Over half a century ago, Edward Norton Lorenz, an MIT professor, came up with a powerful insight about the way nature works: small changes can have large consequences. Popularised as the ‘butterfly effect’, it suggests that the flap of a butterfly’s wings could ultimately cause a tornado. His insight became the founding principle of the Chaos Theory.
We are living in the times of the ‘butterfly effect’ on steroids – with uncertainty, unpredictability and constant disruption. Historically unprecedented quantum changes in technology are compounding interconnected small changes, leading to constant new temporary states repeatedly disrupted in an unyielding cycle.
Most people have probably not heard of Lou Montulli or Henrik Aasted Sørensen, yet, their impact on the current state of advertising is profound. In 1994, Montulli implemented a change in the Netscape browser that enabled behaviour tracking – the web cookie; a single innovation that spawned countless other innovations, leading to the dominance of digital advertising. Eight years after the launch of the web cookie, Sørensen in Denmark wrote the source code for AdBlock – the first widely used ad blocking extension. Today, people increasingly deploy ad blockers and according to GlobalWebIndex, 47% of internet users globally use an ad blocker with young people and the Asia Pacific region indexing higher. One event caused a positive change until its misuse led another event to counteract it.
In 2012, in Rewiring for a Digital Mindset, an article I wrote for Aurora, I argued that only if organisations are able to rewire themselves to embrace chaos and complexity will their adoption of digital be significant in the way they build brands and products. I quoted Stephen Johnson in The Third Place Manifesto, where he aptly describes a core premise of the digital mindset: “We live our lives in a perpetual state of beta.”
Today, this mindset is not a luxury but a necessity for survival. Leaders must be willing to challenge their beliefs and not be dogmatic about sticking to decisions that once made sense. Corporate culture must promote self-reflection and embrace failure as a path to disruptive change. Otherwise, the tendency will remain to nudge small incremental changes, sticking to one’s comfort zone until the business is disrupted by a new competitor.
Advertising requires bold thinking. Globally, communication groups are caught in the disruptive forces of more technologically savvy competitors and are pursuing different directions. Interpublic and Publicis have doubled down on data by acquiring Acxiom and Epsilon respectively (both data and technology-driven marketing firms). Omnicom and WPP are optimising their existing structures through incremental changes such as merging digital and traditional agencies. The new challenger, S4, created by the tenacious Sir Martin Sorrell, after his exit from WPP, is in the enviable position of starting with a clean sheet without legacy structures. Sir Martin Sorrell is focusing on “a faster, better, cheaper, digital-only unitary advertising model”.
These approaches are a reaction to market needs and competitive forces; however, will they allow change to happen quickly enough in the face of future disruptions?
In a state of disorder, opportunities are boundless but temporal opportunities not seized can become threats. Technology is replacing the middlemen and agents across industries. The trend for in-house agency services, specialised online marketplaces for creative and production services, AI-driven decision-making and executions may prove an existential threat to agencies or an opportunity to disrupt and innovate.
Living in beta requires constant reflection and almost a sense of paranoia. Jeff Bezos mentioned Amazon’s inevitable demise three times in the past six years. The fear of failure seems to motivate him to delay the inevitable by remaining in a Day 1 mindset. Explaining this philosophy Bezos said “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”
Marketing and advertising in Pakistan need to shift from Day 2 to Day 1 by embracing real digital transformation. Among the three drivers of digital marketing (data, content and online media planning and buying), the absence of data is stalling progress. Content is created without the benefit of any deep understanding of customer needs, while media is bought based on efficiency rather than effectiveness. New digital content firms are mushrooming while strategy and analytic services are almost non-existent. Advertisers are more willing to pay for production rather than invest in customer data and analytics, even if the latter are likely to result in savings and in happier customers.
The culture in Pakistan has not traditionally valued analytical thinking. It favours opinions over facts. Although tech start-ups are challenging the status quo, marketing and advertising has yet to immerse itself in data. The application of data is done on a cursory basis, primarily to validate the success of a campaign, rather than derive meaningful insights.
A corporate culture built on customer obsession promotes iterative testing. Constant contextual analysis of data provides information on patterns which can be more predictive. Curiosity and constant learning hardcoded in the culture is critical. Few Pakistani organisations in sectors with direct customer relationships harvest customer data to develop a better understanding of their customers’ journey and needs – and so miss the opportunity to build better experiences and communicate more effectively.
Marketers need to put their customers at the heart of their decision making. This means giving up bombarding customers with irrelevant messages. Intelligent marketers want to understand where and why the brand failed to deliver on the promise of the customer experience. Here are two examples. Recently, while browsing a local news website, I saw an online ad banner that promised a quick sign up application process for a banking product. The landing page was the bank’s home page where the user had to look for the product page and then figure out how to apply. The expectation created by the advertising did not match the experience and there was a lost opportunity to capture leads. At the other end of the spectrum, during a recent hotel stay abroad, I was delighted by an innovative offering. The hotel offered to rent workout gear from a renowned brand for a small charge; a great motivation for people like me who exclude workout gear because it occupies luggage space. The idea offered a valuable experience for the hotel’s customers and provided the brand with the opportunity to have potential customers try their product. Two different experiences. The bank example is most likely a result of a process whereby the digital agency created the banner and the media agency placed it; each one working in silos and not questioning the mismatch between the message and the experience. The hotel example demonstrates a genuine thought and a desire to improve the customer experience and a willingness to collaborate.
The industrial age focused on scale and specialisation resulting in an assembly line of services; the information age is driving integration and collaboration. The unifying thread is a seamless customer experience. Single-brand consulting firms are providing strategy, analytics, creative, tech and media services under one umbrella. Most traditional communication groups are creating teams around clients by cobbling together talent from multiple specialised agencies. And the trend on the client side is moving away from the title of Chief Marketing Officer to Chief Marketing Technologist or transcending to larger roles, such as Chief Growth Officer or Chief Customer Officer.
In a state of disorder, opportunities are boundless but temporal opportunities not seized can become threats. Technology is replacing the middlemen and agents across industries. The trend for in-house agency services, specialised online marketplaces for creative and production services, AI-driven decision-making and executions may prove an existential threat to agencies or an opportunity to disrupt and innovate. The pace of change is relatively slow in Pakistan, yet the status quo should not be taken for granted. Success belongs to people who are not afraid to disrupt and fail.
Amin Rammal is an entrepreneur and digital strategist. firstname.lastname@example.org