December 31, 2013
2013 - This Year I Learned...
I'm trying to create a tradition and look back on every year with regards to its developments in digital - and, of course, this is nothing else than looking forward based on past experience. This is a very personal perspective - the learnings described here are directly connected to my personal life (a bit) and work (a lot) during the past year, which has been incredibly busy (which is also the main reason for the low number of posts in this blog - I am promising improvement on this one for 2014). There was a lot to learn for me and this is why I love my job. So here are my Top 10 Learnings for 2013:
1) The Web is full of terrorists
1) The Web is full of terrorists
Last year, under the impression of the Assange-hunt with companies like Paypal not taking donations for either him or Bradley/Chelsea Manning, proud of how everyone fought off SOPA & PIPA, I learned that if we do not defend the web, no one will. And by "we" I mean every single one of us. I will continue to support EFF and I can only hope many other people will, too. This year I learned that we lost the web already - there’s nothing to defend, only to re-conquer.
2) Marketing becomes a patchwork activity
The days of putting together a 30 second ad video, deriving 2 ads from it and running your campaign for the next 3 months have been over way before 2013. Somewhen during the 90s everyone started to think about integrated, 360 degree communication, and later digital was added. But now digital itself splits up in an own 360 degree cycle that gets more and more fragmented – at least as long as you still want to reach as many people in a meaningful way as you may have reached in the good old mass communication days. Not only is there banner advertising, real time bidding, search engine marketing, social media and tons of more stuff, even social media itself is not only serving Facebook and Twitter with a few updates and running some ads there anymore. Whenever there is a new platform that reaches a significant amount of people, be it Instagram, Tumblr, Vine, or messengers like Snapchat, WeChat or Line, every serious E-Marketer has to ask himself if and how his company has to be present there – and what a compelling offer for that specific audience on that specific platform could be. With a high fragmentation of media and platform usage has to come a high diversity in running communication – in this way or another, all business accounts in messengers or social networks have to be broadcasting to a target group. This year I learned that every company will become a storyteller - to dynamic, always changing audiences in different environments.
3) The mobile shift was only the beginning – Explosion of connected devices
There are not only more and more communication platforms that marketers can use, but also more and more devices that target groups use to connect to the web. A few years ago my friends considered me a gadget freak because I had 6,7 devices connected to my WLAN. Today, I doubt if I even know a single household that connects only 6,7 devices to the web. Nintendo DS of the Kids, Televisions, Set Top Boxes, Blue Ray players, Smartphones, Tablets, Laptops. And desktop PCs. Scales. Fitness Trackers. Wristwatches. Glasses. Nest. You name it. The “mobile breakthrough” and “mobile shift” from 2012 was merely a beginning: A few years ago, easily 80-90% of our online data consumption originated from Desktop PC and Laptop. In 2013 you can clearly see how this changed dramatically – and will continue to do so. Nearly everything will be connected to the web, and we will be able to access the web through it – or let it access the web “as us” or “for us”. For companies using the web to market or sell products and services the world will become much more complicated – you will have to be able to serve a variety of platforms, so (marketing) content and its distribution will have to be more or less separated, and an identity management & “single sign on” that will recognize the unique user on different devices and import/export his actions will become absolutely necessary. This year I learned that a responsive website and an occasional app will not be enough for the future.
|Pic from http://informitv.com/news/2012/07/15/futureofvideo/|
4) The mobile shift was only the beginning - the "App Web" is coming
If the mobile shift is not primarily about “mobility” but a shift from keyboard/mouse to touch devices, we seem to accept that these devices each have a (more or less open and functional) OS and are operated differently from PCs: People spend way more time in native apps than in a browser on these devices. Now think of Watches, TVs, Set Top Boxes, Consoles – most of those don’t even have a Browser, and if they do, they are crappy (Kindle).
All of the connected devices will have some sort of an operating system. Owned by someone. And this someone will control what you as a consumer or as a company will be able to do with the device, and who will be able to offer their services on it. Some devices will be “dumb” and merely connect to an app on your smartphone or tablet, so they adopt the mobile OS. Others will have their own system, APIs and terms and conditions. But they will have in common that they will be used mainly via apps.
Apps in 2013 are in a weird state: They are super established, have billions of downloads, found “freemium” as their predominant win-win-win business model (developer-OS provider-consumer) and their platforms are mature and reliable and offer access to billions of people. But their market environment is like the internet stone age: App stores / marketplaces are like Yahoo in 1998, presenting millions of apps in categories like “Health” and “Productivity”, reviews and recomendations do not really work, and discoverability is a disaster. And it seems we are very far away from interoperability that is desperately needed and the beauty of the browser web. Apps linking deep into other apps or importing data or functions from one app to another is very rare unless one of the apps is Facebook. I won’t say that the Browser web is dead, but e-marketing will have to prepare for a completely different market: This year I learned that the App Web is inevitable.
5) Facebook continues its transformation
From being a social network and Zuckerberg’s convincing 2010 vision of every business becoming social and "designed around people" in the next few years, Facebook has developed to a very crowded “marketing space”. It reminds me of Times Square: so many people, happy and sad, so many stories, and because there are so many people, there are so many businesses present and even more advertising is trying to catch their attention. Everyone with a professional eye on social media is tired of reading about the newsfeed algorithm (formerly known as Edge Rank), and Facebook is tired of social media marketers complaining about the newsfeed algorithm due to brutally declining organic reach, and users are tired of “Like this post if you want to live and win an iPad”-Posts that are basically direct reactions to the news feed algorythm. So everyone’s tired. A high ranking Facebook guy is even tired of the term “Social Media” (Interview in German). No wonder: He helps in running times square, in a digital sense. For marketers this is not a bad thing necessarily. If they have a sufficient budget or are able to shift budget into Facebook from somewhere else, they will be able to achieve something. But the days of Facebook as a “communication platform” and a meaningful customer dialog with a significant return on your immaterial (content) invest are over: This year I learned that Facebook is turning into a performance marketing platform.
6) TV has a golden future - but what about TV stations and networks?
Put 3,4&5 together: The Web becomes accessible through any device (with an OS and apps) and Facebook, as a performance marketing platform, will question any campaign based on print, OOH or especially TV with regards to performance and their value for money – targeting these budgets. And the highest ones are in TV, still. Facebook will add video advertising and is already pitching to clients by showing how their reach exceeds TV. At the same time, less and less people watch linear TV. I got to know a lot of people this year in a professional context, all of them between 25 and 40, all of them in the media business, and none of them watches linear TV anymore – except for maybe sports or the occasional live event. Personally, I still don’t know the endings of Breaking Bad and Homeland. Somehow everyone is aware that you might want to see those stories another time. Linear TV gets under severe pressure with regards to reach, and as we know, advertising money follows eyeballs. Up to now media agencies might have been slowing down this process as they haven’t figured out how to get their cut in digital budgets – but this won’t last forever. So TV stations will have to find other ways – on demand offers, Smart TV channels, web video, multi-channel-networks – to ensure their reach beyond linear TV. Because maybe people turn away from linear TV, but not from audio-visual content in a lean back scenario. And the TV devices get bigger and better. So demand is there. The question is if TV stations will be able to transform their former position in the value chain into a new, modern one before an iPhone-like disruption comes from “outside”. The Chromecast dongle may very well be one of those, and connected devices get more accessible to non-traditional hardware companies as a general trend, too. This year I learned that TV stations have to change into a “now or never” mode to survive.
7) Digital is back on the CEOs’ agendas
Not only TV is under severe pressure. This should have happened a long time ago, but following the Gartner Hype Cycle this is a normal 2013 phenomenon: CEOs really care about digital - since now it really has an impact on their day-to-day-business-reality (not to mention private life). What I enjoyed most 15 years ago when the digitization had its first hype was that easy C-level access. But even if the board members understood – and in most times they didn’t, which doesn’t mean they didn’t free up hilarious budgets – their organisations didn’t. Now the lower levels and also mid management are filled with early immigrants or even digital natives. And digital is back on the agenda. Everyone thinks about the digital transformation of their business, the “impact of IP”, and in opposite to the early days they are now doing it systematically. “Digital Boot Camps”, “SiliconValley Expeditions” and internal conferences, innovation labs and trainings ensure that entire companies can go digital – once they have a clearly defined strategy, which is one of the most complicated things to accomplish as a “formerly analogue corporation”. The fear of digitization is finally gone. Now it becomes a corporate development and strategic topic, and that is clearly a breakthrough. When newspapers die, no one will act surprised anymore. This year I learned that no one underestimates the impact of digitization on traditional businesses anymore.
8) Venture money increasingly comes from exit targets
Billion dollar exits and valuations are back. At least in the US. In Berlin, you sometimes get the feeling that soon there will be more Business Angels, Accelerators and Seed Investors and than startups (this link is even from 2012). But many of those are not your typical serial-entrepreneur-retired-multi-millionaire or traditional financial corporations or actors, but the exit targets themselves. Those who may not be able – or don’t want to risk – to innovate themselves, or those who have a vital interest in diversifying digital business because digitization will eat up their traditional revenue may set up funds to finance promising startups. This is an intelligent way to create additional, digital value while trying to defend the traditional business as long as possible – which, as a structure, is the only formula so far that has proven to be a successful route for transforming from an analogue past into a digital future. You can do this organically from within, which has a high probability of failure, you can do this externally by simply buying suitable digital companies (which is very expensive), and you can choose the middle way through investing in startups with the perspective of enriching your traditional business – the earlier the better. These options are not even mutually exclusive, but as long as cash is not the issue, but innovation and disruption is, investing in startups that relate to your business should always be an option. And for founders, what could be better than having your exit target as an investor, building a relation from the very first day? This is so promising that we will see a lot more of this in future. This year I learned that funding well-selected startups can become a significant component of any digital transformation strategy.
9) Nearly every B2C business could develop a powerful platform business
Personally I believe that systematically managing relationships is at the core of each digital business. Relationships are the molecule of digitization, be it customer, supplier or partner relationships, and when you transform an analogue business into digital, you have to translate the way you managed relationships with tools and applications that allow a systematic, efficient and – for all parties involved - beneficial approach. To make an example: Anyone who sells advertising, a newspaper, a sports club, a TV station or an internet portal, sells a relation from someone who has something to offer to potential buyers. Currently the relationship sold is pretty weak: It is a purely visual one that lasts for seconds at best. It is pretty much based on accidental luck that this may lead to success (deepening the relationship, up to a transaction as best case). Therefore this kind of relationships is valued by quantity. The higher the quantity of these relationships – eyeballs – you can offer, the higher the probability of success, the higher your revenue as a seller of advertising space. The other way to increase revenue is to focus on the quality of these relationships. If a newspaper, a sports club, a TV station or an internet portal knew more about the audience, they could better target advertising and increase the probability of success… etc. You get the point by looking at Facebook’s ad planning tool for 5 seconds. So what they all need to do is to better understand the needs of their audiences – and the needs of their clients, the advertisers, and match those. This structure becomes increasingly relevant for any business: Also companies who thought they have a simple supplier – seller relationship structure in everything that they do have way more options to systematically develop relationships and profit from those.
If the digital economy’s molecule is the relationship, then it needs platforms on which these molecules can form something meaningful together and grow, develop into something bigger than the sum of its parts. For example, many businesses do not consider the opportunities yet that lie in opening parts of their company structure to third parties, be it data, access to customers and/or processes, in order to strengthen their relationships to customers, their effectiveness of processes or their position in a networked digital economy. Imagine an airline to open access (under strict rules, of course) to its flight schedules, customer data, on board entertainment, airport data etc. in a structured way to third parties, and these could develop apps and services based on these… let’s call them “real life APIs”. Just like Apple, an airline could take a 30% cut from any revenue over its own business platform while continuing innovation and offering more and better services and opportunities to their customers than any of their competitors. By this, an airline would extend their core business from transportation to additionally running a services platform around their transportation instead of trying to offer everything by themselves. They would open a totally new field of relationships to partners who would use their business platform, bring customer relationships to a new level and benefit in their traditional business, too. It is hard to think of any (B2C) company that would not have a platform business potential. This year I learned that managing relationships will go way beyond CRM and offer huge opportunities for already established businesses when thought in a platform context.
10) Customers can accomplish anything
If there’s no company to be found that would invest in an idea – or if the founders do not want a traditional investment – that does not mean that the idea won’t happen: There’s nothing that properly organized, digitally connected people cannot achieve. If there were enough people who would see a good enough reason for a manned space program, I am pretty sure, we, the people, could do this without NASA. There’s a smart watch. There’s a game console. There’s a 360 degree “ballcamera”. There’s even a smartphone funded by the crowd. It is built “fair and transparent” – the founders tried everything they could to get “conflict free” materials, they posted images from the production line in China, showed us, the customers, their far east and European offices – this is as transparent as it currently gets, and I hope they will even turn a good profit from the first 25,000 units sold.
There are so many markets with limited choices – not only infrastructure markets where this is pretty much inherent to the business model (energy, trains, DSL lines) but also in traditional consumer goods: check out how many corporations account for 80%+ of the products in your local supermarket, and you will find that it’s not more than 10. If you want to change this, create a product and see if crowds would fund it – and by this already giving you a sense if there’s a market for such a product or not. Systematic and structured relationship management on a business platform (see 8) does not necessarily require a huge corporation. If there’s a market for it, products will find their way to customers, even if they have to build the products or at least fund the product development by themselves. With more and more production capabilities becoming more and more affordable, this can become more than just a trend with a few nice stories to tell. It can lead to the disruption of several industries. Think of what crowd funding can do in combination with 3D printing. This year I learned that the customer has gained importance not only by the power of choice – what to buy – but also by the power of creation – what to build.