This past week, Zeitgeist had the pleasure of enjoying a new adaptation of Shakespeare’s “Much Ado about Nothing”. This adaptation was not performed at the theatre but at the cinema. It was not directed by Kenneth Branagh or any other luminary of the legitimate stage, but rather by the quiet, modest, nerdy Joss Whedon, who until a few years ago was best known to millions as the brains behind the cult TV series phenomenon “Buffy the Vampire Slayer” (full disclosure: Zeitgeist worked on the show in his days of youth). Whedon was picked to direct a film released last year that can, without much difficulty, be seen as the apotheosis of the Hollywood film industry; “The Avengers”. A mise-en-abyme of a concept, involving disparate characters, some of whom already have their own fully-fledged franchises, coming together to form another vehicle for future iterations. “The Avengers” became the third-highest grossing film of all time, and it is a thoroughly enjoyable romp. Moreover, to go from directing on such a broad canvas to shooting a film mostly with friends in one’s own home – as with “Much Ado…” – displays an impressive range of creative ingenuity.
Sadly for shareholders and studio executives’ career aspirations, not every film is as sure-fire a hit as “The Avengers”, try though as they might (and do) to replicate the same mercurial ingredients that lead to success. Marvel, which originally conceived of the myriad characters surrounding The Avengers mythology, was bought in 2009 by Disney for $4bn. Disney for all intents and purposes have a steady strategic head on their shareholders. They parted ways with the quixotic Weinstein brothers while welcoming Pixar back into the fold. They were one of the first to concede the inevitability of closed platforms release windows – something Zeitgeist has written about in the past – they are debuting a game-changing platform, Infinity, which might revolutionise the way children interact with the plethora of memorable characters the studio have dreamt up over the years. However, such sound business strategy could not save them from the uber-flop that was 2012’s “John Carter”, which lost the studio $200m. This summer, the rationale for their biggest release has been built on what appears to be sound logic; taking the on- and off-screen talent behind their massively successful “Pirates of the Caribbean” franchise, and bringing them together again for another reboot in the form of “The Lone Ranger”. The New York Times said the film “descends into nerve-racking incoherence”; it has severely underperformed at the box office, after a budget of $250m. Sony’s “After Earth” similarly underperformed, suddenly throwing Will Smith’s bullet-proof reputation for producing hits into jeopardy.
These summer films – “tentpoles” to use the terminology bandied about in Los Angeles – are where the money is made (or not) for studios. As an industry over the past ten years, Zeitgeist has watched as these tentpoles have become more concentrated, more risk-averse and therefore less original, more expensive and more likely either to produce either stratospheric results or spectacular failures. Paramount is an interesting example of a studio that has made itself leaner recently, releasing far fewer films, and relying on franchises to keep the ship afloat. Edtorial Director of Variety Peter Bart seems to think there’s a point when avoiding risk leads to courting entropy. It’s an evolution that has escaped few, yet is was still notable when, last month, famed directors Steven Spielberg and George Lucas spoke out publicly against the way the industry seemed to be headed. Indeed, the atmosphere at studios in Hollywood seems to mimic that of a pre-2008 financial sector; leveraging ever more collateral against assets with significant – and unsustainable – levels of risk. The financial sector uses arcane algorithms and has a large number of Wharton grads whose aim should be to preserve stability and profit. Yet even with all this analysis, they failed to see the gigantic readjustment that was imminent. In the film industry, Relativity Media’s reputation for rigorous predictive models on what will make a film successful is rare enough to have earned it a feature in Vanity Fair. So what hope is there the film industry will change its tune before it is too late? Spielberg pontificates,
“There’s eventually going to be a big meltdown. There’s going to be an implosion where three or four or maybe even a half-dozen of these mega-budgeted movies go crashing into the ground and that’s going to change the paradigm again.”
Instead of correcting course as failures at the box office failed to abate, studios have dug in harder. Said Lucas,
“They’re going for gold, but that isn’t going to work forever. And as a result they’re getting narrower and narrower in their focus. People are going to get tired of it. They’re not going to know how to do anything else.”
Such artistic ennui in audiences is admittedly sclerotic in its visibility at the moment. “Man of Steel”, another attempt at rebooting a franchise – coming only seven years after the last attempt – is performing admirably, with a position still firmly in the top ten at the US box office after four weeks of release, with over $275m taken domestically. It’s interesting to note that audiences have been happy to embrace the new version so quickly after the last franchise launch failed; though actor James Franco finds it contentious, the same has been true with the “Spider-Man” franchise relaunch.
Part of the problem in the industry, some say, is to do with those at the top running the various film studios. In “Curse of the Mogul”, written by lecturers at Columbia University, the authors contend that since 2005 the industry as a whole has underperformed versus the S&P stock index, yet such stocks are still eminently attractive to investors. The reason, the authors say, is that those running the businesses frame the notion of success differently. They argue that it takes a very special type of person (i.e. them) to be able to manage not only different media and the different audiences they reach and the different trends that come out of that, but more importantly (in their eyes) to be able to manage the talent. They asked to be judged on Academy Awards rather than bottom lines. The most striking thing in the book – which Zeitgeist is still reading – is the continual pursuit by said mogul of strategic synergies. This M&A activity excites shareholders but has historically led to minimal returns (think Vivendi or AOL Time Warner), often because what was presented as operational or content-based synergy is actually nothing of the sort. It’s a point Richard Rumelt makes in his excellent book, “Good Strategy / Bad Strategy”. Some companies are beginning to get the idea. Viacom seemed an outlier in 2006 when it divested CBS. Lately, News Corporation has followed a similar tack, albeit under duress after suffering from scandalous revelations about hacking in its news division. A recent article in The Economist states,
“Most shareholders now see that television networks, newspapers, film studios, music labels and other sundry assets add little value by sharing a parent. Their proximity can even hinder performance by distracting management… they have become more assertive and less likely to believe the moguls’ flannel about ‘synergies’.”
So in some ways it was of little surprise that Sony came under the microscope recently as well, part of this larger trend of scrutiny. The company has experienced dark times of late, with shares having plunged 85% over the past 13 years. The departure of Howard Stringer in 2012 coincided with an annual loss of some $6.4bn. Now headed up by Kazuo Hirai, the company has undoubtedly become more focused, with much more being made of their mobile division. Losses have been stemmed, but the company is still floundering, with an annual loss reported in May of $4.6bn. It was only a couple of weeks later that hedge-fun billionaire Dan Loeb – instrumental in getting Marissa Meyer to lead Yahoo – upped his ownership stake in Sony, calling on it to divest its entertainment division in a letter to CEO Hirai. Part of the issue with Sony is a cultural one, where Japan’s ways of working differ strongly from the West’s. This is covered in some detail in a profile with Stringer featured in The New Yorker. In a speech he gave last year, Stringer said, “Japan is a harmonious society which cherishes its social values, including full employment. That leads to conflicts in a world where shareholder value calls for ever greater efficiency”. But Sony’s film division – which includes the James Bond franchise – is performing well; in the year to March 2013 Sony’s film and music businesses produced $905m of operating income, compared with combined losses of $1.9 billion in mobile phones, according to The Economist. It ended 2012 first place among the other film studios in market share. Sony is the last studio to consistently deliver hits across genres, reports The New York Times in an excellent article. The article quotes an anonymous Sony exeuctive, “We may not look like the rest of Hollywood, but that doesn’t mean this isn’t a painstakingly thought-through strategy and a profitable one”. Sadly the strategy behind films like ‘After Earth’ begin to look flimsy when one glances at the box office results. While Hirai and the Sony board concede that have met to discuss the possibility of honouring Mr. Loeb’s suggestion – offering 15-20% of it as an IPO rather than selling it off in full – Mr. Hirai also commented in an interview with CNBC, “We definitely want to make sure we can continue a successful business in the entertainment space. That is for me, first and foremost, the top priority”. In mid-June Loeb sent a second letter, advocating the IPO proposal and saying “Our research has confirmed media reports depicting Entertainment as lacking the discipline an accountability that exist at many of its competitors”. The question is whether selling off its entertainment assets would remove any synergies with other divisions, thus making the divisions left over less profitable, or whether such synergies even existed in the first place. For Loeb, the “most valuable untapped synergies” are still in the studio and music divisions yet after decades as one company they still remain untapped. That point won’t make for pleasant reading at Sony HQ.
Another problem is the changing nature of media consumption habits. Not only are we watching films in different ways over different platforms, we are also doing much else besides, from playing video games, which have successfully transitioned beyond the nerdy clique of yesteryear, to general mobile use and second screening. This transition – and with it a realisation that competition is not likely to come from across regional boarders but from startup platforms – is largely being ignored by the French as they insist on trade talks with the US that centre on the preservation of l’exception culturelle. Such trends are evident in business dealings. The Financial Times this weekend detailed Google’s significant foray into developing content, setting up YouTube Space LA. The project gives free soundstage space to artists who are likely to guarantee eyeballs on YouTube, and lead to advertising revenue for the platform. From the stellar success of the first season of “House of Cards”, to DreamWorks Animation’s original content partnership announced last month, Netflix has become the bête noire for traditional content producers as it shakes up traditional models. We have written before about the IHS Screen Digest data from earlier this year, showing worrying trends for the industry; as predicted, audiences are beginning to favour access over ownership, preferring to rent rather than own, which means less profit for the studio. As much due to a decline in revenue from other platforms as growth in of itself, cinemas are expected to be the major area of profit going forward to 2016 (see above chart). We’ve written before about the power cinema still has. Spielberg and Lucas pick up on this;
“You’re going to end up with fewer theaters, bigger theaters with a lot of nice things. Going to the movies will cost 50 bucks or 100 or 150 bucks, like what Broadway costs today, or a football game. It’ll be an expensive thing… [Films] will sit in the theaters for a year, like a Broadway show does. That will be called the ‘movie’ business.”
In a conversation over Twitter, (excerpts of which are featured above), Cameron Saunders, MD of 20th Century Fox UK told Zeitgeist that “major changes were afoot”. Such potential disruption is by no means unique to the film industry, and should come as a surprise to one. Zeitgeist recently went to see Columbia faculty member Rita McGrath speak at a Harvard Business Review event. In her latest book, “The End of Competitive Advantage”, McGrath discounts the old management consultant attempts at providing sustainable competitive advantages to business. Her assertion is that any advantage is transient, that incumbency and success often lead to entropy, unless there is constant innovation to build on that success. Such a verdict of entropy could well be applied to the film industry. The model has worked well for decades, despite predictions of doom at the advent of television, the VCR, the DVD, et cetera ad nauseum. But fundamental behavioural shifts are now at play, and the way we devise strategies for what content people want to see and how they wish to see it need to be readdressed, quickly. Otherwise all this deliberation will eventually become much ado about nothing.
UPDATE (15/4/13): Of course, context is everything. The New York Times published an interesting article today saying investing in Hollywood is less risky than investing in Silicon Valley, though the returns in the latter are likely to be greater. Neither are seen as reliable.
This issue isn’t going away. We write again about it, here.
“Breaking an old business model is always going to require leaders to follow their instinct. There will always be persuasive reasons not to take a risk. But if you only do what worked in the past, you will wake up one day and find that you’ve been passed by.”
- Clayton Christensen
What do Dell, The New Yorker and the music industry have in common? All three are currently grappling fundamentally with their business models in the face of creative destruction at the hands of digital disruption. The CEO of Dell is struggling to take it private at the moment – in a proposed $24.4bn buyout – in an effort to ensure its strategy looks away from the short-term needs of investors while it restructures with a new, long-term strategy that will shift focus away from its core PC business. An issue of The New Yorker hardly makes for a quick read, but has been one of the more innovative companies among its peers to embrace and experiment with digital. We wrote about their initiatives last summer. Recently, for their anniversary issue, the publisher offered digital issues for 99c, an offer that Zeitgeist took them up on, and it was pleasing to see how well the digital edition mirrored with print one, while at the same time adding some features that took advantage of being on a digital product. Last week, The Economist published an article on the music industry, which is beginning to see glimmers of hope in its revenues from digital sales. “Sales of recorded music grew in 2012 for the first time since 1999“, although only by an anemic 0.3%. This is still better than Hollywood, which had to settle for celebrating a flattening of home entertainment revenues, after years of decline. After almost being destroyed by it, a third of the music industry’s revenues now come from digital, but they are barely keeping up with the decline in physical sales, which makes up the bulk of other revenues. Lucian Grainge, chairman and chief executive of Universal Music Group, spoke to the Financial Times at the weekend,
“The industry needs transforming. It’s for others to decide whether they want to get stuck in the past or whether they want to come on the journey… We’ve learnt an awful lot, but it’s like being in a commercial earthquake and the reality is it takes time to get out from beneath the desk where you’re protecting yourself and move forward.”
Indeed, one of the biggest issues industries must address is when is the right moment to risk their current business model in order to address change and adapt. Grainge talks about the industry need for a “constructive collision” between musicians, content owners, distributors, entrepreneurs and investors. To what extent this is happening is unclear, but it is certainly thinking outside the box, and could well be applied to other areas similarly suffering at the hands of such change. As goes the music and film industries, so goes the print industry too? How do print titles develop profitable models for generating profits in the face of such volatility in changing consumption habits and digital disruption?
In December 2012, consultancy Boston Consulting Group (BCG) published a report entitled ‘Transforming Print Media’. The report begins on a sour note, admitting that the conventional wisdom is that newspaper and magazine publishing is “a dying business”. This is a hard assertion to counter though, and the consultancy’s own graphics show a rather alarming lack of growth in developed countries. Emerging markets, conversely, are seeing growth in both print advertising and circulation, for both newspapers and magazines. For instance, while between 2006 and 2011, the US has seen a compound annual growth rate (CAGR) decline of 12% in print advertising, China has seen an 8.5% uptick, and India a 13.9% growth. One of the immediate problems the report addresses, and one which Michael Dell is looking to neutralise is that of concentrating on short-term gain at the expense of long-term restructuring with a rigorous focus on which adjacencies work well and which do not. This can be immensely hard to justify in an environment of quarterly earnings reports and instant CNBC updates. BCG suggests implementing a strategy that will instill long-term change while also providing medium-term gains to keep investors happy. The report proposes a 3-5 year plan, and, interestingly, notes that success will rely “more on execution than insight”. Zeitgeist would counter that without both being optimal, the strategy is bound to fail. Moreover, knowing exactly who you want to target and how their methods of media consumption and interaction have altered / are altering is a critical tool for success. It also points out that new business models should not be about “trading print dollars for digital pennies”, something that the music and to some extent the film industry are both grappling with currently.
David Carey, head of Hearst Magazines, commented last year that, in publishing, “you need five or six revenue streams to make the business really successful”. One of the key points that recurs throughout the BCG report, which Zeitgeist, while working on developing strategic recommendations for the Financial Times last year, was also in favour of, was in extending the reach of the business in new directions. These directions leverage the brand equity of the company and extend into areas adjacent to the company’s expertise. For the FT, opportunities exist to extend the brand name into complementary areas of luxury with which the paper is already associated. Monocle has made in-roads into diversification by starting a radio station, which it says is very attractive to advertisers because they have a clear idea of their audience; the type of high-earning consumers who never normally listen to radio. As well as new revenue streams, Zeitgeist also focused on customer retention. One important consideration was that of both vertical and horizontal cohesion. The business as a brand must speak in a relevant, cohesive way across channels, and, in the case of the FT, speak in the appropriate way to its many different readers around the world. BCG advocates “reassessing vendor relationships; stream- lining editorial, content sharing, ad pricing, and production processes; and pooling advertising sales across titles or clusters… the right changes to financial policies— particularly to debt levels and ratios, dividends, and buybacks —can create a clear and compelling case for long-term health, can lift stock prices, and can attract more patient investors.”
Price is a fundamental consideration too. For the FT, Zeitgeist extemporised on the importance of price. Referencing behavioural economics, price for the FT acted as an anchor. It framed the paper more by juxtaposing it with its cheaper peers than by giving it any inherent value. In reports from the last few years taken both in Europe and the US, several major broadsheet newspapers were studied. They had all raised their prices. Some of them had seen their circulation decrease. But all of them had seen increases in revenue, even the ones that had lost circulation. Zeitgeist presented the FT with an analogy; the champagne label Krug, some years ago, hiked up its price, with little notice and for no perceived reason. Production, pricing and taste had not changed. The company lost some suppliers because of this change. But overall, their revenues increased. Krug was now in the upper echelons of the luxurious world of champagne, done to coincide with a global rebrand that appeared in all the right places. BCG alludes to the price increases in its report, saying consumers will “perceive greater value in the product than the amount it is costing them… there is the ability to increase these prices by as much as 70 to 100 percent…”. The report addresses paywalls, which Zeitgeist have written about several times in the past. The key it seems is in making these paywalls permeable, not inflexible. This is one issue the FT will need to address, one its peers, like the Wall Street Journal (WSJ), The New York Times and The New Yorker, have taken steps in the direction of already. The WSJ has frequently taken down its paywall during times of emergency (such as Hurricane Sandy), or for sponsored promotions. Advertisers still play a significant role in US print advertising – a $34bn role – but it is diminishing. The New York Times reported last year that advertising revenue had dropped below subscription revenue. As worrying as this is, it should provide an opportunity for companies to focus more on producing content that the actual readers want, rather than what the advertisers want to see. Broadly, the difficulty lies in getting consumers to see the worth of a digital product versus a hard copy. Obviously this issue is not restricted to the publishing industry.
The importance of the transition to digital is hard to overstate. As well as issues of pricing and paywall strategy, there is also social media to consider. Here, the FT is a good example of a brand that is playing it safe, operating for the most part with a very top-down messaging strategy that leaves little room for collaborative communication. But digital production and the expectation of instant news also means that companies are having to change the way they produce content. Speaking at the Future of Media summit at the Broadcast and Video Expo recently, Editor in Chief of Time Out London Tim Arthur said their changes were “led partly by necessity and partly by desire”. BCG outlines three models that are emerging: “dedicated print and digital editorial teams, integrated teams that operate throughout the print and digital platforms, and full editorial integration”. There are several advantages to be leveraged through digital as well. Research is a big one. Time Out’s Tim Arthur admitted they never used to carry out research until their recent transformation, which included an overhaul of their digital strategy, as well as making their hard copy paper free. It was great then to hear how the company was now using multiple channels to collate data and engage audiences at the same time. Unlike the FT, Time Out was no longer engaging in a one-way conversation, and they were operating with “less arrogance”. The company changed from a content-stacked, “trickle down” approach to one that recognised different audience needs over different platforms, which is a key insight. Furthermore, the opportunities to make advertising more engaging are also quite evident. iAds for example, allow more interaction. A recent ad in The New Yorker promoted a new book with a ‘tap to read a chapter’ function.
“These considerations inevitably lead to a series of hard choices about the degree of diversification that publishers can realistically undertake”, so summarises the BCG report, which suggests controlled experimentation to work out the best model. On an internal level, the company must convince employees that this change will be for the better and for the long-term. It must also convince shareholders of the benefits, while showing real value as early as possible. Such a transformation provides opportunities for streamlining technologies and future-proofing ways of working. It should make the brand think about what its equity is, and where else it can push out to in order to drive new revenue streams. Digital is not something to be feared, it should be embraced. The opportunities for more targeted, engaging advertising, not least through the use of consumer data, which also can help provide more tailored and attractive content – content that is “useful to others” as Arthur says – will be fundamental steps to take. The music industry, which was ravaged by Napster and its myrmidons at the end of the 20th century, took an age to wake up to realisation that money could be made from the millions of people who were already downloading songs online. The film and television industries have reacted slightly faster, and initiatives like Hulu, Ultraviolet and Tesco’s Clubcard TV will help stem the tide. Print on the whole is more on top of the game. Companies like the Financial Times and Time Out are driving innovation in the sector, but must still more readily embrace change if they are to really connect with future readers. Time will tell.
A great ad featured during a commercial break in the Academy Awards broadcast tonight on ABC. There’s no shortage of data out there pointing to the decimation of the retail sector, and we have written on the subject before. Stores cannot be promoted from a practical viewpoint any more; the internet has put paid to that. The irrational, emotional connection is what companies like JCP – after enduring troubles with another rebrand – are counting will bring customers into store. It’s a nice ad that feels genuine.
UPDATE (28/2): Great advertising sadly can’t always save a company from poor financial performance. The stock dipped today by over 20% as the company backtracked on a previous strategy, deciding to hold daily sales after completely swearing them off a year ago. Walter Loeb, a retail consultant and former senior retail analyst at Morgan Stanley, proclaims the company “lost its core customer during the transformation”. Oops.
Whither the sage of a shop assistant? At a time when we as consumers have access to all the information we could want about a brand and its products via our smartphones, of what use is it to have someone tell me something that I am unlikely to take at face value, working as they are for said brand? Why even bother being in the store at all when I can be buying my item at home? The luxury goods company PPR (owners of Gucci, Saint Laurent Paris, Balenciaga et al.) could be said to have recently adopted a similar mindset. A new joint venture with e-tailer Yoox is sure to shake things up. Honcho Francois-Henri Pinault said recently, “While the whole industry has been resisting e-commerce for the last 15 years it’s now realising it’s inescapable”.
Not everyone believes such a move is inevitable. Chanel is steadfastly refusing to sell its principle collections – from ready to wear to handbags – online for the foreseeable future, according to a recent interview with the CEO. While this might strike some as akin to sticking one’s head in the sand, the reasoning the company gives centres around the unique experience of going into a store to buy a product, rather than sitting at home in one’s pajamas. From a strategic point of view, the idea is sound. Reducing avenues of purchase encourages a scarcity factor that high-end fashion must rely on. It also ensures that the products are seen in the best light possible, incredibly important when justifying such a premium. It’s interesting to note that though the thinking may be sound, it is certainly not appropriate for every luxury brand to be resisting the lures of online shopping in such a dramatic way. Chanel is – and always will be, in multiple ways – a very special company, an exceptional brand, in the literal sense. Like Apple though, it’s practices are to be emulated with caution, as a great paper by McKinsey Quarterly highlights. “Outliers are exactly that…”, the report states.
But what is the state of stores, and how important is service in these places? For luxury, we can assume a high priority of the physical shopping experience is connected to the person assisting you. Recent experiences at two different luxury goods stores highlighted jarring differences, monumentally affecting the way Zetigeist felt about the brand. Last month in New York, Zeitgeist visited Tiffany & Co. to find a Christening present. Without turning this article into a rambling letter of complaint, the section Zeitgeist found itself in was woefully understaffed, and when help was available, information turned out to be incorrect and, most importantly, not dispensed as if it were important to them. Zeitgeist left without buying anything. The experience was deflating enough to mention to the manager en route to leaving the store. Returning at the weekend to try again, the experience had not much improved. The item needed to be engraved. Taking it into one of the London stores upon returning home meant being greeted with the same mediocre level of service. No passion, no interest. This would be perfectly acceptable for somewhere such as Ernest Jones, but Tiffany is a massively, massively powerful brand. For many it is incredibly evocative, and speaks to nostalgia and deep-seated emotions with very personal connections. There is a dream that is Tiffany, that is replicated extremely well in their above-the-line marketing. It is completely absent in its physical embodiment, the store. Cartier, by comparison, manage to present a fantastical vision of their brand, while also maintaining a consistently excellent level of service in-store that brings cohesion to the image it evinces.
Louis Vuitton could not have presented a starker contrast to Tiffany. The brand had one brief flirtation with TV ads about four years ago. While also a powerful brand, it perhaps could not be said to elicit such powerful emotions as Tiffany, purely on the basis that Tiffany purchases might often be assumed to be gifts. Purchasing what is surely one of the cheapest things in the store, Zeitgeist was delighted to be led through the purchase process by an exceedingly-well trained woman, who was happy to go over the minutiae of the purchase, and knew answers to arcane questions when asked. It made the experience extremely pleasurable. Remarkably, the store went a step further, sending Zeitgeist a random act of kindness and imploring to get in touch if further assistance was required.
That kind of experience simply cannot be replicated online. If Amazon were to start selling Prada clothing anytime soon, the dissonance would be powerful. So while the luxury industry, and many in the retail sector at large, struggle with the idea of the shopper journey online, moreover how and where that connects with the physical journey, we cannot forget basics. The importance of good training, especially for demanding customer who are expecting a premium experience, cannot be overstated. Though smartphones and tablets may hold the data, it must be remembered that the purchase of a luxury product is often an irrational experience. The service and assistance received during purchase consideration may be an irrational influence, but it is an immensely powerful one. If a brand talks the talk, it must walk the walk, or face the consequences of failing to live up to its own promises.
“Marketing has always combined facts and judgement: after all, there’s no analytic approach than can single-handedly tell you when you have a great piece of creative work.”
- McKinsey & Co., Measuring Marketing’s Worth
Capitalism has come in for a bit of a knocking of late. Recently, the Futures Company found that 86% thought “big business” maximised profits at the expense of customers and communities (not helped by another recent poll stating 51% of top financial services executives think businesses should just be about making money). The antipathy is not a recent phenomenon and hardly one confined to the fringe. John Maynard Keynes, whose ideas framed modern macroeconomics, said capitalism is “not virtuous [and] doesn’t deliver the goods”. And while there was a short period when such sentiment was only to be found in places like Pyongyang, these feeling are now more pervasive, particularly against the driving force of capitalism, the finance sector. Can marketing help shift perceptions?
From the outside looking in, it would be difficult to say that some of the wounds are not self-inflicted. Multiple fiascos have led to much head-shaking and hand-wringing within the industry. The furore has ceased to abate as politicians score cheap points for fingering the blame on bankers, and lionised institutions like Goldman Sachs suffer massive public relations disasters (including a part ownership stake in a prostitution ring). The manipulation of the LIBOR scheme and subsequent reforms reveal no quick end in sight to a period of immense negative exposure that began with the global recession four years ago.
So the image of finance is indisputably tarnished right now. Marketers are trying to change this, in different ways. Many Western financial institutions have been around for a while; the symbolism of such longevity can serve as a valuable asset for brands. Coincidentally, this year sees Citigroup – while dealing with its turbulent present – celebrate its 200th anniversary. They’ve had a broad above-the-line campaign celebrating their place in history, putting their relative achievements – helping fund the building of the Panama Canal – alongside other important moments in time. Citi also have their eye on the future too, making a concerted push in areas of sustainability, recently managing to become the first bank to achieve LEED (Leadership in Energy and Environmental Design) certification for 200 projects from the U.S. Green Building Council. The question is whether leveraging history and sustainability – both of which arguably convey a sense of trusted consistency, rather than reckless risk-taking – with advertising can help address a serious deficit in consumer affinity for the finance sector. Does it even matter? If we assume banker-bashing is an irrational emotion, and the whole sector is tarnished with the same brush, how much sway does it have over the rational part of our brain that must decide where and how to invest our money?
Several banking brands rely on the prestige of their historical affiliations, and have found themselves no safer from customer ire. It can be hard to seek engaging differentiation in a commoditised industry where the power of switching costs can a play a strong role. A PwC report from July summarises, “Many consumers remain loyal due simply to the absence of a negative because it is often easier to put up with something that is less than perfect than go to the trouble, and potential expense, of switching”. So what else can be done to wake potential customers from this inertia?
It’s interesting to see Morgan Stanley take a decidedly more personal tack, with a new campaign, “What If?”. Shifting focus away from the company as a faceless monolith, the WSJ said the aim is to make the company seem “like your neighborly [sic] stock picker”. The creative itself is beautiful, showcasing professional types with aspects of business and social responsibility framing their translucent faces. It attempts to convey a personalised and considerate attitude that includes but also goes beyond profit-making. It broadly taps into themes in a new book. “Positive Linking”, by Paul Ormerod, sets out to dismiss the outdated notion that people are driven by personal, “rational utility maximisation” and instead claims they are more interested in aiding the network to which they belong, realising this will help them too. This in essence is a slightly less selfish form of capitalism.
“I owe the public nothing”, J.P. Morgan was once quoted as saying. Have times changed much since? The problems with the world of finance are too numerous for this article. The crisis of confidence has begun to have an effect on recruiting, as MBA graduates turn their learned eyes to more reputable sectors. Although it may not seem like it now, customer perceptions of brands within this sector are malleable. Any one that can position itself as an outlier in what is currently seen as a pernicious industry will have much to gain. The tail cannot wag the dog though. If these businesses are to change, they must back up their ambitions with operational changes that reduce risk and ensure profits sit alongside dedication to the broader lifestyle their advertising evinces.
Maybe it’s because Target have been an innovative retailer for several years now, presenting a really attractive brand despite offering low, low prices.
Maybe it’s because this idea is such a great example of such innovative thinking.
Maybe it’s the music they’ve used.
Maybe it’s because Zeitgeist is currently having a great time in New York and is easily swayed.
Whatever, we love this ad.
What a fantastic ad from Channel 4 advertising their showcasing of the Paralympic Games, beginning soon. Meanwhile, what of the Olympics? Though there have been tales of Tube and travel chaos, Zeitgeist has not personally experienced problems with public transport, either for commuting or for travelling to the Games themselves. And while our mayor may have been left dangling like a pinata the other day, he certainly seems not to have left London in the lurch in its preparedness for the Games.
LOCOG, however, have had to face two severe lines of questioning since the Games opened last Friday. The first, which became immediately apparent to anyone watching the first few days of events, was that thousands of seats were unoccupied, including for events LOCOG had deemed sold out. The fault, it seemed, lay mainly with the Olympic Family, who weren’t turning up to events. Seb Coe tried to shrug off the incident, saying it was normal for the few first events of an Olympic Games. It must be particularly galling for him though after the same thing happened in the 2008 Games in Beijing and he pledged to avoid such an occurrence in London. It is unfortunate then for all concerned then that, despite releasing more tickets, the problem is still not resolved as of today.
Moreover, this brings us to the second big problem. The selling of tickets. The whole balloting system originally set up was pretty arcane and inefficient to begin with. But now with tickets being released on a rolling basis throughout the day, the chaos is all the more apparent. Yesterday, eConsultancy published an excellent article with a blow-by-blow account of just why “the Olympic ticketing website is so bad”. Worst, for Zeitgeist, was firstly not having a mobile version / mobile-optimised site. Secondly it was not having anything informing users of when certain tickets became available. Thankfully, as in any well-functioning democratic society, where there is a market failure, substitute products or competitors will come in to correct the situation. Such was the case at the weekend, when the completely unofficial @2012TicketAlert account was launched on Twitter, which used automated tweets to alert followers when any Olympic tickets became available. It was a fantastic idea, and seemed much in keeping with the ‘hack’ trend we see nowadays, when companies like Microsoft and Transport for London open up their APIs for users to develop their own programs. Such examples clearly had not occurred to LOCOG though, and earlier this evening, after amassing over 8,000 followers, LOCOG denied the @2012TicketAlert account further access. As the administrator of the account, Adam, wrote,
It seems a poor PR move on LOCOG’s part, and more importantly a poor operational move because it makes it that much harder again to check for newly available tickets. Taking into account the immense budget that must have been allocated to the ticketing website, the result is severely lacking, and many thousands of people have been put off the Olympic experience because of it. Ticketmaster, which has branding on the website, has also come under fire. These acts, as we predicted in an earlier article, may well be the undoing of those involved, for, once lost, a good reputation is hard to recover.
Zeitgeist saw the above ad on the London Underground earlier this week, advertising the new version of the Total Recall film that Sony is imminently releasing. (As if anything could beat the Arnie version).
It’s a nice ad because it doesn’t directly advertise the film, but rather cheekily promotes the central product in the film instead, in an attempt to blur the worlds of reality and fiction (it’s all very postmodern). It appears they’ve also thought about their European target market, by featuring football-related imagery, rather than something more American, like baseball, or something involving large cars.
A similar campaign was featured on the Tube last year for the film Limitless, with Bradley Cooper from The Hangover. The ad itself hawks the pill that forms the crux of the plot, rather than the film itself. We wrote about the promotion as part of a broader article, here. Arguably the first proponent of such a tactic in guerrilla film marketing occurred way back in 1999 for The Blair Witch Project. This kind of advertising also fits nicely into recent findings showing the power of “uninformative advertising”. According to Yale School of Management:
“Using a game theory model, Mayzlin and Shin show that when advertising a high-quality product, specifying product attributes can be counterproductive, because a firm can describe only a limited number of those attributes. An uninformative advertisement, on the other hand, can prompt viewers to seek out additional information on the product, and in the process learn about more of its positive attributes.”