At the close of trading on August 1st 2016, the five most valuable global companies were all US tech giants: Apple, Alphabet, Microsoft, Amazon and Facebook. If the digital revolution was about disruptors, you might look at the news as a sign that that scenario is over, and a new order had been established. And that would be good news for brands as it would suggest that a more stable media landscape for the internet era has emerged.
These tech companies’ ecosystems are increasingly self-contained, competing with one another in arenas as diverse as operating systems, video streaming, social networks and payment systems, and are part of a very different web to the Wild West years of the dot-com boom, or the optimistic tech-utopian years of social media and the open web. We can call this new order the centralised web – and if you control media buying budgets, or are in the business of reaching mass audiences, it feels like very good news indeed.
But market capitalisation tells only one side of the story of the web today. There are two opposing forces trying to shape the future of the web, of the internet, of the system that connects trillions of bits of information, devices and more than 3.6 billion people around the world.
The two versions of the web are the one in the stock market headlines, namely the centralised web, and the other we can call the distributed web. The distributed web is as much a part of global connected culture as Facebook, Google and Amazon, but it is harder to pin down, comprised as it is of loose groups, big ideas, a constellation of start-ups and a few complicated but potentially world-changing technologies and business models. This original idea of the internet as a network of users with no central control, as illustrated by bitcoin, now seems radical. The ways that these two visions of the connected world clash, collaborate and intertwine have massive implications for how brands talk to and serve their customers.
We might think of the centralised web as the one that someone who is a web user, but not particularly technically minded, sees on their laptop and their phone – recognisable brands, trusted services, part of the everyday media and commercial world.
The distributed web is often the one that confuses the person in the Clapham Uber ride – a funny word, a geeky idea, something a little dark, a little scary, and very hard to explain to oneself, let alone others. It’s complicated and, hopefully, if they ignore it long enough, it will go away or be repackaged for common use by Google or Facebook.
The internet, and then the web, were designed as inherently open, decentralised systems. The system emerged and grew and grew and disrupted every industry it encountered – from telecoms and music in the early days to television, finance and publishing today. The open system eviscerated the certainties of old business models and established new rules for business, politics, culture and social relations.
We don’t like uncertainty as individuals, and organisations hate it even more, so while we enjoy the opportunities and benefits, we have tried to bring order and control to the web. The past decade has seen centralised systems begin to win in a new phase of the web’s evolution: social media. Facebook’s dominance in advertising, and of people’s attention, is the most obvious example of this. The attempt to build an ‘internet of things’ is another play, once again led by major corporations (as radical cultural commentator Bruce Sterling points out, like an echo of the failed information superhighway concept), and aims to ‘build the infrastructure of the information society’.
In marketing, we naturally want to work with systems that are closed – or at least stable and predictable – where we can pay to reach audiences. Advertising on the open web is wild and uncontrolled, full of complexity, uncertainty and fraud, which means we don’t really know if half of our advertising budget is really working. There’s data, but we choose to believe it or we don’t – or we do until evidence of fraud or ineffectiveness is presented to refute it.
So, there’s a warm fuzzy feeling about the certainties that the increased efficacy of closed advertising promises (unless you’re a publisher). It’s more certain, verifiable and controllable.
But it’s not the whole of the web. There is a counterculture of technologies and business models that are all about openness. The clearest example of this is bitcoin and the technology that powers it, the blockchain. While this can seem like another Wild West, unattractive and risky for marketers, it is important to understand this alternative vision of the web and plan for its potential rise.
To draw an analogy: it is 1991, and someone has just explained the web to you. It sounds incredible and exciting, but there is no way that it can take down the giants of telecoms and the music industry, right?
There are three areas that marketers can consider to help them develop their responsiveness to these changes: a strategic focus on the customer; digitally literate leadership; and operationalising digital.
1. Focus on all your customers
A popular maxim is that customer-first strategy is the way to go. If your customers are using services, if that’s where their attention is and where they want to find information, you need to be there. Customer-led isn’t as simple as it sounds: like so many buzzwords, it’s often said, but rarely meant – rarely followed up with strategy and action. Customer strategy needs to address the different webs and ways that people are using them.
While the centralised web companies will make it easier to understand what your customers are doing and how you can reach them in the closed systems, you will need to work harder when it comes to the distributed web. By its nature, it is harder to understand what people are doing there and in what numbers. It is important to understand how and why people are using distributed systems.
At a time when fintech and new banking models are coming to the fore, we have grown comfortable with ideas like crowdfunding and peer-to-peer lending, for instance, but using cryptocurrencies like bitcoin is still a fringe activity – at least in most Western countries. In those countries where there has been economic instability, such as Argentina and Venezuela, the popularity of these currencies has been much greater.
As well as currencies, there are new services – distributed, ownerless equivalents of Twitter, Facebook and Google. Again, there are only very small numbers of people using them for now, but a growth in popularity of one of these services could explode the new order of the tech giants.
Beyond the use of distributed web services, a more immediate concern for marketers should be the effect of ideas and attitudes being fostered by users of distributed web services. These can seem like extreme use cases, but they may be signals of the wider concerns and needs of mainstream consumers. Concerns about privacy, personal data use, ad targeting and security are answered by new apps and services that are being used only by tech- savvy early adopters, for now, but show future options for consumers to opt out or block marketing efforts.
While adblocking has become a major headache for the advertising and media industries, it may be just the first of many applications that will make it harder for the centralised web model to offer control and certainty in advertising. Adblockers have been popular since about 2009 with early adopters, but no one worried much about them until their use grew exponentially over the past couple of years. Now the kinds of people who were installing AdBlocker in 2009 are enthusing about services that allow organisations temporary access to personal data, for instance, or alternative search engine and social media platforms.
2. Digital leaders
With new threats and opportunities from the distributed web, what’s needed is awareness and action at a senior level in brands and agencies. ‘Digital transformation’, like ‘customer-centric’, is a phrase that has been worn out with overuse before it has had a chance to be usefully applied in business, not least in marketing.
Spotting edge trends from the distributed web – like adblocking, tracking protection and blockchain- powered, ownerless business models – needs to be something that boards are able to do. The obvious response is to ensure there is a digital director or chief digital officer in the organisation. That goes for agencies as well as clients. And while their brief is not restricted to marketing, explaining the threats and opportunities of the centralised and distributed webs needs to be part of the process.
However, it seems that this just isn’t happening. In a 2015 McKinsey survey, only 17% of directors said their boards sponsor digital initiatives. Leadership teams on the client and agency side need to develop their digital literacy – their understanding of the digital landscape, the nature and pace of change and the urgency of acting to anticipate major shifts in consumer behaviours and expectations.
3. Operationalising digital
Good leaders don’t stop with an inspiring digital vision. They make sure it follows through into action and more broadly into cultural change within their organisations.
When we talk to marketing leaders in businesses that know they need to change, but are finding it difficult to actually push change through, we frequently hear claims of exceptionalism, both about their own business and businesses that have managed to adapt well to new marketing challenges. But in truth, organisations have far more in common than they would think, despite their sense that their industry is uniquely regulated, under pressure from one form of disruption or another.
The most radical and inspiring businesses do not find it easy to change but they have the determination to do so anyway. Netflix is a great example of a disruptive business: it effectively undermined the home DVD rental market dominated by Blockbuster and then successfully anticipated its own disruptive threat from online video streaming.
The strategy is hard, but it is not the hardest part. Major brands are not short of brainy employees and partners who have read The Innovator’s Dilemma and can see the pace and volume of disruptive challenges.
Once leaders have established a direction, making it happen is the hardest part. Taking the insights about how and why their organisation needs to be responsive, customer-focused and innovative and then implementing them goes beyond education and making some digital hires. It requires organisational redesign, new systems of communication and ways of working.
The trend towards the centralised strength of the big five technology companies and the advance of the vision of the Internet of Things bring many opportunities for brands. In large part, this is because of the benefits of more controllable and reliable means of reaching and communicating with customers. While marketers enjoy the relative stability of being able to build systems and programmes that make the most of the Google, Apple, Facebook and Amazon ecosystems for advertising, they need to address the less easily tamed parallel web of distributed and decentralised services. Bitcoin, the blockchain, cryptography and personal data ownership are forces that may seem fringe, or uncomfortably complex and opaque for marketers, but they are the nurseries of disruptions at every level – from privacy features to new models of corporate governance – that could unseat or undermine the current tech-media giants.
The response for the marketing communications industry, both in clients and partner companies, has to be to emphatically resist complacency. This is a challenge that requires focusing on all customer behaviours; developing operational models that are responsive to change; and, most crucially, ensuring that strong, digitally literate leadership is in place.
This article was first published in Admap magazine January 2017 ©Warc www.warc.com/admap