How the Obama 2012 campaign harnessed tech to win votes

Last night, at the Royal Automobile Club on London’s Pall Mall, Zeitgeist was fortunate enough to hear Harper Reed, the Chief Technology Officer of the Obama 2012 US presidential campaign speak candidly about how he helped get out the vote and keep the Democrats in the White House. Harper is ex-Threadless, the famous T-shirt company that lets users contribute their own designs, with the most popular becoming actual products sold the world over. It’s a democratic philosophy, one that understandably caught the attention of the campaign committee. It is also the kind of thinking that cities like New York and Chicago are starting to employ; actively gathering, analysing and distributing data to inform policy implications and help citizens. What follows is a brief summary of his thoughts and points that Zeitgeist found interesting.

Harper began the talk with the fundamentals, discussing how, when he arrived, the campaign seemingly already had much of the data gathering resources needed to achieve what he wanted. The trouble was it as all siloed. Putting all the data together was a major step in the right direction, toward cohesive data analysis. He elaborated, saying they went from having fifteen different numbers for doors that needed to be knocked on, to one. On hiring the right people for the task at hand, Harper was explicit in noting that they had hired tech people and taught them about politics, rather than the other way around. He riffed on the state of journalism, saying it was similarly important when hiring journalists that know about tech.

One of the more interesting insights Harper talked about involved the target demographics. Those most likely to vote are male or female 18-28, and women perhaps in her 50s. The younger group is adept and comfortable with all digital platforms, but still uses paper a fair amount. Paper, by contrast, is an essential medium for that middle-aged female voter. So the insight was about making paper use more efficient, given these groups’ use of it. Understandably this was a hard decision for a group of very tech-minded people to arrive at, but the acknowledgement showed they were willing to park their own pre-conceptions on how things ought to be done.

Like many startups, they were constantly trying to fail in order to create redundancies. This involved hosting hackathons where code was obsessively broken and then reconstructed, “ensuring things would break in ways we understood”, as Harper put it. They had the same approach with the content they published, aggressively testing every piece to make sure it was relevant and engaging for the intended audiences. What they failed to foresee was the Internet activist group Anonymous launching a DDOS attack the day before the election to coincide with Guy Fawkes day, which helped trigger a meltdown over at Amazon’s cloud servers, AWS. Harper made it sound like not too much trouble to switch the servers from the East Coast where they had been affected, to the West Coast, but the experience must have been a stressful one.

Lastly, he offered an opinion increasingly shared by many in the industry, which was a reluctance to talk of mobile device use as “second-screening”. Mobile devices, Harper pointed out quite rightly and obviously, are the first thing you look at when you wake up, the last thing you look at when you go to bed, and the thing you’re actually looking at when you’re supposed to be watching TV. Mobile first should always be the initial mindset.

In questions, Ruth Porter asked whether there were any pearls of wisdom that could be applied to those in UK politics and how they go about with their own strategy of getting out the vote. Harper conceded he had met that day with a party “whose name starts with ‘L’”, and believed that what was key was investment, commitment and belief from the very top in what social and data could do for the campaign. Without that, such efforts would amount to nothing. The lessons of the Obama 2012 campaign – and the pitfalls of Romney’s campaign – offer valuable lessons for political parties, but it seems any efforts at cherrypicking ideas or going in half-hearted would doom any prospect of leveraging what the Obama team were able to do.

Any success in Harper’s tech strategy must be qualified against the sheer unpopularity of Obama’s rival candidate

Is the price right? Battling consumer perceptions in the arts

“Wine is valued by its price, not by its flavour”

- Anthony Trollope

It would be difficult to argue today that attendance and appreciation of Shakespeare’s plays are not, for the most part, restricted to the large niche of the middle classes. This is a pity, and interesting, given that his works are ridden with ribald language, iconoclastic storylines and slapstick humour. In his time, the plays were attended and enjoyed by the masses, ageless and classless. Such reach is the envy of productions performed today. High ticket prices charged by theatres – in a quest to secure enough funding every season to recoup the cost of production - must bear some of the blame. But does price, apart from acting as an immediate barrier to entry for some customers, also act as its own signifier of what the event entails, and the audience it is appropriate for?

In 2009, BBC’s Question Time hosted writer Bonnie Greer and, among others, Nick Griffin, chairman of the radical BNP. The ordeal was such that Greer was inspired to write an opera chronicling the evening’s events. Performed at the end of 2011, Greer hoped Yes would make an effective contribution to the UK debate on both immigration and racism. Such substantive content is what media like opera need in order to maintain relevance.”It’s relatively recently that opera has been seen as an entertainment for the elite”, Greer commented. “It used to be a populist medium – I’d like to play some role in reinstating that status”. This runs counter to other contemporary productions, such as Stockhausen’s operatic sci-fi saga Licht, recently performed in Birmingham. At one point, a string orchestra ascends into the air in helicopters, while later a cellist performs lying on the floor. It would be remiss not to mention the climax of the production, which, Alex Ross, writing for The New Yorker, fails to describe: ”Space does not permit a description of the scene in which [a] camel defecates seven planets”. It is hard to imagine such fare being everyone’s cup of tea. Indeed, it is this sort of seemingly self-interested, arcane and intellectually challenging art that is likely to turn people off an entire medium. Some institutions recognise this. Earlier this month the Royal Opera House hosted what they called the “first in a new series of live-streamed events to feature debate, performance, and audience questions”, around the question ‘Are opera and ballet elitist?‘.

In the past though, the Royal Opera House and other institutions have been too focused on short term gimmicks, with a focus on price, to get people through the door. The thinking is broadly logical: Why don’t more people come to the opera? / The opera is expensive / Lowering prices will attract more people to the opera. These three thoughts have plausible connections, but in reality little in common. Like ‘vulgar Marxism’, such an approach reduces the problem to its most simplistic attributes. It is a fallacy. Despite this, The Sun newspaper has in the past partnered with the ROH to offer tickets from GBP5-20. The scheme was a lottery system, guaranteeing few winners. It provides little opportunity for conversion into a regular customer. Meanwhile, both The Sun and the ROH achieve their aims of shifting brand perceptions. But there is far more that could be accomplished. The BBC reported positive reactions from those that took up the offer, “What The Sun is doing is fantastic – opening the opera up to people who wouldn’t normally be able to come”. This despite the fact that opera tickets are consistently available for GBP10 at the ROH, every season. Away from price, the English National Opera tried their own tactic in October last year, inviting people to enjoy the opera in “jeans and trainers”.  But does the problem of democratising opera really have its answer in allowing people to wear denim? It seems absurd to think that a one-off event of such a nature could really attract new, long-term audiences. Indeed, The Telegraph reported on the affair, saying the ENO was missing the point, that in fact it was the “alluring glamour” of the medium that was what attracted audiences the world over; “It turns opera into an everyday thing, rather than something exceptional and magical”, wrote Rupert Christiansen. He elaborates on the problem,

“[Opera] can make for an atmosphere that outsiders and newcomers find exclusive and intimidating: it’s as though there’s a set of rules that nobody is going to explain or even admit the existence of. This… rubs up the wrong way against the Arts Council’s understandable insistence that the granting of subsidy via taxpayers’ money should mean open access at reasonable prices. Squaring this circle is a formula that nobody has yet managed to crack.”

The outgoing director of the ROH, Tony Hall – on his way to assume a new post at the BBC – wrote diary entries published last weekend in the FT. He wrote about the recent partnership established with the Theatro Municpal in Rio. Like the ROH, they are also looking to attract new audiences: “An idea I particularly like is where every seat in the house for a day a year is sold on the day for a real (about 33p)”. On the face of it this sounds noble and effective. Who wouldn’t want to see any form of entertainment, let alone an extravagantly produced opera, for a mere 33p? But let’s think about it. Doing this one day a year is miserly. It hardly encourages upselling, or long-term commitment. What it most assuredly encourages is that one day a year the opera house attracts plenty of press coverage as people line the streets queueing for such cheap tickets. Cheap tickets for one day a year is an act that smacks of condescension. And what of the price itself? Zeitgeist has written before about the power of behavioural economics. McKinsey have an interesting article on the study. To wit, for most people, consciously or otherwise, price is an overriding symbol of value. Price is used often, especially by premium brands, as a means of framing the product versus its peers. We often make irrational purchases on big-ticket items (a car being chief among these). Conversely, when something is cheap, especially when perceived as ‘too’ cheap, the consumer questions why it is at such a price, acting with suspicion. At its simplest, pricing tickets to the opera at 33p implies that it might not be something you would enjoy. The first reaction – often the most powerful – instilled in the consumer is one of trepidation.

The Globe theatre has a simple, long-term strategy for attracting new audiences

Just as with the current government’s wrangling over minimum pricing policies for alcohol, the approach from the arts to occasionally allow the unwashed masses into their buildings misses the point. In the case of alcohol, the scheme was mainly invented to curb youth drinking, especially among the ‘working class’. But, as The Economist points out, “People on the lowest incomes, who are most price-sensitive, are surprisingly abstemious anyway; those in rich parts of the country, such as the south-east, consume copiously”. Shakespeare’s Globe does a good job of making the Bard’s plays accessible, with standing tickets for GBP5, something that Zeitgeist has taken advantage of several times over the years. It is one of the few artistic houses to have preserved this manner of watching a performance. It upholds tradition while at the same time ensuring the plays have access to a broader public. The Royal Court Theatre in London’s Sloane Square offers a few standing tickets for every performance for a mere 10p. It’s a great idea to have this option as a constant as, apart from anything else, it increases the likelihood of having returning customers who can be upsold to – or cross-sold to in the bar downstairs. Zeitgeist imagines however that the theatre could easily get away with charging ten times the amount for a standing ticket, with zero depreciable effect.

There is no doubt that a certain amount of price elasticity indeed exists with items like tickets to the opera. But occasionally releasing cheap tickets is not the whole answer. There are larger questions here on arts funding and the absence of dedicated, large-scale philanthropy in the UK that have not been discussed here, but will be important in encouraging accessibility to the arts. Earlier we mentioned the recent debate the ROH hosted asking whether people thought opera and ballet to be elitist. The problem with such a question is it immediately consigns the word ‘elitist’ to a pejorative category. One of the greatest points Jon Stewart ever made – now some years back – on The Daily Show, was that the word ‘elite’ should in some contexts be a good thing, something to be embraced. That some people excel in a certain discipline is something to be celebrated. That some art transcends others, is beautiful, challenging, creative and stimulating is something to be cherished. Instead the word and concept have become uniformly demonised. Though one could easily question ‘canon’ texts in any medium, there should be no need to mask something that is perceived as being ‘high art’, rather attention should only be paid to debunking any preconceptions about its exclusivity. Quick price gouges are most certainly not the answer to improving access to these forms of art. It takes time, relevance and above all a security in the knowledge that not everyone has to enjoy every type of entertainment. Just provide them with opportunities to be sufficiently exposed to it, without making it seem like you’re deigning to include them.

When. Cinema. Works.

“[T]he big screen. That is its natural habitat—the only place, you might say, where its proud and leonine presence has any meaning. Anything more cramped is a cage, as Jon Stewart showed during this year’s Oscar ceremony. At one point, we found him gazing at his iPhone. “I’m watching ‘Lawrence of Arabia.’ It’s just awesome,” he said, adding, “To really appreciate it, you have to see it in the wide screen.” And he turned the phone on its side. Deserts of vast eternity, reduced to three inches by two.”

- Anthony Lane, The New Yorker

Film can sometimes be a mercurial medium. Especially nowadays. It encompasses multiple genres, and, like food, is meant for different occasions, for different needs. Of course, sometimes we go to bad restaurants, or order in, and the experience is terrible. Uber-flop John Carter cost Disney a cool $200m, and wasted many a precious dollar and hour for those that went to see it (admittedly few). But sometimes it’s like a great burger and fries – Die Hard springs to mind – and sometimes it’s a sumptuous 6-course meal cooked by a Michelin-starrred chef – Lawrence of Arabia, or All the King’s Men. Film can stimulate us, it can teach us, and it can be a breezy bit of consumption to pass the time, like a coffee at Starbucks. Moreover, as with food, it can be consumed in different places and circumstances. There are times when the right way to watch a certain film is on your iPad in a cramped airline seat. Pure escapism. But cinema has a crucial place too.

It was interesting today, when Zeitgeist went to see a movie, that it was preceded by an announcement showing an empty cinema, covered in cobwebs and dust, bemoaning the death of the medium at the hands of pirates. Its aim was to take the audience on a guilt trip: ‘Why are you illegally downloading films?’ ‘Why aren’t you coming to see more films at the cinema?’ it pleaded. There are a couple of things strategically wrong with this approach. Firstly, what is the principle problem here? Alright, people are not going to the cinema as often as we would like. Zeitgeist remembers in a brief stint working for Fox several years ago that people went to the cinema 1.8 times a year in the UK. The Economist reports that the share of Americans who attend cinema at least once a month has declined from 30% in 2000 to 10% in 2011. The assumption is that people are instead pirating films at home, thereby depriving studios of money (ignoring research that suggests those that pirate are often avid cinema-goers, and optimistically equating every film downloaded to ticket revenue lost). Well, one quick way to address this is to make films legally available – at a sizeable premium – on multiple platforms day and date. We’ve argued this before, and entertainment trade Variety has used our argument for a lead editorial. It should be recognised, that, although the most prominent face of the film industry, cinema is not what makes the studio money; for years the bulk of profits have been made in home entertainment consumption. Furthermore, there are two fallacies here. One is that cinemas make most of their profit from the snacks people buy at the cinema, not the films themselves. If you want to increase margins, there should be a much more prominent focus on food options, and that means offering a wider, more tempting range of food to be eaten, which is then promoted more effectively. The way such snacks are currently promoted – “Let’s all go the lobby” – has not altered for a half century. Lastly and most egregiously, the communication is completely misdirected, talking to the very audience who is already doing what the ad asks them to do. The ad is shown nowhere but the cinema, therefore only people who go to the cinema will be subject to this guilt trip. To avoid feeling guilty, one can avoid the ad by avoiding the cinema. The logic is completely twisted. Negative communications have been shown to be much less effective in influencing behaviour than positive affirmation. So let’s think about a way to promote cinema that goes beyond a highlight reel of what movies are on in a particular season. More robust revenue streams will have to be found soon. Less people are turning out to the cinema, and in foreign markets, which are doing relatively well, a far smaller chunk of box-office receipts go to the studios.

What also played during the reel before the film started was a short film by Disney Animation that has been nominated for an Academy Award, called Paperman (see trailer above). Zeitgeist had watched the short some days ago on his iPhone after coming across it on Twitter, and enjoyed it thoroughly. It was exciting and convenient to be able to consume something so quickly after hearing about it. Moreover, it was instantly shareable with the 400-odd people who follow our tweets when we retweeted the link. Seeing it in the cinema today though really reinforced the power of the big screen; the detail you couldn’t see on the iPhone, the great sound, and the shared laughter and enjoyment from those around you. “Grandeur is a far from simple blessing”, writes Anthony Lane in the same article quoted at the beginning of this post, in The New Yorker back in 2008. The pleasure of watching something in the cinema is ultimately an irrational benefit, which can be hard to quantify, but even harder to ignore.

Beyond the Linear – New ways of entertaining

The days of P.T. Barnum and the sense of spectacle an audience received from seeing a live performance have long passed; codified, commodotised, sanitised and made instantly available. Or have they? The way we entertain ourselves nowadays has changed greatly, and keeps changing. But are our tastes evolving or revolving? Is there hope for such seeming anachronisms as the TV, the live performance and even the book?

Two years ago, Zeitgeist wrote a brief article on the nature of contemporary consumption of media. It began with the headline that 8-18 year olds in the US spend a quarter of their media time with multiple devices. Furthermore, almost a quarter of that age group use one other device most of the time while watching television. In 2013, this preference for multiple stimuli has only accelerated. 80% of UK smartphone owners (making up over half the phone-owning population) use their phones while watching the TV. Similar figures were reported in the US, and similar figures were also reported for tablet owners.  Such figures give marketers pause for thought as they begin to approach these complementary devices as ways to extend their brand from the television onto the second screen. JWT Intelligence has a great report on this.

However, it is easy to overstate the arrival of shiny, new devices, and the apparent death of television. The blame for this misconception lies partly with the media itself; journalism is less engaging when it merely reports on the maintenance of the status quo (i.e. ‘people are still watching TV’). Far more interesting to hear about what new objects are showing a bit of ankle at CES, and that us mere mortals might one day dare to dream of owning ourselves, at which point all other material objects become unnecessary. All the more so when the journalistic integrity is compromised by corporate meddling, as was the case with CNET’s reporting this year. It was refreshing then to read TechCrunch’s recent article with the headline, ‘TV still King in Media Consumption’. The article, quoting a recent report by Nielsen, was particularly interesting in noting the prevalence of TV when it referenced that almost half the homes with TVs in the US owned four or more sets. Startling. More startling, the average household spends six days a month watching television, far ahead of other media consumption (using the Internet on a computer, at a little over 28 hours a month, came a distant second). The FT writes,

Over the past decade, despite the proliferation of video content on the web, TV consumption in the UK has remained steady with the average person watching about four hours a day. Almost 80 per cent of this viewing is on the top five channels, virtually unchanged from 10 years ago.

Creative destruction is something Zeitgeist takes an active interest in and has written about several times before on this blog. It takes hold in some industries (and households in this case) more quickly than in others. The same Nielsen study found that over 55% of US homes still had working VCRs. Moreover, despite much editorial to the contrary over recent years, the PC has not yet been wiped out by creative destruction and remains a staple for several reasons in both Western and emerging economies. According to Deloitte’s recent publication, “Technology, Media and Telecoms Predictions 2013″, although the attraction of tablets – and now ‘phablets’ – mean powerful computing and a cheaper cost, allowing the potential for leapfrogging of PCs in emerging markets, qualitative research shows a small but significant demand remains for PC ownership. Moreover, many businesses in the West, currently struggling with the implications of BYO devices, are not about to jettison the PC either. Switching costs, Zeitgeist suspects, are at play here, as with those stubborn VCR owners. Click here for more of our thoughts on switching costs.

VCR owners though will one day cease to be in the majority. New avenues of distribution and consumption are opening up, though not as quickly as first thought in some cases, particularly in that of live, streaming TV, which has faced many regulatory hurdles. Variety elaborates, “Loudly trumpeted efforts have fallen short, victims of poor design decisions, overpriced services and/or confusion about the target audience”. Yet alternatives are there. One of the more interesting streaming TV options in the US currently is that of Dyle, with 90 stations in 35 markets. It is run by a partnership that includes Fox, NBC, Hearst Television and others. The really interesting thing about the service is that it neutralises the problem many smartphone users will have of returning data caps by streaming off a separate network spectrum, which doesn’t impact on data allowances. Nice thinking.

Is the increasing popularity of streaming, and the content viewers prefer to watch over such a channel, already beginning to effect the types of films being produced?

Though new technology has not created new tastes in content or viewing habits, it has undeniably acted as a catalyst to desires already present. Zeitgeist remembers hearing a LoveFilm representative speak last year at AdTech in London about the increasing share streaming films took in the marketplace. Nothing too extraordinary in that statement, especially from a purveyor of streaming content. The rub came when he went on to elaborate that people tend to stream films when they are in the mood for instant gratification, in the form usually of an action film or romantic comedy. The increasing popularity of streaming, and therefore the increasing popularity of these particular genres, means the way the medium is distributed may very likely have a very significant influence on the type of content in the future that is commissioned. It was no surprise then to see, on a recent cinema trip, trailers for three films that neatly fit into that category for instant gratification (see above). Zeitgeist wrote at length on the need for film studios to address arbitrary platform release windows at the end of last year. Our article was mentioned in the lead editorial of entertainment trade paper Variety. Part of our argument is beginning to be addressed already. The FT recently published news that studios had managed to stem the six year decline in home viewing figures for films last year. The article elaborates that this is in part due to the strength of digital downloads, with films sometimes being available for digital distribution before they were available on DVD. Taken 2, a superb candidate for streaming given the previous statement by LoveFilm, was released Christmas Day in the US on digital platforms, “weeks before its release on DVD”. Such thinking goes hand-in-hand with the new UltraViolet format, to which several studios are subscribing. This allows those purchasing a movie on DVD – such as the recent Dark Knight Rises – to watch it with ease on multiple platforms. Mashable carried an article last week stating that several electronics firms have now also signed up to the UltraViolet partnership. Consumers will receive ten free movies when they sign up to the service, as incentive.

The example of Netflix is an interesting one in trying to understand the balance between consumers’ desire for multiple media and instantly-accessible content, and content owners desires to drive maximum revenue from their product. The company has been making a bigger push into providing TV shows of late, and is being rewarded for it, particularly with regard to older shows. A cultural trend many a pundit has put their finger on since the credit crunch began to bite back in 2008, nostalgia has manifested itself in consumers’ desire for old shows, including Midsomer Murders and Rising Damp, reports the FT. This long tail effect is turning a tidy profit for Netflix, as well as the original broadcaster, ITV. As a complement to this, the company is also fostering new partnerships, first with Disney in December, giving it “exclusive rights from 2016 to movies from Disney, Walt Disney Animation Studios, Pixar Animation Studios, Marvel Studios, and Disneynature”. Then, at the beginning of this year, it inked a deal with Warner Brothers, to show new and old TV shows from the studio. It should be noted however, as with all these new deals and technological developments and marches into previously uncharted territory, regulatory wranglings have ensued, in this case with sister company Time Warner Cable. The problem in this situation is not perhaps so much that Netflix is trying hard to push its availability into lateral markets, but that it is not trying hard enough to create a cohesive platform that is available across all complementary platforms and devices. One thing which Netflix will want desperately to escape being accused of – and it has done so with much success thus far – is being a niche provider of content. Sadly, the days of the point-and-shoot camera, the dedicated games console, etc., are numbered, according to a recent report by Accenture.

It is evidently with such a strategic outlook in mind that Disney have recently announced their Infinity gaming platform. Variety describes it as an “online treasure chest”, featuring a plethora of Disney characters from over the years that can be interacted with over multiple platforms, whether on mobile or on videogame consoles. Importantly, the concept is designed to be an iterative, one that will grow and add characters over time, presumably as new IP is created. It certainly pays heed to the second screen phenomenon by recognising the need for multiple device access. It also plays off the trend started by the game ‘Skylanders’, which involves both physical toys and digital interaction. The same principle will apply with new toys developed for Infinity, which can then be used to create unique stories and drive narratives. The idea of having disparate characters from different Disney franchises is potentially a frightening one for those in charge of the individual brand essences of said titles, but the potential for success can be found by looking no further than the Toy Story films, which feature an assortment of different genre toys that mix well in situ.

We’ve discussed the changing models of consumption for most of the article, but it is worth noting briefly how our cultural tastes are also changing, brought on by technology (again), but also globalisation. Pundits are often quick to point out nowadays that there is a substantial demand for the live experience. Yet if we look at music, one of the most profound things to experience live, recent figures showed attendance to concerts had dipped. At the end of last year, in an insightful roundtable, The New York Times interviewed several talking heads, asking them to round up their thoughts on 2012 in the music industry. One of the more interesting points repeatedly made was that of the abundant opportunity that the Internet now provides for musical talent. Moreover, the Internet at large has become just as viable – if not a more viable – starting place for an emerging artist than signing with a record label:

“Now this year something’s been proven: Pop performers can become truly famous by building their careers themselves online, maybe more efficiently and faster than a major company can help them to do.

… you look at the first-week sales numbers of someone like Kendrick Lamar, who had an independent album that was digital only and is now on [the major-label] Interscope, but basically has no major radio hits, even if he is well-liked by mainstream hip-hop. He comes out and sells about 240,000 in his first week. A couple weeks later Rihanna comes out — not her first album and at the height of her pop fame — and sells a few thousand less than Kendrick did.”

The other trend, globalisation, has meant that voices increasingly other than those that are Western, are more easily heard. The irrepressible Psy had the honour of being the performer in the first YouTube video to cross one billion views. Conversely, in his home country of South Korea, ‘Gangnam Style’ has accrued a pitiful “$50,000 from CD sales and $61,000 from 3.6m downloads”. The point remains, however, that the fallacy of the West as the cradle of pop culture is being exposed. Christopher Caldwell illustrates this masterfully, writing for the FT in December.

Zeitgeist has written before about the upheaval new trends and preferences for media consumption – impacted significantly by the arrival of the Internet – have wrought on financial growth in the media and entertainment sector. Digital, in the form of Napster and its myrmidons in particular, has a lot to answer for. There was some relief then that at the beginning of the year when UK digital sales topped GBP1 billion for the first time (though still failing to off-set the physical media decline). Moreover, Boston Consulting Group predicted last month – in an excellent report entitled Changing Engines in Midflight: The 2012 TMT Value Creators Report – that by 2015 the digital services ecosystem will reach $1 trillion by 2015 (see above).

It is interesting to see where the ownership of content starts and ends across layers, and how content owners are trying to monetise these platforms and grab as much market share as possible from their competitors. Amazon recently began offering digital downloads of any CD you have purchased from them since 1998. It would be a great surprise to see if they do the same for books anytime soon. Fortunately, reading still constitutes an avenue of entertainment, for those of all ages. A recent piece by The New York Times reported that digital reading was on the rise for children. The article notes the numbers give some room for discrepancy, but states “about one-fourth of the boys who had read an e-book said they were reading more books for fun”, which is a desperately important emotional connection to maintain. While e-reading is a commendable past-time, is there any merit in pushing further, and advocating for interacting with a medium that does not involve a digital display? Such a turn of events, perhaps aided by the trend for nostalgia mentioned earlier, is presenting itself in the luxury hotel market, with physical libraries returning to shelves. It has been termed ‘rematerialism’.

So what does this all mean for consumer entertainment? There are evidently lots of new technologies being released, from smart TVs to new gaming devices, that will attempt to capture eyeballs. These devices, far from having to think of their natural competitors, still have the common television – and, as we have seen, even VCRs – to compete with and overthrow first. TV commands such a huge slice of viewing time, but it is under threat from distracted viewers who are now very comfortable – and more importantly socially accepting – of using a tablet, laptop or phone during a show. There are also regulatory implications t consider, which will most likely be shaped, ex-post, along the way. Taking consumers on a journey across multiple platforms and media in a seamless way will be key. Disney’s Infinity platform, when it is released, will hopefully serve as an excellent example to others of how to combine physical and digital entertainment.

The state of retail

The love of the bargain is what drives them… Click for CNBC’s coverage

It’s a common fallacy to think of a time before a change in status quo as somehow being magically problem-free. A Panglossian world where all was well and nothing needed to change, and wasn’t it a shame that it had to. Similarly, we cannot blithely consign the retail industry of the past to some glorious era when everything was perfect; far from it. The industry has been under continual evolution, with no absence of controversy on the way. It was therefore a timely reminder, as well as being a fascinating article in its own right, when the New York Times provided readers recently with a potted history and a gaze into the future of Manhattan department store stalwart, Barneys. Not only is their past one in which the original proprietor sought to undercut his own suit suppliers, creating a bootlegging economy by literally ripping out their labels and replacing them with his own, but it was also one where department stores served a very different purpose to what they do today. They had less direct competition, not least unforeseen competition in the form of shops without a physical presence. Moreover, today they are run in an extremely different way, with an arguably much healthier emphasis on revenue (though some might say this comes at the expense of a feeling of luxury, in a lobby now brimming with handbags and little breathing room). The problems and opportunities for Barneys could serve as an analogy for the industry of which it is a part.

Despite brief reprieves such as Black Friday (click on headline image for CNBC’s coverage), as well as the expected post-Christmas shopping frenzy, can one of the main problems affecting retail at the moment simply be that it is undergoing an industry-wide bout of creative destruction? Zeitgeist has written about the nature of creative destruction before, and whether or not that is to blame for retail’s woes, the sector is certainly in the doldrums. In the UK, retailers are expecting a “challenging” year ahead. Recent research from Deloitte shows 194 retailers fell into administration in 2012, compared with 183 in 2011 and 165 in 2010. So, unlike the general economy, which broadly can be said to be enjoying a sclerotic recovery of sorts, the state of retail is one of continuing decline. How did this happen, and what steps can be taken to address this?

Zeitgeist would argue that bricks and mortar stores are suffering in essence due to a greater amount of competition. By which, we do not just mean more retailers, on different platforms. Whether it be from other activities (e.g. gaming, whether MMOs like World of Warcraft or simpler social gaming like Angry Birds), or other avenues of shopping (i.e. e-commerce, which Morgan Stanley recently predicted would be a $1 trillion dollar market by 2016), there is less time to shop and more ways to do it. The idea of going to shop in a mall now – once a staple of American past-time – is a much rarer thing today. It would be naive to ignore global pressures from other suppliers and brands around the world as putting a competitive strain on domestic retailers too. Critically, and mostly due to social media, there are now so many more ways and places to reach a consumer that it is difficult for the actual sell to reach the consumer’s ears. This is in part because companies have had to extend their brand activity to such peripheries that the lifestyle angle (e.g. Nike Plus) supercedes the call-to-action, i.e. the ‘BUY ME’. The above video from McKinsey nicely illustrates all the ways that CMOs have to think about winning consumers over, which now extend far beyond the store.

If we look at the in-store experience for a moment without considering externalities, there is certainly opportunity that exists for the innovative retailer. Near the end of last year, the Financial Times published a very interesting case study on polo supplier La Martina. The company’s origins are in making quality polo equipment, from mallets to helmets and everything in between, for professional players. As they expanded – a couple of years ago becoming the principle sponsor of that melange of chic and chav, the Cartier tournament at Guards Polo Club – there came a point where the company had to decide whether it was going to be a mass-fashion brand, or remain something more select and exclusive. As the article in the FT quite rightly points out, “Moving further towards the fashion mainstream risked diluting the brand and exposing it to volatile consumer tastes.” The decision was made to seek what was known as ‘quality volume’. The company has ensured the number of distributors remains low. Zeitgeist would venture to say this doesn’t stop the clothing design itself straying from its somewhat more refined roots, with large logos and status-seeking colours and insignia. Financially though, sales are “growing more than 20% a year in Europe and Latin America”, which is perhaps what counts most currently.

Louis Vuitton’s ‘L’ecriture est un voyage‘ is a good example of experimental thinking and missed opportunities

In the higher world of luxury retail, Louis Vuitton is often at the forefront (not least because of its sustained and engaging digital work). While we’re focusing purely on retail environments though, it was interesting to note that the company recently set up shop (literally) on the left bank of Paris; a pop-up literary salon, to be precise. Such strokes of inspiration and innovation are not uncommon at Vuitton. They help show the brand in a new light, and, crucially, help leverage its provenance and differentiate it from its competition. Sadly, when Zeitgeist went to visit, there was a distinct feeling of disappointment that much more could have been done with the space, which, while nicely curated (see above), did little to sell the brand, particularly as literally nothing was for sale. The stand-out piece, an illustrated edition of Kerouac’s On the Road, by Ed Ruscha, Zeitgeist had seen around two years ago when it was on show at the Gagosian in London. Not every new idea works, but it is important that Louis Vuitton is always there at the forefront, trying and mostly succeeding.

So what ways are there that retailers should be innovating, perhaps beyond the store? One of the more infuriating things Zeitgeist hears constructed as a polemic is that of retail versus the smartphone. This is a very literal allusion, which NBC news were guilty of toward the end of last year. “Retail execs say they’re winning the battle versus smartphones”, the headline blared. What a more nuanced analysis of the situation would realise is that it is less a case of one versus the other, than one helping the other. The store and the phone are both trying to achieve the same things, namely, help the consumer and drive revenue for the company. Any retail strategy should avoid at all costs seeing these two as warring platforms, if only because it is mobile inevitably that will win. With much more sound thinking, eConsultancy recently published an article on the merits of providing in-store WiFi. At first this seems a risky proposition, especially if we are to follow NBC’s knee-jerk way of thinking, i.e. that mobile poses a distinct threat to a retailer’s revenue. The act of browsing in-store, then purchasing a product on a phone is known as showrooming, and, no doubt aided by the catchy name, its supposed threat has quickly made many a store manager nervous. However, as the eConsultancy article readily concedes, this trend is unavoidable, and it can either be ignored or embraced. Deloitte estimated in November that smartphones and tablets will yield almost $1bn in M-commerce revenues over the Christmas period in the UK, and influence in-store sales with a considerably larger value. That same month in the US, Bain & Co. estimated that “digital will influence more than 50% of all holiday retail sales, or about $400 billion”. Those retailers who are going to succeed are the ones who will embrace mobile, digital and their opportunities. eConsultancy offer,

“For example, they could prompt customers to visit web pages with reviews of the products they are considering in store. This could be a powerful driver of sales… WiFi in store also provides a way to capture customer details and target them with offers. In fact, many customers would be willing to receive some offers in return for the convenience of accessing a decent wi-fi network. Tesco recently introduced this in its larger stores… 74% of respondents would be happy for a retailer to send a text or email with promotions while they’re using in-store WiFi.”

These kind of features all speak more broadly to improving and simplifying the in-store experience. They also illustrate a trend in the blending between the virtual and physical retail spaces. Major retailers, not just in luxury, are leading the way in this. Walmart hopes to generate $9bn in digital sales by the end of its next fiscal year. CEO Mike Duke told Fast Company, “The way our customers shop in an increasingly interconnected world is changing”. This interconnectedness is not new, but it is accelerating, and the mainstream arrival of 4G will only help spur it on further. The company is soon to launch a food subscription service, pairing registrants with gourmet, organic, ethnic foods, spear-headed by @WalmartLabs, which is also launching a Facebook gifting service. At the same time, it must be said the company is hedging its bets, continuing with the questionable strategy of building more ‘Supercenters’, the first of which, at the time a revolutionary concept, they opened in 1988.

One interesting development has been the arrival of stores previously restricted to being online into the high street, something which Zeitgeist noted last year. This trend has continued, with eBay recently opening a pop-up store in London’s Covent Garden. These examples are little more than gimmicks though, serving only to remind consumers of the brands’ online presence. Amazon are considering a much bolder move, that of creating permanent physical retail locations, if, as CEO Jeff Bezos says, they can come up with a “truly differentiated idea”. That idea and plan would be anathema to those at Walmart, Target et al., who see Amazon as enough of a competitor as it is, especially with their recent purchase of diapers.com and zappos.com. It serves to illustrate why Walmart’s digital strategies are being taken so seriously internally and invested in so heavily. Amazon though has its own reasons for concern. Earlier in the article we referenced the influence of global pressures on retailers. Amazon is by no means immune to this. Chinese online retailer Tmall will overtake Amazon in sales to become the world’s largest internet retailer by 2016, when Tmall’s sales are projected to hit $100 billion that year, compared to $94 billion for Amazon. The linked article illustrates a divide in the purpose of retail platforms. While Amazon is easy-to-use, engaging and aesthetically pleasing, a Chinese alternative like Taobao is much more bare-bones. As the person interviewed for the article says, “It’s more about pricing – it’s much cheaper. It’s not about how great the experience is. Amazon has a much better experience I guess – but the prices are better on Taobao.”

So how can we make for a more flexible shopping experience? One which perhaps recognises the need in some users to be demanding a sumptuous retail experience, and in others the need for a quick, frugal bargain? Some permutations are beginning to be analysed, and offered. Some of these permutations are being met with caution by media and shoppers. This month, the Wall Street Journal reported that retailer Staples has developed a complex pricing strategy online. Specifically, the WSJ found, it raises prices more than 86% of the time when it finds the online shopper has a physical Staples store nearby. Similar such permutations in other areas are now eminently possible, thanks in no small part to the rise of so-called Big Data. Though the Staples price fluctuations were treated with controversy at the WSJ, they do point to a more realistic supply-and-demand infrastructure, which could really fall under the umbrella of consumer ‘fairness’, that mythical goal for which retailers strive. Furthemore, being able to access CRM data and attune communications programmes to people in specific geographical areas might enable better and more efficient targeting. Digital also allows for a far more immersive experience on the consumer side. ASOS illustrate this particularly well with their click-to-buy videos.

As the Boston Consulting Group point out in a recent report, with the understated title ‘Digital’s Disruption of Consumer Goods and Retail’,  “the first few waves of the digital revolution have upended the retail industry. The coming changes promise even more turmoil”. This turmoil also presents problems and opportunities for the marketing of retail services, which must be subject to just as much change. If we look at the print industry,  also comparatively shaken by digital disruption, it is interesting to note the way in which the very nature of it has had to change, as well as the way its benefits are communicated. It is essential that retailers not see the havoc being waged on their businesses as an opportunity to ‘stick to what they do best’ and bury their head in the sand. This is the time for them to drive innovation, yes at the risk of an unambitious quarterly statement, and embrace digital and specifically M-commerce. What makes this easy for those companies that have so far resisted the call is that there is ample evidence of retailers big and small, value-oriented to luxury-minded, who have already embraced these new ideas and platforms. Their successes and failures serve as great templates for future executions. And who knows, the state of retail might not be such a bad one to live in after all. Until the next revolution…

Branding on a Broken Web – The APG @ The Economist

Exciting. Inspirational. Thought-provoking. And that was just the view from the room we were in. Last month, the Account Planners Group hosted an event called Ideas Exchange, in association with The Economist. Unlike New York, it is always remarkable just how far you can see being only fourteen floors in the air. The London Eye, Big Ben, the Shard and Canary Wharf reached into the sky, with rolling Surrey hills in the background. Many a visiting planner was captivated, before being regrettably distracted by some sort of talk going on elsewhere in the room.

Unfulfilled potential?

Opening the exchange of ideas was Aleks Krotoski, author of ‘Untangling the Web’ and visiting fellow of the London School of Economics. Aleks’ polemic rests on the idea that the Internet is not quite the idyll we initially imagined it would be. The Internet, according to Aleks, gave society a tabula rasa, a chance to create and nurture a platform that was unblemished with influence, or history, or imperfection. Instead we just went about transposing all the biases, prejudices and ways of working from the offline world onto the online one, creating the same communities and social hierarchies. The Internet was supposed to help us reach beyond our closeted knowledge and beliefs, to interact with those we had not met before, the types of people we would have not otherwise interacted with. Instead the opposite has become the case. There has been no utopian transcendence; none of us is virtually swanning round something akin to the pleasure gardens in Metropolis.

Moreover, the serendipity of the Internet that was, among other things, supposed to bring about such felicitous interactions, has been trampled on and abused (think Chatroulette). Aleks declared the web “broken”, breaking a little more every time a user has pushed to them what they want– or what they think they want – instead of having to proactively go looking for something. What we want is supposedly served up on a platter for us now, whether it be Amazon recommendations, or advertisements for sites / products we looked at quickly but have long since lost interest in. This collation and analysis of user behaviour has led to a backlash of sorts, evident in Microsoft’s recent announcement that it will have ‘Do Not Track’ set as a default option on its new browser.

The power of social influence and the declinism of serendipity

In discussing messaging and influence online, Aleks contended that attitudes and behaviour were shaped and formed in exactly the same way online as they are offline. She called the notion of influence “messy” and “unpredictable”. But on the question of how users decide which stuff to pay attention to online, the answer was clear; social influence. The way people become aware of content (and, by extension, opinion) is increasingly through social media, particularly on Twitter. Because we tend to seek out people similar to us online as in real life, this does not bode well for the objectivity of, for example, Fox News fans, as online their beliefs will be reinforced by the echo chamber they have created for themselves. Worse, this echo chamber is created more or less unbeknownst to the user, imperceptible as it is. Not entirely encouraging…

 

Alan Dunachie, director of operations at The Economist Group, focussed more explicitly on the business challenge of how brand owners can communicate in a world of, to paraphrase Aleks, tangled webs, and the role that ideas play in the network.

Tangled Distribution

Alan noted that for ideas to be powerful, they need to be shared and discussed. This sharing encourages something to spread far more quickly than it would have done in the past. The downside of such a system of distribution, as Alan admitted, was that, for anything a brand owner says, consumers can get instant feedback from friends, family and others. This goes for everything from chocolate bars to hotels and wine. Brands must express a view rather than tout a product.

Using stories to influence

The Economist Intelligence Unit, part of the Group, has helped brands solve problem with, what he calls, “editorially-oriented ideas”. Philips wanted to be seen by consumers as a ‘wellbeing’, rather than an electronics company. The Unit developed the idea of Liveanomics with the aim of making cities more productive, and thus enhance wellbeing. They collated urban experts, government policymakers and other from disparate associations, whose conversations then sparked engagement over social networks and traditional media with opinion leaders around the world, enhancing and reshaping Philips’ reputation.

The group also turned their attention inwards, developing the recent advertising campaign for The Economist with their “Where Do You Stand?” campaign, looking at the feeling a reader gets when engaging with the magazine, rather than just selling on its own reputation. As a result, the magazine saw an 11% increase in circulation, a 15% readership increase and 16,000 SMS responses, half of whom ended up subscribing.

All in all it was a fascinating debate on the Internet; how we shape it as users and how we can hope to influence it acting as intermediaries between the brand and the consumer.

An Olympic Reputation

Dost thou know what reputation is?

I ’ll tell thee,—to small purpose, since the instruction

Comes now too late.

Upon a time Reputation, Love, and Death,

Would travel o’er the world; and it was concluded

That they should part, and take three several ways.

Death told them, they should find him in great battles,

Or cities plagu’d with plagues: Love gives them counsel

To inquire for him ’mongst unambitious shepherds,

Where dowries were not talk’d of, and sometimes

’Mongst quiet kindred that had nothing left

By their dead parents: “Stay,’ quoth Reputation,

‘Do not forsake me; for it is my nature,

If once I part from any man I meet,

I am never found again.’

- Duchess of Malfi, III, ii

Zeitgeist went to see Duchess of Malfi at the Old Vic last month, a brilliant production, and was reminded of this fantastic quotation when thinking of the upcoming Olympic Games soon to descend on London. Though arguably less ephemeral than the brand of today’s salubrious celebrities – written about recently in Vanity Fair – the Games can hardly be said to provide any quantifiable burgeoning of brand to host countries of the past (except perhaps for Barcelona). As The Economist adroitly put it the other week, “When asked why the United States is a fine place, few would instinctively mention its hosting of the 1996 Olympics in Atlanta.”

Are Britain’s current economic woes related to anything that might be solved by hosting an Olympics? Probably not. Will the Games, much like the bloody affairs of ancient Rome, serve to please and distract the hordes? More likely. The Games themselves will have to be good enough to overcome the pre-event controversies of massive over-spending, Zil lanes, anti-missile protests and Olympic torches on eBay. Otherwise, as the above quotation describes, the reputation of many will be lost forever.

The New Yorker in a digital state of mind

Part of Zeitgeist is currently working on the strategy for an acquisition and retention scheme for a major international newspaper. Monetising the digital side of the paper’s efforts is a source of great intrigue and interest. Earlier this week, Enders Analysis published findings showing The New York Times “generated $243 million from its digital services in the four quarters since the launch of its new subscription strategy, representing about 15%” of the Group’s total revenues, an impressive stat. We’ve talked previously about how newspapers are dealing with the Internet, from the introduction of paywalls in the UK, to sponsored takedowns at the Wall Street Journal. Magazines are having a slightly easier time of it, reported The Economist last week. The New Yorker, one of the most stimulating publications out there, itself featured a long essay on the future of the news, back in 2010.

WSJ’s example represents a real opportunity for publishers, and it is surprising this tactic has not been employed since (that we know of). And while some might deem it opportunisitic, we love the thinking The New Yorker had recently, when science-fiction author Ray Bradbury passed away. Rather than simply chiming in on Facebook with a paltry “RIP”, they made the most of their association with the man, and offered a token bit of generosity at the same time (see above image). A nice way to satisfy your fans, boost the brand, and pay respect to an influential writer. This is no standalone piece of activity either, but seemingly part of a broader digital strategy. The New Yorker has been investing heavily in its website of late, reports Mashable, with traffic up around 50% YOY. But, says newyorker.com editor Nicholas Thompson, more than traffic,

“Success is when someone says, ‘I just feel great about coming to the website, I’m going to find things I love,’ or, ‘I haven’t read the magazine before, that’s interesting, let me subscribe.’”

“People don’t buy what you do, they buy why you do it”

While the Jubilee weekend drags itself ever onwards into yet another day, and we witness a smaller version of the chaos the impending Olympics will bring, those of you in need of some intellectual stimulation and insight could do worse than to check out this old TEDx video, touching on, in essence, how companies must orient their strategy, and how they should communicate to their customers if they want to be successful at what they do. The talk is given by one Simon Sinek, and is well worth the listen. Enjoy. With thanks to SM for sending this our way.

(UPDATE 4/10/12: Harvard Business Review published an article yesterday online using this talk as a way of getting buy-in from executives for social media, i.e. thinking about the why, not the what.)

Tesco’s surprisingly refreshing offer on Coca-Cola

After enduring a series of rainy days that have seen Noah put on standby, the drenched British public could do with something to cheer them up.

Luckily Coca-Cola have built their whole proposition around ‘happiness‘.

In sunnier climes this has manifested itself through the celebrated ‘Happiness Truck‘, a branded lorry dispensing presents ranging from surfboards to footballs to free Cokes.

Sixpence of Happiness

With the economy double dipping into recession like a hungry George Costanza at a funeral adding to the misery, Zeitgeist wondered whether the UK team had come up with a more straightforward and practical way to raise a smile.

A recent visit to a local Tesco Express to stock up on some essentials for a night in found this offer where shoppers were actually paid 6p to buy a second two litre bottle.

Clearly the offer is retailer lead. Much as Coca-Cola might want to sell more product they don’t have to resort to paying people to take it. Assuming it isn’t some kind of error, it highlights the power retailers have over manufacturers.

If a brand as loved and powerful as Coca-Cola can be devalued so easily what hope do lesser brands have?

Despite offering shoppers a great deal the promotion doesn’t really work in the retailers favour either.

As a compact store on the high street with no nearby parking available, most people shopping there would have been topping up. By incentivising them so heavily to buy an extra 2l bottle, Tesco are limiting how many other full price items shoppers can carry home.

In fact, the only obvious winner here was me, with an extra bottle of Coca-Cola and 6 pence in my pocket.

I promise to invest it wisely.