09/12/14
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Economics: More Competition Leads to Less Competition (the rule of three)

The Rule of Three by Sheth and Sisodia

today’s selection is a (very old post) dated 2006, taken from this very blog …

… in which I was commenting on a book entitled “the rule of three”. I realise that this analysis is still – or maybe more than ever pertinent – and therefore I decided to revive this post, update it significantly, and submit to my readers again today.

Have you ever wondered why most markets – when they are mature enough – end up being dominated by 3 players? Sheth and Sisodia (2002 – buy it from Amazon; note that there are second hand books available from as little as £0.49!) have carried out a study about this and their book is available in electronic format too (buy an kindle version here for £9.99). 12manage.com comments that this is not applicable to Europe. On the contrary, it does apply to Europe too, or any other area for that matter, provided local markets are open to fair and unbiased competition and transparent (I know, this is a paradox, fair competition leads to less competition in the event).

For instance, if you apply this rule to the telecoms market, it is very likely that you will find that the rule applies in each country/zone of influence individually (multi-national markets). It’s not that the rule is false. It’s just that those markets are heavily regulated and therefore, keep introducing new devices to revive competition at regular intervals.

In the US, the situation is different though; a few decades ago, AT&T was broken into small companiesby the regulator, but the rule of 3 applied in the end nonetheless (Stephen Colbert described this phenomenon in a classic pitch, click the Colbert picture below to view an extract). The process of introducing more competition ended after that though, it is not the case in some European markets in which new devices are still being introduced to fuel competition and lower prices (transparency : I work for a Telco, my comment is and will remain neutral for obvious reasons)

Where globalisation has already happened (for instance in the fast food market), the rule will apply across Europe with Mc Donald’s, Quick or Burger King and the rest of the niche players for instance. Does that mean that the ultimate goal of open competition is … less competition? Eerie isn’t it?

A final comment is that not all markets, even in the high-tech sector, are truly global. Whereas the IT market is for instance (same brands, strong consolidation, same products sold from one end of the planet to the other etc.) others aren’t. Besides, a multi-national market (i.e. an addition of heavily idiosyncratic markets in many countries) isn’t really the same as a global market. In multi-national markets, many discrepancies persist, even when the brand itself is global.

Zipf’s law

Seth Godin described this phenomenon in a different way, in his famous opus entitled “unleashing the idea virus“. Here is the passage about what he calls “Zipf’s law” (the book is rather old too, but it doesn’t matter anyway, what Seth described then is still valid now).

There’s a name for this effect. It’s called Zipf’s law, after George Kingsley Zipf (1902-1950), a philologist and professor at Harvard University. He discovered that the most popular word  in the English language (“the”) is used ten times more than the tenth most popular word, 100 times more than the 100th most popular word and 1,000 times more than the 1,000th most popular word.

It’s also been discovered that this same effect applies to market share for software, soft drinks,automobiles, candy bars, and the frequency of hits on pages found on a website. The chart above shows actual visits to the different pages at Sun’s website [editor’s note: in 1996] .In almost every field of endeavor, it’s clear that being #1 is a lot better than being #3 or #10.There isn’t an even distribution of rewards, especially in our networked world.On the Net, the stakes are even larger. The market capitalization of Priceline, eBay and Amazon approaches 95% of the total market capitalization of every other consumer ecommerce stock combined [editor’s note: still in 1996]. Clearly, there’s a lot to be gained by winning.

05/14/14

Reinventing Marketing at Adobe Summit 2014

My first presentation at Adobe summit 2014 in London today was the morning keynote and it’s so packed with information that I still wonder, while I’m writing these lines, how I can summarise so much information. Here is my account of this morning’s keynote in which Adobe delivered gazillion innovations impacting both the field of marketing and digital. 

Adobe: reinventing marketing

Marketing, let’s be clear, needs a hard reset. We work in silos, pedalling heads down trying to get to grips with new tools as they emerge, and each tool that comes in is being added one after the other in an increasingly hard to digest multichannel sandwich. It’s time to reinvent marketing. And believe it or not, Adobe, the Brand famous for bringing software like Photoshop and Dreamweaver, might well be a major player in this entire marketing rethink. I know it sounds zanyish but it’s happening; if the Adobe Marketing Cloud BU has already reached the $ 1Bn mark, something big must be happening.

Brad Rencher in this morning’s keynote, announced just that; but unlike most corporate marketing presentations, Rencher and his teams showed us, in real time, on the screen, how they deliver on their promises. “We hear about changing consumer behaviour all the time but what we are seeing now is that these changes are having an impact on organisations” Brad Rencher said by way of introduction. “We’ve seen this coming for decades as marketeers and now, we have the opportunity for marketers is to reinvent ourselves and create new things. This is something much broader than just marketing”, Brad said, “it’s about reinventing the enterprise”.

 
reinventing marketing
 
Adobe’s Rencher, Senior Vice President and General Manager, Digital Marketing Business Unit at Adobe Systems ready for a hard reset of marketing
 
Adobe’s CEO Shantanu Narayen stepped in and delivered his vision. “Technology isn’t enough. Enterprises will have to break the silos and listen to customer expectations”. This is in fact what Adobe did for themselves. By moving all their business into the cloud : the creative cloud.  Their whole business model has changed. They were able to embrace this humongous change even though their existing business model made up 70% of their revenue. Tell us about people entitled to talk about digital transformation to others. “This means  reinventing everything and break through the clutter of the buzzwords and deliver outstanding customer experience” Narayen said.
 
How will we unlearn marketing
 
Reinventing oneself is the challenge but “unlearning is a huge hurdle” Brad Rencher said. Like driving in London when you learnt in the States for instance. So how we in the industry unlearn marketing?
 
“Imagine there are no bosses, no hierarchy, no processes … What would marketing look like if we started with blank sheet. Then we’d focus on doing just one things, that is serve our customers” he said. Like jumping on new channels as they emerge and adding channels on top of channels means that we are working the wrong way. We need to be backwards compatible but this is a huge problem because we’d have to ditch everything we do at the moment.
 
Adobe marketing cloud is aimed at doing that
 
Marketing cloud handles the whole process from cradle to grave: analytics, campaign, experience management, media optimiser, social and target. By feeding existing analytics data into the media optimiser adobe is able to make clients save 50% on their SEM for instance. The platform is huge and supports zillions of transactions every year and Adobe comets on pursuing their effort of innovation to support marketeers with their challenges due to fragmentation. In the new version of the marketing cloud platform there a re new tools aimed at solving such issues.
 
Brad took two examples: profiles and content. The profile management service will enable users to use profiles through all existing channels to run their marketing campaigns without having to manage different profiles. As to content, adobe has worked on a system to help users move faster by creating an assets library to speed up the sharing of content assets across platforms and users. Marketing mix planning gives hints as to where marketeers should spend their dollars. And once the recommendation has been issued, marketeers can also use the platform to execute that campaign.
 
And of course the platform is linked to the company’s CRM, and ERP and all necessary back end systems.
 
Marketing reimagined

This is “marketing reimagined” Brad said and he and his teams went on demonstrating how they deliver this directly from the screen. The demo which impressed me most was that of the mobile app development system which gives you hints as to the amount of savings which can be derived from that. Here is how it works :

  • Understand our client as a whole person : never lose sight of customer. Not the media plan view or the CRM viiew of the customer but all bungee.ed together, the real view of the customer. This is what analysts call emergence. This is not just a data store, it’s about taking that data and turning it into useful information. Master marketing profile takes information for of all sources about your customer and sharing it with other employees, it’s some sort of superior webs analytics inclusive of information from social media. Profiles can be grouped into what Adobe calls Audiences. All profiles are shared in an anonymous manner and Adobe insisted on maintaining the highest standard of data privacy but the profile core service is also able to merge. Social media and buying media from an indentified existing client for instance; this enables Adobe to bridge the gap between behaviour (through analytics), assets managements (like items of a marketing campaign which can be generated directly from within the marketing cloud platform) and even the campaign management therefore delivering on the promise of a non fragmented marketing environment sketched out by Brad Rencher earlier.

 
reinventing marketing
A holistic view of Marketing … at last, all unified through Software. Some found it funny that we had to have Software to do that, but in fact, ERPs did this to HR & Finance and many other areas 15 years ago… I’m not surprised
  • Burst of creativity : we’ve had our moments with “cute display ads” Brad said but one has to move beyond this Brad said. We have the data now we must deliver the right experience with the help of the data that we have. Adobe experience manager is about that. Assets can all be inter connected and deliver for desktop and the mobile web. Brad has focused on mobiles in his presentation. Consumers want apps but creating deploying and evolving these apps has never been more challenging. But are we thinking broadly enough? We need to make apps easier to develop. Adobe has development is making it possible to create and maintain mobile apps with drag and drop applications and that included e-commerce applications too. A lot of what we see in the mobile application space is similar to how websites were built 20 years ago. One of the biggest challenge is, despite what people think, bringing the app to a phone. “We want to to make this an accelerated experience” the Adobe rep said on stage. It’s done on IOS only and IOS 7 only though, but the landscape is very fragmented and poses a real issue to marketers. It also enables marketeers to test the look and feel of the new app without talking to IT nor contacting the many agencies involved in the development.
Time will tell us how marketing has been reinvented. Software can certainly trigger behavioural changes, but it will also require a fair bit of change from the people point of view, a challenge which Adobe is ready to tackle as well, knowing that they are very active in various in-job training programmes to help marketeers evolve. They sure have a long way to go.
 
Evernote Snapshot 20140514 092924
 
 Shantanu Narayen … reinventing marketing
03/11/14

Is Marketing Automation A New Marketing ElDorado?

$-smallJudging by the numbers delivered in this Salesforce Slideshare presentation, I would tend to say “yes”. Judging by the response I’m getting from my clients, I’d say “definitely yes”. There is this realisation by companies that nurturing visitors, leads and clients can lead to something.

Marketing Automation adoption on the rise

As a matter of fact, I would call that plain marketing, not marketing automation. It seems that marketing has strayed too much in the past 20 years and that we are discovering, at last, that delivering the right message at the right time to the right people is more effective than drowning them in useless information they don’t want to read.

This, in actual fact, is what we witnessed on this side of the channel when we looked at the results we were getting from marketing automation: while email opening rates fell sharply to less than 6%, we were able to make them take off back to previous levels (at 18%, i.e. 6 times more) with the proper use of profiling and behavioural targeting.

Who needed proof of that? Now, I can believe that marketing automation adoption will be on the rise in the next 3 years.

02/19/14

The path to Big Data: Challenges and Opportunities

Big dataThe New Jersey Institute of Technology’s Online MBA program sent me this infographic entitled “Data Mining and Decision Support Systems“, in which the university describes big data and data mining as the new way of carrying out market research. As a matter of fact, data mining isn’t new – I first heard about it in the 1990s when it started to become fashionable, namely in the Banking industry – and it is not directed at “new  data” but “existing data” as is described in the infographic.

If data mining (or even Big data for that matter) per se isn’t innovative, massive open databases, and unstructured data like those gathered by Facebook and Google actually are the new kids on the block. NJIT even heralds these new giants as the future major players of the data mining industry. To an extent they already are.

And true enough, data mining is bound to become, at last, a major player in the Marketing field for the years to come: when it comes to clients … and prospective customers alike (that’s the real novel aspect of it, we can now gather information about clients to be).

Challenges related to big data implementation

Yet, many challenges will have to be overcome by businesses which want to benefit from this new wave of market research brought by the big data era : improving data quality is one (this is why the retail industry is ahead of the game: check-out data is massive and squeakily clean), allowing time and resources is another, not to mention knowledge and training and, last but not least, internal limitations as to how data can be shared across departments. No wonder that 1% only (according to Information builders) of company information is used at the moment.

Now here’s the challenge, and only those who are able to overcome it will be able to reap the benefits from these new marketing opportunities.

Big data

NJIT New Jersey Institute of Technology – Online MBA

12/2/13

5 Marketing Websites you shouldn’t miss

Today’s specials are …

1. The agile designers website:a great place for Web designers, developers and anyone interested in finding design stuff for one’s website. The site boasts 1302 resources but I haven’t checked the number.

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2. Ads of the World and this amazingly beautiful and arty “heaven and hell” Samsonite Ad

Samsonite: Heaven and Hell

 

3. Pure genius: this LinkedIn Resume builder which, obviously, picks up information from your LinkedIn profile and builds an automatic resume effortlessly!

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4. Lifehacker which delivers plenty of tips and tricks for tech users like this great selection of the best iPad covers!

Five Best iPad Cases

5. Lastly, Kissmetrics delivers great tips for you to use Twitter in order to spy on your competitors. Now you know why the company was valued at that level!