Some Examples Are Changing the Face of Competition

 - the pharmaceutical industry which increasingly has come to depend upon technologies that are fundamentally different from the technologies on which the pharmaceutical research lab is based, such as genetics, micro-biology, molecular biology, medical electronics, etc

 - the computer industry's impact on all industries, such as ATMs and Internet on the banking industry and car industry. The car industry's slow and steady approach, such as using computers to help drivers at the wheel is being challenged by Google who wants to a more revolutionary approach, ie replace drivers. It is expected that Google will not build cars but license the technology to car companies and suppliers as the operating platform for their self-driving vehicles. This is a similar model to its mobile operating software (Android) where Google licence it to phone manufacturers in return for installing Google services; Microsoft did a similar thing with its software. Car manufacturers and suppliers need to be aware of what happened in the computer/phone industries with software licensing, ie the profits went to the software firms and manufacturers suffered.

- impact of social media on traditional advertising

Traditional advertising is very wasteful with around 90% of what you see in the broadcast media being irrelevant to you (Ian Leslie, 2018). Social media, by contrast, can be more targeted.

The domination of the ad business, via the Internet, by technology companies like Google, Apple, Facebook, Amazon, etc has transformed the industry. Clients pour billions of dollars into the digital eco-system.

"...the ad industry, run by people who pride themselves on creativity, is being displaced by the ad business, which prides itself on efficiency. Clients are spending less on the kind of entertaining, seductive, fame-generating campaigns in which ad agencies specialised, and more on ads that flash and wink on your smart phone screen......the ad business is largely automated. Clients only have to decide how many people they want to reach, and how much they want to spend; algorithms do the rest. In the milliseconds before a page loads onto your screen, a virtual auction takes place. Advertisers bid for the chance to place their clients ads on it, based on data about your online behaviour: where you live, whether you're young or old, recently shopped for shoes or searched for a car brand. The advertiser might create multiple ads and serve different executions to different slices of its audience...... the more valuable your particular profile is to the advertiser, the higher price its algorithm will pay the publisher to get an ad in front of your eyes..."

Ian Leslie, 2018

The ad business on the Internet is very profitable for the likes of Google and Facebook (making billions of dollars), and is also the engine to the free Internet, ie providing funds to most of what you read and watch online.

On the other hand, algorithms are poor at making judgements when compared with humans and people are tiring of the aggressiveness by which online ads insert themselves between the client and the content they are watching. This has resulted in more and more people using ad blockers to combat this invasion. A third of the audience for online ads are bots, ie generally activated by criminal groups making money selling fake clicks to advertisers and their agencies

"...successful marketing must not be too rational because, as in military strategy, it depends on surprise..."

Ian Leslie, 2018

You need to be efficient but unpredictable, like doing something slightly absurd in order to be distinctive and able to resonate with the audience. Also the messages can be micro-targeted but still need to have a meaning that is understood by the masses.

Advertising needs to solve the coordination problem, ie help us to see the world as others see it, and adapt our behaviours accordingly.

On the negative side, there is less trust with online advertising

'...The very act of advertising in public tends to make a brand more trusted, since people can see it has a social reputation to maintain. When ads are invisible to people outside their target audience, it is easier to send messages that would fare badly in the light of public scrutiny......Researchers have consistently found  that ads in broadcast media are taken more seriously then online ads: one reason for this is that people can see that other people can see them too..."

Ian Leslie, 2018

It is interesting to note that Facebook in the wake of the Cambridge Analytica scandal ran full-page ads in newspapers to try to restore trust in Facebook.

"...The need to have a meaningful brand forces a company to reflect on how it wishes to be received by society at large. Once that imperative disappears, all that is left is the battle for attention..."

Ian Leslie, 2018

There is an interesting conundrum

"... Adverts have never felt less significant, ad agencies have never seemed less important, but the advertising business has never dominated more aspects of modern life. Mostly in a bad way..."

Tom Goodwoin as quoted by Ian Leslie, 2018

As the focus on social media is selling attention to advertisers, its algorithms have learnt the best way to keep people interested is to push even more extreme material.

"...attention was always important to the ad industry, but so were entertainment and storytelling, since they made a person laugh, think or cry to more likely be remembered. Historically, ads in broadcast media needed to be memorable, because they were not going to be seen very often, and would be absent at the point of purchase. It was important, therefore, to build a brand - a set of visual and emotional associations easy recall to mind when deciding between options. Now people carry media around with them everywhere, advertisers have less incentive to create memorable ads. Instead, they focus on forcing our attention towards a message or offer of the moment. The ad business doesn't care about the future of its audience, only its present..."

Ian Leslie, 2018

During the 2016 US presidential elections, Facebook charged the Trump campaign lower rates than Hilary Clinton's campaign, as Trump made people angry and that generated more clicks. This is an example of the core principle in the new ad business, ie the more attention you win, the more you get paid.

As negative emotions are more likely to gain and hold attention than positive emotions, there is an incentive to spread fear, loathing, paranoia, spite, etc

One of the powerful parts of brand-led advertising is the human mind. It is considerably less rational in its performance than the on-line algorithms, ie

"...the way we choose what to buy, like the way we choose how to vote, will never be logical..."

Ian Leslie, 2018

Thus

"organisations set adrift from past success, flummoxed by the future, unable to find the footing in the present"

Monej Williams, Managing Update, May 1997

"Sooner or later traditional forms of competitiveness - cost, technology, distribution, manufacturing and product features - can be copied"...You must have them to be a player, but they do not guarantee a winner. Winning will spring from organisational capabilities such as speed, responsiveness, agility, learning capacity and employee competence. Successful organisations will be those that are able to quickly turn strategy into action; to manage processes intelligently and efficiently; to maximize employees' contribution and commitment; to create the conditions for seamless change"

David Ulrich (HBR) as quoted by AHRI, 1998

"the accelerating pace of change in today's economy means that it is no longer enough to be responsive to current customers' needs and competitive pressures. Companies must now look beyond their headlights to anticipate the change ahead"

Lila Booth, Harvard Management Update, March 1999

"to get ahead you have to sometimes break the rules and forget everything 'they' told you to do"

Kate White as quoted by Robert Kriegel et al, 1996

"...to get people working and behaving differently, there are four key elements......make sure the measure of performance is easy in economic terms; give people easily understood tools they can use; educate them on how to use those tools; and put them on a bonus system...."

Joel Stern, 2001

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