The modern corporate landscape is quickly embracing the gospel of "innovation."
From their own accelerators to making Silicon Valley their second home, corporations are recognizing that, in a world where technology is constantly transforming consumer experience and expectation, they have to transform how the talk, how they sell, in some cases even what they sell, to survive and flourish.
The question quickly becomes what are the strategies for innovation.
There is, as mentioned above, the strategy of investing in the future through corporate VC and accelerators. Partnered is an indicator of another strategy, which is partnering with leading startups to transform operations and offerings from within - be it finding new relevant channels through which to market or enabling consumers to access products on demand from mobile devices.
There is, however, another strategy taking its place as core to how companies innovate: the acquisition.
M&A has long been a way for companies to access new markets and create competitive barriers or economies of scale through vertical or horizontal integration.
The acquisitions happening today, however, have a new air of future proofing. They are much about accessing a new way of thinking, a new approach to technology, and the teams to do it, and the ability to adapt quickly.
Of course, some of these acquisitions are traditional businesses acquiring startups. Last year, for example, Nordstrom paid $350 million to try on men's home try-on startup Trunk Club. Many large product companies have been acquiring to prepare for the coming era of wearables and connected devices. Just this week, Adidas announced a $239m acquisition of Runtastic, a fitness tracking company that offers apps for mobile, physical tracking devices, and even a new virtual reality experience for the Oculus platform.
Yet in many ways, these traditional businesses are the exception, rather the norm. Where acquiring to innovate has become normative behavior is within leading technology companies themselves.
No company better validates this fact than Facebook, who, among other acquisitions, spent nearly a billion to acquire Instagram, two billion to scoop not-even-launched-yet VR platform Oculus, and a "holy shit seriously?" $19 billion on global mobile messenger WhatsApp.
In the case of both Instagram and WhatsApp, Facebook had competing mobile experiences - experiences that they've continued to grow and promote as separate entities. Yet for CEO Mark Zuckerberg, mobile was too important to the present and future of the consumer experience to gamble with another platform becoming the default. The acquisition of Oculus meanwhile is a bet on an entirely new type of consumer experience - virtual reality - whose applications might stem from gaming to education and beyond; and more importantly, a willingness to accept that another company's DNA might be better suited to lead those transformations than their own.
It's not just post IPO tech companies like Facebook acquiring to innovate. Instacart this week announced its first acquisition. Interestingly, it was Wedding Party, a wedding planning app that had nothing to do (at first glance at least) with Instacart's on demand grocery model. Yet Instacart argued that the company's technology had extremely intelligent and sophisticated ways to connect vendors and consumers that could be applied far beyond weddings.
For these type of Silicon Valley startups, acquisitions are about being able to move faster than the market. They also prompt an interesting question: if some of tech's most exciting companies believe they need to acquire to innovate, why on earth would major brands thing they can do it all on their own?
Perhaps the most watched trend among advertisers is the growth and development of digital video, particularly in the mobile sphere. This week, we look at new developments changing how and of what people create videos.
To meet the startups mentioned in this video, join Partnered.com.
Chances are that you drink Red Bull cans because, whether you want it or not, these videos make you think that you can do the impossible with a bit of Red Bull fluid pumping through your veins. And chances are that you bought a GoPro camera before your vacation thinking that it would be the Swiss army knife of cameras given that you saw people climbing mountains and biking in the mud wearing one. This video strategy is working and the two companies are well aware of that — but it could also be so much bigger than that.
We're not so sure that they need to merge, but certainly, as brands become full fledged publishers (which already includes Red Bull through their Media House among other properties) the idea of an independent media enterprise is fun to speculate on. Mountain Dew already has something in this arena and Red Bull is a more natural fit.
The short of it is that in the world of social and mobile, every brand is a media company - whether they want to be or not.
For more on this, watch this Gary V video "Every Single One Of You Is A Media Company"
Cannes Lions has officially become a tentpole event for leading startups looking to build relationships with advertisers. In this video we look at the five most important startups and startup new items from the festival.
Want to keep your team ahead of the curve when it comes to technology and innovation? We offer brand & agency users an optional subscription video service in which each week, we send a custom video to your team about the 5 most important startups making news that week. Sign up today at http://www.partnered.com and ask us about the Friday Flash.
Vice, Pinterest, and Bank Of America are currently partnering on "The Business Of Life," a breakout web series on financial issues. Convened by Medialink at Cannes Lions 2015, Vice's Shane Smith discusses how, in reaction to the rise of programmatic buying, creative advertisers are looking for more bespoke solutions that bring together platforms and publishers.
In early 2005, Kevin Colleran pitched Sean Parker and Facebook on a deal where he would bring them advertisers interested in the emerging college demographic. He was already working with other startups that appealed to college students and knew how to translate that audience into brand interest.
By April 2005, Colleran had joined full time, one of the first ten employees and the first explicitly focused on brand partnerships. Parker would later call the hire one of his best at Facebook.
In some ways, the hire was like a starting gun on the social era, and the beginning of the era of digital transformation for marketers and commerce professionals at brands. Facebook wasn't just a new channel to reach audiences, but represented a new paradigm of relationships between people and brands enabled by new social technology.
In the almost exactly ten years since then, brands have had to adapt en masse to a new era of digital consumer experience.
First it was social networks, which empowered consumers en masse to be content creators, not just consumers.
For brands, social meant a directly line to and from consumers and a new two directional relationship.
Then it was mobile. All of a sudden, every customer had a computer in their pockets more powerful than anything that sat on their desks just a few years earlier, replete with the sort of information about interests, locations, and habits that would make any marketer drool. Brands again had to reimagine their work to think about the new context they had for getting messages to consumers about products at the exact moment of highest interest.
All the while, e-commerce startups where innovating as well - tapping social networks to translate peer recommendations into buying opportunities, and geo and time data from mobile to make automated, personalized offers.
Brands responded by creating dedicated innovation initiatives, meant to keep track of and translate new technology transformation into the enterprise - first in marketing, then commerce, and then across the enterprise. According to a Forbes Insights study, 72% of corporations have or are planning one of these initiatives.
The problem for these brands is that even as they plan and pilot and dip their toes into the waters of new strategies, the landscape of consumer experience is racing ahead.
Just a few years ago, consumers had barely heard of Uber. Now, they expect that pretty much anything they want - from cars to goods to services - can be delivered directly to wherever they are, on demand.
Just a few years ago, the choices for dining were groceries you bought yourself at a store, going to a restaurant, or take out. Now Instacart will do your shopping for you within just an hour or two. Or, if you prefer, Blue Apron or HelloFresh will send you the ingredients for specific healthy meals every week, pre-prepped to reduce your time to cooking. Or, if you want that fresh healthy quality, Munchery, Spoonrocket and Sprig can deliver top quality meals in just a few minutes.
Just a few years ago, if you went away, it meant you were staying at a hotel or with friends. Today, literally millions of regular people's rooms and houses are available for rental via Airbnb.
The point is that for consumers, there is no distinction between digital and real world any more. They've gotten used to the constant advance of new technologies and new opportunities that make their lives easier, healthier, more convenient, and more fun.
Havas' SVP of Strategy & Innovation Tom Goodwin put this succinctly in an article for MediaPost a few weeks ago. To summarize, he said that while brands still divide the world into TV and online video, consumers care about content delivered to them wherever they want it. While brands still divide things into retail vs. ecommerce, consumers simply want the best deal and most convenient experience to buy things, whether they're in the store, on a website, or on Instagram.
The reality is that the beginning of the first era of corporate digital transformation - where brands had the privilege of waiting and seeing what stuck, or slow walking technology adoption, or dividing things into convenient buckets - is over.
People's experience of technology is wholly integrated across their entire experience - from the moment they wake to the moment they sleep - with no distinction between online and offline.
So too must brand strategy be. Because what's coming next - wearables, and internet of things, and virtual and augmented reality, and data, and data, and data, and personalization, and automation, and in short a fundamentally connected and transformed world - makes what's happened in the last decade since Kevin Colleran walked into Facebook's then modest doors - look quaint.
Welcome to the end of the beginning of digital transformation, and the start of what comes next. Is your brand prepared?
Partnered drives connections & learning at the intersection of marketing and technology innovation. Sign up for the Partnered network to connect with leading startups.
At Partnered, we watch trends in corporate innovation carefully. Last week, Nordstrom acquired men's shopping service TrunkClub for $350m. The acquisition exemplifies the imperative big brands have to evolve through startup partnership, investment, and acquisition. The company serves as a model for other retailers and big brands in adapting to stay relevant for a changing future.
Historically, men's fashion has been a much smaller market than its female counterpart. Men were simply less interested in shopping for clothes, so the logic (and, to be fair, the data) went.
The last few years have seen something of a revolution, as a new crop of startups have risen to suggest that the problem wasn't so much men's interest in looking good; it was how retailers moved those prospective customers from interest to purchase.
Startups have found a number of avenues to explore the idea that there was big money to be made in getting men to buy more clothes.
New brands like Bonobos and Everlane sprung up to fill gaps in what items fashion labels were offering. Marketplaces & deal sites like Mr. Porter and JackThreads launched to make it easier and faster to get to looks of interest and make purchases.
Some entrepreneurs tended to think that the real problem was that men didn't know what looked good on them, but weren't willing to to take the time to try clothes on in stores to find out.
TrunkClub was founded to solve this problem. Men would be paired with a personal shopper who would help them suss out their style. Each month they would send along a new box packed with 10 items. The customer could then try the items on at home and only pay for what they decided to keep. Shipping both ways would be free.
Fast forward...the idea kinda worked. The company was on pace to surpass $100m in revenue this year. Nordstrom, one of the most sophisticated retailers when it comes to investing in innovation made a huge offer - big enough that some questioned the logic.
So why would Nordstrom be willing to pay such big bucks?
1. Innovation First Changes "How"
When we look across digital innovation, the first thing to change in commercial relationships is usually how people buy. For TrunkClub customers, offline shopping models were inconvenient, time consuming, and uncomfortable. At the same time, pure e-commerce required a level of style sophistication that many didn't have. TrunkClub changed the how, winning the loyalty of many men in the process.
2. Next, Innovation Changes the "What"
With the change in how they shopped, TrunkClub customers have more chance to think about what they were buying. Many discover brands they like and become devotees. Some likely even try types of items - pants of different materials, different types of collared shirts, etc - they never have before. This transformation of "what" people buy has the ability to, in aggregate, actually change the size of the market.
3. Finally, Innovation Changes the "Why"
By changing the "how" and the "what" of men's clothes shopping, TrunkClub actually, for many of its customers transforms the why. Instead of seeing clothes as strictly functional; a pain to deal with based on requirements of profession (or expectations of signficant others), shopping for new clothes becomes an expression of self - an extension of the way that the customer tells his story to the world.
This transformation of "why," even more than the important "how" and "what" is why Nordstrom was smart to acquire the company outright, rather than simply trying to copy the model.
Of course there are more reasons: TrunkClub brings a fast growing revenue base, along with a whole new set of customers who may previously haven't had any interaction with the Nordstrom brands.
Nordstrom's relationship with labels means more selection for TrunkClub, and, as Pando pointed out, it's network of Nordstrom Rack stores could lead to synergies and savings around damaged merchandise that is returned.
But ultimately, this acquisition is about getting out ahead of a new world of men's fashion that goes beyond just how and what they buy to how they see their relationship to clothing.
There is a fast growing social media channel with more than 30 million users and almost no name-recognition among major brands.
It's not Whisper, the buzzy Santa Monica startup where teens post inner most thoughts (or, you know, requests for sex).
It's not Secret, the hot Y Combinator company that has the Silicon Valley innuendo and rumor mill in a tizzy.
What if there were a hot social network that checked all the boxes that would make a brand marketer salivate: mobile & photo driven, big audience, clear and desirable demographic, and (yes, this one is crazy) an actually positive environment?
Meet We Heart It: the most important social network your company brand doesn't know yet.
What Is We Heart It?
We Heart It is a mobile-driven photo-based social network where users share images that inspire them or relate to their daily life. They can organize their photos into collections, and share them with people who follow them. To engage with other people's photos, basically all they can do is "heart" the photos. That, plus no comments, means that the network ends up feeling like a generally very positive place.
The company actually started as an international alternative to Pinterest in 2008, but then a few years ago began to get adoption with a younger, mostly female audience who took and reshaped it into the emerging behemoth it is becoming.
Today, the stats are amazing:
30 million monthly active users
80% users under 25
80% traffic from mobile
4.5 billion page views per month
In short, it's the type of audience any marketer would kill (or at least pay a premium) to have access to.
The Brand Knowledge Gap
At Partnered, we spend pretty much every day talking to startups about brands and brands about startups. Our job is to make connections between people who don't know each other yet, but should.
In the last few years, brands have gotten much more savvy about innovation. By and large, they recognize that every aspect of their business, from the way they market to the mediums through which they tell stories to how they relate to their customers to how they design and fund new products to the nature of their retail experiences, is being transformed, over and over, by new startups.
To try to keep up, many have created Innovation Departments to build relationships with startups and keep executives informed about new opportunities. Many of these departments are even based in startup hubs like Silicon Valley.
Yet still a major knowledge gap exists, and far too few of the brands we talk to know about We Heart It - not to mention dozens of other amazing companies with even smaller profiles.
In the case of We Heart It particularly though, the knowledge gap is painful. A quick search of the network reveals for example: If you're Starbucks, you're missing out on finding a way to engage with the LITERALLY 250,000+ posts focused on Starbucks in the network (most of which are pictures of your product and brands).
If you're Victorias Secret, it's a little bit better for you. You've only recently missed out on 59,025 organic, non purchased images that amount to free advertising, and the hundreds of thousands (if not millions of hearts) that those posts engendered.
Luckily, the network just announced the very first native ads in the platform will be rolling out this week with partners including Candie's, Hollister, Old Navy, and JC Penny. Increased attention and new advertiser opportunities will likely bring a whole new set of brands to the platform.
The Innovation Opportunity
The case of We Heart It is more than the tale of a social network flying under the radar. Instead, it's an indication of the need for a more robust flow of information between brands and startups. We are simply no longer in the era where these little guy-in-the-garage companies can be ignored.
In the new world, the only thing sure for brands is change - change in where to find their audience, what sort of messages they respond to, and even what relationship they want to have with people they buy from.
Luckily, for every shift there is, to paraphrase the famous slogan, an app or startup for that. The real question is: where will you find them?
To read more from the intersection of brands and startups, please sign up for The Partnered Report, a weekly video innovation newsletter.
NEXT: "How Startups Are Changing What It Means To Be An Advertising Agency"
On this Trend Of The Week we look at three interesting partnerships that demonstrate how brands are tapping startups to stay ahead of key consumer trends.
Starbucks X Lyft
Chipotle X Postmates
GoPro X Meerkat
To meet the startups mentioned in this report, sign up at Partnered.com
Brands have two very different approaches when it comes to VR: wait for mainstream consumer adoption or DRIVE mainstream consumer adoption. Both are reasonable, but one comes with the benefit of industry-leading status and extra time to master a new content medium.
To connect with leading VR companies, join the Partnered.com network.
Earlier this year, the opening line of a piece by Havas strategy lead Tom Goodwin went radically viral.
"Uber, the world's largest taxi company, owns no vehicles. Facebook, the world's most popular media owner, creates no content. Alibaba, the most valuable retailer, has no inventory. And Airbnb, the world's largest accommodation provider, owns no real estate. Something interesting is happening."
He could have also pointed out that all of these companies -- literally the biggest in their industry -- are less than a decade old.
The point is (to paraphrase Ferris Bueller), "[business] moves pretty fast. If you don't stop and look around once in a while to look around, you could miss it."
More than 13,000 leaders descend upon the South of France this week for exactly that reason. Over the last few years, Cannes has come to be much more than award ceremony for advertising's creatives. Instead, the festival has become a moment for the advertising industry to check in with itself; to connect over rose with the strange melange of agencies, clients and startups transforming what marketing means.
In the past few years, a significant portion of the discussion has revolved around technology and how innovative platforms are reinventing the business. As that has happened, more and more of the startups driving those shifts have actually started attending.
This year, in order to recognize and amplify this new dialogue at the intersection of data, tech, and ideas the Cannes festival welcomes an entire new event within the event -- Lions Innovation.
For all of Thursday and Friday, Cannes will be taken over by speakers thinking on the frontiers of technology and marketing. They will be asking questions like: what does all this data were going to have from connected devices and wearables actually mean for advertisers? Is virtual reality actually going to have the splash in the consumer experience we expect? What about our creative efforts has to change for new mediums, and what stays the same?
But the festival organizers aren't stopping with just adding new mainstage content. Recognizing the vital role that start ups play in driving these changes, a number of new programs have launched specifically to give technology innovators a home at Cannes. The Unilever Foundry program will allow 50 young companies to fast pitch ad execs while the R/GA startup academy will spend 3 days pummeling startup founders with insights and workshops from some of the business worlds most interesting and creative thinkers.
This is where we come in.
Partnered helps brands and agencies access the emerging tech renaissance. That means literal access through our invite only digital network, but it is also about communication. We create content that gives the founders reshaping marketing a direct line to speak to the executives trying to design new strategies.
We've been on the ground for the past few days absorbing all that Cannes Lions has to offer. As Lions Innovation gets rolling, we'll be bringing out the startup voice at Cannes in a number of ways.
Most excitingly, we'll be producing an official documentary in collaboration with the organizers of Lions Innovation. This documentary will explore transformations in areas like mobile, social, wearables, artificial intelligence, and virtual reality, and show why this phenomenal melting pot for creatives is quickly becoming one of the must attend events for technology & business leaders writ large.
On this site, you'll find:
-Video insights from the startup, brand and agency leaders at Cannes
-Thought leadership pieces from founders putting Cannes at the center of their annual strategies
-Links to insightful pieces from around the web.
Stay tuned here for all this content, and if you're at Cannes, tweet at us for access to some extra special events.
Each year, Cannes Lions brings together the advertising world for a collective gut check. What's working? What isn't? Most of all, where are we headed?
In the past few years, a new group has entered the conversation: startups. Technology companies - be they adtech companies providing reems of new data or the latest social platform - are transforming marketing and communications.
While the industry has collectively taken to discussing the implications of these innovations, however, too often a voice has been missing: the voice of the founders themselves.
This is why this year, the Cannes organizers launched a new festival within a festival, Lions Innovation. More than anything, the event was meant to give startup leaders a space at the event; a platform from which they can speak directly to the CMOs and agency leaders who have long made this annual pilgrimage.
But the need for the most influential marketers and corporate leaders to have direct access to the voices of startup leaders - the disrupters whose innovations are remaking their business - doesn't end with the Croisette in Cannes.
Today we launch "The State Of Innovation" a series of videos and essays capturing the voices of leaders of today's top startups. In these regularly published content pieces, powered through a collaboration with the RebelMouse platform, we'll feature startups discussing the topics that mater most to marketers and business leaders, raw and unfiltered.
This is not funding news, and it's not technology for the sake of itself. Instead, it's a direct line to how startups see the world they're trying to reshape.
From The Drum: The network announced in partnership with Meerkat that they will be using the live streaming social platform's new embed technology to feature shark content across discovery.com.
No one has told Meerkat that just because Periscope has Twitter the battle for mobile livestreaming is over. With partnerships like this, they're continuing to figure out where consumers will get interested in live.
A recent survey of marketers suggests that the upheaval caused by changes in technology has brands worried that their agencies aren't doing enough to keep up with innovation.
RSW/US surveyed more than 100 senior-level brand marketers, asking them (among other questions) what they think the main problems with agencies are. Among the responses were concerns like:
- Lack of innovation
- Failure to have a strategy that delivers across platforms
- An emphasis on data without any real understanding of it
AdWeek summarized with an article titled: "Tension mounts between marketers and agencies over data, tech, and social."
There is no doubt that radical shifts in technology have changed the nature of marketing. Where there used to be a comparatively small number of channels, audiences are now wildly fragmented. What's more, each new platform represents a new type of consumer culture.
For more on these topics, review the complete 2015 Silicon Valley Corporate Innovation Outlook from Partnered
Instagram became important in response to Facebook because it was mobile first and visual. Snapchat became important in response to Facebook and Instagram because it was fast and direct and didn't demand that people spend time crafting a perfect image of their lives. And something will come next that is not just a technological but a sociological response to Snapchat. Each of the underlying cultures of these apps presents a learning curve to advertisers that has them feeling constantly racing to catch-up.
Brands have also been steadily increasing their resources for in-house marketing and innovation. In a study by Harris Poll and NineSigma, 81% of executives surveyed said they anticipated spending more on innovation in the coming year. 72% of execs have or were planning a dedicated innovation initiative.
These programs run the gamut from corporate accelerators, such as those run by Wells Fargo and Barclays, to innovation product labs that acquire and build digital products such as Walmart, McDonalds, and Target, to internal researchers and relationship building initiatives like Nestlé's Silicon Vally Innovation Outpost, who keep track of startup trends and share ideas back with the broader organization.
On the one hand, these types of initiatives can give brands a stronger sense of the opportunities of emerging tech. On the other, for agencies they can represent (rightly or wrongly) a competing advisor to decision makers that may have a different perspective on which types of technologies and which strategies are worth time and attention.
So, what happens next?
1. Agencies Will Differentiate on Capacity to Demonstrate ROI
Part of the frustration with new platform strategies is around a lack of clarity on how they drive results. Views? Great. Engagement? Okay, whatever that means. Expect agencies to break out and differentiate by doing a better job than competitors at demonstrating real changes in awareness and sales, rather than vanity metrics.
2. More Consolidation Through M&A to Shore Up Digital Capacities
In the same RSW/US study a full 84% of of those surveyed said that purely digital agencies were going to have to bridge to traditional functions to stay relevant. Part of that might come through ongoing M&A in the industry, where digital shops will get scooped up by larger firms to stay competitive.
3. Emphasis with Integrated Cross-platform Strategies with Expectation of Experimental Channels Built In
Reading the brands self-identified annoyances with agencies, part of the problem seems to be a lack of strategic coherence when engaging with new channels. Agencies will get savvier about developing coherent strategies that cross platforms, and which simply have the expectation that a certain allocation of resources is going to go to channels that are more experimental. In short - an attitude shift from "shiny new thing" to "new applicant for our portfolio of solutions."
4. Data from IoT & Wearables Makes Everyone's Heads Explode
Think it's been complicated so far? Wait until connected devices become mainstream and all of a sudden we are flooded with massive data that has implications for behavior, buying intent, and more. It will make figuring out how to experiment with Snapchat or Vine look like peanuts.
5. The Boundaries of "Marketing" Continues to Blur
When you have an app that allows people to buy goods from the comments of Instagram and Facebook is that marketing...or is it e-commerce? When you're dealing with connected technologies that sends offers in stores, is that marketing...or retail? When you're enabling new payment solutions through bitcoin and digital currencies is that marketing or...? Marketing's role is going to continue to mesh more deeply with other organizational functions. The most successful brands and agencies will take the time to build explicit communication and collaboration functions between different parts of their organization.
Partnered drives connections & learning at the intersection of marketing and technology innovation. Sign up for the Partnered network to connect with leading marketing technology companies today.
Wrought by the rise of the native advertising movement, and the emergence of user-generated content platforms, the role of creative agencies in advertising is changing.
To stay relevant, many will have to transform themselves from being advertising content creators to organizers of distributed networks of creative talent.
The inevitability of native advertising
Native advertising - where advertising content mimics the content of the platform or publisher on which it appears - is one of the most talked-about aspects of marketing today. We got here through i) a ten year emphasis on user experience at the core of new publishers and platforms; ii) venture capital subsidization of online experiences; iii) a decrease in value of traditional online display.
One of the most important shifts in the transition from post dot com burst to Web 2.0 was the rise of simple, clear user experiences uncluttered by advertisements. The emergence of social networks and social media platforms created cause for the return of venture capital, which in turn allowed for the financial subsidization that allowed companies to focus on user experience for years before turning on revenue engines.
Simultaneously, the Apple App Store was enabling an entire new set of digital experiences that had both strict design standards, and a new path to monetization through paid downloads and in-app purchases.
The result is nearly a decade of users getting used to advertising-lite experiences from companies who tend to believe that quality of user experience trumps short term revenue.
This belief has become more and more engrained, as startups model themselves against companies like Instagram, which was acquired for more than $700m before ever showing an ad, and has only now, after 200m users, started to carefully select a handful of brands to advertise with extremely high quality photos.
Instagram is not the only model, of course. Buzzfeed's sponsored content netted them some $60m on 600-700 deals last year, commanding a much greater premium than comparable display CPCs. Pinterest is only just beginning to experiment with "Promoted Pins" and reportedly only considering partners willing to spend big dollars.
Perhaps most of all, the "mobile advertising oligopoly" - as Digiday put it - Facebook and Twitter have both recently launched ad networks that combine the power of precision targeting from extensive user data with ad units that model the core experiences driving each network - tweets for Twitter and posts for Facebook.
While some may scream "bubble" and point out that VC money can't sustain startups forever, it is clear that the growth platforms driving engagement and attention are opting, en masse, for advertising models that don't compromise their user experience by demanding advertising be modeled on core content.
How 'native' is reshaping the role of creative
In this era of increased focus on native advertising, who actually creates advertising content is being reshaped in two important ways: i) a heightened role for publishers in creating advertising content and ii) a new interest in tapping distributed creator networks on content platforms.
Publisher engagement in creative
Publishers are getting more involved in the creation of sponsored content. The New York Times, for example, recently began experimenting with sponsored articles in a first campaign with Dell. Rather than selling the ad space to Dell and then pushing Dell to go use a creative agency to produce the article, the Times Advertising department actually pitched ideas to Dell and upon approval farmed out the work to a freelancer to ensure quality control.
For newer publishers like Buzzfeed, the sponsored content process is even blurrier, with fewer distinctions between who is producing content for general purposes versus content that is sponsored by a brand.
User content platforms like Instagram, Pinterest, and WeHeartIt are also taking an extremely strong hand in shaping both what brands can advertise on their platforms and what content is used to advertise.
Whether this involvement remains as high even as these companies scale their ad operations remains to be seen, but either way, it is clear we're in an era with more publisher involvement in creative.
Many of the channels that advertisers are most interested in are not traditional content publishers, but user-generated content networks. These networks thrive on the content that is created by their users, and organized around the many smaller channels that users create for themselves.
As these channels have come to prominence, they've enabled the growth of a new type of influence. YouTube is an example, where certain channels have developed audiences at a scale that has attracted TV and movie deals, or even acquisitions by old world media companies (such as Disney's recent $500+ million acquisition of MakerStudios).
Over on Instagram, once-amateur photographers have used the platform to actually launch careers. San Francisco-based Ike Edeani was an art director when he began messing around with the app. 570,000 followers later, he's a full time photographer working regularly with publications like Dwell and Bloomberg Businessweek and brands like AllSaints and Gap.
It's not just Instagram, but Vine, Pinterest, Twitter, as well, all of whom have cultivated a new class of creative.
Opportunity: agencies as indexers and organizers of talent
The rise of social media creatives and influencers has produced another outcome: a new generation of agencies designed to index talent and make it available for brands and other organizations who want to deploy that talent on their behalf.
To name just a few:
Fullscreen: A network representing tens of thousands of YouTube channels to brands, representing billions of monthly page views. Raised $30m in 2013.
HelloSociety: A Pinterest marketing platform that helps brands connect with 300+ top Pinterest users who reached a combined audience of 55m per day.
Markerly: A network of top blogs with an intergrated technology solution that gives brands access to much deeper analytics about how sponsored content is performing.
Niche: Taking a cross platform approach, Niche.us indexes creators and influencers from 8 platforms including Tumblr, SoundCloud, and LinkedIn, with a combined reach of nearly a half billion.
One of the most interesting "indexer" agencies - and perhaps the most reflective of where things are headed - is Grapestory.
Started by the team behind VaynerMedia - an agency that has built it's reputation on the back of a much deeper understand of how brands need to work in a world of social media, Grapestory facilitates campaigns that connect top brands with top Vine creators. The company has worked with top brands like Virgin Mobile, Aquafina, and GE, and expanded to also represent Instagram and SnapChat creators.
Whereas many of the new talent indexers simply provide a gateway to meet new creatives on important platforms, Grapestory takes an active role in designing and delivering on the brand's goals. In this way, they actually move beyond simply indexing talent to organizing it.
The reality is that even in a world where brands can directly connect to creators who have their own audiences and understand how to make content appealing, there is still a significant amount of translation, goal alignment, production, delivery and reporting that brands need to engage in any advertising campaign.
What it means to be an agency has never been static. As mediums and values change, the core job of the agency is to translate between brands and audiences, whatever that might mean. In this new era, there are more opportunities than ever for agencies to tap distributed creative networks to produce advertising content that is authentic and engaging for today's consumers.
For our money, the Yo app is more than a toy that can be ignored, and has valuable lessons for digital marketers about the nature of marketing, content, and providing value for consumers in a time when the competition for attention has never been more fierce.
Here is a Silicon Valley story.
A developer has an idea. It's a different, super simple approach to communication. One the one hand, it seems too simple to be of interest to consumers. On the other, how many of today's biggest social networks started with something too simple to matter, derided as "toys" as they accumulated users?
8 hours later, the developer has an app. He submits it to the app store. It's released to the wild.
A few people use it. In the simplicity there is a spark of engagement. The tech press notices. In part they notice because even they can't believe that someone took the time to build something so utterly basic. Some cover the store with benign amusement; others with outright outrage, claiming that we've finally, collectively, jumped the startup shark.
The coverage exposes the app to more people - including entertainers and digital marketers. Those new users have new ideas about how to use that incredibly simple functionality to suite their needs.Angel investors get interested and the company raises an impressive seed round.
More press coverage. More howling. A split between people who think the app's early traction can be the start of something great, and others who think it means the bubble has officially burst.
This story has happened before. Companies like Instagram, Vine, and Snapchat, were all written off as novelty's before getting mass consumer adoption. Today, brands and agencies spend millions trying to chase the audiences whose social experience is defined by them.
The most recent retelling of this story is Yo, the network that literally only allows you to send a single message: Yo.
So, what is it? Bubble indicator or powerful new platform?
YO: The Basics
Yo is an app where you can send the two letter word "Yo" to people. That's it. No ability to customize the message.
The "Yo" appears as a push notification.
Using a new API, brands can embed a link with their Yo. When the user receives a brand's yo and swipes, it automatically takes them to the link embedded.
For more on how Yo actually works and how early adopter brands are using it, please watch the video embedded above.
Borrowed Or Granted: The Battle For Consumer Attention
Marketing is ultimately a battle for attention. Every medium advertisers chose has upsides and downsides. Traditional television ads provide an immersive 30 or 60 second video format that can be used to tell a complete story, but they can also be DVR'd and ignored. Social media offers an immediacy and potential connection, but brands risk seeming out of place next to content from friends.
When it comes to advertising, attention falls into one of two categories: Borrowed or Granted.
Borrowed attention has historically been the norm for brand marketers. They borrow the attention that is granted by the consumer to the television program, or the article, or the YouTube video to show them their piece of advertising content, hoping that it is interesting enough to overcome the fact that the consumer didn't ask for it.
This has always been advertising's great challenge. There is an implicit bargain struck between the consumer, the publisher of content, and the advertiser, where the consumer is allowed to consume that content for free (or for less) because the advertiser picks up the difference.
The problem is that consumers aren't actually involved in negotiating this deal; it just is the way it is.
The era of social media has offered an interesting alternative: Granted Attention.
When a consumer follows a brand on Instagram or Snapchat they are granting their time and interest to that brand, inviting them to send them content. This creates an opportunity for brands to build a fundamentally different type of relationship with their current and potential customers.
The challenge is that the successful networks where brands and consumers meet tend to be noisy and crowded, and branded messages often go unseen even by those who people who have chosen to follow them.
Because of this, savvy digital marketers have been looking towards communication channels that are even more immediate and present in consumers lives.
Enter Yo: gateway to the push notification.
The Most Valuable Media Real Estate
The push notification is the single most valuable piece of media real estate in the new mobile era.
When mobile phone users enable push notifications, they are literally inviting the apps they enable to interrupt their other activities.
Given this, it tends only to be apps of extreme importance to them; things like text messages, where real time immediacy can matter, that get the privilege of the push.
Yo is perhaps the first mainstream social media app to be built entirely around push notifications. There is literally no other way to accept communication from people and brands you follow.
For this reason, users of Yo tend to be much more selective about which brands they follow, because they're guaranteed to see every time that brand sends a message.
Brands, then, are forced to be much more considerate, deliberate, and value driven when they Yo. In other words, while followers may not punish them for sending an uninteresting Tweet, uninteresting or annoying Yos will quickly lead to the brand being unfollowed. The medium of the push notification inherently creates a higher burden of value.
The early adopter brands and entertainers on Yo are tending to define the context of their Yo'ing more deliberately up front, so users who follow them know what to expect.
The Chelsea soccer team (one of the world's most popular clubs) for example, sends a Yo only when the team scores a goal, often embedding a link to a photo or video of the goal as well.
Product discovery community Product Hunt "Yo's" whenever a new product hits 100 up votes on the site, embedding a link directly to that product, and so on.
In an interview with Ryan Morris, Yo's Head Of Business Development, another idea for brands surrounding reminders and exclusive content came out.
He discussed the example of a television program sending a mass Yo to it's followers with a link to the trailer of a series a half hour before the show starts, but then simultaneously sending a direct one-to-one Yo to a handful of fans that had even more exclusive content - like a behind-the-scenes interview with one of the actors on the program.
Final Analysis: How Much Should Brands Give To Yo?
The stakes are this: If Yo continues to grow, brands will have a hard time finding as direct and valuable a channel to consumers. But it will also be easily the most difficult of all social media to build and maintain a large following.
What if, however, Yo is a fad? Why does it matter then? Are brands better off just waiting to see if it goes away?
First, there is good reason to believe that Yo isn't going to run out of steam any time soon. The company now has 2.6 million users, 20% of whom are active every week, sending a total of 88 million Yo's - that's better than where many of today's biggest social media channels where when they were just four months old. What's more, their new $1.5m war chest means they have the ability to experiment, learn from users, and iterate.
But there is something more important as well.
We are entering a time when marketing isn't about the cleverest or coolest graphics or TV spot; it's about actually giving consumers something they want - about understanding and participating in their lives as they live them, not just trying to lay claim to them.
Every brand today is a lifestyle brand, and the only way consumers pay attention in the long run is if a brand is able to convincingly facilitate that lifestyle - whether through providing premium content or giveaways or something that allows consumers to do and be more of what they want.
Yo dramatizes the stakes more than any network so far.
When a brand choses to Yo, it is competing for a limited number of push notifications users are willing to accept alongside not only their friends but their favorite bands and athletes and DJs and YouTube celebs and movie stars.
For a brand to get traction in that environment, they're going to have to deliver real delight to followers.
In that attempt, they will learn more about what it means to market in the social media era that they can bring not only to their presence on other networks but to their thinking about advertising as a whole.
Partnered is the private network where leading brands discover and work with emerging technology platforms. Join Partnered to connect with Yo and thousands of other leading startups.
The press room at Cannes was a madhouse.
Hundreds of journalists from dozens of countries jockeyed for position before the press conference began, hoping to capture an image and some insight that they could, as quickly and as furiously as possible, turn into a piece of content that would delight their readers (and, let's be real, their editors).
As the shuffling, tweet-bound horde waited, one could be forgiven for thinking that - this being the world's most important advertising festival and all - the interviewee was to be a living legend like WPP's Sir Martin Sorrell coming to announce some fantastic new initiative.
It wasn't. Instead it was the world's most famous woman; a person who has leveraged the direct access to an interested world that social media provides arguably better than any person or brand to date.
This year the world's most important advertising event launched a brand new festival entirely devoted to technology innovation.
They didn't do this to capture a hype cycle or to appear forward thinking, but in acknowledgment of the simple fact that, as technology has transformed everything about how people understand themselves and engage with the people they care about, so too has it changed the way businesses have to relate to their customers.
These changes are not superficial.
While new apps may come and go, the networks and platforms that have deep resonance all represent fundamental shifts in the consumer experience that speak to meaningful social and psychological changes.
Facebook provided the most incredible platform for maintaining connections the world had ever seen. Twitter allowed people to instantaneously participate in a global conversation about the most important thing that just happened. Instagram democratized the same spark that has driven artists for millennia by enabling everyone to beautifully capture pre-emptive nostalgia for the moments that made their hearts' swell.
Today, something new is happening.
The generation that has grown up with these technologies aren't just locked into one platform, but have a panoply of digital media experiences that they can quickly and effortlessly chose between based on what they're feeling or who they want to communicate with.
In that environment, no app looms larger for today's young people than Snapchat.
Like all the apps mentioned above (and likely every new one to come), Snapchat was written off by the established world of business and adult consumer society until it got so phenomenally big that it literally couldn't be ignored any longer.
When people first look at Snapchat, they see an app for sending often low quality photos and videos that go away after a few seconds. They see the "what."
What we often miss is why? All of the networks above matter, but the content we put on them lives forever. Every time we post we have to think about how it will reflect upon the image that we've carefully crafted to present our self-imagination in the most flattering light.
When we look at Snapchat, it's easy not to consider the incredible relief of having at least one medium in which to express ourselves where we don't have to worry about how people will think of us later, or judge ourselves based on how many likes we get. We don't feel the joy of a digital experience designed to bring the exact people we want into the silly, stupid, ultimately irrelevant moments that are the real dark matter of our lives as we actually live them.
Is it any surprise that kids - who for all of their tech and all of their violent video games and all of their generally-growing-up-too-fast are still kids - are attracted to those silly, joyful, low stakes sharing experiences?
More importantly, is it any wonder that those of us who aren't kids any longer would want to reclaim those sort of moments, as well?
The point of all of this is that if we really look closely, it's no surprise that the two most anticipated and discussed speakers of the festival are Kim Kardashian and Snapchat founder Evan Spiegel.
In their own ways, they have each contributed a pillar to the new cultural landscape.
Spiegel has built a technology that has enabled one of the essential social experiences of an entire generation; the next phase of a media world that will continue to evolve.
Kardashian has experienced the full spectrum of what it means to live in public - good, bad, and ugly - more than anyone else on the planet, and she's done it in a way where, in large part thanks to her direct line to people via social media, her voice always rings loudest among the wild cacophony that surrounds her. What's more, she's leveraged the insights she gained from that experience to build own of the most successful mobile experiences & video games of the last few years, grossing hundreds of millions of dollars and bringing millions of female fans to gaming.
Technology and celebrity are, ultimately, beacons of culture. The patterns and trends that shape them teach us about where we are as a society.
For marketers to be successful, they must be able to move beyond the easy stories and understand the throughlines of culture that shape consumer experience. It's a coup to Cannes that they've brought these two. Let's hope the audience engages with them as significantly as they deserve.
A number of music related companies had funding and/or launch announcements this week, begging the question of how all the oft-discussed disruptions in the industry are actually playing out. In short: more live music, and deeper relationships between artists and fans.
To connect with companies like those mentioned in the Partnered Trend Of The Week, join the Partnered.com private network.
It's clear that VR has captured the advertising industry's attention. Google Cardboard, for example, won the Grand Prix in Mobile at this year's Cannes Lions, and the reason it won was that the jury saw it facilitating so many different possible campaigns.
At the same time, many brands are waiting on VR. They want to make sure it isn't just a bright shiny object that won't actually hit the consumer mainstream before investing.
In this Trend Of The Week video, we look at some news from the VR space, including:
- Jaunt releasing it's own camera for VR filmmakers
- 360-degree camera Sphericam lighting up Kickstarter
- Google Cardboard's win at Cannes
We also explore how some brands are taking the unique opportunity to actually introduce consumers to their first virtual reality experiences.
Ads, ads, everywhere. But we're programmed to ignore them. That's why true[x], one of the leaders of a new generation of adtech companies, is thinking about a fewer where consumers experience fewer numbers of ads, but better quality.
Times are tough for taxis.
It used to be that a cab medallion was an incredible investment. Today, there are real questions about how long the cab industry can survive in its old form.
The cause, of course, is the rise of on-demand, peer-driven ride apps like Uber, Lyft, and Sidecar. These companies built their initial base by beating cabs at the convenience and reliability game. Just press a button and the cab is coming to you. No picking up another fare on the way and leaving you stranded, and no fumbling around with cash.
Soon, they became platforms for a new type of experience, with peers as drivers. This drove down prices and increased availability. All of a sudden, the decision to take a car over other forms of transportation made more sense.
The effect wasn't just the replacement of taxis for car transportation, but the growth of the category as a whole. Uber is already operating in San Francisco at "a healthy multiple" of the entire size of the pre-Uber SF cab industry. Meanwhile, SF taxi industry insiders are actively speculating that cabs could be gone within just a few years.
How P2P Is Transforming Hotels
Today's enterprise leaders in every industry should be watching the taxi industry story unfold. One of the biggest lessons is that, in a tech-enabled world, consumer habits can shift radically in just a few years. Firms that innovate simply to catch up are almost certainly going to be too late and left behind.
One of the industries paying the most attention to these changes is the hotel industry.
It used to be that staying away from home meant either staying with close friends or family, or staying at a hotel. Hotels as a concept had a monopoly on the business side of being away from home.
Then something happened. Well, really, three dudes selling cereal with Barack Obama and John McCain cartoon faces on it to survive happened.
The idea for Airbnb came out of the experience of actually needing to rent floor space to make ends meet. At the beginning, even the most far thinking of venture capitalists didn't buy it. People were never going to be comfortable opening their homes. It was too difficult to scale and organize. Etc. Etc. Etc.
Fast forward just a few short years. The company has booked millions of rooms in 190 countries around the world. They've just raised hundreds of millions in additional capital at a $10 billion valuation. An entire ecosystem of commerce has sprung up around them, with people supplementing their incomes through Airbnb, landlords building small businesses around furnished rentals, and even Airbnb support and management companies raising venture backing themselves.
Does Airbnb, right now, threaten to replace the traditional hotel industry? No.
Has it created a totally different consumer alternative that many people prefer? Yes.
Has it broken the conceptual monopoly that hotels had on how people stay when they're away from home? Yes.
Should the company's meteoric growth be cause for hotels to kick innovation thinking into high-gear? Absolutely.
How Hotels Are Tapping Startups To Innovate
Hotels are clearly responding to the challenge. In the video above, we look at how a few hotels are innovating, including:
The Hilton Startup Challenge - Hilton recently ran a competition, hosted by Digiday, to surface startup ideas that could transform the guest experience, such as an artificial intelligence system for answering guest questions via text message.
Starwood's Aloft Gets Robotic Butlers - The Cupertino location of the Aloft chain tapped seed stage robotics developer Savioke to put a robotic butler capable of delivering basic needs like toothbrushes or fresh towels.
A common thread in these two approaches is emphasizing the professionalism and privacy of the hotel experience, as compared to the personal feel of renting someone's home.
Hotels who are looking for more ideas at innovation have plenty of options:
Hotel booking apps continue to be a place for entrepreneurial innovation, with HotelTonight's last minute booking services on the rise, even prompting new competitors, and similar companies like Walksource that make it easy for hotels to give over-booked customers a good experience.
Proximity devices like beacons create an opportunity for hotels to transform the experience of being in the hotel, offering discounts, tips for local experiences, flash room upgrades, hotel information on demand, and more.
Partnerships with on demand services, which today include everything from fresh juice delivery to personalized shopping, could take hospitality to the next level and make it even easier for guests to luxuriate in their rooms.
The Answer To Startup-Wrought Disruption Is Partnering With Startups
For businesses like the hotel industry, the scare of the taxi industry has one final lesson.
While it may be too little, too late, the place that taxi companies have turned to ward off the tide of transportation startups is...can you guess it?
Taxis are rapidly signing up to work with apps like GetTaxi and Flywheel to bring Uber-like mobile dispatch services to today's fleets. Ironically, some of these companies launched and floundered at the same time or earlier as Uber and Lyft, because the taxi companies didn't want to play ball.
Today's enterprise leaders have to except that technology wrought change is the norm. They don't, however, have to accept that they will be the disrupted. With planning and partnership, even the most traditional industries can adapt to the new landscape.
Partnered translates technology for brands and agencies. Join the Partnered.com network to connect with leading startups and subscribe to our Weekly Report on YouTube to stay on top of digital innovation trends.
The annual Consumer Electronics Show wrapped up yesterday in Las Vegas.
One of the noticeable features of this year's event was the higher profile of marketers around the convention center. MRY's David Berkowitz analyzed this point in a post for Ad Age, pointing out that overall marketer participation was up 9% between 2013 and 2014, while CMO participation was up 11%.
So, what gives? Why are marketers so interested in a show theoretically all about semi-autonomous cars, bendable televisions, wearable fitness trackers and internet-enabled washing machines?
The first is a growing recognition among marketers that this new generation of hardware represents a fundamental shift in the consumer experience. Taken individually, the products being displayed at CES don't necessarily transform how people live their lives. Taken together, the new connected mesh of devices - recording and sharing data that can be used to automate and improve processes small and large - will irrevocably change the average person's day. Marketing is all about finding the messages, channels, and strategies that resonate with consumers' lives as they're lived, so understanding these changes will be essential.
But there is another reason, as well, that has to do with business model. The data that comes from connected devices will enable more precise, nuanced customer targeting and contextual, relevant offers than ever before. But first, customers need to actually adopt the hardware that produces the data.
It's clear that currently, consumers think many of these innovations are too expensive. According to a 2014 Nielsen survey, for example, 72% of wearables owners wish the products were less expensive.
Reducing the price of hardware to drive adoption is a major prerogative for many of today's largest electronics companies. Xiaomi, the breakout Chinese startup, is taking an ecosystem approach. In a single year between Q32013 and Q32014, the company's share of the global smartphone market jumped from 1.5% to 5.2%. To expand its presence, it is now partnering with hardware manufacturers around the world like US-based Misfit Wearables, who agree to sell a volume of units at cost. This reduced price point increases consumer adoption, and then Xiaomi profits through sales and services that accrue from having more people in the company's proprietary software ecosystem.
Xiaomi's model isn't the only way hardware will be subsidized, however. In the same way that traditional print and broadcast media were free or cheap for consumers thanks to advertising, so too do marketers have an incentive to get as many connected devices in the hands of consumers as possible.
Imagine, for an example, an alliance between a major fitness tracker and a healthcare or food/nutrition brand that gave that brand access to data from the devices for a direct marketing channel for the company's products.
The era of marketer-manufacturer partnerships is just beginning, but it is significant. Berkowitz puts it succinctly: "Partnerships present the greatest opportunity. Even if just a handful of the 20,000 product launches were done in conjunction with non-electronics brands, that would change the dynamic of CES. When all of CES is the official destination for creative communicators, then brands will have finally overtaken another show."
We're at the very beginning of the internet of things era, but what's clear is that marketers are going to have to innovate to stay relevant in a time when the channels and devices through which people access and share information are changing radically.
If CES is any indication, in 2015 we'll see an increasingly robust dialogue between marketers and hardware manufacturers. The question is simply who will best take advantage of the new opportunities that conversation represents.
Partnered drives connections & learning at the intersection of marketing and technology innovation. Sign up for the Partnered network to connect with leading startups and more.
To keep the attention of a media savvy generation, advertisers need to stop trying to guess at and catch up to trends and reassert their role in shaping culture.
This week, the internet's collective funny bone was set off by an advertisement about, of all things, menstrual cycles.
The ad tells the story of an almost-teen who is so eager to get her period that she fakes it, and a mother who responds to her daughter lying to her by throwing a "First Moon Party" - a mortifying parade of themed piñatas and overly-excited relatives.
In the end, it's an ad for HelloFlo's Period Starter Kit - "the gift before the gift." The two-minute mini film works because it is subtly touching - about a daughter desperate to be more mature and a mother who wants her to just appreciate being young - and completely over-the-top hilarious at the same time. When compared with the sanitized, barely-know-what-they're-trying-to-advertise-they're-so-worried-about-offending tampon ads on mainstream TV today, it's clear that this is an ad of a different color.
The video is soaring. Since being released on Tuesday it has racked up more than 6 million views, helped HelloFlo nab thousands of new YouTube subscribers, and generated hundreds of laudatory articles from marketing, cultural, and general news publications - exactly the sort of measurable ROI brands and agencies lust after.
But it has done something much more important. In an advertising world that has told women for decades that what goes on "down there" should be spoken about in hushed tones and euphemisms, HelloFlo has proudly staked a claim as a brand that celebrates and cherishes the experience of becoming and being a woman, culturally-mediated squeamishness be damned.
Cannes & A Generation Lost To Advertisers?
The 2014 edition of the Cannes Festival of Creativity is coming to a close as this week ends.
In a thought piece published this week, John Gapper, lead business columnist for the Financial Times, wrote that at times the gathering of top creative ad execs felt like an exercise in collective confusion (or perhaps even...delusion?).
"Seven years after the launch of the iPhone," he wrote, "advertisers still treat it as a newfangled invention yet to prove its worth."
The central problem, he notes, is that as audiences - and particularly the Millennials, that great boogeyman of a generation - fragment across multiple channels and spend their media attention in differently places, the advertising industry has not come up with a new equivalent of the :30 second television spot. It has not come up with a creative gold standard that can routinely capture attention and win affiliation to a brand.
Gapper's not wrong to note that adworld has been slow if not sluggish to react to the reality of the digital age. Nor is he wrong in his assertion that the fragmentation of media has left a creative gap in the advertising portfolio.
But it is wrong to suggest the Millennial generation is somehow "lost," with attention uncapturable by advertisers.
What we are is harder to impress.
Direct Response & Brand Marketing: Uneasy Bedfellows
Advertising has always had two distinct sides: direct response advertising that focuses entirely on "conversion" - getting the right offer to the right target audience at the right time - and brand marketing that is about building awareness and positive sentiment around a brand, but which doesn't necessarily convert to an immediate sale. These two approaches have not always made the most copacetic bedfellows.
The opportunities wrought by the internet have been an undeniable boon for direct response advertising. The data left by customers across the internet is like a heat trail for interested advertisers. Never has it been so easy to find a highly-qualified lead in the actual moment when they're the most receptive to the offer a brand wants to make.
A massive and growing industry of advertising technology, from realtime bidding to retargeting and beyond, has grown up to help companies leverage this data.
When it comes to brand marketing, however, companies have mostly been struggling to grok the new relationships between brands and their customers that social media demands.
In his editorial, Gapper notes that Millennials are "as likely to be tweeting angrily about a brand as noticing its ads in the content stream." What he doesn't mention is that they only feel entitled to do so because social media has closed the gap between them and the brands that impact their lives. This new closeness can lead as much to a greater willingness to absorb a brand into one's identity and sense of self as to public displays of antagonism.
Social media soothsayer Gary Vaynerchuk has discussed the challenge corporations have had in adapting to the new era of engagement, noting in this clip "What's the ROI of your mother," that the real power in investing in social media isn't measurable clicks but the immeasurable change in sentiment that occurs when people feel like the brands they buy from are actual, honest to god humans rather than sales-driven automatons.
Still, if the internet has allowed advertisers to evolve more effective direct responses advertising and the foundations of new relationships with customers, what hasn't emerged yet is this generation's answer to the epically cool Super Bowl ad - that single piece of Mad Men-style cool-making that makes draws drop and wallets open.
Advertisers have been so caught up in trying to react to trends: in figuring out how to employ the newest targeting technology; in making sure they're paying proper attention to their social media audience; in creating real-time social media warrooms to make insta-reaction social media ads during important events because Oreo did that "Dunk in the Dark" thing that one time when the lights went out at the Superbowl and everyone said it was really cool.
They've been so caught up that they forgot that the roots of the American advertising industry aren't just about taking and reacting to culture, but shaping it.
Great Advertising Shapes Culture
When Samsung bought the first million copies of Jay-Z's most recent album for users of their new Galaxy S, they were embracing a fundamental truth:
Advertising is entertainment, and entertainment is culture.
Looking back over time, the most iconic advertisements of the old mediums were iconic not for any reason that had to do with television, but because they tapped into a vein of who we were as a people - or, more often, who we wanted to be.
Apple's famous 1984 ad tapped a desire to harness the power of technology without becoming slaves to it.
The McDonald's ads featuring Bird and Jordan bouncing impossible shots off of walls and backboards were telling the story of an America that loves fierce, friendly competition, and the idea that there are simply no limits to what we can achieve.
These ads were culture.
By paying for Jay Z's album, Samsung was affiliating themselves with one of the most important progenitors of culture in the modern era (not to mention taking advantage of a growing consumer disinterest in paying up front for the media they enjoy).
HelloFlo's approach with "First Moon Party" isn't to just affiliate with an arbiter of culture, but to create an artifact of it. In their case, its a culture that embraces the experience of being a woman as actually, genuinely fun.
Another recent viral advertising sensation is "Dear Kitten," produced by Buzzfeed on behalf of Friskies. The story of one cat welcoming a new kitten to the household isn't a cynical ploy by bean-counters who noticed that cat videos get lots of views - it's a quietly touching elegy to the notion that pets are part of our families.
The common thread in these approaches isn't a single medium or approach. For example, even though they're both ~2-3 minute YouTube videos, the Dear Kitten from Buzzfeed is technically a "native ad," produced by the publisher on whose platform it would appear, while Hello Flo's spot was produced by an agency, which somehow makes it more traditional?
What they have in common is that they are advertising as an exercise in sharing something important about today's human experience.
In the first season of Mad Men, Don Draper argues that people are all looking to be told they're okay. In today's world, which can be such a confusing mix of talking to everyone but being connected to no one, people are looking to feel a part of an experience that transcends themselves.
The creative, brand building side of advertising is about finding new ways to resonate. If anything, the internet offers a open platform for that creativity than ever before. There is no longer a 30 second limit on telling stories.
How can advertisers use the new mediums to tell stories about what's important, or confusing, or profound, or beautiful, or too-often-unremembered-and-unacknowledged, or fascinating, or awe-inspiring about people's experience today?
Do that, and not only will the Millennials pay attention; they'll tell everyone all about it.
Advertising is being supplanted by content, and how brands think about content is expanding. In this video, RebelMouse's Head Of Agency Partnerships Stephanie Bagley shares how brands are moving away from an exclusive focus on reactive, real-time content, towards a larger investment in long term, content-driven relationships with consumers.
Brit Morin: How Heineken Could Out-Craft Craft Beer (Lions Innovation Insights)
Learn how Brit Morin, Founder & CEO of Brit + Co, discusses content and digital storytelling, with some specific ideas for how Heineken could tap the maker m...
Brit Morin has built Brit + Co into a thriving, 12 million strong community of makers and creators learning everything from 3D printing to creative home design. In the process, she's worked with dozens of brands to help them craft more authentic, genuine stories that resonate with millennials.
Prompted by her Silicon Valley peers who are increasingly making Cannes Lions a key business opportunity, Brit came to Cannes for the first time this year to discuss content, commerce, and the rise of native, authentic voices in advertising.
In this clip, she discusses how Heineken isn't considered by craft beer fanatics, even though it has had the same 3 ingredients for hundreds of years and an amazing, genuine story to boot.
Maybe the most anticipated speaker at Cannes Lions this year was Kim Kardashian, public persona and entrepreneur behind one of the most successful mobile video games of the past few years. Insights on partnership, women gamers, and social media.
I'm 29 now.
My school was one of the first 30 to get Facebook. I have my actual initials as my Twitter handle. I even remember pre YouTube video memes.
In other words, I was a part of the first generation of social media, and now I'm f*%^&$g ancient.
Millennials at Cannes Lions
There is a lot of conversation about Millennials and social media at this year's Cannes Lions, and for good reason.
We now, for example, make up the majority of the work force. And we have very different expectations from brands - both those we work for and those we buy from. Having grown up pummeled with advertisements, our bullshit meters are high.
It's good that brands are finally figuring out what it means to take us seriously - as consumers and employees.
And it will be immensely frustrating to realize that the group of people just 5-10 years before us are a whole new animal.
Social technology shapes social experience
The first generation of the internet was all about consuming. There was more information available more rapidly than ever before.
The next generation of the online experience was about creating. Blogger allowed people to write. Friendster then MySpace then Facebook allowed us to replicate our offline social graph online, and do the things we liked to do online, but with our real life friends.
But then an interesting thing happened. While at first technology mirrored offline social relationships, it soon came to shape them.
Facebook started humbly; a place to see who else was in your classes. And it soon evolved a set of very Facebook-particular behaviors such as "poking."
But as it moved to a place of cultural normalcy it started to influence the actual nature of our relationships. What it meant to "friend" someone took on new meaning ("well, they have 67 friends in common with me, so I guess I'll accept), as did how couples think about how they announce their relationships.
Indeed, as Facebook added photos and then timelines, it became a place not just to list your friends but to actively shape a story of ourselves. Zuckerberg famously said: "The question isn't, 'What do we want to know about people?', It's, 'What do people want to tell about themselves?''
Brands have had to adapt to the world Facebook, Twitter and other social media wrought. Rather than always talking at us, we expect our brands to talk with us, and join the global meta conversation about the things happening around us.
This has taken a half decade or more for advertisers to grok. Even today, brands and agencies are only slowly placing these social technologies at the center of their strategy and budgets.
Snapchat, Whisper, Secret: Welcome to Hyper Generational Divide
The dominant social technologies come to shape social norms and expectations. So when that technology shifts every few years, it accelerates and accentuates the difference in different age cohorts.
Millennials were the first social media native generation. But in many ways our experience with technology is radically different than those just a few years younger.
For one, teenagers today experience the world primarily through mobile devices. This always-on experience is different than the desktops and laptops we had. It makes every moment capture-able, and has led to a different idea of how we derive value from experiences.
It used to be that doing things was what created the value; now sharing it (and getting the validation and response of likes, hearts, and shares) is at the center of how we ascribe meaning to experience.
Another feature of the technology-wrought culture of whatever we're going to call the group after the Millennials? Conversations that never really start and never really end.
Millennials used social media to talk more; we help transitioned the normal way of connecting from talking to texting & typing. But the always on nature of mobile means that there is no distinct beginning and end of conversations. What's more, conversations aren't limited to a single medium, but a message in text might be answered in WhatsApp or Facebook or somewhere else entirely.
Even more, the group after the Millennials is in the midst of two social technology megatrends that will, inevitably, shape social behaviors, in ways we don't yet understand.
Snapchat has normalized expiring, ephemeral messages, and there is much more to how it could change culture than just a rise in sexting. On the negative side, could it increase the chances at bullying if people feel they can get away with saying meaner things? Or might it, on the other hand, help people be vulnerable and say things they would not have otherwise, because the repercussions of ill-received messages don't stare one in the face permanently? Is there any potential for positive cognitive impact by allowing us to distinguish between what's fun and enjoyable or informative in the moment and what deserves to be preserved for all time?
Similar questions arise from anonymous apps like Whisper and Secret where people can share what they're thinking and feeling without attaching their identity. Of course the fear is that it will increase bullying and digital cruelty. But it's not unreasonable to think that the opposite could happen, as well, and people could find support that they never knew existed.
If anonymous apps become a normal and fixed part of the social landscape, one thing that's for sure is that people will increasingly view themselves as a combination of public and private again, rather than just a persona shaped by the images they share on Facebook and Instagram.
Brands need to follow culture, not technology
Each of these changes has massive significance for advertising and brand messaging that go far beyond what channels to advertise and communicate within.
Ephemeral messages might mean that brands need to stop trying to be a part of every essential moment and just share inside jokes with their fans.
Anonymous messages might mean that brands participate in conversations that are much scarier and less controlled than they're normally used to.
The real reminder is that successful brands follow culture, not technology. It used to be that stars and celebrities were the exclusive shapers of culture. Today, it's the collective participation of people in new social technology that shapes cultural norms.
But it's changing faster than ever.
How to keep up? Hire a 16 year old. Hire a whole bunch.
The truth is that when it comes to real understanding of new technology and culture, the experts aren't the speakers on stage at Cannes but their teenagers at home.
Venture capitalists have realized this fundamental truth in recent years and are starting to respond. Some are hiring young associates. Alsop Louie, for example, hired Alex Banayan as a 20 year old, netting them a perspective fundamentally different than their middle aged partners (not to mention more than a few "meet the youngest VC in the world" posts).
Others are participating with college-run venture firms. First Round Capital, for example, backs the Dorm Room Fund, a student run firm that operates in New York, Boston, Philadelphia and the Bay Area.
Advertising agencies could take a page from this book. Why not hire a 16 year old (or better, a set of them) to be a part of strategic planning processes for brands that touch their demographic? Why not try new ideas and new campaigns on this group and see whether they respond or scoff?
Ultimately, agencies win by bridging the gap between brands and their audiences. When the audience changes as fast as today's young people, the only way to stay ahead is to bring them in the fold.
For much of the 20th century, consumers faced a fundamental decision when it came to their food: quality vs. convenience.
Today, a new host of startups is working to obliterate that choice. The food industry is undergoing a complete makeover, with young companies working to change everything from what types of foods people have access to to how they grocery shop to how their food gets delivered to the social experience of meals.
The past two weeks have seen a number of important events that underscore these shifts:
- Restaurant ordering & delivery service Eat24 announced a partnership with Sidecar around the p2p transportation company's new Deliveries service;
- Eat24 was acquired by Yelp for $134m
- Home meal kit startup Hello Fresh raised an additional $160 million
- Rocket Internet pumped $586m into Asia/Europe's delivery hero & acquired 9 food-related startups
Observing and understanding the drivers behind these sorts of changes is essential for CPG brands, restaurants, grocery chains and food retailers - basically any of today's incumbents touching the consumer food experience.
Here are 5 key areas of change in the industry:
1. Grocery Shopping
Since the early days of Webvan, entrepreneurs have been trying to use the internet to disrupt the grocery experience. Today, a new model that taps the existing inventory of grocery chains and uses a new on-demand mobile work force is allowing companies like Instacart to provide online ordering and one hour home delivery.
2. Home Meal Preparation
There has never been more automation in cooking. Hello Fresh, mentioned above, is but one of a large number of players in the home meal kit space, in which companies send a recipe and all the ingredients necessary - often pre prepped for cooking - direct to one's home. The company has seen more than a half billion in financing in the last year alone. Other players include Blue Apron, Plated, and Forage.
3. Prepared Meal Delivery
Eat24 and Caviar, both recently acquired and both mentioned in the video report above, are two of the leaders in restaurant delivery services. But increasingly, restaurants are competing with companies who don't operate physical locations and cater to the needs of busy professionals by delivering hot prepared meals, often within just a few minutes of order. Companies like Munchery, Sprig, and Spoonrocket have rocketed into prominence in their initial markets, raised tens of millions in venture capital, and are quickly becoming a market mainstay.
4. Food Preferences
People are more health conscious than ever before. Green juice has emerged as a major trend, with hundreds of small startups trying to build a brand faster than the biggies like Naked and Jamba Juice can provide their own offering. Good Eggs, an Instacart style online experience enables people to order farmers market style products as easily as standard grocery store products. And then of course there are companies like Soylent trying to provide nutrients in a totally different way than traditional food.
5. Social & Communal Meal Experience
Ultimately food isn't just about calories and vitamins, but about an experience of sharing. Kitchit is a marketplace where consumers can hire chefs to prepare meals for parties and special occasions directly from their homes. Dinner Lab, meanwhile, gives its members the chance to sample innovative recipes from up and coming chefs in unique settings.
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Last night, BuzzFeed announced $50m in new venture capital financing from Andreessen Horowitz. At Partnered, we watch the transformations in media and online advertising extremely closely, and our belief is that this financing and BuzzFeed's continued growth and success are representative of a new playing field for the media, in which BuzzFeed will emerge as perhaps the first seminal property.
1. Attention First
It appeared for some time that the challenges to traditional publications were a problem of business model. People were less willing to pay for print content that was, inevitably, behind its online equivalent, and on the internet, people didn't want to pay for content. The scale, then, required to make digital advertising work as a business model meant massive contractions in editorial staffs and a general crisis in publishing everywhere.
Increasingly, it appears that the real crisis is that of audience attention, and the problems of business model are simply offshoots. In a world where more content is created every day than any one could possibly consume, publications have to find a way to grab and keep audience attention.
BuzzFeed puts that all important priority first, experimenting constantly with the subject matter and formats that will grab a general consumer audience. While the content that has resulted - listicles and more recently quizzes - is often maligned, its success in audience capture is undeniable, with BuzzFeed reporting more than 150 million unique visitors per month.
2. Secretly Smart
If BuzzFeed is perfectly comfortable using viral content to grab eyeballs, it is simultaneously not willing to be solely a provider of junk food content for the internet sweet tooth.
For the past couple years, BuzzFeed has been experimenting with how to deliver news using some of the format innovations that have kept audience attention for its less serious content, the result of which is, most recently a new standalone app just for news.
What's more, BuzzFeed has been increasingly promoting long form content - pieces that range in the thousands of words and which are, undeniably, good. (See for example, "Why Brazil Is Winning The Internet"). Well reported, smartly thought out, and better than most of the writing that appears in serious publications.
The top banner of BuzzFeed's homepage this morning is "Chaos In Baghdad" - a look at the story of what's happening in Iraq with ISIS - a story being wildly underreported by others - paired with "18 Signs You Grew Up In A Beach Town" - a piece sponsored by Pepsi.
The bargain then is building a base off the fun, lighthearted, irreverent in order to syphon some of that audience to important content that they might otherwise never see.
3. Building A Brand, Not A Website
While 150 million visitors is a phenomenal number, BuzzFeed's play ultimately isn't just to build the best destination website; it's to build a media empire that can live everywhere and nowhere.
Evidence for this abounds. BuzzFeed's has a complete video section onsite, keeping attention on their property. Yet at the same time, the company maintains a set of different YouTube channels, organized by different types of content. On mobile the situation is similar, as witnessed by the breakoff of the news content and the emergence of an app constellation.
With this new venture capital round, there is even more to suggest that BuzzFeed believes that what matters is building brand around types and quality of content, not just driving traffic homeward. To that end, part of the new cash infusion is going to a 20 person team whose entire purpose is to create BuzzFeed content for other networks like Snapchat, Instagram, and Vine.
4. Blurring Business & Editorial
Much controversially, BuzzFeed is driven by a native advertising model where its creative team works with brands and with editorial staff to produce content in the standard format that would appear on the site or in video, but which is financed by a brand. While other publications like the New York Times have a strict church-and-state divide between who creates branded content versus who creates editorial content, for BuzzFeed the line is much blurrier. The company's ability to use it's top editorial staff in conjunction with branded content production is certainly working, financially, as a blog post from A16Z partner and new BuzzFeed board member Chris Dixon suggests the company will do three-digit hundreds of millions in revenue this year.
Where this strategy might get even more controversial is if and as BuzzFeed becomes more respected as a source of heavy, long-form news. Will this blurriness become a liability instead of an asset? Only time will tell, but in every way, BuzzFeed's wrestling with this issue will be a major point of observation for the entire industry.
5. Planning For Obsolescence
The only thing that's sure in today's world is that nothing is permanent. Indeed, the rate of change in technology driven businesses seems likely to increase. There are indications that BuzzFeed embraces this reality, and with the new financing will set up a new set of structures including technology labs and a startup incubator to try to stay ahead of changing trends and opportunities.
Like it or love it, BuzzFeed has built a behemoth; a next generation media company with massive ambition and the talent to match. There is reason to be interested and optimistic, even for those who treasure serious, in depth content. In fact, it could be that BuzzFeed is an indication of how to make that sort of content work inside the wildly new economics of brand advertising and audience attention in the digital age.