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Vodafone launches new piggy positioning, retires James Rolleston Burger King puts its Whopper price on the line with Joseph Parker promo Chris Riley resigns from DDB, Mowday quashes rumours about ‘mass redundancies’
Inside: Barnes, Catmur & Friends Night of the acronyms: MBM, FCB Media and Spark PHD enjoy Beacons success
through a wide variety of different media channels. In May last year, we had an event at Auckland Zoo to launch our new children’s book, SleepDrops’ Sleeptime at the Zoo, a bedtime story where we take kids on a journey through their bedtime winddown routine. This was a highly successful event that generated a huge amount of positive feedback from the public and resulted in great media coverage. ASA regulations can be decidedly restrictive around natural remedies. It is frustrating having to tiptoe around the benefits of our products. We literally cannot tell people how our remedies work and what benefits they can expect from the range. We can’t even use the word insomnia on our website or in any of our marketing material. If I ever see the word ‘support’ again… We’ve adapted though and it just means we have to be a bit more creative with our marketing and PR. There are an enormous number of competing sleep remedies in the New Zealand market, over 100 in pharmacies alone. However, as our product range offers a clear point of difference we have not found it too hard to set ourselves apart. We can offer the consumer an individualised programme tailormade to their needs.
As well as this, we specialise in sleep and stress remedies and can offer each customer one-on-one professional support to ensure that they get the best results that they can from the SleepDrops range. The results speak for themselves. We wouldn’t have got to number one brand and number one product in three of the sleep categories if our products didn’t work. Happy customers help us to cut through. Make great products, have integrity and create a point of difference. For someone to want to buy your product, there has to be a notable benefit in choosing your product over somebody else’s. On top of this make sure that you are doing something that you are passionate about and that you truly believe in. If you are doing something you love and strongly believe in, the rest will follow. We want to change as many lives as possible for the better. We hope to one day end up as a household name on every bedside table in the world. The sky is the limit.
“This campaign is brilliant. In a category so often filled with blood, smashes and gore, this approach brought the issue to life by reimagining past memories into the present and highlighting what was lost, and what can be lost. An interesting collaboration with Weta Digital too. The regeneration process broadened and deepened audience engagement by showing the loss spread over a lifetime that wasn’t able to be lived. Very clever. I’m jealous.” Kate Humphries, course leader at Media Design School’s Adschool: “Very moving work created from a strong insight. Well done to both Weta and Y&R.” James McKee, marketing manager at Jaguar Land Rover New Zealand: “A really gutsy project for the families to be involved in but it’s executed with a real respect for all involved and I think that is what makes it so captivating. Teaming up with Weta added real integrity to it and certainly added to the interest in the PR element.”
Campaign Description: To celebrate its 75th anniversary, Air New Zealand wanted to thank Kiwis everywhere for travelling with them. This campaign told the airline’s story through the eyes of its customers. It used passenger photos, videos and souvenirs to create a very real snapshot of everything the airline and its customers have done together over the years. Campaign Description: From Munter to Mighty River Power, actor Tammy Davis shows how Mighty River Power’s Globug makes it easy for Kiwis on a budget to save money on their power in a new branded content style communication that added a sales activation thrust to the brand campaign using BrandWorld’s Discover platform. In Tammy’s words: “Boom!”
Agency: DDB Group New Zealand Client: McDonald’s Brand/product: McRib burger Media: Digital, social media Campaign Description: To get Kiwis excited about the return of Macca’s cult classic McRib burger, we released a film, especially for Facebook, unveiling a more saucy side to the brand. Agency: Ogilvy & Mather NZ Client: Rebel Sport Brand/product: Winter campaign Media: TV, digital, mailer, social and installation
It’s about relevance and resonance. It’s about giving us a different conversation to have with customers other than just price. So, we’ve run a number of homeware programmes—we’ve had Jamie Oliver crockery, glasses and crockery and kitchen knives—and those very much are about the household shopper … It’s a classic example of what’s old is new again. Collecting cards is nothing new. I remember as a child getting cards out of Weetbix packets. What I find fascinating about the recent programmes is that it’s relatively oldfashioned. It’s not a high-tech thing. It’s just paper. Yet, we’ve had people queuing up for swap days for something that’s moderately old-fashioned. It’s no secret that we had a rough ride at the beginning of last year with a lot of negative focus on our business, so we are very honed to hear what is said about is. And, where we can, we look to respond appropriately … We’ve learnt to listen very carefully to what is said [in the media]; and wherever we can, we look to set things right. We don’t use that phrase. We don’t believe in the concept of a price war. However, what we do believe in is that if you ask New Zealand consumers about what is important to them in choosing where they buy their groceries, most of the top twenty reasons have some element of price or value. We are an extremely price-sensitive market, and the global financial crisis and all of the other tough times we’ve been through have honed this price sensitivity almost to an art form. And I do not see this changing, even though we might be a rock star economy. It has become so ingrained in us that whether you’re a low-income consumer or have the luxury of high income everybody is looking for the best price on the products that they want to buy. We don’t believe that we have a right to charge more for a can of beans than anyone else. We’re in market with campaigns saying things like ‘We are committed to bringing you cheaper groceries’. That’s a really overt statement. They are very clear articulations of our intent. We’ve been on that journey since October 2013, and it really started to hit its stride in February or March last year followed up by the $1 bread. It is very clear that we are looking at the products that matter to Kiwis and bringing our prices down, and where we can, we lock them down indefinitely at that price. Does this kick off the words I don’t believe in? We haven’t seen a price war. We’ve seen responses. We’ve seen reaction. I have no doubt that the other guys look at what we do and take it very seriously, as we do with them. You’ve hit a nerve there. My view on New Zealandness is pretty simple. I work with a team of 18,000 Kiwis. I’m the custodian of a brand that operates in 174 communities. I don’t know what else it takes to be a New Zealand brand. We’re owned by Woolworths Australia, and are proud to be. It’s fantastic to see a guy [Dave Chambers] who started as a grocery assistant spend 37 years in the New Zealand supermarket business, and then go on to head up 900 supermarkets in Australia. I think that’s pretty cool—and that’s what being part of the Woolworths group is about. We’re owned by an Australian company, but you walk into any Countdown and you’re going to find a group of passionate Kiwis of varied backgrounds who are working to serve other Kiwis. And for me, that’s the end of it. Why do we do it? Because it works. Why do we put unaddressed mailers into 1.4 million letterboxes (which is just a paper version of shouting)? Because it works. I’m a pretty simple person. In terms of our media strategy, I’m going to advertise where the eyeballs are. In terms of our style of communication, I’m going to do the stuff that works. That’s a gross over-simplification, but retail advertising in New Zealand is pretty shouty … I would like to think that there is opportunity for us to eventually be more elegant, but that’s a long journey … So, will we be the leading force in changing [the shouty advertising]? I think that’s unlikely. We’re not different from any other big brand. We’re looking hard at where the eyeballs are, and our investment in digital has grown significantly in the last three years. I use the digital reference in its broadest terms to include everything from our emails through to social and search. We have trebled our spend in three years—off a small base obviously … I can only see that investment growing, but the challenge we face is that fragmentation, particularly in the marketing mix, can be pretty challenging to keep a handle on. So we’ve made specific decisions on which social channels we’ll be involved in. We were relatively early into the social space in terms of retail brands, and now have 230,000 odd Facebook fans on the channel … One of the reasons we got onto Facebook early was to be able to hear the things customers were saying about us. There were things that people were saying about us anyway, but we weren’t hearing it because we weren’t part of the conversation. To be part of the conversation can be uncomfortable, because it’s not great when you have a customer talking about their poor experience in that environment—but I would much rather hear about it and do something than not hear about it at all. There’s a crisis looming in this country around obesity, diabetes and other related issues. And as a food retailer, we have to stare into that. That’s not to say that we won’t sell foods that don’t have sugar and salt in them. We will sell products that Kiwis want. But can we amplify the conversation around products that are better for you? Can we amplify the conversation around how to cook a healthy meal? Absolutely, we can. So when you start to think about how retail marketing can be more elegant, those are the sorts of conversations you want to see coming to the fore. People choose what they buy in our stores. We’re not here to tell Kiwis what to buy. I think that would be insulting, quite frankly. Online shopping is a real jewel in the crown for us. We’re really proud of it, and we’ve been doing it around 17 or 18 years. Best practice puts it at four to five percent of sales (the obvious one that everyone looks at is Tesco for this). We’re not there yet, but the space is growing very well. Clearly, as infrastructure and technology improves, growth comes with it.
If there is one truism that can be taken from every gangster film ever made, it’s that you can’t buy loyalty in the business world. Sure, you can get people deep in your pocket, doing favours for you. But you’ll never really own their soul this way. And given half a chance, they’ll sell you out over lunch one day in a slow motion hail of gunfire and sweeping orchestral music.
But recognition of this immutable law doesn’t stop business trying to achieve just that. Loyalty initiatives and programmes are big business globally, and the idea that customer loyalty can be nurtured through the provision of incentives and rewards is a cornerstone of modern marketing practice.
In the US alone, $50bn is spent annually by businesses on loyalty programmes and half the top 100 retailers in the US National Retail Federation have one in place. According to a recent BCG review of this space, the typical US consumer has 29 loyalty memberships, using 12 actively. And the space continues to grow. Membership in programmes jumped 26 percent from 2012 to 2014 alone. Such is the ubiquity of these programmes that even as far back as 1993, the average membership of airline schemes alone was 3.1 per traveller.
And it’s not just a US phenomenon either. In New Zealand, 2.4 million Kiwis, across 74 percent of the country’s households, belong to Fly Buys alone. And Air New Zealand’s Airpoints programme has grown by more than a quarter of a million members over the past 12 months to 1.8 million. The recent switch from earning points with BNZ to Westpac made significant press coverage, as more than 20 percent of all credit card spend in New Zealand is on Airpoints earning credit cards. It will be a real test of the power of this programme if it is sufficient to trigger changing banks.
Indeed, so entrenched is the idea of incentivisation and rewards for behaviour that it has become a very established part of consumer expectations as to how business will be done in many markets. A huge amount of survey data exists showing that consumers around the world now expect to see this as part of their transactions with the business world, and claim it to be a big influence on their decision-making behaviour.
Of course, in the real world of marketing, we are entering into these programmes with far loftier goals than simply ‘ buying’ customer loyalty in the mode of Don Corleone. The underlying rationale has always been founded on the principles of relationship marketing; the idea that developing strong bonds with the best customers leads to far greater long-term success and profitability. Loyalty programmes have, at best,
These insights into actual behaviour are startling not only because they question the efficacy of what is a very established marketing practice, but also because they run contrary to what consumers themselves are telling us about how they make decisions. People claim these programmes to be important to their decision-making, but the truth is they really don’t seem to actually impact their behaviour over the long run. Part of this can probably be attributed to the ubiquity of loyalty offers and the idea that you can shop at any grocery store, petrol station, coffee shop, airline or bank and still take advantage of a loyalty offer. But part of this also needs to be attributed to the simple fact that we don’t know our own behaviour as well as we think we do, that a huge amount of our decision-making happens subconsciously according to a set of arbitrary rules we may not completely understand. Our conscious brain can look to rationalise these behaviours, but we should be wary of taking what people say about what they want at face value.
And let’s face it, if you ask someone if they would like the company they buy from to give them a reward, be it a discount or points towards a gift, who wouldn’t say yes? Qualitative work in New Zealand has shown us that when offered the opportunity to join a scheme people say yes, but afterwards consign the card to the deep recesses of their wallet or even that handy-for-shopping place, ‘the shelf in the kitchen’, and never give it another thought.
“They always ask you when you pay if you’ve got a card and half the time I don’t know if I have but you look an idiot if you don’t look for it,” observed one shopper.
When the evidence on performance is taken together, it’s hard to get excited about the efficacy of these programmes. But we do. Indeed, one imagines there are a huge amount of readers right now thinking something like, “yeah, but what about Tesco or Starbucks? What about Air New Zealand? What about Countdown [see interview with Bridget Lamont on page 16]?” And you’d be right. There are examples where loyalty programmes have helped fuel significant success for their brands. From 1991 to 2010, Tesco achieved a 675 percent growth in its bottom line, as it aggressively pursued one of the world’s best examples of a loyalty programme.
But, it is important to see these examples as outliers in the marketing world. Most of the $50bn plus being spent in the loyalty category is achieving little, and inherent in this fact must be the acknowledgement that we are typically getting things wrong in this space. So why is that? Where are marketers going astray, and what can the truly great programmes tell us about how we can more effectively spend our marketing budgets to achieve loyalty gains?
The first modern large-scale consumer loyalty programme arrived in May 1981, with the launch of the American Airlines AAdvantage Frequent Flyer programme, which gave special fares to frequent customers. This was followed almost immediately with programmes from Delta and United. Indeed, so quick was the competitive response that United launched its own programme only a week later.
Much as wars drive advancement in technology, these first airline-based loyalty programmes actually came to be largely a response to increasing competitive pressures that were thrown on the industry via deregulation in 1978. Desperate to woo and retain high-value customers in a suddenly white-hot competitive sector, marketers began experimenting with new ways of incentivising positive behaviour change beyond price discounts and short-run promotional activity. As part of this innovation-out-of-necessity, AA’s most frequently flying 130,000 customers were discovered and pre-enrolled in a programme designed to reward repeat purchase behaviour, via upgrades and discounts on fares. The airline felt that by recognising and rewarding the best customers, brand loyalty could be created and long-term bonds forged.
In a move that would anticipate a lot of thinking that was to follow in the consumer marketing world, the marketing emphasis was switched from simply winning a customer once in a transaction, to considering the value of a retained and improved relationship over the longer run.
This idea of the value of the retained and nurtured customer is important to stop and consider, because it represents not only the keystone concept for the first loyalty
McKinsey analysis of loyalty programmes, when focused in on those examples that actually drove revenue growth for businesses, showed they all shared an approach, which looked to deepen the emotional connection present with customers. They typically used customer data collected from the programme very effectively to improve understanding of the individual customer’s needs and preferences. They use this information to sharpen not only the individual incentives that were offered, but also how the whole product or service offer was shaped for that customer.
Tesco does this customisation extremely well with its programme, and this is a big part of what has driven its success. Each month they mail out over ten million different versions of its coupon mailers to households in the UK, each featuring a tailored set of offers based on the things individual customers buy. It emails customers directly to inform them when favoured products are going on promotion. And it uses customer data in aggregate to improve its range in particular store locations and what they look to put on promotion at different times. The result is that it feels like Tesco knows you. And when we look at the level of emotional connection that it receives relative to competitor Sainsbury’s in a WPP-run global brand study, it is more than double at the very highest levels of connection.
Another successful player in the loyalty game, Starbucks, goes even further with its programme, using it as a way of transforming the whole service experience for the better. Its programme utilises mobile payments technology to allow members to order and pay for their coffee via a special phone app to create a more seamless store experience. It doesn’t just reward the customer for loyalty; it creates loyalty by improving the core offer.
Successful loyalty programmes go a lot further than just trying to buy a behaviour change. They create reasons for customers to re-evaluate their relationship with the brand by improving the experience of using them. In essence, what they are actually doing is reshaping how customers experience the product or service for the better. And what we know from all of the longitudinal behavioural work conducted by Ehrenberg is that when these sort of fundamental improvements to the brand occur, that is when we see growth. And in the words of John Sculley: “As a brand marketer, I’m a big believer in ‘branding the customer experience,’ not just selling the service.”
There is also a much more primal way that loyalty programmes achieve success via emotional connection that is clear across all the empirical results available on the category. And that is by providing customers with status. Something that the travel industry and casinos have known for some time is that identifying key customers and conferring on them a labelled status that is only available for a privileged few drives massive improvements in loyalty and retention. This is where programmes like Air New Zealand’s Airpoints scheme are so successful.
And while part of the value of status is about the rewards you receive, the idea of being singled out as important, without any real benefits, should not be undervalued. A great example of this comes from Shell in Europe, which established its Vpower Club for the highest spending fuel card customers. Essentially, all that this involved was giving these customers a special coloured card, a free magazine and telling them that they were elite customers. That’s it. By holding back introduction of the scheme from some eligible customers, they were able to test the impact of the programme with a control group, and amazingly spend shot up significantly with those who were given status.
It shouldn’t come as a surprise that we like to be recognised and neuroscience ably demonstrates how our brains light up when we receive recognition and our status is acknowledged. It creates a sense of belonging that appeals to both men and women.
It’s like when you go to a restaurant you haven’t been to for a while and they say ‘Hi, good to see you again’, it makes you feel good to know they noticed and remember you.
So where does all this information leave us? First we should acknowledge that most loyalty schemes operating right now don’t work to provide any real gains for their businesses. The reason for this is that they are simply trying to buy a behaviour change that customers don’t desire to make. If we want to improve customer loyalty, we have to focus on creating a stronger emotional relationship by demonstrating that we know and value our customers. What that means for most businesses already operating in this space is using the data we are collecting on customers to improve the value inherent in the product or experience we provide, whether by customising communication and offers, streamlining experiences and conferring status on those who deserve it.
In many ways the lexicon itself is a clear indicator of where we are going wrong in the loyalty space. Often we see these as ‘rewards programmes’, but at best they’re really CRM programmes. Ultimately it’s love, not money, that buys loyalty.
Perhaps, it’s time then to reassess the effectiveness of your weekly email blasts and instead start to take a longer-term view of your customer relationships with a more personalised loyalty programme.
At Aimia, we view loyalty programmes as the foundation for growing real relationships with customers. We aim to build sustainable, symbiotic relationships and brand trust with your most valuable customers through a fair and transparent data-value exchange and highly personalised communications. Beyond this, loyalty programmes also offer a wealth of data insights that can revolutionise decisionmaking on your marketing investments. These could include understanding more about the incremental shoppers that a particular SKU brings to a category or being able to make more informed and targeted decisions on customer communications to maximise penetration.
“Globally we see many clients with large high-profile loyalty programmes that just aren’t getting the traction they should in the market or within their organisation”, says Aimia New Zealand’s managing director Simon Rowles. “Using our global expertise from running over 1,250 large loyalty programmes across airlines, retail, banking and owning our own coalitions in the UK, Italy and South America, we have developed a well-tested Loyalty Healthcheck framework. This tool ensures you understand the real value your scheme is producing, and what’s missing. It also helps assess whether the programme is fit for purpose and on the right path for the next stage in its evolution.”
Rowles adds: “We are excited to bring this Loyalty Healthcheck to the New Zealand market and for New Zealand companies to see how they can maximise the profitability of their loyalty programme and communications, as well as having access to our global expertise and experience across several industries.”
At Aimia, we realise having a robust strategy is just the first part of the journey of getting the most out of your loyalty programme. Our range of loyalty and communications platforms, when combined with our basic to advanced analytics capabilities, mean we’re well placed to answer your business questions quickly with a dedicated team that will help you build even closer relationships with your customers.
Before 1870, diamonds were a very scarce resource and were only found by the handful in Brazil and India. But after the discovery of diamond pipes in South Africa, there was a sudden glut, which meant their intrinsic value was likely to decrease. To limit that, a cartel (now called De Beers) was created in 1888 to control the global supply and maintain the perception of scarcity. But the cartel also needed to increase demand for diamonds. So in the late 1930s, it set its social engineering plan in motion in the US with the help of ad agency NW Ayer.
Over the next few years, the cartel paid movie producers to include scenes featuring leading men giving women diamonds, it helped create the famous song about diamonds being a girl’s best friend, it provided society photos to newspapers and magazines that focused on the stars and their large stones, it developed the ad campaign ‘a diamond is forever’ (and, so, shouldn’t be sold), it had fashion designers talk about the trend towards diamonds and it even gave lectures about diamonds in high schools. So by rigging the game and manipulating culture in its favour, the idea that diamonds equalled romance—and that the bigger the diamond, the bigger the love—took root.
If you look at it rationally, it’s a manufactured con. But humans are, as Dan Ariely’s book suggests, predictably irrational creatures and the strategy to play on our emotions and create social norms worked brilliantly. As investigative reporter Edward Jay Epstein wrote in his famous Atlantic story of 1982, the ‘diamond invention’ managed to convert “tiny crystals of carbon into universally recognised tokens of wealth, power, and romance” all around the world and, as of last year, 75 percent of American brides wore a diamond engagement ring at an average of US$4,000. For many, these various ‘nudges’, a phrase coined by Richard Thaler and Cass Sunstein in their 2008 book, have made buying a diamond for a loved one an almost sub-conscious short-cut; a tangible—and close to inevitable—manifestation of love. And, depending on your view of the world, it’s either one of the greatest or most manipulative examples of consumer influence the world has ever seen.
World-renowned ad man Rory Sutherland is a vocal proponent of governments and businesses using the principles of behavioural economics (BE) to improve human well-being and economic progress and he helped set up a specific business unit called #ogilvychange to help its clients do just that. And while this area is complex, confusing and often contradictory, he offers a concise rundown on what those main principles are: “1) Small changes can have large effects, 2) Psychology is really important. 3) People can’t always explain why they do what they do, or what they want. 4) Preference is relative and social and contextual, not absolute. 5) Trust is never a given; commitment really matters. And 6) People satisfice [a portmanteau of satisfy and suffice].”
He says these six things are not widely assumed in decision making and the theory of the rational man that always optimises his utility has held sway in economics for decades. But most agree the so-called ‘homo economicus’ is largely mythical and Sutherland believes the neo-classical model of economics is largely disparaging of marketing and doesn’t really factor in irrationality and the importance of sub-conscious thinking. Of course, marketers and advertisers have been attempting to influence consumer behaviour in subtle and not-so-subtle ways for decades, perhaps even centuries. And one of the criticisms often levelled at the industry—and particularly the retail sector—is the idea that it’s practising some form of mind control. What those critics tend to forget is that the world is full of influence. The architecturally designed spaces we inhabit, the signs on the road, the music in a restaurant, the most-read stories on a website, the average-use table on your water bill, the type of floor you’re standing on, the wine list you receive when you sit down at a restaurant, the stories you hear in the media, the uniforms worn by those in authority, the values instilled by your family, the recommended retail price … they are all subtle cues that condition us to a certain mode of behaviour.
Similar behavioural principles were also applied to the Electricity Authority’s ‘What’s My Number’ campaign, which encouraged them to take the first step without mentioning the trickier steps that followed and the showed other people’s savings, and The Journal, a step-by-step online programme that aimed to help those with depression.
“It’s about making decisions easy,” says Thomason. “… Authority is a shortcut, ads are a shortcut, what that brand says about me is sort of a shortcut.”
This can also be seen in action when you look at recommended settings, because the more unsure we are about something, the more likely we are to go with the default option (we’re also less likely to add options than to delete them, hence dodgy airlines adding various fees online).
So does knowledge mean power? Can we beat the system if we know we’re being persuaded and make a rational decision based on the information at hand? Sort of, although Kapitan says that while you may think you’re finding the best deal, frugal people have been proven to be more susceptible to messages about sales, so you’re probably still being influenced. Some rationalists believe that because information is now so freely available, the power of brand is declining and rational choices can be more easily made. But Thomason there’s very little talk
about what happens before that searching starts. Why did you decide to go to Fiji? Why did you put Subaru on yout list when thinking about a new station wagon? Why do you think of Mitre 10 when you need a hammer? And that’s why Kapitan says planting the seed in someone’s mind is so important.
“The idea is that once you’re on the ‘customer decision journey’ we’ll influence you along the way, but most of the stuff that’s influenced your decision happened to you before you had a kid or needed nappies. You just happen to know that Huggies is a good brand.”
There are no simple answers here. And as Thomason says, one of the biggest issues with BE is figuring out the behaviour you’re trying to change.
“One of the things that’s been concluded about BE is there’s not much consistency in which principle will apply in different contexts.”
And making it even more difficult is that for every rule (eg. make it easy, something marketers have been taught to do for years), there are often contradictions (eg. make it difficult so you create a sense of scarcity or exclusivity, as can be seen with many luxury brands, ivy league schools or the cable company that made customers dig their own trench).
“Sometimes if you put hurdles in front of them it makes it more appealing, more of a challenge and it makes it more sticky,” Thomason says. So are marketers using behavioural economics principles well? Thomason believes we’re understanding more about it, but a lot are getting worse at it by making things difficult and asking customers to interact with them on a variety of different channels. And the rise of personalised communications, while cool to a point, does have its drawbacks.
“You don’t want to choose a brand that no-one knows about. That’s a big danger for direct. We want to talk to the one guy who wants to buy a brand new 5 series BMW and no-one else, but he wants everyone else to know what this is about … Essentially we want to be talking about the same movie, or the same brand. Of course there are exceptions, but we are a herding animal. And I think most people would say this has the biggest impact on our behaviour.”
Of course, BE isn’t just advertising or communications. That’s just one little piece of the equation. But Malone says most ad agencies are guilty of talking about attitude change or awareness rather than using these principles to create actual behaviour change, something #ogilvychange hopes to address in this market. Thomason admits shifting attitudes doesn’t necessarily shift behaviour, but sometimes it’s a precursor to that, something that NZTA has shown over the years with its Safer Journeys work.
“When you’re a hammer, every problem looks like a nail,” says Malone. “Conversely, when others see you as a hammer, they’ll only give you more nails. It’s why marketers often only give agencies problems they’ve already decided can be fixed with an ad.”
If you’re embracing BE wholeheartedly, Thomason says it has to be used in the call centre, in IT, in merchandise and in all the other areas of a business, “otherwise you’re just talking about something rather than changing the experience”.
He says the modern agency is in a rush to say ‘we’re not just comms’, “but if we’re honest the vast majority is still comms and it will be for some time.” He also says many agencies have a bias towards big ideas that are crafted until they’re perfect, so it’s difficult for them to embrace the trial and error mentality that’s required to make the most of behavioural science.
Ironically, retail advertising, which is often maligned for its quick and dirty nature, has long employed behavioural tactics, whether it be 50 percent off, while stocks last, or as seen on TV. Retailers have also been experimenting with instore techniques for decades. And while some of the tactics have been used so much that they’re borderline cliché, they still work.
So should marketers focus on the emotional or the rational? A paper written by one of his colleagues in South Africa called ‘The Big Easy’ talks about targeting everyone to make it look like everyone’s doing it and then making it easy to do whatever it is you want people to do.
“That’s the fundamentals of all behavioural thinking.” Thomason believes there is currently a tension between short- and long-term effectiveness and it appears as if the short term is winning that battle because results can be seen almost instantly.
“If you’re trying to get a short-term result, then you probably are more towards the rational end of things, but you still use scarcity and it’s less about creative. But even a retailer needs to be positioned as the go-to option. Think of John Lewis and their Christmas ads. [Effectiveness expert] Peter Field’s magic number is you should be doing 60 percent brand, 40 percent retail. It becomes very difficult to separate them, and I don’t know what the methodology was, but that’s their formula.”
Interestingly, he says studies from the IPA and AdMark say that under six months (ish), creative, award-winning campaigns are actually less effective and over six months they’re more effective.
“That’s a fucking huge issue, because increasingly a lot of the campaigns we’re doing and winning awards for don’t even run for six months. It’s got to be a major generalisation, and there has to be some stuff that gets more attention in the short term because it’s cool and creative, but for real brand building stuff, that’s a correlation.” It may seem like a cop out to promote both approaches. But that’s what the research shows— and, as Daniel Kahneman’s book Thinking, Fast and
esign harnesses creativity to improve customer experiences. But with traditional forms of manufacture, designers waited months for genuine consumer feedback on their work. The advantage of the digital world, however, has always been its ability to be measured and tracked in real time. Now we’re able to apply that same measurement to design. Decisions’ impacts are measured in days, not months; and cycles of refinement are possible in ever shorter increments. Analytics and real-time optimisation tools are driving a rapid shift in design practice towards an approach that is simultaneously more experimental and more rigorous than in the past. In effect, these tools have enabled design thinking to embrace the scientific method.
Design is an incredible fount of product and service innovation ideas. Traditionally the process of sifting through those ideas to find the nuggets that will drive real business value has resisted quantification; opinion and experience have held sway.
Digital technology has changed that, enabling real-time measurement of customer behaviour in digital channels and live testing of design variations with thousands of real users.
Accessing this feedback loop allows a new kind of creative process, with more informed decision-making and better business outcomes. It’s an approach most powerfully seen in the Darwinian world of tech startups, where realtime measurement feeds into rapid release cycles that accelerate innovation.
That cycle of rapid iteration is leaking out of the startup world to be embraced by established businesses seeking to improve their customer experience, and their return on design investment. With its design practice grounded in digital channels, Digital Arts Network is at the forefront of applying this new rigour to the creative process. While creative problem-solving remains at its heart, it is now integrated with a hypothesis driven approach.
It all starts with measurement. We begin by working with clients to ensure their analytics implementation offers insight into the performance of their digital touchpoints; you can’t improve what you aren’t measuring.
Next, experience researchers combine those analytics measures with observation-based insights to develop hypotheses for what is driving customer behaviour online.
These hypotheses inform the designers’ creative approach, enabling more focused thinking. But, because the hypotheses are explicit, they are also testable. Rather than designing a single solution, we conduct multiple rounds of experiments with users in the lab or online to evaluate multiple solutions. Does this lead to less creativity? Not at all. Highly creative concepts can be trialed in the court of user behaviour. Creativity’s contribution to the bottom line is quantified and valued.
Increasingly efficient testing allows a greater range of options to be evaluated – from the conservative to the outlandish. If more creative solutions are selected, it’s because they were more successful.
At Digital Arts Network, we’ve moved from guessing the value of creativity, to measuring it directly. Creativity becomes accountable to the bottom line, enabling our designers to confidently–and demonstrably–drive real returns for clients.
that the designer is the arbiter of quality. Ultimately the user is the arbiter of quality.”
Sharpen up those CVs because, according to Mark Curtis, chief client officer at multinational design agency Fjord, chief marketing officers are about to become obsolete—all thanks to design. Curtis’ reasoning is that as consumers respond less to traditional marketing, and more to well-designed products and experiences, businesses will align accordingly.
It’s not yet clear how accurate that prediction will turn out to be – but design is increasingly recognised as essential for businesses. Rising stars like Airbnb and Uber were birthed by designers and in an effort to remake themselves into successful ‘design-led’, organisations, and many established businesses are formalising a commitment to design by appointments at the C-level. Johnson & Johnson has hired a chief design officer, so has PepsiCo, and the only thing surprising about Apple’s recent promotion of Jony Ive to the position is that he wasn’t already there.
Being design-led means putting the user and that user’s experience first. That’s where things like user testing and rapid iteration come into play, where the belief is it’s better to get a minimum viable product out into the hands of users and use feedback to refine it, rather than spending a lengthy development period inside a bubble.
The idea is picking up steam in New Zealand too, with some of the lead singers of our ‘rockstar’ economy— Icebreaker, Xero, Air New Zealand—placing customer design at their hearts and inspiring others to follow. Icebreaker founder Jeremy Moon established his company in the early 2000s, and says design has been central to the company’s “sense of purpose” since its inception. Today that philosophy is reflected in a workplace environment that encourages creativity, a product line that is 50 percent refreshed every six months and a two-year lead on a constant development cycle.
“The big prize is unlocking the creativity of the people in your organisation. It makes business a lot more exciting and interesting,” says Moon. “That energy you create within your teams becomes obvious to your customers and that grows sales, so it’s a virtuous cycle.”
At Insight Creative, creative director Brian Slade says he doesn’t believe budget should be an inhibitor to great design. “Design comes from the idea... it’s where the gold is, where the real spark is. But the bigger flame or realisation, that takes time.”
The UK Design Council obviously has an interest in proving the economic impact of design, and it has some nice hard numbers to help make its case. The Council can tell you that for every £100 ($215NZ) a “design alert” business invests into design, it realises a 125 percent return, and that
Rejigging your whole approach seems fine and dandy for multinationals and enterprise class businesses, but what about your average Kiwi SME? We asked Better by Design’s director Suzie Marsden for some examples of companies they and NZTE have worked with to see how the principles of design thinking paid off. GALLAGHER This Hamilton-based agribusiness worked with Better by Design to define its purpose and branch out into security. Subsequently, Gallagher has taken this knowledge and applied it to the remodeling of its pigtail electric post systems. Using design thinking principles, Gallagher surveyed farmers and found the pigtails were actually quite hard to use. The consequent new ringtop post design has reduced cost and increased margins, says Marsden. RINNAI The Kiwi water heating company has been on a five-year journey to embed design as a core strategic part of its business. AEROQUAL An outdoor air quality monitoring company struggling with cash flow, the current chief executive was brought in to turn things around. Despite the hardships, Aeroqual maintained a great internal culture with employees who believed in the product. With the help of a specialist coach, Better by Design and NZTE, Aeroqual was able to reduce the cost of production by 20 percent and increase margins by ten percent. It’s even broken even six months ahead of target.
Better by Design’s programme is open to NZTE customers only, but its CEO summit and master class accelerators are open beyond that. Regardless, Marsden recommends first forays start with something small. “Take something you’re already working on and give it a go. Don’t bet the business on it, take a skunkworks approach and carve off a few people to take a punt. Just start,” she says. “It absolutely is a learn-by-doing process.” Everyone’s got an opinion about the flag these days. It’s either long overdue to shed the shackles of colonialism or a huge waste of money (or both). But with the government shelling out $26 million for the process, it hasn’t escaped notice that no one’s actually getting paid for the redesign. Well, no designers anyway. A crowdsourced submission process and all the winner stands to get is a sentence in the history books. Twitter user Typographica packed a lot of snark into a tweet: “New Zealand has unpaid flag contest asking ‘what do we stand for?’ The answer is: devaluing professional design.” We asked professional designers what they thought.
Brian Slade – Insight Creative Simon Wedde & Donna McCort – Dow Design McCort: I don’t think the politicians would want to do their job for nothing. I don’t really see the distinction there. Wedde: I don’t necessarily think they [the government] get the best solution either. You need to really invest the time to research and interview. There’s every reason to believe whoever got commissioned to design the flag would have gone around the country and talked to New Zealanders and interviewed kaumatua and Maori, would have interviewed different ethnic groups. I don’t think they’re doing it because they want to get a free solution, I think they’re doing it as part of a political process … to demonstrate that it’s democratic and that people are involved and New Zealanders have a chance to speak about it… It’s hard to separate politics from the design solution.
n terms of business, the Darwinian theory of “survival of the fittest” often applies. It’s a dog-eat-dog world out there and the design industry in particular has a lot of competition. But sitting down with Dow Design founder Annie Dow creative director Donna McCort and group account director Simon Wedde it quickly becomes apparent as to why Dow remains ahead of the game.
McCort says Dow’s method is pragmatic and involves a solid foundation of research to ensure results are carried through. The Dow team take an ‘outside view in’ approach, using a research method dubbed ‘discovery’ which becomes a rock solid foundation on which to build the brand identity or solution.
“A key part of us adding value is not just following orders but to be thinking and bringing something to the table. Discovery is an audit of our clients’ brand, service or product and a look at the consumers’ point of view and where it sits in its environment. We find out what their competitors are doing and throughout the process of that analysis, we might uncover something that’s not in the brief. So if you do that sort of thinking up front rather than following, you achieve much more powerful design.”
Dow group account director Simon Wedde says being pragmatic also extends to the way the company operates. He says it doesn’t get tied up or lost in branding and design jargon, but remains transparent without pushing any kind of ego.
“That’s another observation I’ve made as a newcomer, is the openness. You won’t get any arrogance here. We are completely open to listening. We will come back with an opinion, but with an opinion that is informed from our design perspective,” he says. “As soon as you start thinking you know or start assuming, that’s when it gets you into trouble.” And the evidence of the efficiency of Dow’s procedure is clear, with founder Annie Dow pointing out that average client tenure is 10-plus years, with some clients like Fonterra Brands sticking with Dow since its inception.
“Dow really delivers, from a sales level and a business level as well. Coupled with the experienced team building close relationships, hence the longevity of some of the relationships of 10, 15, 20 years,” she says.
The company also has a point of difference, it is led by two women, with Annie Dow leading
Evangelical radio broadcaster Harold Camping has gone down in infamy for having incorrectly predicted the end of the world on numerous occasions leading back to 1994. “I’m like the boy who cried wolf again and again, and the wolf didn’t come,” Camping said to the San Francisco Chronicle in 1995.
Incidentally, the channel Camping used to broadcast his thoughts has also had its share of doomsday prophets, with journalists intermittently predicting that its run was due to expire.
“Radio has been around for a hundred years, and whenever new technology comes along someone makes the comment that this will spell the end of radio,” MediaWorks Radio chief executive Wendy Palmer recently pointed out at the annual Radio Rewired event.
And murmurings and speculations of the end times once again emerged on the pages of many international publications earlier this year when the government of Norway announced that it’s moving toward switching off FM radio transmitters by 2017—or 2019, if prerequisites aren’t met—on account of audiences shifting their consumption to digital broadcasts.
These enquiries into the possible end of radio aren’t without merit. With the rapid growth of digital streaming services, the reduction in the cost of data plans and the increased connectivity of vehicles, traditional radio as we know it is certainly under threat.
But, before reaching across for the tissues in melancholic yearning for Spandau Ballet classics, Bon Jovi rock anthems and Leighton Smith’s climatechange denial, it’s worth noting that radio in New Zealand isn’t in bad shape.
Yes, listenership is going down, but the channel is far from being a barren wasteland.
“[Listenership] is at 75 percent at the moment,” says Radio New Zealand chief executive Paul Thompson commenting on the downward trend that has seen the proportion of New Zealanders aged 15-plus listening to radio on a weekly basis drop annually from 96 percent in 2000.
While this decline isn’t great news— and by Thompson’s estimates is set to continue—radio has remained one of the most stable among the media channels in terms of attracting ad spend.
At a time when newspapers, magazines and television are losing market share, radio has bucked the trend and enjoyed an increase in its cut of the pie, enjoying an increase in ad spend of $13 million between 2013 and 2014 (only the interactive channel was higher, with an increase of $117 million, although TV says adding digital video would add $23 million to its number).
“Radio is still delivering 12 percent of advertising spend and it’s still showing growth ahead of total market,” Palmer says.
But this doesn’t mean that all is well in radioland. As evidenced by the slew of changes over the course of the last year, the industry is clearly looking at how it can adapt to some of the most significant disruption the industry has ever faced. The Kiwi radio industry has always been fiercely competitive. And nowhere has this traditionally been more evident than in the partisan press releases that are sent out following the biannual survey results.
This year, the survey was again at the centre of the competitive back-and-forth between NZME and MediaWorks, but for very different reasons. It started with news that 2015’s T1 survey was to be cancelled
approximately 50 percent of radio listening— has until now existed under the rule of FM (and to a lesser degree AM) transmission.
“Auto is a really important strategic pillar for us,” says Reece. “Our recent New Zealand research shows that 80 percent of Pandora listeners want Pandora in their next car. We are in seven major car brands in New Zealand already and working with others to launch in-dash this year.” Far from waiting around for the likes of Pandora and Spotify to slice away slivers of radio’s ad spend, MediaWorks and NZME have over the course of the last year made some important moves in terms of modernising their business models.
Both networks are looking beyond radio and finding ways to deliver content across all their available channels. The most extreme example of this would be the multi-channel Paul Henry Show, but it’s also seen with the likes of Mike Hosking presenting a Newstalk ZB radio show, writing for the Herald and appearing in online clips across several NZME websites.
In fact, part of the reason why TRB’s position was brought into question earlier this year was because clients and agencies are increasingly buying multi-platform packages directly from the media owners.
The networks have since confirmed that TRB will continue to function, but its scope has now been limited to providing single-source radio solutions.
“The biggest change was the disestablishment of the branded content and digital teams,” says TRB acting general manager Peter Richardson on the restructure of the industry body. “This has resulted in TRB focusing on its core competency of delivering impartial radio planning solutions.”
What this means is that bigger, integrated campaigns will continue to be sold by the networks directly to clients.
“[Clients can benefit] hugely from promotional work that goes across radio, TV into our websites and social,” says Palmer. “It’s certainly our area of growth, particularly for agency clients and the larger national advertisers.”
In many ways, local radio brands act well beyond the limited online remit occupied by the likes of Pandora and Spotify—and this is an advantage that they’re trying to capitalise on through these bundled deals. However, to sell these packages, the radio industry needs to provide proof that commercial messages delivered across all the channels are reaching their intended targets. A major problem faced by the traditional channels is that measuring them is
difficult, and this is quite pronounced in the ‘radio vs. online’ streaming context. While Pandora and Spotify can identify exactly who is listening via their platforms and for how long (with such accuracy that they are able to incorporate videos that only play when listeners are looking at their mobiles or desktops), radio has until now relied on an antiquated diary system of measurement that only took two six-week periods into account every year.
To rectify this problem and update the research methodologies, the radio industry appointed radio research consultants Peter Don and Eriks Celmins to look into an alternative. The recommendations were then put to several research agencies, which are currently involved in a tender process (the incumbent is TNS and a decision is set to be made in June).
“This process was really about figuring out whether there was a way that the audience measurement system could be improved,” said Don in video played during Radio Rewired.
Don said the researchers looked at various international examples and found the methodology being used in the United Kingdom, which incorporates a mix of paper and e-diaries, as most adaptable to the local market.
“We took that base of interviews that had been happening over the course of two six-week surveys and modelled it to see what we might be able to do over a much longer period,” Don said.
The new system would incorporate 40 weeks of data capture, bring on Radio New Zealand as a partner and extend the footprint of measurement from the current 2.9 million to 3.9 million—thereby providing a more holistic analysis of the radio market (Nielsen’s survey for Radio New Zealand already runs over 40 weeks).
“We [also] had to change the frequency of delivery of results,” said Don. “[And] on the basis of the [proposed] model, we could end up with four results per year for some markets, two results per year for other markets and maybe one result per year on a national basis.”
This is still not quite as appealing as the subscriber-based analysis employed by the likes of Pandora or Spotify, but it is a marked improvement on what has come before.
When viewed alongside all the other recent action, the radio industry seems certifiably manic at the moment, but it’s worth noting that the old cliché defines insanity as doing the same thing over and over again and expecting different results—and this is an accusation that no one could level at the likes of MediaWorks, NZME, Radio New Zealand or any of the independents that populate the alwaysfeisty world of radio broadcasting.
tasks to check in on the news, “says Gillespie. “We aim to cater for this.”
Through One News Now they will have access to unfiltered breaking news and curated features through three channels: latest, featured, and popular. The ‘latest’ channel is a never-ending feed of news as-it-happens; ‘featured’ includes curated stories of interest, and ‘popular’ shows the most viewed content. The format takes advantage of users’ ‘snacking behaviour’ to serve bite-sized news on the go. The One News Now launch is backed by a culmination of changes in the newsroom that allow TVNZ journalists to make full use of mobile and digital technology to report on news quickly.
That’s included new desktop publishing tools and training for journalists on shooting and delivering news from the field with their smartphones, to complement more traditional broadcast tools. These changes mean TVNZ can publish content more quickly and across multiple platforms.
TVNZ’s digital streaming numbers are climbing fast and ONE News Now will capitalise
on growing consumer desire for video. “We’re hitting numbers we didn’t think we’d hit so quickly, even before the launch of the new platform,” Gillespie says. Last month that number was 3.7 million video views, but he’s confident that will double after the launch of ONE News Now. With the launch of the ONE News Now website and app, users will have a consistent experience across all platforms – and so will advertisers, who will have more opportunities to extend campaigns digitally and target consumers on the go.
“We’ve greatly enhanced the advertising experience by providing user-friendly formats for viewers to engage with it,” says Jeremy O’Brien, TVNZ’s head of sales and marketing.
New features include an ‘Advert Stream’ sidebar and billboard opportunities to replace the old homepage takeovers.
“By enhancing the user experience for our viewers we will in turn be able to deliver a more optimal mobile environment for advertisers,” says O’Brien. “Given the rapid increase in mobile screen video consumption, we believe advertising interest from clients will be significant.”