Brand Loyalty and Boyle’s Law

Andrew Ehrenberg passed away this year. I had the pleasure of meeting him on several occasions and have him explain to me first hand his findings on brand loyalty. I never really understood it then and have still not entirely got my mind round it. Andrew applied the laws of physics to brands and in a study of over 100 fmcg brands in Europe, Japan and America proved something that none of us marketers wanted to believe, still don’t – that brand penetration and average purchase move in a constant relationship. Put in plain English, big brands are big because more people buy them and on average they buy more of them. Small brands are small because fewer people buy them and buy less of them.

“It is like Boyle’s Law, Mark, as the volume of a gas declines the pressure goes up in a constant relationship” he explained to me (I did not have the heart to point out I gave up Physics at the age of 13 years). But what causes the change, I asked? “Ah, that is for you clever marketers to find out!” he replied.

The implications of this struck me as staggering. For years I’d believed that most of marketing was designed either to build penetration or increase loyalty and that we could somehow manipulate these as separate objectives. His findings were clear – they work in tandem. If you make a brand stronger then both penetration and loyalty (in terms of how often/how much people buy) go up.

Over the subsequent years I was exposed to many marketing models that failed to take this into account. McKinsey have a funnel that dissects a brand into sub groups from aware to consider, to buy occasionally, to buy most often, which they use to define the specific marketing objectives for a brand – its opportunity to grow. Wrong according to Andrew Ehrenberg. Strengthen the brand and every one of these measures will rise.

At one level this makes sense. It is hard to think of any marketing activity which addresses only one aspect of the funnel. Even if you flight an ad that encourages people to try a brand for the first time it will also encourage some to use it more often. If you run a promotion that rewards heavy purchase it will get the attention of non-buyers and persuade them to try. But surely there must be different levels of effect that would cause a skew in Ehrenberg’s findings? He was certain that there were not – he had the data to prove it – unless there was some structural market anomaly. Unleaded petrol was just coming on the market at the time I met Andrew (tells you how long ago it was) and he used this as an example which could skew the results because the distribution of the new type of fuel was controlled artificially and patchy. It was, in economists’ terms, ‘an imperfect market’. But in most fmcg markets were brands are freely available and fair competition keeps prices in line (i.e. a more perfect market) Ehrenberg’s Law held true over time. Those last couple of words – ‘over time’ – are important. I am quite sure that in the short term, a month or so, certain marketing activity will disproportionately affect either penetration or loyalty but over the course of a year they effect will work their way through to either a stronger or weaker brand in the way Ehrenberg described.

During my time at SAB we focused hard on the nature of brand adoption (and ‘unadoption’) and loyalty, and I got heavily immersed in studying it from many different angles. This included a lot of data-based analysis building on Ehrenberg’s work but also ethnographic work (studying consumers’ behaviour in real time). We even looked at the differences in people’s learning styles from the findings of educationalists to see if we could segment the different ways people assimilate new information about brands. We studied the best circumstances in which to sample a beer brand – in a busy pub when the party is in full swing or when you had quieter groups of friends in the early evening. We found that if people were ‘out of their comfort zone’ for example in a new venue with an unfamiliar group of friends, it improved their receptiveness (in a lasting way) to new ideas and new brands. We looked at various conversion models and even developed one of our own. But I never felt we got to the ‘answer’ and I certainly never felt we fully took account of, let alone disproved, Ehrenbergs challenging empirical analysis and findings.

So I’m still thinking about it. Here are my latest thoughts.

The journey to loyalty is not a journey

At any one moment in time we can divide a brand into various usage/attitudinal groups:-

•    Blissfully unaware
•    Passively aware but don’t know much about it
•    Saliently aware – both know the brand and know something about it that makes it interesting/relevant/attractive.
•    Actively considering
•    Using occasionally
•    Using most often
•    Using exclusively and downright evangelical about it

You can look at a brand in this way – people have to fall into one, but not more than one, of these groups. BUT it is not a journey from “aware to loyal” with several neat steps along the way. You can go from blissfully unaware to evangelical in one brief moment.

There’s a difference between behavioural and attitudinal loyalty

Financial people only care about bevioural loyalty because that shows up on the P&L. If someone is buying a brand on more than 80% of their purchase occasions we can say they are behaviourally loyal. But they may or may not be attitudinally loyal – they may be buying out of indifference and/or inertia or they may be buying very deliberately because of their strong feelings towards the brand. Guess which is better in the long run?

Cheating only helps in the short term

It follows from the above that we can manipulate behavioural loyalty with short term incentives – a discount, a promotion. I’m not knocking this – if you can do that cost effectively and there is no competitive reaction it can be profitable. If you force trial and therefore force people to see how much better the brand is it can also be of value. But that is the point – you need to affect the attitudinal loyalty, the strength of relationship with the brand to make it so strong it will still be bought as often by as many people long after the discount ends.

We want to shift the demand curve

As Andrew Ehrenberg said, as marketers we need to figure out the best ways to create the difference in “volume and pressure’ in other words to strengthen the brand, in fact to shift the whole demand curve so that at any given price more people will consider, buy and buy more often. There are no short cuts to loyalty – it is a proxy for brand health and it takes time and effort.

I did not know Andrew Ehrenberg well but he struck me as a highly intelligent, decent and thoughtful man. He was a scientist and he enriched our understanding about marketing through the appliance of science. He injected some facts based on experimentation into a ‘marketing discipline’ that is often anything but.

Stick and Carrot Doesn’t Work

The excellent TED.com has served up another gem in this talk by Dan Pink. Using hard evidence from experiments around the world he makes the case that stick and carrot type incentives actually reduce performance in any task requiring a little creative thinking. As he points out that means pretty much everything businesses expect from their employees these days.

http://bubble-cast.com

The explanation is that an attractive financial incentive actually narrows our thinking. If the solution to the task is anything other than obvious this kind of ‘motivation’ causes us to focus on the task at the expense of a better solution that might lie at the periphery.

He suggests – he would say, proves – that autonomy, mastery and purpose are what drives motivation. The desire to have control over our lives, the ambition to get better at something and the need to feel we are serving a higher order purpose that we believe in. In this short talk he only gets to prove convincingly that stick and carrot does not work. He does not get much time to explore the more enlightened approach but it makes sense.

I’d add recognition to his list. A little public acknowledgement for our efforts goes a long way towards motivating people. It also allows everyone else to see what they should be seeking to emulate.

As Dan Pink argues, business is not applying what we know to be true – what we can prove – from science. I am with him. My comment above, that public acknowledgement allows others to copy desired behaviour is also based on social science.

Facilitating copying is the most powerful way fro ideas and actions to spread. We have long known that it is not necessary to first change people’s attitudes. We need to change behaviour and attitudes follow.

Dan is optimistic that business is prepared to look at radically different ways to manage and motivate. We have the “carrot” of organizations like Google who take a more results focused approach and give a great deal of autonomy, e.g. in NPD, to its team. We have the “stick” that old models of management, oversight and incentives have so spectacularly failed in financial institutions. Maybe, but I fear the change will be a long time coming for the big business behemoths. Inertia is the most powerful force and insecure greedy people will find it very hard to believe that fear & greed are not the best motivators.

Agency of the Future

Came across this the other day – very interesting contribution to the agency of the future debate. It also has some useful links.

Direct your comments to Bud not me – if you scroll down you will find mine, which in summary is that we live in a both/and world. There will be a need for a ‘conventional advertising agency’ for many years to come, but there will be growing demand from both conventional clients (P&G et al) and non-conventional clients (i.e. everyone else but especially the new economy businesses) for a whole host of new configurations of services in which digital (= creative use of technology) will play a bigger and bigger part. As Bud points out, increasingly clients will bring some aspects of ‘marketing services’ in-house facilitated, as they are, by galloping technology.

A couple of simple observations. Clients have always paid only for what they cannot do cost effectively themselves. If clients cannot get what they want from their current agency roster they will go looking for it and someone will offer it or develop it. As I keep pointing out – age has its advantages – Ad agencies used to offer everything from making ads, pack design, research, new product development, PR, media buying etc etc. However, only the first of these did they do very well so new agencies developed as clients went looking.

I offer one piece of evidence of this both/and view, and it is a back-handed compliment to Martin Sorrell. If it was obvious that one agency model was going to be the clear winner rather than it being both/and with lots of different and emerging agency models, then WPP would look much more focused. As it is he buys everything that moves and even aims to have 3 competing brands in every major sector (I don’t think this is just about managing client conflict). He is betting on every horse in the race and any new ones that come along, a bit like his mate Rupert Murdoch. Who’d bet against this “strategy” – no-one but a private independent which is where I think the real action is.

“Change the World” by Not Trying To

I was in Unilever’s Offices in Durban last week. They really are fabulous, big views of the ocean and more meeting rooms of every description than I have ever seen. They have lots of open space with small informal meeting areas, conference rooms and brainstorm rooms aplenty and working kitchens, laundry rooms and bathrooms dotted around. Together with all the pictures of real consumers and areas designed to look like a township you could see they have gone to great lengths to make sure the whole business feels connected to their market and what they make and sell.

Around the Brainstorm rooms they had decorated the walls with inspiring quotes from famous entrepreneurs. One in particular caught my eye:-

“The people who change the world are the people crazy enough to believe they can change the world” Steve Jobs

I like the idea of specifically designed ideation rooms where people feel they have permission to dream big – we made this a feature of Added Value offices and called them Idea Generators. I also like inspiring quotes. But this one from Steve Jobs struck me as all wrong.

I can’t think of many instances in life, and especially in business, where people changed the world because they wanted to, or set out to, change the world. They normally intend only to change their world or solve some particular problem they confronted and, in a very few instances, they succeeded unexpectedly in making a big impact on THE world. Steve Jobs had no intention of changing the world when he started Apple. He had dropped out of university and needed to justify having done so by making some money. In fact if you look at the case studies of many of the game changing internet innovations and the people behind them– Skype, Paypal, Google, the internet itself – they actually set out to do something much more modest and mundane. They get full credit for not only achieving what they set out to do but also spotting and exploiting the discovery that they had stumbled on a much bigger opportunity. But let’s be quite clear – they were absolutely not crazy enough to think they could change the world or arrogant enough to want to.

Nelson Mandela changed the world, and he certainly dreamed big, but he set out purely to overthrow a regime that disadvantaged his people. There is a quote of his I particularly like that goes something like this:-

“Dreams without action are a waste of time. Action without dreams is merely passing time. But with dreams and action you can change the world”

A great reminder that when the ideation sessions end a smaller group of people actually need to make the ideas happen, and a great reminder that we need the stretch of some big ambitions to give our actions lasting purpose. But he said this after he was President and the old regime had been dismantled. He did not set out to change THE world, just his inequitable world.
Unilever has for more than a century (Unilever was created in 1930 but Lord Leverhulme kicked the whole thing off in the 1880’s with Sunlight soap) focused on making the best value cleaning and food products it can. Lord Lever had as much impact on the world as Steve Jobs but he did seek to change the world. He just concentrated on doing what he knew best, to the best of his abilities. Like Steve Jobs he was smart, ambitious and tenacious and sure, he dreamed big, but his dreams were purposeful. They inspired him to overcome any obstacle in his path. Like Steve Jobs they occasionally got him into trouble (his desire to control every aspect of his supply chain from plantations, shipping lines to factories and stores overstretched the company and is what effectively forced the merger with Dutch company Margarine Unie).

No, I don’t like the quote from Steve Jobs and actually think it is very unlike him. Watch this video of his address to Stanford graduates for much more inspiring words from the truly impressive Mr. Jobs

He offers some very inspiring advice and reflections to all of us, not just graduates.
My favourite all time quote which I think is much more relevant to Steve Jobs, Lord Leverhulme, Mandela and all the other great leaders, visionaries and entrepreneurs comes from George Bernard Shaw:-

“The reasonable man adapts himself to the world. The unreasonable man adapts the world to himself. Therefore all progress depends on the unreasonable man”

Don’t accept things the way they are just because that is the way they are. Challenge everything, be unreasonable, ask why not, what if. GBS deliberately said ‘man’ and not person. Men are often more unreasonable which is both a good thing and a bad thing.

Why was I in Unilever Durban? They have just launched a mobile marketing scheme with which I am involved that may well change the world of FMCG marketing in emerging markets, but neither they nor I are crazy enough to think we can change THE World.

McGuffins and Nerdwanglers

I’ve been tweeting recently about some purchases I have been making, joking about the fact that I have no idea what Canon SLR 550d 18MP really means, or RAM, memory and processor speed for that matter. Not entirely true, I have a vague idea that more megapixels in a digital camera gives better picture quality, but someone who really knows what they are talking about explained that it is not quite as simple as that. There are many other aspects of the camera, and how you use it, that will negate the benefits of just having more little ‘pixies’ as I call them.

Megapixels is just an indicator of performance, a heuristic or shorthand that helps us judge what we are getting for our money in terms of performance. We need them because most of us cannot grasp all the aspects of performance needed to make a fully considered choice. So we rely on these heuristics and we also just copy what we see other people do who in turn have relied on them. It does not just apply to high tech products like cameras or computers. Most of what we buy now has a huge amount of technological know-how behind it or at least expert craftsmanship. From my earliest days in brand management I learned how complex a detergent is, and from my more recent time in the beer industry I know just how complex is the process (not so much the ingredients although they of course matter) of making beer. Miller Lite (not the most strikingly different of beers) involves no fewer than 3000 choices in the brewing process, each one of which, if made differently, would result in a different tasting beer. Have you ever seen a perfumers organ (no sniggers) – the thousands of little vials of perfume ingredients, some of them worth a fortune, that they use to compose a new fragrance? The marketing focuses on simple vocabulary like “fresh, musky or sensual” to describe what is in effect a work of pure art.

As Gladwell pointed out in Blink we thin slice to form our judgments. We use a few simple things to sum up a person, situation or brand choice. Marketers exploit this by latching on to a few simple concepts – often but not always based on the science – to ‘help’ us. They will hype some aspect of the product to persuade us to buy and sometimes they employ what I used to call “Nerdwanglers” and I discovered years later the Americans call “McGuffins”. Let me explain.
Nerdwangler – showing my age – refers to the late Kenneth Williams, a very camp UK comic who had a character who spoke in a strong west country accent and used phrases with made up words such as “She took me down the orchard and I showed her my nerdwangler”. Nobody knew what a “nerdwangler” was but it sounded naughty and got lots of laughs. It was suggestive. When I ran Persil, we relaunched the brand with a new low temperature bleach that had the chemical acronym of TAED (can’t remember the full name but it starts with tetra). There was an impressive amount of technology and chemistry know-how behind this ingredient. It was only one of several changes we made but in total they did give noticeable cleaning improvements at the lower temperatures people were having to wash in because of more and more artificial fibers (you can literally boil wash cotton). When we tested the new packaging we got a great result for “New Improved Persil – now with TAED for a better Cool Wash”. We knew we would, it was an improvement on “miracle ingredient X” which had worked in the past until it got over used. TAED was a ‘nerdwangler’ – no-one knew what it meant but it sounded good, like more megapixels and twin turbos.
The button on the sleeve of a Dunhill blazer actually unbuttons, the second hand on a Rolex actually sweeps, the door of a Mercedes shuts with a soft, firm sound rather than a clunk. They are all heuristics.

They justify our purchase decisions to ourselves, and to our mates – “Look Fred, your watch goes tick tick tick but my Rolex goes swoosh”.

Any harm in any of this? Well let’s look at some common McGuffins, Nerdwanglers and heuristics.

Audi RS6 does 0-60 in 4.6 seconds, faster than a Porsche Carrera

Single malt whisky is more expensive than a blend (price is the single most common heuristic in purchase decisions)

Rolex is made from one piece of metal with a fully mechanical movement

Dettol kills 99% of all known germs

Camel One has only 1mg of tar and nicotine

You lose weight faster on the Atkinson diet

Canon 550d has 6 more megapixels than the Nikon DX3

Yes but…….

The Audi only does this in a straight line, the Porsche thrashes it on a track or winding road.

A single malt whisky is just an ingredient used to blend a whisky, one with a very distinctive but singular taste – fine for sipping but not for having a few drinks. Any scotch expert will tell you there is vastly more complexity and balanced taste in a decent blend. Scotch drinkers drink blends.

Any Rolex will lose or gain 5 seconds a day (if you are lucky) – the cheapest quartz is more accurate.

It is not good to kill all germs, we rely on them to build our immunity. What about the ones we don’t know and what if the 1% is a superbug that will kill you?

Tests show that smokers who switch to low tar/nicotine cigarettes end up smoking more in a day so the total effect is no different and certainly no better for you.

The Atkinson diet worked by satiating you with protein and fat so you felt full quicker and therefore ate less. Smoking will do the same thing and is probably no worse for you. You lose weight if the calories you expend exceed the calories you take in. If you diet you actually programme your body to gain more weight in the future (it’s a genetic thing, we are designed to gain weight to see us through the winter months).

The Nikon has a better lens and is full frame – it will take much better pictures. It is however a brute to carry around and only the professional will be able to make full use of its superior performance.

Everything I have just said can be discovered on the internet in just a few minutes from a variety of sources that are more trusted than the manufacturer – Wiki, blogs, chat rooms, social networks etc.

The days of the McGuffin and the Nerdwanglers are numbered. We are not becoming more rational in our purchase decisions we are just able to be more rational.

Those of you who are following the debate I am having with Paul Feldwick will know that I do not accept the distinction between rational and emotional choices. If I buy something because a) it makes me feel good b) it says something about me or c) I see lots of other people doing it, then I am behaving entirely rationally as a super social ape wishing to enjoy life, get on with others and avoid risk.

So yes, I have a Porsche, a Rolex (2 actually), a Canon 550d (I did my research, it does take great pictures with all those pixies, a decent Tamron lens and a light body), I smoke Marlboro Light, drink a single malt but only if someone gives it to me. I disinfect my toilet (well someone does). But I eat and drink what I like and try to work it off in the gym. And of course I smoke so I am never as hungry as my more clean living friends but that might not be sensible for my lungs and heart. Apes don’t smoke, maybe I should copy them? But then they don’t see the funny side of showing someone your nerdwangler. (I have no idea of the origins of ‘McGuffins’).

The Biggest Creative Department in the World

If you had a problem you needed solving would you give it to one creative team, 3 creative teams or a thousand? It depends. If the creative brief is confidential you will want to restrict the number of people who know about it, that’s obvious. But there’s another huge advantage to working face to face with just one trusted creative team (or agency). The original brief gets modified as the process of solving it gets underway. This starts when the brief is presented and discussed – aspects of the brief are challenged, nuances emerge. The brief the creative team finally works on is rarely the one the client originally wrote. And then as ideas are developed and submitted more insights emerge that cause the brief to be further fine tuned or in extreme cases thrown out.

For these reasons, crowd sourcing creativity does not spell the death of the Ad Agency (or design, innovation, PR agency) any more than cinema or television killed books, although they did have an impact and these days they all work together. Like books/cinema/theatre/TV, there are occasions when crowd sourcing creative ideas is better and other situations when it can work to enhance the client/agency relationship.

For those of you who are unfamiliar with creative crowd sourcing you can check out Crowdspring, 99 designs or Quirk’s Idea Bounty (I have a vested interest in the latter). You post a brief, offer a reward or ‘bounty’ and the creative community built by these platforms goes to work. Crowdspring and 99 designs are more design & execution focused and ask for ‘spec work’ i.e. finished creative work. Idea Bounty asks only for ideas although people can, and often do, take the opportunity to support this with visuals to various degrees of finish. People are not penalized if they only submit a very rough idea – it is the power of the idea that is judged (by the client but with help from the Idea Bounty team).

This difference – spec work versus just ideas – is important in two respects. Firstly it matters to the creative community who see crowd sourcing finished work as exploitative. Secondly, focusing just on ideas makes the kind of problems you can work on much broader and allows a wider range of professionals and amateur creatives to participate. During its Beta Testing Phase, Idea Bounty successfully delivered ideas for a strap line for the a beer brand’s World Cup campaign (“It all comes together with a Castle”), a idea  for how to encourage more people to use on-line banking (FNB bank) and a new campaign idea that could stretch to TV and posters for an FMCG brand (Peperami). The creative Community that Idea Bounty has built up over a year is now close to 15,000. They come from around the world (but with a bias to English speaking countries) and span a wide range of full time professionals, freelancers, students and Joe Public. Professionals and Semi-Professionals form the single biggest group and so far all the winning ideas – every brief has delivered a winning idea that has been implemented by the client – has come from them but it is early days.

The average number of submissions to a brief on Idea Bounty has grown steadily. Peperami got over a thousand submissions of which roughly half were good enough to make the first shorlist! The cost of getting anywhere from a few hundred ideas that solve your brief to over a thousand is between $3000 and $50,000 depending on the size of the Bounty (roughly half the total cost) and the appeal of the brief and the brand. Seems like a no-brainer, why wouldn’t you use Idea Bounty? The cost is relatively very low, the results are excellent so far (every client has had a successful outcome and the idea has been used). Well, with a certain degree of bias I think everyone should use Idea Bounty and that over time everyone will – but not all the time and not for every brief.

Idea Bounty is great if the brief is not confidential (or if the sensitive aspects can be disguised). Note that only the brief is public – the submissions are seen only by the IB team and the client. It works when the brief is absolutely clear and can be expressed succinctly. This may require some pre-work but then all good briefs do. It’s not essential but it helps if the brand or category is familiar so the context for the brief is also clear. So far Idea Bounty has for the most part been used by big well-known brands– Levi’s, BMW, Red Bull, World Wildlife Fund.

You can ask for communications ideas or an idea for some aspect of communications. What I like is the possibility to post briefs on a wider range of marketing problems or opportunities  – ideas for new products or service enhancements, a different approach to internal marketing, a new twist on Corporate Social Responsibility programmes, trade launches, complaint handling…the list is endless if all you want are some good ideas for a clearly expressed need.

Clients have spotted the pure value of this kind of crowd sourcing. If you only have a total marketing budget of $1million you cannot afford to spend a big chunk of it on the creative. Idea Bounty does let clients source ideas cheaply and then work directly and more cost effectively with a production house. This is how Peperami used Idea Bounty.

So far all this sounds very threatening to ‘conventional agencies’, especially the last point which allows clients to by-pass them altogether. But it’s not how I see it developing. There are many more instances and many more constructive ways that clients can use Idea Bounty or other forms of Crowd Sourcing in collaboration with their existing agencies. Here are just a few.

The client and agency can post a brief in order to get some great upfront insight on the brief. A thousand submissions to a brief tells you a vast amount about the brief, the issues and some areas to explore. If the client agency team think they have something absolutely brilliant why not test that by using crowd sourcing. If the idea cannot be beaten (or if it can be slightly enhanced) how much more commitment will this generate – all for the cost of a few focus groups (which we all know are fairly unhelpful in developing or approving creative ideas)?

What if the client is working with an agency whose core creative strength is in one area of marketing – the one most appropriate to the overall task in hand – but there is one aspect of the work that requires different kinds of ideas. Do you bring in another agency or use Idea Bounty? Ad agencies can source a PR idea, PR agencies can source a digital idea, digital agencies can source a new product idea.

I am not saying that platforms like Idea Bounty offer no threat to ‘conventional agencies’. By allowing agencies to compete creatively in non-core areas and by allowing smaller agencies to punch above their weight creatively it does change the rules. Victor & Spoils is a break-away from Crispin Porter + Bogusky and they have made crowd sourcing their business model – expect to see more of this over the next few years.

Cinema did have an impact on books and television had an impact on cinema but they all co-exist and increasingly they work symbiotically.

I don’t command big marketing budgets these days but I know if I did I would be using, and experimenting with, Idea Bounty and other crowd sourcing platforms. Back in the day I was one of the first clients for David Bernstein’s agency, “The Creative Business” (now long since gone). Their offer was “creative ideas where advertising is not necessarily the answer” and for a while they were really successful until someone decided to turn them into an Ad Agency. I see Idea Bounty as a progression of this kind of creative offer – creative ideas where you need more than just one team can offer.

What is Creativity – in Digital?

I want to share this ongoing debate about creativity and what it means in digital aka eMarketing. There is good material on creativity in brand communications in the free downloads section of this site. In ‘Persuasive and Creative Brand Comms’ you can hear the views of the best brains in the business – Hegarty, Wight, Wieden, Shelly Lazerus and many more. There is lots of discussion about how to develop outstanding creative but a fair consensus about what creativity means. It is a fresh idea that will inspire a wide range of great communications to an agreed objective (let’s just say, building the brand). It is art but it is, as John Hegarty says, applied art and not art for art’s sake.

Tempting to think it is no different for eMarketing. Creativity means having a great digital idea that is relevant to a brand or business brief. Well maybe…..

In advertising there is a case to be made that the agencies regarded as the most creative – the hot shops – can often be stronger on the ‘fresh idea’ than they are on being effective in achieving a business or brand objective. Some will argue that’s fine because fresh is what makes it effective – good creative cuts through the clutter and makes the brand being advertised distinctive. Being seen, heard, talked about creates momentum, and that plus distinctiveness are key drivers of brand growth. This is not just faith, it can be proved although not perfectly so and not in real time.

In eMarketing there is a version of the same debate. So called ‘creative digital agencies’ translates as “eye catching web sites with lots of flash”. In fact there is an expression among digital agencies for this – “eye-candy”. I guess ‘candy’ is a reference to the fact that it may taste sweet but it is not so good for you. In eMarketing there is no escaping measurable results. It is not the same debate, as in conventional advertising, that good looking creative may not necessarily be as effective. Eye-candy can actually get in the way of effectiveness if site usability suffers and search engines can’t find you (to use flash as one simple example). In advertising you can believe that an idea that is “too creative” i.e. really strong and original, can get in the way of the brand. An example would be Bud’s “What’s up” campaign – won all the awards but did not do much for the brand, if anything it dumbed it down. But in digital you can show that, for example, a great looking site or innovative brand game download, achieved appallingly low visits, click throughs, usage etc and that the ROI was therefore terrible.

There is no reason not to strive for great design, a distinctive look and feel, fresh eye-candy, but effectiveness in achieving pre-specified and measurable results is the absolute priority.

All agencies want to be seen as effective and creative, the best want to show that they are effective because they are creative. With less by way of hard data but more in terms of years debating this, advertising has achieved some kind of consensus about what is meant by ‘creativity’. Not so digital agencies. By creativity, do we mean:-

A Big On-Line Idea?
Creative use of technology?
Creative use of eMarketing tactics (site, social media, email, gaming, content, apps etc)
Creative design – the eye candy?

The answer is yes, we mean all of that, and it is judged by hard data not a panel of experts in Cannes.

In fact, in digital, strategic, original and effective are all aspects of ‘creativity’.
Let’s pause for a moment and look at different routes to an effective creative idea. By effective I mean an idea that solves a problem or realizes an opportunity – applied creativity.

Based on what I’ve read, there are 4 sources of an idea:-
•    Inverse Logic
•    Connectivity
•    Reduction
•    Peacocks

Inverse Logic is what I think of when I think of Edward De Bono. Problem = my car lock is frozen. I try pouring hot water on the lock to unfreeze it but it just pours ineffectively down the side the car. De Bono pitches up and suggests I heat the key with my lighter.

Inverse logic is about turning the problem on its head, seeing it from a different angle, challenging the assumptions that people make. Rather than use the internet to sell people things more things efficiently, why not allow people to sell things to each other more efficiently (eBay). That kind of an idea.
Connectivity is forming new connections by using a variety of stimulus to create a new idea or solution. Peroni uses the language of luxury style brands to sell beer. Smirnoff Ice uses beer codes to sell pre-mixers.
Reduction is where an idea comes by seeing though all the clutter to some pure essence or insight at the heart. Innocent Smoothies, EasyJet, Magnum Ice Cream. (Was it Michelangelo who just chipped away at a block of stone to reveal the sculpture contained within?)

Peacocks are all about elaborate and exaggerated display – they survive as a species despite being one of the most impractical birds of all time because Peahens look at them and go “Wow, how good must his genes be?”. Gaultier perfume bottles, Honda’s Power of dreams, Cadbury’s Gorilla.

Not only am I mixing brand ideas with creative problem solving and communication ideas but I am implying that ideas come from one of these sources. It is much messier than that. Peroni, the brand and its communications, are inverse logic, new connections, reductive thinking and peacock display all rolled into one.

So creativity comes in to a lot of things and comes from a variety of techniques and inspiration. But it starts with a problem or opportunity.

That problem/opportunity needs to be interrogated, challenged, discussed, so it can be redefined in such a way that a successful idea can be recognized and successful implementation can be related to milestones and results.
This process – which can take a year or an hour  – sets up the possibility of having an idea by challenging assumptions or by seeing through all the issues to a pure solution. The process of defining the problem allows you to apply new stimulus, new combinations of elements to create something fresh and original.

In digital there is always some new stimulus in the form of new technology or the application of existing technology in a new way.

The process of reducing the problem to clear outcomes promotes reductive thinking as a source of ideas.
Understanding the components of the idea, and new components you can add, may offer the chance to elaborate and exaggerate.
The thinking up front is the foundation for creative thinking – or is it strategic thinking – or is all great strategy creative in the sense of being bold, unexpected, selective, forming new connections?

Strategy relies on developing options  – no choices means no strategy. The process of generating options from which to choose a strategy, especially bold, selective, fresh options, is essentially creative.
This may sound overly complex but surely in order to be more creative we need to explore what we mean by creativity. It leads me to the conclusion that creative strategy is strategic creative. The kind of thinking and processes (essentially questioning) that one associates with strategic thinking seems to me to be the basis of creative thinking.

In digital, the introduction of technology and numerical goals at the outset of the process, ensures fresh thinking that is applied to a problem – applied creativity.
What about the creative design – the execution, what it actually looks and feels like? Design creativity in marketing normally falls into two disciplines:-
Product design – the Dyson Vacuum Cleaner, the iPod
Graphic Design – the logo, the pack, the web site, the identity (and as soon as you introduce the notion of identity you link product and graphics).
In digital it is always product and identity – how it looks and how it works. Because of the strongly empirical aspect of digital – we can test things and we can measure a lot relatively easily – usability always trumps look and feel. Is amazon a great looking site or a really effective site (ditto Twitter, Google, Facebook etc)?

Designers have two great skills – one that is art and one that is craft. They can introduce new semiotic codes to create fresh design. Semiotic is a fancy word that means cultural or ‘what we have come to expect’. We expect a car to look a certain way, financial services to use certain colours and graphic conventions, beer to have certain traditions. The skillful, artful designer respects some of the rules and breaks others by introducing some new design element borrowed, consciously or not, from another category or walk of life. They then craft this into a form that is aesthetically pleasing in an extremely detailed way. Every element of a typeface, every shade of colour, every line and shape is carefully considered and tinkered with until it just looks just right in the context of an overall design that is effective and creative.

Digital designers do the same but like all early adopters of technology they emphasize function over form. Look at cars, computers, phones, watches several years ago and look at them now.

First it has to work, then we can make it aesthetically pleasing. If form does not compromise function but rather it enhances it we have the Holy Grail – we have Apple, Dyson, Porsche

Well this is as far as I have got in this debate but I am still asking questions. In digital, creativity is:-

•    An idea that solves a problem
•    Strategic and creative and effective
•    Form and function
•    New combinations of tactics, applications, content and other digital assets
•    Peacock, aesthetic and functional design
•    It embraces technology and data as stimulus right upfront
•    It is an attitude of mind, an orientation, not a step in the process

It is worth debating all this if it helps us understand a) how to make effectiveness the result of creativity not the trade off and b) organize our teams and our processes to increase the chance of this happening.

Was Agency Commission Such a Bad Thing?

I promised to share some more of my conversations with Mark Earls when he was over recently. Inevitably we got to chatting about Ad Agencies, especially the ‘Big Ones’. Are they evolving fast enough, can they? How come some of the best ideas come out of independent agencies?

A surprising conclusion – at least to me – was the idea that Ad Agencies lost something when they moved away from the old commission system. Ad Agencies began life as agents for media owners (hence the epithet ‘agency’). They were paid a commission on media sales and used to throw in the creative for free. This method of remuneration persisted long after they evolved to be, first and foremost, creative ad agencies, well into the 90’s in fact. Why, the argument went, should an agency get paid according to the whims of the client regarding their media budget, a budget that was notoriously vulnerable if the clients were under profit pressure? So after a brief flirtation with market success related payments (P&G tried this) Ad Agencies moved to the now familiar agency fee structure– essentially a retainer based on the predicted workload and the level of resource the agency puts on the account. (True, some clients operate a hybrid system with fees plus a kicker if the media spend is increased significantly but remuneration is still effectively fee based not commission based.)

Fees sound fairer and more professional but do they deliver creativity that works? Jeremy Bullmore tells the story of Archimedes to illustrate, among other things, the benefit of a tight timeline and a very strong incentive (tell me if the crown is made of gold, you have one week and you’ll be executed if you don’t come up with an answer). Knowing that with a really well executed, great idea that drives brand sales the client will spend heavily and remuneration will rise accordingly is a very clear incentive.

Yes, we can all see the flaws in this. It steers agencies towards big budget media ideas where the job could perhaps have been accomplished better with cheaper forms of promotion like events or social media. Are short term sales the right measure – many of the effects of advertising are longer term? Agencies cannot predict their income if it depends on a budget set by someone else. If they can’t predict their income it makes it harder to run the business, attract and retain talent etc.

My favourite quote at the moment comes from Gareth Kay (Goodby, Silverstein & Partners) – “not advertising ideas but ideas worth advertising”. This nails it. The job of the Ad Agency – any creative agency – is to come up with ideas so good clients want to invest behind them. Perhaps media spend is a crude indicator of this but if you want “ideas worth advertising” there has to be an incentive based on how enthusiastic the client is to get behind the idea. Market place success as an incentive is too complex with too many stakeholders and variables.

Media spend is very crude, total execution budget would be better but is still flawed as noted above. Perhaps, however, it is like democracy – a crap system but better than the alternatives?

Because, as Mark pointed out, if an agency team knows they are getting pretty well paid and that this remuneration is linked more to inputs (size of the team, time invested) rather than outputs (how good the ideas and execution are) you drive the kind of ‘big agency’ behaviour that people complain about. And when I say people I include those in the big agencies not just the clients. I spoke recently to a former head of a big agency who is about to launch his own independent shop. He was very cynical about the ability of big Ad Agencies to do anything effective or creative these days.

It’s not black or white. Big agencies do some brilliant work and fee systems can be made to work. But losing the link to ‘ideas worth advertising’ that the old commission system, with all its faults, gave must be a bad thing for creativity. Why do independents have a stronger reputation? Because they are brave and hungry in equal measure, they have to be to survive.

The Effect of Technology on Behaviour

Mark Earls, ‘The Herdmeister’, is in town this week and we were having a catch up over a beer or three. Mark was described, by The Spectator no less, as ‘the essential guide to the new business landscape’ He has also been called “Malcolm Gladwell on speed’ (by the Guardian I think). He is quite simply one of the most interesting people to talk to about social behaviour, marketing and the impact of the internet. Anyone who reads my stuff will know he is a big influence.

We talked about a lot of things. I needed to pick his brains as I am going head to head with Paul Feldwick in a running debate “Market Leader” in the UK has organized – the first volley launches in their June edition. Paul is arguing (somewhat disingenuously) that the internet is a big fuss over nothing – plus ca change etc. I have, what should be, the easy task of pointing out that it is changing just about everything. The problem is that Paul Feldwick is very smart and was in fact Mark’s mentor when he joined BMP many years ago. I will need to get my thinking straight, so Mark’s visit was very timely.

I’ll share more of our discussion in other posts as part of a rehearsal for the Market Leader piece. One thing we did discuss was the effect the internet has, positive and negative, on peoples’ behaviour. Mark’s business thinking is always underpinned by his knowledge of psychology, social anthropology and social sciences generally. We quickly agreed that since opposable thumbs, stone ages and iron ages, technology shapes society and the behaviour of people within it. On the positive side the internet has created a seismic shift in communication and collaboration. The technology has heightened our desire to share ideas and build on the ideas of others.

One insight Mark had was that when people of like minds cluster together they become more extreme in their views. He cited America as an example of this – creationists become radical, clusters of democrats in Texas become myopic. The reason is simple – we don’t hear opposing views so we become even more set in our own ways of thinking. Pluralism is vital to social progress – thesis then anti-thesis creates a new synthesis as Hegel explained.

The internet offers the opportunity for both cluster extremism and dialectic progress. We can violently agree with each other or take the opportunity to surf other points of view that move our thinking forward.

We also discussed the effect of the internet on social etiquette. People behave badly towards others on the internet, it encourages extreme behaviour for which one would normally be embarrassed or even ashamed. We’ve all experienced the ‘email arguments’ – a small, often unintentional, offence can escalate into a full blown, daggers drawn, row. Emails encourage short sharp communication (gotta clear that inbox) with no subtlety or finesse. We can’t see the person we’re responding to, so we do not have the advantage of facial expression or non-verbal communication upon which we rely as super social apes.

But there is also the perceived disconnectedness and safety of the internet. We sit there late at night in front of our keyboard, possibly with a few glasses of wine on board, and fire off crass tweets and blog comments. I’ve done it myself. It’s not really ‘us’, it’s a darker more extreme version of ‘us’. We would never behave like that face to face, we aspire to higher standards of social behaviour. It’s like road rage. We call the guy who cut us up in traffic “a stupid ****”  from the cocoon of our car – something we never do if we just bump into people on the pavement while walking. In fact often, if someone bumps into you, by sheer reflex, you apologize to them.

We feel disconnected to the person who cuts us up in traffic. We can’t see them properly, we’re robbed of the non-verbal communication that tells us whether it was unintentional or deliberately rude. The person who bumps into us on the pavement reveals more about themselves. They are in a hurry, they look worried about something, they were distracted – that’s fine, we’ll let it go. Up close, we can judge people by their intentions, not just their actions.

The other feature of the internet is that you cannot target or conceal your comments and behaviour. You put it out there with some vague idea of who it is aimed at but  almost anyone can get access to it (or see it – remember those Facebook pictures?). Mark was telling me a story about some innocent joke he made about dead sheep in a review he posted. For months he was Cyber Stalked by some woman – one presumes an Animal Activist. She left comments on his blog and sent him tweets that became more and more bizarre and threatening. It turns out she held a very responsible management job somewhere in the States, by all accounts a perfectly nice woman. She had behaved badly but when Mark contacted her directly – personally – to explain he had meant no offence by the joke so could she kindly leave him alone, she behaved like the person on the pavement, “Yes, of course, sorry, my mistake”.

Because, of course, the safety, disconnectedness and anonymity of the internet are only perceived. The cocoon of your car is not a real cocoon. If you behave badly or inappropriately you can be confronted with the consequences of your actions.

Mark and I agreed that we are still, as a society, developing the internet etiquette that goes with its undoubted freedom of expression and access. The technology has changed our behaviour and not always for the better. In time, the intelligent and sensible among us will learn to behave better. We are social apes, and that means that over generations of genetic honing we have learned that it benefits us to get along with others and, if asked nicely, to leave them alone.

What’s Hot According to McKinsey? Nothing much.

A while back I started using McKinsey’s Top 10 articles as a way seeing what is on the minds of senior business people, their clients and their readers one assumes. The boys in blue publish a lot of work but they give a summary every quarter of which 10 articles were most popular. Last year this was dominated by stuff about the crisis – cutting costs, leadership in turbulent times, how to plan when all your numbers are going south – that sort of thing. So I was interested to see what the hot topics were for the first quarter 2010 and relieved to discover that some sort of normality has returned.

Among the 10 most read articles by McKinsey clients are ones about:-

•    Building organizational capabilities
•    Strategic decision-making
•    Better innovation
•    Change management

In other words all the normal themes that McKinsey punt because it’s what they do. There are then a range of articles on such things as:-

•    Marketers’ use of behavioural sciences (I posted on this)
•    Family businesses
•    New use of Game theory in decision-making

Call me cynical but this is the normal McKinsey new business tool. They take the output of some recent projects and package it up as a “thought piece” to tout for some more projects (good idea if you already know the answers).  Or they take the output of a new piece of research so that some partners can make a name for themselves. These new business articles have hit the top 10 so there must be some fees to be had.

Finally there are a couple of topical articles on the internet and water conservation. Never let it be said that world’s biggest and best management consultancy do not have their finger on the pulse – digital and green – two things every CEO wants to look as if they understand and care about but probably don’t. Hot, hip and happening – that’s McKinsey.

Despite the cynicism I do actually have the highest regard for McKinsey based on my dealings with them. Their people are very smart and they have the most disciplined and coherent company culture I have ever seen.

But back to the point. Judging by their top 10 Articles so far this year, things seem to be getting back on to an even keel.  As we slowly emerge from the biggest slump in living memory CEO’s can get back to figuring out the best way to make strategic decisions, structure or change their business accordingly and develop new products. The enduring themes that have kept McKinsey in business for many years. Phew – that’s alright then!

PS I have often wondered why it is that with all the thousands of articles and books on strategy, decision-making, innovation and leadership most businesses are pretty poor at all of them. They succeed, most often, because they are good operationally not because they put any of this best practice into practice. In fact, as I have commented before, if all business books aim to give us competitive advantage and we can all read them how can there be any competative advantage? Again as I have said before, I suspect most business people read business books and articles for the same reason that we read romance or adventure novels.

It’s an escape from real life.