Recently I came across an ‘ROI’ report for a sponsorship produced by an agency that specializes in the stuff. It turned out to be essentially  a savings statement which gave the % discount off rate card costs after assigning weights to specific components of the exposures. A very good savings statement . But ROI ?

It’d be ROI – if the end objective were to buy media space !

A bit like calculating the returns from your stocks as the savings on brokerage ?

Meanwhile , an excellent The Economist special report on the gaming industry

Cheers

Borders’ (and others’) main problem  is more about channel than product – physical books are still the overwhelming leader. It’s more about the impact of E-commerce as their emerging distribution channel. While again bricks-and-mortar are still 2/3 + of the market , that share will only decrease steadily. In the long run , the picture will more than reverse. And E-books will continue to grow at mega rates too until  the physical and digital sizes converge.

This will be over a longer time span of course. And it’s unlikely that physical books will disappear altogether. Not for a couple of generations at least ? But now you can at least conceive of a time in the distant future when it just might. Who knows,  human faculties could transform that way.

Even though it won’t be in my lifetime (thankfully) ,it’s still painful to imagine. Not that there’s anything inherently superior or arguably even natural in physical paper books. It’s just a sentimental thing. Nothing beats the comfort and pleasure you get from them : the sight of the printed word, the smell of paper , the sound of rustling pages , the feel of  turning  a leaf …..

Cheers

There seems to be a faint whiff of worry  again now. By most accounts , hopefully it won’t amount to more than a temporary blip.

And then again : who knows ?

A key takeout of the crisis was how infinitely better heads supposedly in the know didn’t see it coming. Through all the talk about recovery shapes - W, L , LUV- the one message a layman novice  like me  could take out was : it ain’t over till it’s over ! Here’s a recent one from Nouriel Roubini , one man who did see it coming.  (Read here).

Sobering read  and one  that a lot of us from most parts of the world , including this , will be quick to consider.

Cheers, nonetheless

GCC economic growth for 2011 is now projected at 5% based on higher oil prices , strong public sector /government spending growth and an improved global economy. More on this in a later post. 

Meanwhile , two questions : a. how  will this translate into increased consumer spending (i.e.,basically the C part of the  C+I+G+X-M equation) ? b. what impact , if any, will the wider regional political situation have on growth this year ?

Cheers

This is a blind spot:  first, in the literal sense of missing the ad from an audience POV and second, in the current conversations on  Digital from the industry standpoint. Because this quite pervasive if ‘layman’ observation is given a wide miss in all the shouting that is on at the moment. Or at most, it’s covered under the ‘you-only-pay-for-what-you-get’ umbrella.

What prompted this post was the latest “never notice them” I got at a party recently when I was speaking about the Digital revolution in our industry. I’ve heard a lot of this by now and from a diverse range of people (though regular internet users all). But this one from a very digitally clued-on, gadget-and-games loving Investment Banker in his early 30’s was what really spurred it. It was time to look it from an outsider / ‘layman’s perspective. (To paraphrase  David Ogilvy : the ‘layman’ is not a moron , he’s your target audience !)

Ceteris paribus, ad avoidance is the norm: you avoid ads when you can. It holds true across media. For e.g, there’s a roughly 30% drop on average in TV audience during ad breaks. The difference though comes from the way media consumption plays out in each case. Two important elements of the process rarely get factored into the current conversation about Digital – namely, audience state of mind and communication format.

The constraint of online formats is easier to understand: the static banner occupying 1/10^th of a cluttered screen, or that pre-roll TVC playing on a little window with low wattage laptop speakers on. That straight away puts a limit to impact and recall.

But audience state of mind when consuming media is as big a point. Audience passivity is underrated. It’s actually one of the most valuable things there is in this line. It renders the remaining 70% (or 50%, or 25%, if you prefer…) of the TV audience who stayed with the ad break pretty much captive. The guy takes what’s coming on the screen.

With online, there’s a more active sense of purpose. The natural consequence of that are things like closing that Pop Up box when logging into E-Mail or completely ignoring the ads when updating your Facebook status or relying only on the unpaid-for Google Search results when hunting for information. It’s the flip side of interactivity and choice.

Combine the two elements and you size up that blind spot pretty well. It’s where that guy at the party was coming from. In a nutshell, your audience is more actively focused on something else and what you’re trying to distract them with is just not powerful enough to either distract them at all or to distract them enough.*

The internet (and the digital revolution in general) is one the most profound developments in human history. It’s a game changer. To labor on that point would be a banality. Its impact on business has been colossal. It has impacted the business of marketing communications.

But my hunch is that the impact on communicating to consumers online and changing / shaping their attitudes and behaviors – big as it is, hasten to add – is not as big or to the same extent. It’s more ‘incremental’. (see a previous post on this). There is a difference between consumers’ consumption / adoption of the digital life and their consumption of digital advertising as it stands now.

Operative word being ‘as it stands now’. Because the true power of ‘Digital’ will be unleashed the day rich content (read full-on video) is delivered on a mass scale, economically and without a technical glitch  in a big , easy to operate , switch on-off box (read TV set or tablet device ) to consumers in a lean back / passive mode. The power lies in its becoming more an all-pervasive distribution technology than remaining a ‘medium’.  And that day is coming. No doubt about it.

Cheers

* PS :

Metrics like CTR (3%? 9%? 15 %?) or Facebook ‘Likes’ (25 million for the Coca Cola page, or 5% of the total FB universe , or 1% of the brand’s consumer universe) could bear all this out but that’d be straying from the point of this post of seeing it from the layman’s POV.

In our region compared to more advanced markets , a lower audience base could be seen as an issue as well. (click here for internet penetration stats). But : a.) that’s not the point of this post. We’re talking about current internet users and b.) the base will only grow – and grow fast.

A few months ago , The Economist carried another interesting piece on e-commerce becoming more – what else ! – Social. (Read here)

Google  A couple of posts ago (read here) i touched upon Google expanding into more and more areas of our lives. In the last couple of days , we read about (a) its investment into the O3b Networks satellite venture  -  a $1.2 Bn project including $ 410 mn in equity from a group of companies led by SES and including HSBC , Liberty Global and Google which aims to provide internet access by satellite to 150 developing countries through wholesale deals with telcos / providers -  (b)  and then about Google Translate getting into patent application services free of cost  for the European Patent Office . Both are perfect fits. Over and above direct financial  returns on the O3b investment itself is the bigger picture – higher the internet penetration , more the reach of Google. Then , from the EPO deal will come  experience and the physical volume required to hone and improve the translation product. No such thing as free lunch after all !  

UAE Peoplemeter Project   This one is going ahead then , is it?  (Read here ) A welcome bit of news but one will wait to eat the pudding first ! I see that still no dates are mentioned. And of course its still status quo on the parallel (and more important) Project Illumination project for KSA. Oh , waiting for the day when we cynics will be made to feel foolish !

In the attached Ballpark 8  file : top e-commerce sites by base and updated nos for Amazon and Google

Cheers   

Now how Big is that ? 

Hmm , lets see now. Big obviously for tactical promotions. Big for retail outlets (given reasonable pricing) . Biggish also  for   brand idea-driving contextual / creative placements. Lots more besides i guess.

But to my mind the really significant Big comes  from  Small :  i.e.,LBM’s contribution towards further driving  what i’d call an ‘incrementalizing’ of media. This is the move towards increasingly more  of ‘smaller’ media selections : in terms of not only audience size and unit costs  necessarily but also creative formats and , i’d imagine , communication effects. Think Search text ads versus TVC’s and glossy double spreads  for  a classic example.  Two decades ago, who’d have thought a 10×10 text box ad would excite the Marcom industry ?

I guess this is a trend that’s creeping up on us sort of under the radar because we do not really think of it in those terms. The big sexy world of digital  / New Media is mostly small and unsexy. Or perhaps , Small Unsexy is the new Big Sexy.  It’s a matter of perspective – and you’ve got to get the right one ! The long term implications go beyond  individual brand communication strategy and into landscape-shaping industry economics.

In Ballparks 7 ,   a look at market sizes of computing devices and 3D TV sets plus a snapshot of  the Qatar telecom scene . (See Ballpark 7)

Cheers

 PS : By ‘small’ i mean   in terms of Marcom from the marketer’s POV , not  the underlying technology itself or its utility/usage from the consumer’s POV. There is a difference ! More on that later . . .

But I think it is still very interesting from three perspectives :

1. Influence on macroeconomic research : a web index like this will increasingly  mirror the official CPI in the long run.  How will  ‘traditional’ data  gathering and analysis tap into this channel ?

2.  Microeconomic relevance : in adequately penetrated markets , an index like this could as relevant/useful for many sectors (e.g. consumer electronics ) as an official CPI, or perhaps even more.

3. Business opportunity for data owners :  Digital giants like Google or Facebook  with all their data assets could well be entering  the realm of economic and market research. How about , for example , Facebook coming up with consumer confidence indices  ? 

Endless possibilities. And who better than these guys to tap into them !

Some key  Google financials in the attached Ballparks file – as also an illustration of how it’s becoming ever more difficult to predict  well.

Cheers

   Ballpark 6

Going beyond the comparing ranks game , actually there is a lot to be said for  the two countries complementing each others economic well being. For   Japan , China offers a gigantic and growing market for its producers – in sharp contrast to its own sluggish and deflationary domestic conditions. It also provides a low cost manufacturing base to enhance competitiveness of those Japanese products. On both counts , China benefits from the increased Japanese investment . China’s huge export strength meanwhile is skewed towards more low end , non-value added products and  commodities which the Japanese do not even produce anymore., let alone compete on in export markets. Even for items like electronics or PCs , the more China exports of these , the more Japan gains through increased exports of components to them. In fact . the more China grows the more Japan benefits from its overall technology / knowledge / R&D edge.

Going forward , this week’s news is like a  first scene of the first act of what looks like it will be a fascinating , long drawn Asian drama ;  scene two is being played out simultaneously – China and India. A-ha !

This is based on a survey conducted with YouGovSiraj and you can read it here.   I have put together some of the  key numbers from the report in Ballpark 4 attached with this post

For sure , things have improved from those grimgrom days of late 08 – early 09 but I’d take the savory headlines with a pinch of salt yet .

Glass half-full , half the businesses surveyed (56%) expect to improve in the coming year ; but glass half empty , the other half do not. If you combine the latter  with the facts of reduced cash and constricted credit,  firms’ likely spending and investments in the immediate future are not so rosy as all that. Actually ,  digging deeper into the numbers , the  glass is really about only 17% full or  3% empty ! Those being the outliers of  expecting “significant” improvement and worsening respectively . My interpretation is that  businesses are expecting things to be pretty much where they currently are , i.e. 73%   between “improve a little” to “worsen a little” is what i’m looking at.

On the consumer / public side , for the 66% whose salary did not increase over the last 12 months , I believe the ‘real’ impact , given the drop in inflation, was not as bad as it could have been.  By the same token however ,  you’d need to look deeper into those expecting salary increases .Now ,  if you assume – reasonably , I think – that those who expect a raise are expecting  an  improvement in the economy  and – ok,less obviously -  therefore , some natural inflation which that implies – say , around of 5% or roughly half the 2007-08 inflation rate – then it means that 30% of  those optimists  (the 18% expecting a raise of less than 5% )  expect  no improvement in their ‘real’ salaries.  So rather than reading a 61% expecting a salary increase , I am seeing this as 58% (18% + 40% not expecting any raise) expecting no significant   ‘real’ raise in their salaries.

This is not to say that the ‘public’  think  it through exactly that way of course. But the key pointer for me really are  the 75%  that are concerned about job security. That to me straight away is a dampener on  future spending , irrespective of any positive salary-raise expectations. 

In sum , I believe businesses are still very cautious and will be for some time. Consumer salaries have  remained flat for nearly two years now and will probably remain that way into the immediate future. Any increases moreover will not translate into significantly higher immediate consumption owing to continuing uncertainty and job security concerns. Just my two cents – and i sure  hope i am reading this wrong and erring  on the side of caution !

Consumer confidence and business outlook findings are only one aspect of the picture. Must take a dekko at  other , regional (especially KSA) and global indicators soon

Cheers for now