Communities Dominate Brands

Real money vanishes in virtual banks with global financial crisis

The Economist of this week (26 Jan 2008) reports that a dozen virtual banks inside Second Life have been closed due to problems with the interest rates. Yes, yet another phenomenon we have to learn to live with as the real world and virtual world collide. Banking regulations are very strict in the real world, after centuries of failures of major banks, runs on money, etc. Again we see it now from Northern Rock in Scotland to the seven billion dollar investment fraud by an executive at Societe Generale. Even with "real world" banks, of some of the most reputable banking nations (UK and France) with very strong banking regulations and oversight, we find problems from time to time. How will that be in unregulated virtual worlds. A sad bit of news on the path to the future.

Blyk expands into new markets

Blyk announced today its expansion to the Dutch market.

Vodafone will be its carrier.

More on Blyk

Engagement Marketing as described in 2003

Today, I have been mostly thinking about a workshop for a client and I went back into the SMLXL vaults and pulled out a presentation. If any one wants the charts, please get in touch with me. So here is some thinking about Engagement Marketing

The economic landscape around media cost-efficiencies is in flux

The escalation of property and sponsorship costs are mounting

The trifecta that is the fragmentation and proliferation of media, and the consolidation in media ownership – soon to be followed by a wholesale unbundling.

The erosion of mass markets

The empowerment of consumers who now have an unrivaled ability to edit and avoid advertising and to shift day parts

A consumer trend toward mass customization and personalization

And the emergence of an experience-based economy, where cultural production is more important than physical production – cultural production is where the traditional world of marketing communications meets the world of content.

Our shared challenge isn't just in overcoming the creative and economic tensions that are an inherent part of this convergence of content and commerce... it's about creating more value for the consumer – as a way of creating more value for our business and shareholders.

Our recent history has been deeply affected by the increased speed of technological development plus the convergence and proliferation of the audio-visual, mobile, IT, and personal computing industries, increased internet and bandwidth penetration, and media choice. These developments have impacted businesses and the marketing community.

As a result of these developments, business itself is faced with a tougher job when innovation and flexibility are the markers for competition.

We are operating in a different landscape. One of multiple stakeholders:
- Business
- Media: audio-visual, mobile, web, press, live space, retail etc.
- Populations
- Communities
- Diverse cultures
- Passion audiences

Who are all connected, via their mobile phone & or their PC.

Engagement Marketing at its most ambitious can respond to any combination of these. It can be a driver to greater revenues, and valuable customer experience. It is not exploitative and focuses on a co-creation principle. Engagement marketing develops solutions that solve your marketing problems - from brand saliency right through to promotional and sales efficiency.

It does this by creating new types of multi-media content (or ‘properties’) through which your brand can engage its audiences - and thus deliver its commercial messages more effectively.

These properties might include creating your own TV programme, building innovative new web or mobile applications, or even developing a live 'bricks and mortar' solution for your brand (and probably a combination of a number of these.)

Creating your own multi-media property is capable of addressing your marketing objectives more effectively than conventional 'interruptive' advertising - delivering potentially bigger results, with wider commercial benefits, and at a fraction of the cost of tv advertising.

And it is not only the marketer that needs to rethink the rules.

With the proliferation of media, good content is in short supply. Broadcasters/media owners and distributors are desperate for great rating shows.

All media distribution want “engaging stories” that will draw in audiences.

They also need to rethink the Co-creation principle.

If the 21st Century was about Interruption – The the 21st Century will be about Engagement

Engaging properties will bring audiences, create IP, and generate multiple revenues.

We need Trans-media and Cross-platform branding and marketing communications intitiatives

We need to embed the 4E’s into what we do in marketing and media
An opportunity to: Engage your customers
To Experience the product or service
And Enhance your company/customer relationship
more Emotionally than traditional advertising.

Engagement Marketing reaches right back to 1903 and the creation of the Tour de France
1). Was designed by L’Equipe to increase revenues for its newspapers across France in 1903
2). It has since grown into one of the worlds great sporting events
3). L’Equipe is one of the very few sports newspapers published on a daily basis

The Tour by numbers today
Course: 22 teams, 198 riders, 350 accompanying people, 15 members of the
College of Stewards
Media: 1,200 accredited journalists, 1,000 technicians or chauffeurs, 370 press titles
or agencies, 70 local or national radio stations, 15 million spectators lining the roads,
2 billion TV contacts, 75 channels broadcasting the race (21 live), 170 broadcasting
countries, 2,400 hours of TV programming

The Requirement of clients
1). A genuine commitment to a very different type of marketing advice and logic
2). Ability/insight to integrate business and communication objectives
3). The potential to develop strategy before any creative development
4). Clients prepared to commit to a lead strategy developer - NOT ADVERTISING
5). Understanding of the drivers/potential within the media market
6). Existing structures neglect the mutual potential
7). Need for Social Marketing Intelligence

What are the benefits of engagement marketing?
1). Solution-driven, not format-driven
2). Increased marketing productivity and cost efficiency
3). Increased accountability
4). Scaleability
5. Engage a ’disillusioned’, over sold to, media saturated population

Today there is no leisure — brands are what people ‘do’. – Companies today have no choice but to engage.

Gutenberg and the changing nature of how we read and find information

We take technology as a raw substance and direct our creative energies to harness its capability to do our bidding and it has always been such since made found out how to make fire. We have mentioned Gutenberg from time time and even in our whitepaper on mobile as the 7th Mass Media

And I have found Carlota Perez's work to be very valuable in understanding the role and cycles technology in business and society.

John Naughton in his piece Thanks, Gutenberg - but we're too pressed for time to read writes

The First Law of Technology says we invariably overestimate the short-term impact of new technologies while underestimating their longer-term effects. The invention of printing in the 15th century had an extraordinary short-term impact: though scholars argue about the precise number, within 40 years of the first Gutenberg bible between eight and 24 million books, representing 30,000 titles, had been printed and published. To those around at the time, it seemed like a pretty big deal.

They didn't know, for example, that Gutenberg's technology, which enabled lay people to read and interpret the bible for themselves, would undermine the authority of the Catholic church and fuel the Reformation. Or that it would enable the rise of modern science by facilitating the rapid and accurate dissemination of ideas. Or create new social classes of clerks, teachers and intellectuals. Or alter our conception of 'childhood' as a protected early stage in the lives of young people. In an oral culture, childhood effectively ended at the age when an individual could be regarded as a competent communicator, ie, about seven - which is why the Vatican defined that as 'the age of reason' after which individuals could be held accountable for their sins.

Naughton refers to a recent study on reading behaviour from the British Library and researchers at University College London. I am not sure if this is the correct link that Naughton refers to however it is interesting and I think it is the right one. The google generation and research

The findings describe 'a new form of information-seeking behaviour' characterised as being 'horizontal, bouncing, checking and viewing in nature. Users are promiscuous, diverse and volatile.' 'Horizontal' information-seeking means 'a form of skimming activity, where people view just one or two pages from an academic site then "bounce" out, perhaps never to return.' The average times users spend on e-book and e-journal sites are very short: typically four and eight minutes respectively.

John sums up

The study confirms what many are beginning to suspect: that the web is having a profound impact on how we conceptualise, seek, evaluate and use information. What Marshall McLuhan called 'the Gutenberg galaxy' - that universe of linear exposition, quiet contemplation, disciplined reading and study - is imploding, and we don't know if what will replace it will be better or worse. But at least you can find the Wikipedia entry for 'Gutenberg galaxy' in 0.34 seconds.

In one oy my speeches I say

The comedian Bill Bailey describes reading Stephen Hawkings’ A Brief History of Time. In it Hawking suggests the universe could be 3 possible shapes. These are:

1). Long and thin like a piece of tagliatelle
2). Round like a marble
3). Saddle shaped

Bailey finds it hard to deal with the notion that our universe could be saddle shaped. In fact, he believes that Hawkings should say that the universe is saddle shaped, and that is strapped to a giant donkey being led up and down an intergalactic beach by God.

The point is that our once familiar analogue world, which we understood no longer exists in our digital universe.

As Bailey observed, in the days of Christopher Columbus it was easier to buy a "To the edge and back ticket"

We don’t know what shape our new digital universe is. We have to learn to navigate and describe it, and it presents us with new challenges in creatine new businesses, new culture, and having a new logic and language to describe the world we live in.

Often we hear newscasts or documentaries where people are talking from the the 1940's their voices sound so different from today. It is a simple observation, but it readily demonstrates that nothing ever stands still.

We are in perpetual motion.

Thank you Carnival of the Mobilists for best post of week

We've supported the Carnival of the Mobilists since its launch in 2005. We've even hosted the Carnival twice. The latest edition (Carnival of the Mobilists number 107) was hosted by MobHappy, the spiritual home of the Carnival, and featured again the best of the past week's blog entries about mobile.

For any of our readers, please remember that the Carnival will feature the best blog writing about mobile that week, and is quite literally the best of the best, among breaking news stories and analysis, about our industry. We strongly support the Carnival and urge any readers interested in mobile to monitor the weekly Carnival As the Carnival is always hosted at a different site, you'll find the latest host and link at the Mobili.St site.

This time the Carnival gave our blog posting, When there is a mobile phone for half the planet, the recognition as the best blog of the week. Thank you Carnival of the Mobilists, MobHappy, and Carlo Longino for that honour.

Dennis at the WAP Review site very kindly endorsed the choice as well, saying "You really must read it to understand how huge the mobile business and mobile data is today." Thank you Dennis for the kind words.

New Bond movie this November, now has title

Yes yes yes, this is the Communities Dominate blog, but sometimes when you REALLY want to dominate, you don't reach for the community, you go for Bond, James Bond.

Alan and I are big Bond fans, so the new movie title is of course big news for both of us. "Quantum of Solace" will be the second 007 to star Daniel Craig, and will continue from the point the previous Bond movie ended. Can't wait... 

Congratulations Nokia ! For achieving the 40% market share target

Congratulations Nokia!

Nokia is a good customer of both Alan Moore and myself and have bought tons of our book Communities Dominate Brands and featured both of us at various Nokia Marketing events around the world, etc. We enjoy the Nokia way of working and both love our Nokia phones. We greatly appreciate it that Nokia has embraced philosophies from our book and blog and we have lots of friends at Nokia. So just that alone is reason to join in and celebrate this milestone as Nokia reaches the 40% market share level.

But this story goes much deeper for me. I was there employed by Nokia back in February 1999 when the story broke that Nokia had passed Motorola and become the world's largest handset manufacturer. That was amazing news for Finland which did not have a reputation for high tech in the IT/telecoms sector. Many of our readers will know the importance of Nokia to the Finnish economy as by far its largest company with a legitimate ecosystem of supporting companies and vast employment in Finland today, around mobile phones. Yet it was only nine years ago that Nokia achieved that milestone, passing the global giant handset maker, Motorola, and snatching the number one position. That was in a market where total global sales were 162 million units and Nokia's market share hit 22.9 percent.

I remember the celebrations at Nokia back then. It was a huge moment for the company and a huge moment for Finland.

Let me give a little side story on Nokia history. Nokia the company takes its name from the town of Nokia (in inland Finland in the SouthWestern sector, near the city of Tampere). Nokia the company started out as a woodmill and then added a rubber factory. So the original Nokia made wood and pulp products, like toilet paper (yes this is true) and rubber products like tyres for cars and rubber boots. Eventually Nokia was looking for new areas where to expand, and found new needs for its rubber. The cold goods that desperately needed rubber coatings - cabling. So Nokia got into cables - wire that is rubber coated. After that, eventually Nokia noticed that there was more profit in the small ends of the cable (the connectors) than miles of wire. So Nokia got into cabling components. And soon after that, got into the electronic circuit boards that are components of electronics. Again moving on that path to finished electronic goods, by the latter half of the past century Nokia was selling home electonics and telecoms switching equipment for the fixed telecosm industry (Nokia Networks).

Only after that came mobile phones (and mobile networking infrastructure). There was a time I think mid 1980s that Nokia was on the brink of bankruptcy and sold most of its assets and units to survive. It decided to focus on telecoms. No more toilet paper, no more rubber tyres, no more home electronics etc.

With that, its a very recent shift in direction for a historic Finnish conglomerate. So now back to our regularly scheduled programming..

So yes, in 1999 Nokia overtook Motorola. It was neck-to-neck briefly, but soon Nokia took off (as Motorola was very slow to shift to digital handsets). Then, still as I was with the company, Jorma Ollila the then-CEO, announced that Nokia's goal was to achieve 40% market share. This was early Spring 2001. We were in the low 30% market share range, and I remember the mild panic that this announcement created at Nokia HQ. We could see Samsung and the Asians coming. We could see the competition getting tougher. Motorola had recovered and now was focused on digital handsets. And it was not enough to hold onto the number 1 position, but we'd need to grow the overall sales dramatically by winning even more market share. All this while the industry was rolling out WAP and GPRS (2.5G) technologies and the whole company was shifting into the 3G era.

Nonetheless, that 40% was now the stated public goal, and Nokia moved decisively to pursue that aim. For a while there was growth and the market share got somewhere near 37% or so I recall, around 2002, but then came 2003, the Razr and the simultaneous backlash by mobile operators against Nokia's Club Nokia and N-Gage initiatives. Nokia phone market share started to decline and conveniently the Moto Razr was the hot new kid on the block. Many analysts said around 2004 that Nokia had missed out on the clamshell style and even expected Moto to recover its number one position. Well, as I've told many over the years, the clamshell was a total red herring, the myth of the Razr revenge. No, it was a temporary setback to Nokia, as it reacted to the strong statements from the operator community, and withdrew the N-Gage and refocused Club Nokia to be no threat to the operators. The operators returned to Nokia in 2005 and within a few quaters the temporary Moto revival was over, and Nokia was again marching to growth.

Now the past year has seen Samsung surge past Motorola. SonyEricsson has finally gotten the Japanese-Swedish collaboration to work and are again growing ever stronger. LG is not giving up the fight. The clear loser is Motorola whose market share is in a tailspin (and their handset unit is not profitable). Samsung and SonyEricsson have profit margins in the 12%-14% range, but this last quarter against that kind of competition, Nokia grew market share, grew overall shipments and sales, and simultaneously grew profit margin for its handsets to 23.8%. Amazing performance !

And for those eager to mention the iPhone or Blackberry in this context to try to rain on Nokia's party, note that Apple sold 4 million iPhones in a bit over two quarters last year. Counting only its N-Series phones, many which cost much more than the iPhone, Nokia sold 11 million N-Series phones in only the last quarter. As to Blackberry? RIM sold about 2-3 million Blackberries last year (might be 4, I don't have last numbers) but Nokia sold 2 million E-Series (Blackberry rivals) in just the last quarter. Very impressive.

So in the global market for mobile phones, that shipped 1,140 million (1.14 Billion) handsets last year, Nokia has 40% or 456 million phones. So for every calendar day of the year Nokia now ships 1.2 million phones. Or if counted by weekdays, they ship about 2 million phones from every Monday to every Friday of the year.

And yes, now there are 1 billion people on the planet with a Nokia branded device in their pocket. Better than one in every 7 people worldwide have a Nokia device. Wow. There has never been any branded technology with this level of global penetration. Sony Walkman in its peak never was in every seventh pocket. Sony TVs or Playstations, not even close. Ford Model T car was once the predominant car on the planet, but there was not a Model T parked in every seventh yard. I wonder if any branded product has had this kind of global market share. Perhaps Levis jeans might been in that kind of penetration at some point perhaps gracing every 7th rear, I don't know. But at least nothing in the technology space anywhere near that level of global success.

And in a related story, there is good news about the Nokia Siemens networks collaboration, apparently they have already turned the corner and are on the side of making profits as well.

So, to all my friends, old and new at Nokia (and on behalf of Alan and all his friends there) and all our fans and readers of the blog who are with that giant handset maker, or partners of Nokia supporting it - CONGRATULATIONS !!!  This was a day very long time coming (not really in human years, only 7 years, but in mobile/internet years - or in dog years - that is a lifetime ha-ha), but it was a worthy effort. With its ups and downs, that incredible goal has been achieved. That has been done with a lot of innovation, listening to customers, maintaining quality and customer satisfaction.

Keep up the good work !  We love our Nokias.  Congratulations to all Nokia employees on this major milestone.

Poetic justice to villains of Sprint 1,000 - Tim Kelly the marketing brains, also fired

We've been following the Sprint 1,000 fiasco (where last July Sprint Nextel sent letters to 1,000 of its customers disconnecting them supposedly because they complained too much). The damage to Sprint Nextel's image has been devastating the past 6 months, as customers are deserting the company and its share price has lost more than half.

The first to be booted last Autumn was the CEO Gary Forsee, who had approved the moronic move. He was replaced by Dan Hesse who came from Embarq. The new CEO announced last week that they are firing 4,000 staff and closing 125 stores. I was very critical of the new moves in my blog posting reacting to the news, pointing out that the true culprit of the scandal, Chief Marketing Officer Timothy E Kelly (aka Tim Kelly) was the real source of the loss of all the customers - and a massive 2.3 billion dollars of Sprint Nextel revenues (definitely one of the costliest errors of a single marketing communication ever, as well).

So this is welcome news. While yes, it is a shame 3,999 other Sprint Nextel staff will be cut, at least those who remain, will see that the unprofessional management of their marketing, and the misguided head of it, Tim Kelly, is justly punished.

There was also the announcement that Chief Financial Officer, Paul Saleh is also fired. Paul Saleh obviously must have been involved at least superficially in the boneheaded decision to terminate customers (who accounted for less than one half of one percent of all calling center calls - thus a totally  meaningless act when considered from a financial and accounting point of view to the company).

Yes, I applaud these actions by new CEO Dan Hesse. It is not a big surprise, however, as Hesse has had a history of understanding both marketing and finance, and if so, he will have seen immediately that Sprint Nextel was on the wrong track.

I do hope he, or perhaps his new (permanent) Chief Marketing Officer, soon make a public commitment to bring Sprint Nextel back from the wilderness beyond caveman marketing, where the customer comes last. Sprint Nextel has over 53 million customers and a history in both parts of the combined company, Sprint, and Nextel, of innovation and customer satisfaction in the past. There is nothing to stop this company from becoming great again.

Certainly for any Sprint Nextel customers (or shareholders) out there - I'd say - give this new guy a chance. At least Hesse swiftly observed where the problems were, and got rid of the true culprits of the scandal, Forsee, Kelly and Saleh.

The architecture of the 21st Century organisation

Recently, I have been working with to a number of companies via our Engagement Marketing Workshops

We have worked with large media companies, a large newspaper group and a mobile operator. Not all the in the UK.

I was asked the question,

If, I buy into your concept Alan of Engagement Marketing, which I do. What does that mean to me in terms of how my organisation is structured and operates?

For me, this is a question that demonstrates that someone has deeply understood the potential for Engagement Marketing but also understands the dilemmas and challenges involved.

In a recent workshops these were the topics raised...

1). What is advertising in the 21st Century?
2). Should brands and business be more service orientated?
3). There has to be room now for new creative business propositions has the technology allows us to do so
4). How might this enhance revenue streams?
5). How can we build proper revenue profiles around these new initiatives?
6). Targeted commercial communications will become the norm
7). Metadata and 3D customer profiling will become key and vital to all organisations in their marketing efforts
8). Segmentation will be created via networks not demographics
9). How do you migrate legacy businesses through the digital journey
10). How do you create value in the digital age for advertisers and customers?

This is where everyone goes a bit misty-eyed as its a mother of a problem.

The reality is its incremental revolution, you have to educate and take people with you, you need new metrics and job descriptions and dare I say a more flatter organisation.

Its a new logic, a new culture a new way of framing who you are and what role you play in fabric of peoples lives.

In the Digital Challenge Roy Greenslade wrote

The future of newspapers is online - but how are they responding to the demands of different platforms and round-the-clock reporting?

Actually I would say the future of newspapers is on digital platforms that is different to online.

But Greenslade also writes

It is really about the creation of a new journalistic culture, a method of working that reflects both the technological possibilities and the demands of a wised up, increasingly media-savvy public.

Indeed, it is also about the response to a new public because newspapers are no longer serving a geographically distinct area. Worldwide access to news sites means that the audience served by London-based national newspapers is no longer merely British.

So of course I missed point 11). That is the world is hyper local and also super global.

Time and geography and distribution have collapsed.

And also back to the thorny problem of where do we start? Start with a laugh and work backwards... Don't solve your problems by chucking technology at the problem.

Its how one frames and understands ones world: economically, culturally and socially that insights will offer themselves to those in desperate need of answers.

1968 and all that

In my speeches that I give, I often refer to how societies values change as the economy of that society develops.

1968 was a big year - the Paris Riots, Berlin, Prague, Chicago, Rome, Mexico City and even London.

I refer to this as a significant moment in history when individuals started to question their relationship with authority. One might want to add the explosion in the creative counter-culture the Black Panther movement and a thorough investigation into spirituality via experiments in religion and drugs.

I also talk about how we get caught up in the technology web/mobile 2.0 being one of them, however, its understanding how society, the media and culture remodel themselves also as part of that process.

As Wassily Kandinsky said

Every work of art is a child of its time

I raise the issue as there was an article in the Observer on Sunday looking at the momentous events of 1968

Sean O'Hagan writes

On New Year's Eve 1967, Charles De Gaulle, the 78-year-old president of France, broadcast his annual message to the nation. 'I greet the year 1968 with serenity,' he announced, brimming with self-satisfaction. 'It is impossible to see how France today could be paralysed by crisis as she has been in the past.' Little did he know. Six months later, De Gaulle was fighting for his political life and the French capital was paralysed after weeks of student riots followed by a sudden general strike. France's journey from 'serenity' to near revolution in the first few weeks of May is the defining event of '1968', a year in which mass protest erupted across the globe, from Paris to Prague, Mexico City to Madrid, Chicago to London.

Societies relationship with authority is an interesting one. And I believe that we are today re-considering our relationship again with authority. Just look at the recent Paris Riots.

Back to Paris

These rebellions were not planned in advance, nor did the rebels share an ideology or goal. The one cause many had in common was opposition to America's war in Vietnam but they were driven above all by a youthful desire to rebel against all that was outmoded, rigid and authoritarian. At times, they gained a momentum that took even the protagonists by surprise. Such was the case in Paris, which is still regarded as the most mythic near-revolutionary moment of that tumultuous year

Today we challenge the authority of the media via a whole set of activities that can be networked and grassroots. It is done via co-creation, the forming of a new media ecology, that affects al aspects of society right down to how we teach our kids in school.

The common spirit of rebellion is

a distrust of all forms of established authority including parents, police, college administrations and government

However I am fearful of where we go in this wonderland of networks, engagement and a new sense of self, community and possibility.

Will it be so as the old media infrastructure breaks down more curbs and regulations by vested interests are put in place to coerce and control these self organising networks? In Britain we see actually the reverse of a new an open society perhaps? One more akin to state control than liberty and the rights of the individual. For a 1000 year old democracy this has deep implications.

Which then begs the question - who is in the best position to decide policy, centralised government or a network of organised and motivated communities, who understand the needs of its communities better than any government could. The end game is far from clear however. Yochai Benkler argues in his book The Wealth of Networks that individuals in a interconnected and network society can and do play a more significant role in culture, society and the economy. And I believe him. But, at what point does that movement end when the incumbent authority realises all this openess, sharing etc., mitigates and dilutes its own purpose and power?

And was TV in '68 the internet in a perverse sort of way? broadcast then was more naive, unregulated, ignorant of what it could unleash? So are we naive today, will be regulated tomorrow.

Vietnam became the first war beamed into the living rooms of America, and the images were as raw and visceral as today's are diluted and controlled. 'In the Sixties, television turned up the intensity of what was going on in the world,' says Sandbrook. 'We had all seen war footage but this was the first time we had seen it almost as it happened. People had a sense of the sheer disproportionate force involved. The carpet bombing, the Napalm, the scale of the American operation shocked viewers and then angered them. Vietnam was the first TV war, and, as a direct result of that, it spawned the first global anti-war movement.'

We talk a great deal about engagement on this blog and what it means. TV as a mass media to a mass audience engaged society in 1968 by sharing information with a vast audience that was not available elsewhere - it was uncensored, visceral and in your face.

So what is the endgame of the networked economic-society?

Do I worry unnecessarily? Or, are we beginning to live in a world that is unprecedented?