Brett King

Posts Tagged ‘advertising’

Google Wallet is not about Payments

In Engagement Banking, Future of Banking, Media, Mobile Banking, Mobile Payments on June 6, 2011 at 02:27

Last week Google announced their long awaited NFC-trial for mobile payments. On the face of it, many perceive that Google’s play is an attempt to cannibalize the lucrative payments market, but if that was the case, why has Google not taken a share of interchange fees from Citi and Mastercard? In addition, Google is supplying contactless point-of-sale units to merchants participating in the upcoming NFC trial free of charge. Why on earth would they do that?

It doesn’t make sense

In early May the Smart Card Alliance conference held in Chicago, Wal-Mart’s Jamie Henry was asked directly about the retailers plan in respect to point-of-sale. His reply was telling:

“We’re interested in helping to migrate EMV to the U.S. market. We view it as a much more secure transaction, and we want to provide our customers with the most secure transactions in the market place,” Jamie Henry, director of payment services with Walmart treasury organizations (source: NFC News)

Henry has said that 100 percent of Wal-Mart’s terminals already support EMV cards. However, when asked recently at the Smart Card Alliance Annual Conference about the role of NFC or contactless technology in the greater POS environment in the US, Henry was reported as saying

“There’s no business case for NFC yet”

Many bankers take a similar stance in respect to mobile payments support for NFC phones, stating that until contactless point-of-sale terminals have broad enough distribution, customers won’t be able to make use of their NFC phones and thus the expense of rolling-out a trial and investing in the supporting technology would be premature.

So why would Google, who admittedly have some pretty smart people in their team, not only invest in an NFC-trial, but also give away NFC point-of-sale terminals free of charge to partner merchants?

Maybe it does make sense

The thing is, Google sees the big picture.

NFC is not about payments modality alone. It’s not simply the shift from chip and PIN or contactless plastic to contactless mobile payments. It’s about what the mobile phone can do as a payment device that a plastic card can’t – it can give you context.

For example. The number one enquiry to retail banking call centers today is still “What’s my account balance?” Combining that piece of information with a payment device gives you a very powerful context for your everyday personal financial management.

If you are focused on a savings goal, I can show you the potential negative effect of making a big ticket purchase.

If you are at a retailer about to use a competitor bank’s credit card, I can offer you a no-interest payment plan through my bank.

I can tell you if you purchase that big flat screen TV that you won’t be able to make your mortgage payment due in the next 3 days.

I can offer you a really great deal at a retail outlet that you just walked into or you are walking past.

Google Wallet is simply a platform for Payment-based marketing

Google has worked out that the context of payments is perhaps the biggest advertising market ever to emerge, far more impactful and lucrative than search-based advertising. This is about offering you compelling, relevant and timely messages that improves your service experience in-store. This is about positive behavior on the part of your service providers that produces extraordinary loyalty through relevancy and responding to your behavior in a way that benefits you day-to-day, not just when you go to the bank to ask for something.

The future won’t be written by banks and marketing organizations that are passive. It won’t be written by marketers who broadcast message after message hoping you remember a brand when you want to make a purchase.

The future will be written by organizations who know you so well that they anticipate your needs, make it very simple for you to capitalize on the relationship, that saves you money and respects your time and privacy. Trust can be earned back, but it is about me trusting you enough to receive your offers and you not burning that trust with irrelevant direct mail, newspaper ads and TV commercials.

The future is messages wrapped around the context of a payment, and Google wants to own that space. It doesn’t look as if there’s really anyone ready to challenge them on that front.

Whatever you think of Google Wallet, it’s clear they have probably the most compelling business case of all for pursuing NFC payments, and it has nothing to do with competing with banks, but everything about owning the customer.

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The Mad Men are Dead – Long Live Engagement

In Engagement Banking, Media on September 7, 2010 at 02:46

The perfect Ad is something advertisers dream about. Some “mAd” men, go their entire career searching for it, others who are creatively gifted, come up with home runs, Gold Lions and accolades time and time again. Mad men have come to believe that if you can get the perfect mix of emotion, message, imagery, nuance and impact – that you can practically sell anything. There are Ad’s that make us laugh, make us cry, sit in awe, or clutch our hand to our mouth in disbelief. Messages that have the ability to inspire, change our opinions and most importantly get us to part with our hard earned cash in exchange for a little piece of that same magic that was embodied in that message.

There’s only one problem – those messages … aren’t getting through any more.

The problem

The digital world has been upon us for close to two decades, starting with the emergence of the commercial internet back in 1994. In October 1994, HotWired (Wired Magazine’s former online brand) made history by placing on their website the very first banner ad for none other than AT&T.

Figure 1 - The first ever banner Ad (Credit: Hotwired and AT&T)

That may not have seemed significant at the time, but it represented a very significant shift in advertising modality – a move from static messages, to interactions in response to a message. The difference with this Ad was that you could ‘talk back’. It allowed you to have a dialog of sorts, to be part of the experience, rather than just passively watching, listening or reading the Ad. Why is this important?

Marketing 101 states that consumer behavior is defined by things such as stimulus response, cultural and core values, social influences, personal determinants, and psychology. Marketing (and Advertising) has been mostly designed to influence behavior – the accepted mantra being that if those messages work, then the ‘brand’ or product becomes embedded in a ‘choice-set’ of filtered options. The premise is that if the message works, then you will recall the product or brand at the critical time. We’ve been delivering those messages by broadcasting to audiences through mediums such as our TVs, newspapers, radio, direct mail catalogues or offers, and billboards.

Over time, however, as consumers have been bombarded with more and more messages in greater frequency and breadth, it’s become more difficult for advertisers to get ‘their’ message to dominate and influence your behavior. This has lead to increasingly brash TV Commercials (i.e. think Superbowl) and other such Ads driving the psychology of advertising into a superfine art and science. The problem is that these broadcast methods are largely failing today. Why? Simply put, the message is no longer enough, as consumers we have to be engaged.

The death of the campaign

In 2008, the Internet surpassed all media except television as the primary source for national and international news. In March 2009, the 146-year-old newspaper Seattle Post-Intelligencer went completely virtual. Since January 2008, at last count, 58 regional newspapers in Britain have “folded”. New York Times reported a $35.6 million loss for the 2009 third quarter alone due to falling Ad revenues. In 2009 TV Ad spend declined by as much as 22% in the US, declines of 27% and more were recorded in radio too. In the UK, TV Ad revenues were down 12–14% in 2009, but OFCOM has forecast the total TV Ad spend in the UK could fall from £3.16 billion in 2007 to £520 million in 2020 – an 83% decline. This is a trend that we’ve been seeing for more than a decade. In fact, the only forms of Ad spend that have consistently increased in the last 10 years are web, mobile and most recently social media based advertising.

This is more than a shift in modality, it is a change in the way we process marketing messages. Those that have the highest impact are contextual, based on our own searches, criteria, classifications or psychology. Increasingly, they are time sensitive and are in response to a behavioral trigger, event or a location. Because of increasing use of digital interactions, the messages have had to become experiences with the intent to engage us and produce a response in real-time. It is no longer sufficient to deliver a static message and hope for a latent stimuli response…

This is why the campaign itself is failing. Campaigns rely on the assumption that if I choose the right segment, and marry the right message – I can get a latent stimulus response that will result in a change in buyer behavior at a future date. But the digital space is teaching us that latent response based on broadcast messages are simply not for us – they aren’t targeted, we can’t respond in real-time, and more often than not, they are delivered when we don’t have a need; so we filter them out, ignoring them – thus they just aren’t effective. In fact, we even have technology now such as TiVo to automatically block them. While brand will still be able to be reinforced through broadcast (if you can afford it,) campaigns cannot possibly survive because the ROI is not sustainable with decreasing effectiveness.

As modality shifts, "Messages" like this are untenable thru traditional broadcast media

Engage me – don’t tell me

So that’s why advertisers need to think differently about the journey or behavior of the consumer. We have to forget the concept of producing a latent response through the impact of telling consumers a message, we have to aim to deliver a message that elicits a response in real-time. In that respect, the more poorly targeted the message is, the greater the likelihood is that the engagement will fail – so broadcast campaigns designed to be one-size-fits-all need to be exorcised from our marketing departments today. We need to be thinking beyond the message – we need to create an engagement experience.

Engagement Banking

For bankers, it’s going to be even worse. Banker’s are relying not only on a latent response to a campaign message, but they’re also relying on you to physically walk into a branch to demonstrate your response to that message. Increasingly this is just not going to happen. The engagement has to be brought to the customer! Think blockbuster, no amount of advertising is going to change my behavior when it comes to downloading movies and getting me back in the store…

Last week Sapient, Geezeo and BANK 2.0 launched what is the first ever digital whitepaper based on this concept of engagement banking. Check out the engagement and tell me how you are planning on reaching your customers and getting rid of the campaign – ping me on Twitter (@brettking) with the hashtag #engagementbanking. Whatever the case may be, starting phasing out campaigns today – get targeted, get digital and engage!

Digital versus Traditional Advertising? Wrong Question

In Media, Retail Banking, Strategy on May 5, 2010 at 05:15

There is a debate that has been raging in Advertising quarters for almost a decade now – which is better Digital Media or Traditional Advertising. The fact that this question is being asked at all shows that most advertisers and institutions don’t get consumer behavior in the interconnected world. Considering that agencies are in advertising, you’d think they would get it right? Considering the declining ROI in traditional marketing approaches, you’d think marketing staffers would get it too right?

Over the last couple of years the debate on Advertising spend has centered on where the money is going. In March 2008 General Motors shocked the traditional advertising world when they announced they were shifting US$1.5Bn of ad spend to the digital space and while some shift towards digital has been hailed as ‘game changing’ most advertising spend is still heavily biased towards traditional media. Susan Wojcicki, Google’s vice president of public policy and communications, was quoted in Digital Media Buzz as arguing that Ad spending has not caught up with consumer behavior.

“U.S. users spend 12 hours per week online, which represents about 32 percent of their media time. However, online advertising makes up only 13.6 percent of advertising spend in the U.S.”
Susan Wojcicki, VP – Public Policy and Communications, Google

This is accurate, but what is holding back the shift? Long entrenched marketing behaviors, lack of digital skills in-house, lack of agency drive away from traditional media buy, or lack of understanding of changing consumer behavior…

It’s probably a combination of all of these. The fact that most financial institutions, for example, have minimal social media or mobile advertising spend today shows either a complete lack of understanding of consumer behavior, a lag in internal adaptation of ‘digital’ or organizational inertia that is just too hard to shift?

I think all of the above contribute, but the real problem lies in the ‘campaign’ mentality. Brand marketing is very well suited to traditional media, because it is about creating a ubiquitous recognition of your brand, logo, image or message. To fit broadcast mediums for product ROI advertisers created the campaign – really mini product or service branding initiatives designed to create recall at a time when customers are compiling their ‘evoked’ set of purchase alternatives. But while the campaign worked in the 70-90s utilizing broadcast, this is no longer the case in the digital world.

The question over Digital or Traditional is the wrong question. The question should be, how do we better engage customers today so that they are compelled to buy?

Campaigns on traditional media are struggling in the one area that digital is increasingly effective – measuring ROI. Measurability is a strong advantage in the new world because the ability to understand why, when and where customers need a product or service should be considered the Holy Grail. But traditional broadcast methods such as TVC, Radio, Newspaper, Direct Mail, and static outdoor, only work efficiently when it is a static message directed at a wide audience that doesn’t need to change.

It was for this reason that Pepsi started its shift to Direct Response Marketing this year as they moved their entire SuperBowl TVC budget to online and social media. At the Sears Annual General Meeting Edward Lampert explained that even a major retailer is having to conceptualize a shift away from broadcast methods to much more targeted conversations with customers, something that static media can’t deliver.

“It’s not just us broadcasting to customers any more, he said. “It has to be interactive, and it has to be relevant.”
Edward Lampert, Chairman of Sears

Retail organizations, whether banks, financial institutions, or retailers like Sears need to understand that Brand advertising can survive and thrive with traditional media, but campaigns are effectively dead in the IP-conversation space. Companies need to re-gear their marketing teams toward conversations, not just telling their customers a message and hoping for brand recall at purchase time.

In the next 5-7 years TVCs will largely disappear because consumers aren’t watching them, why? Because we’ll either be downloading or TiVo’ing and Ads won’t be a part of the experience. Newspaper will shift to digital format so that ads in that space will go from static to just like web banner Ads. Radio will survive, but perhaps be delivered differently based on subscription feed models. Billboards just like Newspaper will move to digital format also. The question over Digital versus Traditional is kind of redundant. The way media is morphing everything is going digital, even traditional.

What marketers and advertisers need to work on is the conversation, not broadcast. It takes a lot more competency internally, and initially the cost of delivering conversation marketing is alot more expensive than traditional broadcast production. However, the ROI in direct response, permission or conversation marketing blows anything in the traditional media measurability space away. We have the technology now to target messages at customers at the right time, across the right channel, but we’re not using it because we can’t fit campaigns into this model. It’s tough – but reengineering our approach to customer engagement is the only way through this discussion.

Bank marketing staffers better go back to school, and fast…

Banking’s biggest challenge – Marketing 2.0 (HuffPost Blog)

In Blogs, Media, Retail Banking, Social Networking, Strategy, Technology Innovation, Twitter on February 11, 2010 at 13:09

See the original entry on Huffington Post

Point-of-impact MMS offer

A location-based offer at the retail point-of-sale is 550% more effective than Direct Mail 3 weeks before

There are some massive changes occurring in the banking space today, but none so dramatic as what is happening in marketing and advertising.

Direct mail offerings have been declining rapidly since 2006. In 2009, less direct mail was sent by banks than in the year 2000. Direct mail has declined 32 per cent since 2007 alone.

In 2008 the Internet surpassed all media except television as the primary source for national and international news; this has taken its toll. In March 2009, the Seattle Post-Intelligencier or the “PI” as it was known, a 146-year old newspaper, closed down, citing rising costs, falling revenues and declining circulation. Since just January 2008, at last count, 55 regional newspapers in Britain have folded. Of the top 25 newspapers in the U.S. in 1990 (the year newspaper employment peaked), 20 of those newspapers have seen declines (on average reporting circulation down by more than 30per cent), and two have been closed down or declared bankrupt. New York Times reported a 30 per cent fall in advertising revenue, resulting in a $35.6 million loss for the 2009 third quarter alone.

In 2009 TV advertising revenues in Australia fell by more than 12.6 per cent in the first half of the year. In the first quarter of 2009, the U.S. recorded losses of more than 14 per cent in TV ad revenues in normally stable locations such as the Bay Area and New York, and is expected to suffer a total decline of 22 per cent for the year. Declines of 27 per cent and more were recorded in radio ad spend for the U.S. for the first half, even worse than the decline in TVCs. Yet, in a recent report commissioned by UK’s OFCOM forecast the value of TV ads in the U.K. could fall from £3.16bn in 2007 to just £520m in 12 years’ time. That’s an 83 per cent decline.

Bank’s are finding their brands are no longer able to just get by with brand marketing, after all BofA and Citibank have great brand marketing, but are being hammered by customers on Twitter, YouTube and elsewhere. Thus I find it amusing that ‘digital’ or interactive marketing still makes up only a fraction of marketing budgets for banks in 2010. The very fact that banks separate ‘digital’ in respect to budget or spend, signifies the challenges of changing a culture that is so dependent on direct mail, print, radio and TV – all broadcast mechanisms.

Let’s play Devil’s advocate for a moment. What will the advertising space look like in 5-10 years? It’s more than likely that TVCs will be gone – with declines in revenue we’ll have to find another way to pay for TV either through subscription or download, but there is no business model that indicates Free-to-air TV can survive with out Ad revenue. Direct Mail will be relegated to very specific segments, and then only for loyalty promotions. Newspapers will be on iThingys with paywalls – we’ll subscribe to newspapers and virtually every newspaper will be digital. Billboards will be all digital, but not based on TVCs – they have to be even more efficient. Physical magazines will be a luxury item, most magazines will be digital. In this space nearly ALL advertising will be digital within 10 years..

TiVo already strips out TVCs. SPAM filters on our phones and email ensure the eDM ain’t going to work. We need something more. In my book BANK 2.0 I call this “Point-of-Impact” marketing. Banks need to insert their ‘value’ message into the transaction where it will have an effect, not send out millions of messages hoping for ‘brand recall’. Brand marketing will still exist, but campaign marketing needs to shift to point-of-impact. To illustrate, when you are on BA.com, United.com or CathayPacific.com and I’m booking a flight, that is where you need to sell me travel insurance. When I’m on a real-estate website, that is where you can target me with mortgage deals. When I walk into Bloomingdales, Marks and Spencer, or Armani Exchange send me a location-based MMS coupon on my mobile offering me a discount using a specific card. Get me when I’m interested, when I need it.

But this requires a complete rethink of the structure of the marketing department, and a complete new set of tools. This is the biggest fundamental change to the marketing department of the bank…well ever. I’m not surprised that quite a few of the banks I’m talking to are not sure how to make this transition, but that doesn’t make it any less likely.