It’s the Age of Google and Sorrell has no time – or money – for Twitter

April 29, 2013

Martin SorrellThe most interesting thing about WPP Group’s first quarter financial results were not the numbers, but its chief executive’s obiter dicta.

The numbers themselves were a curate’s egg. They beat the revenue forecast, bizarrely enough they delighted in Britain, but they disappointed in the United States. Which is just about the only part of the world economy currently showing signs of dynamism.

The obiter dicta, on the other hand, were curiously memorable. WPP CEO Sir Martin Sorrell used the occasion (well, near enough: he was actually speaking at the FT Digital Media Conference the previous day) to highlight a singular phenomenon. So far as his company is concerned (and it  is, after all, the number one spender of advertising money in the world), Google will soon become a bigger destination for his clients’ money than the biggest traditional media owner in his stable, News Corporation. Google is currently in receipt of $2bn of WPP’s quarterly spend; while NewsCorp gets about $2.5bn. But, given the Google figure represents a 25% increase year on year, it can only be a short time – Sorrell assures us – before the search giant moves into pole position.

I say “search giant”, but that of course is history. Sorrell’s underlying point is that Google – after some initial fumbling – has made the transition from a techie company, peopled by nerds, into a multi-media corporation with global reach. He calls it  “a five-legged stool”: there’s search (of course); display advertising; social media (google+); mobile (via Android and AdMob); and video through YouTube.

Note well where Sorrell places his chips, however. From an advertising point of view, the Age of Google (as he calls it) is primarily defined by video. YouTube has made big inroads into what traditionally would have been television viewing. He’s bullish about mobile, too: Android is now the most popular smartphone platform and in some developing markets, like China, it accounts for two-thirds of all mobile sales.

But social media: Oh dear, what an advertiser’s no-no! Yahoo, though generally lacklustre these days, garners about $400m of WPP spend. Facebook, infinitely more successful with its audience figures, receives only $270m. And Twitter a lot, lot less. What’s the logic? Well, Yahoo “gets” the commercial need for a five-legged strategy (indeed, TechCrunch speculates it is about to buy Dailymotion, a smaller competitor to YouTube). Whereas Facebook and Twitter do not. Facebook, Sorrell reckons, is important for brands – but in a negative sense – absence of criticism, which has little to do with any advertising content. Twitter, on the other hand, is simply a PR medium with almost no value to advertisers.

“It’s very effective word of mouth,” Sorrell told Harvard Business Review last month. “We did analyses of the Twitter feeds every day, and it’s very, very potent…I think because it’s limited in terms of number of characters, it reduces communication to superficialities and lacks depth.”

Maurice Levy, CEO of Publicis, speaks during the Reuters Global Media Summit in ParisThat last may sound a little harsh. And is certainly not a universally accepted view among admen. Significantly, it is not shared by Sorrell’s deadliest rival, Maurice Lévy – chief executive of Publicis Groupe. Lévy has just announced a four-year pact with Twitter which will involve PG’s media planning and buying arm Starcom MediaVest Group committing up to $600m of client money to monetizing Twitter’s audience. Details, at this point, are sketchy.  It is clear, however, we are not just talking “pop-ups” here. Lévy makes specific reference to video links and “new formats” yet to be developed. He admits to there being “some risk” involved in the project, though whether this relates to his own reputation, clients’ money or both is not apparent.

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Chris Wood helps to launch top-end male fashion brand Dom Reilly

March 28, 2013

Dom ReillyFor years, you’ve run your own brand consultancy. After successfully selling it, you step into the limelight as chairman of the Central Office of Information, only to find that mad axeman and part-time cabinet minister Francis Maude is cutting off at the knees the very organisation you’ve just been invited to head. What next?

I caught up with Chris Wood recently and found out. It transpires he is helping to give lift-off to a new top-end fashion brand called Dom Reilly. Never heard of it? Well, unlike Chris Wood, you’ve probably had nothing to do with Formula One. Wood, in his spare time, is an unreconstructed petrol head; and Dominic Reilly (pictured) – the eponymous brand name –  is the former head of marketing at Williams F1 Team.

Reilly’s company, where Wood is a non-executive director and adviser, is ambitiously pitching itself at the very top of a very discriminating market – with a price-tag to match. The initial range, admittedly exquisitely hand-crafted, starts at £95 for a tooled leather phone case and escalates to an eye-watering £1,400 for a weekender bag (roughly the price of a Manolo Blahnik handbag or a Jimmy Choo tote).  This new brand has no intention of being a Mulberrry also-ran, no siree.

So why is Reilly so confident about his ambitious positioning? The answer lies not so much in the quality of the goods – that’s a given when competing with the likes of Louis Vuitton, Armani and Alfred Dunhill – but in a judicious soupçon of Formula One. A soupçon, because too much of it will asphyxiate the brand with the rank odour of “petrol-head” and “anorak” – in short, death by downmarket male. While there’s no escaping Dom Reilly’s essentially masculine appeal, the idea is to imbue the brand with FI’s sophisticated reputation for engineering excellence and technological innovation. One of the accessories, for instance, is a beautifully finished crash helmet case; and some of the collection features a special high-density foam used in F1 cockpits that absorbs almost all shock on impact.

Reilly, given his 6 years as head of marketing at Williams, has second-to-none access to one of the world’s most sophisticated R&D departments. But he has to be careful how he plays the Williams card. Few team brands, with the exception of Ferrari, have much charisma off-track. And in any case, Williams has not performed well of late (one, but only one, good reason, why the Williams name is not directly associated with the brand). Instead, an aura of cutting-edge R&D is being subtly diffused through the person of Patrick Head, co-founder of Williams F1 and its fabled chief of design – who just happens to be a founder shareholder in Dom Reilly.

Dom Reilly EnglandIn truth, the attractions of launching an haute gamme fashion brand are there for all to see: salivating margins and high resilience to recession. Equally, so is the demerit: everyone’s at it. The sector has become crowded with participants touting increasingly obscure and recondite “provenance”: the 17th century Huguenot diaspora, the Empress Josephine’s personal dressmaker etc (I made those up, but you know what I mean). So attaching your brand to future-directed technology with wide aspirational appeal is certainly a point of difference.

But that’s not to say fashion and high-octane auto culture are natural bedfellows, as the history of the Ferrari brand all too clearly illustrates. “It’s interesting,” says Wood, “That in the last Top Gear programme I watched, they were extolling the virtues (and innocence) of Pagani (750bhp hypercars, costing three times as much as a Lamborghini and correspondingly rare), while referring to the Maranello mob (i.e. Ferrari) as ‘purveyors of key rings and baseball caps’. And about Lamborghini as a contrivance of Audi. Out of the mouths of children, and even Clarkson, can come a certain wisdom.”

Indeed.


Cook acts after Browett upsets the Apple cart with half-baked retail recipe

October 30, 2012

The surprise is not that John Browett, former Dixons CEO and Tesco high-flier, quit Apple after only 6 months. The surprise is he wasn’t fired earlier: or indeed that he was hired at all.

Not that there’s anything wrong with Browett’s retail skills, in their place. Which is, or was, running a British high street retailer; not at the helm of the retail arm of a global corporation fanatically dedicated to innovative product launches and superior customer service.

The announcement of Browett’s departure, which coincides with – but is only tangentially connected to – the sacrificial dispatch of Scott Forstall, head of iPhone software (for the horlicks he made of the new Maps app), has been greeted with widespread “told-you-so” cynicism. And nowhere more articulately than in the comments section of The Telegraph online.

My own favourite? Quote from Mr Cook : ‘Mr Browett had a commitment to customer service “like no one else we’ve met.” ‘ Similar to Morecambe and Wise writing: ‘We shall tell all our friends’ in the visitors’ book at a particularly awful Blackpool b&b.

Quite. The fault lies not so much with Browett (who is in any case going to walk away with much of his £36m golden hello intact) for initiating ‘pile it high and flog it cheap’ tactics – the only thing he knows – but with Apple’s chief executive Tim Cook. Whatever was he thinking of when he made the appointment late last year? Browett is the complete antithesis of everything Apple stands for.

It’s not about command-and-control retail structures where costs are minutely controlled. It is about money-being-no-object where customer service is concerned. It’s also about silo’ed autonomy, something alien to Browett’s own retail culture.

Cook can chalk this one down to inexperience. But it does make you wonder whether he’s got a sufficient measure of the “vision thing”.


Rail crash? You wait until they try to auction the 4G mobile phone spectrum

October 4, 2012

Business groups have launched  a scathing attack on the Government over the 4G spectrum auction and say it has revealed serious problems at the heart of public sector procurement. Simon Walker, director general of the Institute of Directors, expressed a typical view: “It is shocking that such a crucially important process has gone so seriously wrong. Businesses need a stable, reliable telecoms network and certainty in the provision of key infrastructure.” “Procurement mistakes increase risks for companies, threaten jobs and harm Britain’s reputation as a destination for inward investment,” added Adam Marshall, policy director of the British Chambers of Commerce.

Just joking. I’m sure Messrs Walker and Marshall will forgive me for quoting them out of context this once; after all, I’m investing them with seer-like prescience. Their cited words are real, but in fact relate to the very clear and present danger of the West Coast Main Line rail fiasco. The fallout from that will be a moon-cast shadow compared to what will happen if HMG manages to screw up the mobile phone spectrum in the same way it has screwed up our railway network.

As it happens, there has been some relatively good news on the 4G front recently. Maria Miller, the obscure former Grey advertising and PR executive recently catapulted to culture, media and sports secretary, has made a brisk start to her tenure by bringing forward the inexplicably delayed auction date of 4G spectrum to January and cutting through the legal wrangling among telecoms carriers which has deadlocked the introduction of the new, much faster, mobile phone standard to the UK.

But will her timely action be enough to avert a looming disaster? First, a little background. 4G is not some minor incremental improvement on the current standard, 3G. It can offer speeds of up to ten times that of the average current home broadband service. Data-hungry yoof, but more importantly business people and commuters, will love it. Miller herself observes that its introduction is “a key part of economic growth strategy” and will “boost the UK’s economy by around £2-3bn” (growth at last – the stuff that George Osborne’s political dreams are made of). America’s already got it, Apple’s got it, Germany’s got it, Korea’s got it. For God’s sake, Estonia’s got it. Britain, which prides itself on being at the heart of the digital revolution, has not. Why not? Because of years of government dithering over the auction structure. Gordon Brown made a bit of an idiot of himself by appearing to hand out the lucrative 3G spectrum to the telecoms carriers for a song. Successive administrations since have been determined not to make the same mistake twice, but seem uncertain how to prevent it.

Now events have caught up with them. The situation is complex, but distils down to a simple reality. Apple has launched its latest ‘must-have’ iPhone with a 4G capability that no one in the UK will be able to take advantage of in the near future. Well, almost no one. The exception: those who use EE, as of October 30th. Er, let me qualify that. No, not all users of Orange and T-Mobile, the brands which have had all their resources pooled into the Everything Everywhere receptacle (or EE, as it is now known – what a whoopee cushion of a brand name). EE itself has the exclusive iPhone 5 franchise, and only new subscribers, not old customers, will benefit from the 4G offering. Everyone else – that is, the vast majority of UK mobile phone users – will have to wait at least 8 months to subscribe.

It may well be objected that what gives the EE brand a timely ‘digital’ lift is actually brand suicide for the company’s premier and better known brand, Orange. But that’s one for UK chief executive Olaf Swantee and his strategy team to worry about. In the meantime, they can congratulate themselves on having – unlike their competitors – farmed existing spectrum to make space for the 4G platform. A merry Christmas is assured, thanks to the exclusivity of their iPhone 5 4G contract.

Once EE’s rivals, O2, Vodafone and Three, realised what Swantee was up to, cries of  “Unfair” and “Unlevel Playing Field” were heard to rend the air. EE had played the ant in Aesop’s fable, and harvested its existing resources wisely, but the grasshoppers were beside themselves with rage that they would have to wait another six months to grab their share of the new spectrum via a dilatory government auction – and then some before the service could actually be implemented. What’s more, they were prepared to act decisively: they threatened to blunt EE’s leading edge with legal action. That might have been explicable in terms of competitive advantage and buying extra time to build the necessary 4G infrastructure. But as a prelude to launching the 4G standard in the UK, it would have created a public relations disaster. How do you explain to an iPhone-crazy public that access to much higher broadband speeds is being blocked by red-tape, selfish industry interest and legal chicanery?

Miller has therefore done well to defuse the legal wrangling by agreeing to bring forward the spectrum auction date 6 months to the end of January. But implementation of the 4G dream is still a long, long, way away for most of us punters – we’re talking at least the latter end of next year. In the meantime, all sorts of teething problems will need to be sorted out: poor signal distribution, patchy network coverage, a quite possibly incompetent auction process that leads to further legal action and, let’s not forget, potentially incompatible 4G phones.

“Wrong spectrum”. We’re going to be hearing a lot of that in the next 12 months, while the phone companies sort themselves out. If my mobile phone contract were coming up for renewal (which it is not), I would be very tempted to let it ride until at least the beginning of 2014 …


Why Confused.com is trying to put a back-seat driver into everyone’s car

July 24, 2012

Fit a black box in your car and slash those top-heavy insurance premiums at a stroke. That’s the intriguing new pitch from Confused.com, one of the UK’s biggest price comparison services.

Apparently, the European Court of Justice has ruled that from December 21st, 2012, car insurance premiums must be gender-neutral. Which is bad news if you are a 22-year-old female driver of spotless record, because you’ll now be subsidising all those 19-year-old acned, testosterone-junkies who treat driving as a form of personal combat. Car insurers are therefore on the hunt for new ways of assessing risk.

Such as through telematic devices fitted in your car to monitor driving performance. Telematics? Generally, any form of inbuilt electronic servo, such as SatNav, in-car entertainment centres and plumbed in mobile units. They’re particularly big in the States, although ironically regulators there are now voicing concerns about how many accidents they cause.

That’s clearly not the branch of the science Confused.com has in mind. Rather, your car will have a purpose-built in-board computer constantly monitoring fuel-consumption, mileage driven and how harshly you corner, accelerate and brake.

The idea is that the insurance provider fits this device free of charge to its customer’s car. The better the driving, the greater the chance of premium reductions on renewal. Customers who use the device can also monitor their driving manner online through a secure personalised portal.

As an additional safety benefit, the telematics device will inform the insurance company of an accident, and may even contact the emergency services where necessary. In addition, the device acts as a tracker, meaning the car can be located if stolen.

Confused.com reckons it has got 5 insurance companies signed up already: insurethebox, Autosaint, Coverbox, AA Drivesafe and Bell. It’s running a 30-second TV ad – produced in house – to announce the fact this week.

Intelligent individual mass-marketing in the digital age, or Big Brother at the wheel? We leave you to decide. LOVE to show you the ad, but I’m afraid it’s not up on the Confused.com site yet. So here’s a rather pedestrian infomercial instead:


Taint of scandal touches Google as ICO reopens Street View investigation

June 13, 2012

I wonder what we should call it? Googlegate? Datagate, perhaps? Google’s inept handling of rogue data captured in the course of its Street View surveys is giving the search giant an unsavoury corporate reputation. It’s hard not to detect parallels here, albeit on a minor scale, with the Murdoch scandal.

And these parallels are? Out-of-control employees apparently breaking the law in pursuit of a private agenda; the abuse of private data; a corporate cover-up involving middle to upper reaches of company management; weak and complaisant regulators who have been forced to reexamine the inadequacy of their earlier rulings.

The UK spotlight has been turned back on Google only because of some disturbing findings uncovered by a Federal Communications Commission inquiry into material gathered by Street View cars – which have specially adapted cameras – in the US. Earlier, the UK regulator – The Information Commissioner’s Office – had dropped a probe into the affair after receiving assurances that Google had collected the data – which includes emails, email headings, visits to pornographic sites and personal medical information – purely by accident.

Not so, it now transpires thanks to the US investigation. A Google software engineer – we’ll call him Engineer Doe, because that’s what the FCC calls him – deliberately built a program capable of capturing all this stuff and then put it into operation between 2008 and 2010. Engineer Doe, it seems, “intended to collect, store and review payload data [as it is known] for possible use in other Google projects.” I wonder what these could have been? iSpy or Gotcha perhaps.

Engineer Doe told two other engineers working on the project what he was up to, one of whom was a senior manager. But the senior echelons at Google deny all complicity.

Having reopened its inquiry, the ICO now wants to know what type of data was captured; when exactly Google managers became aware of the rogue capture; and why Google had previously failed to disclose to the ICO the exact nature of the gathered data.

Extraordinarily, Engineer Doe and his two colleagues still appear to be in the employ of the company. Although, presumably, they are deployed on alternative projects.


Smart cookie Microsoft fails to keep track with advertisers

June 11, 2012

Microsoft stirred up a hornet’s nest among US advertisers a couple of weeks ago when it introduced a new version of Bing. Why? Because version 10 of its internet Explorer browser in Windows 8, which accompanied the Bing relaunch, has apparently gone soft on the civil liberties lobby, and set up a nasty precedent for restraint of trade.

Need a bit more unpacking? Fair enough. It’s our old friend behavioural targeting – sometimes called behavioural analytics – that’s causing advertisers’ pulses to race. BT is the new frontier, allowing advertisers to plot an accurate path through our internet interests via specially implanted cookie files (more on this in my earlier post here). Without it, they are flying blind, or rather they are dependent on old-fashioned demographics-based contextual advertising, which is a bit like trying to find your bearings from a soggy map in the open-air cockpit of a pre-war biplane.

Anyway, back to Microsoft. It has embedded a ‘Do Not Track’ functionality in its highly popular browser, with a default setting in the ‘On’ position. And the Association of National Advertisers, the US equivalent of  our Incorporated Society of Practitioners in Advertising (ISBA), is very angry about it:

“Microsoft’s decision, made without industry discussion or consensus, undercuts years of tireless, collaborative efforts across the business community — efforts that were recently heralded by the White House and Federal Trade Commission as an effective way to educate consumers and address their concerns regarding data collection, targeted advertising and privacy. We reject efforts by any provider or other group to unilaterally impose choices on the consumer in this critical area of the economy…”

…. says Bob Liodice, president & CEO, of ANA. Just why ‘imposing choices on the consumer’ is such a bad thing is not immediately apparent. Surely choice is at the core of the consumer society? But we know what he means: Microsoft hasn’t exactly been helpful to the cause.

I have yet to discover whether Microsoft will be inflicting a similar burden of choice on consumers in Europe. UK  advertisers have been breathing a collective sigh of relief now that the tireless efforts of ISBA, the Internet Advertising Bureau and EASA (European Advertising Standards Alliance), which had been arguing for a laissez allez approach to BT, have finally borne fruit. Privacy regulator The Information Commissioner’s Office (director-general, Chris Graham, pictured) has, after much havering, decided that what the new EU ePrivacy directive actually means is “implied consent” to carry on cookie-tracking. Which comes as a huge relief to thousands of website owners, let alone advertisers, who feared they were going to have to bombard users with innumerable trade-impairing pop-up warnings every time they wanted to activate a cookie. “Implied consent”, in other words, firmly shifts responsibility in law from the advertiser and website owner to the consumer.

Not unnaturally, the industry has praised Graham – former director-general of the Advertising Standards Authority – for his “pragmatism”. But doubts remain about what will happen to the British position – which is, shall we say, a unique interpretation of the ePrivacy directive – once it is tested by case law elsewhere in the Community. Doubtless Microsoft’s decision back in the Land of the Free will not be considered helpful.


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