Perfect Crowd

Freemium and market research

"The freemium business model works by offering basic services for free, while charging a premium for advanced or special features" (Wikipedia).   By letting the basic service go for free  we let people use, taste and experience the brand,  turn them into fans and then trade them up to premium service. Skype, Second life or the latest albums of Prince and Radiohead are the most famous examples of freemium.  I know quite a few people who traded up to premium in case of Radiohead latest album, buying the £40 pack, containing the CD, vinyl and artworks...

What is the £40 unexpected premium in market research? It is easier to define the basic service first. Data, charts, even glossy PowerPoint charts are the basic things. Data are becoming a commodity and market research should make data available now when there is still interest in it.  Data should be free or available at a low cost. 

The basic in market research industry still cost a lot though.  Market research is still growing mainly through the sales of commodities - data, charts, cross-tabs, benchmarks and focus groups.  Similar to tobacco companies, the traditional market research is cashing on ignorance of its consumers: some of the old research methods are best sellers in developing markets such as Eastern Europe where the confidence and expertise of clients is low.

Market research has re-branded itself in recent years  and market researchers became insight managers - they promised to gather insight, transmit knowledge and educate their clients. If we had succeeded in this transformation there would be less market research and more educated
clients acting on gut feel. Isn't the true goal of market research/market insight to obliterate data gathering, to throw it away like a person with broken leg throws away crutches when the leg is heeled? Well, the crutches are not flying away as yet.

It is not for lack of intelligence in the market research industry.  There is lots of great thinking and really interesting papers talking about the need to understand emotions and metaphors, about the unconsciousness, neuroscience or anthropology.  I read these papers with interest until the almost inevitable anticlimax (it always comes at the end) when this great thinking is usually transformed into something very small, into implications and execution for market research. The results are (usually)  re-dressed but still the old and mundane ways of data gathering,  multiple-choice questions with pictures or photos or  scales of different colors.  These are pretty good ways for engaging  consumers in filling the questionnaires but they don't seem to be worth the great efforts.

This approach (great thinking, mundane executions) often works for the research buyer.  We, on the client side, can boost our image of "progressive researchers" by buying the latest research gadget that is just the old mechanistic test re-dressed to look cool... I don't think that there is a need to radically innovate ad tests, concept tests etc. - they are good enough (meaning not that good at all)  for what they are designed for, that is, to help us in case our judgment is failing us and to be thrown away when we know more.  It is the  basic of market research and it should go free (OK, it should be cheaper, one should be able to do such test in a couple of days for a couple of hundred euros).   

What is the premium then, the £40 goodie bag? The junior researcher sent by the senior researcher to the client to read from a shadow on the wall that 35% is more than 20%? Nope. The reports from four focus groups that always mysteriously fit to 50 slides? I don't think so.

I talked about this over a coffee with John Kearon a couple of months ago.  "Meaning," said John, "meaning is the £40 goodie bag".  Meaning, understanding of people, products, brands and the  way people, products and brands interact is the premium.  It sounds obvious because so much lip service has been paid to it but the money is still elsewhere - with the basics.

Things are changing, even in market research.  Those of us who have seen one (or two) political systems crumbling down in our lifetime can't be fooled by talk about "growth and great opportunities," such talk is often masking  fear, agony and the beginning of an end .  Market research will change radically. The global market research agencies of the future  - Google, Facebook, MySpace, Twitter - will take care of the data. 

The network of creative experts will take care of the meaning.

Philosophy of "Narrow and Deep"

Recently I watched an interview on CNBC Asia Market with Jeremy Moon, founder and CEO of Icebreaker. Yes the same Icebreaker I mentioned in my last entry. Apart from the interview being absolutely fantastic and interesting it had a link to the entry "Ethics in Marketing".

One of the things that were most interesting was Jeremy Moon mentioning strategy of "Narrow and Deep". I don't know if it's an Icebreaker thing or not, but that's besides the point. This philosophy means establishing relationships that are very close, family like and long lasting. As Jeremy said "... this way it makes no sense for them to screw us and for us to screw them...". This philosophy in terms of relationship penetrates basically to all partnerships Icebreaker establishes.

But it's not just person-to-person philosophy and it's not one-dimensional. This approach is towards suppliers, retailers, third party partners, employees. It's also a philosophy penetrating the very subject of business in trying to focus and in fact focusing not only on one thing, but on one niche thing and I would maybe go even further in saying supra-niche field.

The most fascinating thing I see on this philosophy is that "Narrow and Deep" in the Icebreaker understanding is actually a tool aiding to fill up the cup of ethics in business and marketing. I guess this would be best described by another of Jeremy's quote:

Q: Are you thinking about listing the company?
A: No, I'm not doing it for the market, I have an obligation to fill towards the growers, retailers, employees... I love my job.

Global vs. local - at Millward Brown

I was at Millward Brown a few weeks ago, participating at a discussion moderated by Andy Truslove, who asked us (Richard Swaab from AMV, James Eadie from Coke, Dr. Val Curtis from London School of Hygiene and Tropical Medicine and me), "whether international advertising works most effectively with one central global campaign or whether advertising should be targeted towards particular regions or cultures".

I thought that we had a really good debate, without really answering the question. Here are my random notes:

*When we talk about global brands, we are talking about  Western brands (born in the US, UK, France, Germany that are exploiting the opportunities in the East (= Asia and CEE) and South (LATAM).

*The first wave of expansion of global brands that culminated in the 1970's  and 1980's,  consisted of American brands such as Levi’s or Coke, that is, brands based on the mythology and image of America and tied up with America's pop culture.

*Since the Berlin Wall came down, the world has become one world (in theory) and key Western manufacturers started to develop global brands, exploiting opportunities in the East. (Even conservative manufacturers such as Wrigley or Masterfoods were suddenly looking at global needstate and at the way how to make their brands work across markets).

* The new generation of global, Western brands (late 90's until now) was built on broader positioning (against the earlier, more narrow, functional "American" positioning). These brands have been built on "pieces of human truth" and  higher order human needs. Their territories are bigger and rewarding and they (in most cases) work across borders, e.g. Dove's "Real beauty," Coke's "Optimism and connectivity," Omo's "Dirt is good", Apple"s "helping everybody to express their creativity".

*The broad brand territories are rewarding but they entail the danger of "virtual consumption", i.e.  the "human truths" resonate with people, people are being entertained BUT without giving the brand an emotional ownership of the "truth" or an insight...

*The feverish effort to generate new "consumer insights"  doesn't help - we often grow insights away from brands by being focused on consumer needs only and forgetting about the needs of brands.

*Brands cannot pick and choose which piece of human truth to own. To develop an ownable territory takes effort, time and consistency. Coke owns the territory of " optimism and connectivity" successfully, because they have been dominant and consistent in this territory for a long time (going back at least to the post-WWII optimism in the US and Europe, to which Coke was attached).

*If a brand truly owns a broad territory, it can then move beyond executional uniformity. Every piece of communication will be recognized as belonging to the heart of the brand (without the need for uniformity or excessive use of literal brand cues).

* These broad brand territories often challenge existing stereotypes. We talked about the difficulties in communicating the counter-cultural messages to people in developing markets who haven’t had the time and resources to experience the stereotypes that we are trying to challenge (i.e. the "beauty" stereotypes that Dove is challenging). In this case, executions need to be adjusted in order to remain aspirational.

*The structures of the different companies that market global brands are similar: there are global centres that generate strategy and global campaigns and the local markets that generate cash. The relationship between the centre and the local markets is often difficult but could work well if the locals stop endlessly challenging (global strategy, campaigns...) and start concentrating their effort on activating in stores, and if the global centres listen to the local markets and recognize great local ideas with the potential to travel (and that requires humility)

*For instance, the 2006 World Cup advertisement for Coke was developed in Argentina, recognized as outstanding by the centre and then run in all countries.  Here is a Chinese version of it:

* Market research plays an important (and often problematic) role in the global vs. local (and regional) split. It is being used as weapon by both side to promote arguments and counter-arguments. Often, what seems to be more important than the research findings (which are often relative and open to interpretation) is the physical getting together and the bonding (local, regional, global) over the findings.

*We touched on the "global sources" of creativity (in advertising). There are many places with great talent but the two key global centers when it comes to creativity seem to be London and Buenos Aires, i.e. the British use of humour (Richard said that humour is the closest the British can get to any real emotion) and the visual and poetic Argentinian style:

So, one global campaign or a few ads targeted to key markets? It depends.
What does it depend on? The region (Is it the Czech Republic we are talking about or China?), the budget, the category, the brand and on the task...