200 years of evolution: From the Statue of Liberty to KickStarter

“2012 was the year of the crowdfunding boom.” True, and the trend does not seem to be slowing in 2013. Over the last 4 years, crowdfunding has grown at 46% CAGR¹ and was included on a number of trendlists as a key area to look out for in 2012. This said, it is by no means a new phenomenon.

Way back in the 1800’s Joseph Pulitzer raised over $120,000 (equivalent to $2.3 million) from New Yorkers willing to contribute to the building of the pedestal on which the Statue of Liberty now sits. In return for contributions of $1 or more, Pulitzer offered every donor a miniature model of the statue.

Today, crowdfunding is used to raise resources for a vast array of reasons, from starting a business or publishing a comic, to giving aid to people affected by natural disasters. On the back of this growth and diversification, four alternative crowdfunding models have emerged.

• Donation: The donor does not receive any tangible reward (e.g. www.gofundme.com)
• Reward: The donor receives a token of appreciation (e.g. www.kickstarter.com)
• Lending: The lender receives interest on the money lent (e.g. www.kiva.com)
• Equity: Lenders receive an equity stake in the business (e.g. www.seedrs.com)

Friends, Family and the Equity Gap

Should we be surprised that crowdfunding has taken off in such a spectacular way? Collectively, raising US$1.5bn² in a year is impressive, however it only hints at the potential on offer.The rise of crowdfunding platforms and the evolution of the 4 models can be seen as a broadening and deepening of the social network revolution.

It’s an evolutionary step in the worldwide connectivity which we all now take for granted. Why share photographs and sell your handicrafts to an ever-widening group of people…but not ask them for funds when launching your start-up?

Social networking gives budding entrepreneurs the visibility needed to create a buzz around their new product – increasing consumer exposure, allowing for product testing and giving them the opportunity to access funds that are not normally available to them. It is increasingly clear that crowdfunding plugs the ‘equity gap’ between friends & family and business angels or venture capitalists.

Many start-ups tend to rely on close relatives and friends for funds up to a certain point, there is then a void before business angels or venture capital firms will take the plunge. Crowdfunding overlaps at either end of this gap and gives entrepreneurs the initial funds needed before progressing to the second and/or third round of investment (if needed).

As the name suggests, the growth of crowdfunding would not be possible without the participation of the crowd. There are enough consumers out there who want to ‘be a Dragon’. Investing in small start-ups is attractive to many people with spare cash looking for that ‘feel good factor’. By investing in a small business in return for a pre-release or an equity stake, investors not only satisfy their emotional needs but are also able to avoid the high transaction charges typically associated with investing in small, private companies.

Challenges: Laws and Lotteries

Crowdfunding faces key challenges which will need to be overcome for platforms to continue growing and become the fully-fledged ‘alternative’ funding vehicle it aspires to be.

Legislation presents the most obvious barrier. This is especially true of equity-based crowdfunding where the share return model presents the biggest obstacle. Governments are, however, working to overcome these key challenges in a drive to stimulate small businesses. The Obama administration passed the Jumpstart Our Business (JOBS) Act while, in Italy, the Monti government passed the Decreto Creciata. Fundamentally, both bills are aimed at exempting small businesses from certain regulatory requirements and increasing the number of permitted shareholders.

Not all challenges and barriers are so clearly defined. Crowdfunding is not yet perceived as an investment vehicle, with 95% of start-ups unable to reach their original revenue projections 3 and only a tiny minority making a significant profit. Although this will not affect reward and donation-based platforms, it suggests that equity-based crowdfunding may be more of a lottery, with the restricted prospects of seeing any real return affecting the credibility of crowdfunding platforms in the face of more serious investors.

Looking forward: Onwards and Upwards

Where does the future of crowdfunding lie? With governments keen to stimulate small businesses,consumers wanting to help start-ups and participate in cutting-edge projects, and entrepreneurs increasingly looking for alternative funding, the future can best be described as
“fundamentally well supported on many fronts”.

Evolution is by no means a fast process and crowdfunding already has over 200 years’ worth of experience to build on. The four models should by no means be seen as the final steps. BD Bacata, Colombia’s tallest tower, is funded by the ‘crowd’ in return for a share in the building – to name but one example of innovative and large scale crowdfunding. Will this diversification continue? So long as the crowd is willing to fund, businesses will turn to them for help. With increasing government support it seems evolution and innovation will continue to thrive both on and within the platforms.

¹ Crowdfunding Industry Report, www.crowdsourcing.org,2012
² The Venture Crowd, NESTA, 2012

Whether or not your love of Fawlty Towers matches my mild obsession with House MD or my friend’s fascination with semi-scripted, reality drivel, it follows that people are more likely to look out for/ watch/(steal)/ pay for content that they like. As consumers, being able to watch things that we like is really important to us.

No one would argue that within the on-demand TV market we’re witnessing an increasingly confusing/ complex market. Assuming I’ve decided to watch video content (as opposed to reading a good book [competitor 1]), what decisions do I have to make?

The first hurdle is actually getting to the TV…whether it’s your brother [let’s call him competitor 2] watching Geordie Shore, your partner watching a football match between two European clubs with names you can’t pronounce or your children being kept quiet by the devil box in the corner, there’s no way you’re getting close to the TV.

For some of us this won’t be a problem and crucially it won’t be a problem all of the time…perhaps using on-demand TV is all down to luck?!

The next option might be another TV in the household; failing that, I’m probably resorting to another device (if I haven’t given up and gone to the pub [competitor 3] instead!).

This alternative device may not be connected to the internet (seriously?!) and in this scenario, I’m probably amusing myself by writing macros in excel or playing Angry Birds [competitor 4]. It’s possible that I’m able to watch something I’ve bought previously, such as a movie or TV series on DVD or maybe even a digital copy [competitor 5].

I’ve not even thought about on-demand TV at this point…I’m not even considering it, but let’s assume, however, that my alternative device is connected and this can open up a whole host of options…

YouTube may be enough [competitor 6]; perhaps I’m just killing time so something entertaining and short is what I want?

Perhaps I’m a fan of making the most of my TV licence and I don’t mind the occasional ad – I’ll head to a Freeview channel’s catch-up TV [competitors 7, 8, 9 & 10]. This option isn’t just satisfying my need for a short 30 minutes of escapism; I’m even able to catch the whole series this way or maybe even a film, potentially downloading the content to watch later/ on the commute in the morning.

Maybe I’ll even roll the dice and go for an illegal download…[competitor 11] On-demand TV still hasn’t been considered – my alternatives are just too numerous. I may not be aware of these services [competitor 12 – probably a stretch, but I’m counting it], but even if I am I also need to be prepared to part with money right there and then.

Oh, and I still have to pick which one to use!! [competitors 13, 14, 15 & 16] As you can see the landscape & customer consideration journey is complex and confused. Whilst my diatribe on the on-demand use case is somewhat tongue-in-cheek and recognising that on-demand TV can be considered earlier in the customer journey, it’s evidently a minefield.

Furthermore, with the arrival of YouView last year and the emergence of yet more on-demand providers, the on-demand marketplace is set to get even more complex. The choice of content is expanding along with the technology through which it is available.

Getting the strategy right is the key. As a provider, whilst it’s important to prove yourself against competitors, it’s going to be essential to thrust OTT services higher up in the consumer journey/ consideration.

The digital revolution has made it amazingly easy to measure our lives in an ever increasing number of ways. I am connected to 5,415,386 people on LinkedIn, have read 2,891 pages so far this year according to goodreads and last year I ordered exactly 29 take-aways, as hungryhouse will happily reveal. Nicholas Felton has taken things one step further by publishing a detailed account of his life every (other) year, using a flurry of metrics and data visualisation techniques to ‘measure his life’. Anyone seeking to quantify their own life can use Twitter tools to track anything from coffee intake to hours of exercise.

Despite what the title may suggest, Clayton Christensen’s book is not exactly a traveller’s guide to this jungle of metrics (there is a blog called Quantified Self that is). Rather, the author invites us to reflect on which measures are truly important to us and, like good Key Performance Indicators (KPIs), will tell us whether we are headed in the right direction.

While Christensen clearly has an idea of what a good life means to him (his KPI is the number of people he has helped in his life), he is interested in how we can achieve our own goals as much as in what they should be. To find answers to the question of how we can live a better life, Christensen examines a variety of business theories and applies them to the arena of personal life in three areas: work, family life and integrity.

Finding happiness in your career

The topic of how we can find work that will make us happy is addressed using a strategy framework. To get what we want, we need to decide what goals to pursue, react to opportunities and threats along the way, and allocate resources in line with our priorities.

Christensen draws on research by Frederick Hertzberg about the difference between hygiene factors and motivators, discusses emergent vs. deliberate strategy and explains principal agency theory. Ultimately, however, the advice boils down to: until you have found a job that intrinsically motivates you, keep looking! That isn’t exactly ground-breaking, but the mini case-studies used to illustrate key points make for interesting reading. For example, the shift in Honda’s marketing strategy from a focus on big bikes to a focus on dirt bikes is used to illustrate the importance of emergent strategies in business. While Honda was focused on big bikes, people had started ordering the smaller and cheaper dirt bikes. Having seen Honda employees riding them in the hills of Los Angeles on the weekends – an early example of (inadvertent) guerrilla marketing – Honda adapted its strategy and succeeded.

Finding happiness in your relationships

The second part of the book will be particularly interesting to young parents, as much of the advice is centred around bringing up better children and doing right by your partner. Christensen presents some great case studies in this part of the book, relating to challenges many businesses face. One story illustrates, for example, how different customer groups sometimes use the same product to do a number of different ‘jobs’. So to improve the product we need to look at these groups separately rather than just look at averages. The life lesson drawn from this is that we should seek to understand what roles our partner wants us to fill to make them happy, rather than assuming we know what they want.

The overarching framework in this section is the concept of capabilities, broken down into resources, processes and priorities. Christensen takes the view that parents (and companies) should be wary of focusing too much on resources while neglecting processes and priorities. Children, he argues, need to be genuinely challenged to develop the ability to learn, solve problems and overcome obstacles.

Staying out of jail

The third and final section, focused on integrity, is the shortest of the three and expands on the benefits of never violating your principles – not even ‘just the once’ – to avoid the dangers of a slippery slope. The business analogy employed here – accounting for the costs of not acting, rather than just focusing on marginal returns – is only loosely connected to the advice, but it is a timely reminder, particularly for fast-moving sectors, like technology and entertainment where companies need to continuously build new capabilities for the future.

Closing comments

While the book does not dwell on any one theory in great depth and the link between business theory and personal life sometimes feels a little forced, the author shares a number of valuable life lessons and the writing is peppered with interesting business anecdotes. Those looking purely for insights on innovation might be better off picking up one of his earlier books like ‘The Innovator’s Dilemma’ or ‘The Innovator’s prescription’; for everyone else, ‘How Will You Measure Your Life?’ is recommended reading.

Much has been written about Apple’s financial performance, duly owing to the public’s hunger for column inches examining Apple’s stellar success or the steady stream of projections about its next magic product. Books have been and continue to be published exploring the role of its founder, its unique culture, management philosophy, and the innovation processes fostered within the organisation.

There is no secret recipe for such success. Apple’s high-achieving performance has been driven by a combination of factors stretching across every element of the firm’s ability to exploit opportunities that other corporations cannot see or pursue successfully. With an awards scroll crammed with market-changing innovations and competitor scalps, the global recognition of Apple’s success is well deserved thus the public’s hunger to learn what they can apply to their own businesses is perfectly understandable.

Apple can maintain such price insensitivity due to the consistently pleasing and utterly unique experience customers enjoy regardless of the device or platform with which they are interacting.
Understanding how far a brand can travel reveals much about how consumers perceive its true value. In other words, how we, as consumers, identify ways in which Apple’s promise can add value elsewhere in our lives.

Recently, consultancies KAE and Toluna tested Apple’s ability to extend into new categories using a survey of 5,000 consumers from the UK and USA. One hypothetical scenario presented to consumers was the appeal of Apple if it introduced a current account; in other words, what would happen if the iBank became a reality?

The survey revealed that one in ten adults would consider banking with Apple. This ‘10 per cent of everyone’ translates into more than 40% of current Apple users, and those of us who have worked in financial services for decades were forced to ask ourselves: ‘How could a brand with no banking experience possible garner such trust from consumers?’.

Such appeal becomes a concerning prospect for banks if we imagine a future where an existing payment platform – that’s what iTunes is – begins to take in deposits, supported by the finest retail operation in any industry. The cross-fertilisation effects across its content business alone (music, video, apps etc.) would make any investor grin from ear to ear. In fact, the flow of additional cash into the Apple ecosystem would also drive value for the hundreds of thousands of publishers, developers and content owners who rely on iTunes as their number one retail channel.

Supported by their existing cash pile of over $120 billion, the basic structural conditions exist for Apple to land themselves one of the most successful financial services operations ever. It is easy to imagine an entire portfolio of financial services products offered by Apple. However, we cannot imagine a world where iBank launches itself looking like the banking industry of today. It would be totally ‘un-Apple’ to simply enter a market without radically changing the terms of competition at the same time.

Apple has disrupted the music, mobile, computer, application development and publishing sectors with great success. There are plenty of opportunities within the categories it currently competes in and we are not privy to any evidence that suggests Apple is preparing to enter into retail banking. We do, however, believe that one overriding lesson from this study is of great relevance for the financial services industry: namely the ability to design and maintain a consistently rewarding consumer experience.

So what makes Apple so different? Apple understands that consumers buy ‘why’ more than ‘what’. Apple knows that consumers buy ‘think differently’ rather than ‘a phone’. The reason Apple exists is made manifest in the products and services it chooses to deliver to market. From the dramatic, industry-changing forms of the iPhone to the subtle, almost imperceptible nuances of its operating systems, its reason for being is translated in detailed precision for the user. Crucially, across every contact, it is completely consistent.

The power of ‘why’ vs ‘what’ is reinforced by one single statistic from our survey. Of those who are already Apple customers, 43 per cent would consider switching their day-to-day banking to Apple if given the opportunity. This is an incredibly high figure when we take into account that this includes those consumers who own a single iPod, not just those who rely on a combination of Apple products. Apple users perceive a fit where, at first glance, we would assume the brand could not travel.
That 43 per cent consideration is testament to the power of the consistent experience that Apple has delivered to its customers. Apple’s consistency translates ultimately into integrity.

In the survey, 66 per cent cited ‘trust in the brand’ itself as the number one reason for their consideration, with over 50 per cent believing that Apple would provide a reliable service and an easy-to–access-and-manage-account.
The results of the survey when stacked up against similar studies carried out for retail banks, both new and old, make astonishing reading. It has been suggested that Apple’s ability to extend into financial services has as much to do with what is missing from consumers’ relationships with their existing banks as Apple’s ability to add something new.

To profitably deliver consistent experiences is tough enough for any retail bank, but to create a truly meaningful reason for being – a reason that matters to consumers – and to translate this across all possible touch-points is, at first inspection, a seemingly impossible task. But then again; no-one ever thought that thousands would queue for hours in the freezing cold for a new mobile phone.

The secret recipe? Despite all the analysis and media chatter, we come back to one of the simplest formulae in marketing: understand why you are different, make sure someone cares, and consistently translate this into everything you do.

About the research
The nationally representative KAE Toluna survey was conducted across the US and the UK, with a total sample size of 5,092 (2,921 respondents from the US and 2,971 respondents from the UK). The profile of those consumers who would consider switching their banking services to Apple comprised men and women aged 25-44, living in city centres or city suburban areas, with an average monthly income of between £900-£2,099 in the UK and $1,000-$3,499 and $6,000+ in the US.

Danish mobile providers poised to develop common mobile payment platform

Denmark’s four mobile network operators have joined forces to develop an NFC-based digital wallet, with the aim of bringing mobile payments to the country.

As news site Finextra reports, Telia, Telenor, TDC and 3 first announced their joint venture plans last summer. Now, though, the company has been formed and a managing director appointed. Starting in January, Peter Bredgaard from mobile specialist Unwire will oversee the three-stage project to introduce the mobile platform.

During the first phase, Danes will be able to make payments via mobile apps and SMS, with funds being deducted automatically from their bank account or via their mobile carrier. The second stage will involve the launch of a system that enables users to make purchases online, using just their mobile number and a PIN. Finally, the network operators will introduce a full digital wallet that can be linked to a variety of cards, including gym membership cards and charge cards.

Citing Bredgaard, Finextra said, “Demand for mobile payments is increasing rapidly. With the unique opportunity to bring together all telecom operators’ knowledge about mobile payments, we can meet the need for user-friendly and secure mobile payments.”

www.finextra.com

We would all be wise to learn more about those numbers. In Asia, Singapore has one of the fastest growing elderly populations in the developed world; China’s age pyramid is skewed – as a result of the one child policy – and its dependency ratio is alarming. In the West, the US has some 10,000 baby boomers turning 65 per day, fewer babies are being born; more people are dropping out of the workforce, and fewer are coming in.

Ten million people in the UK are over 65 years old. The latest projections are for 5½ million more elderly people in 20 years’ time and the number will have nearly doubled to around 19 million by 2050.

The number of very old people grows even faster. There are currently three million people aged more than 80 years and this is projected to almost double by 2030, and reach eight million by 2050. While one-in-six of the UK population is currently aged 65 and over, by 2050 one in-four will be.

The Silver Tsunami
The silver tsunami provides us with a fantastic opportunity to engage with those who are still spending, who still have assets and own their homes. Sadly though, so often our marketing and advertising campaigns are built on myths and preconceptions, as are our service and product development efforts.

Media buying is not up to speed – the creative output is focused on stereotypes. We spend so much time listening to and understanding the GenY and the millenials, and so little time getting under the skin of the third and fourth age
segments.

In the UK, the annual household spend by those aged 65 and over, was some £109bn in 2010, up from £102bn in 2009. Of that market, 39% feel that businesses have little interest in the
consumer needs of the older.

Businesses would do well to smarten up to that and start recognising that those over 65 have the means to spend and will move to providers who best meet their needs. And you would be surprised by the behaviours they display.

Understanding generational differences
Our needs change as we move through our life. Unfortunately, broad generalisations are done for older consumers, and less regard is given to the fact that we can today expect many years, decades even, of great, continued, active living when we turn 65.

We still enjoy learning, socialising, travelling, buying, consuming. We just turned 65. That is all. And when we turn 70 or 75, 80 our needs have shifted again. But most likely, we are still in relatively good health and living independently.

Distinguishing third from a fourth age in the human life came to the fore in the 1980s when researchers in the fields of demography, biodemography, gerontology, and sociology recognized that average life expectancy in western societies had increased and that the oldest subgroup of the population over age 60 was growing rapidly in absolute numbers.

The definition of subgroups of the elderly population was one attempt to specify factors linked to the heterogeneity of the older population in terms of social participation, mortality,
morbidity, and service needs.

Research into generational differences in attitudes and behaviours is based on either analysis of trends to locate boundaries, or identification of generation cohorts based on historical and external events that bring these together.

Segmenting and understanding characteristics, attitudes and behaviours of those 65 and more should be a key input into your service and product development, innovation and customer servicing design.

In a recent study of pre-purchase decision-making, we found, somewhat surprisingly, that the silent generation (those born between the Great Depression and WWII) are active in using digital media, and turn to aggregators for reviews to inform their purchasing decisions in financial products.

They are better informed than younger generations, they have time to look for, and compare information, and they will socialise their decisions and viewpoints amongst friends.

Older people own 80 per cent of the private wealth of the UK, with over-65 year olds controlling £460 billion in unmortgaged equity alone – enough money to fund the NHS for ten years. You’d be a fool to ignore them, or to make your business decisions based on an ‘idea’ or a ‘feel’ of what the aged need and want.

If you have ever suffered through a 60-minute PowerPoint presentation of marketing data “results” with no context or analysis, you will know exactly what this book is about.

If you have ever read or created a report so dense with numbers that the point of the report becomes ambiguous, you will know exactly what this book is about.

Drinking from the Fire Hose: Making Smarter Decisions without Drowning in Information was recently published by Christopher J Frank and Paul Magnone. Frank and Magnone are veteran business leaders with experience ranging from Fortune 500 companies to dot-com era startups.

Any Internet marketer who is mining mountains of data for insight will appreciate the seven Essential Questions that Frank and Magnone say everyone needs to ask, which are detailed
in the book itself.

The authors explain the seven questions that can help you bring a big picture perspective to problems that often leave others buried in irrelevant details. They show how their method can have a dramatic impact through real-life case studies.

These include: Trader Joe’s, Starbucks, Kodak, Microsoft, iRobot and IBM-how their method can have a dramatic impact. It really is possible to convert the fire hose of information into useful insights.

The authors state that their objective is to alleviate the problem of information overload caused by the explosion from digital, social and mobile environments. We need to improve our judgment in how to use the vast amount of information that we are exposed to everyday. The volume of information in many instances drowns out the substance, and it’s growing
exponentially.

Due to the time taken to sift through so much information, the amount of time that we have left to deal with real business issues is diminishing rapidly. We need quick response tools and skills to get to the bottom line of any business challenge. By learning the right techniques, any organisation will make faster, more productive decisions.

The book shows how to leap frog the whole notion of swimming in data by turning facts and figures into practical business learning. Learn to create value by using seven Essential Questions to amplify your decision-making and separate the signal from the noise in a simple and effective way.
Understanding the seven questions and their implications will lead to improved decision-making. The seven questions are:

1. Which is the Essential Question?
Asking the right question is the key to finding that indispensable answer in the mountain of information. The wrong question buries you, your team and your customers under a mountain of meaningless data. The question differs depending on your business goals. For example, if you’re simply trying to boost sales, that question might be, “What effect will pricing have on sales?”

2. Where is the Customer’s North Star?
Shift your view from company-centric to customer-centric. Employ the Customer Impact Assessment (detailed below)
by asking four questions to understand the effect a company’s decision may have on its customers.

3. Should I Believe the Squiggly Line?
Question the validity of short-term data. Bring broader thinking to the short-term nature of business by considering three easily measured data points:

• Today’s numbers, which could be total sales or market share.
• Your competitive score, which is how your company is doing relative to its competitors.
• How your company, as well as your competitors, is doing over time.

4. What Surprised You?
Uncover hidden information and use it to change the dialogue. Game-changing information is almost always a surprise, but you’ll miss it if you’re in the habit of looking for corroboration instead of information.

5. What Does the Lighthouse Reveal?
Identify the risks, barriers and bridges that surround your business. Ask yourself where things might go wrong and develop a plan B for each of them. Also consider what leading and lagging indicators you should track. This is called lighthouse data – that is, the critical information that will keep your business out of danger.

6. Who are Our Swing Voters?
Drive growth, increase revenue and boost satisfaction by looking at your existing customers in a new way. Identify the swing voters – i.e., potential customers or potential defectors – and convince them to give your product or service a try. This customer base often constitutes your company’s best, lowest-cost opportunity for growth.

7. What? So What? Now What?
Effectively communicate results and inspire action. Data-orientated presentations often fail because of poor technique. The most effective model we have seen is the three Ws – i.e., what, so what, and now what – but the secret lies in maintaining the balance between them. Most presentations focus too much on data – spending too much time on the “what” and not nearly enough on the “so what” and the “now what.”

Focus on the North Star

The customer’s voice is typically at the heart of conducting a Customer Impact Assessment and drives the customer decision making process. Frank and Magnone state that the customer’s North Star needs to be identified, and there are four key principles to achieving this:

1. How could this decision negatively impact the customer?
2. How will the customer perceive this change (in price, packaging, advertising)?
3. How will you manage the change—for the customer, not the company?
4. How will we track the impact of these changes on customer behaviour?

One of the killer pieces of insight that the authors draw is the complex relationship between the customer and the vendor. They realise the distinction that customers sometimes may not know what they want. At times it can be hard to research around innovation, and on products or services that may not currently exist. So in an ideal world, it’s more than just sensing, or learning, what is the customer’s North Star is, it’s taking their information (e.g. behaviours, perceptions, sales), and applying it to a new way of thinking.

To Conclude…

We live in an age where the amount of information at our fingertips is truly staggering, yet at the same time intimidating. We are fortunate to have these resources, but we need to master the fire hose of information.

These seven questions can bridge the gap between data and strategy, provide stimulus to transform your business and provide foresight on key areas for growth. There are a select few who understand the power of data, know the questions to ask, connect it to their larger business strategy and use it to engage customers and achieve revenue objectives. By learning the right techniques, businesses have the opportunity to make faster, more productive decisions.

The chances are that you know the concept, but are not quite able to relate it to everyday marketing practice. Trust us, Big Data is not just something for mega-brands with tens of millions of customers and budgets to match.

Just finding a definition of Big Data can be a little awkward. Search online and you’ll find more references to Big Data (2bn) than you will for Big Mac, Big Brother, Big Society, and Big Bang Theory combined. The point being that its actual definition is debatable.

This is strange. Depending on who you ask, Big Data is usually described as data generation or data processing. But always in high volumes, high velocities, and often, in new formats. Or just the manifestation of trends that founder of the World Wide Web, Tim Berners-Lee, helped set in motion.

Actual definition is less important than simply agreeing that Big Data is an increasingly important phenomenon. The real challenge with Big Data is how to make sense out of the tonnes of data being produced every day.

Almost every interaction between people, businesses and government is creating an immensely rich data trail. In fact it is so rich that many marketing opportunities to learn more about customers are being left on the data centre floor, since the volume of data created has recently exceeded the ability to store it.

For marketers, Big Data is not a new concept, but rather a term used to describe what we have been doing the whole of our careers; the organisation and interpretation of raw data, to produce knowledge or insights. It entered the lexicon of data scientists in the 1990s and has become all-things data since.

Commercial scale is important but not the single most defining feature

• Walmart handles more than 1 million transactions each hour, which feed into databases estimated to contain more than 2.5 petabytes of data — the equivalent of 167 times the information contained in all the books in the US Library of Congress
• Google processes around 24 petabytes of data per day
• The BBC’s iPlayer is reported to use 7 petabytes of bandwidth each month.
• Netflix uses 1 petabyte to store the videos for streaming
• AT&T transfers about 30 petabytes of data through its networks each day
• Decoding the human genome originally took 10 years to process; now it could be achieved in one week

All these examples tell the same story: our environment contains an unimaginable volume of digital information which is growing increasingly vast, ever more rapidly.

Big Data’s marketing successes are not all ‘drowning in data’

• Wonga, the payday lender, makes credit decisions based on a broad array of data sources, including social media that are well beyond the 15 or so ‘classic’ metrics a typical lender would appraise
• Mint, the US-based online financial planning tool, draws together all of a customer’s financial information from different accounts (bank, card issuer, savings and investment providers, etc.) to provide an aggregate view, it then matches this with better value products in the market
• Cancer Research UK’s gamification initiative connects the collective data interrogation capabilities of hundreds of volunteers who analysed a huge dataset to help scientists bring forward the cures for cancers

Making the most of Big Data isn’t easy, but making a start is. Data mining in all its forms – from credit scoring to advert tracking – more often underplays the original role played by market researchers. After all, which other profession has applied so many analytical techniques to understanding vast numbers of consumers?

The ideas behind Big Data have led to some people in the market research sector flagging concerns about its applicability when it risks neglecting sound principles such as using a representative sample, or by being overly concerned with actually handling the huge quantities of data.

This approach may lead to results being biased in some way. Integration across varied data sources – some that are genuine Big Data and others not – presents formidable operational or analytical challenges, but many market researchers rightly argue that such integrations represent some of the most promising new frontiers in marketing science.

Companies invest tens of millions to derive insight from information pouring in from partners or customers. Yet there are scores of major businesses that have insufficient processes and skills to make sense of what these investments tell them.

To overcome this insight deficit, Big Data, no matter how comprehensive or well analysed, needs to be complemented by “big judgment”, according to the Harvard Business Review. Surely this is what professional marketers can offer?

The bottom line is that Big Data is a convergence of trends that market researchers helped set in motion, through commercial application of insight generation techniques. The idea has moved on quickly and risks leaving market researchers behind.

How does all that sound to you? Manageable? Frightening?
A combination of both?

Human beings tend to get bored rather easily.
In the majority of Western societies we’re also frequently bombarded by superfluous communication – noise – which ultimately hampers our ability to focus on one thing for a prolonged period of time.

Certain elements of our lives have become so fast-paced that our brains are increasingly, and instinctively, looking to maintain a high pace throughout all our interactions. Inevitably, this means we crave the shorter, sharper and faster in everything.

As Western consumers, we’ll watch a 30 minute TV show instead of a 60 minute one, because it takes less time to consume. We’re more inclined to watch a T20 cricket match instead of a 5-day test because the action is more frantic.
We’ll send an instant message, rather than calling because it’s quicker. Shorter, sharper, faster.

But what happens when our cravings are not satisfied? What happens when our lives don’t match the pace that we’ve come to expect? Well, we tend to get frustrated and we end up getting bored. From a business perspective, it’s ever more challenging to keep people’s attention, whether in a salesroom, training room or a website.

We love to game
We have the increasing tendency to fill this frustration with games. The proliferation of the smart device has given rise to the phenomenon of the casual or social gamer. The casual games market has the potential to reach $7.5bn by 2015. Meanwhile, 81 million people play social games every day, with the average age of the social gamer being 39. The principles behind social and casual gaming are substantial. We see a lot more of the principles of gaming moving into different walks of life. Some people like to call this the notion
of gamification, which we define as:

“The application of the mechanics of gaming to non-game activities to alter people’s behaviour, through driving participation and engagement.”

Is gamification set to explode?
A number of different components are currently converging to whip up the perfect conditions for gamification. Consumers’ desire for gaming is without doubt strong and unwavering. Companies are taking gamification seriously; they spent $100m in 2010 and that figure is expected to rocket to $2.8 billion in 2016.

The access to technology and the appetite to integrate it into our everyday lives is growing substantially. The adaptable nature of gaming principles and digital platforms is an additional contributor to the proliferation of gaming principles.

Gaming is not only for hard core or casual gamers; it can flex and extend to almost every pocket of life.

The structure of gamification
Gamification has three predominant applications:

1Engagement: Creating a relationship between the game owner and the audience.

Involve your audience

The Barclaycard Rollercoaster (Barclaycard):
was part of a long-term strategy to encourage customers and businesses to switch over to contactless technology. (http://www.barclaycard.co.uk/personal)

My Marriott Hotel (Marriott):
A kitchen management game focused on employee
engagement and talent acquisition. (http://www.facebook.com/marriottjobsandcareers)

Reveal (L’Oréal):
An online game with learning and recruitment objectives,
simulating the backstage of a product launch at L’Oréal. (http://www.reveal-thegame.com/about-reveal.aspx)

2Behaviour Change: Influencing and encouraging specific behaviours for a better overall commercial or societal environment.

Influence changes in behaviour a. Recyclebank:
Encourages citizens to live a greener lifestyle and be rewarded for it. (https://www.recyclebank.com/)

b. Liftshare:
A car-pooling scheme that enables users to save money and reduce CO2 emissions. (https://www.liftshare.com/uk/default.asp)

c. Foursquare:
Uses simple game mechanics to drive traffic to merchants, and has built a user base of over 10m.
(https://foursquare.com)

3Education: Learning difficult concepts in a stimulating and intuitive way.

Enhance the education and training experience

a. Pass It On (Axa):
Demonstrates the benefits of life insurance to users,
on a particularly sensitive subject.
(http://www.axa-equitable.com/life-insurance/life-game.html)

b. Game Dev Story:
A simulation management game in which the player takes charge of a video game development company. (http://en.wikipedia.org/wiki/Game_Dev_Story)

c. Ultimate Team Play (Hilton Garden Inn):
Helps to train employees in delivering high levels of customer service in a simulated hotel environment. (http://virtualheroes.com/projects/hilton-ultimate-team-play)

Gamification has seemingly endless applications. Some of them are exemplified below:

There are three methods of behavioural influence within gamification:

Game Mechanics – Typically include:

• Points – Awarded for specific high value behaviours and achievements

• Achievements – Provide positive reinforcement for high-value user behaviours. Can manifest themselves with virtual or tangible goods

• Levels – Signify levels of engagement across a company’s ecosystem

Reputation Mechanics – Typically include:

• Levels – Levels of status and reputation, tied to both the quality and quantity of high-value behaviours and activities

• Tracks – Groups of missions that represent an area of expertise. As users complete tracks, they increase their rank and reputation in that specific skillset

• Leaderboards – Display which high-value behaviours can boost themselves to the top. Linked to specific areas of pertise with contextually rich metadata

Social Mechanics – Typically include:

• Behaviour Graph – The graph empowers the connection of users through their activities around key objects, such as commenting on content or reviewing a product

• Social Context – A collection of rich activity streams that surface the contextually relevant behaviours users perform

• Real-Time Notifications – Alert users about contextually relevant behaviours as they happen, connecting them with valuable content and products

The business and the workplace are no escape
Enterprise, and even business in general is a fascinating opportunity to embed gamification principles. On the one hand there is the workplace, which is a veritable playground for game mechanics. On the other hand, there is the marketplace, which is always thirsty for innovative methods of each spectrum of gamification.

Employers are forever seeking improved methods of staff motivation and engagement, or ways to drive behavioural change. This is a notion that will be explored further in our next issue.

The mobile application market has grown enormously over the past few years, and this growth is not expected to slow down. According to Gartner, almost 25 billion apps were downloaded globally in 2011, which could almost double before then end of 2012. Downloading and using apps has definitely become a part of consumers’ everyday life; but what role do consumers have in the app development process? Ratings and reviews were the only ways for developers to integrate customer feedback.

Most mobile developers create mobile applications with little or no consumer involvement throughout the process. Telcos recognise the critical role of developers to drive brand preference and device sales, and are investing heavily in developer marketing and engagement activities. They acknowledge the relationship between developers and consumers, but these are considered two “distinct species” that need to be targeted with different marketing activity.

Increased customisation, consumer co-creation and crowdsourcing are key trends that have affected multiple industries over the last few years. Consumers are taking a more proactive role in the creation of products and services they use; in some cases they have become an integral part of a business’ value chain.

Recent events indicate that these trends are affecting the app development industry too, and that the boundaries between consumers and developers could be blurring. In the near future, we could all become mobile app developers of some sort, and even monetise from it. This convergence could transform developer marketing strategies as well as the industry’s monetisation models.

How blogs evolved, will apps follow suit?

In 1994 Justin Hall created Links.net, the first ever blog. During the early stage of blogging you had to be a programmer and create your own custom blogging platform to have your weblog, as it was called at that time.

It was only in 1999 that Blogger launched, paving the way for blogging to become mainstream. Thanks to services such as Blogger and WordPress authors no longer needed to be programmers, web or digital specialists to create a blog, causing a dramatic increase in the number of blogs. Anyone with a computer and an internet connection could shift from being a blog reader to a blogger, from being a pure consumer to a creator of content.

Many individuals used blogs as a channel of communication with friends, family, or the rest of the world. Others, typically the most tech savvy, started to monetise on them through advertising and affiliate marketing; some have made blogging their main profession.

Similar opportunities could open up in the app world.
Consumers who are not only interested in creating the ideal app for their friends, but also interested in developing apps that address universal needs will have the potential to monetise from their app.
A whole set of new monetisation opportunities could open up for this type of user/developer. These could include existing monetisation models such as advertising, or go beyond what is currently offered and focus on enabling peer-to-peer payments.

The democratisation of app development
There are strong indicators that democratisation is one of the avenues the fascinating app industry could take. Typically over the last few years there was only one point of consumer interaction within the app creation process; to write a review and give feedback to the developer. Ratings and reviews was the only way for developers to integrate consumer feedback.

However, initiatives to engage consumers in the app development process are emerging; primarily tools that allow anyone to create an app without coding, technology or design experience.

For example, Appmkr allows users to create their own iPhone or Android app with no need for coding experience. Users can create their app for free, or pay to upgrade in order to access premium features and customisation tools. In addition, users have access to an app analytics dashboard, can push notifications to users, monetise their app with advertising and publish it in app stores. Other similar DIY tools include Yapp, MIT App Inventor or Andromo.

The quality of apps developed using DIY tools is still up for debate. However, as blogging has demonstrated in the past, there is reason to believe that emerging platforms will improve, with the potential to match the quality of professional apps.

Beyond app creation
Consumer participation goes beyond app creation. Consumers can become app investors and fund apps with success potential through websites such as Appstori, also known as the “Kickstarter of mobile apps”. Alternatively, they can share their ideas through communities such as Ideas Project which helps app ideas to become a reality.

Initiatives for greater app personalisation are also emerging. Apps such Flipboard enable users to personalise content.
My Fitness Companion is an example of self-monitoring apps that allow customisation based on personal goals. In addition, with the proliferation of HTML5 and hybrid apps, in-app user
experience and in-app advertising are expected to become more targeted. Finally, the advent of “compound apps” could bring this phenomenon to the next level by connecting multiple apps and data to offer us the ultimate personalised experience.

App development consumerisation: the implications
We anticipate three potential implications for equipment manufacturers and operating system providers. Firstly, they will need to consider launching tools and templates that allow users to create their own apps. Secondly, a single strategy leveraging the synergies between consumers and developers could improve the effectiveness and efficiency of marketing activities. Finally, apps will become more prominent elements of sales and loyalty activities as they become a key driver for smart device purchase.