Guest Feature - Marketing Ecosystems
Microsoft Corp. is now entering the keyword-advertising market dominated by Google and Yahoo, having just unveiled its adCenter platform to buy advertising space across everything MSN.
By on Jun 20, 2006Microsoft Corp. is now entering the keyword-advertising market dominated by Google and Yahoo, having just unveiled its adCenter platform to buy advertising space across everything MSN. Like Google and Yahoo, Microsoft will now be offering advertisers (initially in France) a targeting capability through the medium of paid search. But Google also plans to sell web advertising that includes video, something it sees as a first step to selling advertising on television sets, a business niche the company intends to enter in the near future. And AT&T plans to offer television service and content as a cornerstone of its strategy to compete with cable operators in offering consumers packages of phone, TV, high-speed Internet and wireless services. One can only assume cable operators will respond to AT&T with new media packages of their own.
It's easy to understand the Microsoft counter-offensive. Google and Yahoo have built on-line advertising into hugely profitable businesses while Microsoft waited to get in on the action. Revenue is slowing from a software market mature with Windows and Office, so it makes sense to make a strategic push now into the steadily growing Internet advertising market expected to reach $26 billion in 2009, according to Forrester Research.
But the story here is far more complex than a business rivalry between Google and Microsoft. It's also much bigger than The Internet as a platform for marketing accountability or media convergence as a new business model. The really big story has to do with a conceptual gap between the thinking systems used by marketers to create novelty and demonstrate value, the ground truth's of a saturated information environment, and the currents shaping major directional change in the world.
Fundamentally, improving the performance of marketing has no technical solution. Assuming all players have access to virtually the same information and information technologies, and can therefore equally target a demographic with precision, there is no compelling competitive advantage in a digital marketing capability that targets consumers, regardless of how deep it can reach to personalize. When every brand team in every product and service category restaurants, automobile manufacturers, hospitals, pharmaceutical companies, florists, computer makers, accountants, department stores decides, for example, to leverage global positioning systems in cell phones to tailor a promotional message based on a consumer's location, personalized promotion based on location becomes a zero-sum game. Ditto for e-detailing, direct marketing, anonymous patient-level data, and ads linked to search results.
The problem with micro-targeting as a strategy-making philosophy is that it perpetuates a tragedy of the commons and consistently trails technological innovation. Said another way, it's reactive to the latest wrinkle in information-distribution and completely ignores the complex networked environment in which the brand, customer, and business, lay. An already fragmented media environment is fracturing even further through the introduction of new media packages and technology companies entering the market to distribute and measure advertising-related content. The human mind is being overgrazed by marketing as it is conventionally practiced. So at the end of the day, marketers will still confront the same dilemma they turned to the internet and information technology to solve: consumers opting out in ever greater numbers by skipping the ad and hiding behind their own technologies that exempt them from the onslaught of product promotion.
The dynamics of information production, dissemination, storage, display, and retrieval have changed radically, to the point where significant amounts of information are produced and obtained outside the control of any one organization. As the cost of processing and communications power has tumbled, it has become cost-effective for organizations, and individuals, to adopt and utilize information technologies in more and more situations (including ad-blocking). So what was once a highly constrained and vertical information flow has evolved to a torrent of vertical and horizontal flows pushed and pulled from a galaxy of sources, both on- and off-line. The issues associated with information glut, including the increased potential for overload, second-guessing, micro-management, and distraction, are critical business and societal challenges, particularly in the public health arena.
Globalization has changed the perception we had of the world in the late 20th century and the strategic context for business. But globalization isn'st about opening offices in Beijing and Mumbai. At its core, globalization is about a new operating theory of the world based on connectedness between, across, above, below, and through pre-existing political, social, economic, thematic, geographic, and security boundaries. It is this connectedness, and its complexity, which is increasingly a source of uncertainty, instability, risk, and a virtual tidal wave of change. The connections and interactions can be so intense and transformative that we can no longer fruitfully distinguish between actors and their environments, let alone say much about any piece in isolation. Whereas previously it was possible to separate customer from competitor, and analyze the performance of individual pieces, advances in telecommunication have linked the information and economic domains of customer, competitor and collaborator like never before. It is the same kind of world-is-flat reality that has Google involved in selling advertising space, AT&T creating TV programming, McKinsey now examining media budgets, Starbucks in the music and movie business, and Pfizer competing with United Healthcare for patient care solutions.
Making strategic choices to compete between and within ecosystems system-level competition is now an emerging strategy-making philosophy. Marketing ecosystems are a new framework to organize coordinated sets of action from internal and external components, and to shape the combined behaviour of large and interconnected networks of companies to achieve mutually-reinforcing effects from their output. Marketing ecosystems shift the view of brand's as the primary unit for business strategy to an aggregated view of strategy and action at the system level. Rather than replicating what already exists, matching what a competitor may be doing, or trying to squeeze more life out of a worn-out branding paradigm, marketing creativity should center on developing the skills to architect and manage an environment of changes and opportunities simultaneously. In other words, the only sensible way to compete is by being better than your rivals at molding new marketing ecosystems, not just products and pieces, and from being able to steer ecosystems to lasting growth. Instead of message, the marketing ecosystem becomes the thing that gets created, deployed, managed, measured, embedded in the marketplace, and evolved to accommodate more and more components.
There has been a rapid succession of body blows to the common consensus of what constitutes marketing creativity and strategy. In response, the advertising industry is beginning to stir: rewarding agency executives who can sell and manage aggregated business units is one example, as is the growing attention from major holding companies to realms outside of traditional advertising. The much bigger question is whether these moves will yield capability packages new forms of creativity driven by transformative thinking in demand by the marketplace, or is it simply incrementalism from a brand and promote's sphere of conceptualization. The emerging reality is that Microsoft v. Google is a story about the dissolution of interpretative frames of the most elemental aspects of marketing that have grown up, literally, since the beginning of recorded history. The only way marketers will be able to win in the information age will involve, in some sense, abandoning the game as they intuitively understand it.
Author Info: John G. Singer, principal, Blue Spoon Consulting
Company Info: Blue Spoon is a marketing architecture consultancy
Contact Info: john@bluespoonconsulting.com,
www.bluespoonconsulting.com,
917.538.4239