The Cloud, and why it is so important

Cloud futures

View more documents from Graeme Wood.

The first time I heard Kevin Kelly talk about the move from millions of computers connected BY the internet to one computer that IS the interent, in his TED video on The Next 5000 Days of the Internet, a lot of cloud/semantics/NLP/mobile ideas started to converge in my head, and the more time has passed since, the smarter I think the description is.

Microsoft know that cloud computing is a fundamental part of their future as a software, advertising, and increasingly hardware business, so when I was asked to introduce a cloud/futurology session at a Microsoft conference at our place, Kevin Kelly's views on machine intelligence seemed a suitably controversial place to start. I've posted my slides with some notes - all views and challenges appreciated!

Mary Meeker Morgan Stanley deck for June 2010

via morganstanley.com

So there is a lot of data in here, and most of it is extremely usable. For example there's quite a lot that is an update of the Oct 09 State of the Internet report that explained how smartphones differed in internet usage. Essentially Apple and Android OS had a share of mobile internet usage disproportionate to their respective marketshares. This data came from April 09, when Android v1 was on two handsets at under 1% global share, so this slide shows exactly the same trend a year on for Apple OS, but an evening-up of Android share (but of course Apple and Android both have a far greater share of the handset market now). This suggests that Android is not competing with Apple at the top of the market, but is providing a broad base of tier 2 smartphones between Apple and the traditional players. On Android devices the mobile internet experience is less good, but the app market is sufficiently well developed to make this an alternative. So share of app usage on Android is far ahead of marketshare. If you are planning mobile internet strategy this is a useful insight.

There's reams of other stuff in here too - anything that you need to explain about how the internet is changing there will be stats to back it up in this deck.

Posted via web from Graeme Wood

Record Companies, Bands and the concept of value

(Image used with thanks)
I've never really believed that telling people not to do things was a good way to stop them doing them. The War On Drugs for example has been pretty comprehensively won. By drugs. We are not a logical economically minded species, so changing how we behave changes how we think, not vice versa. And the simplest and most effective way to change how people behave is to make it worth their while - to give them something of value in return.

The idea of enforced behaviour change is in the news at the moment as the Digital Economy Bill has among its aims the toughening of copyright law online. In fact, this is seen as such a significant issue for the British economy that the government is willing to sacrifice on our behalf such seemingly useful things as Wifi (which will be too great a risk for any business to operate), fast broadband (which ISPs will be disincentivised from investing in as their focus will be on steaming open our digital mail), and internet access as a human right (as anyone who doesn't have a decent understanding of home network security can be disconnected from the internet in punishment for what their children or neighbours do). The opposition agrees that although there are parts of the bill that are even worse, they will let the copyright law stand because of its importance to the UK creative industry.

So let's ignore for a minute the fact that large parts of the UK creative industry, particularly those involved with music, don't agree, and have a look at the value transaction in a music purchase.

Record companies developed their business model through the scarcity of resources required to create and market recorded music: recording studios, musicians, pressing plants, distribution, access to radio stations to promote. These scarcities have changed beyond recognition since 1999. With a few $$s investment in software, any computer made in the last 5 years is a fully equipped recording studio (no extra software needed if it’s a Mac). No music now needs to be recorded onto anything. Myspace and a bit of talent can break a band far better than any radio promotion (not hyperbole – the Arctic Monkeys are the fastest selling week 1 debut in history). The scarcity problems that the record industry fixed no longer exist. Clay Shirky talks about this disappearance of scarcity problems in answer to Murdoch's claim that "Web users will have to pay for what they watch and use" by pointing out that this is only half of the equation:

“Web users will have to pay for what they watch and use, or else we will have to stop making content in the costly and complex way we have grown accustomed to making it. And we don’t know how to do that.”

In the record industry things are slightly different: most people know how to stop creating in the costly and complex ways of the past, but they still want to charge the same amount of money for the product. Which, like the newpaper industry is freely available elsewhere. But while we are left with a near perfect distribution model, there is still a healthy supply and demand. It's just that the intermediaries, the industrial organisations who previously matched supply with demand, are no longer necessary. Supply and demand in recorded music still have two important discriminators: on the side of the vendor, talent to produce music better than the alternatives, and on the side of the purchaser, convenience to consume that music in the way they want.
(Image by Flickr user Mick Yates - used with thanks)
Talent has always been a scarcity: in fact that is why recorded music was developed - because it was more convenient than using actual musicians. That is a compromise, as having actual musicians play for you is a better experience. But the convenience makes it a worthwhile compromise. However as the creation and distribution of recorded music has become next to frictionless, more people are exposed to more music and demand grows for the scarce experience of live music (witness the growth of festivals - pre-Napster the UK had 2 or 3 major festivals each summer: now we have 2 or 3 major ones each weekend of summer). Now this is crucial in the search for music value, as the musicians who are distributing the most recorded music will be in highest demand for the extremely scarce/valuable live music market. So recorded music is essentially advertising the bit that makes money for performers (with the potential to charge for it if it adds to convenience).

Convenience means portability between devices, and it means always available, and crucially it means participatory and recombinant. Those same computers that record music for free also remix it. So that's another element of value: status ("I created this").
Of course, what that all means is that DRM is the antithesis of value in recorded music. Well let's face it, we knew that anyway, but it is worth bearing in mind as music moves to the cloud (convenient). As Techcrunch pointed out this week, many online music retailers are embedding personal identification in the file so that there is the potential to block cloud uploads of anything that was not purchased online (ripped CDs for instance).

So obviously free music downloads harm record companies, and record companies don't want to be harmed. But no-one cares about the intermediary so much of the BPI PR focuses on the artists themselves. This is all based on the premise that if record labels aren't making as much money then that is bad for the industry. The Guardian have been tracking this closely, and this article lists a range of companies profiting from music even while album sales are falling. While they include Spotify, We7, Nokia, Shazam and Apple, they also miss the more obvious ones: Live Nation, Ticketmaster and O2. What all these have in common is that they are not traditional players in the music market. What they don't all have in common is passing their profits on to musicians. Spotify is useful case study: aside from the slick interface the real stroke of genius that allowed Spotify to scale quickly was to avoid the endless legal wranglings with record labels over payments (at least in Europe - they are still bogged down in the US). This allowed them to quickly access most of the music that you might want to play on the service. And they accomplished this by making sure that those payments went to the record labels rather than the artists, by effectively paying in Spotify stock. This is a cap table for Spotify (from this piece on Techcrunch, which also investigates what price the labels paid for their stock)

Shareholders in Spotify on 10/7 2009
Bolag Andel
Rosello (Lorentzon) 28,6%Instructus (Ek) 23,3%
Northzone Ventures 11,9%
Enzymix Systems (F. Hagnö) 5,8%
Sony BMG 5,8%
Universal Music 4,8%
Warner Music 3,8%
Wellington IV Tech 3,8%
Creandum II LP 3,5%Swiftic (Strigéus) 2,6%
Creandum II KB 2,4%
EMI 1,9%
Merlin 1,0%
SBH Capital (B. Hagnö) 0,8%

Helienne Lindwall in The Guardian suggests that the labels paid roughly 1/1000th of the price that other investors in the service paid. This would certainly have made negotiations on the price per stream simple - they would be kept artificially low to minimise the amount that had to be paid out to artists. Spotify has been removed from the Guardian's Fair Trade Music Business list
So there are grey areas even in the proposed saviours of the traditional music business. And 'value' is very different for fans and artists than it is for the intermediaries. And back to my original point, why won't artificial scarcity (of the kind supported by the Digital Economy Bill) work? Well, apart from it being counter to the way the internet works? The internet (in its earliest guise as ARPANET) was developed as a peer to peer system. One of its early benefits was the potential to maintain government communications in the event of a nuclear attack on the USA. This is because P2P systems route around blockages (an inexact analogy might be to say that they treat blockages as wounds, which they are able to heal). Although consumer access is nowadays based on a server/client relationship mediated by ISPs, the internet remains a global P2P system.

Other than that it won't work because telling people to change their behaviour doesn't work. It's currently not working in France, where total free downloading is up by 3% since the introduction of strict HADOPI laws last year(chart from Arstechnica, stats from M@rsouin, CREM, Universite de Rennes).

and because potential of the internet combined with the creativity of musicians and developers means that there is plenty of value for anyone who has good ideas and talent. So after this little rant I'm going to quit whinging about the record industry, and celebrate great marketing ideas from those creative folks.

Things to watch in 2010

Okay this is a little late, but I wanted to have a think about some trends for this year. I'm deliberately not saying predictions, as this is all stuff that is happening, and in most cases I realised that I'd already written about the stuff I think will be important this year and don't have much more to add (we are only five days in after all). So I'm just going to link to the original posts rather than paraphrase myself.....

Location
Don't want to burst the bubble, as there is so much potential in always-on location-aware map-enabled applications, but I can't see Foursquare or Gowalla going mainstream this year. They are much more like where Twitter was two years ago. Proof?The 'also visited' section of a UK Trends for Websites search on Foursquare. We like it, no-one else cares. I think the overall rise in knowledge of and usefulness of location-enabled applications will mean that unless a killer app is launched before Q3 then this will be a slow burner (if 1/2m Android v2 handsets are sold before June then the satnav application alone might do it. Other than that I'm holding out for Foursquare turning Glastonbury into an actual competition with the whole festival for who saw the most bands, while Orange turn the festival guide into an AR app complete with on screen menus and pricelists for every food stall).

The year of mobile
Of course it will be the year of mobile. Just like last year, and the year before that. But more so. The iPhone has revolutionised not just the mobile market, but overall technology (ie communications, entertainment, everything else we use it for). Hyperbole? Well the sales figures agree: Mary Meeker's slide shows the speed of penetration of the iPhone/ iPod Touch compared to the previous fastest growing tech products (and a couple of other big hits from Apple's own categories). And why is this important? Because everyone else is catching up. Google/HTC, Motorola, Nokia, RIM are finally competing in a market that has changed beyond all recognition from the unwieldy backwards mobile landscape of 2006. And they are doing so by providing products that acknowledge that always connected technology based on ease of use and access to entertainment, friends and, well, pretty much anything that you want finally delivers on the promise of the mobile internet. Another lift from Mary Meeker shows the comparative market share and share of the mobile internet by mobile OS. The key stats are iPhone global market share at 11%, and share of mobile internet traffic at 65% - the opposite skew from traditional handset manufacturers RIM, WIndows and Nokia/Symbian. That is revolutionary. It means that using an iPhone means that you will use the mobile internet in a completely different way to someone who doesn't. Also worth noting that Android relative share back in April 09 (so Android v1) is skewed exactly the same way as Apple's - as Android is groing to grow exponentially on much better handests this year this is just as important. And if Nokia's N900, and the expected new releases from RIM and Microsoft are in any way competitive then they will work in the same way too. So yes, the year of mobile will be as true as it was the last couple of years, but for a lot more people.

While mobile applications will carry on growing at exponential rates across more devices, the Google Voice/Apple AppStore dispute shows where apps will start to develop over the next 18 months. As Apple wouldn't allow a web-based phone service in the store, Google rebuilt the app's functionality as a web app. As mobile processor speeds increase and browser functionality improves, websites will be able to do much of what apps can. The rationale for apps will be based on deep integration with the phone's core functions. Anything else will be a bookmark. I don't think that this will happen to any great degree this year as the handset technology isn't there yet, but brands should be asking of marketing-based applications whether they could be better served by a well made site or web app.

HTML 5
A little bit out of my comfort zone on this, but I'm told it'll be ace. I haven't learnt much more since I wrote this

Real Time Search
I'd defy anyone to have predicted the speed with which Twitter took over the British media in the first few months of last year. By summer 2009 Google's search results were starting to look very antiquated: a search engine that could pull up results from 2 years ago when you were looking for a breaking news story? How quaint. And to be fair it didn't take long (roughly $25m) for both Google and Microsoft to access Twitter's (and in Microsoft's case the increasingly public Facebook's) real time stream and start to include them in search results. As Google roles out Caffeine over the next few weeks this will start to have an interesting effect on brands' attitudes to social marketing.

Brands that aren't regularly discussed in social environments have largely tended to avoid showing too much interest in them. In many categories these are brands for whom the internet plays a vital role all the way along the purchase path from research to transaction: ie those who rely most heavily on search results. Google's search algorithm ranked sites based on reputation (of the site based on links) and relevancy (of the content to the search query). As Google becomes able to analyse sites based on their visitors' social graph, this adds a new level of reputation to build into results. The ROI of social marketing? How about the ROI of SEO?

Obviously it is very early days for how Caffeine will affect search results, and the main real time pipe feeding Google results at the moment is Twitter's. For all the hype, actual regular Twitter users are still in the minority. However if Facebook succeeds in convincing even a fraction of its 32m monthly UK users not to change the revised privacy settings it imposed on them last month then this could rapidly start to have a significant impact on how search engines view brand websites (NB. Not Google, as Facebook won't share with them)

Online Identity
The first question that agencies and marketers should ask to gauge how good an idea or a proposal is this year is this: Does it properly integrate Facebook Connect? If it doesn't, you could probably do better. If it doesn't use it at all, you probably aren't doing it right.

Charging for online news
Murdoch's plans for charging for content haven't gone away, but then they haven't got any firmer. I've written a couple of posts on why i don't think it is a good idea, and on how it might work out, and there isn't really anything new to say other than it is definitely happening, and definitely happening this year.

The internet on TV
Considering how far the internet has come in the last year in getting TV onto our computer screens I'm amazed at how utterly difficult it is to do the opposite and far more rewarding job of getting internet TV onto the TV screen. I wrote about this exactly a year ago and thought we'd be a lot further down the line. So Windows 7 came out, Windows Media Center worked great, no-one really used it to run a home entertainment system as they didn't trust a Windows machine to do that; Apple didn't care about Apple TV, LG and Panasonic are still working on release dates for internet enabled TVs, Kangaroo died, Canvas is still a year away. I'm currently trying to build a new TV system so this is partly borne of frustration (and the subject of another post....) but my view is exactly what it was this time last year: the market is backwards looking and stifling innovation. Sound familiar? Music in 2003, Mobile in 2007, TV in 2010. I think Apple are all over this.

Companies to watch -
Polar Rose
Currently makers of facial recognition apps that tag your Facebook photos for you, Polar Rose have just recruited a new CEO from the mobile industry. His job will be to make the video below, real time facial recognition technology, come to life on mobiles, and more generally to make computers see. The internet of things is all very well based on data, but these guys are thinking about genuine visual processing.

Boxee
I've spent a fair amount of time tweeting about TV programmes over the last year, and I'm not the only one. While the main benefits of Boxee are around getting internet content onto the TV screen (their software already does a great job of this for the laptop screen, and the set top box to connect to the TV screen is on sale in the next few months), it also pulls a viewer's social profiles into the TV experience to create integrated social TV. While C4 will get more press when they integrate Facebook Connect across their site in the next couple of months, Boxee is a genuinely new product based on convergent technology that integrates social graphs into the viewing experience.

Microsoft
.... in a way that XBox users will be very familiar with, as Boxee software is based on Microsoft's open source XBMC (X Box Media Center) OS. Which has been integrating social graphs into XBox Live for months. So why a one to watch in 2010? Because Windows 7 was a return to form, and the music and mobile strategies are rumoured to be receiving similar overhauls imminently? No, becuase that is simply keeping up to date with what Apple and Google are up to. Xbox is the big revolutionary play, as from the looks of Project Natal it will do for consoles, in home entertainment and communications what the iPhone did for mobile and computing. Rumoured to be live before the end of the year, this is one to look out for.

Augmented ID and new viewing screens

Awesome or Scary?
The basic AR tools are already available - Bionic Eye does simple things really well, while Layar has the potential to do a whole lot more if mobile handsets had more memory. Face Recognition is already available on social photo editors (and on iPhoto) as long as you give it something to work from: ie tag some faces and it will recognise them in future. As William Gibson said

"The future is already here, it's just unevenly distributed"

But platforms like Android and iPhone are increasingly becoming evenly distributed in the UK and US, and they offer the infrastructure and revenue potential for developers to bring the future to those handsets quickly at low cost. The Augmented ID application in this video doesn't exist yet, but it is being developed by Polar Rose, developers of one of the leading facial recognition phone applications.

I'm not sure whether this is scary or exciting. The prospect of publicly sharing your data as you walk down the street might be one privacy setting too far for some. Initially you'd be suspicious of anyone looking into a handset....

But the handset bit is also looking like it might get left behind soon. I saw Ian Pearson talk about the idea of augmented reality contact lenses about this time last year, and dismissed it as something that may happen in my lifetime but not something to get excited about. Even a professional futurologist like Ian only included them in the 2015-2020 section of his presentation.

A year on and these are in development: according to Gajitz.com,

(Image from Gajitz.com)
Babak A. Parviz, a bionanotechnology expert at the University of Washington in Seattle, has released a report detailing just where the bionic eye (or at least the augmented vision contact lens) technology is at right now, and it’s pretty amazing. Not only is augmented vision possible – prototypes are being tested right now

How long till Augmented ID happens on a head-up display in front of your eyes?

More from Gajitz here and from the BioMedical section of Spectrum IEEE Magazine here
(HT to Katy Lindemann for pointing out the AR contact lens news)

UPDATE: According to Jeremiah Owyang, LinkedIn are planning to integrate facial recognition technology into their apps by 2011.

Using mobile devices, users can quickly hold a device up a cell phone in front of a peer to see their LinkedIn data –without even having a conversation.

#IPASocial Principle 9: Change will never be this slow again

(Photo courtesy)

So I've written a few things about the #IPASocial project over the last few months, about how it got started, and how I've had the chance to chat through loads of ideas about the future of advertising and communications with some awesome folks. And now comes the important bit - the time to chat about it with everyone else who is interested. We're going to have a go at doing that in person next week on October 6th when the IPA are running an event to have a chat around what social really means for our industry. We’ve worked up ten principles to start this off, and this introduction (written by Amelia) gives the proper context:

Social Media is a conversation. That seems to be one thing that we can all agree on.

But given that Social Media is a rather noisy and opinionated conversation, what value do we think we will have by adding our voices to it?

We are not Social Media gurus. In fact we are rather sceptical of people who claim they are. We are simply 10 people from across a wide range of communications disciplines in the UK and the US who would like to share some thoughts. Thoughts that have either been bugging us or inspiring us, thoughts that we believe could form some of the building blocks for succesful Social campaigns. We came together to respond to and add our voices to some work that the IPA had done earlier in the year.

We have each defined a Principle which we feel is important in this Social world. You will find each principle up here but they are also on our individual blogs where we will be curating the conversation which we hope they will generate. Please do get involved, maybe you think these principles don't apply, are there better ones? Are there changes that you would like to make? Are there examples that you could add to help illustrate them? The only thing that we ask is that as part of the advertising and communications community that you become part of the conversation. After all the more opinions that are being shared and built on, the more interesting and stronger the outcome. At least that's what we are hoping.

Thank you in advance.

The IPA have created a hub for all ten principles, along with an overall summary of twhy this is important, written by Mark Earls. This can be found here. Everyone who has joined in so far is also hosting a principle on their blogs, so please join in the discussion there too.

1. People not consumers – Mark Earls

2. Social agenda not business agenda – Le’Nise Brothers

3. Continuous conversation not campaigning – John V Willshire

4. Long term impacts not quick fixes – Faris Yakob

5. Marketing with people not to people – Katy Lindemann

6. Being authentic not persuasive – Neil Perkin

7. Perpetual beta – Jamie Coomber

8. Technology changes, people don’t – Amelia Torode

9. Change will never be this slow again – Graeme Wood

10. Measurement – Asi Sharabi

So my thoughts are all around the underlying changes in how people communicate, and particuarly what this means for agencies

IPA Social: Principle 9 - Change will never be this slow again

“It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change.”

Change has never happened this fast before, and it will never be this slow again. This shouldn't come as a surprise; Intel founder Gordon Moore observed in 1965 that since the invention of the integrated circuit in 1958 that processing power had doubled every 18 months, and predicted that this trend would continue unchecked. So far he has been proved right, and the future of advertising is too closely linked to that of technology to escape the effects of Moore’s Law.

That isn't to say that people are changing. Without paraphrasing too much from Clay Shirky and Mark Earls, all the things we are evolutionarily disposed to do and have a cultural requirement for are simply quicker, easier and further reaching than previously possible. Most of those things are to do with other people, not technology. To get hung up on technology risks missing the point: as Henry Jenkins says,

“Our focus should not be on emerging technologies but on emerging cultural practices"

As an industry we have faced change before; early radio ads were print ads read out. Early TV ads were radio ads in which you could see the face of the person reading. In each case the rise of a new medium provoked a step change in the advertising industry, but one that didn't happen immediately. But each of those media worked in the same way, and the one-to-many assumptions of the 20thcentury about how brands communicate are fast becoming a casualty of the power laws of 21st century networks. While it is fun to speculate on how technology will change behaviour, most examples follow Bill Gates' suggestion that

“We overestimate the change that will happen in the next two years, and underestimate the change that will happen in the next ten”

Interruptive advertising won’t disappear overnight, but each change towards a more networked world will make it less relevant. We can’t predict the impact of new technologies on cultural practice, only prepare our businesses to embrace and foster change rather than reacting to it. Things are happening quicker, including irrelevance. In the words of AG Lafley, former CEO of P&G,

"..our company's success rate runs between 50 and 60 percent. About half of our new products succeed. That's as high as we want the success rate to be. If we try to make it any higher, we'll be tempted to err on the side of caution”

So the real step change for agencies is about not keeping control or making things perfect, it is about embracing business models that constantly evolve and communications that are designed to exist in beta, making the move from what Gerd Leonhard calls “protecting brands to projecting brands’. Charles Darwin said

“It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change.”

We know that species of animal can remain unchanged for millennia, and then suddenly evolve in a few generations as their environment changes. The increasing speed of communications is eroding the 19th and 20th century assumptions that our businesses are built upon. Leading change rather than being lead by it demands that we don't err on the side of caution.

Things are happening quicker....

(NB. This is part of some work that the IPA are doing on the impact of social media on the ad industry. When I say 'part', it's more like a big pile of ideas that would need sorting into some sort of order before they became part....)
The changes going on in the advertising industry are doing so faster than ever before. It is probably fair to say that they will also never be this slow again. This shouldn't come as a surprise to anyone; Intel founder Gordon Moore observed in 1965 that since the invention of the integrated circuit 8 years previously the number of transistors that could be placed on a circuit board had doubled every 18 months, and predicted that this trend would continue unchecked. So far he has been proved right, and the increases in computing power that Moore's Law describes are the reason that we are coming to talk about technology and advertising interchangeably.

That isn't to say that people are changing. Without paraphrasing Clay Shirky or Mark Earls too far here, all the things we are evolutionarily disposed to do, and that we have cultural requirements for, are simply quicker, easier and further reaching than previously. This is not a different challenge to those faced by our 20th century predecessors:
Early radio ads were print ads read out. Early TV ads were radio ads in which you could see the face of the person reading. In each case the rise of a new medium provoked a step change in the advertising industry, but one that didn't happen immediately. So if we have survived and adapted in the past, is the challenge really as great as it appears?

Well, not unless you believe that the set of assumptions that underpins how we help brands communicate might also be a casualty of the power of Moore's Law. It is fun to speculate on how technology will improve, but most examples follow Bill Gates' suggestion that

“We overestimate the change that will happen in the next two years, and underestimate the change that will happen in the next ten”

Our ability as individuals to control access to our attention is likely to be amongst these. Since the internet was invented, it has slowly grown to a point where it has roughly the same number of computers connected as there are cells in the human brain, and about the same number of links as there are connections. The number of synapses, or connections, in our brains is taken as a proxy for intelligence – it is basically processing power. So in the 18 years since the public birth of the worldwide web in 1991, the internet has developed the intelligence of one person. Moore’s Law means that all the processors, and all the storage, and all the other capacity will each be doubling in power every 18 months. According to Kevin Kelly’s calculations, by 2040 the internet will have the brainpower of 4 billion people. According to Kelly, in the medium term future we will move from computers connected BY the internet, to one single computer that IS the internet. Our devices will simply be views into it, our networks always on.

Advertising tends to be seen as a necessary evil, as a transaction in return for content, which means that the challenge that has historically faced those who work in advertising has been to disrupt, interrupt, gain attention. Increased demands on peoples’ attention has made this job more difficult in recent years, but it has still been fundamentally the same challenge. What will alter it dramatically is the shift from gaining our attention to gaining the attention of our digital gatekeepers, the devices that will increasingly filter our access to entertainment and information. If I trust my applications’ recommendations, why should I look myself? They know more about what I like than I could ever have time to. Technology simply amplifies and speeds up underlying human behaviour and interaction. Brands that are asking themselves why people would want to be friends with them should think about what the alternatives may become.

And going back to the earlier question, is the challenge really as small as it appears? If I knew the answer, I'd start the agency that solved the problem. What we do know is that it is time to test. We have been wedded to the big idea of the Big Idea for generations, but big ideas that are rigorously researched and pretested will struggle in a world of ever increasing change. Things are happening quicker, including irrelevance. The idea of lots of little ideas seems more suited to this quicker world. In the words of AG Lafley, the former CEO of P&G,

"..our company's success rate runs between 50 and 60 percent. About half of our new products succeed. That's as high as we want the success rate to be. If we try to make it any higher, we'll be tempted to err on the side of caution”

Lots of little ideas acknowledge that all we as an industry can do is to make things as mimetic as possible. It is down to the other 99.9% of the population as to whether they happen. In Sketching User Experience, Bill Buxton talks about an art college ceramics professor who comes in on the first day of class and divides the students into two sections. He tells one half of the class that their final grade will be based exclusively on the volume of their production; the more they make, the better their grade. The professor tells the other half of the class that they will be graded more traditionally, based solely on the quality of their best piece. At the end of the semester, the professor discovered that the students who were focused on making as many pots as possible also ended up creating the best pots, much better than the pots made by the students who spent all semester trying to create that one perfect pot.

So the real step change for agencies is about not trying to build that perfect pot – it’s about not worrying about the bad ones. Charles Darwin said “It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change.” We know that species of animal can remain unchanged for millennia, and then suddenly evolve in a few generations as their environment changes. As the increasing speed of communications erodes the 19th and 20th century assumptions that our businesses are built upon, our role is to avoid erring on the side of caution.

Wolfram Alpha: the next generation of Search?

The possibility of genuine semantic search being just around the corner has been around for several years. With, let's face it, the strongest contender being the bottomless R&D budget at Google HQ. So the very soft launch of Wolfram Alpha the other day (no product demonstration, lots of theory, a request for the tech bloggers invited to the launch webinar not to post screenshots, etc) shouldn't really be anything to get excited about. The product is not a search engine as such, rather a curated collection of data and statistics already available on the web. This data is organized using natural language processing in response to user search queries.

So not a competitor to the existing search behemoth, but potentially a radically different vertical search proposition. The caveat being that no-one outside of Wolfram programmers Mathematica, really knows what verticals, or how specialist.

However, two days after the demonstration, on the 1st of May, some screenshots started to appear, principally on ReadWriteWeb. These show the output from Alpha from research-orientated search queries:

"Internet Users in Europe"

So automatically outputs a range of the most relevant data relating to the query. As a contrast, I ran the same search in Google, and received this set of results :

"Internet Users in Europe"

There might even be some of the same data there, but to me the Wolfram results look much more usable: you wouldn't need to go any further with the query to have a reasonable set of answers. Google is more about giving you a starting point to look for more.

I don't think that this is in any way a 'Google-Killer', but I do think that I will get a huge amount of use out of the Wolfram system. I've been building my network and tag history on Delicious for a couple of years to get to a point where I can use Delicious as a starting point for most advertising/marketing/planning/digital related searches, but I also work in finance, travel, charity, youth, auto and sports sectors, and there isn't (as far as I have been able to discover) enough Delicious history or users in the UK to make these worth developing. NLP seems like the obvious successor to social search, and so I hope to be able to write up how I have been finding Wolfram in a month or so's time after the Beta launch.

Virtual MultiTouch - 3D entertainment controller

Swiss tech designers OZWE have created a virtual interface that replicates the iPhone screen's control surface.... controlled by gesture in 3D! According to TechCrunch,

Think of the convenience of multi-touch gestures applied to all your media, and not limited to a small patch on your laptop. Raise your hand and make your fingers into a shelf, then lower it the volume decreases. Spin your finger around clockwise to fast forward, counter-clockwise to rewind. Speak the name of a song, or the track number, or hold up an album cover to play it. This from anywhere in the same room as the QB1 or whatever successor makes good on these ideas

That's right, not just controlling the audio functions, but actually selecting tunes based on picture recognition (moot point - who has album covers any more?). Anyway, the video isn't embeddable, but can be found here

Faris wrote a couple of months ago about Pattie Maes from MIT's TED talk showcasing the wearable web, and this announcement shows that this type of tech is nearer than we think.

David Armano on the Future of Advertising

The Future of Advertising. WTF?

View more presentations from David Armano.

Sure most people will see this without me posting it, so if anyone has accompanying notes i'd love to see 'em 

...or just remove the word 'paper'

After yesterday's post on the future of newspapers or lack thereof, I was pointed towards an elegant summary of the thoughts that inspired it

"Just remove the word 'paper', and talk about the future of news"

Job done. (thanks @lickbrain)

Betting against the future

I used to work on a financial spread betting client, which involved learning a lot about how that sector worked, how people with different attitudes to risk used the site, what helped someone using the site for the first time start off with realistic expectations, etc. The main thing that every serious spread better is looking for is the 'edge' - the approach or the knowledge that will make them successful. The simplest approach is to watch out for news stories or interviews and be able to react quickest; many spread betters never get beyond trading this way. However, it is time and labour intensive and relies heavily on luck.

So the article in the Times today in which the CEO of EMI explains why his company will be betting against the 21st century and investing heavily in the 20th reminded me of this. The skill in spreadbetting off news stories is getting information about something about to go wrong, and then selling it before the market does. If I had the time or money to still play around with these sites, I would be selling every bit of EMI I could get my hands on. Any sort of long term bet against this company's future looks a pretty safe investment. As The Music Industry Manifesto points out , this is a corporate suicide note. Actually, it's not even that: a suicide note shows intention, whereas this interview just shows lack of understanding at a fatal level (in the same way that intentionally jumping in front of a train would be suicidal, whereas not realising the danger of playing on train tracks is fatal stupidity).

You might expect that Terra Firma, the VC that owns EMI, might be considering backing a more clued up CEO in the near future.
(Hat tip to Jonathon MacDonald for the sources)

mobileYouth talking about the future

When we think about the future of anything it is difficult to frame it in anything other than what the present, or at least the recent past, is like. I've seen (and borrowed) a few people's ideas on how our late C20th experiences may be actually be the anomaly in the transition from pre-industrial brands to a networked society - Karl Long, Rohit Bhargava and Andy Hobsbawm particularly.

So I wanted to share this deck from Graham Brown at mobileYouth, mainly because it is a great analysis of what has changed and what is changing, using education analogies rather than the production line ones that tend to explain our changing economy, but also because it looks so good and I want to remind myself next time I'm writing something on Powerpoint what presentations should look like. Enjoy!

The Next 10 Years by Graham Brown (mobileYouth)

View more presentations from Graham Brown. (tags: mobile attention)

Television: The last ten feet

I had a look back at some 'what media will look like in 2010' predictions that I wrote about 2 years ago (before I started publishing them for posterity....) to see how I was looking. Obviously the less said about my mobile industry predictions the better (I didn't see the iPhone coming, therefore I'm wrong. To be fair the same thing happened to Nokia, Sony Ericsson and Palm, so I'm in good company)

The TV views struck a few chords though, as there are a couple of wild guesses that 2009 is already starting to make reality.

By 2010 there will be no such thing as TV as a media channel
Ouch! Not something borne out by viewing figures or advertising. What I mean though is that there will be no difference between the various different screens that we have in the home. The PC screen will become outdated as we are able to stream TV directly from the internet..... yes, I know we can do that at the moment, but the spate of internet-ready TVs announced last week at CES shows that the hardware manufacturers know this is an idea whose time has come. This will allow us to cross the 'last ten feet' between the computer and the TV screen. Interestingly they all seem to be doing deals with content owners to create bespoke IPTV set-ups rather than just sticking WiFi in. So packages of Netflix, Boxee, Hulu, YouTube etc will be pre-installed, but in some cases there won't be general browsing. To do this you need to connect a computer to the back of your TV. Which for most people means either knowing how to install cards, fighting with Windows, dealing with hardware incompatability, or buying expensive Apple gear. And have big fat computers lying around in your lounge

Fortunately for those of us who can't afford Apple systems to audio-visual up our homes, it looks like Windows 7 might solve many of these problems by Not Being Shit, which is a radical departure from much of Microsoft's recent work. This will give us the possibility to simply connect the computer to the back of the TV and browse/listen/watch away. And the computer in the lounge is far less of a problem now that manufacturers are listening to what we want and making them smaller.

To be honest, I expect to see something from Apple this year that means this will soon all seem as outdated as cd shops. Don't know whether it will be Snow Leopard, a new generation of Apple TV, or iTunes as a PVR rather than a store, but this is a category so ripe for innovation that Jobs and co must be about to shake it hard.

So basically we will not talk about TV any more, because where the TV used to be will also be the internet - probably called video (?). And because TV will also be on the smaller screens in our pockets that used to be called mobile phones. I'd expect that using a much more integrated and intelligent version of the technology powering Slingbox, which beams AV content from your TV or computer to whatever device you want to view it on, that the TV and the mobile will be talking to each other. So for instance if I had been watching a football match at home but have to go out before the end, I should then be able to pick it up where I left it when I get on the train.

And what does this mean for advertising?
The current system of TV advertising is starting to buckle under the strain of increased DVR ownership. I have written in the past about why I don't think that we really understand viewing of TV ads in DVR owning households, but there is real potential in some of these technological developments to dramatically improve the role and impact of what used to be called TV advertising.

Personalised ads
The developments being made by Virgin and Sky appear to be based on behavioural targeting as well as demographic information (the danger with demographic targeting that isn't based on a BARB-style panel is that it confuses family members who are all viewers of the same screen). While not a perfect system, as the classic Tivo targeting dilemma My Tivo Thinks I'm Gay shows (link to the article text rather than the original WSJ piece, as get this, the WSJ is still subscription only. On the internet!), this is still an improvement on current TV targeting.

From a media planning perspective, there are times when I want to broadcast 30" in the old-school style. However, there are also many times when I'd prefer to have the option of showing 120" of great content to people who I know are interested in it (ideally I would know this because they had told me - by saying 'I really like the stuff this brand makes, please show me more of it as it is often better than the programmes' rather than 'I don't not allow you to not use my personal data for marketing purposes (tick here if you disagree)'. In almost all cases I'd rather invest in ads that are going to appeal a lot to fewer people than not appeal to the large number they are seen by (see Digital Mindchange for a more detailed analysis of the trade off between scale and involvement). Untargeted advertising leads to boring ads, which contributes to boring brands. As we are able to filter out more and more ads, there is no need to watch boring advertising. Personal targeting will allow more good advertising to get on air, as we all have different views of what constitutes 'good'. Adding geo-demographic data to behavioural would start to build a more rounded picture of individuals, so merging the three systems together would give us something significantly more accurate than we currently have, and should allow more enjoyable advertising to be created.
(see here for more on my thoughts on what might happen to advertising in future: it is a long post, but points 30-32 are the relevant bit)

Broadcasters
The role of the broadcasters is an interesting one in this debate. Virgin already have a lot of personal data as they know what on-demand programming has been watched by their households. As there is no reason why you wouldn't have their superfast internet access as well as their TV services, you would expect they would have rather a lot of IP data too. While Sky have been slow off the mark with advanced internet access (as their infrastructure is so satellite-based), I have a sneaky suspicision that they know more about us than they are letting on. That phone socket that runs out of the back of the Sky+ box is apparently to update the EPG. Because this can't be done over the satellite dish which is busy streaming HDTV? Sounds unlikely. In fact, when I unplugged the phoneline the EPG was just fine. In fact, it has been working just fine for a month without it! It is used to buy movies etc, but there seems to be a lot of data coming OUT of the Sky+ even when you aren't buying movies. The media planner in me hopes that this is marketable data, while the normal person in me thinks it is a bit suspicious.....

And where does that leave the terrestrial players? Let's leave Kangaroo to one side, as nearly a year after launch it still shows no signs of being out of court any time soon, and in any case is likely to have been eaten or beaten by the UK launch of Hulu when it finally does. What is interesting is that this shows that they are all able to play nice together when it suits them to do so. As ITV, C4 and Five (not too mention the commercial juggernaut that is the modern day BBC) are all missing the viewing data that Sky, Virgin and BT all have, can we expect to see them pooling data when they launch? As revenue will come from audience numbers and these are different to actual viewing habit data, maybe the answer will come with a swift reform of BARB that shares viewing data across all (ex-) terrestrial channels.

For more on this, check out Simon Kendrick from ITV's more objective take on the subject

Media Trading
The real value to broadcasters and content owners here is twofold. Firstly, if all devices are synchronised and personlised then they should be able to serve totally personalised advertising to individuals across multiple platforms: so once I have seen a set number of ads for a new product (and I mean 'seen' not 'been exposed to'. There is a fundamental difference that we don't seem to get in the UK in the way that they do in the US) then a money-off ad will be served to me the next time I'm near a suitable shop (or SMS-ed if I subscribe to a service like Blyk, or as an audio ad if I'm listening to Spotify, etc). The main point being that it doesn't matter what 'media channel' it is being served through, as everything is transmitted in the same way, and appears on either a large screen or a small one.

So far that isn't a particularly radical idea as it is only taking what ad servers do now and synchronising it across multiple screens. Where I believe media owners have a chance of making their scale relevant in the future is by assigning value to individuals. Selling large numbers of eyeballs belongs in the last century, but the thoughts behind those eyeballs are worth plenty.

WTF is he on about?

Well let's take the concept of a personal CPM, as proposed by Marian Selzman at JWT (and as I can't find a link to it, here's one from Charlene Li that refers to it). This assigns different value to individuals based on their influence across networks: how many contacts and how much online authority they have. It will no doubt be the ad model for Facebook Connect and Google Friend Connect. But there are only certain categories like music and technology where this is really relevant to advertisers, and the really authoritative individuals would likely know about things that interest them before an ad agency even has a brief. However, say a broadcaster could use behavioural targeting to work out what I am likely to be buying soon, and can then sell the potential of my attention to the highest bidder. If I was starting to research buying a new car, then my price to auto brands will go through the roof. As I start comparing prices, I should only be seeing the latest discounts from all my local car dealers. They will be paying through the roof for these ads, and they will be worth every penny, as I will be interested in watching them and will imminently part with a large amount of money to the one with the best combination of product and price. However the ads for say a beer brand that I see in the same break will only cost a fraction of the price that the auto brands did. And rightly so, as my attention is worth so much less to them.

Conclusion
So I think there are enough ideas, launches and rumours coming out of CES to suggest that we will be crossing the last 10 feet in the next couple of years. We are clearly going to see the initial tests of personal targeting of 'TV' advertising, but I think that it will be very hard in future to see the difference between TV and online ads. This raises the threat for the current big players of the arrival of some much bigger ones. Those that innovate now stand a chance of maintaining a distribution and ad sales platform in the face of direct competition from Google, Apple and Microsoft, while those that don't will just be content manufacturers.

You are. Is it? Does Independent mean digital only?

Ok I wanted to come up with some awe-inspiring 2009 predictions about the future of media, advertising and the meaning of life (well, my geeky advertising techy life anyway). And to be fair I got a few…and then read what Peter Kim was curating, and it didn’t seem so groundbreaking any more. So looking at next year there was one over-riding theme

Well, hopefully not, but you know what I mean. But with all the talk of closures, losses and other economic related FAIL, one theme that seems unavoidable is that there is going to be a big casualty or two in the UK. And casting around for candidates throws up some unpleasant thoughts. In previous recessions, companies that invest in and build their brands have tended to grow at a greater rate in relation to competitors than they would in normal economic climates – due to less competition, greater share of voice, lower cost of media, etc. Actually The Economist sums it all up here

Ads on Edge

View SlideShare presentation or Upload your own. (tags: branding recession)

Obviously not everyone can afford to invest in their brands (that’s how the theory works: if 70% of your competitors cut their marketing budget as other costs are fixed, then share of voice is there for the taking. The 30% will see the benefit of their consistency through the years of recovery. Sorry for lack of links but it’s all in the slideshare deck). Amongst the traditional great and good of the UK media scene, there’s clearly some that can and some that can’t afford to invest, so those that are already struggling are where the first casualties will come from.

The TV market has its back firmly to the wall at the moment, but although I have been sceptical of Thinkbox in the past, they are absolutely right in saying that the country will be watching a whole lot more of it next year. Although that doesn’t mean more income for broadcasters, the model is far from broken, and (ITV share price aside) the big players will batten down the hatches next year.

Looking at the world of national press is more frightening though, as the medium has been managing decline for many years. Looking around for the weak and vulnerable here brings a bit of personal sadness here, as my introduction to the world of media agencies a few years ago was as a sales rep for The Independent, and state of my former employer now is downright scary.

Circulation on going fully tabloid (Jan - March 04) - 258k
Current circulation today - 201k

Full price UK circulation 2004 - 223k
Full price UK circulation today - 119k
(all figures Audit Bureau of Circulation)

Massive underinvestment over the last few years has meant that the world of digital sailed past without anyone noticing. The gulf between the Indy and the Guardian in press looks big, while the digital gap looks insurmountable.

Having spent a year of my life trying to convince people who really don’t care one way or the other of how great The Indy is, some of that has clearly sunk in and I’m struggling with the negativity of writing this…

So instead I thought I’d have a look at what can be done about it.

Well first you can’t manage decline in 09….

Reducing overheads by sharing office space and support staff is clearly a vital move to buy time, but looking at the figures it won’t buy much. Putting the cover price up from £0.80 to £1 seems totally short-sighted unless the additional sales revenue was needed to keep the paper afloat THAT WEEK. Otherwise it just gives the ever-decreasing readership an opportunity to reconsider the newstand and see whether their brand loyalty is worth a 25% price hike in a climate of cutting their outgoings.

The Indy titles are as or more dependent then their better funded competitors on Retail, Finance and Auto categories, and it doesn’t take Nostradamus to predict that there won’t be much ad revenue from there next year.

(% of ad revenue from Finance/Autos/Retail)

I think there is a real opportunity here to change the game. Other than genius, the main advantage that Apple have had when revolutionising first music retail then mobile phones was that they weren’t trying to protect a legacy business. There were no existing vested interests to water down the business model, the design, or the idea.

So this isn’t the case for the Indy, but if you have a brand that will probably not be here this time next year unless it does something radical, and is already a loss-leading figurehead for a larger global plc, then you are going to have to think like that.

Fixed costs for a newspaper are all based around content (journalists), production (paper and printing) and distribution (physically carting the thing out to newsagents to try and sell to people who are busy checking their RSS feeds). None of this will change just because there is a recession on (except they will all be housed in a different building and their accounts done by the Daily Mail). All that has changed is that their scarcity business model is no longer valid. Income on the other hand is reliant on copy sales (down: see above) and ad revenue (down: see the news). Both hugely variable and not in a good way. Now this isn’t the first time that the paper has found itself in this position: the launch of the tabloid in 2003 was said to be a last ditch attempt to save the paper, and it not only worked, with sales up 21% after the first year, but it was copied worldwide.

And this is all totally consistent with the values and heritage of the brand. The Indy was launched as a response to a formulaic rightwing royalist press in the 1980s, and has tried to break the mould whenever it could afford to since. The viewspaper concept of running single issue analysis-based front pages, the avoiding all royal family coverage, taking minority sports seriously, anti-Iraq war, all innovative stuff for a newspaper. However having run with the idea that we don’t need breaking news on the front page of a paper as we already know it through 24-7 media they failed to invest in the sort of 24-7 media that would also allow readers to choose to opt in or out of all the other innovative stuff. They are failing because they aren’t being true to the brand. The ad campaign that launched the paper drove sales of close to half a million by asking

It is. Are you?

Now the tables have turned.

You are. Is it?

Because the core readership for the Indy is still far younger than the Times and Telegraph, and more financially literate and business orientated than the Guardian. Young, affluent and techy. Brands’ favourite people. But not people who like turning up for work with ink on their fingers.

The Indy isn’t the only one to feel the pinch though: according to a recent column, former Guardian editor Alan Rusbridger believes local papers should be supported by public funding. In France print unions seem serious in suggesting that Google owes them a living now that out-of-date scarcity business models can’t support them any more.

So what is the solution? Scott Karp talks about newspaper execs having to think about how they would survive if forced to move out of print. This is exactly what those established US publishers that he is referring to should be doing, shoring up their digital assets and looking at how their brands will maintain a share of the revenue that moves out of newsprint. But not the Indy: it is too far behind the digital curve already for digital revenue to make a difference. They need to think what Apple would do. Okay, probably not quite as cool as what Apple would do, but think about how to redefine the category. What replaces print? It needs to be as mobile as print, but as connected as a mobile. So a mobile then? That really doesn’t do it justice: reading heavy text-y articles is about the least fun you can have on the mobile internet and is only marginally less bad on a proper browser like the iPhone.

The Kindle on the other hand was designed for reading text. So was the wave of competitors sweeping in from Japan. None have launched in the UK yet, although the Kindle has taken the US by storm this year. They make newsprint sexy again (or is that just booky-geekness?) One of the most profitable areas for a newspaper publisher is subscriptions: if you make sure readers pay you something every day, it doesn’t matter if it isn’t very much. The Telegraph for instance does 25% or so (might look it up and post a correction, but it's getting late...) of its total circulation through subscription – readers guaranteed every day. Digital print reading devices have no advertising model. If someone decides to bring them into the UK on an adfunded model then it is not out of the question that they could persuade some media agencies that 25x4 ads, or the 5” screen equivalent, were a more realistic way to advertise on such devices than banners. And that this could then be added on to press campaigns that would formerly have run in newspapers…..

So if you can maintain the variable income such as it will be in 2009 by maintaining ad revenue in a way that looks like print, but cut the fixed costs by not printing any more and distributing digitally, then the economic model starts to look more robust. Except of course no-one has a Kindle, and as I've suggested above a mobile phone, even an iPhone, won't cut it. So how about The Independent moves one step ahead of the game into the technology business. Skip all this creating digital content that their traditional competitors have been mucking around with. Don't worry about trying to be a TV channel. Just provide a subscription model that includes the cost of a year's worth of content (which in an attention economy of course is free really, but let's take this one step at a time) and more importantly a device to play it on. Oh, and do it in time for Xmas, as it will be a great gift. Doh!

This is a little bit slash and burn as survival plans go, and does beg the question what will be the strategy in 2010. But the brand will still be around then, some of the staff might still be employed, and the future of newspapers will be rewritten. And if the 2010 plan doesn't work, at least you went down fighting. Good luck!