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Planning for Change

March 26th, 2012 by Kip Cassino

It seems passé to say that the marketing world is changing rapidly, but it is.  And faster than ever.  A lot faster.

According to entomologists, it took nature 4.3 billion years to create the unprepossessing earwig. This is important only because some other scientists tell us today’s computing devices – the one in your pocket, under your arm, or at your desk – have about the same intelligence as an earwig.

Here’s where it gets interesting. The first semiconductor devices – “chips” with more than one circuit imprinted upon them – appeared 42 years ago. If we compare the evolution rate of the chip to that of the earwig, we get a ratio of 0.0000000097:1. That is, for every year it took to evolve the bug, it took a ninety seven hundred billionth of a year to evolve its electronic intelligence partner. If this rate continues, we’ll see chips as intelligent as we are within a decade, by 2023.

What would a world where devices are as smart as we are look like? It is impossible to envision any more than our great-grandparents could foresee the impact of plastics, automobiles, or airplanes. We are chained to the attitudes and realities of our past. Psychologists tell us that less than 1 person in 10,000 can foresee a future that’s very different than the present. Here are some examples:

  • In the 1850s a renowned scientist predicted that human travel by rail would prove impossible because no one could survive speeds greater than that of a fast horse.
  • In 1927 a prominent economist predicted that, if telephone connections continued to grow at then-current rates, by 1948 one in three Americans would be employed as a switchboard operator.
  • In 1950, the president of IBM predicted that five computers would be sufficient to service all computing needs of North America.

Track record aside, we have to make the effort to foresee the future. Our grandparents had nearly a century to create their future. We may have less than 12 years – and parts of the future will come sooner than that. Think of how quickly the world has turned already. In the early 1990s we used acoustic modems to access AOL at a BAUD rate of 300 bps from computers that ran DOS and sported 10-megabyte hard drives. A few years later, the future of the Web as an advertising medium was still the subject of debate. Today, we have watched online disrupt newspapers, magazines, the Postal Service, book publishing and the record industry. Mobile devices promise to eliminate demand for cameras, end landline phone communication, and change the way people shop. What will next year (and the year after that) add to the list?

Here are suggestions to help your company anticipate the future:

  1. Determine the parts of your business model that make your organization successful.
  2. Evaluate each according to its vulnerability to change. Use scale where 1 indicates “least vulnerable” and 5 indicates “least vulnerable.” Don’t wear blinders. Don’t limit yourself to changes that have happened already. Imagine changes that have yet to occur but which seem logical based on your experience.
  3. Estimate how your organization would be affected if the business model elements you rated “1” were swept away by future change.  That’s right. Base your future survival plan on changes to the elements you think have little or no vulnerability. After all, it’s not the anticipated changes that hurt.
  4. Engage the best minds to help you create a plan to react to and survive the change you’ve identified.
  5. Repeat this exercise. Re-evaluate your scores often. When you can’t think of anything new to add, ask others to help.

When you’re done, if you’ve done a good job, you will have developed a survival plan. Of course, you’ll never really be done. But you will have a good idea of what the future is likely to bring.

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The More Things Change…

February 17th, 2012 by Kip Cassino

We’re going to talk about what’s coming – about the future. But to do so, we first have to go back to the past – 30 years back, to be exact. In 1981 Adam Osborne had just unveiled his Osborne 1 computer, the first portable (or laptop) to hit the small but growing PC market. The Osborne computer was indeed portable, but just barely so. Even a strong young man had trouble carrying one more than a few blocks. But this early computer made history in another way.

Back then, the general assumption was that anybody who wanted to use a personal computer would have to know how to program. Osborne aggressively challenged that premise, and predicted that in the future less than one in ten PC users would be programmers. His statement caused furious debate at the time, but these days it’s just limpid fact. Most people happily surf the Web, check their e-mail, compose text, construct spreadsheets, play games, and do a thousand other things – all without writing a single line of code themselves.

Cycle forward to today … and tomorrow. Both Apple and Microsoft have announced big changes to their next operating system releases. The announced changes will make both feel more like tablets than desktops. Both will offer access to apps, those nifty micro-programs that are so much fun to use, so easy to get, and so cheap that nobody minds dumping those no longer useful or used.

Here’s a prediction: by 2016, most computers available to consumers are going to look and act just like today’s iPhones and iPads. That is, they will be able to communicate like cell phones, they will all have built-in GPS, and they will feature cameras and touch-screen interfaces. Most importantly, they will depend on apps instead of expensive, pre-loaded software for the functionality users will want. In fact, what we now call computers will have largely faded from the scene – except for some business and gaming applications. Personal computers will be replaced by mobile devices of one sort or another.

I don’t expect the kind of pushback Adam Osborne got for his prediction. For one thing, what I’ve described is already beginning to take place. Tablets and smart phones are replacing desktop computers and laptops in many homes and businesses. The app business is thriving, with hundreds added to “app store” inventories every month. All indicators point to a post-computer future. Your children’s kids will wonder what a computer desk was for.

The cloud will grow in importance to this new digital world, and that’s another replay of history. Back in the ‘60’s and ‘70’s, we used to call it time-sharing, and it allowed us to search enormous databases without taxing the capabilities of our small computers and dumb terminals. We relied instead on renting computing power from the water-cooled giants of IBM and other industrial firms. Ever wonder why some of the older business parks have big, glassy areas in the fronts of many buildings? They were put there when those buildings were constructed, to show off the resident firm’s computer. It typically filled the room and was a point of great corporate pride. The techs who worked in these glass-fronted rooms often wore white lab coats and gloves.

All that said, some things won’t change – at least not much. The Web will still function much as it does now, as time goes by perhaps more as a foundation for social sites than as an entity of its own. There will probably still be websites for some time to come, although some businesses already question the need for them, choosing to go straight to social sites instead.

The world will change a lot during the next five years, at a faster pace than it ever has before. How much more change will there be by 2020? The short answer: a great deal. We’ll report it to you as soon as it becomes clear to us. After all, at Borrell that’s our job.

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YAM’s Bigger Bomb

November 9th, 2011 by Kip Cassino

Yahoo, Microsoft and AOL (let’s call them YAM) plan to share unsold premium display ads to “appeal directly to Madison Avenue’s desire for scalable reach – something that has been increasingly hard to come by via TV, but not yet achievable online,” according to an article in Media Post.

The story reminded me of the effort during World War II to build bigger and bigger bombs. At the start of that war, 500-pound bombs were the standard. As conflict continued, 2-ton, 5-ton, and even 10-ton bombs were developed.  But as it turned out, the secret to ending the fighting did not reside in a heavier bomb, but in a single atom.

The YAM deal will undoubtedly yield some results – just as bigger bombs made bigger holes during World War II.  But it doesn’t hold much long-term promise, in my opinion.  The big Madison Avenue agencies persist in trying to reshape the Web into another mass media choice. They talk about scalable reach and CPMs – vestiges of the days when reach was measured by audiences, large groups, markets and households.  The world of concentrated media is changing to one of fragmented, personal media.  If Moammar Gadhafi were still alive, you could ask him.

The Web doesn’t easily fit any of these parameters.  It is, and always has been, a personal medium, more like a letter than a magazine. As users move their online reception from static computers to portable tablets and smart phones, the personal nature of the Web becomes more prominent while the mass communications side of it continues to wither.

Thirty years ago, when PCs were first gaining a foothold among consumers, a debate raged over whether people who couldn’t program computer code would ever use them. That debate has long since been settled. The debate now is whether people who don’t use spreadsheets and word processors – the bulwark of the static desktop – will use computers. I submit that the immediate and growing demand for tablets has settled that argument as well.

Most of what we use computers for can easily be done with smart phone or iPad apps, which are also more fun to use. They’re cheap, they have no learning curve to speak of, and when we are done with them they can be erased without qualm. Sure, there are work-related apps we can download as well, including some that can link us to desktops for “serious” computing. Some of us will continue to want and need these. Most of us will not.

Chart Copyright 2011 Borrell Associates, Inc

The chart shows where local online ad spending is most likely to migrate as these trends persist and grow.  It’s not that advertisers will stop sending ads to stationary computers. It’s just that most ads will be received by mobile devices.

Advertising to mobile device users follows different rules than the ones set up for the mass media we have all learned to use. In fact, it won’t be advertising any more – at least not entirely. It will be a mixture of advertising and promotions that appeals to individuals, not mass audiences.

Some marketing innovators will learn the new rules and thrive in this new media world. Some, like the Madison Avenue agencies of today, will try to bend the world back to a mass audience model.  The chart offers a clue as to how well this might work.

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