf.” Therefore, consumers expect from brands that they tell them which kind of person they are. “Consumers gather around object which define their identity and become centrepieces of particular routines of sociability,” according to D. Miller & al. (1998, p. 89). Brands must build on this quest from consumers to find distinction and difference in the use of their products to enhance customization and personalization. The development of interactive digital technologies encourages brands to build platforms that enable people to customize their own products. The idea of customization requires from brands 38
  39. 39. that they stop thinking in terms of control and start to open themselves to customers. On this regard, A.G. Lafley, CEO of Procter & Gamble, quoted in an article from L. Crombie and A. Simmons (2008), challenges marketers to “stop trying to control their brands and allow customers to engage with them in creative ways.” Moreover, according to D. Tapscott (2009, p. 79), “the desire is about personalizing and accessorizing, it is more aesthetic than functional.” In fact, consumers are becoming overused with standardized products and they want products that are perfectly tailored to their needs. Companies such as BMW, Converse and Mars have fully embraced the idea of customization and allow their brands to serve for their consumers’ personal expression. For example, consumers can draw the exact features, colours, and designs of their Mini Cooper cars and Converse sneakers. In the case of M&M’s, brides can even serve monogrammed chocolate candies for their weddings. Nike also pioneers customization since it created its service Nike ID in 1999. The basic idea of the Nike ID platform is to use technology as a solution to let consumers customize their own products and experiences. Customization became one of the key elements of Nike’s strategy that is to shift its perception from being a sportswear brand to become the enabler of customized and personalized experience for its consumers. In the blog Buzz Canuck, Nike’s Brand President, Charlie Denson (2007), explains it in the following words: “customization is a very important part of the way that consumers interact with anybody or with brands today. We have spent the last 20 years trying to bundle things, adding value to a purchase or a relationship. And now, it’s almost in reverse, because you have to unbundle everything if it’s going to become customizable.” Therefore, Nike’s strategy tends to illustrate the fact that we are leaving an age of controlled and limited product offering to an age of customization and creative personalization. The Nike ID platform is the perfect example of brand customization applied to the digital age. Either on the Nike ID website, on Nike stores, or through Nike ID applications, people can experience customization in very entertaining ways. Across all these platforms, customers are given the opportunity to very easily build their own shoes from special sets of colours and materials. Using the advances in technologies, Nike went further in the interactive experience and created a mobile service, Nike Photo ID, which enables customers to create their own customized shoes from pictures of the real world. The service, using MMS technology, identifies the two dominant colours in a picture, matches them with the ones available from the Nike Store, and finally generates Nike sneakers inspired from these colours, sending them to the 39
  40. 40. user, which can purchase them instantly using a unique Design ID code on the Nike ID website. See Appendix 2.6. The power of the case from Nike is that it matches visual technologies, very simple and easy to use interfaces, with a real customer desire which is to customize their own experiences. Other examples of brands that created customization platforms include a certain number of luxury brands, including Zadig & Voltaire, which enables its consumers to customize their own watches on its interactive website (See Appendix 2.7.), and Longchamp, which offers the opportunity to its consumers to create their own personalized bags. (See Appendix 2.8.). The idea of brand customization can also takes much simpler forms. Consumers are looking for personalization and brands can provide them with additional choices or options to accessorize their own products. Companies can enhance simple details that will provide a different experience and develop the feeling of owning truly personalized products. For example, Apple gives the chance to its consumers to add a personal laser-engraved message at the back of their iPod for free. We insisted in the importance of physical and digital experiences in consumers’ choices. Enhancing customization provides brands with the opportunity to enhance their experience through interactive or physical platforms. Brands should definitely seek new ways to improve the customization of their offering and use the opportunities of evolving digital technology to provide consumers with truly valuable ways to personalize their brand experience. 1.2. Encourage customer innovation and participation Brands should not only enable consumers to customize and personalize their offering but they should also open their organization to encourage customer innovation and participation. D. Tapscott explains in his best-selling book Wikinomics (2006, p. 4) how the “traditional plan and push mentality is being replaced by an engage and co-create economy.” The collaborative revolution that D. Tapscott describes impacts companies in much more areas than brand communications only. It involves changing the way companies do business. Companies such as P&G and Dell have found that collaboration with customers could be extremely successful and drive the emergence of powerful innovations. P&G launched a website dedicated to open-innovation called Connect + Develop, which solicits externally 40

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