#NE XT YEAR ! 2015
RETHINK DIGITAL STRATEGY. HOW THE LATEST INNOVATIONS WILL SHAPE MARKETING IN 2015.
#iN DE X
#iNTRO Four paths to the NEXT Experience. How winning brands will be managed in 2015. Page 4
#COmmerce Challenge and opportunity meet head-on. Amazon and Apple are turning retailing on its head. Page 8
#CONNECTION
Everything is connected and things are starting to speak. Brands are creating new uses through the Internet of Things. Page 16
#CAMPAIGN
#COnTENT
The key to campaign success is data. But only if you can unlock their value. Page 30
The perfect path to new customers. Brands are carrying content for themselves. Page 24
#OUTRO What’s NEXT? Digitalisation is triggering leadership t ransformation. Page 34
#In TR O 01
05–07
N EX T Experienc e
By NI LS WOLLNY
next E xperien c e
NEXT EXPERIENCE
5
# intro
No more marketing routine. Brands need digital user experiences with vision
next E xperien c e
D Digitalisation marches on, changing everything in its path. It impacts on every single individual as well as on society as a whole, on business models and on entire industries. This change sets new challenges for companies as well as opening up new opportunities at the same time ... with one prerequisite: an unconditional focus on the user and his or her needs.
“Services such as UBER or Netflix are showing how it is done. They combine commerce with connection, content and campaign to create an out standing offering.”
NEXT EXPERIENCE: the four elements of a digital brand More than ever, meeting the new demands of the user necessitates a clear and decisive rejection of well-established marketing routines. This in turn requires a company culture that is oriented towards the needs and interests of the user in every way – with leadership that is actively shaping the digital change. A major task here is to conceive for the future, constantly developing and refining digital user experiences. It is about creating the blueprint for an entire NEXT EXPERIENCE, consisting of four elements:
NILS WOLLNY M A N AG I N G D I R E C T O R S T R AT E G Y SINNERSCHRADER # intro
NEXT GENERATION: I want it all, now Together with the rheingold institute, SinnerSchrader carried out a qualitative study of young people between the ages of 6 and 29, asking about their digital life. The main finding: no one in this age group can imagine life without the smartphone or the services that come with it. Intensive and masterly interaction with digital technologies is the norm. They distinguish less between ‘online’ and ‘offline’, and more between ‘onscreen’ and ‘offscreen’ – although this boundary, too, is becoming increasingly blurred. Young people confront the daily torrent of offers and information with an out-andout digital mind-set: quick decisions based on a like or dislike logic, declining anything that does not promise immediate utility. The expectations of the digital experience that a brand can offer are based on its user value and on the criterion of maximum simplicity. Established players like Apple, Google or Facebook set the standards in terms of functionality, look and feel, and design. Everything in the digital space is compared with them. To continue to be perceived as a brand in this context requires focusing on the design of digital experiences.
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next E xperien c e
NEXT AGENCY: The agency for a new age Developing such outstanding offerings and overseeing their realisation is only possible with a new type of agency: one that assists companies to keep pace with the speed of technologies and users – because this is what they do themselves. One that analyses people’s behaviour, gets to the bottom of it, and is in a position to alter it with its ideas. One that thinks in terms of holistically conceived, living systems, which are designed to grow and constantly change. SinnerSchrader interfaces with technology, people and brands, developing and implementing products and services that add value, and always with the user at heart. As the initiator of the international conference NEXT, we have been influencing digital trends for years. We fuse creative ideas and technology to develop solutions that make our clients successful. That is our claim. That’s what makes us the NEXT AGENCY.
N ils W ollny
is Managing Director Strategy at SinnerSchrader. Working and thinking usercentrically, he helps companies in diverse sectors to accelerate innovation and digitalisation.
7
# intro
Commerce – Transactions of goods and services. Companies like Amazon have altered the buying behaviour of people enormously in the last two decades. The next wave of innovations, which will again revolutionise user behaviour, is imminent: mobile payment, intelligent logistics and beacon technology. Connection – connecting the physical and virtual worlds. Products such as the Apple Watch or Google Glass are raising the opportunities for wearables to a new level. At the same time, technologies like beacons and NFC are bringing about new types of services. In addition, private 3D printers are creating entirely new product categories. Content – material which is of great interest to the user. Traditional advertising campaigns leave the NEXT GENERATION baffled. At the same time the auction models of the network giants are reducing the effectiveness of marketing spend. And aggregators are becoming the gatekeepers for digital offerings. For brands, therefore, developing a content strategy that offers genuine added value to the user is essential for survival. Campaign – communication between a brand and its public. Campaigns are currently undergoing a twofold evolution: a change that is both systemic and contentbased. Thanks to new technologies, the distribution side of campaigns and content has become more effective, with message and content becoming both ‘personalisable’ and adaptable in real time. A well-conceived and integrated NEXT EXPERIENCE can combine these four elements into a novel and convincing offering. Services like UBER and Netflix are already transforming the transportation and entertainment industries respectively, using: connection (vehicle tracking via smartphone or device-agnostic distribution), content (liberalisation of the travel business or Netflix’ own programs) and campaigns (affiliate marketing or social media) to create outstanding commercial propositions.
#co mm erce 02
0 9– 12
T H E Ama z on challenge
13 – 15
Mobile Payment
by Ola f Kolbrü ck
by Meike S chreiber
What Amazon’s dominant position means for costumers and marketers
A M A Z O N Challenge
the Amazon CHALLENGE
When Amazon chief Jeff Bezos stopped off with friends at Mount Rushmore in 2001, he was himself something of a tourist attraction – not as the CEO of a company that was powerful even back then – but as the guy from the Taco bell TV ads, at the time for cheese tortillas. Perhaps Bezos has harboured an ambivalent relationship with advertising since then. For years Amazon ran a mile from TV spots. Before the digital giant did eventually book TV time for the
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# c ommer c e
W
2 0 1 2 to 2 0 1 7
E - C O MME R C E G LO B A L LY
2,043*
38% 81% ONLINE
2,000 1,763*
IN SHOPS
2,345*
DOES SHOPPING EXHAUST YOU?
1,500*
YES
M O B I L E C O MME R C E
2011/2014
1,248
NO
1,500 1,058
People using mobile devices to shop online
23%
57%
1,000
43%
500
77%
USAGE
0
20
2.66 BILLION IN 2013
12
20
13
* PROGNOSIS
AMAZON.COM TURNOVER
1.69 BILLION IN 2000
PA R C E L V O LU ME IN GERMANY FROM
20
14
20
15
20
16
20
17
TURNOVER IN BILLION US-DOLLARS
F R O M 2 0 0 7 TO 2 0 1 4
3.0 20.6 BILLION US-DOLLARS 1ST QUARTER 2007
2 0 0 0 TO 2 0 1 3
10
BILLION US-DOLLARS 3RD QUARTER 2014
sources: eMarketer (2), bevh, boniversum, BIEK, KE Consult, Amazon, DHL-Studie Einkaufen 4.0
NO USAGE
“Our biggest search competitor IS Amazon.” E ri c S c hmidt E xe c u tive Chairman G oogle
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A M A Z O N Challenge
ing programme for authors, a digital library with an ‘all you can read’ flat rate, content suppliers with their own TV productions for its ‘Instant Video’ play station and the ‘Fire TV’ in-house TV set-top box. The purchase of the Washington Post fits into the overall picture too, strengthening the content offering for the Kindle. The purchase of ‘Twitch’, a YouTube for gamers, ensures yet more content and new sales leverage. And then there’s the ‘Fire Phone’ To date it hasn’t been a big sales hit. Nor does it have to be. Bezos takes a long term view of the smartphone. It not only triggers the sale of more digital content, above all it hoovers up data: with a single touch of a button the user activates the purchase-feature and can buy products, music and videos taken by its camera and/or microphone. In this way the mobile phone turns the world into a showroom, and Amazon is not only positioned right at the start of the sales process, but makes even Google search in part superfluous. Why bother typing into a search engine when a simple photo will do? There’s more: Amazon saves photos taken with the ‘Firefly’ feature to improve the functioning of its system. Through additional GPS data, local information and other metadata the company learns more about the user: where they shop, what they do in their free time, what interests them apart from shopping and maybe what they have kept hidden from Amazon up to now. For example, say you take a picture of your child with the recognition tool. Amazon can use this for precise product recommendations and more impactful advertising. So while Google can only tell advertisers what users are searching for and clicking on, Amazon can tell them what they are actually buying, where and how often they are buying it, and increasingly and more
# c ommer c e
Kindle reader, Bezos viewed classical advertising as a sign of weakness: “Advertising is the price you pay for having an unremarkable product or service.” In future he would make the advertising industry pay. In all probability the ad men didn’t even notice what was facing them. One person who did grasp its significance is Google CEO Eric Schmidt: “Our biggest search competitor is Amazon.” After all, one in every three product searches is already carried out in Amazon and not in Google. That means fewer clicks and fewer AdWords dollars for Google. But it’s not all about search. With the exception of Eric Schmidt, the rest of the world still sees Amazon above all as an online sales platform, as a quasimonopolist even, which looks to gain ever more market share with little thought for profit. With good reason: almost every second e-book in Germany is bought following recommendations from Amazon. Amazon has more than 40 percent share of the entire book market (this, too, is only like reading tea leaves). In 2013 its turnover in books, music, electronics and clothing in Germany totalled €7.7 billion. One in four euros spent in Germany on e-commerce is pocketed by Amazon. And Bazos is doing his utmost to ensure customers stay with him. He is building a digital conglomerate that includes: clearly subsidised Kindles, its own publish-
A M A Z O N Challenge # c ommer c e
There is a lesson in how this online giant deals with its partners: if the data shows that a new product is selling particularly well in a seller’s marketplace, that is often a cue for Amazon to sell it directly – undercutting all other prices in the process. If a consumer goods manufacturer comes to enjoy double-digit market share on Amazon, Amazon puts on a real squeeze for rebates and new terms, as book publishers in particular have found out, with corresponding impact on sales too. For Amazon is interested above all in low prices – and cross-subsidisation of the manufacturer’s and trader’s advertising monies suits that goal perfectly. Charges (effectively ‘tolls’) could work one day to the detriment of these brands, if Amazon were to support predatory pricing with marketing monies, to force through its own brands against the competition, for example. Or to undercut in the trader’s marketplace. Ultimately, Amazon can always be cheaper, because it alone can avoid the Amazon charge.
H ow to deal with ama z on
# Exploit presentation options such as product descriptions, product images, videos. # Utilise Amazon advertising packages such as the Brand Store to expand your own channels. # Offer only certain product lines on Amazon. # Strengthen and/or diversify through other sales channels. # Sell private labels and new products initially through your own channels only.
precisely – with an ever closer eye on the Customer Journey – why they are buying it. Amazon has only really been a competitor for Schmidt since the company has been accused of going after more advertising spend and utilising its data goldmine to this end. Amazon already wants to start its own display advertising network in 2015 and to place advertising space similar to AdWords. Firstly the advertising will appear on its own website, and then later also on other publishers’ sites. In doing so Amazon is entering into direct competition with Google. And not just Google. The targeting goldmine impacts equally on marketers, technology providers and agencies. If Amazon starts to peddle its own personalisation algorithm and its data power, it will make these service providers superfluous to some extent. It is not just a case of Amazon being able to achieve outstanding conversion rates due to its data and its reach. With each single click Amazon enhances its know-how to improve its own products, its own content and its own services.
O la f Kolbr ü c k
is founder and director of specialist e-commerce portal etailment.de and author of the book ‘Erfolgsfaktor Online-Marketing’. From 2000 to 2013 he was a reporter with HORIZONT magazine, with responsibility for internet and e -business.
12
When your smartphone becomes your wallet
mobile payment
Mobile Payment
W
13
# c ommer c e
When Apple chief Tim Cook revealed the iPhone 6 in autumn 2014, one new feature in particular caused lively debate especially among the brand’s aficionados: the ‘Apple Pay’ mobile payment function. Cook announced presumptuously: “Apple Pay will forever change the way we buy.” Time will tell. Owners of the new iPhone have only been able to pay with it since October 2014 – and so far only at 220,000 contact points in the US. At its heart is Near Field Communications (NFC) technology, which transmits data by a radio signal from mobile phone to a station. For security, users must identify themselves by fingerprint. In Europe, where NFC technology is actually more widespread than in the United States, the service is expected to be available to iPhone users from 2015, by which time wearers of the Apple Watch in the US will also be able to use it. One thing is clear: paying is getting easier. A new technical revolution is around the corner. With the introduction of iTunes, Apple has already proven that people’s purchasing behaviour can be radically altered. For each Apple-Pay transaction of 100 dollars, the Americans pocket a 15 cent charge from participating banks and card providers – which Apple claims makes it cheaper than other payment methods.
mobile payment
“Up to now no technology has been able to establish itself on the mass market. The latest push from Apple with various credit card providers could change this in the medium term, however,” wrote Deutsche Bank in a study of the FinTech sector. The trend is clear: in 2013 the volume of cashless payments globally rose by 9.4% to 366 billion transactions, compared to 2012. According to the latest Payment Report by consultancy firm Capgemini, this was “due to the strong growth in emerging markets as well as increased use of credit and debit cards, especially in electronic and mobile payments.” With more and more people using tablets and smartphones, the lines between online and mobile payments are becoming increasingly blurred, according to Cap gemini. The consultancy anticipates an increase in mobile payments worldwide of around 60% per year from 2011 to 2015. For online payments, on the other hand, Capgemini has forecast a yearly rise of “only” 16% over the same period. Even in Germany, long a mecca for notes and coins, many more people are likely to pay without cash in the near future.
The auditing and consulting firm PwC estimates that the 176,000 end users in Germany who currently pay by mobile will rise to 11 million by 2020. And Apple isn’t necessarily the trailblazer. Many start-ups, banks and mobile phone operators already offer mobile payment options. And even the Ebay subsidiary PayPal is currently testing an app for mobile payments in Germany. However, thus far, no system has established itself. At present only 40,000 of the more than 740,000 payment terminals in Germany can communicate with mobile devices or special cards. That may change: MasterCard recently compelled all its German retail partners to convert their terminals to NFC technology by 2018 at the latest. A survey by the EHI Retail Institute of 55 retailers with a total of 58,300 outlets found that 81 per cent want to upgrade their cashier systems. But what about the banks, whose core business is, after all, payments? For the time being they are relieved that Apple continues to cooperate with them. The German Sparkassen (savings banks), for example, have already announced that they
Ann ual growth of mobile payments
S hops planning to adj ust to mobile
f rom 2 0 11 to 2 0 15
payment by 2018
+60 %
14
81 %
2015
source: EHI RETAIL INSTITUTE
# c ommer c e
11 12 13
14
Anneke Neuhaus, marketing expert at the Frankfurt University of Applied Sciences, says: “Marketing decision-makers need to ask what benefits the customer can draw from it. Further information on the product can be provided via smartphone, for example. In the case of higher value products, why not offer an explanatory video or an alternative model in a different price category? The customer can acquaint himself or herself with the product or take advantage of a discount scheme or bonus points by using the payment function.” Moreover, manufacturers will understand their customers better and utilise this insight for product development or for improving communications. “The opportunity to interact with the customer this way can lead to some displacement in the market, but equally to a genuine win-win,” says Neuhaus. The delicate issue surrounding data protection raised by the NSA affair remains. At Apple they are at least attuned to the sensitivities of Europeans in particular. “Apple doesn’t know what you have bought, where you bought it, or how much you have paid for it, ” swore the management at the reveal of Apple Pay.
John Collison C E O O F T H E PAY M E N T S TA R T- U P S T R I P E
wish to work together with Apple. As a payment is only completed when the customer’s account has been debited. “The cake has not yet been divided up,” contends Deutsche Bank in its latest FinTech study. Banks will not give up the commissions that go along with payments without a fight. Nor should they: experts at Deutsche Bank believe that, in the current test phase, the traditional finance providers have the opportunity to play a part in formulating digital payment solutions. In marketing departments, too, especially those of manufacturers of consumer goods, experts are musing over how Apple Pay will influence purchase decisions. The widely held view is that opportunities lie in particular with Apple’s Passbook app for loyalty programmes, which in all probability will be linked to its payment system. Marketing decision-makers need to ensure that users can easily deposit their loyalty programmes or coupons with the app. The app can then advise the customer how many points their current purchase is worth or automatically pay for a product with the appropriate coupon.
mobile payment
“Most of our spending right now happens offline, and that’s starting to shift. All of our payments are moving online.”
Meike Schreiber is a Frankfurt-based journalist who has been reporting for many years on the banking sector. She founded the journalist agency SchreiberDohms along with Heinz-Roger Dohms. Both write for ‘Capital’, ‘manager magazin online’ and ‘DIE ZEIT’, among other titles.
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# c ommer c e
M eike s c hreiber
#co nn ect ion 03
1 7 – 19
20
2 1– 2 3
Internet of things
Beacons
by P eter Bihr
by Axel Averdu ng
M obile connections
by L aurent Burdin
internet o f things
INTERNET OF THINGS
17
# c onne c tion
Connecting things for fun and profit
internet o f things
The IoT allows for a much deeper engagement and has the advantage of allowing us to collect and analyse data to build services that are valuable to both the audience as well as marketers. Two areas offer particularly huge opportunities for fast movers who overcome the (sometimes thorny) challenge of balancing value-add versus ‘data collection creepiness’: Wearable technology and connected driving.
I
# c onne c tion
If everyday objects could talk, what would they say? That is the question we should ask ourselves when thinking about the opportunities offered by the Internet of Things, or IoT for short. The IoT is what you get by connecting physical objects – TVs, cargo containers, bracelets, coffee makers, cars or thermostats – to the internet: A connected world, studded with sensors, permanently exchanging data with both machines and humans. And it is one of the most influential trends in technology we have seen since the advent of the consumer internet itself. How can IoT be beneficial in the context of marketing? Data and deep engagement Over the last few years, we have witnessed a wide range of experiments around the IoT. Many of the more widely known ones were driven by advertising. To name one well-respected example, Budweiser built a big red light that connected to the web and checked a feed for ice hockey results. Whenever the user’s favorite team scored a goal, the light would flash, and a loud horn would sound. It was a cute, well-executed and playful way to engage with fans around a topic they were passionate about. Hundreds of these lamps were sold as these fans paid money for an advertisement in their living rooms. As advertising ideas go, this one was very smart. And it just scratched the surface of what is possible.
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Wonderful Wearables What happens if you strap a smart watch to your wrist or place a fitness tracker in your pocket? By putting on wearable technology (Wearables for short) you allow a computer complete with sensors and internet connectivity into your life. Most of us don’t think much about it, after all we carry a connected computer almost constantly anyway: Our smartphone. As sensors and chips get both smaller and cheaper, Wearables evolve. Rather than bulky smart watches, we see stylish accessories: Jewellery and fashion are increasingly connected, too. A ring that subtly notifies you of a text message from your spouse? New York startup Ringly has created one. Clothing that tracks your vital signs? Look no further than the sports bras and running shirts that San Francisco-based Sensilk is currently developing. What today may sound like gadgets for early adopters will be a normal part of life within just a few years. If we build services today that are so good, valuable or interesting that users let them into their everyday lives, it allows for huge engagement opportunities.
The key: respecting privacy The key to success is, as always, to be sensible. With the tools provided by the Internet of Things, companies are tempted to collect as much data as possible just to be safe: Collect first, analyse later. In Germany, more than anywhere, consumers are highly sensitive to data collection and the implications for their privacy. As such, we will see consumers reward those companies who find the best balance between marketing that offers added value based on data analytics on the one side and respect for privacy on the other. Don’t be a creep, and consumers might allow you into their lives. If they do, both sides will benefit.
Connected driving Along with data, cars move into the cloud – or rather, the cloud moves into the car. Automobiles become another media surface, another interface. As cars – owned or shared – get connected to the internet, the car stops being a mere means of transportation. By combining navigational data (where you are now and where you want to go), intentional information (your calendar knows where you want to go, why and with whom) and external data sources (weather, traffic, event information) we have a treasure trove of data points to work with. We can build true context-aware services. This could range from subtle reminders to more complex offerings. Two examples:
peter bihr
Peter Bihr is the founder of The Waving Cat, where he explores the impact of emerging technologies and helps apply the insights of innovators through consulting and conferences like ThingsCon and NEXT Berlin.
19
# c onne c tion
Crowdshaping With new technologies at hand, data captured from people in the physical world can be used to reshape experiences. Wearable bracelets like the Lightwave, an invention by Silicon Valley technologist Rana June, can measure physical engagement and energy levels of the people wearing them – like in this case allowing the DJ to play with the information and to show the most active dancers on a leader board. This kind of innovation cannot only be applied to performances, it can also reshape the way we shop. Just imagine, for example, advertisements that adjust in real-time to the emotions of a TV-audience or in-store offers reshaped by the energy level of the shopping crowd.
internet o f things
• Shopping reminders: “Your fridge says that you need milk. We are passing by a supermarket with milk on offer in two minutes. Do you want me to recalculate your route?” • Media recommendations: “Based on current traffic information, your drive is estimated to last about 28 minutes. Should I read you a few chapters of your audio book?”
bea c ons
BEACONS The invisible keys to new services
S “Software Is Eating The World” explained the entrepreneur, investor and developer Marc Andreessen in a famous essay of 2011. “How come?” one may ask: Sure, doesn’t the physical world still consist mainly of atoms, even if bits are taking over in the digital sphere? Part of the answer lies in beacons (or iBeacons, as Apple calls them), which connect the physical and digital worlds. Beacons are nothing more than small transmit ters with low energy consumption and limited local reach. Mobile phones, for example, can receive and react to their signals. It is thanks to beacons that an app knows the location of its user and can offer him or her a relevant user experience
in that context. Among the earliest adopters are retailers – no surprise that Apple quickly equipped its own stores and upgraded the Apple Store app accordingly. But the possibilities go well beyond the retail space. Interactive museum guides converse with visitors via beacons, explaining all about the latest exhibitions. In the US, fans inside baseball stadiums receive background information on the game that is taking place. The ticket inspector on the train makes his presence known to the railway app via a beacon, as a result of which the app on the passenger’s smartphone automatic ally displays his or her digital t icket. All kinds of new interfaces can be created. In place of cumbersome ATMs, as we know them, bank customers can avail themselves of an elegant app which, thanks to beacons, knows which customer is at the ATM. After a minimum of interaction the machine dispenses the desired amount. The scope for innovative services is practically limitless. But here, too, success will depend on how well the user’s requirements are considered and how the content and user experience is suited to the location and context. For marketers, beacons become valuable, when indiviual interactions with the brand or its products are beautifully designed to create real benefits for the consumers. The most important thing is to stay relevant: If it isn’t relevant, the user will ignore it. Creativity, too, is called for. After all, to just send out pushy messages flagging the latest special offers is to ignore the opportunities which beacons provide.
# c onne c tion
D r . A xel Averd u ng
is Head of Strategy at SinnerSchrader und developes innovative solutions for digital products and services.
20
mobile c onne c tions
Mobile cONNECTIONS Dawn of a magical times
The watch on your wrist has long stopped ticking. Instead, you can talk to it, read the news on it, or pay for a coffee with it. It’s likely, in the coming year, that every early adopter will wear one, and so get to experience all the wonder of mobile connectivity: new technologies, new applications and new customers. With the smartwatch and other innovations, the Age of Connected Devices is dawning. So what will the world be like, when everything is connected with everything else? And what consequences will that bring for the mobile sector?
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# c onne c tion
T
mobile c onne c tions
From mobile marketing to c onne c tivity strategy in 6 steps today:
1. Dedicate far greater resources to managing mobile assets (app and web). 2. Raise activity levels to achieve greater frequency and higher numbers of app downloads. 3. Improve those neglected mobile web portals.
# c onne c tion
A torrent sweeping through the sector Experts are predicting that the number of connected devices will increase one hundred fold within the next five years. The mobile sector will become the mobile connectivity sector. Everyone will be affected – developers, start-ups, agencies, providers of mobile products, marketers and big brands. A look at Berlin, where the mobile sector in Germany is particularly well represented, reveals the magnitude of the upheaval that is currently taking place. The technological revolution Behind this trend are three technological drivers: the devices, the connectivity and the cloud. Every few months the device manufacturers introduce new features such as mobile payment or smart objects – more memory, more performance, more screen. The connectivity options are also becoming greater: mobile communications, Wi-Fi, NFC, Bluetooth Low Energy and proprietary in-car connectivity such as CarPlay or Android Auto. Behind them lie the cloud services, which gather and analyse all the data. Working wonders with everyday stuff! Coffee lovers, for example, can connect via an app with the Espresso machine in the coffee shop, which then brews the desired coffee. Payment for the cappuccino then takes place automatically with the smartphone. This is already a reality at TopBrewer in Copenhagen. It’s child’s play for the customer and extremely time-saving for the coffee shop.
tomorrow:
4. Create a user case related to a device (e.g. smartwatch). 5. Connect web applications with the physical world (e.g. in stores). 6. Develop your own proprietary connected device.
Powering the market Consumers are ready. And so are electrical retailers: MediaMarkt recently created a large department for digital wristbands and smartwatches and wants to expand it further. Remember the headphone market? Small and unexciting only three years ago, it now features lots of interesting products and retailers offer a large range of them. It will be the same with Connected Devices.
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mobile c onne c tions
Personalised stimuli Opportunities to reach customers and prospective customers at just the right moment have increased enormously. Personalised stimuli allow for a completely new form of Customer Relationship Management, which in retail can make all the difference. A new shopping centre in Marseilles, fitted out with 240 beacons, illustrates just how it works: if the customer has the relevant app, he or she receives location-based promotions from the stores, and the shopping centre can analyse in detail the resulting customer traffic.
“ The biggest mistake is to do nothing.” “The area of mobile connectivity holds huge opportunities, but considerable risks at the same time. The biggest risk is to do nothing. We can see that currently in the retail industry, where we are talking about the likes of Amazon and other giants such as Alibaba, with a market capitalisation of over $200 billion. Many of those involved are banking seriously on innovative mobile solutions: Tesco, for example, with connected price signage, the rolling out of a beacon network and push notifications in store. Or Amazon with its own ‘Dash’ device, a barcode reader with a microphone, which helps to draw up household shopping lists and connects automatically with the app, thus enabling OneClick-Shopping. Imagine if every brand were to bring its own device onto the market to connect with its customers in its own charming way. That would be the stuff of dreams in my book.”
Pressing ahead with no standards The biggest mistake here is to do nothing. Despite the absence of technical standards, all the big players are already active in the game. Google is positioning itself with Nest in the area of home automation for house and office. Behind the iBeacon lies an Apple protocol. And all players are developing in-car platforms.
L a u rent B u rdin
is Managing Director of SinnerSchrader Mobile in Berlin, right in the heart of Germany’s mobile ecosystem.
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# c onne c tion
The end of isolation An app here, an app there, maybe a mobile website, a customer app, then a banner and a mobile landing page ... the mobile sector has long offered only additions to isolated applications. Now stand-alone solutions are being connected with the physical world: with a smartwatch, with a beacon in a shop, stadium or museum, with a checkout, a door, a piece of packaging or a car – and all of it based on technologies and code languages from the mobile sector.
#co nt ent 04
25 – 2 7
Best Practi ce
28 – 29
Entertainment
by Nils Jac obsen
by A dam Tinworth
A “An iPod. A phone. An internet mobile communicator.” Eight years ago Apple’s founder presented his invention to the world. The gadget would influence the culture of the 21st century like no other, and pave the way for the triumph of the smartphone. Within the past few years our usage habits have changed fundamentally – away from the desk, and over to the smartphone or tablet. “Mobile first” is being increasingly replaced by “Mobile only”, especially among the young generation. Mobile has won out.
25
But what does this younger revolution mean for telecommunications and mobile phone providers, who connect millions of customers around the world with their networks? Above all, it means a complete rethink. The telephony and SMS business model is the stuff of yesterday. In the near future it is data volume which will make up the lion’s share of revenue. But how and where can (potential) customers be reached most efficiently? This is something which E-Plus, for example (now number one in the German mobile phone market following its merger with O2) has to address. In this broadly saturated market, the key is to develop points of differentiation. Traditional TV and print advertising have long been able to reach the target market only marginally and for a short time-span. The internet would appear to be the natural way to go. With ban-
B est P ra c ti c e
curved.de – The ‘Michelin Guide’ for the mobile generation
# c ontent
Best practice
B est P ra c ti c e
ner advertising and initiatives to acquire new customers through online and social media seemingly exhausted, CURVED creates a new route.
# c ontent
Content for ‘Generation Touch’ On behalf of the E-Plus Group, SinnerSchrader launched the CURVED platform at the beginning of 2014 – providing the Generation Touch with a tech portal for the mobile era, something which had been previously lacking. CURVED reports on the human side of the mobile revolution, telling us what the gadgets are doing for our lives, how they are making our everyday easier and driving social progress. The concept draws on a successful 100-year-old recipe: content marketing. John Deere, the American agricultural machinery manufacturer, has been talking to its customers in ‘The Furrow’ magazine since 1895. Another fine example of successful content marketing comes from 1900: the Michelin Guide. The brainchild of tyre manufacturer Michelin, the restaurant guide has long given motorists good reasons to go that extra mile – and to use more tyres, thus contributing to increased sales in the process. Since the very beginning, the success of this model is based on two pillars: the quality of the content itself and the integrity achieved by separating the brand from that content. Reach rules More than a century later, CURVED is adapting this principle for the digital age. The editorial team, made up of experienced tech journalists, offers smartphone users round-the-clock support and help, orientation, analysis, background pieces and advice. Over 25 new articles appear each day on the site, which reaches 1.3 million unique users per month. Independent editorial content – which, from a quality perspective, is journalistically the match of any traditional media title – is the foundation of this sustained growth.
The rapid rise in reach has been possible due to a steep learning curve and constant monitoring of the traffic generated per article. SEO experts help to priorise subjects and keywords and ensure the website is optimised technically for Google. Visibility on Google is a critical determinant of success, as being on the Google News Index leads to an explosion in traffic: Presence on organic search delivers sustained traffic for CURVED, even for older articles. So what direct benefits does E-Plus draw from CURVED? “Leads generated by content enjoy better conversion in our Shops than do leads from advertising”, according to Jürgen Rösger, who, as Chief Digital Officer (CDO) at E-Plus, supervised the introduction of CURVED. In other words, the more often a page is read, the higher the conversion rate. The articles concerned are linked to appropriate products in the Shop, with additional banners – and advertorials including offers – developed specifically for readers of CURVED. CURVED’s success formula can serve as a blueprint for other sectors: why let ‘manager magazin’ or ‘Rolling Stone’ do what a bank or music portal with suitable product links can do just as well?
N ils Jac obsen
Nils Jacobsen is a financial and tech journalist with 15 years of experience. Apart from being the editor-in-chief for CURVED, he writes among others for the media portal MEEDIA and Yahoo.
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B est P ra c t c e
Interview with CURVED editors-in-chief Nils Jacobsen and Felix Disselhoff
How are things at CURVED one year on? Nils Jacobsen: Very positive. SinnerSchrader has managed to create a tech portal that works, in just 100 days. With over 1.3 million users visiting CURVED each month, we already have twice as many as the online offerings of ‘Neon’, ‘Computerwoche’ or ‘Horizont’. Editorial independence is clearly the basis for sustained growth. What are your key success factors? Felix Disselhoff: The technical foundation, which SinnerSchrader brings to the table as one of Europe’s leading digital agencies, is extremely important. The interface between editorial and programming allows problems to be solved very r apidly and in an integrated way. Above all, though, contemporay content is the key in the mobile tech space.
“Leads generated by content enjoy better conversion in our Shops than do leads from advertising.” J ü rgen R ö sger C O - F O U N D E R O F CU R V E D
In your opinion, what are the prerequisites for a successful content portal? Felix Disselhoff: An absolute commitment to editorial independence and lots of patience. We were not expecting CURVED to be the rapid success it has been, but in the fast-moving tech scene no two months are the same. Every day is a new challenge.
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What can marketers in other sectors learn from CURVED ? Nils Jacobsen: These days innovative projects are taking place almost exclusively online. The learning effects occur practically on a daily basis – even in the interaction with our readers in the form of comments or social media. CURVED’s success as a content provider can certainly be transferred to other sector portals in the music, lifestyle, food or finance space, but not without adapting it. The tech space has its own particular target group.
entertainment
entertainment The Superseding of the Goggle-Box
T TV used to be such a simple medium. You checked the schedule, you switched it on and watched it. Or you missed it. All very simple. Those days are very long gone. Television has been going through the same digital disruption as other forms of content – but in slow motion. A decade ago people were talking actively about the end of linear TV – and yet, it endures. There hasn’t
Y O U T U B E - S TA R P E W D I E P I E
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Earning millions with funny gamer videos
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been a single device-based disruption to change things, or a single service that upended the business. Instead, disruption is coming from all angles, in a multitude of forms. On one extreme you have the rise of paid streaming services. The last couple of years has seen a proliferation of streaming boxes to attach to your TV. Apple’s “hobby”, the Apple TV, has long been a front-end for iTunes content, but now serves as a streamer for Netflix and an ever increasing number of other services. Google has two offerings in the fray: the Chromecast stick – a tiny budget device, which allows video to be ‘cast’ from other devices, and the new Android TV-based Nexus Player. Amazon released its Fire TV earlier in the year, primarily as a front-end for its Prime Streaming service. What started as peripheral services have now become proto-TV studios in their
entertainment
son lifestyle brands, talking direct to huge audiences in a way that traditional TV would have rejected as unprofessional. A new medium is emerging, one with very different content rules from the old one. There’s a new vocabulary of video content that makes sense in a digital world. BuzzFeed, that content powerhouse, has invested a significant amount of money in both hiring top-flight talent – renowned online video pioneer Ze Frank – and building a studio to produce its video work. The studio has a large number of standing sets of classic locations – homes, offices, cafés, and the like – which allow them to quickly go from drawing up an idea to shooting the video on the set. BuzzFeed’s funding is expected to grow so that they can offer everything from animated GIFs to motion picture-length productions. This is the new dynamic of online video content – fast, personal, with smart use of technology and standing sets to bring ideas to life fast. And they’re consumed, on demand, on any one of a huge range of devices – a range that continues to grow year on year. This quiet, slow revolution is still rolling on, but it’s far too advanced to ignore now. If you’re looking to take advantage of it, the traditional media buying route is looking ever less relevant. Will you support emerging media, shown mainly online? Or will you enter the cheap, smart and personal content production game yourself?
A dam T inworth
Adam Tinworth is a business journalist, publishing strategist and lecturer in digital journalism. For over a decade he’s been studying media, tech an business topics and writes about them on the NEXT blog.
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own right. Netflix has been creating original series for a while – and extending the life of cancelled series like ‘Arrested Development’. However, it’s now going even bigger by expanding the vastly successful Marvel Comics movie franchise. Five interlinked series are being shot now, introducing a group of street-level superheroes, who will eventually come together as a team. Amazon has also dipped its toes into the original content production world, with three rounds of pilot productions, many of which have gone to series – including the well-reviewed ‘Transparent’. And, unlike traditional broadcasting, these series are usually released simultaneously, rather than serialised across weeks or months. This is no longer appointment TV, but storytelling for the post DVD boxset age. This changes the relationship with marketers and advertisers. For one, this new breed of television series does not carry advertising. In effect, the series is, itself, advertising for the streaming subscription. For those looking to ride on the back of their success, the only opportunities seem to lie in product placement. Perhaps the most interesting development, though, has been the rise of the YouTube celebrity to the point where they have become viable media brands in their own right. YouTube has been heavily promoting its biggest celebrities – because of the advertising revenue they can draw. PewDiePie – real name Felix Arvid Ulf Kjellberg – is the biggest celebrity they have right now. He produces videos for gaming fans which rapidly cruise past the 2m to 3m views mark, from 30 million followers. According to The Atlantic, ads on those videos net him between $140,000 and $1.4m – a month. His current contract with Maker Studios ends now. It’ll be interesting to see what he does next. Michelle Phan, Bethany Mota and Rosanna Pansino, the stars featured in YouTube’s advertising campaigns, cover fashion, beauty and cooking. They’re one per-
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Private Programmati c
Cu lture o f Testing 30
Interview with M atthias S c hrader
TI P P S by AM ELI A S HOWALTER
o
How do companies manage to get data that can help them in their campaigns? Matthias Schrader: Amazingly, most already have access to it. Advertisers’ own exclusive data, so-called First-Party data, is extremely valuable. Examples would be data illuminating how customers use their website, as well as CRM data. Their value lies in the fact that these days a significant portion of display advertising in programmatic buying is based on user profiling. In reality this takes place in milliseconds, in high speed. And as with every auction, he who possesses the best information makes the best deal, in this case reaching the relevant users on the most favourable commercial terms.
Online advertising is being automated at a rapid rate and has been able to target, based on user profiles, for some time. Key to this is the data which firms now possess, but which they often don’t use effectively. NEXT AUDIENCE delivers improved results with its Private Programmatic offering, linking advertisers’ own exclusive data with individually tailored algorithms. Matthias Schrader explains how it all works.
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P R I VAT E P R O G R A M M AT I C
Maintaining sovereignty over customer data
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private programmatic
P R I VAT E P R O G R A M M AT I C
That sounds a bit like the age-old retargeting. Matthias Schrader: Retargeting is in actual fact a special case in the process, which we at NEXT AUDIENCE call Private Programmatic. It differs from conventional retargeting in three main ways. Firstly, we don’t just look at the buying funnel, such as cancellations at the shopping cart stage, for example. We analyse a user’s Customer Journey, delivering relevant messages in every phase of the customer cycle. That’s the only way to scale display advertising for advertisers in the entire process. Secondly, we don’t depend on cookies, we save the profiles on our own server, enabling us to enrich them at any time with other information, such as CRM data, or using statistical methods to divide the market into segments, which can be addressed individually. Thirdly, with our solutions, advertisers can define with great precision the quantity and quality of contact for each user. This is something which will become ever more important for the short-term success of campaigns and the longterm acceptance of online advertising. So what is Private Programmatic exactly? Matthias Schrader: Scratch beneath the surface and you’ll find an epochal war is going on at the moment around advertiser data. On the field of battle there are three parties, whose future business model lies in monetising this data. In one corner you have the large platforms such as Google and Facebook, in another the ad networks (retargeting providers of a sort) and then again you have the international media agency networks. The latter two are losing their purchasing advantage through auction models with Real Time Bidding– under the hammer, more of the same becomes dearer, not cheaper. And so they are trying to maintain their very comfortable margins using their own technology. Here’s the hitch: in this game advertisers can’t really exploit the potential that Programmatic Buying offers them. Very few advertisers will want to share their CRM data with Google and Facebook, for example. Media agencies are awkward bedfellows for them too, because a
M atthias S c hrader CEO SINNERSCHRADER
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“ SCRATCH BENEATH THE SURFACE AND YOU’LL FIND AN EPOCHAL WAR IS GOING ON AT THE MOMENT AROUND ADVERTISER DATA.”
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form (DMP) for them on their own hardware. This guarantees complete control over their data and allows them to enrich user profiles without having to release information, such as CRM data, for example, to third parties. As the only costs involved are technical, the entire efficiency gains in programmatic media buying go to the advertiser, who doesn’t have to share them with third parties. We call this principle Private Programmatic.
Culture of Testing
P R I VAT E P R O G R A M M AT I C
near-lock-in occurs through their own proprietary technology. User profiles can’t be transferred to a new agency partner, and so advertisers have great difficulty in switching agency partners without suffering massive losses in performance. At NEXT AUDIENCE we work exclusively for the fourth party at the table: the advertisers who, as hosts, pay for the entire show at the end of the day. We operate an exclusive Data Management Plat-
It’s important to test out lots of messages and images, and to use every opportunity to learn more about your audience’s preferences. # Implementing this culture of testing means that people will need to do a little more work, to come up with different versions of each email, banner or webpage. It is important to plan ahead. And, of course, the leaders of a company will need to approve the process. It’s very hard to have a culture of testing if the people at the top aren’t on board.
As Director of Digital Analytics Amelia Showalter participated in President Obama’s successful re-election campaign. Her new mission is to bring the Obama campaign’s culture of rigorous testing and analysis to progressive organisations, campaigns, and companies. Here are some of her tips about testing:
# To amend campaigns, it is important to have the right data at hand. The most useful information about people is the information they voluntarily give you.
# Rely on data, rather than gut instinct. If you’ve got ideas about which marketing messages will work on your audience, you should test them out and let the data prove you right or wrong. # Start small! If you have an email newsletter, you can divide your audience randomly in half and test out some new messages and formats. Or you can run a test on your website, and try out new ways of getting people to make purchases or sign up for your email list. To build up the culture of testing, you just have to start somewhere and keep testing out new ways to improve.
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A M E L I A showalter C ONS ULTANT AND DI GI TAL S TRATEGI S T
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W H AT ’S N EX T
by MA rtin recke
W hat ’ s next
What’s NEXT? The digital transformation reaches top management
The impact of most inventions is overestimated in the short-term, but dramatically underestimated in the long run. Truism though that may be, it happens over and over again. With such predictability, in fact, that Gartner’s IT consultants have managed to plot it in some detail in their ‘hype cycle’ for each new technology. Hype surrounding the digital transformation probably reached the peak of exaggerated expectation in 2014. Just like the New Economy fifteen years earlier, it arrived at the floor of top management, who quickly delegated it to interns back in 2001, prior to its gradual reemergence in the middle of the last decade. With the NEXT conference alongside other events, SinnerSchrader has been overseeing the digital revolution since 2006 – from its beginning and initial successes through to the transition to its next phase, the digital transformation. This revolution has shifted the balance of power to the benefit of the consumer and the detriment of the corporation. Today, digital consum-
NEXT BERLIN
Since 2006 SinnerSchrader has been introducing digital business trends at its annual conference NEXT Berlin.
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ers expect the same standards in their nalogue world as they have come to know a from the network or their smartphones. In the first instance this has consequences for interfaces, communication and interaction with customers. And subsequently for products and services themselves, as well as for the entire production process including the supply chain, as described by terms such as ‘Industry 4.0’ and ‘Industrial Internet’. In this way the digital transformation transcends traditional departmental boundaries. Where the matter becomes the remit of the Chief Marketing Officer, the experience of recent years has shown that few CMOs on their own can put companies
“ It is the best of times and it is the worst of times. Technology has never been more amazing, but at the same time, we feel the challenges for our organisations.” P eter H inssen A u thor and speaker at N E X T 1 4
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W hat ’ s next
Another approach is to include the subject area within the remit of the COO, who, well used to tasks which transcend departments, tends to view the digital transformation more from a procedural and process perspective as a result. Deutsche Bank opted for this approach in autumn 2014 when its COO, Henry Ritchotte, took over responsibility for digital. Other potential candidates for the role of the digital transformation in management are the CIO and CTO, of late the latter tends to be sometimes written out as ‘Chief Transformation Officer’. They are already responsible for the digital platforms and processes within the organisation, which gives them a gatekeeper role. At the end of the day it is not what the management position is called, or whether it is newly created or not, that determines success. What is critical is • the support of the CEO, in order to overcome resistance within the firm • that the digital transformation, being a topic of much strategic import, resides with top management, • a clear focus on the consumer and his or her needs, as consumers are further advanced in the digital space than most companies. From the very start the NEXT set itself the task of providing a level of orientation in what is a confusing environment, and to put relevant trends and subjects onto the decision maker’s agenda. Alongside the yearly conference, a rich video archive and a constantly updated blog also serve this end. With the ‘NEXT Generation’ study,
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with an analogue mindset onto a digital footing. It needs a clear commitment on the part of the CEO. Many firms, especially in the US, react to this realisation by appointing a Chief Digital Officer (CDO). Atif Rafiq, for example – formerly of Amazon – has been advancing digital at McDonalds for the past year, seeking to extend the fast food chain into an e-commerce enterprise. Around a quarter of US firms will have a CDO by 2015, according to Gartner. In the first instance this is a clear signal – both internally and externally – that the subject has made it to the top management rung, and now has a voice on the board of management. That CDOs are sometimes also positioned in the second tier of management is only a limitation of sorts, as other CXOs are in the same boat.
N E X T E X E CU T I V E C I R C L E
Marketing decision makers gathering: CMOs and CDOs discuss topics of the digital transformation.
c arried out for the first time this year by SinnerSchrader and the rheingold institute, we are taking a qualitative glance at the behaviour of the young user segments. In addition, we have started to develop the NEXT Executive Circle, as a forum for decision makers who wish to face the challenge of the digital revolution. Having kicked off in Berlin, further meetings took place in Hamburg and Paris. Upcoming meetings are planned for March 2015 in Barcelona and May 2015, again in Berlin. Participation in these regular events is by invitation only. If you are interested in taking part, please contact matthias.schrader@nextberlin.eu.
“ Anyone who calls himself an expert in this space, is an expert for 15 seconds.” T ony D o u glas I nnovations M anager B M W and speaker at N E X T 1 4
M artin R e c ke
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Martin Recke is the Head of Conference Management for SinnerSchrader and organises the NEXT conferences and other events since 2006. He blogs at nextberlin.eu, among other sites.
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I mprint P u blisher SinnerSchrader Group, Völckersstraße 38, 22765 Hamburg, Deutschland Contrib u tors Axel Averdung, Peter Bihr, Anni Brück, Laurent Burdin, Nils Jacobsen, Olaf Kolbrück, Martin Recke, Matthias Schrader, Meike Schreiber, Amelia Showalter, Adam Tinworth and Nils Wollny E ditorial T eam Ina Feistritzer, Benjamin Nickel, Martin Recke, Niko Timm (CD), Nils Wollny T ranslation and P roo f reading Tim Gill, Conor Horgan, David Thompson I llu stration Christian Schupp P i c t u re Credits Thomas Fedra, Nils Hasenau, Katrin Saalfrank, Dan Taylor D esign ringzwei, Hamburg separation Johannes Bauer in der Printarena, Hamburg print Eurodruck in der Printarena, Hamburg Copyright 2014 SinnerSchrader Group Despite careful scrutiny of the publication by the editorial board the publisher accepts no liability for its accuracy. Prior permission must be obtained in writing from the publishers for any use that is not explicitly permissible under copyright law. www.sinnerschrader.com