The Blog

Visiting the Valley: Trending Topics

A few weeks ago I had the opportunity to spend a day out in Silicon Valley, the land of digital start-ups just outside of San Francisco. A friend of mine who works for a major global manufacturer is a “marketer in residence” at one of the largest VC firms. He invited me up for a day to visit a handful of this VC’s seedlings and a few other friendly investors. It was only a day, but thanks to smart scheduling and the proximity of so many start-ups, I was able to get an outstanding firsthand view of the ideas and people that make this a hotbed of innovation. During the next two weeks I will share my takeaways here.

One of the things I found interesting about my day of meetings in Silicon Valley was how the same questions and opportunities are on the minds of so many people. Likely because of the interconnected nature of relationships and critical mass of talent here, innovation topics that spread throughout the world seem to gestate here first. In no particular order, below are some of the discussion topics that arose during my visit. If you’re not talking about them today, you probably will be tomorrow.

Rewarding Engagement

One of the companies I met with was going through a “pivot”–which in the start-up business means that your original idea that got funding didn’t work, and you are trying to shift to a new, usually related idea instead of just giving up and giving the money back. This company was toying with an idea around the concept of “rewarding engagement.”  The most common example of this is when new mobile software developers attempt to increase their download and install base by offering some kind of virtual incentive. Companies such as Groupon and Zynga Poker have offered up Tap Tracks song credits or Farmville Bucks, for example.

Some might argue that rewarding engagement is a variation on Marketing with Meaning. After all, the consumer gets something of value, the software company gets a bigger user base, and the media company gets paid only when these two are successfully paired up. However, I have many doubts. The problem is that incentivized downloads are meaningful for the consumer, but not really related to strong brand marketing. They encourage people to download something not for a brand-related benefit, but in order to get something in what is often a completely different product or service.

Apple agrees that this is not meaningful, but for a different reason. Just a few weeks ago the company began cutting off apps that were using this practice, claiming it is a violation of its terms of service. Apple does not like the fact that “buying downloads” like this can send apps to the top of its Top Downloads list overnight. Apple knows that people expect this list to be the very-best-quality games and utilities, rather than the ones that gave away the most virtual cash.

I think it’s pretty obvious that these kinds of incentivized downloads are not going to earn the kinds of frequent users that app developers want. Looks like gaming the Apple app store is the only, now impossible, goal of this gimmick. I’d look for this trend to fade quickly.

Influencer Rankings

We had an opportunity to swing by the bustling office of Klout, a company that is rapidly becoming a killer app for influencer marketing. The guys at Klout say they are “an analytics company that happens to run campaigns for marketers and their agencies.”  For those who don’t know, Klout offers a score or ranking of people based on their social media profile. Although the tool has a lot of opportunities for improvement, I love the fact that it can be used today by brands that want to, say, pick the top 100 people to invite to an event or prioritize the high-ranking people who call the telephone complaint line. I was mildly proud to learn that my own Klout score of “51″ puts me in the top 20% of all profiles. Such a scoring system also means that people will work even harder to boost their scores and influence.

Although the company did not start off as an engine for marketers’ use, it is coming around to this opportunity quickly. I got to see a big brand that is using Klout to invite the top influencers in a specific topic to join an invite-only club, brands are starting to use it to see who their most important Facebook “Likes” are, and a major job search company is starting to add the score to people’s profiles. A new Klout.com is on the way, which promises further improvements and will include more than just your Twitter feed in calculating influence.

Building Dependencies

One well-known and respected investor we met with spent some time sharing his team’s formula for picking winners in this noisy environment. He specifically mentioned that his partners look for new businesses that “build dependencies” among their customers. This means creating a company that becomes so necessary and ingrained with how customers operate that it keeps their business for the long haul and keeps competitors out.

Omniture is a great example of a company that does this, by locking businesses into a system for measuring their digital customer engagement. The more you use Omniture, the more tightly it is linked to your way of working. And the fixed costs of implementing the tool dissuade companies from bringing in another way of measuring results. Dunnhumby does this by creating a tool that retailers and their suppliers can use to understand purchase habits and provide personalized offers. Salesforce.com takes this to the next level by not only creating its own killer apps, but by allowing its platform to be used by thousands of third-party application developers.

Companion Viewing

Content is on the minds of start-ups, marketers, and investors. Many are coming to see that content–not channel delivery or advertising interruption–is king. Nothing is more valuable than an aggregated audience that is voluntarily giving you its increasingly valuable time. And speaking of content, television continues to be a media vehicle for content that dominates all others. It combines sight/sound/motion, mass delivery, and an established ecosystem. And television is only getting better for consumers, thanks to greater on-demand options and bigger/better sets.

While some believe that television will be substituted with new screens such as laptops, smartphones, and tablets, some early consumer research suggests that new screens are additive to the television viewing experience. According to a recent Nielsen/Yahoo! study, 86% of U.S. mobile Internet users watch TV with mobile devices in hand. Of that group, 40% use devices for social networking, and 33% use apps. The concept of “companion viewing” suggests that television content creators–and marketers as well–should consider using these additional laptop/mobile/tablet interfaces to add value to the experience. If you are like me, you might find yourself keeping an iPad close to you on the couch while watching a program. During commercial breaks or when I want to look something up related to the show’s content, I increasingly hit the TiVo pause button and pull up Google to satisfy my need for information.

To date, only a handful of television programs are taking advantage of this trend. The History Channel lets you pull up Tweets of fellow viewers during shows such as Top Gear, and Top Chef Masters lets you rate the players’ dishes for yourself. Some new televisions are coming with interactive features built in, but I believe it will always be easier to use a separate screen/device to interact. If programs truly integrated smartphones and tablets for companion viewing, we might see live stats and replays-on-demand during sporting events, or a moving map with vacation suggestions during a travel show.

At the end of the day, not all of these are truly “new” ideas spun from the epicenter of digital innovation, but they might give you a jump-start on what’s coming next–before the annual “What’s Hot for 2012″ lists start propagating.

Twitter Works, but Is It Working for Your Brand?

(This is a special guest post from Douglas O’Donnell, Possible Worldwide Associate Director of Measurement & Analytics. The other day we were trading emails about how many brands fail to think about how to use Twitter the right way, and he took the initiative to write up the following point of view. Please enjoy and reach out to Douglas directly on Twitter, of course.)

Most brands have no business on Twitter. They apply traditional push marketing strategies and spend large amounts of money on irrelevant content that annoys customers. Most are on Twitter because it’s cool or to be on par with their competition.

The problem is that brands do not humble themselves for the new medium, nor do they consider how their strategies might affect operations challenges. My favorite southern saying is, “Big hat, no cattle,” and it applies here. If you don’t connect with customers in a human way, they won’t buy what you’re selling.

6 Rules of Humanizing Your Brand

  • Be human and humble (this should come naturally).
  • Follow the 80% (value add content)/20% (marketing) rule.
  • Establish Twitter-specific objectives, strategy, and measurement, and optimize.
  • Seek out your advocates and follow them first; don’t make them find you.
  • Interact with customers, like you would with a friend in a coffee shop.
  • Be relevant to their interests, be available to address their needs, and embrace negative comments as opportunities.

(Bonus rule: Fire your legal and editorial departments–unless they are solution biased.)

The Issue

Your brand is a snob. It expects that people will automatically love it. This approach doesn’t work in the social media space, especially on Twitter. The whole premise of Twitter is real-time, relevant interaction, and this is where brands drop the ball.

Let’s talk some psychology and consumer science. Your brand wants to be loved and talked about, but this does not happen in a vacuum. People like exclusivity. Access is the reason Twitter a la Southwest or Zappos (or Lady Gaga) is interesting. It’s an opportunity to peek behind the curtain of a company (or celebrity) that interests you. This plays to social media’s other strength, voyeurism. It’s the direct connection to someone or something you otherwise have no access to. So make it interesting. Who cares about your new product push? But it might be interesting if you tell me you’re the VP and post a picture from the manufacturing plant while finalizing the “new product” nobody knows about yet. For your followers, it’s a ticket to the party.

Twitter vs. Facebook

Brands struggle with Twitter because the people pitching content do not typically use the medium. Twitter is a completely different mind-set than other social media platforms. Twitter is public as opposed to Facebook’s walled garden. Twitter is about the conversation, in real time. On Facebook, conversations are fragmented over time based on when you access and check the posts within your social circle. A community manager on Facebook will have a planned strategy, a content calendar, and some guidance on occasional real-time interactions. A community manager on Twitter should be on call, like a doctor. This doesn’t necessarily equate to high-maintenance or time-consuming tasks. But Twitter must be monitored consistently for it to work as intended. Some brands such as @DellCares actually put the hours up of their social media outreach team on their Twitter profile, which is completely acceptable.

Provide Valuable Content

Nowhere is an 80% value-add and 20% marketing approach to content more important than on Twitter. If a brand is churning out coupons and a weekly pre-planned “buy our stuff” Tweet, they should not be on Twitter. If a brand is not committed to interacting frequently, each week with their customers or fans, they should not be on Twitter. If a company’s legal department can’t get over itself and its 1970s processes, the company must either educate legal on a real-time communications tool or not be on Twitter. In short, being on Twitter badly is worse than not being on Twitter.

Who does this well? There are good case studies and they’ve been exhaustively covered so I won’t rehash. But I will say that @southwestair (customer service strategy) and @zappos (transparency strategy) are two of the best. They are directly and intimately connected to their customers. They actually know them. They study them–not their ComScore profiles–but the actual customers and what they discuss. Also the “tweeters” are actual human beings, not mascots or faceless brands.

The Human Touch – @RoadID

In 2009, I launched Road ID on Twitter, a maker of identification gear for endurance athletes. We built a following by first seeking out and following people already interested in the brand or common interests that aligned with Road ID offerings. Engagement was instant and in six weeks we had more than 1,000 high-quality followers. Road ID is smart, tracking promotions to the sale so they truly understand how Twitter interactions influence sales. And they do.

Here’s the key. The account was attributed to Edward Wimmer, the cofounder, not a mascot or a brand. Ed is a human. The company and the content match the personality of the customer. He posts relevant content about sporting events, sponsorships, and highly engaging contests tied into Ironman or Tour de France races. Content his followers appreciate. He also interacts regularly when people tweet about his product, thanking them or taking on a customer service role if there is an issue. When you execute the 80% well, people accept the 20% marketing because it’s genuine. Transparency is key.

Paradigm Smashing


“It isn’t about who follows you; it’s about who you follow.”

This process works well on Twitter, but is completely counterintuitive. You must seek out and follow your customers first. Likely, people are already talking about your brand. Find them. Not with a social listening tool, although those can be helpful (Radian 6, Crimson Hexagon), but manually. Get intimate. See what people say over a few weeks time (content is different each time, as this is real-time search). Follow those people. Interact with the ones who say something clever or relevant.

Put yourself in the customer’s shoes. Why should I follow a brand? Offers? Coupons? That creates a pretty shallow relationship with your customer and you condition them to expect “deals.”

However, if I get followed by a brand the reaction is: “Interesting, Brand X just followed me, cool!” Especially if it was in connection to an @ response to something I posted. You got my attention because you didn’t sell me something. Instead, you engaged with me and thanked me, you told me what I had to say was interesting, or you acknowledged my frustration, humanly. You reached out to me in context and for that, I’m more likely to follow you back, brag to my friends, or even defend the brand. The brand must humble itself as a new kid in town. Get out and meet people!

“Remove traditional editorial and legal barriers.”

How many lawyers understand that that offensive tweets do not appear on a Twitter brand account, like they do on a Facebook page? The problem is editors and lawyers do not use the mediums they police. The premise of Twitter is real-time human interaction wrapped in authenticity. Timely interaction is what makes the ecosystem hum. Tweets that require legal review or editorial proofing before posting are useless. The opportunity has passed. If you’re a brand that cannot let go of editorial and legal control to an expert community manager you hired for their expertise, cancel your account today. Being human requires human attributes, like trust.

“Negative comments are opportunities. Embrace them!”

This is rooted in public relations and referenced frequently by David Meerman Scott, author of Real-Time Marketing & PR. Acknowledge issues as they unfold in an authentic way and you have the potential to convert a bad customer experience into a great one or an annoyed customer into a fan. It’s powerful when a brand directly contacts a customer who has an issue via Twitter (instead of requiring the customer to contact the brand). Goodwill is extended to the brands that try.

“My brand must be followed by important people to gain clout!”

If by important people you mean your customers, then yes. There is much talk about clout, or Klout the social influence aggregator. Both are nebulous, subjective, and changing daily–just like judges’ scores at the Olympics in figure skating. I have a striking example of clout on Twitter, Sarah Slowik.

Sarah (@lovelybutton) is a nice girl from Michigan and was randomly chosen by Conan O’Brien to be the only person he follows on Twitter. Conan has nearly 3 million followers. He follows one person, Sarah, who originally only had a few dozen followers. When Conan followed her, her followers increased to more than 45,000. So her clout by association is substantial. There’s value in being followed (or endorsed) by an influencer, but that rings true in life as well. And influencers are more likely to endorse you if you have something relevant to offer. Again, human rules apply.

So take a step back and truly understand why Twitter would make sense for your brand from a business standpoint. Then align that with the needs of your customers, humanly. Are you committed to establishing a long-term, meaningful relationship with them? If the answer is yes, then Twitter can be a powerful tool to improve your brand’s business performance.

Please Vote For the Betty Crocker iPad App!

While many brands and agencies are “exploring” iPad marketing and considering added-value apps, only a handful have actually made the investment and turned talk into action. I’m proud that our agency, Possible Worldwide, and client, General Mills, came together to produce one of the first and best branded apps in the marketplace.  Now, the Betty Crocker iPad App has been nominated for a Webby People’s Voice Award, and I would appreciate your help in giving the combined team the credit they deserve.

The Betty Crocker App Case Study:

Betty Crocker is not just a national brand: She’s a national hero. The sharing and exchange of Betty Crocker recipes and tips between family and friends–and down through the generations–has made Betty the “original social media queen.” General Mills asked us to take this brand trust, recipe knowledge, and need for instruction to a new level by creating one of the industry’s first iPad cookbooks. The Betty Crocker team wanted to “take Betty into the 21st century” by creating a tool that cooks can more effectively use in the kitchen.

The new iPad app makes it easy to find recipes and features a “cook mode” that helps users who are deep into a recipe. We’ve created easy-to-read instructions and clear, enlarged food/meal imagery. We’ve also integrated multiple timers to help cooks stay on top of the tasks at hand, whether it’s boiling an egg or baking a soufflé. The larger screen and innovative gestural interfaces make the Betty Crocker iPad app a visual, as well as practical, aid in the kitchen.

The Betty Crocker iPad app was an instant hit: In its first week, it reached #1 on the free app best-sellers chart (above Netflix and WebMD), and remains a best-seller to date.

How You Can Help:

Voting takes a little more than one click, but please do take the time to register and vote. You might even discover some other great examples of meaningful digital marketing in the process. Here’s how to vote:

  1. Register to vote: http://webby.aol.com/ (Look for a confirmation email in your junk folder.)
  2. Visit http://webby.aol.com/media_types/mobile-web.
  3. Scroll down to LIFESTYLE – TABLETS & ALL OTHER DEVICES.
  4. Cast your vote for the Betty Crocker iPad app.

Voting ends April 28 and we need everyone to help spread the word right up until the deadline. And please also encourage your friends to vote via Facebook and Twitter:

You might be surprised to know that most of the award winners come down to just a couple of votes. Last year our Pringles Can Hands banner barely edged out work from Apple and Burger King to win the People’s Voice Award–thanks to your help!  So please lend a hand again and put the iconic red spoon on top.

Nordstrom Email Gets It Right

A little more than two years ago, I wrote an open letter to Banana Republic in this blog. I asked the company to please stop sending me emails for women’s clothing, and instead only send me notices about gear for men. I also hoped for something more meaningful than the constant reminders of items for sale—perhaps “fashion tips and suggestions” for an almost 40-something guy with little sense of style?

Alas, there was no answer to my call, and the company continued to spam me with what even a basic database lookup would confirm as irrelevant. I finally unsubscribed from the email and now I rarely go into a Banana Republic store. But today, dear reader, my belief in the goodness of retail marketers is renewed—as Nordstrom sent me this very meaningful email.

I don’t recall signing up for a Nordstrom email, but when it started arriving in my inbox, I was willing to give it a chance. I was immediately impressed that the company only sent me information about men’s clothing. Shocking, I know, because Nordstrom sells so many other types of items, and virtually every other retailer has failed to discriminate in its approach. Nordstrom’s email made a positive first impression, and I kept the relationship going.

Naturally, upon seeing offers for men like me, I started to open the emails. And today I was blown away to see not just a list of what’s on sale this week, but rather a message that felt like real-life content:

“The Basics of Business Casual” is an interesting topic; many of us struggle a bit to figure out what the best office look is in a world far beyond the suit and tie. And I was so surprised and delighted to see content instead of a sales push that I clicked on the “Men’s Style Guide.” Suddenly, I was at Nordstrom.com and learning about some of the “rules” to look good by. I learned that one should keep at least one button buttoned on a polo shirt, and that plaid works great with no suit or tie required. I know; it’s probably basics to you female readers, but give us guys a break. Some of the suggestions came from actual Nordstrom employees. I could tell because they included their corporate email addresses.

Suddenly, I found a shirt that I liked and discovered a discrete link to purchase it. I then noticed that there was free shipping with a $200 order so I went ahead and picked up a few more items to take advantage of the offer. I checked out with a smile and went back to whatever I was doing before, looking forward to my new clothes and happy that Nordstrom was helping me stay stylish.

Sure, I’m a focus group of one, but a sale is a sale, and meaning is meaning. In the battle for my wallet, Banana Republic loses, and Nordstrom wins. Not just today, but likely for years to come. I imagine this is rippling across quite a few other email inboxes of men like me.

It didn’t take much for Nordstrom to develop this content, just a few suggestions and pages. Just enough to make it feel like they care about how I look, rather than just closing a sale. Interestingly, this “novel” approach happens to come from a company that is well-known for its service. It just goes to show that a meaningful marketing strategy can work everywhere from the retail floor to the Gmail inbox.

This is actually the topic of my 60-second speech in the upcoming Future of Marketing 2 event, which will focus on “Technology-Driven Personalization.” My point is that consumers are increasingly expecting your business to use their data (which they know you have) to make their experience better. Those businesses that choose not to personalize will not only fail to get their email read, but will lose customers for life. And competitors like Nordstrom that respect their customers will pick up the revenue and loyalty.


(Warning: This is a #longread that I’ve been marinating on for about a month now. I would highly advise you, dear reader, to take advantage of the Print functionality below or use a service such as Instapaper to enjoy when you have some good thinking time. Have a look and please share with others and share your thoughts in the comments!)

From time to time we all take some “facts” for granted and fail to question them until it is too late to adjust. For example, many of us grew up hearing the repeated fears that we will see human population grow at an increasing rate, and past the point of resource exhaustion. Futurists predicted that current growth trends would continue unchecked. This led to much worry over the past several decades, and even inspired the government of China to create a one-child-per-couple law.

But now we know better. We were silly to miss the fact that rising standards of living around the world would lead to a natural reduction in birth rates. While population is still growing, the warning signs are pointing in the opposite direction: Birth rates in some countries are declining at a rate below what is needed to sustain the current population, and some United Nations scenarios show that our population could shrink from a little more than 6 billion today to 2.3 billion by 2300. While there will be less traffic on your great-great-grandchildren’s daily commutes (by hover car, of course), a population implosion has its own dangers and would dramatically reorder societies and economies. I believe the false inevitability of population growth is mirrored by the false inevitability of advertising impression growth—and if you don’t readjust to this new reality, your business could be left in the past.

For ages we have heard the siren song of growing advertising spending, powered by the digital media shift and rise of ad-powered start-ups. Nearly everyone in our business excitedly shows upward trending prediction graphs of marketers’ new outlays on mobile, social, virtual gifts—you name it. Just this week Eric Schmidt, outgoing CEO of Google, spoke before the IAB to share his firm belief that the online display ad market—what many of us call “traditional digital” at this point—could rise to $200 billion in the near future.

This seemed high to me, so I went a-Googling to discover that J.P. Morgan claims today’s global display market is only $25 billion. Further, the global TV commercial market is $169 billion, and the entire advertising market has been fairly flat for years at a total of $500 billion. Unfortunately, Schmidt did not share his model with the IAB audience, but I do wonder how digital display advertising could grow at a 700% rate. In fact, I believe that the media trends we see today and increasingly in the future point to a world in which advertising spending might just shrink. Much like the false claims of population explosion, I believe a new world order is resetting old assumptions and the next evolution of marketing will usher in a world of fewer advertising interruptions. Heresy, I know, but please allow me to make my case…

Consumer Media Choices Make Mass Advertising Harder

One of the reasons we are accustomed to 3,000 ad messages per day and buy into the assumption that ad spending will only increase is that it has been relatively easy to create and distribute advertising over the last few decades. Mass media arrived in the form of newspapers, magazines, radio, and television. Following closely was the chance to do mass advertising; brands could create a print ad once and run it across a critical mass of millions of eyeballs. Enough people were moved to purchase products by these handful of ads that marketers could see sales as a direct consequence. Life was good.

But today, fundamental shifts in media habits and practices are making it much harder for mass marketers to hit their target audiences with impressions. Here are just some of the changes, which are only accelerating:

  • We have gone from three television channels to more than 1,000 on most cable systems. Brands now need to negotiate media buys across dozens of networks in order to hit a similar critical mass. Many are now spending more for less in a handful of “mass-like” television programs. For example, viewership of this year’s Academy Awards was down 10%, while the cost for a 30-second ad was up 20%. Because audience is not guaranteed for advertisers, this translates into a 33% year-over-year increase in the cost per impression.
  • People are multitasking in ways never seen before, and clearly at the expense of ad impression impact. In the near-past, some people flipped channels or walked out for a beer or bathroom break, but today’s TV viewer is habitually distracted. A recent study in the U.S. by Deloitte shows that 42% of people surf the ‘Net while watching, while 29% talk on the phone and 26% text.
  • Our consumers have decided to use digital technology to shift media to their needs—not marketers’ needs. Once a group of people are given freedom and control, a funny thing happens—they like it and want more of it. So it’s not a surprise that time shifting of media consumption has grown thanks to DVRs, DVDs, Netflix, and Read It Later. Conveniently, these media shifting tools allow the consumer to skip over advertising messages. When we had no choice but to watch or page through advertising, we couldn’t complain much—but once we have the freedom to control what media we consume, we guard it jealously—and advertising feels much more painful to sit through.  And no matter how “must see” a particular program is, there is simply too much other good content out there to hold people hostage to 20 minutes of commercials for every 40 minutes of content.
  • People are employing tools to actively avoid advertising. A rising number of people are moving from “passive” to “active” advertising avoidance thanks to simple technology. Take Adblock Plus, for example, a free plug-in for the Firefox browser that removes 100% of banner ads from a Web page—often putting useful content and links in the ads’ place. You might think this is deployed by only a small fringe group of users—and you would be wrong. Adblock Plus is used by 12 million people on average each day, and has been downloaded 112 million times (84,000 per day). Compare that to a tool that has gotten 10 times the hype: Foursquare has only about 600,000 daily users, and it is downloaded 25,000 times per day.
  • Government is limiting the number of impressions we see. Democratic governments usually listen when voter trends emerge. Europe continues to pass laws limiting everything from TV commercial time to product placement. In the U.S., the Do Not Call list was an overwhelming success, and now legislators are eagerly considering a Do Not Track law that will prevent banner ad targeting that our industry claims will help drive ad spend further.
  • And while new media offers new advertising opportunities, it is still exceedingly hard to make them work. Take gaming, for example. This is one of the media choices that young men are leaving TV for. And for years we have read hype about how in-game advertising networks would be the prime time of the future. But then reality caught up. Game companies have found that it is too hard to build big enough scale to win mass marketer dollars, and the people who have paid $60 for a game don’t like the idea of having additional ads forced upon them. The general manager of EA says, “We actually aren’t getting much from ad revenue at all”—while his competitor at Activision laments that, “There was a time when we thought advertising and sponsorship was a big opportunity…”

New Media Can Make Fewer Impressions

Aside from these fundamental changes in consumer behavior, there is a dramatic change in how new media alternatives behave in terms of advertising: They allow for a lot fewer impressions, often of poorer quality. Let me take this as the cue to tear down the age-old assumption that advertising dollars will follow consumers’ media attention. Again and again we have been subject to a PowerPoint slide showing the percentage of time people spend with various media in comparison to the percentage of marketers’ budgets that go against advertising in them. Most recently, industry guru Mary Meeker presented this argument in an otherwise strong deck about trends in mobile.

A lot of smart people have pointed to this “gap” in spending, but I have heard none of them spend as much as one additional slide considering what could lie behind it. Allow me: This is not an apples to apples comparison. Advertising spending amounts are guided by much more than how much time consumers choose to spend. First, there is the quality of the creative platform—TV and print allow a much higher-quality ad experience and are much more “interruptive” than typical banner ads. Second, a lot of marketers are still struggling to build ROI models for digital while they have decades of experience and test results from traditional ad platforms.

And the future of digital marketing does not necessarily spell more opportunities for closing this perceived gap. The shift to mobile offers a perfect case study. This is another specific area that has gotten prognosticators excited. eMarketer predicts mobile will be a $2.6 billion market in the U.S. by 2014, and one mobile expert, Paran Johar of Jumptap, claims that, “Mobile advertising will eclipse traditional PC ads very quickly.”

Johar might be right, as each dollar to mobile could take $3 from display. The mobile screen (whether phone or tablet) is significantly smaller than a laptop browser window. By my back-of-the-envelope calculation, a consumer’s shift from a PC to mobile Web page is at least a 3-to-1 reduction in the amount of space available for banner ads. So, at consistent CPM rates, the move to mobile could shrink the ad market dramatically—or they would have to be 3x the CPM of display ads, which is so far not close to holding true.

Or perhaps mobile will get bigger because there will be a lot more ads squeezed onto the tiny screen, and ways for businesses to helpfully alert passersby of what is on sale inside their stores. Unfortunately, there’s another problem: Consumers already find mobile advertising to be the most disliked marketing platform, per this research by Advertising Age.

Other new media similarly might mean a trade down in the number and/or price of advertising impressions, and thus a contraction in the global market. For example:

  • Hulu—One of the fastest growing “channels” is only willing to show one-third the number of commercials as network broadcasters show during the same programming. Its CEO has boldly claimed that “Traditional TV has too many ads. Users have demonstrated that they will go to great lengths to avoid the advertising load that traditional TV places upon them.”
  • Groupon—Only one offer per city per day. This might grow to more offers, but they will increasingly be personalized—so you will get one, more-relevant offer per day.
  • Twitter—Has added and plans to expand Promoted Tweets program to try to monetize the service. It will interrupt your Twitter stream with advertising, but if these are more than a handful per person per day, there will be a mass exodus of users.
  • Facebook—Current advertising formats are few, small, and out of the way on the right. The company learned from MySpace that ad clutter leads to lost users. Unfortunately, that means fewer clicks and low CPMs. With more than 600 million highly active users, and an ad-building tool that can have your small business up and running in minutes, the company only reached $8.9 billion in display sales in 2010.
  • Pandora—If you are a frequent user like me, you have likely noticed more ads between songs lately. But, again, there is a natural limit of only a handful of interruptions per hour of listening or you lose people to one of the many ad-free alternatives.
  • AOL—Well, AOL isn’t a new company, but it is reinventing itself with a model that has a lot less advertising. AOL CEO Tim Armstrong strongly believes that, “There are just way too many impressions on the Web.” And he has put his money where his mouth is by redesigning AOL to reduce the number of banners per page—to the tune of a 25% drop in ad sales.

Efficient Targeting Means Less Spending

We’ve all heard the old saw about “half your advertising spending being wasted; you just don’t know which half.” Well, with the increase in targeting information and new ways to track actual purchase behavior, there is growing hope that marketers will be able to discover and eliminate the 50% (or likely much more) of spending that is wasted. So the multi-billion-dollar question is: What will they do with the savings?

I believe that the majority of saved dollars will be taken to profit, thus removing a significant amount of money from the $500 billion global advertising market. Shareholders have this odd desire to see companies improve profits, and too many CFOs are closely eyeing the marketing budgets.

What This Means to You

My first hope at this point is that you have become a little more wary of the hype that continues to plague the digital marketing world. I know it might sound crazy for a leader working in a large, global digital advertising agency to sound pessimistic, but the reality is that we all suffer when companies make poor business decisions. The last thing we need is another digital bubble that will cause marketers to overreact in a very negative direction. Instead of falling for the hype, marketers must examine the bigger trends and changes in the landscape and take the time to shift how they go about their jobs.

Here are three implications of the shifts in media and marketing that you must begin adjusting to today:

  1. From Impressions to EngagementsNow is the time to choose a new common denominator for marketing performance across media. As I hope the 2,000 words above made clear, the impression—while somewhat measurable—is more and more meaningless. Instead, a growing number of marketers and media companies are moving toward Engagement-based planning. I wrote a lot about this in my book and in this blog post, and just this week YouTube and the IAB came together to suggest a new engagement measure: the Cost Per View (CPV). The CPV is a way of pricing advertising or other videos in which a consumer actively chooses to push the play button. It is meant to complement an impression-based plan, adding some further performance data. Marketers must begin to measure engagements and start to build financial models that allow them to uncover the value of an engagement.
  2. From Paid Media to Earned and Owned—In a world where it becomes harder and harder to track down your customers and interrupt their attention, it becomes imperative to attract them with content that they choose to engage with. Of course, this is the story behind Marketing with Meaning—but it is even clearer in the growing recognition that marketers must create Earned and Owned media. Earned and Owned is not only often cheaper than Paid, but it delivers a higher-quality experience—whether it is Charmin’s iPhone app for finding a public restroom or Red Bull sharing “Drunkish Dials” from its consumers on Facebook. (Disclaimer: Both are Possible Worldwide clients.)
  3. Relentlessly Track to Sales ResultsOne of the most exciting things that I have seen in business is the rise of e-commerce, which allows companies to closely track the price and performance of every marketing decision and investment all of the way to the final sale. This is the main reason search marketing took off and Google is now a $30 billion/year company. I believe that every large-spending company must invest in tools and models to apply this way of making marketing choices—whether or not e-commerce is the way a sale is made. In this future, brand managers will come into the office and get a heads-up display of the previous day’s sales results, quickly alter spending on the fly, and measure the response in real time. If the Shake Weight can do it, you can do it. And we’d love to help you.

Conclusion

To quote Sir Martin Sorrell, “The 21st century is not for tidy minds. It’s messy.” The wrong way to behave is to sit on the sidelines and wait for new advertising media to evolve to meet your historic marketing model. On the other hand, just jumping on the bandwagon of hype can end up burning your business as well. I believe the right answer is to step back and look at broader trends in how people live and society works today—then invest time and money into building a new approach that beats the competition and meets customers’ needs.

This is what our agencies recently did by combining into a new global digital network with a purpose to create interactions between our clients and their customers. We saw a future and shifted multiple organizations into a position to survive, thrive, and lead. What will you choose to do?

Book Review: “Linchpin” Our Needed Wake-up Call

Way back in December 2009, Seth Godin offered his blog readers a chance to get an advance copy of his new book, Linchpin. The first 3,000 folks who were willing to donate at least $30 to one of his favorite causes, the Acumen Fund, received a book. I jumped at the chance to do so, both because I enjoy Seth’s books and I wanted to participate in this novel form of meaningful book marketing.

Godin’s plan was to get a flood of positive reviews and word of mouth in time for Linchpin to hit bookstore shelves. He even followed up a few weeks later by sending an additional book to people who accepted the original offer. I’m a little more than a year late to the party with my own blog review of the book, but I would be doing my readers a disservice by ignoring the positive impact of reading Linchpin—and I hope Seth benefits from new long-tail sales.

Simply put, Linchpin is a motivational tool for businesspeople who are seeking a new path and need a loving kick in the pants. For years Seth Godin has given us books to help us think about marketing and business positioning in a different, evolved way. But this time he sets his sights on providing individuals with the mentality they need to become “linchpins” in whatever they do. Here are a few of the key points that I underlined in my copy of the book:

  • The “factory contract” of the economy is going away; we can no longer expect to plug into a job, follow the rules, and be taken care of. The future will belong to artists who create something original, interesting, and meaningful. “…History is now being written by the artists while the factory workers struggle. The future belongs to chefs, not to cooks or bottle washers.” “Art” can mean whatever you uniquely bring to the world—a skill, knowledge, experience. It can come to life in a painting, a business idea, or a blog like this one.
  • Education is ripe for an overhaul. “The launch of universal (public and free) education was a profound change in the way our society works…. We trained millions of factory workers.” We need to transform education to teach children two things: (1) Solve interesting problems; and (2) Lead.
  • We must think differently in how we look at success in the workplace or hunt for jobs. “The problem with meeting expectations is that it’s not remarkable…. A resume gives the employer everything she needs to reject you…. Having a resume begs for you to go into that big machine that looks for relevant keywords, and begs for you to get a job as a cog in a giant machine.” It is your visible results that matter in today’s economy: “Projects are the new resumes.”
  • “Real artists ship.” (‘Nuff said.)
  • We must continually learn about the world and ourselves, and have strong opinions but be ready to shift them. “It’s not an accident that successful people read more books.
  • “One of the fascinating aspects of business and organized movements is that there’s some correlation between the passion and effort that people bring to a project and the outcome…. In great organizations, there’s a sense of mission.”
  • A new model for success is to create valuable art and share it broadly (especially thanks to the power of the Net), and if helps others they will repay you in many ways.

Even if everything here seems that it has been said somewhere before, it’s worth the time to read Linchpin. I know you will find something that inspires you, gets you out of bed in the morning, or refocuses your best efforts. I personally was most moved by Godin’s ability to distill the work I have done around the concept of Marketing with Meaning for nearly three years. It is my passion to help others succeed, and by giving  knowledge and assistance away as much as possible, I have benefited from seeing our company enjoy better business results—but I also get the pleasure of hearing how a blog post, book chapter, keynote speech, or email with advice has helped others.

Sometimes it is difficult to trust that “giving the gift of your art” will allow you to continue to grow your business and yourself. I thank Seth Godin for giving us the manifesto we need to keep creating a new and better future of work.

Many months ago one of my daughters told me that she learned in school that sharks must keep swimming to stay alive. I cannot think of any better analogy to the advertising agency industry. In a world of constant competitive pressure, demanding consumers, and brands that see CMO turnover every two years, success depends on making proactive improvements and leading your clients to what’s next. That has been one of the keys to success at Bridge Worldwide, a digital agency where I lead the strategy practice, and it is why I am thrilled to announce that we are merging our company with three other leading agencies (Schematic, Quasar, and BLUE) to create a new, global business: Possible Worldwide. And I am excited to be taking on the role of Chief Strategy Officer in this new venture. Here’s an official Wall Street Journal story of the breaking news.

Our Story

Some reporters have already leaped to the conclusion that this was “just another roll-up by an agency holding company,” but this is very far from the truth. In reality, this merger was completely our idea.

The story behind Possible began back in fall 2009. My fellow execs and I were going through our annual planning process and we recognized a growing need to create scale in geography and services in order to serve the evolving needs of our clients. We decided to reach out to a few other digital agencies within our holding company, WPP. Although sometimes competitors for new business, we all joined WPP around the same time and periodically compared notes as we built our businesses over the past five years. Eventually we broached the topic of doing something together, and decided to meet in person but away from our offices. We went to Cancun, Mexico, to test the waters of working together—figuring that if it worked for climate-change treaties, it could work for us.

Our purpose in meeting in Cancun was not only to see if our businesses would match up together, but, more importantly, to get a feel for how we could get along personally—so we shared our personal hopes and dreams, our visions for changing the advertising industry, and the cultural glue that holds our offices together. We made enough progress in that first meeting that we got together again in London, then New Delhi, and followed by Singapore and New York City.

With each meeting—about every two to three months—we made more progress on building a model for a new network while elevating office leaders to take our places. Not every agency we spoke with chose to continue the journey, but some acquisition targets have specifically said they wanted to throw in with our group. Through it all, our parent company, represented by Mark Read (WPP Strategy Director and CEO of WPP Digital) encouraged and aided our progress along the way—yet continually gave us the freedom to make our own key business decisions.

And so after many months of planning, we are putting a new team together. It is a team of entrepreneurs who have all built successful digital agencies independently, and who have chosen to come together to create something bigger and make an even more positive impact on marketing and society.

Possible Worldwide: An Interactions Agency

As you might imagine, it has not been completely frictionless for a dozen or so entrepreneurial leaders to come together and agree on the future of an agency. The naming process was a pain, as always, and many late night and early morning conference calls were organized to sort out the innumerable details. But perhaps the simplest choice was our new, combined brand positioning. Early on in our merger discussions we felt energy around the idea of creating “interactions” as the focus of our work and what we believe lies at the heart of the future of marketing.

We struggled with categorization of company as a “digital agency” for two reasons. First, digital is becoming “everything” in marketing and media and more or less table stakes in the future of business. Second, it does nothing to describe the specific skills or beliefs that we have. On the other hand, “advertising agency” is limiting in that it mainly conjures up a world of interruptive messages. We wished to classify ourselves as something beyond these mental shortcuts to something more, an interactions agency, and I couldn’t describe it better than with the words our team came up with:

“Possible is an interactions agency. That means we help our clients create experiences that deliver something of real value to their customers, whether that be utility, entertainment or community. These interactions, or platforms, are driven by big ideas and customer insight, and have a lasting life beyond a single campaign. Advertising serves as a function, too: Not just to broadcast a message, but to invite consumers into a larger, longitudinal brand experience that consumers can engage with.”

The facts and figures behind our new company still give me goose bumps: 1,000 people, 18 offices, and a client list that includes several of the biggest marketers in the world: AT&T, Barclays, BBC, Comcast, Dell, Dow Corning, General Mills, Luxottica, Mazda, Microsoft, Nokia, Orange, P&G, Samsung, SAP, Southern California Edison, and Starwood.

You might be wondering what this means for Marketing with Meaning? Am I going to shut down this blog and Twitter feed? Hell no! In fact, the formation of Possible creates an even bigger, global platform for the movement that we launched here nearly three years ago. In our company description we affirm that Possible Worldwide “is a global agency that creates meaningful and measurable interactive marketing.” We’ll be taking this movement to more countries and more clients than we ever could have on our own.

As regular readers know, my personal mission is to make a dent in the universe by helping to lead a shift in marketing from interruption to meaning—with the aim of improving business results, doing more for people, and creating jobs that we love to come to in the morning. With this new agency and new role, I feel that achieving this mission is even more Possible.

Groupon should have had one of the best Super Bowl ads during the big game last weekend. After all, the company checked off nearly all of the steps that many other advertisers have used in the past: widely known celebrities (Cuba Gooding and Timothy Hutton), a big-name director (Christopher Guest), an award-winning creative agency (Crispin Porter + Bogusky), a budget that allowed for multiple ads, and a humorous commercial concept. Unfortunately, while many other companies have taken these steps, many similarly failed to score in the Super Bowl—and there are a lot of former CMOs, sock puppets, and dead dot-com companies to prove it.

Groupon’s approach to the Super Bowl has not fared well according to however you might measure its results. For starters, one commercial stirred a controversy by poking fun of people’s support for the oppressed people of Tibet. Not only was this in poor taste to most Super Bowl viewers, but extremely risky to tweak a sensitive issue for China, where Groupon has prioritized opening up shop next.  Consumers in the USA TODAY survey ranked it near the bottom of its annual likability ranking. Nielsen pegged it outside the 10 most-recalled spots. And it didn’t make an impact in Twitter tracking.

So in what should have been its big coming-out party, Groupon made a poor first impression. The cost? Huge. The media expense of three, 30-second spots before and during the game likely ran around $7.5 million. Plus there’s the expense of producing the spots. I know from personal experience that this quality of filming, actors, and direction for three completely different commercials is probably on the order of $2.5 million in total. So that’s about $10 million in cash for a questionable return. Not to mention the fact that the company might have hurt its brand by creating controversy and looking bad in front of more than 100 million potential customers. As a famous commercial once said: You only get one chance to make a first impression.

How could things go so wrong for a company that seems to have everything going for it? Like many things in business, it comes down to the strategic choices that are made along the way. The purpose of this blog post is to shine a bright light on the lessons Groupon hopefully learned the hard way in hopes that you don’t fail as spectacularly in launching your own new product.

Lesson 1: Advertising Must Communicate the Concept of a New Product or Service

In terms of its overall company strategy, I believe Groupon has been wise to shift toward driving Awareness. Due to rising competition and a business model that is fairly simple to replicate, the company is in a race to win mind share. But when it is time to build awareness of your new product or service, the advertising must hit on the fundamentals of Concept or Copy Strategy. It must teach people what it is, how it works, and why it is right for them. And it must do so in a clear, direct way.

Groupon fell for the old advertising dogma that TV commercials—especially for the Super Bowl—must be entertaining to “break through.” You can hear this in the comments of Groupon’s CEO, Andrew Mason, as he explained his company’s commercial choices:

“Our ads highlight the often trivial nature of stuff on Groupon when juxtaposed against bigger world issues, making fun of Groupon. Why make fun of ourselves? Because it’s different—ads are traditionally about shameless self-promotion, and we’ve always strived to have a more honest and respectful conversation with our customers.”

Mason does not believe that people want to hear what Groupon is, calling it “self-promotion,” and instead agreed to make fun of his company in its very first ad! In this quote he is directly calling some of his small-business customers “trivial.” And more specifically, the idea of eating at a Tibetan restaurant itself makes the service seem like a goofy, niche idea—after all, how many people in the U.S. have such cuisine within driving distance? Is this a Groupon commercial or a Saturday Night Live spoof?  UPDATE: Mason decided to take down the ads by the end of the week.

I know it might sound crazy coming from an author who promotes Marketing with Meaning in this space, but with new products and services, consumers often find the advertising interesting. That’s right. People are really interested in what’s new, and will reward advertising that teaches them what it is, how it works, and why it is right for them.

It might surprise you that infomercials are some of the least-skipped commercials in TiVo’s regular testing. I know from my own experience in launching new products such as Mr. Clean Magic Eraser that the highest-scoring commercials present the basic product concept in a clear, direct way. Or take the example of Hyundai’s Super Bowl ad in January 2009, which simply and directly described its Assurance Program. While it was dead last in the USA TODAY poll, the ad clearly described a new benefit, and the program grew sales 6% while the industry was down 19%.

Groupon could have done so much more by taking this educational route instead of relying on entertainment. For example, because the service is focused on local deals, it might have been smarter to, say, purchase local market TV time during the game and create a commercial that could be edited to show the actual, great recent deals on products and services in these markets. That’s the kind of ad that people would find relevant, informative, and compelling. Plus, you save some money on the celebrity actors and director.

(Note: My problem with most TV commercials is that they don’t contain useful information about new products, services, and benefits that people care to see. They push product improvements that have little novelty/relevance or attempt to entertain when we already are watching something entertaining.)

Lesson 2: The Super Bowl Can’t Be Your First Game

None of the football players in the big game was putting on pads for the first time. It takes years of two-a-day practices, film room time, and firsthand lessons learned from both victory and defeat. The same goes for all of the marketing executives who suit up to bring commercials to market. This is not the time nor place to first strap on a helmet.

I do not mean to question the usefulness of the Groupon service here, and I have to give the management team and its investors a ton of credit for building what has been called the fastest-growing company in history. However, this team has never been in the big advertising game before—and it showed. CEO Andrew Mason has never had a mass marketing role. There is no CMO on the company’s roster of top management or investors. Its Director of Marketing comes from a loyalty marketing background. I think these people could make a very successful company tapping into their existing skill sets, but when you jump into the Super Bowl of Advertising, you’ve got to have an expert in your corner.

I am sure that the choice to go with Crispin Porter as its advertising agency was made to overcome this lack of experience. Crispin is known for some of the most creative, award-winning advertising in the world. It has done great Super Bowl ads in the past. But there is a fundamental flaw when there is no one on the client side with experience in managing the agency. This is the play we saw again and again during the dot-bomb years: company gets crazy amounts of investor funding, is pressured to gain awareness fast, and hires a fancy ad agency—which does what it wants with little “adult supervision.”

At best, an outside agency just doesn’t have the same skin in the game as a company and its management, so it doesn’t think about the risks and issues that might arise. At worst, an agency just sees this job as an opportunity to soak its dot-com client for millions, make friends with celebrities, and win a few awards. Sorry, folks, that’s reality—and I learned this lesson myself the hard way early in my career at P&G. Being on the agency side now, I see how an experienced client partner can make sure we do our best business-building work.

One misfire does not mean the end for Groupon, however. If anything, this Super Bowl fiasco is a costly but important lesson for Groupon and its investors: It’s a big brand now, and needs to bring in more seasoned executives to help ensure that its early promise converts into long-term success. I believe that by looking into the strategic misses of the company, you, too, can take away lessons that might save you the pain of similar moves in the years ahead.

If you work in the digital marketing world like me, you might have noticed a gradual increase in the number of recruiters calling with a wish to fill some pretty big roles in Fortune 500 companies. Just last week my friend Pete Blackshaw was hired as Global Digital Officer for Nestle. I won’t list other searches I’ve heard about here for obvious reasons, but let’s just say that some of the largest, most respected brands in the world are looking for senior digital talent. Roles like Senior VP of Digital Marketing and Chief Digital Officer are opening up. These companies are looking to hire candidates with skills that you might expect—things like several years of experience with both traditional and digital marketing. But there is a bigger theme running through this rising need. Companies are looking for digital experts who can confidently lead them through change. Digital experience, titles, knowledge, and awards do not equal leadership, but if you have the latter, the doors could open quickly.

It should serve as no surprise that major marketing-driven corporations are elevating digital leadership roles. Their consumers are increasingly going to digital media first, and the line between offline and online has become sufficiently blurred. In some cases, Chief Marketing Officers are looking for a right-hand digital native who can help them learn the new rules of the lead marketer role. And a little more than 15 years since the first websites and banners went up, there is now a pool of candidates with seniority and experience.

Despite the high demand for such roles and what should be an ample supply by now, recruiters tell me that many potential candidates lack the ability to provide the needed level of organizational leadership. I hear this in comments like, “We need someone who is confident in front of the CEO,” and, “Digital people seem less willing to bring forward recommendations and more frequently just wait to receive guidance.”

After spending my past 15 years working on both the client side at Procter & Gamble and now on the agency side, I generally believe that there are both perceived and real issues around the leadership skills of digital experts at large companies. Perception-wise, there is usually a bias to give more weight to the opinions of those who “own the P&L.” Experts in every area—from PR to Design to Product Supply—rarely have direct business decision-making responsibility, so senior leadership can have a tendency to discount what they say.

But I believe this lack of P&L ownership leads to a very real issue: Digital experts can come to believe that they are not really key business influencers, and end up waiting for an assignment or request for input rather than driving the dialogue, project list, and budget requests. One friend of mine in a senior digital position recently told me that, “I am waiting for one of my people to come into my office with a recommendation on what our brand should do next.” Instead of “managing up” and leading the thinking on what the team should be doing—say, what new technology is ripe for attention—his team was waiting for assignments to trickle down.

The good news is that a leadership mentality is something that you can take on at any time in your career. You certainly do not have to come from the client side or have owned a P&L at some point. Sometimes you just need to reset your thinking and choose to drive your work plan rather than waiting for it.

I have generally seen digital experts succeed in leading when they are given more specific ownership of projects or pieces of the business (for example, “owning” the brand website, a CRM program, or an e-commerce initiative). In these cases individuals tend to feel that they are expected to drive overall business success, rather than simply delivering on a project plan. The best digital leaders take on this mentality at a corporate-wide scale. They convince themselves (and others) that the entire company is depending on them to figure out how to win in digital marketing, and they propose and fight for the strategies, budgets, and work plans needed to win.

Thinking bigger picture—I expect that in the future we will see the “digital expert” role go away and instead brand leaders have digital knowledge and experience baked in. This goes hand-in-hand with all of the talk that traditional and digital advertising agencies will merge into one. So if you’re in a digitally focused role today, this is your opportunity, your mandate, to lead your organization into a new land. You just might become the CMO of the future.

Working vs. Nonworking in Digital Marketing

As I tell people frequently, the driving purpose of the work I do each day is to help brand marketers make the move to the next evolution of marketing. Therefore, one of the core challenges that keeps me up at night (and gets me out of the bed in the morning) is the need to provide marketers with tools and perspective that can help them make what can feel like an enormous change in habit. After years of thinking about marketing in one way, it is incredibly difficult to break principles that have guided us to success for decades. Today I wish to show how new media demands new principles and to blow up the old habit of using strict formulas to dictate the amount of money clients spend on media versus production—or Working versus Nonworking dollars.

As many readers know, in budgeting, brand marketers set aside funds for two broad categories of spending: (1) “Working Dollars”—the price to purchase impressions for an advertisement on a media channel; and (2) “Nonworking Dollars”—funds that are used to create the advertisement itself (e.g., production, editing, agency fees) and measure results before or in market.

Marketers typically wish to minimize total spending on Nonworking dollars (itself a denigrating term), as these costs are mainly perceived as a drag on ROI. After decades of work in traditional media such as TV and Print, many marketers have established guidelines for the appropriate budget percentage allotted to these Nonworking costs—usually 10% to 15% of total costs.

Unfortunately, we increasingly see brand marketers pass up opportunities to grow their businesses and change the marketing game for the better through new forms of media. By following old heuristics, many are giving up opportunities to optimize Search and Display, and are under-investing in Mobile, Social, and Websites, which can generate superior, Earned media engagement. Here’s what I believe is breaking down these historic principles:

1. New digital media is altering the formula that brands historically have applied to guide spending.

According to research by Exane BNP Paribas (adapted into the chart above), traditional media is holding at around 12% of total spending, yet newer media forms push that number up significantly. Search and Display (e.g., banners) rise to 15% to 20%, and recent efforts in Mobile and Social shift up to 55% to 60%. Search and Display have been used by brands for more than a decade each, leading to efficiency gains and a gradual decline in Nonworking percentage. However, these new media will stay higher than traditional media because they typically include in-market measurement and refinement. Brands should adjust their expectations and budgets accordingly for Search and Display.

2. Mobile and Social are even higher in Nonworking percentages because they represent the rise of Earned media that breaks from the traditional, Paid media model.

Generally, brands’ efforts in Mobile and Social do not simply turn over to paid media placement, thus breaking the age-old formulas that have been applied. Brands active in Mobile have focused on producing mobile-friendly Web pages and useful or entertaining apps. And in Social, marketers are building platforms to connect directly with consumers (e.g., active Facebook pages). None of these activities is transitioned into a typical media buy, so under the guidelines of historic habits they are labeled as Nonworking. I have seen brands decline to spend the tiny amount of money necessary to update their Facebook pages because of this self-imposed rule.

3. Although Nonworking costs may rise, Earned media offers a greater ROI than traditional, Paid/Working media.

Our research with several major brands/categories proves that Earned media engagements beat Paid media interruptions in nearly every measure. For example, Paid media does not account for the vast majority of impressions that are not noticed by consumers, while Earned media only counts those who lean forward and give attention to the marketing. Paid media must be repurchased continually, while Earned media can generate repeat visits and CRM activity. Further, the fragmentation of media consumption means that CPMs on Paid media are rising, and brands must produce more ad units across more media channels—thus lifting the Nonworking percentage even for traditional media.

4. New media offers the opportunity for scaled, Earned, and Owned media for brands that invest in creating content.

Brands that break the Working versus Nonworking mind-set and create valuable content platforms are reaping new levels of success. Examples include the Kraft 15 million person email database and successful iPhone app, Old Spice’s Twitter/YouTube videos generated 35 million views in seven days, General Mills’ Box Tops for Education with 30 million engagements per year, and Coke Rewards with more than 10 million members. And a recent Syncapse study suggests that a Facebook “Like” is worth $136 for the average brand thanks to low-cost, earned impressions, engagement, and word of mouth.

Conclusion

Chances are high that your brand or your clients have had at least a few discussions about how the next evolution of marketing is testing these tried-and-true formulas. My hope is that you have hard conversations about this change and make the adaptations that are required, rather than resting on old models that might help you sleep at night but won’t move your business forward.