Digital Trends 2020: Master the Art of Value Creation
This is an excerpt. Read the full article on Tangent.co.uk.
‘It began in the smoke-filled gaming rooms of South Korea in the late 1990s… farmers collectively earned hundreds of millions of untaxed dollars.’
The Economist, 2019
The farmers in question weren’t agriculturalists. They were gamers who spent hours playing ‘MMORPG’ games (think World of Warcraft) for the sole purpose of collecting ‘gold’ – digital currencies traded for useful items – which they could sell to other players for real-world cash.
The practice now props up the economy of Venezuela, much to the chagrin of the games’ developers, some of which ‘sell virtual gold themselves, and dislike competition’.
There’s a lesson here for your digital strategy.
Many businesses often fail to spot revenue opportunities in their own ideas.
That’s nothing new; think of Alta Vista, and the numerous other pre-Google search engines that disappeared.
But in 2020, brands will come under unprecedented pressure to master the art of digital value creation.
Some pressure will come from the ground up.
Former digital bit-part players have matured into driving forces. Content publishers, influencers and startups are evolving novel, scalable business models off the back of monetized digital experiences. Consumers are speaking with their wallets.
From the top down, appetite for ‘growth investing’ has waned.
Behind the scenes of high-profile IPO embarrassments (or lack thereof), tech unicorns are now diverting into R&D around new profit centres, with promising early results.
Established businesses are watching closely. Banks, in particular, are making smart investments designed to defend and grow their existing market shares.
As pressures build through 2020, one thing is certain.
If you don’t start mining your own gold, somebody else will.
Virtuous circles in the creator economy
2019 saw huge gains for the creator economy: small publishers fulfilling a public appetite for branded content, and the various businesses spinning off it.
Unlike some early digital publishers which struggled to turn a profit, many are now managing to monetize in innovative ways.
Youth culture media platform Complex earned its reputation off long-form, advertiser-friendly entertainment. Its ‘Hot Ones’ show spun out a $10m hot sauce business. It also has a show called ‘Sneaker Shopping’, and is rumoured to be launching a sneaker marketplace in 2020. Complex now turns over $200m.
A newer business, Kyra TV, is tracking $10m this year: a threefold increase on 2018, off the back of diversifying into brand integrations, social commerce and talent management for influencers.
You only have to read the comments on PAQ, Kyra’s YouTube fashion show, to see that a Netflix show is a likely next step, as are new commerce lines and more influencer events.
These businesses are interesting for two reasons.
A screenshot from Kyra’s PAQ Ralph Lauren 100th Episode Special
One: what I call the Media x Marketing x Enterprise business model, whereby an audience-and-creator network, profitable in its own right, provides a springboard for complementary business.
Two: they produce the greatest value at small scale….
This is an excerpt. Read the full article on Tangent.co.uk.
Whitepaper: the ISBA In-House Agency Survey
This is an excerpt of an interview with key stakeholders in the whitepaper project. Read the full article on OLIVER.agency
OLIVER: In-house agencies took a beating in May when PepsiCo was forced to pull its Kendall Jenner ad.
Debbie Morrison, ISBA: “Let’s get real here: this could have happened with any agency, external, in-house or on-site. To blame the agency model is naïve in the extreme and implies that only external agencies are connected to the real world and popular culture. This was purely and simply a judgement miscall.”
Adele Gritten, Future Thinking: “This sort of thing usually happens because a brand misunderstands its audience.
Whatever your model, if your agency doesn’t have the right insights or you’re not feeding those insights into your marketing strategy, you will end up in situations like this.
The problem was amplified in Pepsi’s case because it tried to tap into the zeitgeist, but failed to recognise its place within it.”
Sharon Whale, OLIVER: “It’s also important to remember that every iteration of each agency model – in-house, on-site and external – takes a slightly different form.
It’s possible PepsiCo’s own specific setup did allow a mistake to slip through, but eight brands in our survey are creating their own TV advertising in-house; four completely off their own bat.
There’s no reason an in-house agency can’t be creatively and strategically excellent, with the right level of rigour and push-back if properly built.”
Safe & Simple: Can UX Design Protect Us from Hackers?
This is an except. Read the full article on Tangent.co.uk.
Digitalization has made some things in life simpler, but not security.
A joint-press release by MasterCard & Microsoft, who have recently launched a collaboration over online payments and identification, said:
“Currently, verifying your identity online… places a huge burden on individuals, who have to successfully remember hundreds of passwords for various identities and are increasingly being subjected to more complexity in proving their identity and managing their data.”
Beyond being inconvenient, this complexity is proving positively dangerous – and yet, neither brands nor consumers seem capable of tackling the problem.
Today’s consumer has little patience for the faff of multi-device, multi-interface, multi-page verification processes, thumbing codes into cumbersome mobile keyboards and endless password resets.
Businesses, meanwhile, are still figuring out how to profit from customer data, and the scale and costs of data hacks are escalating. The Marriot-Starwood breach this year was the second-largest in history, with 500m customers affected The largest-ever attack – on all 3bn Yahoo accounts – ended up costing $47m in litigation expenses.
More worryingly, a trend towards card-not-present transactions, and a general, deepening dependence on our digital identities, leaves consumers ever more exposed to crime.
If simpler security protocols do not become widespread, consumers and merchants alike may sleepwalk into cybercriminals’ hands.
Horses to water
Consumers are cybersecurity-conscious, but disinterested in managing the risks.
PwC’s 2017 Protect.me survey found that “87% of consumers say they will take their business elsewhere if they don’t trust a company is handling their data responsibly”.
“Almost one in five people has faced an account hacking attempt but … only a third create new passwords for different online accounts and a worrying one-in-10 people use the same password for all their online accounts.”
A lack of understanding seems to be an issue.
Two Indiana University academics surveyed 500 American adults to understand why two-factor authentication – theoretically, a fairly effective security protocol – is not more popular.
Most consumers, apparently, simply didn’t see the urgency.
One of the researchers said of the participants, “We got a lot of, ‘My password is great. My password is plenty long enough.’”
Even Adam Cooper, who helped set up Verify, the UK government’s online identity system, confessed of his experience of online security processes that “I am baffled most of the time. I just click OK.”
Loyalty programs once enabled relatively personalized marketing.
From a standing start of zero customer data some 20 years ago, brands became able to incentivize desired behaviors in highly-predictable customer segments.
They did this by embarking on ‘no-brainer’ partnerships: where the customer journey is so linear (think airline + car rental) or the customer frequency so high (think grocery store + fast-casual dining) that a brand partnership creates obvious value.
Value, that is, to a minority of highly-frequent, high-spending customers.
Today, practically all these higher-spending customers are already enrolled in ‘no-brainer’ loyalty coalitions. Comprising perhaps 20% of your customer base, they form one of the ‘big, molasses segments'[i], now widely considered totally insufficient for modern marketing.
To the majority of less-frequent customers, these partnerships are not only impersonal, but many are downright irrelevant. If you don’t fly often, you probably also don’t stay in a lot of hotels.
It is with these less-frequent customers that the biggest profits lie…
Growing pains: why bigger memberships demand smarter tech
This is an excerpt. Read the full story on Tangent.co.uk.
In 2015, a change in government policy saw a surge of over 5,000 new members of the British Medical Association, approximately 80% of whom were junior doctors.
By 2017, that figure had fallen back almost to 2015 levels.
The example is an extreme one: few organisations will ever enjoy a 9% leap in funding in only one year; but there is a lesson here for all member orgs.
What went wrong?
Member bases are uniquely affected by cultural shifts, and the factors that motivated one member to join may be very different from the next.
To retain biggest, broadest possible base of subscribers, member orgs should seek to understand and cater for diversity in their member base.
Organisations leading the way in this effort are doing so with the right balance of strategy and tech.
Digital content has proven a powerful force in the member org space.
The rise in veganism, for instance, may partly be down to the sharing of food pictures on social media.
“20 or 30 years ago, people would have described vegans as extreme and unnecessary… It was suddenly being associated with the celebrities, with the successful people, with the beautiful people.”
The Vegan Society has swollen ranks to 10k members of the back of this shift, and its Instagram feed now borrows tricks of the trade.
A more interesting case study comes from the Federation of Small Businesses (FSB).
The organisation appears to be pulling off a remarkable turnaround.
In 2017, First Voice, the FSB magazine, went digital, with paid media slots, gated content for new members, a live newsfeed for up-to-date content.
In that time, the organisation has enjoyed recent growth in retention rates, from 82% to 86.7% over three years, and more new members under 40 recruited than ever before.
Content ought not to be viewed as a one-way exercise; indeed, every digital touchpoint is an opportunity to improve understanding and refine your approach.
The Guardian newspaper – a private business with characteristics of a member org – A/B tested 30 different member recruitment messages, and scored 1300% growth in one year.
Some people talk about loyalty coalitions as if they’re a single concept.
In fact, there have been two distinct iterations of the loyalty coalition model – and a third, game-changing alternative is now emerging.
We created these infographics as a quick-reference guide to the fundamentals of each model, to help marketers fully understand how they operate, and to find the approach that works best for their customers.
Loyalty Coalition Model V1.0:
Examples: Nectar, Air Miles
Click the image to expand