Art & Commerce: Setting the Pace

As I sit on a sunny Caribbean veranda, I finally have a minute to reflect on the past year and think about the one ahead. I managed to get out of New York just before the season’s first snow storm, but who knows what storms lie ahead in 2008, what with the ongoing credit crisis and the news that so many star athletes earned their stripes through steroids. If you can’t trust banks and baseball, what’s left?

The fact is, we live in a wildly unpredictable world and we all better get used to it. Our industry, more than most, is headed for a major shake-up—driven by trends that seem to gain more steam with each passing year. The inexorable pace of all things digital keeps blasting through new doors, while at the same time shutting some old ones.

In 2007 everyone seemed to be on Facebook. Less than four years after its launch, the site boasts more than 58 million users. Microsoft’s 1.6 percent stake, purchased in September for $240 million, valued the company at $15 billion, or six times the market cap of The New York Times. Social networking is the new mass media.

In 2007 we also saw an explosion of news in the mobile space. First and foremost, the iPhone launched in June—perhaps the most eagerly anticipated new product since the original Macintosh. Although Apple didn’t invent the smart-phone category, it certainly shed new light on all the other great products in the market, including Nokia’s N95 and the BlackBerry Curve. The battle between iPhone and N95—coupled with Google’s announcement of a new open-source mobile-phone platform called Android—contributed to one of the more interesting debates in technology: open mobile platforms. On our PCs, we can download and install applications at will, regardless of which provider we use for Internet access. But on our mobile devices, the world has been “locked” to include only what our mobile operators wish to offer us.

By the end of 2007, Apple had already announced it would unlock the iPhone and make it open to new applications that users could choose and install at will. Verizon followed with an announcement that it would similarly unlock its services and allow customers to pick and choose handsets as well as the applications and services they wished to use.

Social networking and mobility are the most exciting trends to watch in 2008. Social networking is critical because all brands going forward need to foster and stoke online communities, as Nike has done with Nike+.

The proliferation of smart phones and the growing openness of devices and operators give all marketers an opportunity to connect with consumers right at the point of sale. This immediacy is the Holy Grail for brands: having all the selling power of one’s Web site right in the palm of consumers making a purchase decision. Soon all brands will have to consider what this newfound marketing power means and how best to take advantage of it. In a previous column, I dubbed this “three-dimensional branding,” or having the right message at the right time in the right place.

The third trend on my mind is a troubling one. Our industry is not moving toward change as fast as the consumers we serve are. A recent Booz Allen Hamilton report disclosed that 80 percent of the U.S. population spends as much time online as it does watching television, yet marketers allocate only 5-10 percent of their budgets to digital channels. The mismatch in investment is coming at a time when DVR penetration has doubled to 22 percent of U.S. households, according to the latest Nielsen numbers. The same Nielsen study pointed out that only one-third of DVR users are viewing commercials when watching shows they have recorded. The other two-thirds are skipping them—and Forrester predicts DVR penetration will double again in the next two years.

Our marketing mix is so far out of line with consumer behavior that it would be comical, if it weren’t so tragic to clients’ bottom lines. Too many clients are addicted to television at a time when television can no longer produce the “high” it once did. The thrill is gone. But digital technologies are creating new opportunities to deliver a rush at a pace unprecedented in human history. Everyone bemoans the lack of talent to seize the new digital opportunities, yet talent is the trailing edge of spending, which itself is the leading edge of any trend. Until clients even out their marketing budgets, the digitally savvy talent will never materialize. I predict that when the spending matches the lives of the customers that brands so desperately need to reach, the talent will ramp up rather quickly. There’s nothing like money to motivate people to learn new things.

All in all, I am optimistic, looking forward to another great year in 2008. Watching a beautiful Caribbean sunset, it’s hard not to be optimistic. With three different smart phones in front of me and a Wi-Fi-enabled laptop on my lap, the world is my proverbial oyster.