Let’s be open about the future
There’s a huge temptation for companies, in all industries, to lock you in to exclusive contracts. Banks, phone companies, utilities – they’re all at it. If they don’t lock you in by contract, they do it by bundling products together. Banks package your current account with your mortgage and credit card. Phone companies tie together your broadband, mobile and home phone. It becomes too difficult to move on, so you stick with them, perhaps for a lifetime.
The same applies in the corporate world. Major vendors have always sought to increase the value of each sale by adding on products. Take Oracle as an example. They’ve built on their foundation as a database software company to add cloud solutions, middleware software, plus a huge range of apps – everything from HR systems, training, logistics, content management, ERP and industry specific functions. It’s a model followed far and wide. Vendors want to maximise their revenue and the simplest approach is to offer more to each customer.
The problem is it’s hard to be a master of all things. Apple knows this. They are one of the most profitable companies in the world, yet their focus is on devices and the operating system that supports them. They haven’t – and I doubt they ever will – ventured far into the application and content space. They created the App Store for that, leaving independent producers to offer the world the delights of Pokémon Go, Tamagotchi and Minecraft.
None of these ideas would have been generated from a major market player. Pokémon was invented by Satoshi Tajiri who was dissatisfied with what was available for his Gameboy. Tamagotchi was invented by Maita Aki, an office worker in Japan, who thought it would be neat to create something for people to care for – an alien in a handheld device. Minecraft made its Swedish developer, Markus Persson, one of the world’s billionaires.
Ingenuity like this comes from an open system where new ideas can thrive. Whilst we accept this in the consumer space, when it comes to business software we are often swayed by the convincing salesperson arguing that a major vendor has the answer to all your problems.
I can see this happening in the digital advertising space too. The transformation is happening quickly with Asia about to surpass North America as the biggest digital advertising market worldwide. And we have so much further to go. Combined China and India have four times more internet users than the US, but eight times the population. Indonesia is home to quarter of a billion people, continues to see internet growth average seven per cent per year, whilst Europe and North America has plateaued.
It’s easy to see why there’s an expected 18 per cent increase in digital ad spend in this region (to USD57 billion), twice the US rate of growth. And that’s despite a reluctance from some to embrace digital. For example, whilst 85 per cent of Singaporeans are internet users and the same number have 4G mobile access (one of the highest levels in the world) advertisers are still heavily reliant on print and TV – combined they totalled over USD 1 billion in ad spend last year, compared to just USD 200 million for digital
Marketers undoubtedly see the benefits in transferring more of their budget to digital but for many the learning curve is just too steep. A glance at the Lumascape of the industry shows how many players and components there are – getting your head around all that is a challenge most of us would rather do without. To make life easier, the promise of a fix-all solution could be too tempting for many.
But, as we’ve demonstrated in the consumer space, whilst there’s sense in adopting a standard platform for delivery, users need to beware of committing to a proprietary solution that will prevent them for making the most of the latest and greatest ideas, many of which will come from small players who are new to the market.
The biggest risk is choosing an end-to-end solution that only covers a small part of the total inventory available. There’s a handful of players with elegant solutions that serve ads, track placement and measure results in a comprehensive fashion – but you are limited by the places your ads can be seen.
Instead, think about the Apple approach. Work with companies big enough to deliver and maintain a platform that can be the bedrock of your digital trading – the iOS of the advertising world, if you like – that also enables you to easily make use of specialist tools and services from third party providers. That can include data services, attribution tools, private marketplaces and mobile marketing platforms. And whatever comes next!
Let’s hope, in their eagerness to get up to speed with the digital industry, marketers in the region don’t jump on the quick and easy solution – only to find they have locked themselves out from the immense amount of innovation that’s happening in the industry.
To return to the mobile phone analogy – imagine if you had committed yourself to a decade using a Blackberry. In its time, it was revolutionary because it was easy to send emails from your phone. We didn’t know what was going to be possible in just a few short years. We expect a lot more these days. As Confucius said, ‘Study the past if you would divine the future’.
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