|People associate Spring with youth and rebirth. New ideas coming to life, concepts finding a second wind: spring is the time of change and new beginnings. Most of the stories we cover in this edition are exactly of that, be it the brave idea of Kraft Foods to reinvent themselves as Mondelēz International, Snoop Dogg diversifying into smoking accessories, BlackBerry trying to turn the tide with their first reasonable slogan in years, Boeing trying to get into the secure communications market, or popular mass market fashion retailer H&M planning a luxury spin off. Why not? If Volkswagen Group can successfully sell Bentleys and Lamborghinis, why can’t H&M come up with something that competes with Balmain and Lanvin? Everything is possible in spring.|
News of the month
Brand Environment Taken Seriously
20 years ago, ‘shopping’ meant visiting one of several brick-and-mortar stores for the purpose of acquiring a number of goods. Almost two decades after the rise of the Internet and a decade after the dotcom boom, global ecommerce sales are expected to reach $963 billion by 2012, growing at an annual rate of 19.4%. People buy groceries via smartphone apps and furniture in the comfort of their living rooms – with so many retail channels, the role of physical stores shifted from stock selling to providing a brand experience. Successful brands try to use the space to charm prospective customers – sales per square meter in a particular branch are less important as long as people buy the products somehow. NikeFuel station at Boxpark is a great example of an environment created for brand exploration rather than mere retail.
The second largest beer brewer in the world by sales, Heineken, went a step further than creating a theme bar. With the Open Design Explorations project the company crowd-sourced the design of a unique nightclub unveiled at Milan’s Salone Del Mobile design festival earlier this month. Promotional as it is, the venue is about much more than disposing of an extra thousand cases of beer. It portrays Heineken as a company of inventors, a company ‘on the edge’, a company that understands its customers, contemporary fashion, music, technology, and a thing or two about having a good time. Not a dull promotion, yet another festival sponsorship or a semi-clever YouTube viral, it’s all about thinking outside the box, new ideas and bringing the future.
The Good: The Return of Gap
Gap Inc. has had a rocky patch. Cool and trendy in 1990s, at some point it got comfortable, conservative, decided to play safe and lost the edge. Plenty of companies sell generic casual clothes; the niche of a hip affordable retailer was quickly taken over by a number of global players. At the beginning of 21 century Gap found itself truly lost. Hiring Sarah Jessica Parker, then star of Sex and the City series and role model for fashion-conscious young women around the world, was a weak attempt at claiming relevance; replacing her with a 17-year-old singer just demonstrated that the company is a ship without a course. The 2010 rebranding disaster was the pinnacle of image misery that has, rightfully, cost Gap’s head of brand her job. For years we mostly heard of Gap Inc. in the context of even more store closures. Well, it seems the troubled company has found a man to pull it out of the abyss. Following same-store sales rise in February and March (4% and 8% respectively, as opposed to 3% and 10% decrease a year ago), the company’s shares reached a 10-year closing high at the end of March. It seems, for now, Gap Inc. has found a common language with the human race. The man behind the miraculous turn, the former worldwide MD of Ogilvy & Mather and a year-long CMO of Gap, Seth Farbman articulated the formula for success in his speech at the Ad Age’s Digital Conference.
The Bad: New Campaign for Urban King
At the beginning of April, Burger King launched a new advertising campaign built around celebrity endorsement. A number of A-listers David Beckham to Salma Hayek starred in a multi-platform offensive with substantial viral potential. The videos were not particularly creative and the jokes – mostly based on the awe little people have for popular media figures, but bearing in mind the awe is real, the clips were expected to attract the attention of the target audience. Unfortunately, the Florida based chain with 60 years of experience didn’t take a minute to run the campaign past a fresh pair of eyes. As a result, the oh-so-tasty chicken snack wraps were advertised by the popular African American singer Mary J Blige. The reaction to that terrible collection of clichés, both tasteless and vaguely racist was perfectly summed up by Madame Noire. Although Burger King showed formidable swiftness in pulling the ad over the alleged licencing issues, the urban jingle left a strong aftertaste.
The Ugly: Rebirth or Doom for Sony
Sony Corporation, one of the symbols of Japan’s technological revolution of late 1980s and early 1990s, is in serious trouble. Besieged by a multitude of competitors and dragged down by strong national currency, the company finds it increasingly hard not just to remain one of the industry’s leaders but to remain at all. The acquisition of Ericsson was expected to improve operational management: the decision-making will certainly become swifter and easier. Kazuo Hirai, the new CEO who took charge on 1 April, is optimistic, believing there is still time for change. Wishing Mr Hirai the best of luck, I would like to point out the ad that appeared shortly before his ascent. I think it epitomizes the root of Sony’s woes: utter lack of ideas. Advertising the Xperia line, the range many consider to be Sony’s last chance in mobile communications, through an art project based around children’s fantasies is beyond careless. Children and puppies are cute; using them in advertising is a terrible banality that works for low value consumer goods like toilet paper and mineral water. Using babies to position a high-tech product that competes with the highly popular iPhone and the technologically advanced Samsung Galaxy is just hopeless. Asking kids who have no idea what they are talking about ‘what makes Sony smartphones special’ sounds awfully close to ‘we needed a memorable campaign, had no ideas and Evian Babies got a lot of publicity’ – it does not fill prospective customers with tonnes of confidence. Oh, and by the way, referring to Wes Anderson, the man famous for indie melodramas like The Darjeeling Limited and The Royal Tenenbaums as the director of ‘Fantastic Mr. Fox’ makes the ad look like something created by six-year-olds for six-year-olds.
New beginnings for Facebook and Instagram
The largest and most popular social media platform chose the stock exchange to start a new life as a publically traded company. After considerable deliberation, Facebook will entrust the Nasdaq to manage a set of shares that is expected to bring the company $5-10 billion. Home to over 800 million users, Facebook’s valuation reaches as high as $100 billion, 27 times its annual revenue. On one hand, the ratio would be impossible in any other industry- even for Apple, the company valued largely based on expectations, the index stands at 5.5 (a valuation of $590 billion against revenue of $109 billion), on the other hand, Facebook did increase its revenues 88% in 2011: an incredible, albeit slowing, growth.
In the context of the initial public offering, the acquisition of Instagram for over $1 billion ($300 million in cash, the rest in shares) doesn’t sound as surreal: demonstrating hunger for development will make investors value Facebook shares higher, making up for the steep price. Ten years ago (and, possibly, ten years from now) the situation would look like the Mad Tea Party – a social network, whose revenue is tied to its popularity in the industry where popularity never lasts, is perceived to be more valuable than Citigroup, spends a billion US dollars on a photo sharing app, trying to make its spirit of an elitist ‘small community of early adopters’ work for the mob of 800 million members. The question as to whether the hipsters will leave Instagram is rhetorical, once the service is no longer cool, brands will reconsider paying serious money for their accounts, once brands go, the service will need alternative means of support – advertising, paid accounts, paid services? It will take a magician to make Instagram stay and grow within Facebook.
New Life for Dead Performers
The Tupac Shakur gig at the Coachella festival was not just a happening for music fans; it may be the beginning of a new entertainment industry. A moving image that looked like a very realistic hologram of the late rapper, developed by San Diego-based AV concepts, is an amazing retake of the 400-year-old illusionist trick. The idea of using life-size holograms for entertainment isn’t new – Richard Branson did it seven years ago, Al Gore used the technology to impress Tokyo in 2007. The difference is not just in the astonishing quality of the Tupac projection, although it does look and move and sound a lot like the original. In the past, holograms were used to impress – to make a brand look modern, capable, technically superior (Virgin) or act as a less offensive substitute to a sign that reads: ‘I couldn’t be bothered to come in person, so here is my tape, play it’ (Gore). By the way, the irony of using a hardly carbon neutral toy to promote environmental responsibility clearly eluded the former Vice President. The digital Tupac is not a projected recoding; it is a simulation, capable of doing and saying whatever its creators want. Although holograms aren’t real, don’t ooze charisma, improvise or spontaneously flirt with the audience, supported by an able team, the sky is the limit – they can walk through fire, hold a note for as long the battery lasts and give 24-hour concerts in hundreds of cities at the same time. The new technology doesn’t resurrect the deceased, comes with a faint aroma of necrophilia and will be subjected to a little ridicule. But, essentially, it provides an illusion that in the 21st century we have finally managed to cheat death – in a few years, Elvis may go on tour to promote his new album. Why not?
A Man of Practical Appliances
On the 16 April NASA approved the first private spaceship to visit the International Space Station (ISS); the launch is scheduled for 19 May 2012. Writing a note on Elon Musk without drowning in superlatives is hard. Having read a few dozen articles about his endeavours, I can’t shake off the feeling he is a collective pseudonym of a group of men who take Atlas Shrugged a touch too seriously. As a young man, Musk wanted to get into the ‘important problems’ – Internet, clean energy and space’. By forty, he had co-founded PayPal (1999), sold it to eBay (2002) and used the money to found Space Exploration Technologies (2002) and Tesla Motors (2003). Not just an investor but an engineer, an electric car architect and spacecraft designer, Musk seems have beaten NASA with its $18 billion annual budget in a space race. Intellect, creativity and knowledge aside, it is a testimonial to extraordinary managerial skills. In spite of the monumental role of SpaceX, its corporate page doesn’t ooze the expected pathos, instead it talks money. In interviews, Musk is calm, collected, quiet and supremely confident all at the same time. A round-trip ticket to Mars for half a million dollars in 10-15 years? Can be done. Coming from the head of NASA (or any head of state for that manner), the statement would sound like an inspirational hypothesis at best; Musk makes it sound like a business plan. The unsolvable challenges and technological failures of the past are irrelevant; the generations of engineers that fell short didn’t have Elon Musk.
New Ways of Making Things Happen
At first, crowd-funding was surrounded by a little scepsis – when one donates to a charity, one doesn’t expect proof of efficient financial management – we donate to feel better about ourselves: once the money is given, the goal is achieved. How does it work with commercial projects – how do we know the money is spent right, what do we get in return? Kickstarter is ‘a funding platform for creative people’. Whether an artist missing funds for a movie or a designer with a really good idea, one publishes a project description, sets a goal and a deadline and waits. Since its launch three years ago, the site has sourced $200 million to fund 20,000 projects – the concept clearly works.
Pebble is the project of the month: with $100,000 required, the e-paper watch has already received backing of over $7.6 million. The highly customizable smart-watch uses Bluetooth to connect to iPhone and Android handsets and, essentially, runs apps on its high resolution scratch resistant e-paper display. It can pass messages, identify callers, display calendar and weather alerts. It is a speedometer, a bike computer and a remote control for music apps. For those with skills and a little time on their hands, a software development kit is up for grabs as well; finally, Pebble looks nice. You can pre-order the basic version for $115 to show off geek bling in September.