Communities Dominate Brands

Lisbon calling

On Wednesday I was asked to give a keynote at the Portuguese Annual Advertising Conference. Their theme this year was Consumer Engagement.

I had great fun, and met some great people. And so thank you for everyone that came along and thank you to Manuela from APAN for inviting me.

A proud day for all Finns, Martti Ahtisaari wins Nobel Peace Prize

This posting has really nothing to do with our main themes of Communities Dominate. But as Alan is as close as it is possible to being a Finn, I'm sure he joins me in feeling the pride that all Finns feel this day, as our previous President, Martti Ahtisaari, has just been awarded the Nobel Peace Prize. Please allow me a few words on this.

The Nobel Peace Prize is one of the most prestigious and perhaps, one of the most noble of prizes that society can award any of its members. The past winners reflect truly some of the greatness in recent mankind, both in personal character - consider Mother Teresa, or Desmund Tutu or Lech Walesa or Dr Martin Luther King Jr or the Dalai Lama - as well as heroic works towards achieving peace in what has often seemed unending conflict, such as Anwar Sadat and Menachem Begin in starting the peace process between long-warring Egypt and Israel; or Henry Kissinger and Le Duc Tho (who refused the award) for bringing the Vietnam war to an end; or Nelson Mandela and Willem de KIerk with South Africa; or John Hume and David Trimble with Northern Ireland.

There have been some who have won the Nobel Peace prize for achievemens of considerable humanitarian needs, where the Nobel Peace prize has seemed the most fair way to acknowledge exceptional contributions to mankind, while necessarily not actually "achieving peace" in any given conflict at that time, such as Al Gore for his work with the environment. And sometimes the Award has been given for organizations working to peaceful goals, such as Amnesty Interational or the UN peacekeeping forces etc. And there have been years when the Award has not been handed out at all.

While many of the winners have actually achieved a peaceful resolution in a given conflict, the winners in most cases were the political leaders on both sides of that conflict (such as Vietnam, South Africa, Israel-Egypt and Northern Ireland). These are worthy recepients, but there is rarely also an even more altruistic role and contribution to peace. That is the achievement of a peace envoy to a long-running military conflict, where the peace envoy comes from the outside. Not as a political ruler from either side.

That is what Martti Ahtisaari has done all throughout his long career in international diplomacy. Recalling that our country of Finland is in Northern Europe, bordering Russia, Sweden and Norway (and the Baltic Sea), ours is a peaceful country and has not had conflict on our borders since the second world war. Finnish troops serve on United Nations peace missions all over the globe, my cousin Jukka Lundgren served with the UN troops in Lebanon for example. We - like our Scandinavian cousins in Sweden, Norway, Denmark and Iceland - have been promoting peace quite actively all over the world.

But nobody from Finland has been anywhere near as dynamic as a peace activist, as Martti Ahtisaari. He has been personally delivering peace in Africa, in Namibia. In Asia, with the long running civil war between the Aceh and the government of Indonesia. And he's done it in Europe bringing peace to Kosovo.

Here is a man who already had been the President of Finland, who as President brought Finland into the European Union. He had his place secured in our history books and he could have retired to write memoirs and attend some conferences etc. But rather than that, Martti Ahtisaari set on a personal crusade to help bring peace all around the world. The United Nations considered him one of their best - if not "the" best peace negotiator sending him to the toughest trouble-spots.

If there ever was a stereotype of what was the ultimate "peace hero" for winning the Nobel Peace Prize, that could be imagined at the birth of the prize, Martti Ahtisaari embodies that persona. A true hero of peace. And a remarkably successful one at that as well.

Congratulations Martti Ahtisaari. All of Finland celebrates your leadership and example. Thank you.

The Relevance of 10 M - awaiting the final numbers for the iPhone

The Apple iPhone was big news a year ago and a recurring theme at this blog from long before it had a name, and related to the iPod vs musicphone debates we had here for two years before the iPhone was launched. The Apple fourth financial quarter of 2008 results are coming out on October 21 of 2008. It seems very likely that the 10 million annual sales level for the iPhone will be announced. I have no inside knowledge of these numbers, but I'm very confident that it is so. I want to give some background and analysis on what those numbers mean, and how they were achieved.

HISTORY

I gave my first opinion of the iPhone announcement only some minutes after it was announced, on 9 January of 2007, saying it was "welcome innovation fusion" to the industry, but warned the industry was not as easy as those of the PC and MP3 player markets; and also expressed my concerns about the lack of a separate keypad.

I followed that with an Open Letter to Apple, still on the 9th of January, warning them that the killer app for a modern smartphone "is not voice nor music" but that the only killer application for our industry currently is SMS text messaging, and that it was not well understood in America, at Apple's home market.

Then, one day later, on Oct 10, 2007, I wrote what many considered the best competitive analysis of the chances of the iPhone in the telecoms industry, in my major analysis entitled Handicapping the Race. I totally stand by that early analysis and made what I think turned out to be very valid early observations, such as "In Europe.. the lack of 3G will be a serious flaw.. by year end (2007) this phone will be almost obsolete in Europe by then." As it turned out to be; only the 3G iPhone would capture Europe's interest this past summer. The response to the original iPhone was quite muted in only a few European countries compared to what it achieved in America in the summer of 2007. I also praised Apple for its powerful marketing, brand loyalty, passionate customers and innovation. I also warned that the first generation (2G) iPhone was not perfect, and that it might well end up, that a later iPhone variant would be the real success, as I wrote one day after the iPhone was announced:

But Apple is not infallible. Sometimes its first step is not enough - remember the Lisa, the predecessor of the Macintosh PC? A great computer at the time, and revolutionary in some ways, but did not take the market by storm. Only the Mac did. Same for the Newton, a great and innovative early PDA but its timing was off and other PDA makers took over what Apple pioneered.

I also was quite correct in guessing how the first iPhone would be received worldwide, writing:

Expect the most glowing reviews and opinions from the American press; and the most critical reviews and opinions from the Northern Asian and Northern European press.

It turned out to be true. The American IT and telecoms press loved the first iPhone, the rest of the world was more mixed and even lukewarm in their reviews. Finally, as to Apple's stated aim of 10 million sales in the first full fiscal year of the iPhone ie Oct 2007 - Sept 2008 - this is what I wrote:

With the launch and aim of 10 million sales comes a certain corporate-wide commitment by Apple to make it happen. I would say they will do it. But it will come at a serious cost to profitability. Note that this expands Apple's portfolio and helps a PC maker move into the mobile internet - the future, so this is also a clever move by Macintosh, to gain a foothold into the mobile computer market of the next decade. Good move by Apple. A lot of worries by major handset makers. An exciting time for the industry. But I want to see a family of iPhones before the end of the year.

So with that, yes, right from the start, I said this phone could well hit 10 million sales. It would not be easy, and it would be costly. It would particularly hit the profitability of this product. I was certainly assuming one of the marketing cost impacts Apple had that it could use - which I mentioned in several comments - was to drop the price of the iPhone in 2008, to help boost sales if the 10 million was turning into a tough target. It was not Apple's only marketing option, naturally; you can boost sales also with advertising, sales support campaigns, new designs, etc. But yes, that the price was slashed to 199 dollars in 2008, tells the story, that yes, Apple had to take a huge cut in its profitability for this product, to be able to reach its stated goal.

I followed that long analysis posting with several more, including the "definitive" blog about the iPhone prior to its launch, that I released a week before the iPhone hit the market, in late June 2008. That article discussed the market strategies for the three main regions, America, Europe and Asia, in my lengthy and detailed posting entitled: Crunching the Numbers for the iPhone. At this point, over five months of analysis of the original 2G iPhone had been prepared by thousands of pundits around the world, but nobody really had used the real product. I ended that analysis with this comment about what I clearly felt would have to be the 3G iPhone in the summer of 2008:

The phone to fear, the ultimate superphone of its age, the one striking fear into the HQ's of Nokia, Motorola, Samsung, SonyEricsson and LG, is the first re-designed iPhone, after feedback from users in Europe and Asia. That truly re-designed "iPhone II", that may be released in the summer or autumn of 2008 at the earliest, that is the must-have smartphone. I can't wait to use that iPhone. This first iPhone is more like the Lisa for Apple PCs, an important step along the way, but the next iPhone is like the Macitosh, a true masterpiece.

(Emphasis was in the original posting.) And compared to the first and quite flawed 2G iPhone, the 3G iPhone is far better, yet still, surprisingly incomplete (as I've blogged many times). But yes, pretty good guesses and insights on the day the iPhone was announced, one day after it was announced, and a week before it was launched.. 

Now, I also promised I'd return to discuss the performance and whether this 10 million level would be reached. I am very confident, from many sources, that Apple was on target to hit and exceed that level of sales. I am very confident that on October 21, Apple will announce it has passed 10 million sales. And that will be greeted by Apple investors with a great sense of relief and satisfaction. And it is quite a great achievement, certainly. But we do need to then put this number in context and dig a bit deeper what it may mean for 2009.

10 MILLION IS ONLY 0.8 PERCENT OF MARKET

Yes. That number is right. If Apple sold 10 million iPhones in the past 12 months, it has captured zero point eight percent, 0.8% or four fifths of one percent, of the total mobile phone market worldwide. Understand that the Macintosh PC has been fighting in the 5% to 12% range of the PC market most of its life for the past twenty years or so. Now, the iPhone has not that. Nowhere even in the "same ballpark". There is a whole order of magnitude between those. The Macintosh series of PCs was a relevant player to the market with high single-digit market share. But the iPhone is totally irrelevant to the big picture of the mobile phone market. Not even one percent. A fraction of one percent. So while Apple celebrates 10 million sales (or whatever actual number it will be, 11 or 12 or even 15 million units), it is tiny. TINY. In the picture of mobile phones.

Please do not misunderstand me. I said from the start, that no matter how well or poorly the iPhone sells, it is an innovative product that will drastically alter the whole industry. The mere launch of the iPhone was a revolution to the industry. That has not changed. BUT the NUMBER of iPhones sold, at 10 million is totally irrelevant because of the size of the industry.

To put it in context, Nokia sells 10 million new phones every single week of the year. So yes, 10 million is a major milestone for a brand new phone-maker that has just entered the market; but it is still small potatoes. Very very very small potatoes.

Yet, the iPhone is not fighting for mass market phones. Its not fair to compare, say a Ferrari sales number to that of Volkswagen or Ford or Toyota. Ferrari is an exclusive premium sports car, in the luxury bracket. So too is the iPhone. It is what we in the industry call a "smartphone". So a far more relevant comparison is to see how it fared in that market.

HOW OF THE SMARTPHONE MARKET

The news is far better. The market size is smaller. Gartner says 190 million smartphones are sold this year 2008. So out of that, 10 million is obviously just over 5%. That is quite impressive indeed, and within this more tightly-defined market, the iPhone is nearing the performance of the Macintosh in the PC market. A far cry from the best that the iPod managed at its peak days in the music player market, but still certainly impressive.

But again, before we get overly excited, we do need to look a bit at the competition there. The American press tends to look at their home market and think that the natural rival of the iPhone is the Blackberry. That is not true. The Blackberry is at almost diametrically the opposite end in the smartphone field, geared at business executive users for their wireless email use that is a magnificent messaging phone; the iPhone is a multimedia and internet -optimised device, far more like the N-Series of Nokia.

But yes, lets look at smartphone market shares. I don't have the numbers for the third quarter of 2008 as of yet, but the second quarter of 2008 have been discussed by Gartner. During that quarter, RIM, ie Blackberry, outsold the iPhone at the rate of 5 to 1. And in the same period, the Nokia smartphones (mostly N-Series like the N-95 and N-82) outsold the iPhone at a rate of... get this.. 15 to 1.  Even in the smartphone market segment, that 10 million level does not get you far. And incidentially, this latest quarter for which we have numbers, worldwide, three other manufacturers sell more smartphones than Apple - they are HTC, Sharp and Fujitsu. Apple is not in the top 5 for smartphones even. For all the hype about the iPhone, how much coverage do these brands get? Did you even know there is a better-selling smartphone from Sharp or Fujitsu, than the iPhone? They do outsell the Apple worldwide...

Of course if we expand the market to look at featurephones, ie musicphones, etc, then we have the giants Samsung, LG and SonyEricsson (and Motorola) joining the game, and all having their "equivalent" models in similar price ranges and of similar specs, outselling the iPhone by factors from 5:1 to 10:1.

I do want to be very clear about this. Yes, 10 million is impressive, but Apple is a tiny spec in the sea of 1,500 models of mobile phones sold worldwide, and they have in the past 15 months taken now less than one percent of market share in the world.

ITS STILL VERY IMPRESSIVE FOR THE NOVICE PHONE MAKER

With all that negative "anti-Apple propaganda", lets then turn to the sunny side. Many said it was an aggressive and ambitious target. There were plenty of pundits in 2007 who said Apple would fail to reach 10 million in one year, especially considering how expensive the iPhone was.

Big giants of the industry were struggling, we've seen Motorola lose massively in the game over the past few years. So yes, going from zero to 10 million is very impressive. I then also want to point out this number. The big five makers - Nokia, Samsung, LG, Motorola and SonyEricsson - capture about 80% of the worldwide phone market. But there is a huge drop to the next "biggest" player who fight for that sixth largest supplier slot. And here it gets interesting.

We have to see the final numbers, as these fluctuate among a dozen players all selling in the 8 million to 25 million range, but Apple is very possibly in the top 10 of global handset makers (already). Bearing in mind, there are about 30 makers who are in that group, including HTC, RIM, Sharp and Fujitsu, but also such unfamiliar brands as Kyocera, Huawei, TT and ZTE. In this race, behind the big five giants, RIM is the sixth-largest handset maker in the world, and Apple is barely at the fringe of being in the Top 10. In the fourth Quarter of 2007 they were the tenth-largest maker, but fell out of the Top 10 in the first half of 2008. Now with the 3G iPhone and more aggressive pricing, its very likely that Apple is once again in the top 10.

THAT is a big achievement indeed, whether they are ranked 9th or 11th or 13th. It means that in their first year, Apple has fought ahead of about 25 handset makers in the world, and are certainly one of the makers to watch. And obviously they are growing their modest share, so expect this ranking to improve over the next year, as the iPhone 3G (and its successor phone sometime next year) will be available in far more markets than the original 2G iPhone.

HOW FAST TO TEN MILLION

Now, a contrast. Canadian Research in Motion (RIM) makes the Blackberry. They got into the phone business in 2001 and have grown a steady and fiercely loyal user base with wireless email on their iconic phones. In seven years, they have achieved a global subscriber base of 19 million who use both their phone and the Blackberry wireless email service (as of mid-2007, three quarters of that subscriber base was in North America). There is a difference between a "Blackberry subscriber" who uses the phone and their service, and the total user base of Blackberry phones. RIM sell more phones than only to that subscriber base; in fact in Europe the biggest Blackberry user base is teenagers and young adults who are addicted to SMS text messaging, and love the BB's keypad for texting, but who never even use the email function of the Blackberry. RIM reported that they sold 6 million handsets in the second quarter of 2008, so they sell about 24 million devices per year. This in seven years from launch.

Taiwan based HTC made PDAs and other electronic gadgets. It moved into the mobile phone space in 2002. It was the first phone maker to use Microsoft's Windows for Mobile operating system and has grown its market steadily in the smartphone space, and currently sells about 12 million phones per year. This level of sales achieved in six years.

12 million in six years, 24 million in seven years? But Apple does 10+ million in one year. Certainly achieving 10 million sales in one year is a considerable achievement.

AT EXPENSE OF PROFITABILITY

When Steve Jobs announced the aggressive 10 million sales target in 2007, I am certain it was made with a lot of analysis and understanding of the market, as well as Apple's internal strengths and abilities. I am also certain, that since Apple announced a strategy of an exclusive partner network programme, and attempted to pursue that in 2007, but abandoned that in 2008; there must have been a drastic change in facing the reality of the mobile telecoms market, compared to the assumptions made when the iPhone launch was still being planned and the original strategy made.

The original network deals included a revenue-sharing element - where Apple would gain a revenue-share out of the data traffic of iPhone users - something no other major handset maker has been able to achieve. This requirement by Apple was also its big hurdle in 2007, with many fruitful network negotiations crashing on this one Apple requirement. They had only a handful networks under contract at the end of 2007 with this arrangement.

Apple finally abandoned this requirement in 2008 and now have a vast range of countries where the iPhone will be sold; and indeed in many countries like Italy and Australia, there are several network operators who will offer the iPhone. It is no secret, that Apple has radically altered its strategy.

The original strategy did include the requirement of selling the iPhone at an "unsubsidised" cost of 499 or 599 dollars depending on the model. In all of its early markets, like the USA and the UK, the rival smartphones are all heavily subsidised. So rival phones, say like the Nokia N-95, in many markets sell for zero dollars (to qualified buyers willing to sign two year contracts). The argument was that since Apple would be gaining from the revenue-sharing, then the mobile operator partner would not be willing to subsidise the phone.

When Apple was willing to abandon the revenue-share requirement, then the mobile operators were also willing to handle the iPhone as they would other similar smartphones, and depending on the market, offer severe subsidies to iPhone buyers. (Note that in some countries subsidies are illegal, like in Italy; and in other markets the subsidies have been extinguished by all telecoms operators as harmful to the industry, such as in South Korea)

Nonetheless, the net result is that firstly, Apple was unable to secure the network deals to get any chance of 10 million unit sales with the original strategy. Part of that strategy, that was told to Apple investors, was that Apple would gain out of the revenue-sharing of the telecoms traffic. Note that in the big picture of the Trillion Dollar industry of mobile telecoms, 85% of the money is in telecoms traffic (voice calls, SMS text messages, and various wireless data services), and only 15% in the hardware (mobile phones, data cards, USB dongles etc). Even a small share of the far larger pie, could have been a remarkably lucrative benefit to Apple. Mobile telecoms as industry maintains EBITDA margins ("profitability") of 35%. The IT sector has profitability rates in bad times in the single digits and in good times barely in the teens. This was a major goal for Apple and now it seems clear, that this avenue for profit generation by the iPhone has been abandoned (the current contracts probably continue for a few years, so for example AT&T in the USA and O2 in the UK will probably continue to deliver some revenue-share to Apple until those contracts are renegotiated).

The other element is the lower payment to Apple per phone sold, obviously. So much like I predicted, Apple was able to achieve its goal of 10 million sales, but that goal would be achieved by cutting seriously into the profits of the iPhone.

Still, all in all, a great first year by Apple. It did truly shake up the industry. The iPhone has helped Apple move from a stagnant PC industry and a stalling MP3 player business, into the still strongly growing mobile phone industry. Now Apple is a legitimate and very desirable premium handset maker with a very strong brand. They have enormous potential and opportunity here.

WHERE NEXT?

I would hope someone at Apple HQ bothers to read my Open Letter and release an iPhone with a real (slider) keypad/keyboard; that would greatly enhance the phone. And for the next model, yes a better camera and adding the flash. But video recording has to be there now, out of the box; and the iPhone has to support MMS picture messaging - MMS is poised to become bigger by user base than total worldwide email users, near the end of this year or early next year. The iPhone is the only smartphone that is not compliant with the global standard for MMS picture messaging (shame!). These little improvements will make the next iPhone far better and it could start to aim to double its market share, and start to battle RIM for the position of the 6th largest handset maker if Apple really wanted to succeed in this space..

But now, the iPhone is an established model in the smartphone category. Now Apple has to conform to the industry game rules, and no matter how much they hate it, they have to start to increase their range of models, speed up the product introduction cycle - one new model per year will not get them from 10 million to 20 million. Look at RIM, they release a new Blackberry at least every quarter. Nokia releases a new phone model every week. And while its impressive to add fantastic features to the iPhone, the easiest way to add satisfaction and customer acceptance, is to remove the glaring deficiencies in the current model.. But Apple is hearing all that from all of their "real" customers (the network mobile telecoms operators/carriers, who buy the iPhones and sell to their subscribers ie end-users). They want to win. They will adjust. I wish they'd just do this sooner rather than later, so that we can get to the real advantages of Apple's innovation and leadership. Perhaps the next phone (next summer?) is finally the superphone that everybody truly loves...

(And for anyone who is interested in understanding the mobile market, I've got the primer for you. Send me an email to tomi (at) tomiahonen (dot) com, and I'll send you my 2-page Thought Piece crammed with stats and facts about the mobile telecoms industry)

The promise of engagement marketing

Tomi was interviewed recently by MobiAd

Key themes were

[1]  What does advertising look like on the mobile platform

[2] The need for Engagement Marketing vs. interruptive communications

[3] Co-created commercial communications

Tomi expands on this later theme...

However, my best example today, is the Japanese snack foods brand Tohato, and their engagement marketing concept. Yes, it was another advergame.

But what a game. Think of the addicted hard-core gamers on massively multiplayer fantasy wargames like World of Warcraft, Lineage 2 and Everquest, with literally millions of active gamers online. The multiplayer gaming activity is very compelling especially to young male adults - the kind of customer that the spicy snacks brand Tohato wanted to appeal to. So they launched the World’s Worst War campaign, as a mobile multiplayer online advergame.

Tohato launched two new extremely hot spiced snacks brands in Japan, Habanero and Satan Jorquia. Each package had a 2D barcode, and customers were invited to fight in the war by joining in the army for one or the other brand. And gamers who could recruit more gamers would be promoted in the army, so the game had a strong viral element.

The game ran for several months over 31 battlefields, and soon over 100,000 gamers were interacting daily in the game. The brand even provided a daily news service to report on the war - who had been promoted, who had died bravely etc. The game generated such passionate involvement that gamers would collect at social networking sites like Mixi and Facebook to plan their strategies for the upcoming battle.

Ten stages in life, thinking of how we change behaviour

I've been doing some of this thinking with my various workshops mostly in the mobile space. About how people go through a major change in life, and how that presents opportunities for new services, products, sales, and also of changes in loyalties.

I've often looked at it in the mobile space with eight relevant changes in our lives, starting with puberty, the first time we start to set our own path and preferences, rather than those of our parents, which also has big impacts for mobile phone choice and of operator (carrier) preferences etc.

So yesterday I happened to be talking about this with a colleague here in Hong Kong, and I was struck by the fact that while for mobile phone and service sales, yes the teenager youth puberty age break, at about age 15 is the first relevant change, there actually are still stages in our lives before that. We have a previous significant break at about age 6 or 7, when we learn to read. Roughly at that time we can become computer literate for example, able to Google etc. I recall Alan talking about his son Joseph and how Joseph before he could read and write, would ask his father to "write in the computer, dinosaur game" or "write in the computer, motocycle game" etc. Young Joseph did not know how to read or write yet, but loved videogames, and understood kind of instinctively, that Google existed, and if daddy wrote into (Google), then any videogame that young Joseph could imagine, would also be found (by Google)..  But yes, clearly there is a previous age break, around that time, maybe 6-7 years of age, when kids learn to read and write, and suddenly they can become literate in the digital world.

So. Rather than 8 age breaks relevant to mobile telecoms business, there is a previous one as well, so there are 9 age breaks (at least, perhaps even more) and thus we get 10 stages in life. Ha ! Gotta blog about that, eh?

So, here my thinking..  I do believe most brands, products, companies and services can find new opportunities for new customers, for selling new and different services, and find the risks of losing long-standing loyal customers, when the changes happen with these stages.

First stage is the young child. The baby, the toddler, the "rug-rat"..   The under 6 year olds who will accept almost whatever their loving parents give them and tend to be very content with that. Not really aware of a world far beyond the immediate family, and with not many friends and contacts and outside influences, beyond perhaps childrens TV programmes that they might watch together with the parents.

Second stage (and thus first change) is literacy. The approx 6-7 year old learns to read. And goes to school and discovers friends not selected by the parents or not out of the back yard of the home. New friends, new influences. Now things like brand competitiveness starts to emerge, I want Levis brand jeans, not the ones mother had suggested, etc..  But most importantly for readers of our blog, any digital media will not be powerfully (probably fully) able to be used. Yes, we have lots of videogames and basic computer programmes for even younger kids but after they learn to read, they can go Google and discover the digital world for themselves. If for some reason you don't have the PC and connection for them at home, soon they will find a best friend who has a PC and broadband in their room and suddenly spend a lot of time visiting that friend.

The third stage is puberty. From about age 15-16 maybe 14. Now kids rebel. They want to excert their own identity, they refuse to take their parents suggestions and ideas and services. Things that are "not my parents" choice are particularly appealing. A kind of MTV generation is here, the rebels. Experimentation with alcohol, sex, drugs. Possibly big shifts in the behaviour. The desire often develops to leave the home (soon, as in a few years)

We all go through these first three stages. The next six are all optional, some happen to most, some only for perhaps half the population.

The fourth stage is leaving the home, and I like to say this is the "going to university stage" even though it may be going to serve in the military, or it may be really just leaving home to set up an apartment elsewhere, or moving in to live with the girl friend/boy friend etc. This stage is the first time the person has to take care of himself/herself. It means no curfews, can party all night, get as drunk as they want, etc. If its the university option (as in moving to another town and living on a college campus) it can be very "free" with very few limitations and still strong support from home; and at the other extreme is the military option, which is very restricted with lots of rules and probably much more tightly controlled than the last year or two at home. Nonetheless the person goes through a radical change again. What is typical of this stage, is that the young adult is not very well off in terms of money and disposable income. (Note some people never leave home, and eventually take over the family house or farm or business etc)

The fifth stage is the first job. Note this can happen simultaneously with the above, but can also happen years after the previous, ie if the person goes to college and then graduates four years later and gets a first job. The first job is when we feel like millionaires. The first paycheck, it seems to last forever, we go on major spending sprees and still find lots of money left over in the bank. How soon that changes..  But yes, this is a major opportunity for spending and for new experiences.

The sixth stage is marriage. This won't obviously happen to everyone, and it may happen sequentially, ie many times. But the first change from single status to married status is the relevant change. I'd argue in many cases the commitment to move together and live together as partners is also equivalent to the married stage. It means that some of the late night partying is diminished, the family unit starts to plan for common household investments, the couch, the new bed, etc.

The seventh stage is the first child. It sometimes again happens without the marriage/living together stage, but often follows after that, and obviously not all families have children. But yes, the first baby into the family changes it drastically. Now the needs of the child come first. Priorities are totally changed.

The eighth stage is not desired, but happens to more than half of marriages and obviously to the far majority of all cases of partners living together; it is divorce (or break-up). The previous happily married parent turns into a single adult, and returns to the singles-scene. A different style of dating and partying lifestyle happens here and all kinds of lifestyle needs, from new fashionable clothes to fitness etc are suddenly an interest.

Note that the second marriage and second divorce and third marriage etc cycle can repeat many times. But these would produce generally a similar change in behaviour, ie the change from single to first marriage, would be far more similar to the change from second single to second marriage; than say the change in puberty or first job etc.

The ninth stage is grandparent. Not all get to this stage, and obviously you have to have had at least one child to be able to get there, but many older people do get there and it again changes priorities. At this stage the person is also old enough to mostly have paid off mortgages and car loans etc, perhaps retired or nearing retirement, and thus well-to-do in terms of disposable income. And suddenly the delight of grandchildren to give new and different meaning to life. And a particular need to connect with that age. I often point out that grandparent age people usually learn to send SMS text messages and MMS picture messages, not by messaging with each other, but rather by first connecting with their grandkids.

Ok, and the last stage is retirement. We all get there (obviously unless we die before that) so its the fourth stage that we all necessarily go through before death. At retirement we also have lots of time and often good disposable income as well. But now things like personal health matters are ever more important.

So there, ten stages. Not everyone goes through all ten. Not everyone goes through them in the same order. And some may be repeated several times. But these ten are rather universal and give good foundation for understanding how we face situations that force us to change our behaviour. And for clever brands out there, in particular those involved in the digital space, these ten can give chances to differentiate. If you can help your customer over the change, you should have a happy loyal customer for the next stage..

Give us your thoughts, this is a works-in-progress kind of thing. Like I said, I had used it in my mobile workshops only as 8 changes rather than 10 stages, so part of this is still very draft and new to me as well.

Cooking for change

Readers of CDB know we have championed Jamie Oliver in his various attempts to get the nation of Britain to rethink what we eat - and how we cook.

Recently - Jamie has started a series called The Ministry of Food. A programme that focuses on the old industrial town of Rotherham with an initiative to try and get people to learn new recipes and pass them on. In doing so a grassroots effect takes place where people begin to re-engage with cooking from scratch.

In this way he hopes to change peoples attitudes to having a healthy diet. in an FT piece this weekend entitled the Culinary Evangelist Jonathan Guthrie writes...

Liam Black, a respected social entrepreneur, knows Mr Oliver well, having run the Fifteen restaurant chain, of which Mr Oliver is a trustee, for three years.

Mr Black says: “Part of Jamie’s power is his naivety – with the school dinners campaign you needed someone to say: ‘Why are we feeding our children rubbish?’” But it can be a handicap. Obesity cannot be driven back with a plan for virally marketing Italian food recipes scribbled on a flip chart, as Mr Oliver appears to believe. “The poor man’s diet is not the result of a lack of will but a symptom of a broader social malaise,” says Mr Black. “You can’t just ride in on an organically-fed horse and fix it.”

What I disagree with here is - what the real result is all about. If The Ministry of Food brings a spotlight to diet and poverty, or struggles with a modern work/life balance - I think its a job well done.

I agree with being naive - being prepared to ask THE Question and to seek a meaningful answer has always been the way we break with tradition.

The NHS cannot support a society incapable of looking after itself, we have been trained that the state provides - via system of taxation and provision. Yet what what few fail to recognise that it is a system that is stretched beyond capacity and we need to completely re-evaluate how society and ourselves are accountable to each other. Jamie on a talk show on Friday highlighted the problems the NHS described by...

NatWest chief Derek Wanless who stated that unless the nation became healthier, spending on the NHS would increase by £30bn over the following 20 years.

The allure of the mobile society

I am speaking at an event in Slovenia in November and I was asked to write something about my presentation. I thought it was worth sharing...

It is often said that that what works in one country, does not work in another - especially when it comes to mobile - an argument I wholeheartedly refute.The reason being that human beings as a race, are in fact more alike than we care to admit. We share the same gene pool for a start. This is important when we understand that we are programmed to be a "we species" - a social and networking species - with an innate need to connect and communicate.

And that is why we inevitably move towards the Mobile Society, where our mobile devices become the remote control for life. Any piece of technology that allows us to better connect, communicate, share knowledge and information, get stuff done - will be adopted. I often muse on the reasons why sms is so universally adopted as a communication tool. It's because we as a species do in fact communicate via short messages - constantly. A behaviour that we learnt millennia ago.

The mobile society - is completely different to the industrial society, it requires a new logic and a new way of thinking of how to create business, civil governance, health care and education.

The Mobile Society already exists, dotted across the 4 corners of the globe - yet it does not exist in any one country. This is because we are in transition from one type of economy to another, the collapse of the banking system recently perhaps a painful symbol of that transition.

But also the reason why it is not universally adopted is because there are vested interests that do not want the mobile society to flourish - as it signifies [1] a re-ordering of business models, [2] flows of communication [3]  the appearance of new gate keepers in the information distribution wars. This is a natural pattern when society changes structurally.

So the way forward is to truly understand how the Mobile Society can benefit us all - business being but only one piece of this jigsaw. In my recent work I have come to the conclusion that we have separated commerce from community, we have lost sight that in fact the society of consumers is in fact us - people, who need more than shopping to give them richer lives. Again, the epic and sudden collapse of the banking system demonstrates how removed commerce has become from community and that ultimately leads to hubris - and ultimate demise. Curiously its the taxpayer that has been asked to foot the bill.

The Mobile Society can promise I think a richer life as in the same way that Gutenberg's 42 Line Bible released information from the church and brought us The Reformation, the Mobile Society will bring flows of communication unprecedented - and it is these very flows of information and communication that are the engines of innovation and commerce.

Engagement Marketing the Obama way - free tickets to rap concerts for your phone number

The fundamental principle in engagement marketing, is that there is a bargain, an honest exchange, between the target customer and the brand. Not just interruptive advertising (to annoy and interrupt us) but rather an enticing reason to make our target customer want to interact with us; to engage with us.

So.. seems like the Obama campaign is reading our book and blog ha-ha.. We reported earlier how they are collecting mobile phone numbers of voters and interacting with them via SMS text messaging, so that they can then use SMS text message based alerts and reminders to get their voters to the polls in November.

Fine. Where is the engagement? Here is a good example. In Florida the Obama campaign has spent 2 million dollars in a new voter registration campaign with Project Vote, which has signed up 145,000 new voters. The story was reported by the Palm Beach Post on 4 October, 2008. They have used celebrities such as athletes like Alonzo Mourning of the Miami Heat, and the actress Cynthia Nixon from Sex and the City etc in the Project Vote campaign.

The total new registered voter number in Florida is about 430,000 so far (and in 2004, approx 7.5 million people voted in Florida). If we assume the "normal" new voter registrations split about evenly between Democrats and Republicans (the state has voted slightly more Republican than Democrat, but is almost evenly split, and considered a "battleground state" where both parties have a good chance of winning, rather than say the state of New York where Democrats always win, and the state of Texas where Republicans always win). But back to the math.. So if 285,000 were "normal" sign-ups, and we assign them evenly, its almost 143,000 new voters for both sides, but very likely most - not of course all - of the Obama campaign to get new voters, the 145,000 will be strongly leaning Obama's way rather than McCain. So this gives new voter registrations on a rough basis balanced 2:1 in favour of Obama.

Now, where is the engagement marketing.. What the Obama campaign has offered to new registered voters in Florida - and bearing in mind, many of the registration drives were young adult voter -oriented, and held for example at university campuses - is now a series of free rap music concerts with Jay-Z and Wyclef Jean (yeah! rap music again, no wonder Tomi blogs about this...)  And here comes the engagement marketing bargain. If you are a new voter in Florida, and want the free tickets, you only need to give the Obama campaign your mobile phone number. And you will be told, that you will be contacted on election day with a reminder.

This is engagement marketing. It is interacting with the target customer (prospective voter in this case), and having a dialogue, a give-and-take, an honest bargain. We ask for something (your support, your phone number) and we give you something in exchange (free rap concert). This is brilliant.

Now, when we remember that there was a USA based study of how much SMS reminders will increase voting (adding 4% to the vote), and think of these new voters..  The 2004 election within the state of Florida was decided by 380,000. And if John Kerry had won in Florida - because of the size of the state in "electoral college" votes, Kerry would be President today, not George W Bush. The Obama campaign is aggressively seeking to shift the balance of the voter base in Florida to be more friendly to his campaign (and the Democratic party) which in itself will help him close the gap in the state. And coupled with that, he has powerful incentives to new voters to give their phone numbers - and with SMS text message reminders, the campaign can boost the actual voting behaviour of their side.

The Obama campaign is certainly adopting radical new technologies and methods in activating their supporter base. The McCain campaign now has two serious problems if it wanted to try to copy this. Its almost too late to alter either campaign's projects to sign up new voters - Monday is the deadline in Florida for new registrations - but worse than that, Obama's campaign has consistently seeked to collect mobile phone numbers. The news article reported it costs on average 14 dollars for a campaign to sign up a new voter on average. Its a lot of hard leg-work, going from door-to-door, having staff at shopping malls, arranging events at college campuses, etc. If at that point the voter is not asked for the phone number, it would be a very heavy effort to try to get back to them later, and try to get their mobile phone number.

Also, McCain has a very severe age barrier in Florida. Florida is one of America's retirement states, and has a very large population of retired people - part of McCain's core constituency. As we've reported here, American senior citizens are still very unfamiliar with SMS text messaging, and are only very recently getting oboard with mobile phones as such. Meanwhile, the youth of America splits about 2:1 in favour of Obama, so in a state where the age divide is particularly strong, it means Obama's campaign has a particularly strong advantage in using the "youth method" of communicating - SMS text messaging..  Yes, very clever campaigning by Obama, once again using technology - and yes, engagement marketing methods - to appeal to his constituency. Oh, and a final point, Obama has moved ahead of McCain in the Florida polls over the past two weeks or so. The hard work seems also to be paying off. Now lets see if the new voters turn up on election day.