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Open Banking: Our view

On January 13th 2018, the radical piece of regulatory reform known as Open Banking went live, marking the dawn of a new era of hyper-competition in financial services. Open Banking will completely reshape how people spend, save, move and manage their money. It re-sets the rules in the battle for customer trust, and creates immense opportunity for established players and new entrants alike.

At Manifesto, working with our clients in the payments sector, we felt the dialogue around Open Banking was dominated by technical implications at the expense of fruitful discussion about commercial opportunities. So in March 2018, we gathered 100 people together in the Hospital Club in Covent Garden to shift the locus of the debate. Here’s what happened…

Our Open Banking event: 1 minute highlights

 

Our Open Banking event: 3 minute highlights

 

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One step closer to the Whole package

A little over 4 years ago, I went to Whole Foods for the first and last time. Baffled and bemused by the multitude of delicious looking dishes, I played along as the assistant loaded up my box with lashings of greenery and stuck barcode after barcode to the outside with unbridled enthusiasm. By the time I worked out what was going on, my wallet was £20 lighter.

Whole Foods came back into my life in dramatic circumstances last week when it was bought by Amazon for just under $14bn, the retailer’s largest ever acquisition. Even though Whole Foods controls just 1.2% of the US grocery market and has only 460 stores globally, the deal has sent shockwaves through the retail world, wiping $11bn off the market value of rival Walmart.

The takeover is another sign of the ambition of founder Jeff Bezos, who, even from Amazon’s relatively humble beginnings as an online bookstore, aspired to build an online emporium catering to every conceivable customer need.  Amazon has been trying to break into the $780bn grocery market since an unsuccessful dot-com gamble on start-up homegrocer.com in 1999.  The Whole Foods takeover augurs better, but the purchase raises as many questions as it answers about Amazon’s future.

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Where is the golden egg?

Today, boasting best-in-class logistics networks, data platforms, and video content, Amazon has shown considerable aptitude at buying and integrating the parts of the chain that it doesn’t already own. Once touted as being the death knell for bricks and mortar shops, Amazon has surprised many by recently increasing its physical footprint, opening high street bookstores in several US cities. Amazon could benefit from Whole Foods’ fleet of urban locations that can double as warehouses that make use of a famed cold storage supply chain. On the other side of the coin, Amazon can instantly improve the grocer’s fulfilment options in a market where consumers are increasingly seeking convenience.

Fertile ground?

An element of the deal that has customers’ tails wagging is whether Whole Foods may become the first commercial testing ground for Amazon Go. Go is a recent proposition dubbed the ‘robo-store’ where computer vision and sensors are used to track what customers place in their bags and charge their Amazon account accordingly, allowing them to walkout without having to queue to pay. At the moment Go exists purely in test form for employees near Amazon HQ in Seattle but bringing this technology to Whole Foods would certainly be a strong differentiator in the market.

A fresh start?

One question mark hovering over Amazon is whether or not it can be seen as a credible retailer of fresh produce. Last year Amazon launched the Amazon Fresh proposition in the UK after signing a wholesale supply deal with Morrisons (think Ocado’s offering of Waitrose products). Like in the US, the take-up hasn’t been overwhelming. Whilst millennials are very comfortable buying some groceries online, many prefer to buy meat, vegetables, bread and milk from a bricks and mortar store. Bezos himself has opined that ‘brand names are more important online than they are in the physical world’ and, as one Whole Foods shopper was keen to point out, ‘Amazon aren’t exactly synonymous with organic, high quality food.’ The big challenge therefore will be layering convenience of delivery over the top of the current proposition without negatively impacting the strong Whole Foods brand and reputation.

In 2015, Whole Foods’ CEO John Mackey predicted that the move into grocery delivery would be Amazon’s ‘Waterloo’. One thing is for sure, it will be exciting to follow. Who knows, I may even get a lunch box delivered.

 

Change is the new constant – get used to it

We live in a world where every day consumers expect and demand more, ground-breaking new technologies are changing the way we live and work; and businesses are learning that continual evolution is the future…so what are you doing to keep up?

Just look at the likes of Woolworths, Polaroid, Kodak, Blockbuster…the list goes on. Innumerable organisations have learnt the hard way that not embracing change is no longer an option. Take Blackberry, whose CEO was once famously quoted saying:

“We know we have a very poorly diversified portfolio. It either goes to the moon or it crashes to earth – but it’s going to the moon pretty well right now so we’ll stick with it!”

What about the organisations that are thriving in this environment? There are a number of commonalities that can be found between these, and we’ve outlined just a teaser view of what some of the more innovative firms are doing…

Keep the customer at the heart of everything you do – Having been charged $40 in late fees for an unreturned film, an irritated Blockbuster customer decided to set up his own business. Unlimited films, fixed price and no late fees – Netflix was born. And by the time Blockbuster followed suit…well, it was far too late.blockbuster

All businesses have a strategy, but the best ones are built fully around quickly understanding and acting upon their customers’ needs (and recognising that these needs may not be the same now as they were 20 years ago)!

Crowdsource Ideas – Use the power of the crowd. Businesses are beginning to realise that good ideas no longer just come from a few at the top of the organisation. They come from the heart of it – from all of its employees; and also from the customer – what best to talk about what they want.

Embrace failure – For every good idea, there are a thousand bad ones, and it is easy to forget that successful businesses undergo multiple failed ideas and ventures. Take James Dyson; in 1978 he became fed up with his vacuum cleaner clogging up all the time. 5 years and 5,127 prototypes later he invented the world’s first bagless vacuum cleaner. Embrace and learn from failure, the worst strategy is to do nothing.

Just do it – It can be tempting to plan until every minute detail is catered for, but the reality of the world that we live in means that sometimes it’s better to figure some things out on the way as plans will change. A great idea doesn’t necessarily require perfect detail, it just requires someone to go ahead and implement it.

These behaviours work together to cultivate not only a culture for success, but also a culture that enables survival in this ever-changing world that we live in. Keep up!
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Innovation Fatigue – the Start of an Analogue Fightback?

At first glance, the numbers released last month by the UK Publishers Association tell a compelling story. Sales revenues of £4.8bn represent the highest ever recorded in this country – an increase of 7% on 2015 and the largest single increase since 2007, when digital sales were first included. Taken at face value, the implication is clear. The publishing industry has steadied its ship by embracing the digital revolution, placing innovation at the heart of its business model to chart a once-uncertain route back to commercial good health.

If you dig deeper, however, it is clear this is only half of the story. While digital sales have increased by 6%, and now make up 35% of total publishing revenues, total eBook sales slumped by 3%, to £538m, with consumer eBooks registering an extraordinary 17% decline in total sales, worth £204m. Over the same period, the UKPA reports that consumer print book sales have risen almost 9%, to £1.5bn, following an indifferent 2015.  In the US, the story is similar: 3.3% growth in print, weighed against a 19% decrease in eBook sales.

The unexpected resurgence of physical publishing and the decline in eBook sales demands an explanation. Clearly, new pricing strategies, revised metrics, amended VAT rules and the release of blockbuster titles have all had a significant bearing on the attractiveness of both products. There is also evidence, however, that physical customer experiences are becoming increasingly important to consumers as digital becomes ever-more integrated with their day-to-day lives. In one context at least, analogue products offer a respite from the onslaught of digital devices, which now dominate the attention of UK and US adults for almost 10 hours per day (a 400% increase on 2012).

The music industry offers a direct comparison in the form of vinyl record sales. In the UK, the once-obsolete medium defied the prevailing industry trend towards digitisation to achieve single-year growth of 53% in 2016, cementing a 25-year high. In the same period, digital download revenues declined 20.5%. For both print books and records alike, marketers have successfully leveraged their status as lifestyle products to create a distinct use case from their digital counterparts.

There is also evidence to suggest that the desire for physical touchpoints extends to the retail sales journey. The demise of the book shop was an early prophecy after digital technology began to disrupt the publishing industry. Yet across the US, sales through physical bookstores increased 3.8% in 2016.

Nowhere has embraced Oscar Schumpeter’s famous adage that technology and innovation produce a “gale of creative destruction” quite like Silicon Valley. For its first decade of operations, the walls of Facebook’s California headquarters were adorned with a slogan expressing the same sentiment (recalibrated for its millennial workforce) – “move fast, and break things.”

In most cases, the relentless urge to reinvent has been carried forward by a drive to satisfy unmet customer needs. In the case of eBooks, Amazon’s Kindle offered a host of solutions, both economic and functional – allowing users to buy titles at lower prices than their local bookstore, and transport hundreds of titles in a tablet-sized object. As a result, the threat to ‘break’ the traditional publishing industry became very real indeed.

The resilience of analogue products and the continued demand for a physical retail experience suggest that entertainment consumers are increasingly conscious about the format of the products they buy and how they buy them. In the case of books and records, the advantages conferred by the experience of browsing in a shop or having an object to display on the shelf at home challenge the advantages of speed and storage that digital services provide.

For businesses, the takeaway is to be more rigorous in understanding customers’ needs. Although speed and convenience may define the use case for a product, the automatic assumption of obsolescence in existing technology may amount to throwing the baby out with the bathwater. Amazon itself has attempted to turn threat into opportunity, opening its first physical bookstore in 2015, with 400 more planned across the US. Whether this hybrid approach, which encourages to make active choices about both the format of their products and the point of sale they use, takes hold will remain to be seen. It is clear, however, that for the time being, analogue is here to stay.

Bibliography:

http://www.ifpi.org/facts-and-stats.php (IFPI 2017)

https://www.itstimetologoff.com/2016/01/07/uk-adults-half-their-day-on-screens/ (It’s time to log off/Nielsen 2017)

https://www2.deloitte.com/uk/en/pages/press-releases/articles/media-sector-trends-for-2017.html (Deloitte 2017)

https://www.recode.net/2017/5/2/15518900/digital-analog-rediscover-tactile-physical-experiences-vinyl-print (Recode 2017)

Are dentists more attractive than banks?

  • 71% of millennials would rather visit the dentist than their bank (me included)
  • 73% would be more interested in financial offerings from Google and Amazon than from high street banks
  • 33% believe that banks will be unnecessary within 5 years and are open to switching banks in the next 90 days (Scratch/ Viacom Media Networks, 2016)

 

So how can the banking sector engage this digitally savvy, disloyal and demanding audience?

Gone are the days when reps from the high street banks rocked up at Fresher’s Week and recruited their customers for life – the 4 UK leading banks are now among millennials’ 10 least-loved brands. These digital natives – cash and time-strapped but with high expectations – know what they want and a group of challenger banks are lined up in the race to win them over.

So what do they want and who’s winning?

  1. Ease of transaction and transparency – multiple passwords and not knowing if your payment to account number 007007, sort code 00-70-07 has actually reached James Bond are no-nos
  2. Real-time information – most banking updates are instant but contactless, albeit an excellent innovation, often doesn’t show up for a couple of days
  3. Personalisation – millennials love it
  4. Money management tools – to see where they’re spending their pennies and meet targets
  5. …and innovative and digital, preferably an app, The ‘Uber’ of banking

Since the relaxation of banking rules in 2012 and the launch of the Current Account Switching Service (2013), the Prudential Regulatory Authority and FCA have received 45 banking licence applications! Of these, four large digital challenger banks emerged – Monzo, Atom Bank, Starling Bank and Tandem. Combined they raised £332m through crowdfunding and VCs (Real Business, 2017). These players are still jostling for position – most are still in beta and vulnerable to setbacks. Let’s look at four…

  1. Monzo…the best for prepaid cards
  • This pioneering, mobile-only bank has grabbed millennial’s attention for more reasons than its snazzy, coral cardPicture1
  • Monzo has just been granted a full, unrestricted banking license by the regulators, having smashed a second crowdfunding record
  • Future plans include current accounts, one-click access to third-party financial prod
    ucts, retailer loyalty and discount schemes, price comparison sites, investments and even the possibility of switching utility provider or filing your tax return – all this as part of a move toward “banking as a marketplace”

What do we think?

  • Monzo has brought a buzz to the banking customer experience by energising it with personalisation – photographs of users, emojis and effective word-of-mouth marketing with ‘Willy Wonka-style’ golden ticket referrals
  • They have created a community which appeals to millennials and engages users in the company’s development. The website encourages suggestions (open innovation) and the transparent publishing of their product roadmap on the website increases trust in the brand 

 

  1. Starling Bank…the best for current accounts
  • Starling’s goal is simply to build “the world’s best current account”, no initial prepaid card. They call themselves a ‘tech startup with a banking licence’ and have partnered with TransferWise to provide cheaper international money transfers and Moneybox to give customers access to a suite of saving and investing tools
  • They offer real-time balance check (Starling Pulse) and notifications, overdraft facility with adjustable limits and biometric identification by Picture2video
  • They are the first UK licensed bank to launch a public PSD2-ready API, the first challenger bank to offer Faster Payments and organise hackathons to encourage open innovation

What do we think?

  • Of all the challenger banks, Starling is the  most mysterious and guarded about future plans,
    but we particularly like their idea of personalised current account numbers and their planned use of AI to offer a personal assistant service, suggesting an alternative coffee shop if you’re spending too much at Starbucks

 

  1. Atom Bank…the best for savingsPicture3
  • Atom Bank was one of the first challengers to launch, in April 2016 and so far have focused on savings and mortgages. Their USP is high savings rates (until March the best in the market) and low mortgage rates – their new29 % five-year fixed rate is by far the lowest ever seen (the next comparable deal is 1.74% from First Direct
  • They are ‘UX-ing’ banking with personalised colour-themes and logos and selfie and voice biometric log-ins
  • In future, Atom plans to use 3D animation and sound to engage its customers through its gaming platform Unity

What do we think?

  • While I fancy having my personalised ‘Amelia’s bank’, Atom’s current offering seems to target older millennials – younger, cash-strapped millennials will be less interested in a bank offering mortgages and savings products than a payment card or current account, which Atom will only be launching this year
  • The ‘What’s in Store’ page on their site engages potential users by informing them of future plans eg. current accounts, instant access savers and credit cards

 

  1. …the best for price comparisonsPicture4
  • Newbie Tandem suffered a set-back in March 2017, losing its banking license after funding from a Chinese conglomerate failed due to China’s overseas capital controls
  • While currently unable to offer full banking services,
    robo-based Tandem will for the moment provide a price comparison service. In the future they are hoping to be ‘corporate’s worst nightmare’ – giving customers actionable insights into where they can save by switching eg. energy supplier and then actually switching them

What do we think?

  • The fun, animated website gets our vote
  • The ‘co-founder’ community engages millennials by working in ‘tandem’ with customers to build a bank which reflects their needs (they also offer drinks parties)!
  • Tandem stands to increase healthy competition in industries way beyond banking

 

These are just 4 of a multitude of fintechs looking to revolutionise the world of banking for the next generation – check out also exciting Revolut, Loot and Curve. All challengers offer an enhanced customer experience and increased transparency which was lacking in the incumbent banks, but as yet all are lacking a full product offering. As such they are complementary rather than substitute products. If they want to win back millennials, high street banks should snap up these baby banks in their infancy and allow them to flourish and grow with an independent identity.

What do Millennials really want?

Millennials are lazy, entitled narcissists.” So said Joel Stein of Time Magazine, tarring, with one broad, dripping brush, a generation which he admits is the largest we’ve ever seen.

Since 2015, Millennials have made up the majority of the workforce: those born between 1980 and 1995, are members of the most marketed-to, most studied generation to date. They are the generation with all the information at their fingertips, and a drive to seek authenticity of experience and values. In spite of the perception that they’re lazy, entitled and narcissistic, this is actually the main thing to differentiate them from Gen X and the Baby Boomers: it’s getting harder and harder to be insincere or generic and expect Millennials to buy it. I think Shane Smith, founder of Vice Media, put it well when he said:

“Young people have been marketed to since they were babies, they develop this incredibly sophisticated bullshit detector, and the only way to circumvent the bullshit detector is to not bullshit.”

So other than a little sincerity, what do Millennials really want? Well, this comes down to a few simple things, things which smaller, more agile businesses can give them more easily than large corporates can, but things which both should be aiming for:

  • Values that resonate with them: 50% of millennials would take a pay cut to work somewhere with values they can relate to. Is this all about having a social purpose? No. Is it being very clear about purpose – and the wow? Yes. Zappos applies this brilliantly, by making customer service central to everything they do, and hiring people who hold it as a core value. Taking it a step further, they reward staff for adhering to this value, knowing their customers by name and having long customer service calls – KPIs that defy the nature of how the success of call centres has traditionally been measured.
  • Support and the opportunity to grow and develop: PwC research found that the biggest reason for Millennials leaving their jobs is feeling that they weren’t given a chance to grow. This isn’t to say that this generation is less loyal than previous generations, far from it – more Gen X-ers left jobs after less than a year than Millennials have. But companies which leave them to sit at one level rather than helping them to push themselves will soon find themselves losing a few. Giving teams short term opportunities that enable them to grow today, as well as longer term structures for development, are key.
  • To use their full skillset: only 21% of millennials believe their employer makes full use of their skillset. It’s easy to see how ideas and offerings from junior members of a team can be passed over in favour of what more experienced parties think. But based on the fact that in Silicon Valley, about 25% of founders are between 20-24 years old, sometimes you should shut up and listen. Creating opportunities for two-way innovation – huddles, competitions, reverse mentoring – will seed the future behaviours you want to see from teams at all levels.

 

It’s important to point out that this isn’t a scary new way of working. It’s something startups do from their inception and should strive not to lose as they grow. It’s just how you behave when everyone in your company makes a tangible difference to its outputs, and of course, as your business grows it’s easier and easier to forget that that’s still true.

The way a company behaves towards its employees can empower as well as break. The interesting part is that there might be no difference in the tasks they’re actually given. Millennials just tend to abandon the bullshit for something which lets them grow then gives them their time to shine.

Originally presented as a Tedx talk by our very own Lucy Cooper at the Fidelity TedX event, September 22nd 2016.

 

Blockchain: the emperor’s new clothes or a knight in shining amour?

Imagine a world where an anonymous, Banksy-like character going by the pseudonym of Satoshi Nakamoto, remote Chinese ‘mining’ installations and the Russian founder of an entity called Ethereum operate side by side and the scene is set for a Bond spy movie. This world exists. The world of blockchain… so we’d better arm ourselves to deal with it!

According to the WEF, 10% of GDP will be stored on blockchain technology by 2025. Last year alone, almost half a billion dollars was invested in VC-backed blockchain companies (RSA, 2016).

So what is blockchain and will it transform the world as we know it?

Firstly, to be clear, blockchain and Bitcoin, often used synonymously, are not the same thing. Bitcoin is just one application of blockchain technology… but more of that later. Blockchain is, a ‘database that takes a number of records and puts them in a block. Each block is then ‘chained’ to the next block using a cryptographic signature’ (Government Office for Science, 2016)?!? Clear now? In essence, it’s a cloud-based, digital transaction ‘ledger’ of any form of information, which is transparent (public) but somehow protects the identity of those involved, distributed (shared across a network of users) and immutable.

So is blockchain a knight in shining armour?

Some of blockchain’s main advantages- cost saving, empowered users, disintermediation and trustless exchange- stem from its transparency and immutability. We know with certainty what belongs to whom, which allows A to transfer money to B without having to pay a transaction fee for 3rd party validation. This is great news for consumers and innovators in all industries, less great for the middlemen. But it may not be all bad news for banks either, provided that they’re prepared to data share. According to Santander InnoVentures, blockchain technologies could reduce banks’ back office costs by $15-20bn a year by 2022.

Other advantages are:

  • Speed- as banks’ monopoly is disrupted and incentivises rapid transaction settlements
  • Value innovation- as blockchain is open source, it can be applied in all industries, reduces barriers to entry and encourages innovation
  • Ecosystem simplification- with all transactions being added to a single public ledger, it reduces the complications of multiple ledgers
  • Reliability- as the network is decentralised, it doesn’t have a central point of attack or failure

 

These advantages have led to a host of applications and that’s where our Bond world re-emerges

  1. Bitcoin- blockchain’s most famous application, is a peer-to-peer digital asset, an alternative ‘currency’. It is global and no government or bank owns it, which is why it appeared attractive when founded by the mysterious “Satoshi Nakamoto” (a.k.a. possibly Australian Craig Wright?) following the 2008 financial crisis. Bitcoins are issued to the market based on ‘miners’ (computer wizards) racing against other ‘miners’ to solve mathematical algorithms and bundle transactions into blocks to earn bitcoins!! Bond’s Q would be in his element! Intriguingly again, 80% of Bitcoin is ‘mined’ in remote Chinese locations with cheap software and electricity and by only 4 organisations, making these ‘miners’ pretty influential over the future of Bitcoin software and Bitcoin itself. Check out this 7 mins video! Despite Bitcoin’s small market cap at c.$10.2 bn and a series of hacking attacks which have called the security of the system into question, several leading brands, including Microsoft, Expedia and Home Depot, now accept Bitcoin payments. It must be said though that in the western world, Bitcoin might be considered a solution seeking a problem as we are well served currency-wise. The developing world is where Bitcoin makes most sense, for example in Indonesia where only 4m of 280m people have credit cards, or for hedging purposes in countries with unstable economies

Map of Bitcoin accepting venues (CoinDesk, 2016):

map3

  1. Finance- All traditional banks fear the blockchain effect and are investing in it at breakneck speed so they are not left out of the party and the potential cost savings. R3 consortium is raising $200m from over 60 of the world’s largest financial institutions to fund collaboration for the adoption of blockchain and 15 banks are collaborating with Ripple to revolutionise settlements. Nasdaq has launched Linq, a private trading platform based on blockchain technology, allowing private companies to trade shares together. They believe that blockchain has the potential to reduce settlement times from 3 days to 10 minutes, reducing both risks and costs

 

  1. Government- Dubai’s government has committed to 100% blockchain by 2020 and the UK government has been testing the technology to make benefit payments. In July 2016, the Bank of England said replacing 30% of the currency in circulation with a central bank digital currency would ‘permanently raise GDP by as much as 3%’

 

  1. Music- Start-ups such as Ujo Music are building Ethereum-based blockchain smart contracts to solve the industry’s monetisation and licensing problems. Storing a song on the blockchain, with its own unique ID, allows artists to be paid directly for their music, aiming to cut out online services. Singer Imogen Heap has launched her first song on the blockchain

 

  1. Energy- smart meters enabling digital payments could revolutionise the sector, particularly for unbanked customers. A pilot project by start-up Bankymoon brought electricity funded by foreign donors to a South African school. This also has applications for charities, ensuring that donations reach their intended destination

 

  1. Healthcare- blockchain technology has the potential to deal with healthcare’s major problems- lack of interoperability, security and costs

 

  1. Sharing economy- blockchain has the potential to disrupt even the most innovative business models. lmagine if Airbnb and Uber were replaced by blockchain clones. This world, envisaged by Don and Alex Tapscott in ‘The Blockchain Revolution’ (2016), would verify financial transactions and codify reputations, diminishing the power of middlemen and the 20% cut that Uber takes from its drivers. The two companies could share customer information but would have to endure margin squeeze. No surprise then that Airbnb has pre-empted the situation by employing blockchain experts themselves

 

So this new world is full of possibilities. While I do believe that blockchain, although very much in its infancy, has the potential to be the knight in shining armour which brings the consumer to the centre of every business transaction and saves costs throughout the economy, Bitcoin, at least for the developed world, might be considered a case of the emperor’s new clothes. And blockchain ex Bitcoin is not without its problems, among them scalability (maximum 7 transactions/sec), speed (minimum 10 min delay for transaction confirmation), security as all transactions are transparent and perhaps most importantly, that it contradicts existing legal, accounting and taxation rules- whoops!

5 companies winning in experiential marketing

Experiential marketing involves bringing a brand closer to its customers by immersing them in interactive, visual events.

As the volume of content released online everyday reaches astronomical levels, an increasingly important part of storytelling is happening in real life. Here are 5 companies I think are winning in experiential marketing…

 

1) The Economist: Insect ice cream

Following the publication of an article making the case for an insect diet to combat the growing global population, The Economist offered Londoners free samples of insect-infested ice cream. With flavours including chocolate with grasshopper chunks and strawberry with meal-worm swirls, experiential marketing proved a great way to bring a publication to life for consumers whose only experience with it is online and in print.

Picture1

 

2) Carlsberg: ‘Probably the best poster in the world’

In April 2015, Carlsberg unveiled its billboard named ‘Probably the best poster in the world’ in Brick Lane. People could pull their own pints from a working tap attached to the centre of the poster, and queues quickly stretched far down the street.

Aside from garnering favour by offering customers free beer, this was an interesting reaction to the surging popularity of craft beer and ale in Shoreditch, where the billboard was erected.

Picture2

 

3) Not On The High Street: ‘Gift-O-Matic’

Aimed at last-minute Christmas shoppers, Not On The High Street’s ‘Gift-O-Matic’ was essentially a Twitter-powered vending machine.

Passers-by were invited to tweet Not On The High Street with one of five hashtags, including #Foodie and #PetLover, in return for a free gift related to that personality type. A great example of an online retailer bringing the high street to life.

Picture3

 

4) Red Bull: Stratos Jump

Pretty much everything Red Bull does is based around experiential marketing, from its Air Race and F1 team, to its extreme sports events.

However, none of these garnered the same global attention as the Stratos Jump; in which Felix Baumgartner passed the speed of sound as he broke a 52-year-old record for the highest recorded parachute jump.

Due to the 8 million people watching live, and huge international excitement, it was impossible not to feel in some way a part of it.

Picture4

 

5) Milka: ‘dare to be tender’

Across France & Germany, Milka took a square of chocolate out of 13 million chocolate bars, instead presenting customers with a unique code and the opportunity to either claim their missing square of chocolate for themselves, or to send it to someone else with a personal message.

The shareability and personal nature of the campaign ensured that its reach went far beyond that which traditional marketing would have afforded.

Picture6

 

At its best, experiential marketing evokes emotion and appeals to the senses, and brands that put on an unforgettable event or engage with consumers in a novel and rewarding way can evoke surprisingly warm and fuzzy feelings in their customers.  Marketing has always been about storytelling – but as these 5 brands are demonstrating, experiential means that rather than dictating stories, brands are beginning to invite customers to be a part of them.

Now that the dust has settled – Pokémon Go and how it makes money

It was a stampede. There have been injuries, violence, deaths. The world is a stranger place now, a place where people shuffle distractedly around in small swarms, eyes agape, hunting.

Is it a zombie apocalypse? No. It’s Pokémon Go.

Estimates had download numbers at over 100 million, with iPhone users spending 33 minutes a day on the app, more time than they spend on Facebook (22 minutes), Twitter (17 minutes) or Instagram (15 minutes). Apple has reportedly said that it had more downloads in its first week than any app has had before. It’s been big.

But then, any number of things have been big for a while, and fallen by the wayside as fads with limited lasting appeal. Look at the Nintendo Wii… The difference this time is that Pokémon Go relies on hardware which is pretty much ubiquitous, and it’s generating money in more ways than one.

 

In-app purchases

You’d be wrong to describe non-consumable in-app purchases as a license to print money, but I for one am always amazed at how people throw away their pennies with alacrity for an imaginary lucky egg or a lure. This is greatly helped by the seamless purchase process: the app is already synced with players’ iTunes accounts so at no point does it take them out of the game to ask for card details. You can spend between 79p and £80 in one purchase of PokeCoins, exchangeable for the things you’re really after; ways of getting more Pokémon without having to do loads of walking around. This conversion to an imaginary currency removes the whiff of spending real money, also mimicking the confusion tourists have abroad of not really knowing the value of every purchase they make without stopping to do some calculations. SurveyMonkey reckons that the app is hauling in $6 million a day in the US on in-app purchases alone, of which Apple takes 30%, and for their money the players get a little closer to the end goal of catching ‘em all. So it’s a win-win, right?

 

Sponsorship

In addition, the game opens up a number of opportunities for marketers to exploit their position in the Google Maps-esque world of Pokémon. On the 21st of July the game launched in Japan and McDonalds became the first major sponsor. In exchange for sponsorship, all of the 3000 McDonalds restaurants have become PokeGyms, battlegrounds for players to exercise their virtual quarry. McDonalds is running a line of Pokémon-themed Happy Meals, as if customers hadn’t already got the point. We’ve yet to see how the move will increase sales at McDonalds, or whether the effect will last.

Niantic is also selling ‘sponsored locations’ with advertisers paying on a ‘cost per visit’ basis, similar to ‘cost per click’ but presumably harder to track. On a far smaller scale, individual stores, restaurants and cafes around the world are using Pokemon Go accounts to purchase lures within the game. One coffee franchise owner has described this as “the best ROI we’ve ever seen on marketing” (Warc).

 

Invisible advertising

In my view, the beauty of this kind of advertising is that as far as the user experience is concerned, there’s no change. The sponsored ‘gyms’ don’t look any different to the ones which already exist in the game, there are no pop-ups and the brands involved have no control over the look and feel of game play. As soon as the leap is made to allowing brands to message players during the game, something valuable will have been lost: nobody enjoys discovering that they’re favourite toy is trying to sell them a frappuccino.

 

A terrifying new world?

There has been talk of further opportunities in gaming: other games which use the real world as their playground and send players to wander their home towns on foot. There are games which translate well to this format, and rather more disturbing possibilities: Grand Theft Auto Go is, in principle, among the worst ideas I’ve ever heard.

10 Ways to Have a Better Conversation

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