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Slide 1: THE DIGITAL REVOLUTION IS LEAVING THE CONSUMER BEHIND MY BRAIN HURTS
Slide 2: We must help consumers understand technology better. If we do not, the digital revolution will fail. Our jobs, house prices, pensions, the future of our nations all depend on the economic growth that digitization is bringing. Helping consumers to grasp technology is thus the defining issue of our time. By: Simon Silvester simon_silvester@eu.yr.com tel: +44 20 7611 6356 For new business enquiries, please contact: Yossi Schwartz yossi_schwartz@za.yr.com tel: +27 11 797 6314 Helen Kimber helen_kimber@eu.yr.com tel: +44 20 7611 6750 For press enquiries, please contact: Bernard Barnett bernard_barnett@eu.yr.com tel: +44 20 7611 6425 MY BRAIN HURTS ‘The new net boom’ announces Fortune. In California, venture capital is flowing. After five years in the doldrums, tech is back. And it’s back big time Last time it was only dotcoms, telecoms and computers that boomed. Today virtually every industry on Earth is experiencing rapid change. Hollywood is digitizing. Airlines are digitizing. Fast food service is digitizing. Soon, with the arrival of radio ID chips on every package in every supermarket, the humble food and drink industries will digitize too. But But as the world again gets excited by all things tech, perhaps we should pause. The emailable version of this document is at pubs.yr.com/brain.pdf Podcasts and video podcasts to accompany this book are at pubs.yr.com/podcasts MY BRAIN HURTS 1
Slide 3: And remember how things ended in 1999/2000. When a trillion dollars of technical development crashed into a mountain of user indifference, and tech entered a depression. Millions of people lost their jobs and their pensions. And it could happen again. How could it happen? Digital technology gets twice as powerful every eighteen months. And it’s predicted to keep doing so for the next two decades. No industrial change in history has happened as fast as today’s digital revolution. As this happens, we tend to forget that there is one part of the digital world that hasn’t gotten any more powerful. Not just in the past few years. But in the past ten thousand. The mind of its user. Strain on the brain Each year, consumers are presented with new, more complex digital products and services. But each year, their ability to understand them does not rise. Twenty years ago, a phone was a simple device, with one dial. Many of today’s phones are packed with complex, badly understood functions. Lest we forget the 2000/1 dotcom bust. In 1980, televisions had a few buttons and a volume knob. No longer. How many of these commonly used tech symbols do you recognise? Do you know the precise meaning of any of them? 2 Y&R ADVERTISING
Slide 4: IMAGINE IF ALL MARKETING WAS LIKE TECH MARKETING: ‘Hi honey, I’m home!’ ‘That’s great dear! I’m cooking XRC-30 tonight.’ ‘’Mmmmm – is that with quadband 3G CDMA and a level 2 cache?’ ‘Yes indeed – and would you like a little 802.11g on the side?’ ‘I’m licking my lips!’ ‘Now you just settle down with a nice bottle of XC-L30K and I’ll have it on the table shortly.’ ‘That’s great honey, I can’t wait to taste that delicious SDRAM!’ Twenty years ago a television had one dial and a volume knob. Today’s AV systems have tens of each. The technology is leaving its consumer behind. And it’s getting worse Meanwhile, technology keeps moving on at high speed. Digital devices will be ten times faster and more capable within five years, and perhaps one hundred times within ten. There is already a gulf between what technology can do and what consumers - both young and old - can make it do. As technology surges ahead, this gulf can do nothing else but grow. Not funny We may laugh when consumers fail to understand the full capabilities of their phones, TVs and computers. But the consumer’s failure to grasp technology is not trivial. It leads to the vaporization of venture capital. It is the issue that is increasingly holding back the whole digital revolution. Global growth, and the fate of nations depend on rapid adoption of new technology. It is thus the decisive issue of the early 21st century. Twenty years ago, phones were simple. MY BRAIN HURTS 5
Slide 5: THE DARK SECRET OF DIGITIZATION The human mind’s inability to assimilate technology is the dark secret of the tech industry: • Research by consumer electronics manufacturers reveals that consumers never touch most of the buttons on the remote controls in their living rooms. • Washing machine manufacturers report that however many programs they build into their washing machines, consumers rarely use more than two of them. • Software companies keep building extra commands into their programs, but quietly concede that consumers refuse to use more than a small fraction. • Banks offer a wide choice of funds in online investment supermarkets, but find that most people don’t even browse beyond the basic options. The consumer simply doesn’t use most of what technologically advanced companies build into their products. The consumer holds things back for decades The inability of consumers to understand a piece of technology can hold it back not just for years but for decades. Today, consumers marvel at how they can collect shows What does the button with two circles on it do? What exactly does ‘chaos defrost’ do? In the 21st century, you need a degree in rocket science just to iron a shirt. What do ‘SysRq’ and ‘Scroll Lock’ mean? Digital devices can get twice as fast - or as confusing - every eighteen months. 6 Y&R ADVERTISING
Slide 6: Consumers only use a couple of buttons on their remote controls. Even teens have litte idea what most of the buttons on their phones, computers and audiovisual equipment do. on their digital video recorder (like TiVo or Sky+) to play back later. TV schedules no longer dictate how they use their leisure time, and they love the freedom. But this isn’t the first time digital technology has made this promise. It was already promising time-shift viewing back in 1980 with the invention of the video cassette recorder. It’s just that no one over fourteen could program a VCR to record the right channel at the right time. It took twenty-five years for the electronics industry to design a time-shift viewing device that ordinary consumers could actually use. This pattern is repeated in many other industries. It is thus the pace of consumer comprehension, not the pace of technological change, that will determine the pace of the digital revolution. Consumers struggle with new concepts too Consumer confusion also slows the introduction of new technological concepts. Sure, consumers can tell you they prefer HDTV to ordinary TV, but when it comes to evaluating really new technological ideas, they struggle: • When the telephone was first invented, many of its early users thought its main use would be to broadcast orchestral concerts. • When email first became popular in the mid 1990s, many CEOs responded by putting an email terminal in their telex room*. • When television first arrived, early viewers thought its Y&R ADVERTISING 8 * Telex was a key business telecommunication system before the arrival of fax. Even since the beginning of the century, digital technology has sped up dramatically. Computer chip speeds are already ten times faster. Download speeds are already thirty times faster.
Slide 7: biggest audiences would go to the newsreels they had seen in the movie theater, not to game shows. • And as Henry Ford put it in 1910, ‘if I’d asked my customers what they’d wanted, they’d have asked for a faster horse.’ The consumer absorbs new technological concepts slowly, and with difficulty. Even young consumers struggle ‘Don’t worry about complexity’ say some tech companies, ‘we’re targeting digitally literate 17 year olds.’ Crap. Young people may absorb tech concepts faster than old people over 30, but they still struggle with how to make things work. • Y&R’s qualitative research has yet to find a teenager who knows what all the buttons on their phone do. • Few can explain even a quarter of the functions of their parents’ DVD, TV or VCR. • And Virgin mobile phones sell because they have the only pricing plan 17 year olds (or anyone else) can understand. Even amongst young people, it is the pace of consumer comprehension, not the pace of technological change, that will determine the pace of the digital revolution. But the tech industry has failed to acknowledge this. It needs to rethink its attitude towards its consumers and do so fast. 1010 10 9 TRANSISTORS PER DIE: LOG SCALE 108 107 106 105 104 103 102 SOURCE: INTEL 1970 1980 1990 2000 2010 MOORE’S LAW MEANS DIGITAL TECHNOLOGY GETS BETTER FAST If a technology is digital, that technology obeys Moore’s Law. Moore’s Law, first proposed by Gordon Moore of Intel back in 1968, states that the number of transistors on a silicon chip, and therefore the speed and abilities of computers double every two years – since revised down to every eighteen months. Chips have obeyed that law for the past thirty-five years – and show all the signs of continuing to do so for the next twenty. Put simply, anything digital can get twice as good, or as fast - or as unintelligible every eighteen months. Time for a change This booklet challenges the way tech companies do things. It argues that they should put the consumer first, not last. It uses Y&R’s intensive program of qualitative and quantitative research, consumer observation and analysis to set out some of the keys to successful communication. None are intuitive. Few are reflected in current marketing thinking on the web, in consumer electronics or in telecoms. The keys reflect the ways in which humans have responded to technological advance since time immemorial. As such, they risk being ridiculed by those within the technology community who regard any solution that is more than six months old as being out of date. But the eternal is eternal for a reason. And genuine marketing insights are no more abundant today than they were in the dotcom boom. Without an understanding of their consumer, technologies will struggle. The companies responsible for them will stumble, and industries will die. And they will do so however good their engineers, however smart their manufacturing - and however much money they spend on their marketing. THE BURSTING OF THE INTERNET BUBBLE DIDN’T STOP TECHNOLOGY Since the internet bubble burst in 1999/2000, technology hasn’t stopped advancing. Many digital devices are now ten times better than they were then: 2000 Typical processor speed Typical home download speed Typical number of peanuts in a Snickers* 300KHz 2006 2000KHz 56Kbps 2000Kbps 22 22 * control 10 Y&R ADVERTISING MY BRAIN HURTS 11
Slide 8: Even in high science, good names are vital. The ‘relativistic gravitationally collapsed massive object’ was discovered in 1916. But it didn’t grab the popular imagination until someone renamed it the ‘black hole’ in 1967. THE 17 KEYS TO CONSUMER UNDERSTANDING Names need to work across cultures: The 1967 worldwide media frenzy around black holes was subdued in France because ‘trou noir’ was French slang at the time for ‘asshole’.
Slide 9: 1. THINK SIMPLE If you want to get inside the consumer’s head, simplicity is the key. In the late 1970s, Sony was developing a new consumer electronics device. The device would allow people, for the first time ever, to carry round music easily and listen to it anywhere without irritating others. The device was designed to do this – and nothing else. ‘But they will still want a record function’, said the engineers, ‘and how about a radio?’ But Akio Morita, the founder of Sony, knew that he had a serious communication problem on his hands. At the time, young people always shared music, wandering around in groups with throbbing ghettoblasters. He was asking them to wander around listening to music that no one else could hear. He knew they would find the concept weird, and would resist the idea. ‘When I listen to music, I like to hum along and tap my feet’, they told him. ‘If other people can’t hear the music I’m doing it to, they’ll think I’m a psycho.’ To communicate the idea, he needed a product that could be understood in one way only. And that meant it had to have one function only. The record button and radio had to go. So he overruled the engineers. And his one-function press and play device went into production. Because his new product could only be used in one way, young people were forced to take Morita’s intention seriously. This forced the Walkman into the public consciousness, and made it a worldwide hit. Simplicity acts like a missile into the consumer consciousness. ‘The ideal consumer electronics device has only one button.’ AKIO MORITA, FOUNDER OF SONY Which means A device that does one thing well is a much stronger consumer proposition than a complex multifunctional offer, no matter how advanced its specification. So if you want to get inside the consumer’s head, think simple. 1. Simplicity gets remembered In the 1960s, offices flooded with new technology – duplicating machines, golf-ball typewriters, telexes and more. But the only machine in that office with one-button simplicity was the photocopier. Most companies that made office equipment in the 1960s are now footnotes in history. Even government can be simple. Clinton’s 1992 election team pinned these words to their hotel room doors. 14 Y&R ADVERTISING MY BRAIN HURTS 15
Slide 10: Not so Xerox, the inventor of that photocopier. 2. Simplicity builds loyalty Most tech products are so difficult to learn, that those that are easy inspire great loyalty from their users. Nokia gets the highest loyalty amongst mobile phone brands because their 2006 models work without your having to read the instruction manual – and in exactly the same way as their 1996 models. Similarly Canon’s Digital Ixus cameras inspire loyalty because their current seven megapixel model works in exactly the same way as their two megapixel model from 2001. 3. Simplicity solves complex problems Even when a product is complex, it still pays to market it simply. When Microsoft was launching the latest Word upgrade a few years back, their engineers unveiled a product with many new capabilities. It had amazing mail merge, a 3D text graphics engine and web integration. But Microsoft’s marketing didn’t mention any of these. They focused all their efforts on communicating When they rent a car, most people can start it up and drive it without problem. But most new tech appliances do not work without reading an instruction book. A $30,000 car needs an instruction book no more than 9mm thick. So why does a wireless router need one 30mm thick? Most people who use a computer less than once a month forget how to use it between sessions. 16 Y&R ADVERTISING The same is true of camcorders – many families simply forget how to operate theirs.
Slide 11: something quite simple – its ability to make simple spelling corrections like ‘ist’ to ‘its’ and ‘hte’ to ‘the’ as you typed. And the world went to their IT helpdesk and asked for the upgrade. 4. You can never be too simple For years internet search engines prided themselves on their simplicity. Whilst other portals added complex offers and confusing navigation, the search engines stuck to one page. But all were trounced by Google with its one fill-in box, and otherwise blank screen. So So if you want your technology to fly, think simple: • Mobile phones are increasingly easy to make voice calls on, now their software has been simplified. But their airtime packages are still complex. Service providers think they are providing ‘choice’ and ‘freedom’ by offering 25 different price plans. They might attract more customers if they just offered just one good one. • Most online banking sites are simple – security fears make banks keep the functions to a minimum. Not so online share dealing sites. Some don’t display vital information if your monitor isn’t large enough; others are drenched with obscure finance-speak. If online dealing is going to break into the mainstream, these sites need a fundamental rethink. • Most national railway automatic ticketing machines have simple dialogues – but leave consumers thinking they could have got a better deal elsewhere if only they’d known the system better. To satisfy customers, you have to be transparently simple. • Moore’s Law means that software can get twice as complex every eighteen months. Message to software designers: making it so is a bad idea. The MP3 player market was flooded with multifunction devices that played FM radio and told the time as well as played music. Then Apple came in and took 80% of the market with a device that did only one thing. 18 Y&R ADVERTISING MY BRAIN HURTS 19
Slide 12: As mankind’s first lunar module approached the moon’s surface in 1969, its main computer crashed. Today’s electronics consumer is far less tolerant of failure. 2. THINGS THAT DON’T WORK, DON’T WORK Marketing money is wasted on unripe technologies. In 2003, millions of people were captivated by the picture messaging campaigns of mobile service providers. And they upgraded their mobile phone to a camera phone. Then they charged up their phone, took a picture, and sent it to a friend. Very few of those friends ever saw the picture: • The majority of the pictures were sent to phones unable to display pictures. • The networks hadn’t agreed common technical standards, so any picture which crossed networks disappeared. • Many people who did receive the pictures never saw them, because they didn’t know how to open them. 20 Y&R ADVERTISING
Slide 13: As a result, picture messaging failed in 2002/3. Compare that with the previous great mobile messaging technology, the SMS text: • Mobile service providers didn’t advertise SMS, as they saw it as a competitor to their lucrative voice calls. • As a result, text messaging grew organically. • Young people checked whether their friends had 2G phones or not, and only sent texts to those who did. • As compatibility grew in the mid 90s, text messaging exploded all over Europe, Africa and Asia, with billions of messages a year being sent by 1996. • Within a few years, texting was providing a new revenue stream of 7% of revenue for mobile service providers. Picture messaging failed, despite hundreds of millions of dollars of marketing because it wasn’t ready. Text messaging succeeded, despite any marketing, because it was ready. Technology producers need to think further about this, making sure their technology is ready before they set out to market it. Before a technology is ready, no amount of marketing will make it happen. Afterwards, not even silence can stop it. Networking computers together can still stump even the geekiest of consumers. So So make sure your technology works before you market it: • Is the home wireless network ready for the mass consumer market yet? Most routers require a PhD in computing to set them up. • Internet telephony is also not quite ready for the ordinary consumer. Congratulations to Skype, who are continuing to allow their service to spread virally, rather than pushing it at an unprepared mass market. • We’re still waiting for it – the video editing application for the common man. When home networks break down, how do you fix them? Sites like eBay and Craigslist are hitting newspaper classifeds hard in the US. In Russia though, lower computer ownership means that classified advertising is still going strong. 22 Y&R ADVERTISING MY BRAIN HURTS 23
Slide 14: 3. WHAT WORKS NO LONGER MATTERS When a technology finally delivers on its promises, marketers should watch out. The late 19th century was a great time for farmers. New technology – in the shape of traction engines, harvesters and milling machines - was arriving on farms, making them more productive. Farming journals spoke of a new ‘golden age of farming’, of new heights of food production and of farming at last becoming an important, economically vital industry. But that’s not what happened. Over this period, agriculture fell from 60% of GDP to under 3% in some industrial nations. Farmers lost their power to affect change. Farming became a small part of the economy. Once the problem of adequate food production was solved, it ceased to be an issue. When watches ran fast and slow A similar thing happened with timekeeping in the late 1960s. At the time, everyone had clockwork watches, many of which lost or gained five minutes a day. Daily conversations revolved around the correct time, and adjusting watches and clocks. ‘Do you have the time please?’ was a standard pick-up line. Then digital quartz crystal technology arrived, promising precise timing. Precise timing caught the popular imagination. The dialogue of 1960s TV series reflects the widespread belief at the time that ever more precise timing was the way of the future: ‘Negative, captain, the shuttle is landing in 24.8 seconds.’ ‘You have eight minutes and three seconds to live Mr. Solo.’ ‘Arrival in two point three eight six minutes affirmative, Virkar.’ But by 1980, everyone had a super-accurate quartz watch, everyone knew the precise time. And the timing issue – and with it the craze for precise timing - disappeared. The ungrateful consumer When the main benefit of a technology is delivered, The accuracy of clocks and watches was a popular topic of conversation for the two hundred years upto the invention of quartz digital watches. Nowadays, it’s just not an issue. 24 Y&R ADVERTISING MY BRAIN HURTS 25
Slide 15: consumers stop being grateful to companies for providing that benefit. And simply forget that that benefit exists. So watch out Consumers stop being grateful fast: • Mobile network service providers were the darlings of Europe in the 1990s as they let consumers talk to their friends anywhere, any time. But now that call quality is perfect, and everyone has a mobile phone, European mobile service providers are rapidly becoming perceived as little better than the state landline companies that preceded them. • In the 1920s, managing a steady flow of electricity into factories was such a critical issue that most companies had a main board electricity director. Once electricity supplies became secure, he disappeared. Does the same fate await CIOs, now that corporate PC and email systems all work? • With 24/7 global email and intranets, information flow within companies has now become so fast that information is no longer the critical factor holding them back. So are we now in the middle of the information age – or are we watching its end? Mobile phones which read barcodes on the bottom of ads will shortly be the wonder of the West. But they are already taken for granted in Japan. MY BRAIN HURTS 27
Slide 16: 4. BEWARE THE COUNSEL OF NERDS Winning technologies are those that appeal to ordinary people, not just geeks. When Kodak introduced its point-and-shoot Box Brownie camera in 1900, American photographers laughed. They wanted better pictures – and that meant more sophisticated cameras. Kodak’s new offer was little more than a box with a hole at one end. But Kodak had inspired the average American to think that perhaps he could now take photographs all by himself. As there were a lot more ordinary Americans than there were photographers at the time, the brand rapidly came to dominate its market. Similarly with AOL in the 1990s Throughout its early days in the mid 1990s, the online community laughed at AOL, with its no-brainer sign-up Tech company employees often regard mainstreamers as dinosaurs. Some nerds choose to carry a selection of pens in their shirt pocket. Corporate health and safety manuals warn that this habit can be lethal in the event of an automobile accident. 28 Y&R ADVERTISING
Slide 17: process, and cutesy low-tech imagery. As an AOL user you were regarded as pond life in chat rooms. An AOL email address was social death. But AOL had inspired the average American to think that perhaps even he could take the on-ramp to the cyberactive infobahn thing everyone was talking about. And as there were many more ordinary Americans out there than wired people at the time, AOL rapidly became the main dial-up way of accessing the internet. Ten years later, AOL remained attractive to many millions of ordinary Americans – and one of the biggest money earners on the web. Your audience loses its brain What AOL and Kodak understood, and what most tech brands don’t, is that as a market develops, levels of understanding, and comfort do not rise. On the contrary, they fall. First come the nerds, with love of technology, and their intuitive sense of how it works. Then come the early adopters, excited by the technology, but with slightly less knowledge. Then the mainstream flood in, with their fears and ignorance. Finally come the laggards, who just don’t want to feel left out. Over time, as the market floods with new, less tech savvy consumers, the average level of understanding in the market falls rather than rises. And amongst advicehungry new entrants, the level of tech savvy is even lower. Not all software is designed by nerds for other nerds. On the computer map on Virgin Atlantic flights, a dancing Elvis appears as you fly over Greenland. Jeff Bezos at Amazon focused firmly on the mainstream. When he first launched Amazon in 1997, he included a phone number for people who didn’t feel confident about transmitting their credit card details online, together with rapid email confirmation that an order had been accepted, was being processed and had been mailed out. None of the geeks and nerds who were Amazon’s first customers used the phone number; most found the emails a nuisance. Y&R ADVERTISING But a year later, when online purchasing became mainstream, suddenly Bezos’s planning bore fruit. Unlike at most other online retail sites, the mainstream knew when they had placed an order at Amazon. They knew they had an alternative if they didn’t want to transact online. And they knew when to expect the package. And so whilst all other online retailers were losing the mainstream’s trust with their bug-ridden payment processes and chaotic fulfilment, Amazon gained it. 30
Slide 18: Companies need to tune their offer to these successive waves of less and less techy consumers. As time goes on their marketing has to get more basic, not more sophisticated. So: • Online banking portals worked fine for their first users in the 90s. But the sort of people who are trying online banking for the first time now aren’t that comfortable with software interfaces. They need to be simplified to cope. • Similarly with microwave ovens. They worked fine when they were bought by tech-savvy early-adopter housewives in the 1990s. But now they’re mainstream. Brief to microwave designers: come up with a microwave as idiot-proof as a regular oven. • Vodafone are currently marketing simplified-interface mobile phones aimed at mainstream people over forty. Could such an approach pay off in the digital camera market too? Mainstreamers are different: In the early days of video in the 1970s, cash-strapped mainstreamers plugged their new VCR into their old TV set. And the real benefit of a VCR to them was that they could, for the first time in their lives, experience the luxury of changing channel without getting out of their armchair. Are you a mainstreamer or some other type of person? Find out in our online personality test at http://4cs.yr.com/diys MY BRAIN HURTS 33
Slide 19: 5. THINK INFECTION How fast a technology passes from person to person is decisive to its success. Between 2004 and 2007, two new devices appeared in the living rooms of the world: the flat panel TV, and the DVR. The flat panel TV rapidly became a must-have item across the world, despite its high prices. But the DVR grew much more slowly over the period despite the fact that most DVR owners say that it has revolutionized their lives, and despite the fact that any satellite TV subscriber given a DVR never gives the service up. The reason flat panels have a much higher consumer-toconsumer infection rate: • In 2004, the flat panel TV was the high status item in early adopter homes. He talked about the amazing The most successful technologies spread virally from person to person. 34 Y&R ADVERTISING
Slide 20: picture quality; she endorsed its minimalist lines and space-saving ability. And they repeated their sell to every visitor to their home. • By 2005, the world was sold on flat panel TVs. Mr Average was inviting his friends round to watch football on it, and extolling its virtues to them. Compare that with DVRs over the period: • In 2004, the first TiVo and Sky+ owners were amazed by their devices, and found themselves suddenly no longer watching live television. • They tried to communicate their experience to their friends, but couldn’t. Their friends just thought they had a digital version of a normal video player. • In 2005, DVRs had become more mainstream. But again, owners struggled to rave about them to their friends. ‘It lets you pause live TV.’ was the best they could do. ‘How often do I want to pause live TV?’ came the reply. Today, in 2006, DVR owners continue to struggle to articulate what the DVR has done for them - despite the fact that they have moved into a completely new world of on-demand television. The flat panel TV succeeded rapidly because consumers found it easy to infect their friends with the need for one, The DVR is growing much more slowly because no one can express quite why it’s so good. So If you want the world to accept your device quickly, concentrate on making it more infectious: • The iPod spread fast because even if you put yours inside your jacket pocket, your white headphones were still visible to everyone around you. Other MP3 player manufacturers need to think up a similar mechanic. • It was the ‘my friends are’ section of the homepage that made MySpace spread like wildfire through schools and colleges. Everyone went out and asked their friends to sign up and link to their page, because otherwise it would be obvious that they were simply not popular. • The Blackberry spread fast because every email it sent included ‘sent from my wireless BlackBerry handheld’ by default. Why don’t other communications systems brand their output? Photography only took off when people learned to ask their audience to pose and say cheese. At airports, retailers, and nightclubs plasma screens are spreading like wildfire. 36 Y&R ADVERTISING MY BRAIN HURTS 37
Slide 21: THERE’S NOT THAT MUCH GOING ON IN THE WORLD APART FROM THE DIGITAL REVOLUTION, SAY ECONOMIC HISTORIANS We still drive around in automobiles, invented in 1899, fly around in jumbo jets from 1968, and worry about atomic weapons invented in 1945. Our best scientists spend their time exploring Einstein’s theory of relativity from 1915 and the theory of quantum mechanics from the 1920s. Because not much else fundamental is happening in the world today, digital technology brands are some of the most energetic brands in the world, when measured on Y&R’s global BrandAsset Valuator study. But not all tech brands are equally successful. Some tech brands are less energetic than others, and the thing that drags the alsorans down is often consumer confusion. Imperfect marketing drags tech brands’ energy levels down in three key ways: • Lack of consumer understanding of where a tech brand is heading in a philosophical sense drags down its level of VISION. • If consumers do not recognise and respond to a brand’s innovation activities, this drags down its level of INVENTION. • If the brand doesn’t exude a sense of buzz, this pulls down its level of DYNAMISM. On the right are energy levels for 30 brands in the US. Google is top of the pile. 38 Y&R ADVERTISING 6. BUYING IS ONLY THE BEGINNING Successful technologies are those that consumers rethink their lives around. Most tech marketers advertise and promote heavily to get their consumer to buy their products. Once that consumer has left the shop, they see their job as done. But the success of tech products relies massively on whether consumers adopt the product for everyday use or not. No tech product succeeds long term if the consumer buys the product, takes it home and puts it in a drawer. Whether they integrate it into their lives is what separates a successful tech product from the rest. Integrating the video camera For instance, most Americans or Europeans using a video camera will stand motionless, zooming in and out, producing boring video. Give that same video camera to a young Japanese woman, however, and the reaction is completely BEX Google 99.8 TiVo 99.7 Nike 99.4 iPod 98.6 Starbucks 96.8 PlayStation 92.3 Crate & Barrel 88.0 JetBlue 87.2 Ben and Jerry’s 87.1 Gap 86.7 Subway 85.6 Mini Cooper 85.0 Target 74.7 Louis Vuitton 71.0 Staples 68.4 McDonalds 65.8 Samsung 64.1 BlackBerry 61.2 Banana Republic 59.6 The Body Shop 56.6 Heinz 54.7 MasterCard 52.8 Chipotle 52.0 Domino’s Pizza 51.9 Sierra Mist 43.8 Blockbuster 43.5 Amtrak 41.8 Delta Air Lines 40.1 Tostitos 32.7 J Crew 32.2 TM Source: BAV USA Jan-Dec 2004
Slide 22: different. Many will start narrating as they use the video camera, interviewing people as they film them, and producing their own personal documentary. The result is much more compelling and shareable. And so video cameras have become a much more central part of young Japanese life than they are in the West. Integrating the homepage It’s also the difference between ordinary homepages and the homepages people create on social networking sites like FaceBook, Bebo and MySpace. The web homepage has been around for years, but never became a vital part of anyone’s life, because, after the first few hits, no one’s friends could ever be bothered looking at it. It was only when MySpace decided that homepages were a social networking tool – and fifty million teenagers realised that they would never get another date without looking good on theirs - that the idea took off. So Many tech brands should think harder about how they want people to use their products. Then they should publicise their ‘usage instructions’: • Computer manufacturers need to articulate better how their modern media-centric computers can change their users’ lives. They currently say In Japan, young women integrate technology into their lives much more readily than in the West. The period 1900 to 1940 saw the appearance of the automobile, the airplane, electricity, radio and many other technologies. These technologies changed our grandparents’ and great-grandparents’ lives out of all recognition. In the period 1980-2006 there has been much less change. Apart, that is, from the rapid development of digital technology. 40
Slide 23: ‘Store hours of TV’. It’s not enough to persuade nonowners to buy. • YouTube.com is attracting a lot of people who want to share the movies they’ve made with their webcam or MP4 recorder. But it has not yet defined how non movie-makers should use its site. They need to sell the ‘YouTube evening’ as a more compelling alternative to TV. • Camcorders are getting smaller and more robust. Congratulations to Samsung on positioning their latest tiny camcorders as extreme sports recording devices. 7. THE SECOND GENERATION USES DIFFERENTLY Extreme sports camcorders: Cooool. The true impact of technology on a society may take a generation. When mobile phones first became popular in the early nineties, the first generation of consumers to use them found they were a very useful part of their social lives. If they were late for a dinner appointment, they could call their friends and apologise from their car. If they made a mistake in an arrangement, they could call the other person and find them. The second generation are different But the next generation to use them do so differently. They no longer make plans in advance, because they don’t need to. They know that all their friends can be contacted at any time because they all have mobile phones with them. And so they just arrange their evening by phone on the go. 42 Y&R ADVERTISING MY BRAIN HURTS 43
Slide 24: For the first generation of users, mobile phones were a helpful aid to their existing social lives. For the second generation, mobile phones have redefined their social lives. Similarly with PCs A similar change happened with PCs. When the first generation of companies bought PCs in the 1980s, they regarded them as a better form of typewriter, and put them on their secretaries’ desks. But the next generation of executives in the 1990s were all computer literate. And so their companies gave them the PCs, and gave the secretaries pink slips. Similarly with email First generation CEOs used email to improve communications across their management structure. Next generation CEOs used the improved information flow to flatten command structures, cutting out the layers of management that were no longer necessary. With both PCs and email, the first generation of companies used them to make their existing structures work better. The second generation redefined their structures around the new technology. So Watch the way the second generation use technology for the way it will really impact the world: • Current TiVo users still do most of their viewing live, And singer Sandi Thom made it through webcasts. 44 Y&R ADVERTISING First generation corporations used email to allow their managers to communicate better. When digitization hit, first generation musicians called their lawyers. But then Britain’s Arctic Monkeys made themselves famous through MP3 downloads. Second generation corporations eliminated the managers. Today, savvy record companies use CDs as a medium for selling ringtones.
Slide 25: as they have TV schedules etched into their brains. But no one will remember TV schedules if they don’t have to. And so the next generation are likely to use their TiVos differently, collecting most of their viewing to watch when they want. Classical ad industry watch out. • Current drivers use satnav as an aid to the mental maps they already have in their heads. But who will bother to memorise a map if they don’t need to? Like the generation of schoolkids who forgot how to add one and one to get two because they were allowed calculators in their math exams, expect the next generation of motorists to be completely lost when their satnav breaks down. Expect the next generation of motorists to be completely lost when their satnav breaks down. 8. CONSUMERS LEARN ONLY THROUGH DOING Every tech device or service today comes with an instruction manual, which can be up to five centimetres thick. Tech manuals are so incomprehensible that some manufacturers pray silently that someone will write a ‘for Dummies’ book to explain how to use their new device. But the problem goes beyond this. Observations show that most consumers never read the instruction book, no matter how well written. The only way most consumers learn is by handling a device and trying to make it work. The only way most consumers learn is by doing. ‘Plug and play’ was therefore never a manufacturer strategy. It is just a consumer reality. Instructions for using payphones in South Africa are visual, because South Africans speak eleven different languages. Other telecoms companies could learn from this. 46 Y&R ADVERTISING MY BRAIN HURTS 47
Slide 26: Consumers fear the confusing What’s more, consumers know they don’t read instruction books. So when they look at a new device and they don’t understand how it works, they tend not to buy it. This means that one of the most useful roles of technology marketing is to explain what a thing does in advance. If consumers feel they understand a device before they buy it, one of the biggest fears they have is removed. This is why tech stores like CompUSA and Germany’s Saturn chain allow consumers to ‘play’ with their wares so freely. Consumers aren’t just playing with them – they are working out how to use them – and thus significantly increasing their likelihood to buy. Similarly with games – giving away the first few levels for free creates a huge market of hooked users, who simply have to finish. So: • The vogue for ‘usability testing’ – rooms full of students surfing to websites and exploring the userfriendliness of their navigation and payment systems happened too late in the internet boom to make a difference to the companies that used it. Usability testing needs a revival. • Most DV camcorders have a ‘demo mode’ for use by retailers. The camcorder cycles through demonstrations of its main features to the delight of browsing customers. All well and good – but a demo 48 Y&R ADVERTISING
Slide 27: mode for use by forgetful owners would also be useful. • And not just in audiovisual equipment - a demo mode would be massively helpful in office phone systems too. • The latest camcorders have ‘easy’ mode buttons that allow users who have never read the manual to use them. More consumer electronics devices, from satellite receivers to microwave ovens need such a button. 9. PRICE DICTATES PERCEPTION Consumers value things according to their price. ‘If the car had developed at the same speed as the computer’, say Silicon Valley geeks, ‘Today you’d be driving from Los Angeles to New York in under four minutes. And the car would cost you less than twenty cents.’ The boast reflects the flipside of Moore’s Law: that digital technology tends to halve in price every couple of years or so, and keep doing so for decades: • $3000 plasma panels from 2003 sell for $500 today in 2006. • $1000 camcorders from 2003 now sell for $300. • $300 DVD players from 2002 now sell for less than the cost of the cable that connects them to the TV. Coping with such price falls, and resulting changes in consumer expectations and perceptions are amongst the most difficult issues in tech marketing: • Consumers who bought a state-of-the-art computer As PCs become cheaper, they are increasingly being sold by hard discount food outlets. 50 Y&R ADVERTISING MY BRAIN HURTS
Slide 28: in 2002 have difficulty accepting that their machine today is virtually obsolete. • Indeed, consumer expectations of price falls are often the biggest barrier to sales today: many consumers say they didn’t buy a 42 inch plasma to watch the 2006 World Cup on because they thought that plasma screens would halve in price by Christmas. • On the other hand, consumers are often so good at finding uses for cut-price technology that marketers need to be careful: The Mercury 1-2-1 mobile phone company thought they were doing their customers a small favour when they offered them unlimited free evening calls between their mobiles in the late nineties. What they didn’t expect was for their network to be jammed by customers who chose to go out drinking for the evening, leaving one phone permanently on in their baby’s cot at home as a baby monitor. So The speed of falling prices are of massive importance to any tech based marketer: • Lexus built its reputation around the many electronic devices and features which were fitted as standard in its vehicles. Today though, the cost of these features has fallen dramatically, and many are now fitted as standard on mid range saloons. Lexus needs to develop new reputations – and to do so fast. 75% of the cost of running a newspaper lies in its distribution: printing, delivering and chopping down trees. Digitization is allowing newspaper proprietors to cut all of these costs - but the indications are that consumers value news they receive for free less. MY BRAIN HURTS In Ridley Scott’s Blade Runner, 2019 Los Angeles detective Harrison Ford interviews an exotic dancer who performs with a snake. ‘Is that a real snake?’ asks Ford. The snake is an artificial living copy. ‘If I could afford a real snake,’ replies the dancer, ‘would I be dancing here?’ Airtime is so cheap in 2006 that mobile phone companies can offer free airtime to couples without risk. 53
Slide 29: • As average voice revenue per user continues to fall for mobile phone companies, they need to encourage people to spend more time on the phone. Young women already rate their boyfriends by how frequently they call and text them; Perhaps marketers should start to suggest to them that the ultimate sign of commitment is the always-on relationship – where an (exceptionally besotted) couple agree to sleep, eat and work with an always-on phone connection between them. • ‘Information wants to be free’, said internet visionaries in the nineties. They may as well have said ‘Information wants to be worthless.’ ‘Talk for hours, not minutes.’ HEADLINE, HUTCHINSON WHAMPOA ‘3’ MOBILE PHONE AD 10. THE VISIBLE WINS Consumers place little value on things they can’t see. When Karl Benz’s first automobile hit the roads in 1889, people called it ‘the horseless carriage’. Every previous form of road transportation they had seen had horses in front. The striking thing about this one was that it didn’t. Similarly when the radio first appeared. Unlike gramophones and telephones, it had no wires attached. So people called it the ‘wireless’. But the names didn’t last. After a while, the lack of horses and wires faded from the public memory. And people started calling the wireless a radio. And the horseless carriage an automobile. Over time, consumers stop valuing, and eventually don’t even remember, things they can’t see. It’s a lesson technology-based companies have often failed to heed. If consumers can’t see your product or As wireless devices become commonplace, consumers will forget that wires ever existed. 54 Y&R ADVERTISING MY BRAIN HURTS 55
Slide 30: service, it stands a much lower chance of long-term success: • Consumers can’t see satellites. So they failed to get hooked by satellite phone technology. In the late 1990s, the Iridium consortium had a network of forty satellites orbiting the earth, allowing phone coverage across the whole planet. It was a pretty cool idea. But the consumer didn’t buy - because all they saw was a handset the size of a brick. • Mobile network service providers suffer from being invisible. As a result, mobile handset manufacturers became stronger brands than mobile service providers across the world. The smart mobile service providers in the nineties were Orange and Vodafone, who insisted on putting their logos on phones connected to their networks. France Telecom paid $45 billion for Orange in 2001. That’s how much that brand was worth. • The Blackberry wireless handheld device took the corporate world by storm in 2003. But the Blackberry’s marketers were careful not to market their device as a ‘wireless network technology’. They simply sold it as a handheld device called a Blackberry. And the question on the lips of owners of all other PDAs was not ‘How do I get my PDA to connect?’ but ‘Why can’t I have a Blackberry?’ So make yourself visible Digital marketers need to work out how to make their activity visible to the consumer, and then brand it: Breaking into your neighbour’s unsecured WiFi network is the yuppy game of the mid 2000s. But WiFi is invisible. As it becomes more widespread and more reliable, people will forget that it exists. MY BRAIN HURTS Harman/Kardon took an invisible ingredient brand the computer speaker and turned it into a desirable object in its own right. 57
Slide 31: • Can you see WiFi, GPS and BlueTooth? Don’t bank on these brand names being in perfect health in 2010. • Congratulations to Dolby Labs for getting their logo on every piece of hi-fi equipment for the past thirty years. But surely they could have done more with such a famous brand? • Digital technology means consumers use ATM networks to withdraw money from banks nowadays, so no one goes into their branches any more. In the 19th Century, banks spent a fortune on a good visual appearance, decorating their branches with marble and other fine stones. Today, they need to spend some money making their ATMs look a little more special. • In today’s online world, the one visible thing a bank offers is a credit card. And the logo that guarantees acceptability of these cards is that of Visa, not the bank. Visa is thus the world’s strongest financial brand, and could play a powerful role in cross-selling the insurance and investment products banks are currently struggling with. ATMs are banks’ sole point of contact with their customer nowadays. They need a design upgrade. Airlines make their frequent flyer schemes visible through cards and luggage tags. Tech companies need to consider how to make their offerings more visible too. MY BRAIN HURTS
Slide 32: 11. CONVERGE WITH CARE Today, analysts, consultants and engineers have convinced themselves that consumers want ‘convergence’. By which they mean any device that has aspects of television, computing and telephony built into it. But do consumers want convergence? Convergence devices usually offer a range of benefits. And consumers gravitate not to those that offer a range of benefits, but those who promise just one good one: • Most business executives choose to carry both a mobile phone and a mobile email device – when each device can both make voice calls and send email. • Most people also continue to wear a wristwatch, when their phone tells the time perfectly well. • They also continue to buy separate VCR players, DVD players and TVs, when combination devices are widely available and cheap. Convergence isn’t good marketing Indeed the history of marketing is the opposite of convergence. With converged cameras and camcorders, you either get a good camera or you get a good camcorder. Rarely both. 60 Y&R ADVERTISING
Slide 33: When scientists invented synthetic detergent in the 1940s, they saw it as an amazing product that would clean clothes, hair, floors and cars. But smart marketers recognized that consumers want different products for different needs, and launched separate shampoos, laundry detergents, floor cleaners and automotive foams based on synthetic detergent. Still think convergence is a good idea? Try washing your hair in laundry detergent. Convergence failed in the past It’s an idea has been with us for a very long time. In the 1920s, manufacturers put optional small nozzles and a reverse switch on to their vacuum cleaners so that you could also use them as a hair dryer too. The basic principle of convergence wasn’t attractive to consumers then, and it is no more attractive now. Where consumers are buying videophones and portable email devices, they are buying them because they offer them real, tangible benefits, not because they offer convergence. So So tech companies beware. You need to ensure your convergence concepts are driven by consumer need, not technological dreaming: • Do consumers really want a converged digital hub in their living room? Parents may like the idea of controlling all digital feeds in their home from the living room – but the last thing most sons want is In the late 1990s, mobile service providers invested upwards of $100 billion dollars in 3G phone licences. The research said that everyone wanted to see the person they were talking to. But the research forgot to ask whether they wanted the other person to see them. 62 Y&R ADVERTISING
Slide 34: parental oversight of the online sleaze they’re looking at in their bedroom. • At the time of writing, telecoms companies across are excited by the concept of triple and quadruple play – they idea of bundling broadband, landline, mobile and other services into one package and selling them to the consumer. There is a clear benefit to the telcos – they get to sell more. But what exactly is the benefit to the consumer? • Mobile telecoms companies have been bitterly disappointed over the past few years by the low takeup of all their new 3G technologies. Perhaps they would have done better to think better about the core need mobile phones deliver to their core 16-24 consumers – social networking – and work out how to enhance that instead. In South Korea, SK Telecom has done that, by linking social networking webspace to users’ mobile phone accounts. And the users are paying real money to furnish their virtual living room, or ‘minihompy’ to impress their friends and dates. 12. CONSUMERS DON’T ALWAYS WANT VERSION 2.0 They may want what they had yesterday. From the 1920s to the 1960s, the aviation industry focussed on producing better, faster, more comfortable passenger aircraft. First came the twin-propeller planes, then the seaplanes, then the jets. Transatlantic flights ceased refuelling in Newfoundland and Ireland, and flew direct to Paris and London. Then in 1968, Boeing launched the 747. The 747 flew 400 people from New York to Europe in about seven hours. And then… And then nothing. If she really wanted convergence, she’d be washing her hair in laundry detergent. The 1920’s aviation industry was driven by the dream of ‘an airplane in every driveway’. Most consumers were happy with a car. 64 Y&R ADVERTISING MY BRAIN HURTS 65
Slide 35: Faster, better competitors failed. 1977’s supersonic Concorde today no longer flies. Other concept planes never left the drawing board. 38 years later, in 2006, the main vehicle for crossing the world remains the 747. As the futurist Tom Morton put it in the Financial Times, ‘The assumption is that because tech companies live for change, their customers should do also.’ Many tech companies’ sales depend on there being a version 2.0. The consumer is often happy with version In 1840, trains carried you at 30 1.0. So • Phone handset manufacturers should be careful with the assumption that the consumer always wants the latest phone handset. Today in 2006, many are happy with the one they already have. • The digital camera industry has already reached this point: the mainstream consumer appears to be perfectly happy with a six megapixel sensor on their digital camera, and struggles to find a reason to upgrade to a ten megapixel model, or a digital SLR. miles per hour, and covered you in soot and rain in open carriages. But by 1890, the train could take you at almost 100mph in elegant surroundings whilst you enjoyed fine food and wine. They haven’t gotten much better since. Not every technological rainbow has a pot of gold at its end. MY BRAIN HURTS 67
Slide 36: In the digital revolution, technology develops so fast that even industry insiders find their visions surpassed. The history of computing is littered with overcautious predictions from producers: ‘The world market for computers’, said Thomas Watson of IBM in 1943, ‘will be about five units.’ ‘Everyone’ said Bill Gates in 1982, ‘should be happy with 640K of RAM’ But the rule still stands. Consumer needs do not follow Moore’s Law. The photographic industry is heading for a slump. • Desktop publishing software needs a new big idea because the publishing industry remains comfortable with ten-year-old software releases. Surely such software ought now to be taking advantage of the amazing flexibility modern commercial digital printing now offers? • What can the consumer do with four gigabytes of RAM and a terabyte of memory on their laptop? The PC industry needs an answer fast. MY BRAIN HURTS 69
Slide 37: 13. EVERYTHING NEEDS A KILLER APP Industries are an illusion. Consumer needs are what matter. In his 1960 article that defined the word ‘marketing’, Professor Theodore Levitt of the Harvard Business School argued that the oil industry didn’t actually exist. All there was, he said, was a series of overlapping consumer needs: In the 1890s, people need to light their homes. That meant kerosene lamps. The kerosene came from oil. But then electric light replaced kerosene lamps, and the market for lamp fuel collapsed. Fortunately for oil companies, a new need – of personal transportation – took over. The new automobiles needed gasoline, and gasoline too came from oil. Industries are an illusion, argued Professor Levitt. Consumer needs are what are real. 70 Y&R ADVERTISING
Slide 38: Then in the 1950s, consumers wanted to fly. Planes needed aviation fuel, and guess where aviation fuel came from. And as aviation matured, the plastics industry became more important, and that too depended on oil. There was no oil industry, said Levitt. There was just a series of growing and declining consumer needs, and oil just happened to meet them. And the fortunes of oil companies lay not in their drilling, refining or pumping, but in their ability, or the ability of others, to find uses - or ‘killer apps’ for their product. Killer apps are vital in all technological products: • When CD players went mainstream in the mid 1980s, their killer app was the Dire Straits CD Brothers in Arms. Music aficionados all bought a copy to check out their new digital sound capabilities. • In 1999, large numbers of consumers went out and bought a copy of The Matrix to marvel at its high definition computer graphics. It was the killer app for that year’s new DVD players. • Apple’s success from 1987 through to the mid 1990s was driven by a killer app: desktop publishing. As the publishing industry moved from pasteboard and glue to PageMaker, QuarkXpress and Adobe LCD panels are used for both information and TV in this Tokyo subway carriage. Expect many more uses for them to appear in coming years. Your next camera may well embed GPS satellite information into every picture you take. It’ll tell you where you went on holiday - in case you forgot - but what exactly is the killer app? 72 Y&R ADVERTISING
Slide 39: InDesign, they needed the computer these apps were designed for: the Apple Macintosh. Many more technologies and devices languish because no one has yet found them a killer app. So: The most important role of marketing in the digital world is finding and defining that killer app: • If the mobile phone industry had recognized before the 2000 3G licence auctions that the killer app for the mobile phone was voice, it could have saved itself a hundred billion dollars in licence fees. • What’s the point of having a GPS positioning chip on a laptop? The computer industry need an answer quick. • And what’s the point of having a GPS chip on a digital camera? The engineers are already starting to build them in. Is there anything more to it than reminding you where you went on holiday? • If you can’t find a killer app for your existing product or service, spend a lot of time with your consumers, and see what uses they’ve discovered for it. They may surprise you with their ingenuity. 14. CONSUMERS HAVE THEIR OWN AGENDA ‘48-hour internet outage plunges nation into productivity’ screamed satirical online weekly The Onion in the late nineties. The observation reflected reality. The internet had made employees more productive – but at shopping, banking, gossiping and flirting at their desk more than working at it. And none of these new productivities showed up in Department of Labor productivity statistics. Similarly, much of the additional RAM capacity in the 1990s was eaten up, not by better office productivity software, but by screensavers and instant messaging programs. And the pressure on IT departments in 2000-3 to upgrade corporate networks was driven less by the size of spreadsheets circulating around those networks and more by employees trading illegal MP3s. Put simply, consumers use technology the way they Patients rarely take their pills exactly the way their doctor tells them to. Should we expect them to operate digital home medical devices correctly either? 74 Y&R ADVERTISING MY BRAIN HURTS 75
Slide 40: want to use it, not how its manufacturers - or their employers - intend it to be used. The selfish consumer What’s more, consumers are relentless in their selfinterest. Electrical retailers moan that they can’t sell single region DVD players any more – because consumers want multi-region ones so they can watch the DVDs they buy on market stalls. And legitimate DVD producers find they can’t sell their legitimate DVDs in Asia. Not just because the pirates are releasing blockbusters faster – but also because the pirates are creating and including valuable extras like Chinese language commentaries in their versions. So Smart manufacturers and services must recognize that consumers act in this way: • In the 1990s, mobile phone manufacturers recognised that they needed to give their users a choice of ringtones so that consumers would know when their phone was ringing, rather than someone else’s. 76 Videophones allow British teenagers to share their unprovoked ‘happy slapping’ attacks on strangers with their friends. ‘The streetcar is the future: it is clean, safe and available to everyone.’ proclaimed civic leaders in the 1910s. Many rich families put their entire fortunes into streetcar stocks. But the consumer wanted wheels of their own. Y&R ADVERTISING
Slide 41: But why did mobile service providers not offer to extend that range through downloads? Today the ringtone market is larger than the CD singles market –and is dominated by independent companies like Jamba and their Crazy Frog ringtone range, not by Verizon or Vodafone. Mobile service providers have sacrificed a vital revenue stream. • The test of a good corporate intranet is: are employees still using pinboards to sell their car/announce a baby shower/run their sideline businesses? If they are still using the pinboard, the intranet isn’t working properly. • Many phones today are equipped for video downloads, but few people are interested in the boring ones offered by mobile service providers. They ought to partner with the innovative two-minute video producers showcased on YouTube before someone else does. • Electronic home medical appliances is a huge new area for digital technology. Our experience working with pharmaceutical companies though is that patients rarely comply fully with treatment regimes once they leave hospital, and sometimes stop taking prescribed pills completely. Electronics companies entering the medical area need to take on board the complex issues of patient psychology if they want their devices to be used effectively. How many baby showers are advertised on your intranet? 15. THE AWESOME POWER OF VIDEOGAMES Recently, murder suspects in several countries have defended themselves by arguing that when they killed they thought they were in a video game - and therefore should not be held liable for their actions. The ‘Matrix Defense’, as it is called, is not accepted in most parts of the world. But that’s because judges in most countries are old, and have therefore never played video games. Today’s video games can be powerful, mind-altering experiences. The fear you experience as a ruthless and methodical SWAT team hunt you down can be real. So if provocation from the real world - perhaps from finding your lover in bed with someone else - is an accepted defense, perhaps provocation from the virtual world ought to be too. Awesome power Videogames are so compelling that they are eating Television is losing its young male audience to videogames because videogames are much more compelling than TV. 78 Y&R ADVERTISING MY BRAIN HURTS 79
Slide 42: heavily into the time young men spend watching television. Why watch the opening sequence of ‘Saving Private Ryan’ over and over again the way young men used to do in the nineties, when you can experience landing on Omaha Beach yourself in ‘Medal of Honor’? And indeed, why watch an action-adventure movie, when you can hunt down terrorists yourself in Tom Clancy’s Splinter Cell? So Innovators in other fields should think further about exploiting the intense immersive power of videogames: • Many people like to read books on philosophy or religion to guide them through life. But wouldn’t this role be much better performed by software? Armed with a smart mobile phone, they could receive situation-specific twenty-four-seven spiritual guidance. • A prediction: the next big religion to impact the world will be software, not book based. • Guidance in other areas could also be better done by game-like software than by a book. A diet that read the RFID chips on the food you ate, and told you what to eat and what exercise to do next could be ten times more compelling than any conventional diet program. Connect with the almighty through your Nintendo. Expect electronic entertainment to become increasingly immersive. MY BRAIN HURTS 81
Slide 43: 16. TO COMMUNICATE IS FEMALE ‘You can ball my wife if she wants you to, Ralph,’ says Al Pacino in the gangster classic Heat. ‘You can lounge around here on her sofa in her exhusband’s dead-tech post-modernistic bullshit house if you want to.’ ‘But you do NOT get to watch MY television set.’ Men can develop very strong attachments to the tech devices they own. This is rarely the case with women. On the other hand the average woman has more friends, and communicates with them more often: • As many shocked girlfriends have found, the address book of most men’s mobile phones usually contains more than 50% women, whereas their own contains far fewer than 50% men. This is not (always) because their boyfriends are being unfaithful to them. It is because women have greater social networks than men. • ‘The typical woman spends three times as much time Men are obsessed by machines and always have been. Women are more attracted to the communications possibilities of technology. on the telephone as men’ say landline telecoms execs. ‘They are our core customer.’ • Observational research shows that women also like to communicate in media-rich ways, using their eyes and hands. This means that long term, women are likely to be better customers for all technologies driven by communications. This vital observation is lying in wait for mobile service providers, who, facing stagnating average revenue per user are desperate for ways to stimulate calls. As fixed line companies have discovered in the past, the key lies with women, and female behaviour patterns. It’s also important for picture messaging. At a dollar a pop, it’s currently expensive for many women. But women will be the eventual main users of it. If men want to celebrate a football score, they will happily do it with a one-line text. When a woman wants her friends to see her new hair, only a picture will do. And for the future of mobile communications, check out the Japanese school girl and her i-mode phone. Mail broadcast services allow them to wish their entire class at school goodnight, and waves of goodnight texts flash across Osaka and Tokyo every night. Network effects Because women are more focused on communication than men are, the way they adopt technology is different: If you are the first person in the world with a video camera, no problem. It doesn’t matter that no one else has one. Medical researchers are starting to regard autism as an extreme form of maleness. Communications devices are therefore skewed female. 82 MY BRAIN HURTS 83
Slide 44: But if you are the first person in the world with a fax machine, you have an issue. A fax machine is only useful if there is at least one other fax machine in the world, and even then it’s not very useful. The usefulness of a fax machine only rises as large numbers of other people buy them too. (an effect known as Metcalfe’s Law) As women are about communication, their use of technology is similar. The attractiveness of a technology rises as more people they know adopt it. Women therefore adopt later than men, but then adopt in crowds. So: • Social interaction between groups of young men in bars can be so perfunctory that there is little quality difference between their conversation in that bar and their conversation within broadband network games. So in the future, expect many to put on a headset and rest a can of beer on their keyboard instead. Phone calls initiated by women last three times as long as phone calls initiated by men in some cultures. Women should therefore be regarded as the key consumer of mobile telecoms. MY BRAIN HURTS Some games manufacturers worked out some time ago that women didn’t get off on killing things the way men do. But most still have not worked out how to connect with women. 85
Slide 45: • The games industry has always struggled to attract women to their product. The insight some companies are still missing is that unlike men, women don’t like killing things: Those gaming products that take this insight on board, like PS2’s SingStar, where singers get rated for pitch and accuracy do well amongst women. Watch also women’s choices in video arcades. In Japan and in China, it’s not the shoot-em-ups, but the ski machines that are popular. • Check out also the games that swept East Asian nightclubs a few years ago, where participants gain points for dancing on pressure-sensitive dance mats. Young women like technology when it does stuff they want. 17. THE FUTURE LIES IN EMERGING MARKETS Technology isn’t just a rich country thing: • Wander into a village shop in Pakistan, and the shopkeeper will add your bill up using an electronic calculator. • Documentary crews working in the last unexplored parts of the Amazon basin are sure to take AA batteries with them. Because the young people in those villages demand batteries for their Walkmans in return for being filmed. • Go to any poor, remote village anywhere in the world, and the one piece of modern equipment they are guaranteed to have is a TV connected to a satellite dish. • Economic research shows that high mobile phone ownership can push up the GDP growth rate of poor rural areas by upwards of 1% a year. The poor like technology just as much as the rich do. And as a technology saturates rich countries, and its Increasing numbers of global corporations run their global computer systems from Malaysia. 86 Y&R ADVERTISING MY BRAIN HURTS 87
Slide 46: price continues to fall, it becomes more and more affordable to ordinary people in emerging markets. By 2010, that Pakistani village shopkeeper will also have a $5 mobile phone. So Marketers of technology who look to the future need above all to understand better the way poorer people live and think. The poor are not just rich people with less money: • Incomes are rising so fast in China that ordinary home appliances have become fashion items. In small towns, the fashion item of today is the air conditioner. Next comes the VCD karaoke machine. • Why are people in Asia flocking to buy plasma and LCD panel TVs as fast as rich Americans? Because their homes are one quarter the size and house thirteen family members, that’s why. • What’s the appeal of the web to teen Tunisian girls? It’s the breakout from parental control. In Tunisia, neighbourhood internet cafes allow teenage girls to listen to the Arabic language stars that their fathers stop them listening to at home. They also get to flirt with boys without going through the strict process of parental approval. • Throughout the emerging world, most people’s first and only phone is a digital mobile. Why don’t they have a landline? Because thieves keep digging up the wires for the copper content, so there aren’t any. MOBILE PHONE USERS The inflight computer displays on aircraft from Islamic countries show you how to face Mecca at prayer. The internet has now reached the remotest places on Earth: Siberian Airlines bookings are now mainly webdriven. 177M 363M USA CHINA Source: Morgan Stanley 2005 ‘The future of the computer is the mobile phone.’ says The Economist. And that future is happening in China more than in the United States. GameBoys are a vital teen male accessory - even for monks, and even in Tibet. A mobile phone airtime vendor in Kerala, India. MY BRAIN HURTS 89
Slide 47: Above all The most important issue is that poor people don’t follow the same upgrade path through technologies that the West experienced: • Western European companies slipped up in the early 1990s when they tried to sell their obsolescent Windows 286 and 286 machines to companies in Central and Eastern Europe. Poles and Hungarians weren’t buying - they went out and bought the latest kit instead. • Similarly, most emerging market bank customers go straight to the smart debit card, missing out the paper check book and pen. • And most mainland Chinese accountants went straight from a wooden abacus in the nineties to Excel today. So When projecting the future of a digital technology brand, think poor: • Most of the words banks use: credit, debit, mortgage, withdrawal - are used only by banks. When you’re marketing to new emerging market people, remember they may never have heard of the concept of interest: that the bank will actually pay them for looking after their money. • Producers of photographic film watch out: many emerging countries will go straight to digital. • Similarly with TV: as prices fall, most of the rural Third World is going straight to satellite. Europe’s most advanced egovernment is in Estonia. Rich, technically literate countries like Germany are years behind. SatNav is arguably of more use on the chaotic road systems of India and China than in the West. 90 Y&R ADVERTISING MY BRAIN HURTS 91
Slide 48: 8. SUMMARY 1. 2. 3. Digital technology gets twice as fast, and as capable, and as powerful every eighteen months. Meanwhile the mind of its user has not gotten any more sophisticated in the past ten thousand years. One result is a widening gap between what technology can do, and what its users - both young and old - understand it can do. The other result is a growing confusion amongst consumers, as they lose touch with how their phones, computers, DVRs, VCRs, TVs, SatNavs, GPSs, home medical equipment and MP3 players work. As consumers and technology diverge, there is a growing risk of a crash. And as digitization is now critical in all industries and all parts of the economy, that crash would be economy-wide. Helping consumers understand technology is not easy. They struggle with the demands modern devices and software make of them, and fail to absorb new tech-based concepts. The key need is for simplicity. Simple devices and software that do one thing, not several can have an 9. 10. 11. 4. 12. 5. 13. 14. Podcasts discussing issues covered by ‘My Brain Hurts’ are at pubs.yr.com/podcasts 6. 15. 7. electrifying effect on consumer mentality, clearing minds, and changing the way consumers think. But a technology must work for it to be able to do this. So many - like mobile phone picture messaging - were launched when they didn’t. We must also be conscious of the fact that consumers are rarely grateful for the changes tech brings to their lives. Once something works, they forget it exists. We must also be careful not to listen too closely to nerds - the early adopters who buy tech when it first comes out. Their thoughts are not those of the general population. We should think more about how technology spreads from person to person in the population. The resulting infection rate will determine how fast a technology takes off. We must recognize that whether consumers fit a technology into their lives or not is the true measure of success - and that the real impact of a new technology on a society may take a generation. Consumers do not read instruction books. Period. Tomorrow’s tech launches need to recognise this. Digital equipment also can get twice as cheap every two years. For the consumer, price is a positioning tool - and something that costs next to nothing can also be perceived as being worth next to nothing. Consumers are also visual creatures: after a while, they forget that invisible technologies - like WiFi exist. Successful technologies are simple technologies. 92 Y&R ADVERTISING MY BRAIN HURTS 93
Slide 49: 16. At the moment, the tech world is buzzing with words like ‘convergence’. But beware: convergence devices do not necessarily contain a strong consumer benefit. 17. Beware also of the conviction within tech companies that all technologies need to keep developing. True for the company that makes them. Not necessarily true for the consumer. 18. For a tech device to fly, it needs a valuable use, a ‘killer app’. Watch out for consumers developing their own - unexpected and often unwanted - uses for a technology. 19. Study videogames carefully - they are taking consumer time away from television because they are much more compelling than television - just as compelling television took share away from passive radio and press in the 1950s. 20. Watch out particularly for women. They are increasingly the key consumer of communications technologies. 21. Watch out also for people in emerging markets. There are four billion of them, and they often use technology more effectively than people in richer countries. Consumers struggle to connect with new concepts: ‘If I’d asked the consumer what they wanted,’ said Henry Ford, ‘they’d have asked for a faster horse.’ ‘A rose’ said William Shakespeare, ‘by any other name would smell as sweet.’ But call it an XTY 667 J35 version 1.2 firmware 5.6, and who would care? MY BRAIN HURTS 95
Slide 50: CONCLUSION As digitization proceeds, technologies that humans do not understand will fail. Software that humans do not understand will fail. If humans fail to understand and want the capabilities of their next generation phones, the telecoms industry will fail too. Our choice is to follow where technology leads, and leave the consumer behind. Or to make technology work for humans, not against them. Choosing the second path is not easy for any company. It means going against the tide of the industry. And it is hazardous, because the consumer is a fickle friend. But it the only sure way to long term success. The emailable version of this document is at pubs.yr.com/brain.pdf Podcasts and video podcasts to accompany this book are at pubs.yr.com/podcasts If you liked this booket, you might also like other Y&R EMEA booklets, downloadable from emea.yr.com Permission to store and display the PDF of this publication on corporate intranets is freely given, provided it is not modified in any way. Permission to quote extracts from this publication is also freely given, as long as such extracts are clearly attributed to Y&R Advertising. BrandAsset Valuator and BEX are registered trademarks of Young and Rubicam Brands inc. 96 Y&R ADVERTISING
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