Putting the right value on creativity

You need to have money to make money. So goes the old saying. And with all the conversation about the disadvantages of capitalism right now (debate about Piketty’s mathematics notwithstanding!) this has never felt more true – the fruits of economic activity benefit the owners of capital disproportionately. The rich get richer, the poor get poorer.

At the same time you can’t open a paper without someone lauding the importance of creativity.  It is dead hard though to make money from creativity. And it’s getting harder as digital networking lays waste to the old formats that middle class creative people have used to monetise their skills – things like books and records. As a society we need new ways to recognise the value of creativity and new business models and economic mechanisms to profit from the value creativity creates. And not allow 100% of that value to flow upwards to the owners of capital, platforms or siren servers.

“Technologists repeatedly apply the extreme efficiencies of digital networks in some area of endeavor in such a way that the sources of value, whatever they may be, are left more off-the-books than they used to be, but we end up in control of the server that runs the scheme. It happened to music and other media early on, but the pattern is being repeated everywhere.”

Jaron Lanier. Who Owns the Future.

The advertising industry also needs to find better ways of profiting from creativity too as was recognised by both clients (Martin Riley, Pernod Ricard CMO) and agency leaders alike (Debbie Klein, The Engine Group) at this week’s IPA event on agency remuneration. Let’s face it, our industry’s way of monetising IP and brand value added is hopeless.  Despite the huge value that creativity can generate we get paid by the hour regardless of any value created. It is high time we developed new business models and disrupted our own industry paradigms, before it is too late.

Creative agencies are filled with creative people who think they make a product –  a brand strategy, a design, an idea or an manifestation of that idea in a piece of communications, .product or digital service.  And those ideas often have the potential to generate huge value for our clients brands.

However we don’t get paid for making a product, or whether that product generates value (I am sure there are plenty of great performance related schemes out there but mostly the upside is minimal and not anything to do with the true incremental sale/revenue increases). We monetize our work with a service business model.  Agencies have been coming up with great ideas for years, contributing to reliable sustainable growth for clients and their brands, but since the death of the commission model we have been paid like lawyers or accountants.   The clue is in the name – we are our client’s agents. But with less perceived skill and thus worse hourly rates, and fewer recovered billable hours.

This is of course a decades old set up.  It made sense for agencies to cast themselves as agents back in the day when clients only had one agent, and could use that agent to help them make decisions about what strategies to pursue and where to spend their money.  But now that has changed. Media fragmentation has led to agencies specialising and so their role as agents is much further downstream.  Creative agencies like to think that their most important contribution is the big idea.  But clients are increasingly taking ownership of the big idea and all they want from their agencies is to have that idea executed or specific deliverables produced.

“One CMO, who requested anonymity so as to avoid disparaging the shops currently working on his account, said he thinks that in five years agency networks like BBDO , McCann , Y&R and Saatchi & Saatchi will matter less. “The agency model is really dead. I don’t need all these different agencies working for me. I don’t want it to be about [agency brands]. I just need less overhead and more efficiency.” ”   Ad Age.

The implication is we are less and less valued agents, and becoming a commodity, interchangeable makers of deliverables.  If the industry shrivels and dies it won’t be because the 30″ commercial is no longer relevant.   It will be because the service business model failed to support an industry that continued to fragment, specialise and slip down the value chain despite the continued value of its core product – creativity.

“For years agencies weren’t accountable. Now they are and the model is crumbling. Advertising that doesn’t drive business will lead to a quick end to the ad budget and perhaps the agency as well.” Anonymous CMO

Part of the reason we find ourselves here is that the service business model pays pretty well and CMOs can still justify agency fees when a slightly better/newer marketing campaign generates a positive ROI or percentage point sales increase.   The other part of the reason is that the industry has  been distracted by a macro argument about how the media and marketing landscape is changing and what it means for clients and agencies, and has assumed that the same business model would apply to a new world order.  Even digital creative agency business models are largely the same as their traditional forebears, despite the measurable nature of the media in which they operate.

So there are two questions we need to answer to put better value on creativity:

Firstly, the age old question of how do we better demonstrate the value we create?  How might we make the impact of creativity more measurable? How might we put more skin in the game and not expect to get paid when things don’t work out, but feel confident in sharing in the upside when things do? How do we change the conversation with procurement teams away from simply about getting to a lower number for a specific line item and get to a place where a true partnership can emerge.

And secondly, the new question of how do we change the business model that underpins the value that we create?  How might we apply our creative skills to new ventures and spheres where the outcome is completely unknown but the potential is enormous? (see Taleb on optionality/convex payoffs)

What is exciting is that it used to be that you needed vast capital and resources to scale. In a mere few years Instagram built a $1billion dollar company with 13 people and a great idea and largely the same skills as is present in many creative agencies.

So time for us to get on and find new ways to monetize what we create.  Sure it isn’t easy, and I speak as someone who’s current day job is 99% tied into the old way of doing business in the creative industry.  But we’ve got to find the time in the day to try new things out, have tough conversations with existing clients, and find new and often smaller ones who want to do things differently.

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Not another top ten! Yup… my top ten reads of 2013

In no particular order…..

1. The news is bad for you – Rolf Dobelli in The Guardian

Rolf Dobelli has taken a bit of Jonah Lehrer style criticism but I try and only read the news once a week and find much to agree with here.

2. The Cult of Shareholder value – The Washington Post

Agree with a lot of this, maximising shareholder value is a very narrow, short term objective. We ought to have triple bottom line accounting where all stakeholders are taken into account not just the owners of capital.

3. The rise of the full stack marketeer – Kyle Tibbitts

The essential marketing skills for start ups. Am really curious as to whether an agency could package these up for the start up community to tap into vs have in house. 

4. The liberation of magic – Martin Weigel

As ever lucid and compelling argument from Martin Weigel on successful brand marketing based on the Erhenberg/Sharp school -Top of mind awareness and relevance to infrequent purchasers are more important than differentiation and appealing to fans if a brand wants to grow. 

5. The Boston Manhunt and social media – New York Magazine

Gripping dissection of the impact of social media on how news is reported and how easily falsehoods are shared and reported as fact as media outlets trip over each other trying to be first with a scoop.

6. Dan Weiden on chaos and culture (from 2005)

Not technically from 2013 but re posted by W+K on their blog last year. Amazing 2005 speech by Dan Weiden on the importance of chaos to creativity and insight into the agency philosophy.

7. Free speech in the era of it’s technological amplification – MIT Tech Review

Fab piece on the impact of technology on free speech written as a letter to JS Mill.

8. An app for gender equality – Natascha McElhone in The Guardian

What constitutes modern feminism has been a hot topic recently and I enjoyed this by Natascha McElhone on the fourth wave of feminism that is tackling society and culture’s remaining issues around gender equality. 

9. In praise of laziness -The Economist

As one of the many people that I am sure hates email this rang true. And the start of the year certainly feels like a good time to focus on getting meaningful work done rather than spinning the wheels doing email and attending pointless meetings. 

10. An interview with Rick Rubin – thedailybeast.com

And finally, thought this was great insight into the creative process in the music industry from Rick Rubin’s work with artists such as LL Cool J, the Beastie Boys and Red Hot Chilli Peppers.

Hope you find some of them interesting and have a great 2014….

Things I would like to be different about Nike Fuelband

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So I have been using Nike’s Fuelband for about a month and enjoying the fun motivation to be more active that it adds too daily life. I have even started regularly running again.

No doubt Nike are working on a ton of new features, here are a couple of things I would love to see in future releases of the web app and in the planned API release and the upcoming integration with Nike+.

1. More flexible goal setting

At the moment you can set a goal for that amount of Fuel you want to score in a day. One of the main things I appreciate is the daily motivation that gives me to hit that target. However some days I know are going to be more active than others because I can fit in a run or whatever, it would be great to be able to change the daily target of the course of a week. That way I would have an extra reason to go for that long run on a Saturday as I have an extra big target.

2. Ability to extract data

Pretty annoying to only be able to see the data Fuelband collects in a bog standard graph. Would be very interesting to be able to look at the data over different time scales and so on in order to see which activities generate the most Fuel. It would also be great to be able to extract the data to use in different applications. Guess we will just have to be patient and await the promised API.

3. Ability to see different metrics

The alternative to being able to extract the data would be more specific metrics. For example as a runner a good indicator of efficiency is cadence. It seems like it would be a pretty simple metric to output as Fuelband already measures steps, so it would simply be a case of showing that over a short time period like a minute.

4. A Fuelband community

There is lots of competitive opportunity with Fuelband and I like being able to see which of my Facebook friends are using Fuelband. But there aren’t many of them yet and I would love to be able to connect/compete with other Fuelbanders instead even if they aren’t yet Facebook friends. And Nike could play in celebrity fuel scores as well for some extra fun!

5. Context based sharing for games etc

I can also imagine a lot of fun could be had if you were able to connect and share with other Fuelbanders based on context. That would mean you could create all sorts of competitive games with the people near you on a basketball court or similar, you could hook it up to a big screen and see the games scores in fuel increase in real time for example.

So overall a great product that I’m looking forward to getting better and better. What do you think?

Debtris – making the invisible, unmissable

The power of creativity, digital and data visualisation to make the abstract and invisible urgent and unmissable. It is hard to watch this and not despair for way our civilisation prioritises use of its financial resources and the absurd inequality of the system.

What becoming a dad has made me realise about brands – brand choice is an act of faith

So this is my fourth week as a new dad, which is why it is some time since I last posted anything – am now getting the hang of typing one handed with baby on lap;-). The birth of our first child and my experience of becoming a dad has so far been indescribable. So I will just summarise with one word, which I mean wholeheartedly and with all its meaning – wonderful.

Life’s most significant moments always influence your perspective and on a personal level I suspect that I am only at the start of that process of change. On a professional level my perspective is changing too and since this is a work/marketing themed blog, I thought I would write a short post on something that I have been thinking about in the last few weeks – the similarity in the relationships we have with people and the relationships we have with brands.

I saw some research recently which looked at human relationships and a sense of belonging. It was interesting to see that increasingly the affinity people have with meta-groups represented by interest areas such as religion, sport etc often trumps physical or geographical relationships. But despite this, people the world over still have a core group of people, their inner circle, that is closest too them.

And in these last few weeks that has really been brought home to me as I have been reminded of the central importance of family in your life. Nothing trumps family. Family is the group that is closest to you, and that you have an intense tribal relationship with. It is a relationship that is bound by blood and marriage of course, but what struck me was the role of faith in familial relationships. We had faith in our families support, and the support our families gave us in the last few weeks has been incredible, touching and wonderful. We were overwhelmed by the reality, and found our faith replenished and invigorated.

I think that the relationships we have with other conscious entities are different in strength from the relationship we have with our families but not different in type. I have total faith in the support that my family will give me, lots of faith in the support that my friends will give me, a little less faith in the support health carers will give me, and less still in acquaintances and strangers – and so on.

Dotted along this spectrum is the faith I have in the support brands will give me. Brands have lots of the characteristics of people – recognisable features, personality and ultimately brands are delivered by organisations of people – they are a conscious entity. So my relationship with brands is exactly the same type of relationship I have with my family – just of a wildly differing quality.

Brands make a promise. My faith in a brand depends on the delivery of that promise. I love Coca Cola. I have faith in the support that Coca Cola gives me (to refresh me, cure my hangover etc). That faith is stronger than the faith I have have in a stranger in a takeaway van making me a cup of tea and so I choose a Coke. My faith in the support that my mobile phone gives me is greater than my faith in an acquaintance passing on a message to another friend (but only just!).

Brands have traditionally been very good at making promises, spending lots on glossy TV ads to proclaim to all and sundry how great a relationship with the brand will be for consumers. These days brands are empowered to have a two way conversation with consumers so making the promise is even more personal and so the relationship is potentially even closer. But we all know how we feel when those closest to us make promises they can’t keep, it hurts when our family lets us down. That applies to brands too – as Bernback so famously put it “nothing makes a bad product fail faster than a great advertising campaign”.

The large organisations that are responsible for delivering the brand promise can often be appaling at it. Coordinating thousands of people to consistently deliver a product or service at a certain price is never an easy task. But, that it is hardly surprising that promises aren’t kept doesn’t diminish the importance of keeping them, or the spoils available to those brands that can. The organisations that will win are those who can encourage their employees to take the delivery of the promise personally, give them the resources they need and reward them appropriately for success. Then consumers faith will be rewarded.

I also think that marketing comunications can play a role not only in making the promise, but in keeping it as well. Consumers buy brands because they respond emotionally to them. Marketing communications can infuse brands with emotion and add to the intangible value delivered by the brand- and in a way can play a role in making the promise and delivering on it at the same time.

So, people have faith in their chosen brands, and marketing plays a large role in that. But ultimately nothing is stronger than the faith I have in my family to support me. And really it is that strength of realtionship, that faith, by which I judge all others.

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What brands can learn about business from TED

Last week Campaign magazine ran a piece about what agencies can learn from TED, focusing of course on the wonderful and diverse ideas from the week.

So I thought I would write a short post about what brands can learn about business as a final comment on TED.

Firstly, I think that TED shows the power of ideas to drive enterprise. If you focus on the idea behind a business rather than money, and make that idea different, beautifully executed and accessible, then the money will take care of itself. The question shouldn’t be how do we make more money, rather how do we increase the value of what we do for consumers.

Second, I think that TED shows us that talk is cheap. It is the easiest thing in the world to talk about something. But the speakers at TED were all doing something about their idea as well. They were taking action, going out into the world and making it happen. And really that is what counts, making something of your idea, differentiating it from the rest and not letting it languish on paper. I would imagine that many banks thought up customer service like First Direct’s in a brainstorm, that there are many dowdy fashion labels who dreamt of reinventing themselves like Burberry and many sneaker brands who have quoted “Just Do It” in a powerpoint chart and then not done it. The people we admire have remembered Edison’s famous quote “genius is 1% inspiration, 99% perspiration”.

Thirdly, TED shows the value of a diverse range of influences and inputs. Creativity, innovation and enterprise are stimulated by applying ideas from field to another. Consider the work of one of the TED Fellows, Frederick Balagadde . He has developed an innovative way of reducing the costs of HIV testing by applying the principles of semiconductors and micro computing to lab testing and so automating the process. It is very hard to learn something new if you are surrounded by the same influences every day.

Finally, TED shows the importance of collaboration and team work – A very obvious point but again worth remembering. On stage at TED, we saw a succession of individuals on stage talking about their work. But in the majority of cases that work had been done or made possible by the efforts and skills of a team of people. Individual genius is very tempting to believe in, but very rare. Teamwork is important, not because it makes people feel better or it is part of being a good manager, teamwork is important because that is the best way of making amazing things happen.

Day 3 at TED – the day of criticism

So Day 3 at TED seemed to be the day of criticism, both the speakers and the listeners seemed to have embraced a slightly more cynical side than the usual exuberant optimism of the other days.

There was one notable exception, the response to a young guy from Sudan, Emmanuel Jal. Emmanuel was a child soldier, rescued by an aid worker Emma McCune. Emmanuel told us his story, and then sang/rapped about Emma and his plan to build her school in her honour. It was powerful stuff, and many people were moved to tears during the course of the standing ovation. Over lunch the National Postcode Lottery, offered a 10 grand prize for the audience to donate to a charity of their choice and Emmanuel’s school was the unanimous choice. This is typical of the TED experience, unbounded optimism and positivity and it is great to be wrapped up in it.

However there were a few strands of negativity and gloom throughout day’s talks.

The most light hearted of those negative strands was Rory Bremner, who, as is his wont took the piss out of everyone from the organiser of TED Chris Anderson to Gordon Brown. It was great to be reminded of Brown’s hypocritical side as Rory pointed out a few of the ways that he has failed to act to solve the world’s problems when he has had the chance which nicely punctured the two standing ovations he had received 2 days earlier. Seeing the other side of the story was a theme in many other of the days’ talks. We saw a range of photos from Taryn Simon that captured people who had suffered false imprisonment as a result of mistaken identity, where very often they had been indentified in a very suspect way cooked up by the police. We heard a story about stories from Chimamanda Ngozi Adichie, based on her upbringing in Nigeria. Chimamanda pointed out the importance of where you choose to start the story in how history gets remembered. And we heard from both an economist and a journalist about the unseen economics and organisations of crime and terrorism and their direct link to the global economic crisis.

There were also few strands of negativity and gloom from the listeners too.

We also heard from Jim Balog of the Extreme Ice Survey, a photographer who has captured, using time lapse cameras, the retreating of glacial ice around the world. His point was to try to visualise and make tangible the impact of climate change to convince people of how real the problem is. Jim didn’t get a standing ovation, which was nothing to do with his work which is obviously extremely valuable and relevant. My suspicion is that part of the reason is that most people accept that climate change is an issue and people are kind of fed up with having the problem thrust in their face with no attempt to suggest any solutions. It is a deep and complex problem, and simply raising awareness of it is too shallow a response. Or maybe that’s just me?

I spoke to a couple of other fellow audience members who voiced a little negativity as well. The rarefied atmosphere at TED can get a little cultish at times, and the negativity being voiced was a reaction against taking the ideas in the talks at face value rather than as a starting point for enquiry and debate. I think most people loved the exposure to such a wide variety of fascinating topics, but also felt the desire to go a little deeper into those topics.

For me that was the biggest lesson of the day, the pursuit and sharing of knowledge is obviously a good thing, but only when it is the start of something, not the end. You can never really know the whole story, and first impressions can be misleading. And while positivity and optimism must be good things, it mustn’t be mindless optimism, ignoring or sidestepping the challenges, trade offs or side effects of the actions we take. Finally, at the risk of seeming tenuous in the extreme, I think the lessons for marketing are clear too. We must always try to understand the situation as well as we can and work hard to develop deep consumer insight. If we don’t our work will appear shallow, vacuous and un-engaging, you only need to glance at a commercial break to see how easy a trap that is to fall into.