Guy Kawasaki is managing director for Garage Technology Ventures. Garage's portfolio includes Claria, Simply Hired, and most recently, visual communications network FilmLoop. Previously, Kawasaki was an Apple Fellow at Apple Computer Inc. He has authored a number of books including, "The Art of the Start" and "Rules for Revolutionaries."
In the lead up to Kawasaki's appearance at ad:tech New York, starting next week, iMedia's Rebecca Weeks had a chance to chat with him. They discussed nuances of customer evangelism, new media growth and the specter of a second bubble was raised.
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Rebecca Weeks: Advances in digital technology have disrupted age-old industries such as music and entertainment. How can traditional companies survive and adapt to these changes?
Guy Kawasaki: Philosophically, they should pretend that they are two guys or gals in a garage, in their senior year of college, broke, and with an idea to create a product that they themselves want to use. Furthermore, they should consider that to these types of people their own company is a big, fat, stinkingly rich cow.
The question to answer is, "How can we kill that cow?" Because if companies don't kill themselves, then two guys/gals in a garage will. The problem is that it's very hard to put yourself in this frame of mind unless it's truly your reality.
Weeks: You reiterate the importance of using evangelism to get customers. How can brand marketers find and recruit new evangelists?
Kawasaki: To a large degree, evangelists find you. First, you have to "let a hundred flowers blossom" by sowing fields, not window boxes. Sure, you may think you have figured out exactly who your target audience is, but then get your stuff out. See where it takes root and flowers. Second, evangelists will emerge from these flowers. You just have to have an open mind to work with them.
Weeks: What are two recent examples of innovative uses of evangelism (campaigns in which you were not directly involved)?
Guy Kawasaki: Very few companies use evangelism. Sure, they hand out business cards to employees with the title "evangelist," but "evangelist" isn't a title, it's a state of mind.
To start, the key to evangelism is a great product. Very few companies have a great product, and very few companies understand evangelism. Thus, the set of companies that have a great product and understand evangelism is tiny -- about as likely as a professional hockey player from Hawaii.
Some entities that may qualify: Craig's List, Harley Davidson, Nordstrom, JetBlue, Apple, Tivo (Tivo evangelism will last only if they improve their software), and the Linux movement.
Weeks: Years ago you said that the secret to evangelism and PR is to create a great product. But now in 2005, having witnessed the strength of blogging and social media, what do you believe is buzz marketing's future?
Kawasaki: Blogging and social media are forms of evangelism. The goal of a lot of online marketing is to get bloggers and networks talking about a product.
The best way to do this remains creating a great product. Ninety percent of evangelism is finding or creating a great product. It's very hard to evangelize crap.
Weeks: Your books inspire people to solve problems in new ways. What is one problem in today's marketing world that you'd like to see someone solve in a new way?
Kawasaki: I would like to configure every gadget that I own via a web interface. At the end of configuration, I would like to transmit the information via Bluetooth, SMS, satellite, or 802.11 [wireless signal] to my PVR, cell phone, thermostat, DVD player, laptop, and car. I know that some of this can be done, but I want iTunes/iPod-level synergy. That is, something that is really done right.
Weeks: Given your experience in the venture capital (VC) and investment banking world, what does the dramatic increase in media merger and acquisition (M&A) activity this year mean to you?
Kawasaki: It's probably too late to fund a media company.
Weeks: How is the current thinking of VC and large media holding companies different than that of 1999?
Kawasaki: Ironically, it's coming back to 1999. I heard Barry Diller say today (10/26/2005) that if you get enough eyeballs, you can somehow find a business model. Deja vu. Bubble II. I need just one more bubble in my life -- this time I know what to do. I sure hope Barry is right.
Weeks: If you could build a technology start up right now that leverages the current state of consumers' media obsession, what would it be?
Kawasaki: Fortuitously, I'm involved with a tech startup that does this. It's a company called FilmLoop. It provides a photobroadcasting ("photocasting") system.
I'm not the kind of guy who sits around procrastinating about what should be. One should invent the future, not talk about it.
Weeks: What is the most fascinating way you've seen a company use the internet as a marketing weapon?
Kawasaki: You know, I can't think of one that literally "fascinated" me. That's a little scary. Or maybe the truth is that evangelism is blocking and tackling. It's not miraculous, fascinating plays. It may be digital blocking and tackling, but it's fundamentals nonetheless.
Weeks: What common strategy in marketing products do you believe leads to failure?
Kawasaki: Reliance on advertising at the expense of evangelism and PR. The best kind of advertising catalyzes evangelism and PR--it does not compete with them.
Make it social
Regardless of whether your target is baby boomers or young professionals, your consumers are probably engaged in some type of online community and will share information they like if you give them the right tools. Provide people with the ability to spread the word easily. Site add-ons like "Add This" give developers quick access to the tools that make it easy to share any content on your website.
With Facebook rolling out its own set of sharing tools recently, you can now easily integrate all of your content with Facebook in a way that allows you to see what your friends have "liked." This has been incredibly successful in the retail industry for early adopters such as Levi's. With this new technology, you can view individual Levi's products to see not only the total number of people who have liked it, but your specific friends' likes as well. This is also a great new way for brands to quickly see product popularity within a particular age group or region.
Create an integrated marketing network
While it is possible to catch a fish with a fishing pole, it is much easier to catch a school of fish with a large net. The same rule applies for your brand's digital presence.
In the digital age, there are a number of platforms and networks on which people are searching for information. Make sure you are where your audience is and, more importantly, once you have them, make sure you keep them. Your blog should lead to your website, your website to your Facebook and Twitter, your Facebook and Twitter to your mobile application, and so on. The wider your net is cast, the more fish you are going to catch.
A great example of this is a recent campaign run by Cottonelle. Cottonelle utilized outdoor media to spread the word about a campaign that asked consumers, "Which way do you roll?" The campaign immediately drove to mobile marketing -- consumers texted in their response -- which then drove to the web and social media. Each channel was also marketed and available independently of the other channels. If accessed independently, they then drove to other channels respectively. The findings were used in a follow-up campaign that then explained that the majority of people roll their toilet paper roll "over the top." By utilizing multiple touch points through an integrated network -- rather than a website alone -- Cottonelle was able to engage a much wider group of consumers through a more interesting, integrated, interactive experience.
Reward brand advocates
Once your audience is engaged and active, how do you keep them talking? An awesome website might only be viewed once, but an awesome experience will bring your brand to life.
You need to reward those users who show brand affinity by including them in the brand through exclusive content, offers, and other incentives this will keep them engaged and active. This content can be simple; recognition of your No. 1 fan on a social network will go a long way. If you have a new product, exclusive event, or any relevant news, let your advocates know first. This not only gives them the sense of community and identity with the brand but also gives them a reason to keep coming back.
Incentivize user-generated content
The definition of content has changed over the years, but the old saying of "content is king" still rings true. As your brand integrates its current communications and website strategy with social platforms, it is important that your fans are just as involved in creating content as your internal team.
User-generated content can be anything from fan suggestions and surveys to images, videos, and more. While this content will occur naturally as your fan base grows, it is important to not only provide the means of gathering this type of content but also, in some instances, reward those who participate through weekly or monthly competitions or giveaways to those who participate in brand discussions.
Guide the conversation
Whether you acknowledge it or not, people are talking about your brand. While most comments are probably neutral or positive, negative content is something that all brands will have to deal with at some point. It is important that these conversations are not only monitored and documented as a form of brand feedback, but also guided to allow not the brand, but its advocates, to describe your brand's unique selling points.
During a campaign for Prince Tennis during the 2009 US Open, a picture was posted on Facebook of an athlete with the particular racquet that was a focus of the promotion. The post highlighted the benefits of the racquet and how it improved the player's performance. A fan of the brand commented on the post, pointing out that "players customize their racquets, so they're not the ones that you get in stores."
This feedback could be potentially damaging and cause others to reject product benefits. Enough comments could lead to additional unsolicited comments, which would create a larger community of nay-sayers. By carefully monitoring the post and realizing the opportunity to turn a negative into a positive, Prince responded with a challenge: "Most players do -- what do you do to your racquet to give it the highest performance?" With one simple twist, a potentially harmful post was flipped to receive positive and beneficial messaging from Prince's fans as numerous fans flooded the page with their best tips for racquet modification.
In conclusion, the new awesome "website" is really all about delivering a great interactive experience. Know your audiences. Be where they are and give them a way to tell people that they are advocates. Let your advocates openly talk about the brand, but make sure you are guiding the conversation.
Follow these simple rules, and you will create the most awesome interactive experience.
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Collaboration, not competition
Here's the good and bad news: Agencies are no strangers to competitive threats. It's in their DNA. "To do marketing is to develop a thick skin to assailants, from every angle," says Josh Rose, chief creative officer of multi-platform campaigns at Weber Shandwick. "We are an industry, by its nature, filled with competitive people, accustomed to this notion of threats and winning in the face of them."
But, Rose says, here's the kicker: That admirable quality -- an always-on willingness to compete -- is the very same one that agency folks need to let go of if they want to succeed into the future.
"More and more, the smartest people about a brand's earned media are the people at the brand," Rose says. "They have historical knowledge that, over time, becomes less and less replicable at the agency level. Traditionally, the marketers who wanted to stay on the edge of popular culture found themselves at agencies. Something about that environment promoted the kind of contemporary thinking you couldn't find in corporate walls. That's not the case anymore. Incredibly cool and knowledgeable people now sit in marketing departments, holding the reins on the fastest growing media properties in the portfolio."
This shift is good for marketing, Rose notes -- but not for the traditional agency model. To survive, agencies need to let go of this notion that they "own" something -- a client, a brand, a relationship. Rather, they need to co-create.
"Creativity is still at the heart of what we do, but knowing how to do it effectively with others is a skill set that agencies need to retrain themselves for," Rose says. "Creative development, by and large, is something agencies protect and build walls around. I have the opportunity to sit with creatives from all kinds of agencies now, in collaborative situations. I can smell within the first five minutes who will be the person trying to establish himself or herself as the alpha. And I know, with great certainty, that that person is the least-evolved among the group."
That spirit of creative collaboration would certainly be welcomed on the brand side. Jeremy Brook, global lead for digital strategy at Heineken, says that the profitable agencies will be the ones that can link their creativity to business problems. But even then, creativity isn't likely to occur in a vacuum. "Tackle competition by showing that you can play nice and win," Brook says. "Acknowledge that collaboration with other partners -- not just agencies but media owners, specialists, and technology companies as well -- is the best way to show your competitive advantage. An agency that plays nice will often win more trust and influence at the boardroom."
The middle-man conundrum
Frankly, there's probably not a "single biggest threat" facing agencies today. Rather, they're being pressed to some degree on all sides. iMedia's own Chris Arens (managing director and publisher) sums it all up nicely under this concept: disintermediation. In other words, our industry is increasingly looking to cut out the middle men. Indeed, few "men" are as "middle" as agencies are these days.
"Agencies have taken on the strategy of fighting a war on all fronts, which means they aren't as strong on any one front that would allow them to add value," Arens says. "Instead they are trying to hold on to their land in such a way that they are putting their entire business at risk."
In essence, the agency has become a middle man in a relationship that one might argue no longer needs a middle man, Arens says. "With the automation of certain business practices (media buying) and the democratization of others (creative), agencies are faced with their clients' bringing most everything in-house and working directly with the vendors," he says. "This is ever-increasingly more real with the advent of data management platforms (DMPs) and brands' wariness about sharing their customers' data, coupled with their desire for that data to inform their media decisioning practices (enter DSPs)."
If an agency wants to demonstrate value in a world of disintermediation, it needs to position itself as a brand's strategic arm, Arens says. "Tactical execution is where agencies have made their money, but that is now becoming a volume game and a race to the bottom for pricing," he says. "The value that agencies can provide in guiding execution is inherently more important."
That means adopting an attitude akin to that of a movie producer, Arens adds. "Don't worry about executing it internally," he advises. "Worry about getting the right expert to execute the strategy and ensure the success of each tactic to drive the success of the campaign, initiatives, and -- ultimately -- the brand."
Part of becoming a brand's "strategic arm" requires agencies to understand a brand's customers better than the brand itself does. "By being the purveyor of the end user and taking a user-centered approach to advertising and marketing, the agency becomes an invaluable asset in the strategic positioning of the brand's communications efforts," Arens says.
That's a sentiment that was echoed by Sean X, digital strategy director at Amazon Advertising. "Clients understand their brands in ways the agency never will; however, the agencies tend to understand the people who consume their products, and what drives them, more than both the client and any of the players in digital who go direct," he says.
X laments the current agency structure, which is typically structured around briefs -- creative briefs, input briefs, assignment briefs, etc. "[Briefs] are needed to help focus pieces of work to achieve their intended goal," he notes. "However, the problem with that is it tends to produce a 'fill the box' type mentality.
"'Fill the box' is not going to help agencies understand the consumer in a way that emotionally resonates across all mediums," X adds. "This process puts the client, the brand, in the role of master and the agency in the role of servant. And it is very difficult to lead from the servant position."
X says that agencies can no longer afford to be the receivers of requests from clients. "The agency must lead the client in both their understanding of the consumer and what is necessary for them to have a relationship with their brand," he says. "If agencies do not do this, the Facebooks, the Googles, and the slew of consulting firms will gain stronger and stronger footholds within clients pushing analytics-based marketing, and push agencies out. And the agencies they do push out deserve to be pushed out for not being leaders of their brands, but merely responding to requests."
The human side of technology
As in so many industries, agency work is being significantly influenced -- and some would argue threatened -- by the advent and adoption of new technologies, particularly around marketing automation. Mark Naples, managing partner at WIT Strategy, says this perceived threat also represents the biggest opportunity for agencies today.
"Technology will reduce friction for buying and selling media, creative will become increasingly commoditized, and good creative will become available less expensively too," Naples says. "What will always retain its value is good strategic thinking, and clients will always pay for domain expertise that informs that strategic thinking."
The era of the horizontal agency is in decline, Naples says. "Programmatic is now a $4 billion-plus business online and is encroaching on television and print too," he says. "What used to be thought of as 'marketing automation' is increasingly isolating the big brains who can deliver and execute on the best strategies from everyone else."
Naples adds that technology will enable winners to scale. "But the winners had better be able to deliver the kind of strategy that clients in an increasingly specific and fragmented business environment require," he says.
Just as technology has flipped the media buying and selling process on its head, it's also profoundly changed things on the consumer side, says Gary Colen, CEO at AMP Agency. "Technology has completely altered consumer behavior and, thus, the consumer's expectation from brands and marketers," he says. "We are in a pull vs. push world, where consumers own the conversation. The changing consumer expectation and transfer of control requires marketers to deliver meaningful stories with equally meaningful brand experience in order to succeed."
Flexibility and nimbleness are key to business success, Colen notes. "To reach consumers effectively, agencies need to reframe the process, the structure, and the type to talent around the customer journey. Operating in traditional silos will hinder agencies' abilities to create relevant, real-time experiences to win with consumers."
A broken compensation model
OK, look. Agencies can refresh, redefine, and reposition themselves until the cows come home. If at the end of the day, the money isn't there, it's all for naught.
Enter the dreaded discussion around compensation models.
Jim Nichols, VP of marketing at Conversant Inc., says that, without a doubt, the biggest threat to agencies today is how they are being paid and how that affects the ways that they serve clients. "When I started in advertising (around the time the wheel was invented), our fees and service agreements provided sufficient money to staff and work as strategic business partners," he says. "We made good money and were able to allocate time to business-building ideas."
That said, agency compensation in those days was largely based on commission, which set a bad precedent, Nichols says. "Commission rewards activity, not insights, ideas, or sales growth," he said. "It's ultimately a dumb model if you want to encourage big thinking and ideas."
Over the past decade, the discontinuity between wanting ideas but paying for activity has come to roost, Nichols says. "These days, many agency contracts pay for tactical stuff but not for things beyond tactical minutiae," he says. "In fact, average compensation has fallen so dramatically that in many cases agencies have difficulty providing the time and senior attention necessary to be business partners."
It's all about money, Nichols says. Agencies and clients need to start having honest conversations about compensation and how it affects service levels. "Clients need to recognize that agencies are businesses and aren't able to create sustained strategic relationships with clients when they can't make money," he says. "Agencies need to stop proposing and accepting unsustainable contracts -- meaning ones that don't enable them to invest in building a long-term relationship. After all, who can blame a client for going for a low price if agencies say they can make it work?"
Aligning compensation and client needs
Reid Carr, president and CEO of Red Door Interactive, notes that the need for agencies to deliver measureable results continues to grow, and compensation programs are shifting to include performance incentives. "This isn't just driven by small clients with little budget, but by big clients like Peet's and Coca-Cola, he says. "Many agencies are not configured to operate under that level of scrutiny, as if true creative, or art, can't be measured. The fact is that every business is measured, and every company tries to align compensation, employees, and vendors with performance toward specific goals."
Don't fight it, Carr says. The trend toward performance-based compensation is a reality. "However, there are a great many things to consider when addressing it and welcoming it into the agency-marketer relationship," he says.
This starts with client selection. "In essence, is it a solid company, with a good brand, great products, and the infrastructure required to deliver to its customers?" Carr asks. "Finally, will there be the right communication and approval structures in place to act on agency recommendations? Where are the risks and where is the alignment? Are the criteria for performance easily measured in real-time and are they something within our influence?"
Carr notes that agencies must understand the circumstances under which the clients are working and how their capabilities align with the results that each client needs. "If you find a match, then you can build a compensation framework that works for everyone," he says.
Along these same lines, Denise Zimmerman, president and chief strategy officer at Netplus, says the biggest threat to today's agencies is the ability -- or lack thereof -- to define and continuously prove value in a time of digital and organizational transformation. "To survive, the agency's role must evolve with the marketplace's and clients' needs," she says. "Clients have an increasing need to prove value to their stakeholders amidst groundswell market shifts, which is further compounded by a pervasive 'do more with less' mandate." The challenge, she notes, is that the ROI value equation varies from client to client. It can be measured in sales, leads, new customer acquisitions, customer loyalty, earned media, brand awareness, market share -- you name it. The key is aligning the agency's value with the client's needs.
"Agencies and clients must work in partnership in a mutually defined and understood value exchange, driven by shared insight and goals," Zimmerman says. "There is an unprecedented opportunity for agencies to be helpful stewards, advisors, navigators, and creators, [especially when] partnering with clients during a time of transformation to help drive accelerated positive business outcomes. The net-net may be a wildly successful ROI on a campaign or new product launch, but higher value is always returned when agencies and clients partner to drive sustainable, iterative success."
Lori Luechtefeld is executive editor of iMedia Connection.