Eva Lihotzky

How the metaverse is speeding up the customer experience

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How can I use the metaverse for my brand? How will this new digital universe transform the customer experience? And what exactly does the term ‘metaverse’ even mean? Strategy expert Eva Lihotzky provides an overview and four recommendations for action for brands.

It was Neal Stephenson who coined the term ‘metaverse’ in his breakthrough sci-fi novel ‘Snow Crash’ back in 1992. His visionary story is about a pizza delivery guy who, as a hacker, roams an immersive, virtual world by night. Thirty years later, the idea of a three-dimensional, immersive online environment where people interact with each other in real time and can create, buy and sell things is no longer just the stuff of sci-fi novels. The potential of social and commercial interactions in a virtualised setting is huge, and investments in technologies and newly created virtual spaces have increased significantly over the past few years. After all, technologists, companies and investors already believe that the metaverse will become a stage of the future and therefore a huge source of revenue. A study by financial service provider Citigroup confirms this: the possible business potential of virtual worlds is expected to reach up to 13 billion US dollars by the year 2030.

The metaverse – more than just a singular space

But what is the metaverse exactly? As well as 173,000,000 hits, my first Google search brings up various definitions. However, most of them have one thing in common: they understand the term ‘metaverse’ to mean more than just a single technology or end state. Rather, they refer to the convergence of several separate technologies, which in the coming years will all gradually reach market maturity – and therefore pave the way for the Web3 era. As well as the increasing use of blockchain and interactive technologies such as virtual reality (VR), augmented reality (AR) and mixed reality (MR), the focus is on Internet of Things (IoT) applications (such as the use of sensors and network communication solutions), computing technology (like 5G and 6G networks) and cloud computing, artificial intelligence (AI) and gaming technologies.

Virtual spaces are resulting in new meeting places

The smart combination of these technologies can create the experience of an immersive, three-dimensional environment where consumers can interact with one another, with a particular company and with its individual surroundings as if they were together in the same room. In the future, this space can have several attributes. First of all, we can assume that both the physical and the digital-virtual worlds will be integrated into the user experience and merge into one. Secondly, reactions and social interactions are enabled there, meaning that there is an ongoing exchange between the consumers, companies, influencers and their avatars. Thirdly, creativity, product definition and product optimisation will be boundless in the space and, ideally, will also be interoperable between individual spaces, resulting in entirely new contact opportunities, communication channels and business models. Fourthly, virtual spaces are available at all times and can be defined and shaped by the users themselves.

Next-level customer experiences

As a result, real-time communication and personalisation will become an even more important differentiating feature for companies that enter into a dialogue with their consumers in the metaverse. This is why the concept of the customer experience needs to be rethought, extended and the communication and interaction speed of brands needs to be raised to the next level. Because as well as the existing touchpoints that companies continue to use when communicating with their customers, there are now touchpoints in the metaverse or virtual spaces to consider as well. This will lead to many new interaction points that companies should take on board in their brand and communication strategy.

The Hitchhiker’s Guide to Metaverse Experiences

Brands are therefore advised to follow these four recommended courses of action:

  1. Identify metaverse potential and implement a long-term strategy
    Companies should determine the metaverse potential that is relevant for their business and incorporate a metaverse strategy into their existing communication and marketing strategies. These should be flexible enough to allow them to react quickly to ongoing technological advances and, in turn, to respond to changing customer requirements and behaviours.
  2. Incorporate relevant technologies flexibly and successively
    It is the aforementioned technologies that make virtual spaces possible in the first place. However, not all technologies are needed for every use case at the same time. Instead, companies will use different technology combinations at different touchpoints. This makes it all the more important to ensure we have the relevant technologies ready for use and can adapt them to customer behaviour along the customer journey. In the future, a diversified technology architecture that can be flexibly applied to the corresponding requirement will be crucial to a company’s success in the metaverse.
  3. Intensify consumer behaviour and emotions in virtual spaces
    A compelling customer experience will also remain a differentiating factor in the metaverse. This being the case, companies should concentrate on also creating consistent and engrossing experiences in virtual spaces that are able to maximise the benefits of immersivity and interactivity. By skilfully combining the relevant technologies – such as AR, sensors and online and offline combinations – brands can approach their consumers through new angles. They can also enable them to identify with products more through ‘tangible’ storytelling, thereby exerting a positive influence on purchasing behaviour and customer loyalty.
  4. Shift the focus onto trust, authenticity and responsibility
    Trust and security will come even more to the fore when defining the customer experience in these new virtual spaces. This is because it will only then be possible to gain acceptance of the newly created experiences that consumers will have with companies in their respective immersive interactions. The more the lines are blurred between the physical and virtual worlds of the consumers, the more important existing considerations – and concerns – relating to data protection, security, IP protection or accessibility will be. So it is up to companies themselves to take a responsible approach and make their products and services inclusive.

Brave new worlds

Technological advances and the resulting immersive spaces are changing the basis of physical and virtual interactions and the way they function. However, we are still a long way off a final definition of how the metaverse will develop further or which gradual developments and functionalities we can expect to see. Even though some of the technologies and building blocks are already in place, the full implementation of immersive, reactive and continuously expanding virtual worlds will take another few years. This is because many of the required technologies will still need time and remain dependent on the progress of other technologies before their capabilities and potential can be used on a wider scale. And even then, they will gradually develop further and set new benchmarks.

But trying to explain what life in the metaverse will be like in the future and how it will affect companies would be rather like asking someone back in 1990 to describe what would become of the internet one day. Perhaps we should just ask Neal Stephenson? After all, the way he envisaged the direction things would take 30 years later was pretty spot on.

This article first appeared in TWELVE, Serviceplan Group’s magazine for brands, media and communication. In the ninth issue, you will find further inspiring articles, essays and interviews by and with prominent guest authors and renowned experts centred around the magazine’s theme „Speed! The Winning Factor in the Digital Age“. The e-paper is available here: www.serviceplan.com/en/lp/twelve/twelve-2023.

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Serviceplan Group

Brave New World: Three countries – three ways into the metaverse

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The metaverse is one of the most exciting – if not the most exciting – innovations in our high-speed digital world. What prospects do companies in different countries see in this new digital universe? And what opportunities are they already using for their brands? Inspiring and surprising insights from the Netherlands, the UAE and Poland.

The metaverse in the Netherlands: A breeding ground for experimentation

Author: Christiaan van Betuw, Managing Partner / Serviceplan Group Netherlands

The digital era in which we find ourselves is characterised by its speed. From small, technical updates that make our lives easier, to large-scale, impactful transitions. The metaverse inexorably belongs to the latter category: a completely new, digital world with other forms of communication and a more intensive digital experience. It is important for brands to explore, test and learn now. And the Dutch market is the place to be.

This is due to the behaviour of Dutch people. For years we’ve been one of the European leaders in digital development. The digital mindset of the Dutch is impressive. For example, 96% of Dutch households have internet and 87% are online every day. The Dutch are at the top of the table when it comes to using online services, such as internet banking, watching digital TV, shopping, and making online (video) calls. In addition, we are very receptive to – and active in – emerging sectors such as e-sports, (digital/hybrid) events and game development.[1]

In 2021, the Netherlands were characterised by the European Union as a “Strong Innovator” in Europe: a country that scores well above average for its innovation efforts. In the period from 2016 to 2018, almost half of the companies in the Netherlands with more than 10 employees were innovative.[2] The advent of the metaverse has also stimulated and inspired the innovative nature of Dutch companies to push things forward.

In addition to a receptive test group and an innovative workforce, the Netherlands – home to ‘only’ 17 million people – offers a clear market and a relatively cheap environment to experiment with the metaverse. And that is already happening on a large scale.

Dutch brands are pioneering the metaverse

More and more brands are testing the power of communication in the metaverse and offering consumers a unique brand experience. Heineken brought – albeit with a hint of fun-poking irony – the physical and digital world together with the launch of the world’s first virtual beer ‘Heineken Silver’ in Decentraland, as well as in the physical world. In doing so, the brand cleverly uses the Heineken experience in the metaverse, but with the clear message that it is still better to drink a beer in the ‘real’ world.[3]

Dutch fashion brand Barki has launched an NFT design but also makes a physical edition of each NFT. The brand states that this prevents the physical T-shirt from depreciating in value and eventually being thrown away. By linking the physical product to the NFT, it retains its value.[4] The same applies to Subway and Lay’s who, in collaboration with fashion brand XPLCT, developed an eye-catching jacket that made avatars in Decentraland look completely on brand. Five unique NFTs were developed, one of which was auctioned, raising €6,000 in proceeds.

It is striking that a ‘phygital’ approach is still often chosen, where brands experiment within the metaverse but also link the physical world to it at the same time. In the near future, the latter will become less so, partly due to companies that focus on full use of the metaverse, such as Dutch initiative Odyssey, which builds interoperable tools for metaverse users.[5]

A long-term goal for the brand in Web 3.0

At the rate the metaverse is evolving, a sustainable marketing effort – one that builds for the future – is an absolute must. And experimentation is inextricably linked to this. I am sure that in a world where everything is faster and grander than ever before, the marketer who dares to make a plan for 2027 will ultimately work for the brand that shapes the market rather than merely following it. That’s especially true when it comes to building a brand in Web 3.0. Let everything you do now contribute to that snowball that defines this future of the brand. The Netherlands look forward to welcoming you.

[1]     https://longreads.cbs.nl/ict-kennis-en-economie-2021/samenvatting/

[2]     https://longreads.cbs.nl/ict-kennis-en-economie-2021/samenvatting/

[3]      https://www.prnewswire.com/nl/persberichten/heineken-r-silver-breaks-out-of-the-metaverse-877176528.html

[4]    https://fashionunited.nl/nieuws/business/nederlands-label-barki-is-straks-in-winkels-en-in-de-metaverse-te-vinden/2022021152646

[5]     https://www.emerce.nl/nieuws/nederlands-odyssey-vangt-vier-miljoen-uitbouw-metaverse

The UAE – a place of metaverse leadership

Author: Helmi Abdalhadi, House of Gaming Manager / Serviceplan Middle East

I recall a conversation with a friend a few years back when we were discussing cryptocurrencies. He mentioned that withdrawing assets in bits and pieces helped avoid German regulatory tax on the crypto-turned-cash. I remember instantly thinking, especially given my regulatory law education, that it was innovative and risk-averse of the German government to be ahead of new technology by putting these laws in place early. I now live in a part of the world where government activities and initiatives are central to the economy and its industries’ activities. The United Arab Emirates government has taken steps, measures and regulations further than most countries in the world to put itself in a position to both lead Web 3.0 and metaverse conversations, as well as enable its native businesses. However, even before regulations, it has made it part of its DNA.

In the second quarter of 2018, the UAE government announced and launched an initiative that “aims to capitalise on the blockchain technology to transform 50% of government transactions into the blockchain platform by 2021”. The Emirates blockchain strategy had a simple goal: to use the secure technology to be much more efficient in day-to-day activities. By giving each transaction and customer a unique identification number that is part of the blockchain ledger, the government aimed to save 400 million printed documents and 77 million work hours annually, as well as almost $3 billion by 2021.

Regulations usually imply a negative connotation for new technology. This is not the case for the metaverses’ main method of payment – cryptocurrencies – in the UAE. Dubai and Abu Dhabi both passed laws in 2021 and 2022 that make it not only easier to use cryptocurrency to make payments for daily purchases, but also possible for crypto exchanges to operate from and within the two Emirates. According to Reuters, over 30 licences have been issued to crypto exchanges to set up shop – including the biggest of the bunch: FTX, Binance and Kraken. As an example, Binance are currently hiring for over 100 positions in the UAE region.

But being ahead of new technology doesn’t just mean regulating and managing. It is also about enabling and building a healthy ecosystem around the industry.

Dubai recently created a committee whose purpose is to build a metaverse strategy for the Emirate. Whether through commerce and shopping, meeting places and social areas, games or learning environments, the committee announced that it will be supporting 42,000 virtual jobs in order to add $4 billion to the country’s GDP by 2030. Resource allocation towards the virtual world, as well as enabling new businesses are key pillars of the Dubai metaverse committee.

In the meantime, Abu Dhabi has pushed for diversity in the male-dominated industry via its Abu Dhabi investment office. ADIO is making it easier for women to be entrepreneurial in the metaverse and Web 3.0 space by giving them free crypto and metaverse domains. This has proven successful. Over 50% of small to medium businesses in this industry in Abu Dhabi were founded by women.

These laws and initiatives have put the UAE in a place of metaverse leadership. They have not only enabled the growth of related start-ups, but also incentivised legacy brands to get involved. At Serviceplan Middle East, we were approached by our client BMW within the past year with a view to taking advantage of the local Web 3.0 facilitation. We created an NFT project called BMW Museum of Sounds, storing and displaying the roars of retired BMW M engines via NFTs. And we won multiple awards and nominations for our efforts.

Regulating technology is not easy and regions that fail to act usually fall behind – but by pushing regulations and encouraging innovation, the UAE are in no danger of making this mistake.

­The metaverse in Poland

Author: Tomasz Przeździecki, Chief Executive Officer / _game changer

It’s a popular phenomenon that millions of Poles are already into. But do they really know about it? Many years of experience clearly show us that games are the best canvas for developing the metaverse and technology in the form of VR and AR. Back in 2017, we carried out activities for our clients (Subway and Coca Cola) in Minecraft, which we can now classify as metaverse projects. Thank you, Mark Zuckerberg!

The concept of the metaverse is one and the same for all – virtual, open, interactive, 3D worlds where players/users can socialise. However, right now there are dozens of different platforms – Roblox, Decentraland, Wave, Ceek, Zepeto, RECRoom, etc. In a few years’ time, we will be seeing global consolidations. Will Facebook, Amazon, or perhaps a new player be leading the market?

For the past few years, it has been a well-known fact that popular games like Minecraft or Roblox are classified as centralised metaverse platforms.

However, the real, futuristic metaverse using Web 3.0 ideology – based on blockchain tech – is considered decentralised. Right now, the key players among those metaverse platforms are Decentraland and Sandbox. Those are the best platforms within Web 3.0, where you can read, write, create and OWN! Where you can purchase land, build your business and possibly make money. And also where you can create art and sell it. But bear in mind that they are still in their infancy, both globally and locally.

The users of the metaverse originating from games like Roblox, Minecraft or Fortnite are younger, usually between 10 and 20 years old. Those who are aware of Web 3.0 are mainly aged 20+.

However, everyone can refer to themselves as users of the metaverse. We should remember not to look at the metaverse only through the prism of games, as this can be harmful. We think along the lines of: “A game can be a metaverse, but the metaverse does not have to be a game”.

Perspective of a Polish metaverse user

Based on the first Polish report on metaverse users in Poland (conducted by the Gameset gaming and metaverse marketing agency), we know that:

  1. 4.3 million Poles perceive themselves as aware users of the metaverse in Poland.
  2. 7.1 million Poles do not participate in the metaverse but would like to.
  3. 29% of respondents stated that they do not want to be in the metaverse. However, most of them (51%) were between 46 and 66 years old. They consider it a waste of time and prefer other types of leisure activity instead.

Among the most attractive aspects of the metaverse, respondents indicated:

  1. The opportunity to meet with friends (83%)
  2. The chance to meet new people (81%)
  3. The possibility of creating new things in this world such as “clothes, art, games” (81%)
  4. The opportunity to look the way you want to (79%)

The top four metaverse platforms indicated by respondents are games:

Minecraft – 83%
Roblox – 66%
GTA Online – 63%
Fortnite – 63%

Roblox in Poland has over two million monthly active users!

So where is Decentraland or Sandbox? Very much on the sidelines – for the moment! So far, they generate around half a million monthly active users globally. We estimate that only 3% of them are Polish users. In the future, that is likely to change in favour of decentralised platforms (once the awareness and education of blockchain increases).

What about brands in the metaverse?

  • 32% of respondents aged between 10 and 55 years old say they would welcome the presence of brands in the metaverse, while 41% say “it depends”.
  • 47% of respondents say they have discovered new brands or services through the metaverse.
  • 39% say they would be willing to buy an offline product from a brand they have interacted with in the metaverse.
  • 43% of respondents expect their favourite brands to be represented in the virtual world.

To sum this up:
YES – your brand should also be represented in the metaverse!
YES – you need to do this as soon as possible, as long as it’s relatively easy, cheap and there’s no clutter.
YES – your target group is already there and it’s just a matter of months until everything is happening on a much larger scale, but will you be able to afford it by then?

That’s why _game changer was created – because it changes the rules of gaming in marketing and communication and is the answer to marketers’ needs for activities in trending channels.

The kind of world you create for your brand depends mostly on the technology and platform you choose. In Poland and around the world, most activities right now are centred around Roblox, Decentraland and Sandbox, so you’d be well advised to focus on those!

This interview first appeared in TWELVE, Serviceplan Group’s magazine for brands, media and communication. Read more exciting articles, essays and interviews by and with prominent guest authors and renowned experts in the ninth issue under the central theme “Speed! The Winning Factor in the Digital Age“: https://sp-url.com/twelve23-lp-en.

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Alexandra Grimm

Speed is the new normal

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The world seems to be getting more complex by the day. We are being forced to respond faster and faster to avoid missing the boat and to secure our market position. How does a public broadcasting company cope with this ever-changing environment? And how is speed becoming a success factor here? Barbara Evans in conversation with Dr Florian Kumb, Head of Programme Planning at ZDF.

BARBARA EVANS: Are you a fan of speed, Dr Kumb?

FLORIAN KUMB: Absolutely! Whenever something is done under extreme time pressure, the motivation is even greater. Even though speed is not an end in itself, it is essential for success in the dynamic media world. For example, speed is now a central success factor when using new technology and in the development times of programme innovations. A good example of this is the fictional TV show ‘Himmel und Erde’ (Heaven and Earth), which examines the war in Ukraine in five stories, focusing on the political situation in the months that preceded it.

Looking at the other extreme: in which areas do you see speed as being of least importance?

FK: In many areas of journalism in particular, both speed and precision are important. If we change our programming because of breaking news, the information needs to be absolutely accurate. Helping people make sense of events is a real challenge if a situation is not clear. And with investigative journalism, thoroughness is much more important than speed. Leaving aside programming, precision is also the top priority when dealing with compliance issues, budget controlling, etc.

Do you see the speed question as being a short-lived phenomenon or one that is here to stay?

FK: User expectations are changing faster than they used to. And we need to respond to this more quickly with our programming content. Constant change is the new normal. I very much doubt that everything is going to return to easily manageable and stable time frames.

In which areas do you feel the greatest need for speed at ZDF?

FK: There was always a great need for speed when reporting the latest news, so that’s nothing new for us – and our colleagues are experts in dealing with breaking news situations. But there is growing pressure on development times in other programming genres as well. The world is changing so quickly that ideas need to be implemented in less time. However, the need for speed has increased mainly in strategic work and non-linear distribution. To achieve our aim of providing ‘a ZDF for everyone’, we need to be very adaptable and highly dynamic in our actions and reactions.

What exactly is ZDF doing to equip itself for this future?

FK: This might sound strange, but the first thing we need to do is increase the complexity because there are no simple answers to complex challenges. For example, we have brought together three areas – communication, digital media and programme planning – that were all under different management at various points within the hierarchy logic. We defined joint processes and task fields such as 360° planning, brand/design or AI in distribution, for which we are now jointly responsible. This increases the need for coordination and lays bare any conflicts regarding roles and resources. However, we all acknowledge that no one area can solve the problems on its own – for me, this paves the way for a successful working relationship in the future.

Will there be any changes in the way you share data internally?

FK: I’m in favour of a complete democratisation of data and, at the same time, a clear framework that provides guidance in this data jungle. We are currently in the process of making all data available for everyone internally. After all, it’s possible for all of our colleagues to learn from findings about formats outside their scope of responsibility. It’s a real mindset change. Another recent addition is the ZDF KOMPASS – an integral ‘compass’ that allows us to manage all relevant performance indicators relating to usage, quality, impact and acceptance of our public broadcasting programming. This tool sets priorities and helps provide clarity in the complex media world.

Do you use AI? And if so, is it easy to reconcile this with your company’s public broadcasting remit?

FK: AI is of central importance for us, for example in our planning work. We use AI both for the recommendation system in our ZDFmediathek and for linear planning, e.g. ZDFinfo. Here, the machine suggests shows for users to watch next or which shows should be scheduled back-to-back. It’s important for the underlying algorithm to have a public broadcasting character. Our aim is not to make money by tying viewers to us with the same kind of content again and again – we have other aims, such as presenting people with new or unexpected content. The data helps us to find out how we can do that.

What has been your experience so far?

FK: Our first experiences have been very good. The diversity of recommendations in the ZDFmediathek increased substantially – more different programmes are now being recommended than was the case when we curated them manually. Obviously, planners can’t be equally aware of all titles. Using AI in linear programming has been so effective that we are now working on expanding it to other broadcasters and broadcasting streams. Also thanks to AI, ZDFinfo has established itself as the most successful linear information broadcaster by far – including among younger target groups.

What impact does this have on the broadcaster’s programming and brand communication?

FK:It doesn’t have any impact at all on the strategic work regarding content profile, brand communication and the development potential of the broadcasting method. Real people are still responsible for journalistic and creative output. AI ensures that they have enough time, because it relieves a lot of the burden in their operational planning work and distribution.

Do you see any particular opportunities or challenges here for ZDF as a public broadcaster?

FK: There are many areas where we need to find new public broadcasting approaches for digital. Take, for example, the expectations regarding user experience. For this, we need to know people’s exact needs. But this is a challenge if we also want to comply with the highest data protection standards. However, our greatest privilege is to be able to implement ideas and projects irrespective of their short-term commercial viability. At the same time, commercial pressure is especially high at the moment: investment decisions are particularly difficult when costs are rising but our income is staying the same. Especially when the investments only pay off in the long term.

When you are developing new ideas, do you look first and foremost within the German-speaking markets, or do you seek inspiration in concepts and ideas from other countries.

FK: Both, but I can’t understand why there is so much of a focus on the USA in our sector. Smaller markets are much more dynamic, particularly when they have a progressive approach to technology. Personally, I find the Scandinavian, Swiss and Israeli markets really interesting. We are in the process of working together with a Danish start-up that is well on the way to solving one of our data problems relating to diversity.

Do you think that German-speaking countries are getting faster in their decision-making and actions?

FK:Germans are often said to be passionate naysayers. At the same time, we like the image of an inventor type who plays around with lots of different ideas and then comes up with compelling solutions. I think the generational shift in companies is a great opportunity to speed things up. The older generation needs to pass on their traditional ‘engineering virtues’ to the younger generation while allowing them to dictate the pace. ‘Fail fast’ is not a new strategy – that was around during the years of rapid industrial expansion in Germany in the mid-19th century. We need to give this more space again.

Findings published by market research company GfK have shown that companies that act faster are more successful. We conducted our own research project about how companies use real-time data, network between various company areas, individualise communication and content, etc. Here, we found that not enough is happening in around two thirds of companies. What advice would you give to decision-makers about ‘speeding things up’?

FK: It’s necessary and it’s hard going, particularly at the beginning. But it’s less about making radical underlying decisions than having a clear vision and lots of elaborate fine-tuning in processes. There’s no way around it. But once top management has set the ball in motion, employees and managers alike will realise that and things will speed up. My recommendation would be to look first at a small number of the company’s core and supporting processes and subject them to an end-to-end examination – even if this is a complex undertaking. For this, companies need to set up and authorise a small internal project team with good people. But I wouldn’t advise using external consultants for this.

Thank you for talking to us!

This artice first appeared in TWELVE, Serviceplan Group’s magazine for brands, media and communication. In the ninth issue, you will find further inspiring articles, essays and interviews by and with prominent guest authors and renowned experts centred around the magazine’s theme „Speed! The Winning Factor in the Digital Age“. The e-paper is available here: https://sp-url.com/twelve23-lp

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Serviceplan Group

Speed is not an end in itself

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“Particularly for younger generations, forwards is the new up”, says Dr Jens Thiemer, Senior Vice President Customer & Brand BMW at the BMW Group. But how fast do brands these days actually have to be if they want to be among the best – and when should they take their foot off the gas? Wolf Ingomar Faecks, Managing Partner of the Serviceplan Group, sat down for an interview with Dr Jens Thiemer to find out.

WOLF INGOMAR FAECKS: Does the “higher, faster, further” principle still apply today?

JENS THIEMER: Status thinking in society is changing, that is something we are seeing more and more. Particularly for younger generations, forwards is the new up. This means that we are seeing a trend away from social climbers and towards social drivers – who want to give something back to the world and who see themselves as part of a society with a shared sense of purpose. So BMW is no longer just about being the best in the world but also the best for the world. We move people, touch hearts and inspire minds. That is how we see our leading role.

Is the ‘fear of missing out’ – FOMO for short – something that should make me throw caution to the wind in a digitalisation context? 

JT: When it comes to digitalisation, we need to be curious and attentive – but not necessarily cautious or conservative. As much as digitalisation propels us forward, it also creates many rewarding challenges, but, in some cases, risks as well. Hacker attacks, data theft and data misuse reached an all-time high during the coronavirus pandemic. Here at BMW, all data is treated with maximum care and confidentiality. And as far as FOMO is concerned: we encounter new hypes and trends in a digitalisation context on a daily basis. People should always ask themselves why they seem to be suffering from FOMO. What exactly could they be missing out on? Have they already understood it completely? What role does it play for other decisions? And then they should carefully weigh up whether they should join in.

How do you decide if something is just hype or a real trend that needs to be followed?

JT: First of all, we analyse very thoroughly – across all sectors – where a movement stems from, which environment it emerges in and who is the first to latch onto it. Many ‘hypes’ are already eliminated at that point because they don’t align with our company orientation and strategy. If a hype offers potential for a brand, you should see how quickly it develops into a more stable trend and how fast other players jump on the bandwagon. And you shouldn’t be afraid that the trend will break or flop. That can happen. Two years ago, the Clubhouse app was an example of us being active relatively early on here in Germany – simply because the platform had great potential for becoming a trend. Many high-profile personalities were on board from the outset. As we have seen, the trend didn’t last as long as expected or perhaps it just still needs more time. In this case, you have to respond so that you don’t use resources unnecessarily.

Speed is a key success factor today but is it also relevant for the sales model, innovations and customer centricity?

JT: Speed has a certain relevance for our processes because they force us to reduce them to the bare bones and avoid any unnecessary elements. Otherwise, you’re just not fast enough. Perhaps you could weigh up the importance of speed in these processes. With innovations, speed is the key factor for staying ahead of the pack. If you’re fast, you’ll set the pace for an entire industry. In the context of a sales model, speed is also growing in importance from a customer perspective: transactions are required everywhere and customers expect them to be simple, short and smooth. By contrast, customer centricity is initially an attitude that calls for certain conditions and that needs to be fleshed out with data in order to gear processes to them optimally. This is only indirectly related to speed. However, you should not underestimate the mindset shift that needs to take place within a company for it to have genuine customer orientation. This takes time and needs to be put into practice constantly and exemplarily.

What risks and advantages does speed have in a company – and also on the roads?

JT: BMW drivers enjoy putting their foot to the floor every now and then. But only if the situation permits high speeds, of course – and with the aid of all kinds of technically conceivable driver assistance systems. But the fun in driving a BMW is not down to the speed itself – drivers and their passengers also enjoy cruising at moderate speeds. In a company, speed allows you to attain competitive advantages faster than others, but also harbours the risk of being inaccurate and making mistakes. But that’s something you just have to take in your stride.

Is speed one of BMW’s corporate goals?

JT: Speed is not an end in itself. It resonates in everything we do as a matter of course. We speed up our processes, avoid anything unnecessary and set clear priorities. This affects in particular our development process, our innovation speed throughout the entire company and our internal decision-making processes. So with that in mind, our goals can definitely be said to boost speed indirectly.

Does speed conflict with your other company objectives?

JT: These things go hand in hand. Some need to be done very quickly, while others need time to grow. That doesn’t mean they are conflicting, though, but evaluated differently depending on the objective.

What do you see as being the three main things that prevent speed?

JT: Long discussion and decision-making channels. Fundamental risk aversion. People failing to look beyond their immediate surroundings in a bold, reflective way.

How can BMW step up the pace against automotive disruptors like Tesla and Nio that have a D2C sales model?

JT: In the automotive industry, there are now many young, fast companies that are willing to take risks and have hardly any structures in place at all. This allows flexibility and room for experimenting and exploring entirely new ground. BMW is a group that has more than 100 years of experience. Here, decisions sometimes take longer to make but we have demonstrated in the past that these were often the right decisions. And we will stick to this course: long-term, customer-oriented thinking with a technological focus – ‘tech magic’ and ‘human-centric’. However, the competition is continually urging us to be even faster, even more resolute and to make even more of an impact.

Is D2C the only way forward? 

JT: As well as improving the customer experience again, direct sales have many other advantages, of course. In particular the direct access to customers and omnichannel, i.e. the ability to facilitate transactions at any sales touchpoint, digital or physical. As well as this, there is a non-negotiable fixed fair price for products so that customers no longer have to look for discounts and special offers, which is simply no longer feasible for a premium product these days. In this way, we will also reach our ambitious goal of having 25% online sales by 2025. We are doing this together with our strong dealership network, which has been involved in the process from the outset. That is how we want to move forward. But of course even a conventional wholesale model can be optimised digitally. Constantly improving processes and achieving better results are the important factor here.

By claiming not to “do sustainability at BMW” but rather to “make BMW sustainable”, the company has a strong ethos when it comes to sustainability. Does this approach need more speed than before?

JT: First and foremost, this approach needs transparency and trust. Sustainability is an area that requires a lot of substance and even more resoluteness. And it also needs lots of communication and explanation, both internally and externally. Superficiality must be avoided at all costs or you will lose credibility. In many cases, loss of credibility comes from companies communicating too much too quickly and then not being able to deliver on it. This is why it’s much more about honesty than speed. How is a company faring with its sustainability efforts? What have we already done and what have we not been able to do? The ideal here is to do what is technologically possible at any given time. And every now and then, to point to the lofty heights we are aiming for in the future. Our BMW i Vision Circular shows here how wide-ranging and resolute our thinking is when it comes to sustainable and, above all, circular mobility. It conveys our aspiration to be the pioneers in developing a circular economy. We deliberately said: “This is our vision for 2040 and that’s where we are actively headed.” Of course, it stands to reason that we still have to work relatively quickly on sustainable solutions during this journey. Even though the steps there still appear too small, someone needs to take the lead.

Are speedboats useful as pilot projects before the regulatory process is changed?

JT: A speedboat (or small-scale project) is an excellent way to explore changes on a small scale to begin with and gauge the effects. This cuts down on both time and stress. It is much easier to adapt individual parameters far more quickly and to set the slider so that it is suitable for the entire process at the end. However, it needs to go beyond the pilot project stage. I’m a great advocate of scaling and transitioning quickly into full size.

Is the speed just as fast in different verticals? 

JT: No, it’s not. And I find that normal as well. Whoever is faster should run ahead. A simultaneous end-to-end responsibility across all vertical streams will then gradually allow everything to sync up. In this way, we create common reference points and ensure that each stream delivers the right thing at the right time. That is the basis for any real customer orientation: everyone knows automatically what they have to do at any given point in time.

What role does speed play in the new performance marketing agency model tailored specially to BMW?

JT: One of the main reasons for implementing the new performance marketing agency model was definitely to increase the speed with which we engage in relevant communication with our customers and offer them our products and services. By significantly reducing the number of agencies and creating a customised solution for our activities all over Europe, we have improved our options here. The Marcom Engine construct is geared towards inherently holistic performance marketing, which generates genuine business impact in a data-based and customer-centric way and produces the best customer experience in our category. The increasing automation and digitalisation of our work processes will be instrumental in increasing speed. Needless to say, the changeover involves a lot of work and, at the beginning, will actually slow down the pace until the transition to the new set-up is complete. The transformation process – i.e. the changed work processes – also requires more management capacity and time to begin with. But we are already seeing enormous synergy effects and efficiencies and, at the same time, a high level of innovation, which makes our customer communication and interaction faster and better.

What kind of risk management is used here?

JT: This change requires us to operate on two fronts simultaneously. While we are working on the transformation, we are also focusing on our current core processes and ensuring that they continue to work smoothly and that we deliver the same high quality as always. A proper planning process and a well thought-out transition plan ensure that the change will be smooth and that there will be a proper handover. At the same time, this is the best risk management.

Are transformation processes slowing down the sales process?

JT: I have no doubt that they help to initiate transformation processes and organisational adjustments. However, in large corporate groups, this often happens at different times. At all the various levels of sales, people need to be won over, processes changed and the organisational structure optimised. The time offset sometimes causes problems in the system, meaning that the new unknown element has to make room for itself first. Pilot projects or support from individual markets can help here. In many cases, external impetus from new competitors or other sectors is needed to set internal change processes in motion, helping us to evolve and optimise our business. You also need to be able to ride this out if necessary. Of course, this calls for a well coordinated transformation and the right communication within the company.

Thank you for talking to us!

This interview first appeared in TWELVE, Serviceplan Group’s magazine for brands, media and communication. Read more exciting articles, essays and interviews by and with prominent guest authors and renowned experts in the ninth issue under the central theme “Speed! The Winning Factor in the Digital Age“: https://sp-url.com/twelve23-lp-en.

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Alexander Turtschan

SXSW 2023 Day 5: Brand Science

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Last recap daily for SXSW 2023 with a couple of great sessions on marketing and pretty pictures from space! Usually, Tuesdays at SXSW see the attendance for the interactive tracks going down, with the music tracks and showcases ramping up – not so this year, every session we attended was completely packed.

I think SXSW will be very, very happy with the attendance this year, after the dramatic decrease of visitors in 2022. At times it felt like the crazy days of 2018 and 2019, it casts a positive outlook on the coming years. More attendees mean more attention from high profile speakers, visitors and brands what keeps the conference as relevant as it is. I think that’s worth the queue times. 

The future of marketing is all about convergence

The day started with a session full of high-profile marketeers on the biggest stage. Conny Braams from Unilever, Jeremi Gorman from Netflix and Tim Mapes from Delta Airlines discussed current trends and developments in marketing strategies for the FCMG, entertainment and service industry. 

I already mentioned in previous recaps this year that convergence was a big meta trend in many fields, with the most interesting things happening at the intersections of different areas. It’s the same in marketing. Conny Braams stated that the way forward for not only FMCG brands was the increased integration between branding, performance and sales. Tackling the challenge of combining brand building while also driving conversion at the same time was the #1 task for marketers and agencies. Unilever’s internal structure already reflects this with a combination of previously separated teams now all working together for the common goal, going as far as adjusting product design for this new reality. 

Tim Mapes from Delta even went one step further – for him, every Delta employee is a brand ambassador and potential brand touchpoint. For Delta, generating first party data through their frequent flyer program with its corresponding app is one central pillar of this strategy – the other one: making the data available to customer facing roles, so consumer facing staff can use it to deliver more authentic and informed interactions with each individual traveller. 

Another big topic of discussion was the rise of retail media: for Unilever retail media is a perfect tool to control the elusive last mile at the store where crucial purchase decisions actually happen – that was previously controlled exclusively by retailers. Digital retail and retail media let’s the brands take much more control here – assuming the interactions with consumers are not purely transactional, but creative and entertaining and brands get access to the data generated. Again, convergence is key for future marketing. 

The five laws of brand science 

My second session of the day was a highly interactive and entertaining talk by Ethan Decker from Applied Brand Science. In his presentation, Decker went over five laws of brand science, that marketers should be aware of – backed by years of research and data. 

He offered an interesting way on how marketers laud customer loyalty as the pinnacle of marketing – despite the fact, that most consumers, for most categories, will buy a repertoire of brands and the more someone buys from a category, the bigger that repertoire gets. For many verticals, it also makes little sense to chase deep consumer connection, because people simply don’t care what their e.g. toilet paper brand of choice does on social media or what their brand purpose might be. 

Decker stated that shoppers are “mental misers”: the average consumer simply is too lazy to deal with hard and complicated questions when making a purchase decision and suggested that marketers should focus on the easy questions shoppers are asking themselves when buying from a category. 

Additionally, when it comes to light / medium / heavy buyers, the curve for almost all brands looks like a banana. High amount of single time / low frequency buyers, very few medium and heavy buyers – negative binomial distribution, or simply: the good old long tail. For growth, market penetration is 5 to 15 times more important than buying frequency according to a study conducted by Bain & Company, so marketing should focus on that lever first. 

Advanced Space Photography 

One thing to love SXSW for: they don’t shy away from giving keynote spots on the biggest stage to topics most of us know very little about. In this case: NASA and an all-female panel of astrophysicists sharing insights on the first few months of operating the James Webb Space Telescope. In addition to showing some of the mind-blowing pictures taken by the JWST in recent months, the panel discussed the massive effort of international collaboration between 14 countries to make this happen, the scientific breakthroughs this already led to and their deep-rooted love for discovery and human curiosity. 

Advertising’s guilty secret

SXSW is a great spot for inspiration and creating new food for thought from various disciplines. But at the end of the day we are still advertisers, so it’s always refreshing to see sessions that speak the truth about our day-to-day work. Today, Welsh advertising expert and CEO of Creature London, Dan Cullen-Shute together with Ivonne Kinder from Avocados from Mexico, gave us exactly that: A critical look at what the advertising business has morphed into, at least at award shows. Looking at the recent Cannes Lion Grand Prix winners, 90% of them were purpose-driven, which of course is a honorable messaging and there’s nothing wrong with that, but often these great award ideas either never reach a broader audience outside or aren’t linked to an equally good media strategy.

Dan spoke many truths today: Advertising is brilliant. We can make things that have genuine cultural touchpoints, boost the economy in needed areas, spark happiness and connect communities. The cherry on top: There are not many other jobs where the level of seriousness and ridiculousness can be the same. It should always be our mission to leave the industry better than we found it, in one way or another, so let’s get back to that: Make people laugh again, create epic things, even be totally ridiculous if appropriate. Get back to the heart of what we do and love – creating awesome stuff that makes brands grow and touches the hearts of our audiences. 

Random observations from Day 5:

  • Props to the SXSW organizers for enabling encore sessions for popular talks – and double props to the speakers of being just as engaging in round 2. 
  • It’s surprisingly hard to find good filming locations at SXSW – unless you want to give your video interview on the latest trends in tech & marketing strong 80s Dallas vibes – as the main color scheme of every conference hotel is beige, even the one built in 2017. 
  • I don’t know if it’s the overall inflation, the fact that Austin has been attracting thousands of highly paid tech workers in recent years or simply SXSW price gauging – but getting food is making your credit card bleed. 
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Alexander Turtschan

SXSW 2023 Day 4: Thinking about the future

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When dealing with innovation – and that word gets thrown around a lot at conferences like SXSW – you need a certain level of resilience towards frustration. Most people, when being confronted with something new, tend to be dismissive about it. Most innovations don’t have immediate world-changing effects. Nor personal relevance for everybody. And often they are hard to grasp and easily dismissed. Our fourth day of SXSW 2023 dealt with this topic in various ways. 

Will data privacy ruin digital advertising?

Yes, probably. If “ruin” means fundamental change, that is. In our first session of the day, Noor Naseer from Basis Technologies delivered an excellent talk on the current state of the effects of increased data privacy on digital advertising. A consumer base growing more conscious about how their data is being used, increased regulation and a changing media landscape will require marketers to rethink their digital advertising strategies. We all know the 3rd party cookie will go away and will cripple a lot of  tracking and attribution systems and targeting options. The big question the digital ad industry is concerned with: will we have viable alternatives by the time this ultimately happens and the answer is: probably, but not as a 1:1 replacement.

In her talk, Naseer laid out the importance of first party data usage, the use of permissible data sources & alternate identifiers, and a coherent tech-stack strategy for data management to keep digital advertising viable – with one downside: we won’t see exact 1:1 replacements for everything we got used to in the last 15 years, so a certain degree of flexibility will be needed. Dismissing any alternatives as non-viable, just because they aren’t exact replicas of the toolset we have today is something we will have to deal with. After all, it might change the future for the better – a digital advertising ecosystem that comes with more trust, user control and ultimately better results, even at the cost of higher friction. 

The slides are available for download here. 

The best storyteller at SXSW

In the afternoon I attended a particularly enjoyable session by Mike Bechtel, Chief Futurist at Deloitte. In his highly entertaining and insightful presentation titled “A Brief History of the Future”, he laid out the history and evolution of information technology along the three central pillars of computing: interaction, information, and computation. One of the key messages: futurism is all about pattern recognition. To adequately talk about the future, you need to understand the past – as emerging tech progression isn’t random, it follows enduring trajectories over and over again.

The main thesis: AI will turn into an ubiquitous, useful set of tools to make our lives easier – even if it isn’t always perfect. The future of computing lies in decentralized systems and the interfaces of today – screens – will look like anachronistic things of the past very soon, when the main interface will be voice controls and contextual automation. None of the technical aspects were of any surprise to me – in fact we have been talking about these topics for years. But Bechtel is an amazing speaker and turned this session into a masterclass in storytelling with a rare ability of explaining complex concepts with well picked examples and relatable analogies. Being able to learn from a true master in one’s own professional niche is what makes SXSW such a rewarding experience. 

Quick, Look East!

Web3, Metaverse and AI – are these the only hype topics of our decade? In today’s session, Tom Nixon, co-founder of Qumin and expert on Chinese digital marketing, threw in another contender for the mix: Social Commerce. In the West, the term often refers to the option of buying a product directly on the app, which is a feature that has been available on many platforms for years. Shoppable Social Ads do have merit for a couple of use cases, but this short-term opportunity to buy within the app should be treated with caution: The customer journey is not linear and not every purchase happens within that respective ecosystem. Looking at China though, Social Commerce can open up a whole new world of possibilities for brands to win the war for sales by including direct customer engagement. WeChat is a great example of an early-stage superapp that might be able to completely revolutionize this business model by offering a seamless costumer experience. 

China is pioneering in various promising fields, one of them being community group buying, where, for example, a village comes together to buy products in bulk from vendors for low prices. The process of buying is happening at the respective apps, while the organization between community members can be done literally anywhere else – from going door to door with pen and  paper to the magic allrounder WeChat. Another important touchpoint for Chinese brands are KOCs – Key Opinion Consumers. These are creators without huge followings that appear as trustful consumers instead of inauthentic influencers and help to validate the products they’re reviewing. From Metaverse experiences to virtual influencer, live shopping and gamification elements: The biggest learning the West can take in from China is the importance of immersive interactions, the aspiration to create something new and innovative, and the diversification of personalized services for the individual user. Taking into account cultural differences between China and the West, many approaches might not work for everyone, but they are no doubt intriguing opportunities worth exploring.

„Us“ Against The World

We’re celebrating a big birthday, because Reddit is turning 18 this year! Jen Wong, Chief Operating Officer of the world’s leading social news aggregation site, sat down with reporter Kerry Flynn to talk about the evolution of online communities. From the producer of the recent hit show „The Last Of Us“ speaking directly to fans about the ups and downs of the show to an award-winning cocktail bar owner that started his passion for fancy drinks on the subreddit r/cocktails 12 years ago: Reddit has always been about connecting communities and shared passions. While content on apps like Instagram is highly polished (some might say even fake) and follow a one-to-many approach, Reddit feels more like a many-to-many conversation that perfectly satisfies the desire for authenticity, which Gen-Z greatly appreciates. You want to get the real deal on product reviews, from real people that literally don’t gain anything (monetarily or influentially) from it other than the satisfaction of helping out others? Reddit is the place to be. Social clout means very little on the platform, it’s all about the idea itself. 

While agreeing with many statements from Jen, Reddit is not always the happy place it is often made out to be. With every social content platform comes the good, the bad and the ugly, and that’s also true for Reddit. There is a unique structure of governance within the community and the ability to flag and remove „bad behavior“, tons of of questionable content remains on the platform. 

Random observations from Day 4:

  • One thing I love about SXSW: people are on their best behavior. Nobody skips the long lines. The volunteers are cheerful and happy to help. Need a phone charger? Power adapter? Piece of gum? Directions? Someone will have your back, always. 
  • I’d love to understand the thought process of people standing in line for 30-45 minutes at Starbuck’s to spend $10 on mediocre coffee. I’d rather stand in line for an amazing session, but what do I know. 
  • A very German problem to have – could y’all not stand on the left side of the escalators? We have places to be. 
/by
Alexander Turtschan

SXSW 2023 Day 3: The Ketchup is out of the Bottle

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One particularly enjoyable aspect of SXSW conference is the immense diversity of topics covered in its program. Technology, business, marketing, design, entertainment, healthcare, politics, psychedelic drugs – there’s a lot of everything. Things get even more enjoyable, when you realize that despite the often fundamentally different backgrounds of speakers and industries, certain challenges are the same. Today was one of those days, and it has a lot to do with Ketchup.

Learning to speak machine 

Technologist and designer John Maeda is Vice President of Design and Artificial Intelligence at Microsoft and a regular on the SXSW stage ever since he released his first Design in Tech Report in 2015. 

Today’s talk was about system design and artificial intelligence and Large Language Models (LLM) in particular. While Maeda is a really engaging and entertaining speaker, his presentations can be difficult to follow, as he rapidly jumps between slides with lots of information, personal anecdotes and colorful analogies to share his thoughts with the audience. And he has a lot of them. 

One comparison really hit home with me – we are at a certain “Ketchup Bottle Moment” when it comes to Artificial Intelligence. Maeda compared the sudden influx of AI tools at our disposal as comparable to the old issue with glass ketchup bottles. You open them, you shake, you prod with knives and spoons and only get very little ketchup and some water out of them. But you really don’t want to eat your fries without ketchup, so you shake some more and then suddenly there’s way too much on the plate, as it all came out at once. AI has been lauded about the next big thing in technology for nearly two decades and 2023 seems to be this ketchup bottle moment. We will have to learn what to do with the abundance of AI models and tools now. 

A second analogy was treating AI models as building materials. Design isn’t really about the design itself, it is about the materials you select to get the job done – some better suited than others, but it requires a good, fundamental understanding to do that. System designers reached this point now with AI: the pre-trained foundation models of today are new materials and will help us design different things than the ones we know. But to actually get good results, we will have to learn a lot more about context and cognition when building these systems. In Maeda’s words: Designers will have to learn to speak machine to interact with AI tools – prompting is about more than getting the job done and really good prompting not only adds context and provides instructions for the model on how to solve a task, it also keeps efficiency in mind to lower computing costs. 

The need to change business culture 

Today’s keynote session featured Patagonia CEO Ryan Gellert in an interview with journalist Katie Couric. Gellert shared insights on Patagonia’s recent restructuring around the transfer of ownership from the Chouinard family to the Patagonia Purpose Trust – with the stated goal of using the profits of the business to combat climate change and protect nature while protecting the integrity of the company. When asked about how this affected daily operations and management of the business, Gellert said very little had changed as the company was still operating under the same set of values, a commitment to radical transparency and honesty. 

One central message of the interview was, that businesses, especially in the sectors of fossile fuels, agriculture and clothing, are amongst the worst polluters on the planet and responsible for many of the problems we currently face with climate change. So it is their responsibility to clean up the mess they created. Quoting Gellert: “Business leaders will do the right thing, after they exhausted every other option.” Basically, the solution is to create another ketchup bottle moment. 

A central role to keep up the pressure in this regard falls to consumers, according to Gellert. He encouraged consumers and employees to be very cynical and critical of every company’s messaging around sustainability to keep up the pressure, especially through social media. In addition, he wants Patagonia to be on the forefront of changing the business mindset overall – maximizing shareholder value should and must no longer be the number one priority. 

Some TikTok creators need to take several seats

With hundreds of sessions to chose from, you can’t only pick winners – my last session for Sunday was proof of that. It featured TikTok creator Robyn DelMonte aka “Girlbosstown” alongside UTA Digital Talent agent Scarlett Perlman. The pair shared insights on how brands should work with TikTok creators to address Gen-Z. While none of the insights were wrong (in fact they were all absolutely right), we might have reached a point where certain creators need to reevaluate their own self-assigned importance. Any brand strategist worth their dime knows that humanizing your brand, understanding your audience, being authentic, utilizing trends in a smart way, and co-creation of campaigns are the key to success on TikTok. In fact, even ChatGPT probably will tell you exactly this, so when getting on a SXSW stage you should bring more than that and not act like you invented TikTok marketing in your living room and as if you were “changing the digital landscape” (that’s a direct quote) on your own. 

What I enjoyed though, was treating TikTok as the internet’s inside joke. I’ll gladly steal that analogy for future reference and probably act like I came up with it myself on the couch in our Austin AirBnB while writing this recap. 

It’s the end of the media world as we know it

Media, as many other areas like entertainment and content, needs fundamental rethinking – that’s a fact. Every brand wants to be present on the same media platforms, every brand fights about the same dollar, every brand wants to be the #1 subscription service. You don’t need to be a media pro to realize that this is not a sustainable model for the future. Ideally, there would be a one size fits all blueprint, but in reality no big tech media can figure out their own business model anymore. In today’s session, Evan Shapiro, creator of the “Media Map” which tracks the massive changes in the world of media, talked to Steven Rosenbaum about the big drivers of change for the next decade.

In the last couple years we already experienced quite a hefty generational shift. When before, boomers and Gen-X ruled the world, it’s now Millennials and especially Gen-Z and Gen-A who took over the steering wheel. Young folks grew up in a global polycrisis while having the highest rates of anxiety and depression of all time – therefore when making decisions, they’ll be making them completely different. We’ll see a drastic shift of consuming content online, as they’re not going to be chill about giving their personal data away for free. Bad news for media. At the same time, they’ll gladly pay for media and content they love. Good news for media. 

Going forward, winners will be those companies who can cater to both age groups at the same time and find the right mix of having single unit sales in form of ads as well as recurring revenue models like subscriptions. Between the two, this should not be a battle, but rather a balance.  Many big tech providers are struggling with that: Meta almost completely relies on ads while Netflix does the same thing but for subscriptions (and yes, this already counts in their ad-based model as well). It’s not enough to get consumers in the door. The real challenge is to keep them inside and entertain them every single day. Ending subscriptions after binge-watching blockbuster series is the new normal, the new channel switching on TV. Consumers aren’t loyal to providers but take power into their own hands. Will this lead to a superapp ecosystem? Future will tell.

Recent numbers are showing another big media change: Ad spend has gone down significantly in some sectors like retail or auto – and even though this money will come back, companies will look for other ways to advertise their products and services. Instead of the good old ads they’re doing for years, companies look out for more performance focused media. According to Shapiro, media has always been about ultimately selling your stuff. Even though Netflix doing PreRolls like it’s 1999 is kind of adorable, impression based ad campaigns are out. From machine learning targeting options to influencer marketing based on sold units: Performance media will be the metric of the next decade.

The Future of Play

Sunday was also the kick-off for the game industry track, with more to come in the next few days. One of the first sessions today brought together some of the most influential people in gaming, like game developer Paul Bettner and Nate Mitchell, co-founder of Oculus. While gaming is already one of the most important entertainment industries, there’s still room to grow if games become even more accessible and broadly available for everyone. It’s about redefining the definition of „the gamer“. From „hardcore games“ like Elden Ring (which is just really hard to play and defeat) finding mainstream success, the rise of mobile platform games to game titles emerging as a huge spectator sport that attract more viewers than big traditional sport events. Everyone can be a gamer in their own way and how they want to be. When meeting new people, do you ask them if they are movie-goers? Probably not. So why are we still asking the question „are you a gamer“? The pandemic already showed that video games are the new schoolyard where people hang out with their friends. This is not only true for kids, but also adults who create meaningful friendships over Discord or Twitter. This convergence of gaming and social will change the way we interact not only with games themselves, but also publishers, game developers and content creators in a major way.

Random observations from day 3:

  • Goodbye Rainey Street. The historic street, once home to many old bungalow style houses turned bars & nightlife spots slowly but surely loses its iconic face, with more and more soulless apartment towers replacing the old buildings. Another major downside of Austin’s ever increasing popularity. 
  • If you ever wondered why the lamp posts, telephone poles and columns around the convention center are wrapped in plastic – it’s because there’s a constant sticker & flyer battle going on. Dating apps, NFT projects, concerts, events, brand activations, viral campaigns – the high-traffic spaces are popular for advertising whatever you currently want to promote. 
  • An equally fascinating amalgamation of weird things, that don’t really fit well together: The Creative Entertainment Expo. Showcases of very niche tech prototypes, often from Japanese companies, live next to the business and investment development booths of various countries, airlines, mobility providers, software companies, and the CIA of all things. 
/by
Alexander Turtschan

SXSW 2023 Day 2: Convergence points

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Duality is a major theme at SXSW, down to its programming, speakers and organisation. Tech and business meet entertainment and arts: A-List celebrities and highly specialized niche experts. A massive 10 day conference planned for over a year by a small team at SXSW, but only made possible by the contributions of hundreds of volunteers over the course of the actual event. Duality, and with it the inevitable mixing and mingling of different ideas and processes and cultures, let’s us make the most interesting observations at the convergence points in between.

The Internet as we know is gone – we just don’t see it yet

We focused our 2nd day at SXSW 2023 on the heavy hitters in the speaker line-up, starting with CEO and founder of the Future Today Institute and SXSW legend Amy Webb launching the 2023 edition of the Emerging Tech Trends Report. Queuing up shortly after 8am for the 10am session turned out to be a good decision, as the room was absolutely packed and many attendants didn’t manage to get in at all. 

The talk itself focused on roughly 35 out of the 666 (!) trends from the latest set of reports and – as mentioned in the intro – the most interesting things will happen at the convergence points between different trend clusters, two of which Amy Webb talked about in detail.

Cluster one, the convergence between web3, cloud computing and – you guessed it – artificial intelligence will lead to a major reshaping of business and society. Or as Amy Webb stated: The Internet as we know is gone. The question we have to ask ourselves is: What if you don’t search the internet, but the internet searches you? With the proliferation of AI and Large Language Models (LLM) combined with Reinforcement Learning from Human Feedback (RHLF), everything around us becomes information that is ready to be processed and used to train AI models – with highly capable generalist AIs on the horizon that will shadow anything we see today. 

The infrastructure to power these AIs can realistically only be provided by a couple of big tech companies, further solidifying the existing monopolies in digital infrastructure, late and lacking regulation and very little ethics involved, if these companies are left to regulate themselves. 

Amy Webb drew two possible scenarios for the year 2033 – an optimistic one, with people centric AI and data management centred on the common good in a transparent and decentralized setup with opt-in data sharing where this new infrastructure works for the user and provides real and tangible benefits. And the catastrophic one, where our digital footprints are constantly scraped into models, leading to aggressive curation and recommendation instead of true user choice. We end up surrounded by information, but can’t get the actual things we want. Chances of the latter happening according to Webb: 80 %. 

The second cluster, the convergence between AI, the Metaverse, bio-engineering and healthcare focused on assistive computing of the future where generative AI and the industrial metaverse act as invisible and ubiquitous tools leading to major improvements not only in medicine but in almost any profession. The danger: creating a new digital divide for those who weren’t trained to use these tools early on. The optimistic scenario for 2038: we invest in education and upskilling and these new tools positively transform the workforce. The catastrophic one: assistive tools are mere ways to increase revenue, we face a massive digital divide and let the AI cause actual harm due to inherent biases and a lack of human reinforcement. Chances: 50:50. 

The complete reports and additional goodies from Amy Webb’s session can be downloaded here.

The only future we can make is one we are able to imagine

The next session had a much less gloomy outlook on the future – even though it focused on similar themes. Rohit Bhargava, SXSW regular and author of the highly successful Non-Obvious Trends newsletter and book series teamed up with trend forecaster Henry Coutinho-Mason to speak about technology, that might have looked like science fiction just a few years ago, but will feel totally normal to us soon. 

Metabolic monitoring for better understanding of personal diets, virtual companions that can have positive impacts on our mental wellbeing, synthetic food, that might require a completely new way of brand storytelling, that for the longest time focused on championing “natural”, immersive entertainment, and augmented creativity supported by generative AI. It was a refreshing interpretation of what technology can do for us, if we think about it positively. The fact that the talk happened right after Amy Webb’s session just further reinforces the theme of duality at a place like SXSW and shows that both these ideas can co-exist – it is up to us, what we take away. 

Fixing the Complexity Crisis 

The afternoon started with a session by Nick Law, Global Lead for Design and Creative Tech at Accenture Song. You might think I’m starting to make things up, but duality was a major topic in this talk as well. Law spoke about the necessary structure in organisations to enable great creative work in an increasingly complex environment. The combination of copywriting and art direction, brand and performance, design and storytelling – and the ideal connections between people from different fields to create truly outstanding work what neither party could have done on their own. It was a convincing call to invest the time and effort to transform the organizations we are part of, illustrated with many examples from the history of advertising down to his own illustrious career at R/GA, Apple and Accenture. 

Artificial Intimacy 

What better way to end the day than with a session by another prolific SXSW speaker – renowned psychotherapist, podcast host and author Esther Perel asked important questions:  to what extent is artificial intelligence a conduit to artificial intimacy? What effects do the growing popularity of AI therapy bots have on mental health? How are our relationships affected by the proliferation of hyper-connectivity and the performance metrics we apply to our digital self expression? For Perel the answer is clear – human relations are way too complex and ambiguous for AI systems to grasp and our hyper-connected digital lives prevent us from being truly present in our real relationships. 

Random observations from day 2:

  • Instead of exporting SXSW to Australia, the organizers should think about opening a branch in Brazil – then again it feels like half the Brazilian tech & marketing crowd is already in Austin anyway. 
  • Did I mention: the lines are back? SXSW has really perfected the art of queue management and every year new I get introduced to new creative ways of lining up. And all of it is surprisingly analog, considering the digital and techy nature of many of the sessions. 
  • I want to hang out with the person in charge of decorating in the hallways of the downtown Hilton. Keep celebrating the tacky 90s vibes! 
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Alexander Turtschan

SXSW 2023 Day 1: The Importance of Storytelling

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Country music is deeply connected to the city of Austin, Texas. And no genre of music does better short form storytelling than country. Love, heartbreak, loss – narratives are at the center of every good country song. It’s more than fitting, that one of the major themes of SXSW 2023’s first day was storytelling. 

The conference itself started with a great story that could just have been a country song. Its narrator: Simran Jeet Singh, Executive Director for the Aspen Institute’s Religion & Society Program and author of “The Light We Give: How Sikh Wisdom Can Transform Your Life”. 

In his opening keynote, he retold a couple of deeply personal anecdotes from his childhood and youth as a “turban wearing boy” growing up in Texas. Facing racism and open violence, but also finding solidarity and community in dire times did not only shape his outlook on the world, but enabled him to better understand Sikh faith and philosophy. 

The gist of it: we all have the ability to make choices on how we see the world. How we react to things, how to look past the negativity and focus on the good, overcoming fear, unhappiness and frustration, to ultimately find the light and beauty around us. Or: how to find optimism in a way, that doesn’t brush off the difficulties. It was a powerful statement, very fitting in current times, where it can be easy to give in to the present darkness – this new normal we all just learn to navigate. 

Some Marketing BS

The next session I attended was titled “Priming, Rhyming, Timing + Other Marketing BS”. The BS doesn’t actually stand for what you think it does. In her energetic and well-researched presentation, HBT Marketing’s expert Nancy Harhut spoke about Behavioral Science and how it enables marketers to effectively improve their messaging by implementing findings from various research on the topic: 

  • Priming consumers can be used to drive preference and purchase and advertising should use words and images that activate the consumers’ memories
  • Rhyming phrases are perceived as more truthful, accurate, and credible and therefore easier for the human brain to process – rhymes and other cognitively fluent phrases in copywriting are more believable
  • Times of transition make people more open to new products and ideas; but distant payoffs must overcome present focus biases

Or to summarize: A good marketing story primes, rhymes and times. Please don’t hire me as a copywriter. 

The Evolution of Online Search

One of the completely packed afternoon sessions was dedicated to trends in online search and how especially Gen-Z is driving major change in the field. While Google has dominated the search market for over two decades, it no longer is the one-stop-shop for all things search. Not only is search becoming more fragmented with the establishment of specialized verticals, e.g. in commerce, but the way young audiences prefer to search on social platforms like TikTok or Instagram changes search on a fundamental level – by being visual. 

Community platforms like Reddit are perceived as much more authentic due to social validation of content in a sea of SEO optimized garbage and an abundance of advertising in search results. And in recent months artificial intelligence in the form of Chat GPT and similar technologies change not only the way we search, but also how we consume the results.  

For marketers the mission is pretty clear: to remain relevant in a search landscape shaped by community, visual content and AI, good storytelling is paramount. Quality content will win on social search, while at the same time, overly polished messaging won’t work on platforms like TikTok. Brands will have to step outside their comfort zone. The downside: paid search was highly attributable and provided a lot of insights. Social search doesn’t provide the neat and accurate measurement. Yet. 

Of Mice and Lightsabers: Creating Happiness with Disney

When talking about storytelling, you must not forget about one of the biggest storytellers of recent times: the great Walt Disney himself. My colleague Simone visited the second big session of the day by Josh D’Amaro, Chairman of Disney Parks, Experiences & Products, who talked about the magic of immersive storytelling experiences in their Disney Parks around the globe. For nearly 70 years, kids and grown-ups can disconnect from the outside noise and experience joy and happiness on the „happiest place on earth“. By combining the three core elements of storytelling, creativity and innovation, Disney Parks continues to reinvent the future to create happiness for even just a day. How do they achieve that, you may ask? They put you right into their beloved story worlds like Avatar or Star Wars, enable magical encounters with characters and using food, music and visual effects to create long-lasting, powerful memories.

You don’t have to be a Star Wars nerd to heavily appreciate the special appearance of the day: A „real life“ lightsaber (or at least as close as you can get to one), that had the whole audience in awe. A curtesy of their very own Disney Imagineers, who were also responsible for a live interaction with Tinkerbell and a guest appearance from Mister larger-than-life himself, the Incredible Hulk. Because happiness is not about amassing more stuff, but about sharing precious memories.

Crafting Human Stories

Not quite Walt Disney, but also a masterful storyteller: Mark Molloy, director of Apple’s highly successful short film series “The Underdogs”. In his session he spoke about writing relatable characters at the heart of every good story, how to utilize humor and entertainment to make boring briefings work and un-focusing the brand or product to create captivating ads, while never giving the audience 100% of what they might expect or want by breaking traditional storytelling formulas and easy schemes. 

Random observations from day 1:

  • The lines are back, baby. After 2022 and the chillest SXSW I have ever experienced, it’s time to make friends in long queues again. I’m just focusing on the positive here, thanks Simran. 
  • I might need to upgrade my home theatre audio setup after visiting the Dolby brand house and experiencing some Dolby Atmos demos. Or at least buy another pair of very expensive headphones. Advertising, why does it work?
  • All the NFT bros seem to have pivoted to generative AI projects, at least according to the many colourful stickers and flyers taped to random objects around the conference center. Keep hustlin’, y’all.
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Mediaplus Group

How Can The Ad Industry Create a Greener Tomorrow?

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We are in the midst of a climate emergency. The effects of climate change are being seen in every aspect of our lives. While it may not be as quantifiable as other sectors, the advertising industry is a major driver of climate change.

Research carried out at Good-Loop, an online advertising company, has found that a typical online ad campaign emits 5.4 tonnes of carbon dioxide. Another recent report published by Purpose Disruptors, an organisation founded by ex-industry leaders, found that online advertising is responsible for an average 28% uptick in the carbon footprint of every person.

So how can we minimise the impact of digital media on the environment and leave the world a better place? Here are some tips:

  • Track the carbon emissions of your own campaigns: There are plenty of available tools online that enable you to measure and benchmark the cost of your online ads to limit your CO2 emissions.

  • Explore carbon offsetting solutions: Carbon offsetting allows business to compensate for their carbon emissions by reducing emissions somewhere else. Carbon offset credits are usually invested into projects in fields such as renewable energy, forest management, water conservation and more.

  • Optimise media assets Digital ad serving requires a great amount of energy as there are hundreds or thousands of assets being displayed online. Reducing your file size doesn’t just reduce the emissions but also provides better user experience and drives better performance.

  • Consider the 3R approach for your media campaigns: This stands for ‘remove, reduce, recycle.’ Remove content pillars that aren’t essential to tell your brand’s story, reduce your assets and recycle your content when possible.

  • Embrace a low-carbon mindset: Programmatic advertising – defined as the automated buying and selling of online ads – may be one of the most significant contributors to CO2 emissions, with thousands of automated bids happening every second of every day. As a media agency, you should talk to your vendors about their technology infrastructure before committing to any campaign – are they running on green servers, how many SSPs do they utilise? Etc.

  • Innovate wisely and smartly: NFTs are an excellent example of how brands just wanted to jump on a trend without taking into consideration the impact of their participation on the planet. Early estimations of the carbon footprint for the average NFT suggest it is equivalent to the monthly footprint of someone living in the EU.

At Serviceplan Group, we take our responsibility seriously and have already started implementing concrete measures to achieve climate neutrality. As part of its sustainability initiative, Mediaplus Germany launched the ‘Green GRP’ model in 2021, in cooperation with ClimatePartner, a company focusing on carbon offsetting projects, and 9 big players from the German media landscape. The Green GRP calculation model is an industry initiative open to all market participants, which aims tooffset all campaign carbon emissions generated by the campaign’s advertising placementwith certified climate protection projects.

‘The German advertising market is worth around 25 billion euros net according to the German Advertising Federation (ZAW). If we manage to invest an additional one percent of the money in carbon offsetting and climate-protection projects, we will have achieved an important contribution for climate protection. If all market participants join in, eventually everyone will run only climate-neutral campaigns.’’ Florian Haller, CEO of the Serviceplan Group.

“Net zero carbon” might sound out of reach, and knowing where to start can be tricky for most companies. However, we must remember that we all have a responsibility to preserve our planet. Therefore, adopting a sustainability-first mindset and setting ambitious yet realistic goals are some positive steps that we can take towards a greener ad world.

Jennifer Al Ghorayeb

Jennifer Al Ghorayeb, Digital Media Manager at Mediaplus Middle East (Part of Serviceplan Group Middle East)

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