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Dear Friends: It’s the time of the year to sign off. And do that on a high. It has been a captivating year for brands and brand guardians. As we prepare to say au revoir to 2019, let’s take a sneak peek at what this issue of BrandKnew has in store. Understand from the mercurial Bob Hoffman, How Advertising can Save this World. We see if the sharing economy has disrupted marketing in any way and discover it is not quite the case. Doing good is doing great for brands- interpret more of it in the feature on Risking it for the Greater Good. The debate has been raging for a while and we carry that forward in the article on Emotions in Branding. AI has been at the receiving end and investigate the dark side of Artificial Intelligence in Marketing. Mobile is a different animal and we examine in this edition some key steps to consider while building mobile brand experiences. Competitive Advantage has been the calling ever since we gained management consciousness. Understand from Paul Skinner and his seminal book ‘ Collaborative Advantage‘ how the tectonic shift has happened from Competition to Collaboration. We also strike a conversation about how employee advocacy can unlock value for brands in this issue. Ample more in this edition to soak in and use as actionable intelligence. As I conclude, my very best to you and yours for the next year and beyond.
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CONTENTS How Advertising Can Save The World Does emotion still matter? Reward The Creative Process, Not The Outcome The Dark Side of Artificial Intelligence in Marketing Has the Sharing Economy Disrupted Marketing? Not Quite… As the CMO title morphs, agency strategists rise Man on a (Collaborative) Mission! The golden age of product placement Four benefits your brand can unlock with better employee advocacy Can brands automate emotional intelligence? The role of news brands in multi-media campaigns Why Mobile In-Game Advertising Is Taking Off and the Different Ad Formats Available Q&A: How DTC brands use smart B2B techniques to connect with consumers Risking it for the greater good-marketing that means more Why brand ‘perspective’ matters Eight points to remember when building mobile brand experiences Why Ridesharing Reaps Unexpected Benefits How To Evaluate Your Startup Idea With Simple Calculation Netflix’s ‘Broken’ covers the tangled mess behind Juul, Ikea, and more of your favorite brands Creation of The Attention Council puts focus on ad placement quality Researchers Want Guardrails to Help Prevent Bias in AI Why Fintech Is Disrupting Traditional Banking Book, Line & Sinker
HOW ADVERTISING CAN SAVE THE WORLD By Bob Hoffman
You may have noticed that the world is a mess. It is rife with hatred, lies, conspiracy theories, violence and hostility between countries and within countries. It ain’t pretty and it’s getting worse. One of the factors in the growing polarization is the influence of the internet. I believe the dumbest thing ever said about the web was said by Arianna Huffington. In 2012, Ms. Huffington said...
“Thanks to YouTube -- and blogging and instant fact-checking and viral emails -- it is getting harder and harder to get away with repeating brazen lies without paying a price...” It’s hard to imagine anyone getting it more wrong. In fact, social media and search have made it much easier for nuts, nazis, and basement dwelling squids to spread their vitriol and nonsense far and wide. The ugliness is spread in two ways: 1) posts and ads on social media, and 2) search algorithms that ensnare people in a vortex of ever more radical lies and nonsense. Unless we find a way to unwind this pattern of polarization there is nowhere to go but down. First let’s talk about remedies that won’t work. We cannot expect Google, Facebook (and their spawn, YouTube and Instagram) or Twitter to do anything serious about these issues. Even though they are the prime repositories of hatred and lies, they are also the prime benefactors. We cannot expect governments to do anything. They are too stupid, inept and politically self-absorbed. Believe it or not, there is one group that can do something seriously effective in combatting this scourge -- the ad industry. The search and social media companies have only one source of revenue, ad dollars. If the ad industry were
to withdraw their ad dollars, two of the most profitable and dangerous companies in the world, Google and Facebook, would evaporate in five minutes. Here’s the plan. I call it The Ten Week Plan. The ANA (Association of National Advertisers) and the 4As (American Association of Advertising Agencies) get together and tell Google and Facebook the following: 1. We’re giving you 90 days to clean up your act. Get rid of the hate content, get rid of the ugliness and incitements to violence, hire enough people to fact-check posts properly before you publish them, change your algorithms so they don’t draw people down the sewer of hatred. 2. After 90 days, if you haven’t cleaned it up satisfactorily we’re going to implement a 10-week program to force you to do it. Week one we will ask our members to reduce their spend with you by 10%. If this doesn’t convince you, on week two we will ask them to reduce their spending with you by another 10%. This will continue until you either change or die. The ad industry has allowed Google and Facebook to take all the hits for the disgusting state of search and social. But we are the money machine that funds it all. We are the paymasters and we can use our power to do some good for a change. We can accomplish with our dollars what governments can’t with all their yapping. We have been on the wrong side of every issue related to online corruption. With one stroke, we can atone for our mistakes and seize the high ground. Let’s see if our industry, which gags on “brand purpose” horseshit, can actually demonstrate some brand purpose. All it would take is the one thing we don’t have -- integrity. Okay, two things, and balls.
Bob Hoffman, Type A Group, typeagroup.com
Does emotion still matter? By David Penn
New thinking seems to challenge the ‘classic’ marketing view of emotion. David Penn reviews the evidence and suggests a way forward – as well as explaining why Tahitians are never “sad”. In the early to mid-noughties, you couldn’t heave a brick in a marketing or advertising conference without hitting a speaker holding forth about the power and importance of emotion. A widespread view grew up that emotions were the fundamental drivers of behaviour, sometimes expressed as “Feel – Do – Think” as opposed to the traditional “Think – Feel – Do” model of how marketing works.
not built purely on rational beliefs or persuasive messaging, otherwise brands like Coke and Apple would never have achieved the status they enjoy. But I sense that in recent years the discussion about emotion in marketing has become confused – a confusion that probably stems from a misunderstanding about what emotion is. Here are some of the questions and issues: • Are emotions innate, or learned? • Are there really seven basic emotions, and are they universal?
Much of this was of course a counter-reaction to the highly rational “persuasion” school of marketing represented by communications models such as AIDA (Attention – Interest – Desire – Action); their basic premise being that, in order to change behaviour, you had to lodge a persuasive message in the customer’s brain.
• Is emotion a physiological or a mental phenomenon, and what implications does that have for measurement?
What is emotion?
So, back to basics: What exactly is an emotion? In 2006, Zaltman and Mast wrote (in an ARF white paper) that “Emotion without cognitive appraisal is just arousal”. A short sentence,
Emotion matters because it’s how we build brands. They are
• Is emotion an automatic response? • Ultimately, does emotion really matter that much anymore?
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but one that deserves unpacking. For them, emotion has two components: a physiological/affective response (arousal and valence) and a cognitive one (how we describe or categorise the feeling it creates). One response is innate; the other learned and context-dependent. More recently, work by Lisa Feldman Barret (How Emotions are Made, 2017) has done much to clarify the definition of emotion. She believes the debate is as much about terminology as anything else, arising from a basic confusion between two terms: affect and emotion. As she remarks, “Scholars and scientists have confused affect and emotion for centuries”.
What’s the difference between ‘affect’ and ‘emotion’? Affect is a psycho-physiological response that underlies all emotional experience – a basic sense of feeling, ranging from unpleasant to pleasant (valence), and from agitated to calm (arousal). Emotions are much more complex mental constructions that sit on top of arousal and valence. So, if I feel good and highly aroused, that’s affect, but when I give a name to or categorise my affect (good, high arousal) as excitement, that’s an emotion. Affect is almost certainly innate (hardwired, if you like) whereas emotions are not. According to Feldman Barret, the evidence that young infants can discriminate facial configurations for different emotions (such as happiness and fear) derives mainly from experiments that prove infants can distinguish between posed faces. But testing whether infants can distinguish for example between scowling (angry) or smiling (happy) faces, is really about distinguishing valence not emotion.
There are two competing views: 1. According to the Affective Primacy Hypothesis, information relevant for affective responses can be activated quickly and automatically, before other information (see Zajonc, 1980, 2000; LeDoux, 1996). 2. By contrast, the Cognitive Primacy Hypothesis posits that perceivers must determine (and categorise) the nature of a stimulus before they can evaluate its affective content (see Storbeck and Clore, 2007, for review). If you’re walking through a jungle and encounter an unknown creature, affective information associated with the creature might demand your immediate evaluation (is it safe or dangerous?). But if you’re at home watching a wildlife documentary you might not even notice that some animals are dangerous. Compare and contrast the (affective) experience of witnessing a terrorist incident with viewing it on the TV. In other words, our affective response depends on context, which means that affect cannot and does not always precede cognitive appraisal. Sometimes we Feel-Do-Think (when we “see” a snake, for example) other times we Think–Feel–Do.
What have we learned? 1. There is not always an automatic emotional reaction to brands or ads. 2. For emotion to occur there must first be an affective response and such responses are not automatic; depending on context, we may think before we feel.
The fact is, infants have no means of labelling or categorising those affects – that is something they learn.
3. Once an affective response occurs, the subject may interpret it as feeling (emotion). But other times we may experience affect without emotion.
Indeed, the contrast of emotion with affect casts considerable doubt on two common ways of measuring ‘emotion’:
4. Emotion, however, cannot happen without affect.
• Facial coding is based on the theory (largely attributed to Paul Ekman, 2003) that emotions are universal and can be interpreted via facial micro-expression, whereas it seems more likely that the seven so-called ‘universal’ emotions are culturally-specific interpretations of affect. Think about it: do you always make a ‘sad’ face when upset, or an ‘angry’ face when you’re raging? A facial expression may indicate that affective response has occurred, but it is not a reliable guide to what the subject is feeling. • Equally, neurometrics such as EEG and GSR are really just physiological measures that don’t tell us much more than that arousal has taken place. They tell us little or nothing about valence or, more importantly, the feelings (emotions) associated with the arousal.
Is ‘affect’ automatic? If affect is innate rather than learned, is it an automatic response that always precedes emotion?
So, do emotions matter? Of course they do, because they provide the evidence that an affective response has occurred and, as Zaltman and Mast rightly observed, they are what gives meaning to that response. Which means that they are, ultimately, what gives meaning to brands because without them brands are no more than bundles of rational beliefs.
Finally, spare a thought for Tahitians who have no way of describing “sadness” in their own language. They apparently use a word meaning something like “the kind of fatigue associated with flu”. In a future blog I’m going to explore the limits of language for of measuring emotion and look at the non-linguistic alternatives. David Penn is MD of award winning agency Conquest, based in London’s Kensington. The company is one of the UK’s leading independent researchers, boasting ongoing clients such as Heinz, Pizza Hut, L’Oreal, Pernod-Ricard, KFC and eBay.
Reward The Creative Process, Not The Outcome By Aaron Shields
When people think about creativity, they typically think of it in terms of three Ps: Person, Problem, and Product. A person solves a problem in a new way and creates a new product.
people when it would be beneficial to have every person in every department trying to think creatively at least some of the time.
The problem with thinking about creativity in this way is that it ignores the fourth and most important P: the Process.
2. It makes people focus on getting to a solution instead of fully exploring the problem first.
In ignoring the process and treating creativity as akin to something like divine insight—which is often the way it feels when a solution comes to mind—it causes three things to occur:
3. It attempts to reward a one-time outcome instead of a repeatable behavior.
1. It treats creativity as something only available to a select few. 2. It places the value of creativity on the product. 3. It causes organizations to reward the product instead of the process that creates the product. This is problematic because: 1. It limits the creativity in the organization to only certain
If you want to motivate people you have to reward the behavior you seek in every single person. If you only reward a select group of creative people, it produces no reason for new people to engage in creative problem-solving. And, rewarding an outcome—something that isn’t repeatable— doesn’t influence behavior; it doesn’t make creative results more likely to occur in the future. Reward only works when it’s applied to a repeatable behavior—the creative process— that produces the type of results you’re looking for. The creative process has three main preparation, generation, and evaluation.
subprocesses:
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between presenting an idea and evaluating. When you switch back and forth between generative and critical thinking, you lose the flow you would have by sticking to one type of thinking at a time and, as a result, impair the full ability of that type of thinking.
Evaluation We often don’t think about evaluation as part of the creative process (even though people tend to do it when they’re trying to generate ideas). Instead, we think of the creative solution as something that manifests itself fully formed. But, that isn’t the case: ideas from the generation stage must be evaluated—logic must be applied—to find the best idea.
Preparation Preparation is a mix of knowledge and definition: knowledge of the specific domain and a clear definition of the problem. Preparation is about constraints. It says these are the conditions under which a solution will work. Without these constraints, truly creative solutions are unlikely to arise as idea generation in the next phase will tend towards either of two opposing directions: 1. The Tried and True: This tendency is the result of being overwhelmed: if you can do anything, where do you start? Under these circumstances, people focus on what’s worked in the past and don’t produce anything new.2 2. The Useless: This tendency is that people try anything. In this case, people produce original thinking instead of creative thinking. Creative thinking has utility—it produces a result—whereas original thinking produces unique ideas that lack utility (e.g., 5+5=76).3 Creative thinking lies in-between these two types of thinking and it requires preparation and the resulting constraints to get there.
Generation Generation produces a pool of ideas. This is where a lot of creativity training and writing is focused: how do you generate the best ideas? This is also the most difficult of the three subprocesses. It’s difficult for two reasons. One, we’re wired to want to be right: from a biological standpoint, being right increases your chances of survival; exploring tons of solutions doesn’t. Second, when we see other people’s creative solutions, they appear logical.4 We don’t see the process that got them to that solution. So, we attempt to apply logic in an effort to create a single solution instead of fully exploring the problem and possible solutions. When generating ideas, there should be no evaluation, but that’s what most people do: they switch back and forth
In addition to evaluating the best solution from the pool of ideas, you also have to determine its doability.5 For a solution to be creative it has to both solve the problem in a new way and it has to be doable for an organization. If it isn’t doable or you can’t execute it, the solution has no value and it isn’t creative—it’s just an original idea: something new that’s useless. In evaluation you have to ask the questions: Will it work? Can we do it? And, do we want to do it? Many people skip the last question because they ignore the social aspect of creative problem-solving. Even if a solution is doable and an organization is capable of doing it, it doesn’t mean that the people who can do it actually want to do it—it has no buy-in. And, if there’s no buy-in, it’s not going to get done: it lacks efficacy.
Onward Anyone can be creative. Creativity isn’t a divine gift; it’s a process with three subprocesses: 1. Preparation: constraints.
Gaining
knowledge
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setting
2. Generation: Generating ideas without evaluating them. 3. Evaluation: Determining the best idea that can be done, that the organization is capable of doing it, and that people in the organization want to do it. If you want to create a company where creativity is a driving force, you have to reward this creative process—the behavior—not the outcome. _______________________ Translation from: Peter Parshall, “Graphic Knowledge: Albrecht Dürer and the imagination,” The Art Bulletin, 2013. Patricia D. Stokes, Creativity from Constraints: The Psychology of Breakthrough, 2005. Sarnoff A. Mednick, “The Associative Basis of the Creative Process,” Psychological Review, 1962. Edward de Bono, Conflicts: A Better Way to Resolve Them, 1985. Graham Wallas, The Art of Thought, 1926.
The Dark Side of Artificial Intelligence in Marketing By Paul Roetzer
I spend an inordinate amount of time thinking about artificial intelligence and its applications for marketing. When writing and speaking about it, I tend to focus on the positive aspects and outcomes.
messages, what we buy, who we’re with, when we’re home, what we eat, how healthy we are, what we read, what we watch, what we listen to, what we search . . . The list could go on for pages.
For businesses, it can increase efficiency by intelligently automating repetitive tasks. And, it can drive revenue by improving an organization’s ability to make predictions.
As marketers, we have the ability to leverage this sort of data to achieve our goals.
For consumers, it means personalization and convenience. Ads that seem to be targeted to your exact interests on every social media channel. Voice searches that give you answers on the go. Content that solves your problems from brands that seemingly anticipate your needs. And emails with links to products that appear to have been designed just for you. But, there’s a potential dark side to the technology that makes this all possible. AI is powered by data. And the more personal and expansive that data is, the more accurate the predictions become. Major technology companies are racing to capture as much information about consumers as possible through our interactions online and offline. And the more devices and apps that we enable to collect our data, the more these companies can learn about our activities, interests, wants, needs and desires. Think about the data collection empires these companies are building, and all the ways they use technology to learn about us. They know where we are, what we say in emails and text
But, the question becomes, where do you draw the line? What data will your organization capture or buy, and how will you use it to motivate consumers to take action. How will you achieve personalization without invasion of privacy? And intelligent automation without dehumanization? Figuring out how to apply AI to your marketing may seem challenging now. But, the real challenge, once you realize the power it gives you, is how to apply AI responsibly. As you think about your marketing AI strategy for the coming year, it’s critical that you start to consider the implications, good and bad, of AI on your customers and other stakeholders. And I also encourage you to join us at the Marketing AI Conference (MAICON), July 14 - 16, 2020. The ethics of AI will be a theme we explore in-depth at the event. Paul Roetzer (@paulroetzer) is founder and CEO of PR 20/20, author of The Marketing Performance Blueprint and The Marketing Agency Blueprint, and creator of The Marketing Artificial Intelligence Institute and Marketing Score.
Has the Sharing Economy Disrupted Marketing? Not Quite… By Knowledge@Wharton
The sharing economy has been revolutionary for consumers. Enabled by the internet, they have more control than ever over what, where and how they purchase, and how they use those products and services. It has also created confusion for marketers now tasked with transforming traditional practices and beliefs to fit this new reality. Wharton marketing professor Cait Lamberton offers some guidance in a new paper titled, “Marketing and the Sharing Economy.” Recently published in the Journal of Marketing, the paper was co-authored by Giana M. Eckhardt, Mark B. Houston, Baojun Jiang, Aric Rindfleisch and Georgios Zervas. Lamberton joined Knowledge@Wharton to talk about how marketers can keep up with the changing economy and even shape its future. (Listen to the podcast at the top of this page.) An edited transcript of the conversation follows. Knowledge@Wharton: From a marketing standpoint, what are some of the key characteristics of the sharing economy? It’s a term we hear often these days. Cait Lamberton: Yes, and I think that is part of the problem.
Part of the reason we wanted to write this paper is that you hear a lot of discussion of the sharing economy, and it has been that way for probably 15 years. This was a big deal in 2003, 2004, and it’s a huge question to ask what it is. What we decided that it really has to do with is a way of exchanging value, usually as a matching platform to bring people together. Very often, the supply is crowdsourced, so the goods are coming from lots of different people. There are other attributes that often go along with sharing economy businesses. For example, there is usually a heavy reliance on trust and reputation because you don’t have a firm that is standing in the middle as an intermediary between people. But that is not necessary, and all sharing economy businesses don’t necessarily rely on people giving each other star ratings. Part of the big question of this paper was, what is this thing and why does it matter? A lot of the discussion said the sharing economy changes everything, in the same way that you might remember that in the late 1990s people said, “The internet changes everything.” Then you ended up with a bunch of businesses who had no business model.
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“In the sharing economy, the consumer is also a producer.” Knowledge@Wharton: What are some of the key challenges that the sharing economy poses for marketers? Lamberton: One of the biggest things that we had some really interesting discussions about has to do with the role of the consumer. Traditionally, you have a firm that provides a good or a service, and the consumer acquires it. In the sharing economy, the consumer is also a producer. There is this new term now in the lexicon, being a “prosumer.” The same person who rides an Uber on Friday might be the same one who drives one on Saturday. More fundamentally, even if you don’t take on the role of being a producer per se, you are participating in a system in a far more active way. For example, on some of the crowdsourcing banking platforms, you can sign up to try to get a loan, but you also are going to assess other people’s credit worthiness. And that is a whole new role for the consumer. The question is, how do we market? Which role are we marketing? If we market really strongly toward the people who just want to consume, what happens to the people who also need to provide [goods or resources] for the platform to work? Do we want to mostly reach out to the people who are going to provide the good or the resource, and then end up with nobody who demands it? There is a balancing act between the different identities of the consumer in this space. Knowledge@Wharton: Are there some classic tenets of marketing that can help answer some of these questions? Lamberton: In a lot of cases, we use the same ideas that we already have, and that was part of the point of this paper. Everything doesn’t go out the window. One thing that we might say is, let’s use classic rules about segmentation. We know that when people have a resource, the longer they’ve had it, the more value they tend to place on it. We need to reach out to people who were asking to put their resource into the pool with a different kind of an appeal than people who are new to the pool. We have classic information about how expertise changes people’s interaction with a good or service, and that doesn’t change in the sharing economy. It is really very much the same. Knowledge@Wharton: In this paper, you suggest that marketers could learn a lot from consumers in this space. It seems that consumers feel like they have a pretty good handle on the sharing economy. It doesn’t really faze them that much. Lamberton: I think that is definitely the case. We stand back sometimes in academia and say, “Wow, look at this big, crazy new thing.” The people who are actually using it are like, “It’s not a big thing at all. It is very normal.” For example, you might think of things like crowdsource lending. This can be very confusing to marketers in some ways because we think that everyone should approach this with a pretty standard, rational model about risk and return, etc. Consumers have
intuitions about who they want to borrow from, who they want to lend to, who is going to be all right. If they have entered this market, they are already comfortable with it. So, in some ways, we have to get out of our own way and listen to consumers talk about their experience instead of trying to impose the roles that we expect should govern their behavior. Knowledge@Wharton: We are coming up on a generation of consumers who have never not had the sharing economy, and that is going to be the dominant group going forward.
“We have to get out of our own way and listen to consumers talk about their experience instead of trying to impose the roles that we expect should govern their behavior.” Lamberton: For those consumers, the acquisition-based economy can be a bit odd. By the time an individual gets to the age where they are buying their first car, they have had Ubers their entire life. The question of why one would then want to acquire for sole ownership becomes more complicated. When that was the norm, it was obvious and people were willing to take out big loans to do this. But now I have better options. Why would I want to saddle myself with more debt? Why would I want to worry about having a garage, worry about where I park? It does create some challenges for the incumbent firms. Knowledge@Wharton: I would think this is a whole new set of questions that you would have to design marketing campaigns to answer. It’s not just, “The car I’m buying has air conditioning.” It’s, “Well, why should I buy one?” Lamberton: Absolutely. There are alternatives that are just as easy to use and seem to cost less. I think this is a tricky spot because depending on one’s usage rate, the sharing economy may not always save you money. It could be that continually accessing something feeds your need for variety, and it feeds your desire to be unfettered and free, but it can get really, really expensive. We see this with clothing sharing systems. They are incredibly appealing because you get so much variety, and very often you can access things at a lower price than you could buy them for. You can get high-end brand names. But in reality, if you are spending $200 a month to rent clothes and are acquiring nothing, at the end of the year you still don’t have anything. We have to be a little bit careful about suggesting that this is a way to be most efficient with your resources. It is not always, and it can lead people down some tricky paths. Knowledge@Wharton: You also propose that marketers could sort this out by adopting some sharing economy principles into their practice or partnering with some players in the sharing economy. How would that work?
Lamberton: I think that what we see is that sharing economy ideas are entering traditional business in many ways through the effect route, in the sense that sharing economy businesses have from their root emphasized collaboration, co-ownership, participation, co-production. Traditional firms can certainly do this without any loss of competitive advantage. They are able to say, “You are a partner, your ideas do matter, and what you bring to us as a consumer is part of all of our success.” I think that when traditional firms import ideas in the sharing economy that create a community, they gain a form of differentiation that is very hard to create without pulling in those ideas. Knowledge@Wharton: research?
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Lamberton: I am participating in this panel on food waste at the National Academy of Sciences. We waste 40% of the food that we purchase, and a lot of that gets wasted at the consumer level. There is an idea that sharing could be a way to help with that. Because what happens when you waste is that you have a slack resource that is not used, and I may never have personal consumption needs that are going to take that up, no matter what I try to do with it. Yeah, I can cook it, but then I throw it away because it’s leftovers. I can store it, but then I forget about it in the fridge. The fridge is where the food goes to die.
“Depending on one’s usage rate, the sharing economy may not always save you money.” The idea is that if we make sharing a more integral part of consumer life, we probably can reduce waste. This is what has happened with carpooling, for example. But we don’t do this so much with food for a lot of interesting and complex cultural reasons. But we want to think a little bit about whether
sharing in general can help us reduce waste and get more out of the things that we have. Knowledge@Wharton: It wouldn’t be a traditional marketing campaign like, “Share a Coke with a friend,” but more like, “How do I market this particular product and also encourage people not to waste it?” Lamberton: Yes. We have spent a lot of effort getting people to buy things, but then we don’t necessarily worry about whether they use them. People do tend to feel an aversion to waste. If you are constantly throwing something away, you are going to stop buying it over time. So, there are really implications for marketing. Another direction we want to go is to challenge the gospel that sharing makes people happier. We would love that to be the case. We would love it to be that everybody who participates in a sharing economy business is suddenly in harmony with the people around them, and this is wonderful, and birds chirp, and the sun comes out. The truth is that we have some preliminary evidence that for people who face financial constraints, participating in the sharing economy can make them quite unhappy. Because what happens is they temporarily access something they would really like to have, and then they have to give it back. It becomes, if anything, a cause for envy and a cause for shame. If you show up at your high school reunion in a really fancy car, and people find out that you just got it through the car sharing service, it doesn’t feel great. Interestingly, for people who are not financially constrained, who could buy anything they want, sharing doesn’t create these negative effects. For them, it is just a way to acquire more variety. It feels great, it’s fun, no commitment, everything is wonderful. But I think we need to be a little bit careful about assuming that the sharing economy is going to make everybody feel better about their lives.
As the CMO title morphs, agency strategists rise By Sérgio Brodsky
Data is the fuel in the tank, says Sérgio Brodsky, but is it strategists who have their hands on the wheel? Providing advice about collection, processing, interpretation and meaningful deployment of data has become a usual discussion between clients and agencies. However, more than a real necessity aiming at addressing a specific challenge or embracing an opportunity, gathering too much data will often turn an asset into a liability. First things first. Information (or data) is not power, knowledge is. As counterintuitive as it may seem, the more information a company or person possess the harder it is to create, manage and use knowledge for your competitive advantage. This begins with the fact that our brains were made to think, not compute.
We are explanation-seeking creatures who tend to think that everything has an identifiable cause and grab the most apparent one as the explanation. From overstretched correlations to imagined causations, many of us will think it is smarter to say ‘because…’ than to accept randomness and sceptically run experiments that may provide richer insights. Take the example of Aristotle Onassis, the original media tycoon. Onassis never portrayed the image of the superefficient, well-informed media executive. On the contrary, as a bon-vivant he did not even bother to have a desk, let alone an office. All his data was contained in a notebook. His method can be summarised as a rigorous examination by looking at empirical evidence on the link between information and understanding. This is fundamentally opposed to the theories data-scientists and analysts can generate from their huge data swathes.
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The problem with storifying data is that our ideas are sticky and once we form a theory (i.e. a story) from a herculean data-mining effort, it is very hard to change our minds – even when new evidence is better or more accurate. This can be verified by the mechanisms of belief perseverance (the tendency to not reverse opinions once they are formed) and confirmation bias (the tendency to search for, interpret, favour and recall information in a way that confirms one’s preexisting ideas). Of course, data scientists and analysts will know a lot more about the processing of data and the point is not to challenge their methods but their confidence. Especially when it comes to marketing and advertising – where lateral thinking can give a real edge – the more data-led the more restrained we are to the box. Information can be beautiful but also toxic. For instance, it is better to read the weekly magazine than listen to the news on the radio by the hour because longer intervals allow information to be filtered and shift our minds from processing to thinking. Chasing the promises of big data and enabled by cheap storage, CIOs have gotten into the habit of holding onto consumer data for unknown future purposes, says Gerald Ferguson, a data privacy attorney at the law firm BakerHostetler in an interview for the Wall Street Journal. This customer data may lay dormant across dozens of systems, like payment and marketing platforms. To lower big data risks, Ferguson says, companies should maintain an inventory of what personal data is stored and why, and if there isn’t a compelling reason to hold onto the information it should be deleted. “Data that you’re storing and not making money off is a liability”, Ferguson says. There is more. Consumers want brands to forget them, to the point that the European Parliament has already recognised the right to be forgotten. Also, security breaches may help hackers find data you should not have and expose your business even more, such as the case when Target (the American brand, not the Australian one) got sued after its analytics efforts predicted a teenage girl was pregnant before she even told her parents. With all that said, the fundamental issue here is how the ownership of the customer has moved away from marketing to IT departments. For starters, big brands like McDonald’s, Vodafone, Johnson & Johnson, Uber and others recently decapitated the CMO position from their organisational charts. Others like Kimberly-Clark, Mondelez, Coca-Cola and Mars rebranded the CMO into chief growth officer. And AEG Europe (which owns the O2 Arena and runs festivals such as Coachella) VP of marketing Kimberly Kriss even suggested marketing bosses should be repositioned as chief cognitive officers. WTF?! Marketing is about money. CMOs are, therefore, the business leaders mobilising resources to ensure their respective companies deliver customer value in exchange for healthy revenue and profitability. Brand, data, campaigns, CRM and the entire martech arsenal are just means to this end. What
is interesting is that, despite some recent infatuations with coding, data and technology, agency strategists – who are often paired with their client CMOs, with the privilege of acting as their trusted advisors have not necessarily ventured down these rabbit holes. This is interesting because agencies are often expected to be at the cutting-edge of pretty much everything and whenever I meet with my inner circles of creative planners, brand consultants and media strategy peers, it feels we are a cult of fundamentalists, discussing the fundamentals of marketing… not the fuel (data) that always feeds the strategies we write. Agency strategists (whatever the denomination) are so valuable because they know they exist to drive, not fill the tank. Providing direction, thinking about positioning, segmentation, targeting and nerding over the literary canons from Field and Binet, Sharp, Galloway and another few is what agency strategists do best. According to all-rounded strategist-planner-consultant Eaon Pritchard: “The idea of big data causes marketers to sometimes engage in a kind of magical thinking, where the mere possession of data bestows special knowledge. Yet, magical thinking is really about anxiety reduction. And, turning the complex, simple and the simple, compelling is the agency strategist hat trick.” An agency strategist can be to a CMO what a Consigliere is to a Capo. A trusted advisor and spokesperson to the boss. We genuinely want to be your best friends by learning from and feeling your challenges. Just as much as CMOs are often cornered by CFOs, COOs and CEOs, agency strategists must be able to demonstrate to the entire agency that their thought-processes will nail the brief. The ones that succeed most often are also the ones to be challenged the most. They are not data-led but rather data-inspired. They use the available information to push the envelope, not minimise potential risks. And they carve out head space not to strengthen their ‘because’ but to find ways to change their minds before settling on an insight. Marketing is strategy (and money) when it goes downstream, understanding and responding to customers often unarticulated needs and desires. The computation of the many variables involved in the marketing function is of extreme value, but it becomes meaningless without reasoning, experimentation and a healthy degree of skepticism. CMOs, join your agency strategists for a walk on the wild side. You may not hear that much about attributions and inferences, but your strategists will actively listen and be your thinking partners. The only thing required is an open mind and perhaps a notebook. Sérgio Brodsky (L.LM, MBA) is an internationally experienced brand strategist, a marketing lecturer at RMIT and chairman at The Marketing Academy Alumni. He is passionate about cities and culture and the role of brands and technology in society.
Man on a (Collaborative) Mission! By Suresh Dinakaran
When you are the Founder/CEO of an entity with a name ‘The Agency of the Future‘ and passionately champion social initiatives through a purposefully provocative titled firm called ‘ Pimp My Cause ‘, you have a premonition of what’s in store. Paul Skinner lives up to the billing and more in this heart to heart conversation for BrandKnew(published by ISD Global). When the rest of the world seem to be missing the wood for the trees under the burden of competition, Paul brings to fore the power of collaboration as the next, new, big, much needed..so go on, collaborate! BK: Could you pl tell us a bit about your growing up years? What/who were your childhood aspirations & inspirations? PS: My childhood hero was an Egyptian doctor called Magdi Yacoub. He was a pioneering transplant surgeon, traveling the world in his own helicopter to perform breakthrough lifesaving surgery and who now well into retirement age still leads a team of research scientists. He operated on my father in one of the early heart transplants, extending his life by thirty years. The operation was also made possible by the ‘donor card’ system of organ donations in the UK: a powerful cooperationenabling idea for our common good that has its counterpart in so many nations of the world. Perhaps that was an early inspiration for my book! BK: Collaborative Advantage is your first book, right? Could you share with us the motivation behind the book and what the experience in bringing the book to life was? PS: The most difficult part of writing a book is probably not the writing of the book itself but the identification of a ‘bookworthy’ idea in the first place. I had been working with the concept of Collaborative Advantage for nearly ten years and saw how it could transform the success of any organisation. I couldn’t just sit on an idea like that and in the end it became too frustrating NOT to write the book so I got to work on doing the idea as much justice as I could for a broader audience than the range of clients and partners than I can work with directly. BK: Since we are in a continuously evolving ‘ Collaboration/ Sharing Economy ‘, do you a sequel to the book on the cards? PS: Every day that passes we become even more interdependent and inter-connected. The solutions to our greatest problems in business and society are rarely available to any of us by working alone. That means we depend on fostering shared purpose which will indeed be centre-stage in my next book. Where Collaborative Advantage asks how we can grow more
quickly by better harnessing the collective value-creating potential of the world outside as well as inside the business, my next book will look more deeply at what kinds of changes and propositions we should seek to create in the first place if we want to achieve extradorinary success in today’s operating environment. BK: Over the years the refrain has been Competitive Advantage and Sustainable Competitive Advantage- why did you want to break that mould and talk Collaborative Advantage? PS: ‘Competition’ as an idea works well for things like a 100m sprint, where we ultimately depend on our own performance alone and where the rules of the game are tightly defined. Today’s business world however does not ressemble that at all. We rarely want to play the same game as other businesses, because that just leads to price wars and value extraction. Competitive Advantage is no longer as sustainable as your question may imply because the length of time we can hold onto it has diminished ever since the idea was first introduced. Competitive Advantage has also been associated with negative externalities ranging from local pollution to climate change. The concept fails to take into account the effect of radical disruption from outside our own industry. And most of all it limits our perceptions of what is possible by causing us to overlook much of the value that we can create with and through the entire business and human eco-system in which
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we operate. It has become more and more apparent to me that the time has come to identify an approach to strategy that begins by taking this fundamental inter-connectedness into account and removes the upper ceiling on the success we can create by de-coupling our ultimate potential from the limitations of our own budgets, resources and internal perceptions. BK: Over the years you have worked with and consulted both for profits and not for profits like the UN, Save the Children etc- what is it that these organisations can learn from each other? and how to address many of the cross-cutting issues that businesses were not necessarily created to deal with and yet find themselves having to cope with. PS: The greatest breakthroughs come from bringing different worlds together – different worlds of perspectives, expertise, capabilities, resources and cultures. As you say, the business world needs to understand how to operate in an environment of complex problems, ranging from environmental resource depletion to the mental health of its staff. It can learn a huge amount from organisations dedicated to dealing with exactly these issues and find new legitimacy from partnerships that build trust among their stakeholders and enable them to efficiently and effectively achieve their goals. The business world also has a lot to learn from non-profits in terms of how to understand and empower people in all phases of life. Most countries of the world face the economic challenge of a rapidly ageing population for example: what kinds of new products, services and patterns of work will accommodate the needs of nations where the majority of people are over 50 years old and where an entire generation may expect to live to 100?
show Pimp My Ride in which an expert team of mechanics re-vamped the battered up cars of selected viewers. The idea of course was to be the Pimp My Ride of charity marketing, inviting marketers to enjoy using their skills to transform the success of small charities and social enteprises with little or no marketing budgets. Marketers have now contributed over £5 million expertise unlocking over £20m of social value creation in support of 2,500 charities and social enterprises – not bad for a voluntary platform. We now plan to build on some of the events and challenge programmes we have run to foster a whole tribe of marketers and businesses working more collectively to achieve shared goals for positive change for the world, for marketing and for themselves. BK: A couple of weeks ago, BrandKnew was in Conversation with Martina Olbertova who runs this organisation called Meaning. Global- Do you see Purpose and Meaning being two sides of the same coin? And are brands and marketers waking upto the true potential with purpose? PS: Purpose gives us our ‘reason why’ and meaning explains the significance of that purpose, so of course they are connected. Too often however, marketers who focus on brand purpose are starting in thr wrong place with too much of an inward focus. From the perspective of Collaborative Advantage, the key question to ask would be ‘whose purpose is it anyway?’. More value is created by customers than suppliers: if I’m a construction business for example, I can’t sell my services unless a customer can create more value with the building I can construct for them than it costs them to buy my services.
And non-profits need increasingly to understand the private sector, firstly because they need to work with its resources to achieve success on the scale required by the problems they seek to solve and secondly because they increasingly need to develop their own social enterprise business models to drive their own financial sustainability.
So it makes sense to begin with a customer’s purpose and then work backwards from there: how can that purpose be better empowered? What new opportunities for innovation could that create? How can this create shared value with partners and other stakeholders to create additional mutual benefits along the way?
BK: In our brand consultancy practice @ ISD Global, we have been espousing ‘ RIP Competition ‘- now it’s all about ‘ coopetition’- the letter m is not relevant- what is your take on this line of thinking?
BK: You are putting Charles Darwin on the spot with the ‘ Survival of the Friendliest ‘, a theme that you use for keynotes- could you please elaborate more on the origin of this thought?
PS: I like the concept. It gives people something familiar and pairs it with something unfamiliar. And it reflects the underlying truth that value creation is now almost always a far more collective process than we previously assumed. We are increasingly likely to find ourselves out of our depth and out of our breadth if we try to succeed alone.
PS: The evolutinary concept of the ‘survival of the fittest’ points to the incremental improvements that come from natural selection through the survival of life forms that are better adapted to their environment. This overlooks the creative process however that brings each of these life forms into being! Evolution is perhaps more a ‘snuggle for survival’ than a ‘struggle for survival’. The success we enjoy as humans compared to other species derives less from our physical ability to compete (many animals can outperform us in speed, strength or stamina) and more from our advanced capacity for cooperation with each other at a scale and complexity that no other species has developed, which is of course made possible by our facility for conceptual thought and language which have enabled us to collectively create our modern world.
BK: Your initiative Pimp My Cause is a purposefully, provocative title – how typically do business leaders and organisations respond to this noble quest? PS: Pimp My Cause is a voluntary initiative but which is also really a living laboratory of fresh insight into Collaborative Advantage. It brings professional marketers together with good causes they can support while getting even better at marketing in the process. The name is based on the cult MTV
themselves than it costs them in the first place. This is true for the shift from ownership to experience; to what we’ve come to call the collaboration economy; and indeed fundamentally for all businesses: disruption is coming your way soon! BK: Museum of Brands is a great concept- could you share what your role with them is about? PS: The Museum of Brands engages the public with the role brands have played in society throughout history and up to the present day. I sit on the advisory board to help them find new ways to bring this to life for today’s generations. The junction point between brands and the public is a rich place for reflection. What I most see when I watch people walk through the Museum is people stopping to talk about the brands and products of their childhoods, remembering who they were with, what they were doing and what was going on the the world at the time. The more brands can wrap themselves around our own interests and priorities and make a contribution to the change going on around us the more Collaborative Advantage they wll create. BK: Could you tell us about the books and people who have inspired your life and career?
In today’s inter-connected environment, most value creation depends primarily on acts of reciprocity and cooperation: our success is determined by who we are working with rather than by who we are working against. This capacity to combine our value creation efforts is the greatest accelerator of our evolutionary progress. BK: Purpose for brands sounds very esoteric while brand equity and brand valuation are narratives well understood and acknowledged in today’s context- you say the twain should and can meet- could you expand on this? PS: Brand equity and brand value are wonderfully interesting concepts and metrics – if you happen to own or lead the brand in question! For anyone else they are utterly irrelevant and are therefore not levers that can be pulled to better engage with stakeholders, from customers to communites and even to employees who may not always see a correlation between brand value and their own role and employment conditions. As long as we remember that purpose needs to be shared by everyone on whom we depend upon for our success, beginning with our customers themselves, then it can open the door to goals that unite us with all our key stakeholders in a tangible vision for positive change. BK: We are seeing a definite shift in consumption behaviour patterns from ‘ ownership ‘ to ‘ experiences ‘- in your understanding, are brands and organisations seeing and adapting to this tectonic shift ? PS: The value of a product or service does not lie in its supply but in its usage. That is one part of the shift from Competitve Advantage, which is all about the value we inside the business create, to Collaborative Advantage which seeks first to understand the value the end customer wishes to actively create and then finds the best way to enable that. There is no opportunity to supply any offering unless the customer is able to use it to create a greater value to
PS: One of the most fun things about my work is that almost anything can count as research – so things like watching a film, a visit to the theatre, participation in a debate or reading a great new book somehow straddle my work and personal interests. By reminding us that we depend on the responses and actions of others to achieve our success, Collaborative Advantage particularly opens the door to the value of greate storytelling that can involve and inspire the people we most need and expands the contribution that stakeholder influence can make across all our activity streams. So I’ve always been inspired by the world’s great writers. Last night for example I was drawing inspiration from the way the Argentinian writer Jorge Luis Borges played with concepts of infinity in stories such as the Garden of Forking Paths. There is a lot of uncertainty in the world right now, but at the same time the opportunities to create breakthrough success have never been greater. BK: What makes Paul Skinner go ‘ Wow, another day at work‘? PS: I most thrive when dealing with problems that I can describe as ‘excitingly difficult’ and with people who really want to find the right answers to the questions they face. The opportunity for thinking and acting from first principles opens the doors to radical positive change – that’s the lifeblood of my work. BK: What do you do in your spare time? Your leisure time pursuits? PS: As well as taking an active interest in the world around me whether that’s in my community, country or internationally, I also try to balance that by taking an interest in my own inner life. I meditate every day which is a major driver of my creativity and helps me find balance and stillness in an ever more complex world. You’ll also find me at the gym or on a tennis court to restore a more physical balance to a life where I spend so much time in thought.
The golden age of product placement By Faris Yakob
Is the world of advertising about to come full circle, Faris Yakob wonders? The period known as the ‘golden age of advertising’ starts at the creative revolution in the 1960s and runs through the end of the 1980s. During this time, and possibly even until now, if you asked the average individual to think of advertising, they tended to think of television commercials. We know this because in research, consumers tended, and still tend, to significantly over-attribute any advertising to that medium. Print and posters are glorious juxtapositions of art and copy, but it is the thirty second spot that every creative seems to aspire to work on. That is advertising your mum will see. Today, we live in what is generally recognized as the ‘golden age of television’, or ‘Peak TV’ (to distinguish it from the prior gilded age in the 50s). However, if you are watching many of the marquee programs that are making cultural waves on their native platforms, you won’t be seeing any ads. Before there is an immediate uproar, yes people still watch plenty of commercial television, especially in the USA. However, at least 14 million homes have cut the cord entirely and many more have access to one or more subscription services. Total media consumption time has plateaued. People are watching [and talking about] Netflix, and, according to UK regulator Ofcom, children are more aware of the existence of Netflix than the entire BBC. Consumers who skew more educated and affluent are more likely to be watching on-demand subscription services. This is why Scott Galloway says that “advertising will become a tax only the poor will pay”. We are only at the beginning of ‘over-the-top-TV’ (in both senses). Significantly more growth is expected, which is reflected in Netflix’s share price. There are a number of heavyweights about to enter the market, including Disney+, HBO Max and Apple TV+ (who brands these things?). So, some people, especially affluent ones, are going to be watching more television without advertising and that is likely to grow. Television remains the heavy hitter in cultural impact and nothing online (except perhaps search, which isn’t really advertising) comes close to creating the same commercial impact for brands (it may be a different story for politicians). All of which leads us to the question, how do brands reach those consumers who only watch commercial-free, televisionlike content, whilst still leveraging the uniquely powerful combination of semi-focused attention on sight, sound and motion that can stir the heart?
Fear not, for brands, like life, find a way. Companies like Netflix have taken on vast amounts of debt to fund their expansion and as such will need to find alternative revenue streams at some point, especially as competition intensifies. In this, as in so much else, the nascent global content companies look to Hollywood, which long ago realized that it could subsidize the onerous costs of production with product placement. The first movie to win a Best Picture Oscar in 1927 was a silent film called Wings that featured a prominently placed bar of Hershey’s chocolate. Product placement is considered “integral to the Bond formula” and the last movie had its twelve ‘partners’ featured prominently on the official website. As Daniel Craig said, “The simple fact is that, without [product placement], we couldn’t do it. It’s unfortunate but that’s how it is.” As with everything in the advertising industry, that which is old becomes new again, in twisted McLuhan-esque ways, when new platforms emerge. Stranger Things is the most popular streaming series in the world (Parrott Analytics) and classic 80s brands were particularly evident in Season Three. Netflix didn’t get paid for it directly in this case (although it has taken some paid placements) but brands like Coca-Cola that featured prominently throughout spent a lot of money on co-promotion, which is often part of these deals (Reese’s Pieces’ famous appearance in E.T. worked the same way). Regardless, the impact on the consumer is irrespective of how something is paid for. My wife Rosie worked for entertainment branding company Translation. She related the tale that founder Steve Stoute would tell of the agency’s genesis. He was working with Will Smith on Men in Black and discovered that Smith made far more money from the Ray Ban partnership than he did from the chart topping single from the soundtrack; this led him to approach Jay-Z with the idea of forming an agency to broker such deals. As more affluent consumer viewing time is spent on subscription platforms, we will see more of these sort of deals and deeper product integrations. Diageo released a number of Game of Thrones whiskeys and Bollinger has already announced two limited-edition champagnes to coincide with the next Bond film. Taken to a logical extension his might lead to brands stumping up the money for entire shows, which brings us full circle back to the origins of television. Before the invention of spot advertising, shows were made by advertisers. Most famously, P&G created soap operas to sell detergents to housewives (hence the name) and liberally placed their products in them so this golden age might end up looking like the first one.
Four benefits your brand can unlock with better employee advocacy By Shirley Boudaher
Specifically, we are talking about the notion of ‘employee advocacy’, which simply refers to employees actively promoting their workplace across their own social media channels. This is a relatively untapped area of brand storytelling but forms an important pillar in gaining peer-to-peer trust. That is, people talking organically to their friends and families versus towing a party line that you may find in comparison with marketing messaging. While leadership participation is critical for success, a brand’s employees are its best and most passionate advocates and their influence can prove much more powerful than traditional advertising. Take ANZ Bank for example. With the desire to strengthen relationships with customers, help employees build their professional brands and showcase thought leadership, the company implemented an employee advocacy program. To do this, the company used LinkedIn’s Elevate platform, an easy-to-use content sharing platform that equips employees with relevant industry articles and topics they can share with their network. After implementing this platform, ANZ Bank saw an average increased engagement rate with employee-sharing influencing four times more company page followers. Employees were also seen to be growing their own LinkedIn connections four times faster than before, amplifying their brand messages to a wider reach. With nearly 40% of people in an organisation spending up to five hours per week on business-related social media activities, brands have the perfect opportunity to implement a formal employee advocacy program. To show how impactful it can be, here are four important and tangible benefits you can unlock for your brand. 1. Elevated brand awareness With employees connected to 10 times more people than their employer, according to LinkedIn, they are actively advocating to a much wider audience than the brand itself, resulting in improved brand visibility.
In fact, recent research from Social Media Today found that 79% of organisations reported more online visibility and 65% reported increased brand recognition after implementing a formal employee advocacy program. Strong statistics which reinforces the effect it could have on brands – and at speed. Keep in mind, people are looking at what employees are saying about a brand, not what the brand is saying. And if your staff are using social media to demonstrate thought leadership, share workplace updates or flaunt your organisation’s culture, their voices are scaled to a whole new level, making them perfect brand ambassadors to the outside world. 2. Increased brand engagement As the social space continues to grow and develop, it’s being overrun with content saturation and shortening attention spans. Brands are finding it harder than ever to generate real ‘qualified’ interactions across their channels. However, this is where employee advocacy can help and deliver significant impact also. Content shared by employees can receive up to eight times more engagement than if posted across brand channels – a significant difference. In addition, employees can also drive a clickthrough rate which is double that of their organisation when sharing companyrelevant content. Think about it, people are more likely to engage with content shared by their personal connections. So if only 3% of employees advocate for you brand, it will result in a 32% increase in engagement – imagine how much engagement 50% or even 100% of your staff can drive. 3. Expanded credibility and trust When employees communicate directly with their trusted connections across social media, they have the power to develop a brand’s credibility. If you really think about it, to the everyday person, a referral or recommendation from a trusted friend is much more
credible than a corporate message, with 76% of people finding content posted by others to be more honest than branded content, according to Hubspot. People put their trust in their social networks because they know they are receiving honest information and recommendations as opposed to a branded message. 4. An impact on the bottom line With more and more people looking to their social media networks before making a purchase decision, there becomes an untapped opportunity for employee advocates to influence their choice. Cue ‘social selling’. This is all about leveraging your social media relationships to develop and nurture potential sales prospects. Employee advocacy is perfectly aligned with this approach, providing the opportunity to turn consumers into customers. Employee advocacy can help a brand’s bottom line, with The Marketing Advisory Network finding that leads developed through social advocacy are seven times more likely to convert. Research also shows that a 12% increase in brand advocacy can double your increase in revenue growth. So if you haven’t got a formalised employee advocacy program up and running, now is probably the time to get it going. And the good news is – it is one of the most cost-effective activities you can include in your budget. It is estimated that these programs can cost just 10% of a brand’s overall advertising spend, making it one of the most affordable ways to drive qualified traffic and sales for your business. There is no doubt that employee advocacy is vital for brands to thrive in the current digital age, but if done right it can also have significantly positive wider commercial impacts on your organisation. And it all starts with arming your staff with the tools they need to harness the power of social media and getting you on the road to social success.
Can brands automate emotional intelligence?
By Gregg Johnson
Intelligence is the ability to gather information and apply it to the human experience. This was true when silicon was just a shiny rock, and it’s true now that machines are becoming more intelligent. Businesses today need to deliver a different kind of intelligence: a high emotional quotient (EQ), which Harvard theorist Howard Gardner describes as the ability to understand what motivates another person and how to meet their needs. EQ (otherwise known as emotional intelligence) is mostly used to describe people—a friend’s ability to empathize with a difficult situation, a manager adapting her approach to an employee’s work style, or a salesperson relating to a potential buyer. It turns out that EQ is also important for businesses. Emotionally connected customers are more than twice as valuable over their lifetime as highly satisfied customers who don’t feel such a connection. For businesses, EQ is more relevant than ever. More companies are gaining efficiency by introducing self-service technologies, whether it’s on a website, through an app, via chatbot or voice assistant or at a kiosk. According to Adobe’s research, 64% of people say they can be delighted by an automated interaction if it’s done well. Yet a human touch is important for building trust and connecting with customers. In a 2018 survey by my company, consumers said EQ is best established in person (80%) or on the phone (49%) versus through artificial intelligence (24%) or a chatbot (22%). Automation works in the right settings, but businesses should approach these interactions thoughtfully. Context matters. When making a small or relatively simple purchase like toothpaste or a t-shirt, we’re usually motivated by convenience—doing it quickly, easily and from anywhere. But when it comes to larger or more complicated purchases where more is at stake, like a car or a mortgage, we value confidence more than convenience. We want someone to validate that we’re making the right choice, which often involves a one-on-one conversation. That is not to say complex and anxiety-inducing purchases can’t be automated. Take the example of buying a home, which is the biggest and most stressful purchase most of us will make in our lives. The decision involves profound financial and emotional implications, including how and where to raise children. Getting a mortgage typically involves reams of paperwork and time waiting to be approved. Fortunately, loan providers are automating the process—the Rocket Mortgage app, for example, allows customers who qualify to get a mortgage within 24 hours. Its simplicity and speed are only possible because the process is automated, but Rocket Mortgage offers human assistance at every step of the way via phone and online chat.
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Recent research backs up the notion that consumers want human reassurance during moments of high anxiety. A study by Michelle Shell and Ryan Buell of Harvard Business School found that anxious customers who use a self-service technology (like an online investing platform or an automated text service for loan updates) end up trusting the provider less and feeling less satisfied with their decisions. Yet anxious customers who use the same technology but have the option to talk to a real person do not report the same effects. Even if customers don’t end up choosing to talk to a human, the option is important. The Harvard study found that “merely having the option to access a person seemed to be all most people needed to feel supported.” This takeaway is especially important for businesses in industries like financial services and health care, where the stakes are high, as is the potential for customer anxiety and uncertainty. To demonstrate EQ, businesses should think about how they’re building trust with their customers and putting them at ease. My local coffee shop and dry cleaner don’t need to go out of their way to make me feel that we have a connection. But a company I’ve never encountered or rarely do business with needs to work a lot harder to gain my trust. If I’m going to buy an insurance policy through an app, as tech companies like Lemonade make possible through bots and machine learning, it’s critical that I feel the brand understands what motivated me to reach out, meets my expectations, and makes me feel supported. More and more, businesses have access to data and tools that make this personalization possible. Transparency is also critical to building trust and lasting relationships with customers. Many of us regularly interact with businesses through a combination of human and digital service, whether it’s getting help with our taxes, buying a new phone plan or contacting customer support. Whether the service is automated or not, it should always be clear from the beginning of the call or chat whether a human or AI is on the other side of the conversation. In California, it became a law to do so. The balance of automation and human touch will only become more important to strike. AI won’t replace humans any time soon, but machines are getting better at parsing emotions—Amazon, for instance, is upgrading Alexa to understand frustrated tones of voice. While automation plays a role in serving customers, businesses should view it as a complement to human interaction, not a substitute.
The role of news brands in multi-media campaigns By WARC Staff
News brands affect behaviour change at two key points in the buying journey, according to research from Newsworks. The UK body for news media teamed up with research company Future Thinking to evaluate the reaction of 2,946 people to 14 multi-media campaigns for brands including John Lewis, Huawei and Uber Eats. This found that average campaign awareness was measured at 46%, but this increased to 54% among news brand readers. “News brand readers are very attentive to advertising, which is an integral part of the experience, and are more likely to take out key campaign messages,” notes Newsworks insights director Denise Turner, writing for WARC. (For more details, read the full article: What news brands can offer and other channels can’t.)
brand exposure. • They sustain customer loyalty and influence other purchasing by prompting word of mouth and brand advocacy. Word of mouth increased by 29% points and advocacy by 23% points due to news brand exposure. The consolidated findings from the 14 in-market multimedia campaigns, Turner says, show that news brands affect behaviour change at two key points in the buying journey: 1. Driving purchase consideration at the ‘Preparation’ stage (when people don’t currently buy but are planning to do so). 2. Creating loyalty at the ‘Maintenance’ stage (when people currently buy and intend to continue doing so).
And she highlights three things that news brands do especially well:
3. The research demonstrates the particular role that news brands can play in multimedia campaigns, she argues; “they are not simply interchangeable with other media”.
• They help to create a brand story by increasing brand knowledge. Knowledge was 18% points higher due to news brand exposure.
In fact, “brands are missing out by not including them in their campaigns,” she adds. “Our research shows they are missing out on £3bn profit by leaving news brands off the table.
• They help drive sales by increasing purchase intent. Purchase intent was 23% points higher due to news
“If I was a client, I’d be urgently reassessing my campaigns on this basis alone.”
Why Mobile In-Game Advertising Is Taking Off and the Different Ad Formats Available By Yoram Wurmser
As more games hit the market, it becomes harder for publishers to get noticed, which has made proactive user acquisition strategies more important. That’s true of casual games, which have found a huge following on mobile, and more complex games that have found ways to integrate advertising that doesn’t detract from gameplay. For our first-ever report on mobile in-game advertising, we analyzed several ad formats that game developers are offering brands, from playables and interstitials to rewarded video and banner ads.
Rewarded Video With their ability to augment the gaming experience, rewarded video—video ads that can be launched at key moments in a game in exchange for a small, tangible in-game benefit, such as an extra life or added energy—has found a home in games. Most game developers that offer in-game ads use rewarded video, according to Walnut Unlimited. In fact, only 15% didn’t use them, while 75% did so with other formats.
Interstitials Although rewarded videos dominate the mobile in-game ad experience, many developers also use interstitial video placements. The two video types have different purposes: Rewarded video often complements in-app purchases, giving users a free way to gain some small value within a game (that otherwise might be purchased with real currency). Interstitials fill otherwise unmonetized pauses within games. Interstitials and rewarded video often have “end cards,” a final ad screen with a call to action. Depending on the advertiser, end cards might invite users to tap for directions to a store, install an app or view a rich media experience, such as a playable ad.
Playables Another ad unit that has benefited from the move to interactive and engaging formats is the playable ad, which is a miniversion of the advertised game or a branded minigame. The ad works best when it replicates the most representative level within the advertised game. This requires analysis of the gameplay to see where players are most engaged and then building the same experience into the ad. The net effect of a well-designed playable ad isn’t just higher clickthrough rates and CPMs or cost per action (CPAs), but also better postinstall engagement.
Banners The growth of hypercasual games—games that are very easy to learn and have short game loops—has also been a boon for banner ads. They remain an important unit in a wide range of games sometimes as a complement for increasingly sophisticated and interactive rewarded video and rich media ads but also as the main monetization tool in games that don’t have an internal purchase economy, lending themselves naturally to rewarded video.
The advantage of these ads is straight-forward and can supplement in-app payments. Advertisers like the ads because they only pay if the viewer takes the desired action— but the completion and install rates are very high. This lets publishers charge a high eCPM, but it centers around the fact that users opt in to seeing them.
More recently, new technologies offered by companies like Bidstack and Admix can insert banner ads into the gameplay itself, effectively turning them into native ads. For example, the banner could be placed on a flag on the side of a racecourse or the arena walls in a sports game. These are native ads, but the creative is a standard banner ad bought programmatically that has been transformed to fit seamlessly into the game’s world.
Q&A: How DTC brands use smart B2B techniques to connect with consumers By Pathmatics
Direct-to-consumer brands are making noise in the advertising space, growing from a challenger to a real force. DTC brands know their customers, have data and embrace creative strategies to build relationships. As the space has matured, brands have figured out how to use business-to-business targeting techniques to effectively build relationships with their customers.
don’t really have a parallel in the broader display market. I think the challenge for most DTC brands in the near future is what do you do once you’ve tapped out on the incremental growth that Facebook can provide?
William Merchan, CMO at Pathmatics, sat down to talk about how direct-to-consumer brands are disrupting the industry, DTC brands’ focus on social and other marketing channels, as well as how these brands have embraced such creative strategies as emojis and hashtags.
We see them investing in mass reach sites like Yahoo as well as more focused content rich sites like YouTube, Hulu and Reddit. Most of the budgets going into channels outside of Social are still what I would call experimental. There are some exceptions to this where we’ve seen a brand like Allbirds who has now shifted investment away from Facebook to the point where over 60% of their investment is now going into other channels.
What are some of the most important recent trends you’ve seen among direct-to-consumer brands disruption and how do these differ from some of their more established competitors? Given where we are in the timelines, funding and adoption of the DTC leaders it’s been interesting to see how they have gone from challengers to establishing and expanding their portfolio of brands. I think one of the lessons any marketer can learn from how DTC brands have seen success is how they’ve taken B2B targeting techniques and applied them to a consumer business. While the use of influencers and their PR gets a lot of media attention, you quickly cap out on how much growth you can drive through those efforts. We’ve seen as the DTC brands have grown, they behave more like a leading B2B brand than a B2C brand. As an example, DoorDash launched their subscription business this year and has shifted from a Facebook focused investment strategy (90%+) to a more balanced approach (including other channels). Last month, 70% in Facebook. What does DTC brands’ focus on social channels look like? And why do you think they’re so focused on social? Social continues to be the best channel for any brand that is looking to drive targeting and performance at scale. This holds for DTC and any other brand as well. Social is a focus for many of the DTC brands because the measurement, targeting and optimization options available on Facebook
What channels are DTC brands using beyond social?
Why do you think DTC brands haven’t taken up programmatic advertising when so many bigger brands are investing heavily in programmatic? The reasons we’ve heard from DTC brands on why they are still only dipping their toes into programmatic is that for them this is new territory. Most of their teams have been solely focused on Facebook as their primary marketing channel and it’s been a bit of a struggle to take the approaches they’ve had for planning, buying and optimizing from Facebook into other channels. I think the lack of transparency and measureability have hindered the movement of meaningful budgets as well. Can you talk about the kind of creative strategies DTC brands are using? What does their use of emojis and hashtags look like compared with more traditional brands? This has been a really interesting growing trend with DTC brands where they use emojis and hashtags very consistently in campaigns and creatives. Everlane has been running a campaign with the #DamnGoodDenim hashtag, which gives their brand a little edge relative to the more traditional brands. They’ve successfully used this approach for over 2 years now. I’m sure we will see more traditional brands jump on the Emoji and Hashtag bandwagon soon.
Risking it for the greater good-marketing that means more By Chris Freel
Risky campaigns can shock and inspire awe, but more importantly, they can be a force for good. Chris Freel shares a few of his favourite risky campaigns that led to more than a path to purchase. As a kid I was always a risk taker, I was a sucker for peer pressure. “Jump over the hedge Chris, you’ll be ‘right”, and so I would, and nine times out of 10 I was alright. Don’t get me wrong, I was scared, always scared, but the adrenaline and excitement would take over and outweigh the fear.
Then came the time it did go a little wrong. We were jumping off a garage roof onto a mattress, and each time the mattress would get further away. As I went for the final leap, I knew I wasn’t going to make it; my body froze, and I panicked. Rather than put my hands out in front to try and break my fall, I forgot and cracked my head on the paving and it split open like an egg. Fast forward and twelve stitches at the hospital followed, providing a scar that still shines brightly today. But would I go back and change that? Probably not.
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Even though I paid the consequences, it was a learning experience and my first realisation that taking risks could pay off. Above all, the key lesson that stuck was that it was probably a good idea to measure – in this case literally – the risk. Risk is an essential part of life. It is defined in its purest form as a situation involving exposure to danger. But ‘danger’ is very subjective. What is dangerous for you may be different to what the person next to you sees as being dangerous. For brands, danger is often seen as change, detracting too much from the beaten track. ‘Stick to what you’re good at!’ After all, for many brands it has taken years to build up a following, a reputation and a business. But now more than ever, brands are finding it hard to cut through and competition is at an all-time high. So how can they evolve and grow? For many, a shift to purpose is the answer and I believe that all brands should think about not just how much money they can make, but also about how they can make the world a better place. This doesn’t come without its challenges. It can be bloody scary. It can mean a complete pivot in strategy and will often mean putting your neck on the line. However, it can also be the most fulfilling thing that you will ever do. Where business and personal values collide to create win/ win scenarios all round. If you get it right then it can work for your brand, work for society and work for your bottom line. It is the future for brands who still want to have a business in years to come. Millennials have a global spending power of US$2.5 trillion and 95% of them would switch brands tomorrow for one that supports a cause, according to a Cone Communications CSR Study. So, who is doing it well and what are the key lessons for success?
Patagonia – be genuine and true to your brand Patagonia lives and breathes its mission. It is ‘In Business to Save our Planet’ and it is fully focused on this. Patagonia donates at least 1% of its time, services and sales to grassroots organisations protecting the planet. But as the climate crisis has worsened, Patagonia has taken more responsibility on activism and fighting governments. It also took a big risk as the first corporate to sue the President and donated all of its earnings from the US Government’s tax cut back to the planet – a US$10 million gift. Not many brands fight against the US Government, and although a big risk that is costing millions of dollars, it is pivotal to Patagonia’s brand and values and because of that, its following has grown and loves the brand even more. As it states, it has been in business for more than 40 years, providing tools and clothing for those who embrace nature, and if it wants to continue to do that for the next 40 years, then it needs to ensure we still have nature to embrace.
Adidas and Parley – what started as a test is now mainstream In 2015, Adidas teamed up with Parley for the Oceans and
in 2017 created one million pairs of sneakers made from ocean waste. What started (in Adidas’ terms) as quite a small test has quickly become core to its entire business strategy. Five million pairs in 2018 and 11 million in 2019, as the movement now expands into apparel, too. It is playing its part in tackling one of the world’s biggest environmental problems and not only is it cleaning up the oceans, Adidas is also cleaning up financially. The Parley range is the most sought-after sneaker in the US and can retail at upwards of US$300. It is good for the planet and very good for the bottom line. As Adidas looks to grow this strategy, it recently announced a 100% recyclable shoe and is also growing this into broader clothing ranges.
Burger King: ‘A Day Without Whopper’ – tactical can work if it is clever In 2017, Burger King launched a very clever campaign to support its biggest rival. On a day when McDonald’s was donating all proceeds from its Big Mac sales to support sick children, Burger King launched a campaign removing the Whopper from its menu for that day and actively encouraging its own customers to go and buy a Big Mac instead. Some may say it’s cheeky, and some may say it’s just a clever marketing stunt and both would probably be correct; but the move also saw an overwhelmingly positive response because good is good regardless. And we all love clever and cheeky.
State Street Global Advisors: Fearless Girl – taking a stance can become your best brand asset The ‘Fearless Girl’ statue was created from an idea by McCann New York for SSGA to celebrate the anniversary of its gender diversity index fund and promote gender diversity in leadership. Its installation in 2017, facing the Charging Bull statue in Wall Street, was originally granted for one week but remained for more than a year before being moved to another site in the New York Stock Exchange. SSGA, which was almost unheard of outside of the industry, was propelled into the public eye and this campaign has almost become the SSGA brand. Taking a stance on gender diversity was bold for SSGA. It has not been without its detractors, and it had to ensure that its own house was in order. But it has stayed true to this focus and it, in turn, has enabled SSGA to gain credibility and respect. On top of that, it has driven results in its quest for gender diversity on boards. *** I believe that the biggest challenges in our lives reap the biggest rewards. It requires bravery, belief and sometimes risk. Above all, it requires you to do something. Haters are always gonna hate, but the rewards out there for those who are brave and clever enough to follow a true course are well worth it.
Why brand ‘perspective’ matters By WARC Staff
Brands may benefit from understanding the difference between having a clear “perspective” versus focusing on a given purpose in their marketing. Neal Arthur, managing director of Wieden+Kennedy/New York, discussed this topic at the Association of National Advertisers’ (ANA) 2019 Masters of Marketing Conference. In a marketing age when seemingly every brand seeks to connect with a specific larger cause, he suggested, it is important to distinguish between “brand purpose” and the idea of “perspective”.
reads “Commit to Something”. Said Arthur, “Equinox is a client that loves to create that sort of provocation. That voice allows them to talk about things like breastfeeding.” He added, “When you ask a brand these larger questions about, ‘What do you stand for? What are you mad at? What do you believe in?’ you get to a bigger place. “You’re not talking about facts. You’re talking about feelings. And that’s massively important, because that’s ultimately where connections happen.”
“‘Purpose’ makes me a little uncomfortable at times; whenever a purpose is forced, it can feel dangerous,” Arthur said. (For more, read WARC’s in-depth report: Wieden+Kennedy’s creative excellence rests on seven points of agency culture.)
Wieden+Kennedy’s work with sports brand Nike is another example. “It was never about the amount of air in the sneaker and a max pocket,” said Arthur. “We always have tried to stand for something that was bigger than the product itself.”
“But every brand,” he continued, “can have a perspective – and that allows it to talk about things that are going on in the real world.”
The brand’s affiliation with Colin Kaepernick – the gridiron star who has failed to find a team for three years, an outcome commonly linked to his protest related to the national anthem – fits into this notion perfectly, he asserted.
Case in point: “It’s Not Fitness, It’s Life”, a brand positioning from Equinox – a notion that has enabled the fitness chain to run compelling ads, such as one showing a mother breastfeeding two children at once, paired with copy that
“That was the most consistent thing that Nike could have done. Nike has always stood for the perspective of the athlete and we’re always going to stand by this guy,” said Arthur.
Eight points to remember when building mobile brand experiences By Darren Coleman
Wavelength’s Dr Darren Coleman outlines the eight points marketers need to keep in mind when building brand experiences so they can make the most of mobile. I’ve been involved with mobile for over 20 years yet marketers still struggle to make the most of mobile. The reality is, mobile provides marketers’ with an oasis of opportunities when it comes to building brand experiences. Increasing consumer acceptance of mobile, the growing familiarity of CMOs with mobile marketing – in addition to device penetration and network advancements – are driving this change.
interested in 5G? Public and private healthcare services are using mobile to enable wonderful, potentially life saving, medical experiences. AliveCor can read a patient’s heart rhythm to check if that person is having a heart attack, whilst Babylon uses artificial intelligence to augment doctors’ diagnostic capabilities at scale. Granted it’s early days, but the potential for these solution-based uses of mobile is profound.
2. Think creatively about location
1. Consider mobile as an enabler
Many moons ago location-based services used ‘cell ID’ to identify a phone’s location. Location data accuracy ranged from tens of meters in urban areas to tens of miles in the countryside.
Mobile is a means to an end, not an end in itself. Most customers or other stakeholders aren’t interested in mobile capabilities but in how mobile can help them accomplish certain tasks. Think about it, how many people are really
Around 2002, I showed the Head of Content Marketing at Orange UK a map of central Bristol on a Nokia 6210. The small, poor resolution monochrome screen delivered a map that wasn’t exactly marvellous. He said, ”Darren, please tell
In my experience, there are eight points marketers need to keep in mind so they can make the most of mobile.
me I haven’t just invested 12m in a dead spider.” Ouch. GPS and advanced mapping capabilities are now the mainstay of new smartphones and these have opened up a number of location-based opportunities. The folks at Gordon’s Gin & Tonic used location to alleviate commuter frustration at the station when their train was delayed. Rather cleverly, they sent pre-qualified target customers within a 200m radius of a station they frequently used an SMS showing them how they could pick up a can of Gordon’s premixed Gin & Tonic. Pre-qualified customers were over the age of 18 and were known commuters due to the habitual data that had been gathered on them. In the fast food space, Burger King used geoconquesting to run a campaign that offered people a Whopper for 1 cent if they opened the Burger King app at a McDonald’s location.
3. Respect peoples’ privacy on mobile A mobile device is incredibly personal because it is seldom, if ever, shared. Opt-in should be a core requirement. Granted, this is a word to the wise for those who understand GDPR, but even beyond the shores of the European Union it is a best practice. Ford got privacy on mobile right when it launched its new Escape and Taurus models. If a potential customer wanted to learn more about either car, adverts prompted them to send a text with the word ‘FORD’ to a short code. Follow up texts then asked the potential customer to state which car they were interested in, along with their name and postcode so a local dealer could contact them. Each text message was punctuated with “STOP=quit” so the potential customer could opt out at any point. Ford’s approach was spot on. It put the potential customer in control of the process, was transparent about how their location data would be used and delivered a highly personalised experience.
4. Deliver personalised experiences Building brand experiences that are akin to blunderbuss blasts are a thing of the past. Personalised experiences are the new norm. Powered by artificial intelligence and augmented reality, Sephora’s Virtual Artist app lets its customers personalise their shopping experience by trying on a variety of facial products prior to purchase. Domino Pizza’s Pizza Hero app guides customers through process of making a hand made pizza. This includes kneading dough, spreading tomato sauce, sprinkling cheese right through to adding toppings before giving customers the opportunity to order their culinary masterpiece.
5. Deliver timely content Most people keep their device with them at all times. This makes mobile a powerful means of delivering brand experiences at highly relevant times. Marks & Spencer’s ongoing “Dine in for two for £12” promotion entailed the brand sending multimedia messages to customers late in the afternoon, when people were either just about to leave work or on their way home. Either way, it’s likely their stomachs
were rumbling and they were thinking about what to cook, M&S used mobile to solve that problem in a timely manner.
6. Capitalise on mobile as a direct channel Mobile helps brands communicate directly with an end customer and so cut through the clutter in ways other direct response tools cannot. Customers of New Yorkbased Saks Fifth Avenue can use iMessage to inquire about and purchase products whilst in South Africa, Hellmann’s connects consumers with chefs via WhatsApp who provide personalised recipe recommendations based on the food they have at home. Adidas’s Tango Squad is a carefully curated community of 100–250 football fanatics, aged 16–19-yearold from around the globe. Squad members receive exclusive content before product launch and are invited to meet players at invite-only events so they can take photos to share on social media. This adds currency to their social cred and makes them feel like valued insiders rather than mainstream consumers.
7. Leverage mobile commerce It’s now the norm for mobile devices to enable payment. The Starbucks mobile app helps customers pay for their daily dose of caffeine, whilst brands like Burberry have been quick to captialise on WeChat’s gifting capability by facilitating the transfer of ‘red packets’ (monetary gifts) during the Chinese New Year.
8. Make the most of mobile’s visual capabilities Large, high-resolution screens and megapixel cameras on the latest mobile devices have fuelled Instagram’s astronomical growth and allowed visually-engaging campaigns such as #MyCalvins to thrive whilst B2B brands such as automotive supplier Faurecia is using AR to showcase its sophisticated products’ otherwise hidden capabilities in intricate and engaging ways.
Summing up: Fulfilling mobile’s promise To make the most of mobile think holistically. This entails considering the points raised above and more importantly thinking about how mobile dovetails with the broader brand experience you build. Thinking in this way will ensure mobile is an integral part – and not an afterthought – of your brand experience building efforts. When building brand experiences it’s essential you think about what your customer is trying to achieve and how mobile is uniquely positioned to make that happen. Delivering personalised, timely and location-sensitive brand experiences is where the value of mobile really shines through. To deliver the best experiences with mobile, ensure you have consumers’ permission to engage with them. Respecting customers’ privacy and being transparent about how their data will be used is key. Do this, and you’ll really start to make the most of mobile.
Why Ridesharing Reaps Unexpected Benefits By By Knowledge@Wharton
The ubiquity of ride-sharing services such as Uber and Lyft means most people have probably spent time in one of the cars as either as a passenger or a driver. In her research, Wharton management professor Lindsey Cameron took a closer at the nature of the interactions between Uber drivers and riders, and she found there’s more going on than just efficient transportation. The interactions are often mutually beneficial, resulting in aid, comfort, friendship and even job opportunities. Cameron joined Knowledge@Wharton to discuss her paper, “Support for Social and Cultural Capital Development in Real-time Ridesharing Services,” which was co-authored by University of Michigan doctoral student Vaishnav Kameswaran and professor Tawanna Dillahunt. (Listen to the podcast at the top of this page.) An edited transcript of the conversation follows. Knowledge@Wharton: What was the inspiration for this research? Lindsey Cameron: Uber, Lyft, all the ride hailing companies, they get a bad rap in the press. Through my work as part of a larger research project where I’ve been interviewing drivers for the past three years — I’ve even been a driver — there are some really positive things that are happening in the car. There are people who are unsung heroes. With my colleagues, Vaishnav Kameswaran and Professor Tawanna Dillahunt from the University of Michigan’s School of Information, we wanted to take a look at some of the benefits from this work. Beyond people just earning income — which is not insignificant — what are some of the social and cultural, non-monetary benefits of this work?
Knowledge@Wharton: The title of the paper refers to social and cultural capital. Could you give me some examples of these benefits? Cameron: Social capital is one of the benefits you get from being in a network of people, whether that’s cooperation, emotional support, information being shared, trust or reciprocity. Let me ground that in a few specific examples we’ve seen from both our drivers and the riders. With drivers, they’re on a lot of these forums — Facebook, Uberpeople. net, Reddit — and they’re sharing information. Where is the best place to go to get some high-volume rides? Where is the best place to avoid the drunk people if you’re a woman and you don’t want to deal with that at 11 p.m.? That sharing of informational resources is an example of social capital.
“People were really proud of the city that they worked in, and they wanted to share what they loved about the city with the folks who were in the car.” But there’s also social capital being exchanged between riders and drivers. There’s emotional support. In the paper, I talk about a young woman who actually came out as a lesbian to her Uber driver. The driver was able to pull the car aside and asked, “What’s the matter? Tell me what’s happening.” He stopped working to offer her that emotional support. Again, that’s another type of social capital, this time being directed to the passenger.
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Now, cultural capital is about learning more about the environment that you’re in, whether it’s your local context like your city or what’s happening in the national or an international theater. Some really common examples are, a rider gets in the car and the driver is taking this person to a place they’ve never seen before. Or they have a conversation about a political event, such as the refugee situation in Germany, that they would not have had otherwise. Many of the drivers and riders we interviewed are based in Detroit, which is going through a huge revitalization. What a lot of the drivers said is, “My riders took me to a part of Detroit I had never seen before” or “a part that I thought was all blighted and run down, and I see it’s been completely renovated. It’s a renaissance.” In this way, the driver becomes almost like a tour guide to their own city. Once they have this knowledge, they can share it with others. So, they’re cultural ambassadors to the new set of riders that are coming in. This is just to give you a fine-grain sense of what social and cultural capital looks like. What are the new things you’re learning through people or about the environment you’re in just from driving your car around. Knowledge@Wharton: You interviewed a number of Uber drivers and riders for this paper. What else did you find in talking to them?
“There are all these beautiful ways there are these unsung heroes who are making a contribution to their community.” Cameron: People were really proud of the city that they worked in, and they wanted to share what they loved about the city with the folks who were in the car. The unexpected acts of kindness were really heartwarming and mind-blowing because on the news, we tend to hear more about the negative stories. Not only was there this story about the woman who came out to her driver, there were also drivers who took care of their sick passengers. They’ve seen people who are on the side of the road and needed help, and they’ve offered assistance. Or victims of domestic violence. There are all these beautiful ways these unsung heroes contributed to their community. That’s one of the more surprising and, I think, untold stories I found in my data. Knowledge@Wharton: If you’re a driver or a passenger, that ride might be a blip on the map of your daily life. But you’re saying these random interactions could end up drawing unexpected benefits. Is there an untapped potential here that ride-share companies could be taking advantage of because they are putting us in the path of a stranger we wouldn’t have met otherwise? Cameron: These are some of the implications that I highlighted with two colleagues at the University of Michigan. What could ride-hailing companies do to augment this exchange of information? Maybe if there is a person that you’re picking up from the airport, and they have the information that this
person is usually based in Chicago but now they’re in Dallas, maybe the app will suggest an alternative way to go that shows them new areas to go around the city. Or maybe there’s just little tidbits of information the app has picked up about both people that they can use to match them. I think there are really interesting ways these companies can help make connections between drivers and riders. Even between drivers and drivers, a Slack group, for example, allows greater information sharing because there is a social, a relational aspect in this work. Knowledge@Wharton: Even though it’s an autonomous job — it’s you and your app — it sounds like people have formed communities around this. Cameron: People have found communities. People have become friends with folks that they have found off the app. Like, ‘real’ friends in ‘real’ life going out to bars and to concerts and things. People have found jobs for each other. One person actually found a termite inspector for his house through a contact from the rider. In an interesting switch, I interviewed a driver who’s a manager at a manufacturing plant, and he hired one of the riders who was in his back seat. He was an undergraduate student studying in engineering, looking for an internship. Again, it’s another example of connections that started in the car — this really small, intimate space — that grew and continued outside of the car. Knowledge@Wharton: What’s next for this research? Cameron: I have some work that’s coming out where I hone in on the algorithms. How do algorithms sit in for a boss? And why do workers really feel this sense of autonomy even when they’re interacting with an algorithm? That’s one set of work that I have coming up.
“I interviewed a driver who’s a manager at a manufacturing plant, and he hired one of the riders who was in his back seat.” Another paper looks at people’s stances to the work. Some people feel like they’re in partnership and privileged to be a driver, and some people feel like this work is similar to lowwage slavery. Those are pretty intense words — their words, not mine. I’m looking at what makes a difference between these two groups. So, that’s some new work I have coming on the horizon. My two colleagues on this, Vaishnav Kameswaran and Tawanna Dillahunt, are going even deeper into under resourced communities, which usually have a lack of access to reliable transportation. They’re looking at developing and piloting a time-banking system for people to share rides to be able to get to health care appointments and things like that. This is part of a bigger, larger-term project for them. But I think it’s a really great opportunity to use these ride-hailing platforms to go to segments of the population that don’t have access to reliable transportation and to get them to their jobs, health care and things they really need.
How To Evaluate Your Startup Idea With Simple Calculation By Abdo Riani
Many ideas sound interesting on paper but are not viable in practice. Some ideas are interesting and viable but not feasible without a large sum of money. Other ideas are interesting, viable and feasible with a little bit of funding and hard work. Every idea has different viability, validity, feasibility, capital requirement and potential characteristics. Entrepreneurs must evaluate their ideas against those characteristics, vision and goals before taking the first step forward. Failure to account for them in the beginnings will have major consequences later in the venture. More specifically, waste of resources and startup failure. Take the example of Uber and Amazon. Those are two interesting business model innovations with growth potential but a huge dependence on cash for venture initiation and growth. The two companies and many others operated under the blitzscaling philosophy documented by Reid Hoffman that suggests continuously investing to accelerate growth even if the numbers don’t add up in terms of short-term profitability and self-sustainability. Today In: Small Business The idea is that the growth will eventually compensate for the losses through future promising revenue channels and market share. It took Amazon over a decade to hit profitability while
Uber is still unprofitable. Bootstrapping and blitzscaling cannot work together. If Amazon and Uber were bootstrapped, they would have grown slowly by focusing on their most profitable segments and areas, but their founders had a vision to build giant companies with investors’ support, what’s your vision? Not matter what it is, the numbers have to add up even if your target values cannot be reached in the short-term. While predicting future values is not easy, every entrepreneur should run back-of-the-envelope calculations to identify the conditions that will make their ideas profitable at some point in the future (and when?). Unit economics provides a framework for measuring the profitability of selling one unit of your solution. Knowing what it will take, in terms of revenue and costs, to profit from every customer or transaction is key to evaluating the potential of the business and the different levers that need to be focused on for the numbers to add up. Homejoy was a leader home cleaning on-demand startup. By the end of 2013, the startup was valued $150M after a $38M investment round. A little over a year later Homejoy seized operations after failing to acquire customers for less than it was making from most users. In other words, the company was not able to keep users for long enough when compared
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to how much it invested to attract them to the service. The key profitability measure of on-demand startups is calculated per-order. When many small orders reach a certain target order volume, the company is expected to break-even. Volume will not make a difference if the startup loses money from every transaction.
• And any other revenue model specific questions such as, the average per unit revenue and expenses from each transaction for on-demand, or profit margin for e-commerce companies. The goal from this exercise is to understand the key levers in your revenue model to discover ways to build a profitable
However, a startup can lose money from one order but make money from another. As such, no matter the revenue model, whether it is on-demand, SaaS, e-commerce, marketplace, subscription or others, the two most important key metrics in a startup is customer acquisition cost and customer lifetime value.
startup.
To measure these two metrics, you need to know the average revenue per customer, churn rate, marketing expenses and number of new customers in a given period. Obviously, without a product, you won’t have the data and thus, won’t be able to make the calculations. Instead, what you need to do is use data from benchmark companies to find an answer to these key questions:
switch to your product, however, this segment may require
• What are their fixed costs? • What are their variable costs? • Are they profitable? • How much does it cost them to acquire a customer? • What is their customer lifetime value?
Competitors’ data can only provide an estimation. Depending on your value proposition and segmentation, the numbers can be lower or higher. For instance, focusing on an underserved market may save you the cost of convincing customers to a higher investment in education and awareness which may increase the customer acquisition cost. At the end of the day, the objective is to estimate the viability and feasibility of the idea given your goals and resources. You may quickly realize that you need to change execution strategy, market or idea. Better knowing this sooner than later. I help tech entrepreneurs build startup products (apps) that generate revenue quickly with a higher probability of success to serve either as a side business venture or a stand-alone startup with growth potential. I am also the founder of StartupCircle.co, a mentorship platform for passionate startup founders.
Netflix’s ‘Broken’ covers the tangled mess behind Juul, Ikea, and more of your favorite brands FROM VAPING TO COUNTERFEIT MAKEUP, ‘BROKEN’ EXPLORES THE SURPRISING STORIES BENEATH SOME OF THE WORLD’S MOST LUCRATIVE INDUSTRIES. By Kc Ifeanyi
From the food we eat to the products we use, consumers have never been savvier about the brands and companies they support. A 2015 report found that 66% of global consumers are willing to pay more for sustainable brands. The organic personal care market is projected to hit $25 billion by 2025. And organic food sales rose 5.9% in 2018, hitting nearly $48 billion. But as influential as purchasing power can be, it’s not, of course, the only answer to issues of public health and sustainability—and Netflix’s new docuseries Broken aims to uncover the tangled mess beneath some of the world’s most lucrative industries in four episodes. In “Big Vape,” Juul is put under a magnifying lens as the leader of the controversial e-cigarette boom that’s been fueled by fruity flavors and the commonly held belief that vaping is healthier than regular smoking (spoiler alert: not really). “Deadly Dressers” breaks down the deforestation and sometimes lethal consequences behind low-cost, highvolume furniture companies like Ikea. “Makeup Mayhem” spans Los Angeles’ infamous counterfeit district Santee Alley and black market production hubs in China to trace the source of the $5.4 billion industry of knockoff makeup. And “Recycling Sham” unravels the myths around what actually gets recycled, where it winds up, and the multinational government and corporate tango at the heart of it all. “People have really intimate relationships with what they buy, yet we know very little about where it came from or where it goes after we use it,” says David Mettler, co-executive producer of Broken, produced by Zero Point Zero Production (My Next Guest Needs No Introduction with David Letterman, Anthony Bourdain: Parts Unknown). After the first season of Rotten, another Netflix docuseries produced by Zero Point Zero that analyzed the food industry, Mettler says Netflix was interested in giving a similar treatment to consumer goods. An extensive reporting and research process yielded “literally hundreds of potential stories and products.” Mettler and his team whittled down their options based on what they found surprising, felt deserved more attention, or presented a new way to look at a much-covered topic, e.g. the episode on plastics.
[Photo: courtesy of Netflix]
“The real fascinating part of that story to me is the fact that petrochemical companies are producing all of this plastic and increasing production astronomically every year,” Mettler says. “But no one had really gone deep on it.” Broken is coming in on the wave of documentaries that have hit the zeitgeist in a meaningful way, including What the Health, Fed Up, and American Factory, the first offering from Higher Ground Productions, Barack Obama and Michelle Obama’s production shingle. “There has been a growing awareness and hunger for information about the things that we consume,” Mettler says. “So there’s been a real increase in an educated consumer base.” However, Mettler notes that Broken‘s mission is not necessarily to tell you which products viewers should or shouldn’t buy. “Better consumption is a part of the equation, but we can’t just consume our way out of the problems,” Mettler says. “Instead, [Broken is] a show that makes you question the systems of production and distribution and regulation themselves.” “We should all anchor our furniture to the wall and we should all recycle and we should all do these things, but individual actions or individual acts of consuming in the quote unquote ‘right way’ are not going to fix the systemic problems that exist in these different industries,” he adds. “Spurring people to make change at [a] political or movement level are the kinds of actions that we see making real change in these industries.”
Creation of The Attention Council puts focus on ad placement quality By WARC Staff
With consumers bombarded by thousands of advertising messages every day, and with the great majority of ads, regardless of platform, receiving very low levels of attention, key experts in the so-called “attention economy” have launched The Attention Council (TAC). The Council’s objective is to bring together experts from all parts of the marketing ecosystem – from technology vendors, to ad experts, to academics – to analyse the quality of advertising placements through what the group calls “the lens of attention.” One of TAC’s founding members, Marc Guldimann, CEO of Adelaide, emphasised that, for too long, media evaluation has been focused on the raw quantity of audiences rather than the quality of the environment in which audiences view advertising. He cited the example of how an audience of 40 million Netflix viewers – who can be easily distracted within that viewing environment – differs from an audience of 40 million movie viewers, where distractions are much more minimal. “By looking at media through the lens of attention we can start to discern its quality,” he said. Karen Nelson-Field, another TAC founder, noted that focusing on the quality of advertising placements can benefit
all parts of the media and marketing universe – incentivizing publishers to provide better experiences to consumers and marketers. “For me, the actual genuine desire to improve our ecosystem is what drives me to this group,” she said. Nelson-Field is CEO of the Centre for Amplified Intelligence and Professor of Media Innovation at The University of Adelaide and worked on Dentsu Aegis’ global Attention Economy Initiative earlier this year. (Read more here: The high value of low attention.) That project, supported by TV broadcasters and digital videosharing platforms, set out to take a fresh look at how the advertising marketplace assesses media. Initially, TAC’s focus will be on thought leadership, with an emphasis on attention metrics, ethics, research, education and lobbying. It also plans to look at the creation of an attention-based currency for media buying. Nelson-Field acknowledged the challenge ahead. “It’s a very complex conversation. It’s not that one thing needs to be fixed. It’s not just a viewability issue,” she said. Other founders include Mike Follett, managing director of Lumen Research, Ezra Pierce, CEO of Avocet, and Yan Liu, CEO and Co-founder of TVision.
Researchers Want Guardrails to Help Prevent Bias in AI MACHINE-LEARNING EXPERTS OFTEN DESIGN THEIR ALGORITHMS TO AVOID SOME UNINTENDED CONSEQUENCES. BUT THAT’S NOT AS EASY FOR OTHERS. By Will Knight
Artificial intelligence has given us algorithms capable of recognizing faces, diagnosing disease, and of course, crushing computer games. But even the smartest algorithms can sometimes behave in unexpected and unwanted ways— for example, picking up gender bias from the text or images they are fed. A new framework for building AI programs suggests a way to prevent aberrant behavior in machine learning by specifying guardrails in the code from the outset. It aims to be particularly useful for nonexperts deploying AI, an increasingly common issue as the technology moves out of research labs and into the real world. The approach is one of several proposed in recent years for curbing the worst tendencies of AI programs. Such safeguards could prove vital as AI is used in more critical situations, and as people become suspicious of AI systems that perpetuate
bias or cause accidents. Last week Apple was rocked by claims that the algorithm behind its credit card offers much lower credit limits to women than men of the same financial means. It was unable to prove that the algorithm had not inadvertently picked up some form of bias from training data. Just the idea that the Apple Card might be biased was enough to turn customers against it. Similar backlashes could derail adoption of AI in areas like health care, education, and government. “People are looking at how AI systems are being deployed and they’re seeing they are not always being fair or safe,” says Emma Brunskill, an assistant professor at Stanford and one of the researchers behind the new approach. “We’re worried right now that people may lose faith in some forms of AI, and therefore the potential benefits of AI might not be realized.”
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Examples abound of AI systems behaving badly. Last year, Amazon was forced to ditch a hiring algorithm that was found to be gender biased; Google was left red-faced after the autocomplete algorithm for its search bar was found to produce racial and sexual slurs. In September, a canonical image database was shown to generate all sorts of inappropriate labels for images of people. Machine-learning experts often design their algorithms to guard against certain unintended consequences. But that’s not as easy for nonexperts who might use a machine-learning algorithm off the shelf. It’s further complicated by the fact that there are many ways to define “fairness” mathematically or algorithmically. The new approach proposes building an algorithm so that, when it is deployed, there are boundaries on the results it can produce. “We need to make sure that it’s easy to use a machine-learning algorithm responsibly, to avoid unsafe or unfair behavior,” says Philip Thomas, an assistant professor at the University of Massachusetts Amherst who also worked on the project. The researchers demonstrate the method on several machinelearning techniques and a couple of hypothetical problems in a paper published in the journal Science Thursday. First, they show how it could be used in a simple algorithm that predicts college students’ GPAs from entrance exam results—a common practice that can result in gender bias, because women tend to do better in school than their entrance exam scores would suggest. In the new algorithm, a user can limit how much the algorithm may overestimate and underestimate student GPAs for male and female students on average. In another example, the team developed an algorithm for balancing the performance and safety of an automated insulin pump. Such pumps decide how much insulin to deliver at mealtimes, and machine learning can help determine the right dose for a patient. The algorithm they designed can be told by a doctor to only consider dosages within a particular range, and to have a low probability of suggesting dangerously low or high blood sugar levels.
“We need to make sure that it’s easy to use a machine-learning algorithm responsibly, to avoid unsafe or unfair behavior.” PHILIP THOMAS, UNIVERSITY OF MASSACHUSETTS
The researchers call their algorithms “Seldonian” in reference to Hari Seldon, a character in Isaac Asimov stories that feature his famous “three laws of robotics,” which begin with the rule: “A robot may not injure a human being or, through inaction, allow a human being to come to harm.” The new approach is unlikely to solve the problem of algorithms misbehaving. Partly that’s because there’s no guarantee organizations deploying AI will adopt such approaches when they can come at the cost of optimal performance. The work also highlights the fact that defining “fairness” in a machine-learning algorithm is not a simple task. In the GPA example, for instance, the researchers provide five different ways to define gender fairness. “One of the major challenges in making algorithms fair lies in deciding what fairness actually means,” says Chris Russell, a fellow at the Alan Turing Institute in the UK. “Trying to understand what fairness means, and when a particular approach is the right one to use is a major area of ongoing research.” If even experts cannot agree on what is fair, Russell says it might be a mistake to put the burden on less proficient users. “At the moment, there are more than 30 different definitions of fairness in the literature,” he notes. “This makes it almost impossible for a nonexpert to know if they are doing the right thing.” Will Knight is a senior writer for WIRED, covering artificial intelligence. He was previously a senior editor at MIT Technology Review, where he wrote about fundamental advances in AI and China’s AI boom. Before that, he was an editor and writer at New Scientist. He studied anthropology and journalism in the UK before turning his attention to machines.
Why Fintech Is Disrupting Traditional Banking By Knowledge@Wharton
Fintechs are growing rapidly. Their range of offerings and number of customers are expanding as they target the pain points that clients experience with traditional banks. A case in point: BankMobile, a five-year-old mobile-first bank that operates as the digital banking division of Customers Bank of Phoenixville, Arizona. Its “Bank-as-a-Service” model enables it to acquire customers at higher volumes and lower costs than traditional banks. This helps pay higher interest on customer deposits than traditional banks do. Luvleen Sidhu, co-founder, president and chief strategy officer of BankMobile spoke recently with Knowledge@ Wharton about its business model. (Listen to the podcast at the top of this page.) The bank is active in the student loan market and in a “white label” partnership with T-Mobile, where it leverages the latter’s brand; it plans several more white-label partnerships. BankMobile is also helping shift the gender bias in banking and financial services by bringing parity in pay and status for its women executives. An edited transcript of the conversation follows. Knowledge@Wharton: As you look at the banking and fintech landscape as we approach the end of 2019 and look forward to 2020, what are some of the most interesting trends you see going on in fintech? Luvleen Sidhu: It’s amazing to me how much fintech has grown, even since we last spoke at the beginning of 2018.
I looked at a stat recently where four years ago, fintechs [accounted for] probably 5% of the market for personal loans. Today, more than 45% of personal loans are originating through fintechs. It’s clear that a shift has taken place, and fintechs are gaining more momentum. We’re seeing many of them diversify from one niche — Robinhood with brokerage, or SoFi with student refinance, or Square Cash (a payments service from Square). Many of these players want to evolve to have multiple touch points with consumers and not just the original niche that they started out with. You’re seeing many of them applying for bank charters, recognizing that a multi-product offering is probably the most compelling. The regulatory environment in Europe has been ripe and open to disruption and digital banking, and a lot of the players that have been successful there are now entering the U.S. So, we’re seeing new competitors shaking things up, [such as] Monzo, Revolut, N26. [U.S. fintechs such as] Varo and Chime have also grown. There’s a lot of movement, a lot of potential, a lot of opportunity, and a lot of competition entering the market. Knowledge@Wharton: What is driving this trend towards fintechs disrupting traditional banking? Sidhu: Firstly, about 0.1% of the top banks have 50% of the assets. In the first half of this year, the big banks have been
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able to garner 50% of the growth and deposits. So they’re doing something right. They have the dollars to invest in technology, and they’re improving. People are seeing that, and they’re continuing to gain market share.
“It’s about fintechs being able to recognize that consumer pain points are still not being addressed. That’s why fintechs have seen the momentum they’re seeing.” But the reality is that people are still dissatisfied. Traditional banks are still not meeting the table stakes of banking. Forget innovation; going back to the basics that I talked about five years ago when we started BankMobile, people aren’t being paid for their money. On average, a checking account provides 8 basis points of interest. Today with our T-Mobile account that we’ve launched, we give 4% interest. People are paying on average $10 a month on checking accounts. It’s close to $120, $130 a year in just checking account fees. That’s the national average. ATM fees are still going up, and people [have insufficient] access to ATMs. We have 55,000 ATMs. Bank of America, the largest bank, has about 18,000. So it’s really about fintechs being able to recognize that consumer pain points are still not being addressed, and consumers responding, “Someone is listening to us. Someone is addressing our frustration. Someone is making this easier for me, more value-additive to me.” That’s why fintechs have seen the momentum they’re seeing. Knowledge@Wharton: Fintech is a big field, with many different aspects to it. If you look forward to 2020, which areas are most ripe for rapid growth, and why? Sidhu: Digital banking, for sure — because it’s amazing to me how many fintechs are applying for charters and how many neo-digital banks are entering the U.S. and trying to get partner banks or are entering or trying to get a charter. Many marketplace lenders are struggling. They’re having trouble accessing low-cost funding, and in being able to have a longer-term relationship with their customer [that is] more than just that one touch point. So, many of them are shifting to lending as a service and trying to help banks and being more of the back-end, or they’re going to try to partner with some of these neo-banks and consolidating some of their technologies. We are going to see interesting things happening, in terms of consolidation between fintechs, and [them] being able to support more products together and having better customer acquisition together. The buzzwords of AI and machine learning continue to be there. Fraud management and cyber security continue to be huge [concerns]. No one has cracked the code for financial management, and being able to use data and machine learning to be able to proactively help people make better decisions in the moment. Many neo-banks have tried elements of it, but no one has
fully succeeded. [New] players will try to solve the problem of helping people make better financial decisions. Knowledge@Wharton: As more fintechs enter the space that traditional banks have been active in and the amount of lending goes up, do you think it adds any more elements of risk to the system? And if so, how do you think those could be managed? Sidhu: Many of these fintechs and marketplace lenders haven’t gone through a downturn, so it’s going to be interesting to see how they perform because they profess that their models are so unique that they’ve diversified and that they are able to sustain themselves within a recessionary period. There are indications that that time may come. We’ve been in the longest economic growth span in a long time. We’re going to see in this downturn, as well, if artificial intelligence and machine learning that many alternative lenders are using are really paying off, or is FICO going to remain the central point of how we assess riskiness of customers? We’re going to learn a lot in the next two years. Knowledge@Wharton: Your comments about what’s happening in the fintech industry today bring me back to the launch of BankMobile in January, 2015. You said at the time that the bank had 1.8 million customers, and your plan was to have 5 million in about five to seven years. Since the bank’s fifth birthday is coming up next January, how much progress you have made towards the goal? Sidhu: Our model and our goals have not changed. We’re all about: How do we acquire customers at high volumes and at low cost? When we spoke to you, our only vertical was in the higher education space. We continue to do well in that space and acquire about 300,000 new customers a year in the student segment. We launched in April our next white label partner, which is T-Mobile, and we launched a product called T-Mobile Money. In our opinion, it’s the most successful digital bank launch, or de novo digital bank launch, in history. We have a strong pipeline for other white labels beyond T-Mobile and beyond higher education in various industry verticals. Our goal of 5 million customers over the next five years continues to be the same. Knowledge@Wharton: You said this is the most successful launch. What were some of the factors that went into making it successful? What could other banks learn from what you have been able to accomplish? Sidhu: What makes it successful is the growth that we’re seeing, the conversion that we’re seeing to primary banking relationships, the balances we’re seeing, and the increasing trend we’re seeing in point-of-sale transactions. All of these add up to our revenue drivers. So, what can others learn? Our model is [about] how you get those in non-financial services business to be able to offer financial services. We’ve built the technology platform and the infrastructure to do that. Now, our goal is to find brands
that have captive audiences, millions of customers, brand equity and emotional connection with their customers. And, find a way to add financial services as part of that.
financial behavior, but [also for] good academic behavior. Our Passport program rewards them for both of those with discounts, et cetera.
“No one has cracked the code for financial management, and being able to use data and machine learning to be able to proactively help people make better decisions in the moment.”
Knowledge@Wharton: Is that what you mean when you refer to what you do as “banking-as-a-service?” Or does that apply specifically to a certain aspect of your activities?
When a brand that you already love or you respect or that you transact with daily adds in a financial services element, you’ve already built in that emotional connection. I think that’s what helps drive some of the success that we’re seeing at T-Mobile and overall in our white label model. Knowledge@Wharton: You have talked earlier of using a customer-centric strategy to build your business. Could you explain how that has played a role in building BankMobile’s operations and growth? Sidhu: You’re not going to gain customers unless you have a product that appeals to or addresses their pain points. That’s why we came into business. Our T-Mobile money account is offering 4% interest on balances up to $3,000 – that’s 50 times more than what the average checking account is offering. Americans are being charged $130 a year in just checking account fees. So, offering a no-fee account is already a huge plus. Americans are being charged $34 billion a year in overdraft fees, so being able to give them access to free overdraft up to $50 every calendar month is already addressing a pain point. That’s what I mean by customercentric. If you’re opening a wireless account in a T-Mobile store, we do an eligibility check for a bank account, and we know if you’re going to pass the on-boarding process. If you’re interested in opening an account, the rep can give you a link to open that bank account. You go through the sign-up process, and it pre-fills a lot of the information for you. So, in three clicks, you’ve opened up an account. That’s the seamlessness with which you need to create the experience. In our student business, this might be their first account. You want to be able to reward them, not just for good
Sidhu: “Banking-as-a-Service” is [about] using our technology platform to allow others to get into banking. For us, it allows for high-volume acquisition of customers at very low cost. A traditional bank might acquire them at $300 to $500 [each]. We’re acquiring them at less than $10. In higher education, we solve a pain point for colleges and universities, which is sending payments between themselves and the students. We interject the bank account in there, and the students have a choice. Knowledge@Wharton: You’re also in the student loan refinance area now. What is the opportunity you saw there and how did you address it? Sidhu: We have a “customer-for-life” strategy. In both our products, we start with a checking account. But then we want to be able to grow with the customer. We offer a savings account, student refinance, personal loans and credit cards, and we continue to expand our offering because that’s how you create a customer-for-life strategy. Specifically, student refinance is an obvious place to play. A lot of students have debt, and being able to provide a product where they can refinance their debt at a lower rate and make payments that are easier over a fixed period of time. Knowledge@Wharton: Clearly, BankMobile has come a long way. If you think back on the past five years, what has been the biggest leadership challenge you have faced? How did you deal with it? What did you learn from it? Sidhu: The toughest challenge was when we launched as a direct-to-consumer strategy in 2015. I had a goal [to address] consumer pain points, and create a consumer brand around banking. I found the market wasn’t ready yet for direct-toconsumer [offerings]. We still grew relatively fast in our first year. We had about 100,000 accounts, but they were small balance accounts, and there was a decent amount of fraud in the accounts.
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When we started off we wanted to have a better product than what exists today – more affordable, easier to use, and also a net income and growth model that’s equal to, if not better than, traditional banks. We realized in our first year that with small balance accounts, with the risk of fraud, we weren’t going to get net income and growth equal to, if not better than, traditional banks. So, we had to pivot.
“By giving visibility and opportunities for women in a small way, and just being outspoken as a representative of BankMobile, I hope I can inspire other women to enter this field.” The leadership challenge was: “The business model we started out with is actually not working. Now what do we do?” Either you go out of business eventually, or you figure out how to pivot. That was a turning point for us. It was about how we could take this challenge and find an opportunity. We had a relationship with a company that was in the higher education space, and that’s how the idea came about of using those relationships as a customer-acquisition strategy for bank accounts. That’s how we got started in our B-to-Bto-C [business-to-business-to-consumer] strategy. Knowledge@Wharton: Do women in banking and fintech face unique challenges compared to men? What is BankMobile doing to help combat these kinds of challenges? Sidhu: Clearly, women are a minority in this field, but it’s amazing to me how many women are actually hold powerful positions in banking. We were a disruptor in this business. We wanted to be a mover and shaker in banking. One thing about me is that being a young woman, and being a minority, aligns well with the disruptor model. I almost felt there was congruence between the business model and what I represented. Knowledge@Wharton: How so? Sidhu: There aren’t that many women in financial services. So when you have a disruptive company come out and you have someone that doesn’t look, feel, and smell like what typically is, there’s congruence there, right? You’re disrupting what is typically the leadership in fintech and financial services. I just felt like I represented it well, and I thought there was a
lot of congruence in that. Challenges continue to exist. The reality is the [number] of women in the S&P 500 C-suite is minimal. I think 2% of women-run companies are funded by VCs. We’re going to go out and raise capital this year, and to know those stats is disappointing. I start my day with meditation and chanting. That is how you become strong. You become confident. You become more knowledgeable of the space. You read a lot. And you earn your way, and you earn your respect, and you pave your own way. What am I doing for others? The income gap is very visible – 80 cents to the dollar for the lack of parity between men and women. I make sure that our women are paid equally, and I encourage them to speak up. I promote them. Most recently, we promoted the product head of one of our student products to CMO. (Regine Fiddler is the new chief marketing officer.) By giving visibility and opportunities for women in a small way, and just being outspoken as a representative of BankMobile, I hope I can inspire other women to enter this field. Knowledge@Wharton: What could men do to be more collaborative in helping deal with these issues? Sidhu: I think that [men could do] the same things that I’m doing as a woman. How do we ensure the income gap is not there? We give fairness to women and help them speak for themselves, because sometimes I think that in my own negotiations on salary, men are much more aggressive. Women should be asking for more. So, mentoring and giving women that voice and encouraging them to speak up is just [what men] should be doing. Knowledge@Wharton: Since we are close to BankMobile’s fifth birthday, where would you like the bank to be on its 10th birthday? Sidhu: Well, we’d better be at that 5 million mark the next time I speak to you. There are many non-financial services companies that want to enter financial services, whether that’s Apple and Marcus (the consumer banking product of Goldman Sachs), Amazon and someone else, or T-Mobile and us. There are many retailers, airlines and gig economyfocused companies [across] different verticals where the financial services aspect makes sense in their business model. And I hope that we have many more white labels to talk about next time.
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Company of One: Why Staying Small Is the Next Big Thing for Business
Digital Minimalism: Choosing a Focused Life in a Noisy World
By Paul Jarvis
In this timely and enlightening book, the bestselling author of Deep Work introduces a philosophy for technology use that has already improved countless lives. Digital minimalists are all around us. They’re the calm, happy people who can hold long conversations without furtive glances at their phones. They can get lost in a good book, a woodworking project, or a leisurely morning run.
Company of One is a refreshingly new approach centered on staying small and avoiding growth, for any size business. Not as a freelancer who only gets paid on a per piece basis, and not as an entrepreneurial start-up that wants to scale as soon as possible, but as a small business that is deliberately committed to staying that way.
How to Do Nothing: Resisting the Attention Economy By Jenny Odell
By Cal Newport
Keep Going: 10 Ways to Stay Creative in Good Times and Bad By Austin Kleon
Nothing is harder to do these days than nothing. But in a world where our value is determined by our 24/7 data productivity . . . doing nothing may be our most important form of resistance. So argues artist and critic Jenny Odell in this field guide to doing nothing (at least as capitalism defines it). Odell sees our attention as the most precious—and overdrawn—resource we have.
In his previous books Steal Like an Artist and Show Your Work!, both New York Times bestsellers, Austin Kleon gave readers the keys to unlock their creativity and showed them how to become known. Now he offers his most inspiring work yet, with ten simple rules for how to stay creative, focused, and true to yourself—for life.
Narrative Economics: How Stories Go Viral and Drive Major Economic Events
Stories That Stick: How Storytelling Can Captivate Customers, Influence Audiences, and Transform Your Business
By Robert J. Shiller In this groundbreaking book, Nobel Prize–winning economist and New York Times bestselling author Robert Shiller offers a new way to think about the economy and economic change. Using a rich array of historical examples and data, Shiller argues that studying popular stories that affect individual and collective economic behavior...
By Kindra Hall
The Infinite Game
The Social Photo: On Photography and Social Media
By Simon Sinek In this revelatory new book, Simon Sinek offers a framework for leading with an infinite mindset. On one hand, none of us can resist the fleeting thrills of a promotion earned or a tournament won, yet these rewards fade quickly. In pursuit of a Just Cause, we will commit to a vision of a future world so appealing that we will build it week after week, month after month, year after year. Although we do not know the exact form this world will take, working toward it gives our work and our life meaning.
Storytelling can do everything-from helping leaders better communicate to motivating sales teams and winning customers away from competitors. In Stories That Stick, Kindra Hall, professional storyteller and nationally-known speaker, reveals the four unique stories you can use to differentiate, captivate, and elevate.
By Nathan Jurgenson In The Social Photo, social theorist Nathan Jurgenson develops bold new ways of understanding photography in the age of social media and the new kinds of images that have emerged: the selfie, the faux-vintage photo, the self-destructing image, the food photo. Jurgenson shows how these devices and platforms have remade the world and our understanding of ourselves within it.
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Think. Do. Say.: How to seize attention and build trust in a busy, busy world
The Disruption Mindset: Why Some Organizations Transform While Others Fail
By Ron Tite
By Charlene Li
People today are inundated with non-stop content, broken promises, endless product extensions. So how do you win their time, and their confidence? From renowned advertising creative director Ron Tite comes a powerful approach to cutting through the noise three words: Think. Do. Say. Ditch the jargon, and start making good things happen for you and your organization.
Growth is always hard, and disruptive growth is exponentially harder. It requires companies to make tough decisions in the face of daunting uncertainties: Should we bet our company’s future on next-generation customers or today’s reliable ones? Should we abandon our current business model for an entirely new one? Making bold changes demands bold leadership and, often, massive cultural transformation.
The Purpose Advantage: How to Unlock New Ways of Doing Business
The Non-Obvious Guide to Being More Creative Kindle Edition
By Jeff Fromm
“Uncork all those ideas you’ve got bottled up inside you with this smart and engaging guide. You’ll understand where creativity comes from, what stands in its way (Hello, Impostor Syndrome!), and how to engender creativity in others. Any innovation starts with taking a risk, so take a risk on this book. It will pay off in creative dividends” - Daniel Pink, New York Times Bestselling author of When, Drive, A Whole New Mind
In today’s noisy market where people have instant access to nearly everything, quality products and services are no longer enough to differentiate your company or organization-your brand- from the competition. What a brand stands for, and the actions it takes to prove it, can provide a necessary memorability consumers draw on when they make purchasing decisions.
By Kathryn Haydon, Rohit Bhargava (Foreword)
Non-Obvious 2019: How To Predict Trends and Win The Future Kindle Edition
ABM is B2B.: Why B2B Marketing and Sales is Broken and How to Fix it Kindle Edition
By Rohit Bhargava
By Sangram Vajre, Eric Spett
In total, the Non-Obvious 2019 edition features 15 all-new trends across 5 categories including Culture; Consumer Behavior, Marketing; Social Media, Media & Education, Technology; Design plus Economics; Entrepreneurship. The book also features a detailed section with a review and rating for more than 115 previously predicted trends, with longevity ratings for each.
“I’ve spent many years trying to bridge the gap between the scientific and the creative. This book will help you do the same, through the lens of ABM. Absorb and implement the ideas in this book if you want to maximize your resources and transform your marketing.” - Corinne Sklar, CMO, IBM iX
Marketing Rebellion: The Most Human Company Wins Kindle Edition
Conversational Marketing: How the World’s Fastest Growing Companies Use Chatbots to Generate Leads 24/7/365 (and How You Can Too) 1st Edition Kindle Edition
By Mark W. Schaefer Path-finding author Mark Schaefer provides an achievable and realistic framework to help you stay ahead of the curve by re-imagining marketing in a world where hyper-empowered consumers drive the business results. Marketing Rebellion will teach you: How cataclysmic consumer trends are a predictable result of a revolution that started 100 years ago.
By David Cancel, Dave Gerhardt Conversational Marketing is the definitive guide to generating better leads and closing more sales.