Investing in the Cloud

Another year, another Cannes — a smaller, quieter version. The twin forces of global recession and massive technological changes are forcing the ad industry’s most celebrated festival to change — just like the agencies and clients that attend it. The Cannes organizers have added new categories in recent years, like design and PR, to keep up with these changes. But I believe we’ll soon need new categories to honor marketing programs that are technology driven.

Cloud computing is one of the hottest topics in IT circles, but it should be equally discussed among marketers. It’s another technology trend that’s already having a tremendous impact on consumers. And where consumers go, marketers need to follow.

Cloud computing is fueling intense interest as a way to reduce technology costs within organizations. But the same dynamics can fuel savings in marketing costs by enabling brands to shift to a new, ongoing dynamic with consumers, one that doesn’t rely on the costly media expenditures of our campaign-centric advertising world.

Let’s start with some simple definitions. When we speak about “the cloud,” we’re referring to any kind of Internet-based service that allows its users to upload, store and share personal “stuff” online. If you upload a video to YouTube, that video is in the cloud. If you upload a photo album to Flickr, those photos are in the cloud. If you sign up for Facebook or MySpace, your profile lives there, where it intermingles with hundreds of millions of other members on the social network. Medical records will soon move to the cloud as companies like Walmart and Dell are investing enormously there. And so on.

The final barriers to technology adoption are cost and simplicity, and the cloud has an answer to both. On the cost side, netbooks are lowering the bar of affordability for people and entire societies that could not previously afford the power of technology. On the simplicity side, everything you do in the cloud is accessed through a Web browser or a mobile application.

There is absolutely no reason why brands can’t get into this game. At its core, cloud-based marketing is powered by a simple idea: be useful to your customers and they in turn will be loyal to your brand. The cloud is a massive engine of technological utility, with myriad ways to be useful to customers.

Some brands are seizing the opportunity. They realize that traditional media and advertising can no longer solve all their marketing challenges and are inventing their own cloud-based services to create strong bonds with existing customers and to win new ones. The services include HP’s Snapfish and MagCloud, Fiat’s eco:Drive, and Nike’s Ballers Network and Head2Head. All honor a customer’s attention with an enormous value exchange. In the end, these services encourage repeat usage and transform the relationship users have with these brands.

This shift is a complete about-face from what is traditionally celebrated at Cannes: the episodic campaign, like outdoor, radio, print and television, which relies on bought media for its delivery. The cloud, however, allows us to create forms of engagement that are sustained over time, even when we aren’t creating anything new. That’s because users primarily fuel the cloud, populating it with fresh content as they go about the business of their lives. In fact, some of these cloud-based marketing services, like eco:Drive and, have already been awarded at previous shows.

Customers visit these services again and again. And by building cloud-based services, brands create instances of “owned” media. These media channels have reach, frequency and 100 percent relevance with the intended audience.

Similarly, the old investment model for advertising was based on roughly a 20/80 split: spend 20 percent of the budget conceiving and producing the idea, and 80 percent on media delivering the message. The cloud-based service model inverses this split: spend the lion’s share developing the technology and just a small amount on a bit of paid media to spark awareness. Beyond that, “earned” media takes over and consumers and PR channels spread awareness virally to drive further adoption.

Campaigns and cloud-based services really have entirely different financial models. Campaigns require ongoing investment in media. Pull the media dollars and the impact plummets to zero. Cloud-based services cost a fraction to develop and they continue to deliver the audience regardless of media spend because consumers have adopted the services and integrated them into their lives. The initial investment becomes an annuity.

That’s why every marketer needs to think about how the cloud can save marketing dollars over time — just as his or her counterparts in IT are doing the same analysis as it relates to software and PCs. This is a paradigm shift in marketing and has the potential to change the game financially for marketers while making agencies important again.

The cloud is about the democratization of technology — and democracy is a good thing. Make sure your brand participates.

Bob Greenberg is chairman, CEO and global CCO of R/GA.