In this guest post, Nic Hodges argues brands are looking for innovation in the wrong place, and as result risk being outclassed by start-ups.
70/20/10. If you’re to believe the hype of every digital marketing conference these days, these three numbers are the saviour of every brand. Just spend 20% on moderately interesting work, and 10% on “innovation”, and watch those sales skyrocket. Agencies are loving it – finally the freedom to pitch those disruptive bottom drawer ideas and put all those Creative Technologists to use. But is this approach working? Is it right? Or are we all missing the point?
Every brand rightfully now sees innovation as a key to future success. Almost every client has an “innovation fund” (but very few have ever used it). Everybody wants to create the next Nike+. The only problem is that nobody seems to be doing it.
In almost every category there’s no shortage of innovative and disruptive ideas. The problem is that they’re not coming from agencies, or their clients.
The Dollar Shave Club in FMCG, Shoes of Prey and Warby Parker in retail, Uber in transport, The Pebble Watch in technology, Spotify in entertainment, and Project Glass. These are just a handful of the new ideas that have brands reaching desperately for the innovation lever.
These ideas aren’t being created by the brands leading the category. They’re being created by startups that have no legacy in these categories. And that’s precisely why they’re succeeding. These businesses aren’t investing 10% into disruptive thinking. They’re investing 100%.
These ideas couldn’t have been made by traditional players in each category. The Pebble Watch couldn’t have come from Omega. Project Glass couldn’t have come from Oakley. Spotify couldn’t have come from the record labels (and the trail of failed streaming services launched by the labels is testament to that).
It’s easy to look at where these ideas are coming from, and attempt to replicate the “startup attitude” that has allowed them to happen. “Agencies should be acting like startups” must be one of the most common ad-blog lines going around in 2012. “We should be starting accelerators and incubators and creating game-changing new products for our clients. Stuff the advertising!”
This misses the point entirely. Being a startup isn’t the reason these ideas are succeeding. Being aware of, and adapting to the real world is the reason these ideas are succeeding.
And this is where agencies are going wrong. As soon as they get the innovation green light from clients, they try to act like a startup.The green light should instead be seen as an opportunity to act like an old agency in a new world, that has new rules. And one of the most fundamental new rules agencies need to understand, is what’s happened to demand.
Creating demand in the old world was simple – buy a bunch of TARPs, a few right hand pages, shout loud enough with a catchy jingle and be front of mind when a consumer gets to the shelf. Only the big brands had the scale of production, distribution, and marketing to compete in this world. They created the demand, and they reaped the rewards.
A quick look at Kickstarter will show you why, and how, that world is changing. Demand is now created upfront – before millions of dollars are invested in R&D and manufacturing and focus groups. The best ideas succeed, and every idea has a (relatively) equal shot.
Demand in the new world is created through amazing products and amazing service – and real people and real customers talking about that amazingness. These disruptive brands create demand by creating products people want. Experiences people love. They don’t rely on shouting louder. They just rely on being real, and being good.
And here’s where both advertisers and agencies seem to be getting it wrong. The agency world still revolves around pushing out messages that are anything but real, for clients and products that are anything but good. Making 10% of those messages more ‘innovative’ doesn’t solve the core problem. And increasingly, legacy brands will find themselves under attack by new players.
These new players will create good things. They will create real things. Things that people actually want. And people will talk about these brands in a real way. And they will disrupt traditional brands quicker than you can say ‘innovation fund’.
Nic Hodges is head of innovation & technology at media agency Mediacom.