Disclosure: Sparksheet is published by Spafax, a WPP company.
At Sparksheet we’re very interested in how brands are serving the Transumer, or the consumer in transit. As someone who spends a lot of time on the road, what do you look for in a travel brand?
If you’re talking about airlines, research shows that the most critical thing is how you’re received at the check-in desk and upon boarding the plane. There’s nothing more irritating than when you see the flight crew chatting amongst themselves instead of talking to you. In my opinion, the devil’s in the detail. It’s not the big stuff. What turns me on is when people are attentive and welcoming.
The key thing for travel brands is that they can get you where you’re going on time. Beyond that I think technology is important – entertainment, music. Maybe I shouldn’t say this but a lot of the Eastern airlines – Singapore Airlines, Cathay Pacific Airways, Emirates – these airlines are thriving because they’ve invested a lot in equipment and service.
I always travel by scheduled aircraft and very rarely charter a private plane, which is extremely luxurious but not very green. I flew Jet Airways and Kingfisher when I was travelling in India. A lot of people say they’re not profitable and won’t be profitable, but their service is absolutely outstanding. The Western airlines face a lot of challenges in competing with them. As a Transumer, as you call it, those are the things that I look for.
I get the impression that the major airlines see investment in the soft touches – video, food, etc. – as relatively unimportant, but I think it makes a hell of a difference.
These days brands like JetBlue can sell off millions of dollars of inventory with one measly tweet. What does this mean for the future of advertising?
The answer to the JetBlue tweet example is that the price point – or the offer – is probably a big determinant to the success of the campaign. So the outcome isn’t a surprise, but it tells you something about the power of the social media. Population-wise, Facebook is the third- or fourth-largest country on the planet. But these things are going to be fluctuating. I’m not saying they’re going to be here today, gone tomorrow, but they’ll fluctuate – it’s early days.
Things have become much more fragmented and very, very different. I heard a figure from a client today that, in America, 34 percent of their consumers’ time is spent online. The figure we usually fasten in on is 20 percent, I’ve seen 28 percent from Morgan Stanley. But clients are only spending about 12 or 13 percent of their budgets online.
Media habits are changing, becoming much more one to one. That’s good news, but it’s also bad news because it’s highly fragmented, and therefore you don’t have large globs of ad revenue sticking to properties anymore. So it makes life for newspapers, magazines, and free-to-air TV much more difficult.
It also means that smaller fragmented audiences are much more important. For example, the Transumer audience becomes much more important because it becomes more defined and more easily addressable and targetable.
The JetBlue example shows you how violently media consumption – particularly amongst younger people – is changing, how it is likely to keep changing, and how specific it can all be. And actually it can be very effective and cheap for everyone.
What’s the missing link in getting brands to seriously spend on the Web? Is it that advertisers flock to quality content, and that just doesn’t exist to scale online?
Time. A lot of it’s to do with time. I’ve described it in the past as “age” but that’s gotten me in trouble. Agencies are run by old people like me, and older people like me are media owners and clients as well.
People take time to change. They might not get it yet. You become the CEO of a company and it’s taken you 25 years and the last thing you want in your last four or five years is violent change. You want things to go on just as they have before. So it’s a natural human emotion if you like – a human feeling – to resist this change. But it’s only a question of time. Because if consumers are spending 20, or 25 percent of their time online and clients are spending 12 or 13 percent of their budgets online, there’s a natural gravitational pull to that 25 percent.
By the time the spend gets to 25 percent, say over the next five years, we’ll probably be spending a third of our time online. And so, as one of our clients said, maybe by then there’ll be less of a gap as we’ll all be used to it. It’s purely a function of time and people’s unwillingness and resistance to change.
You’ve said that you agree with Rupert Murdoch’s decision to charge for content. Why – and what do you think his real motivation is?
Because the current models – the new media models and certainly the old media models – are under a lot of pressure. Craigslist has destroyed classified advertising for “old media” and there are very few new media companies that make any money. Google is an exception. Their new CFO is doing a lot of good and Google is a much more intimidating company than it was even six months ago, if that’s possible, with a market cap well in excess of Berkshire Hathaway’s.
So I think that life has changed. I think that if someone like Rupert Murdoch, who follows his business intensely, sees circulation coming down, and ad revenues coming down, there are only a few ways to deal with it: one, by getting people to pay for content; two, by more consolidation amongst media owners, which is why he’s asking for relaxation in media concentration rules; and three, as media concentrates, and a lot of newspapers and magazines close, governments are going to have to see whether they will protect the private industry – protect you or me from the diminution of editorial content.
Do you think that part of his motivation is that if consumers pay, advertisers will follow? After all, a paid site implies quality content.
No, his central point is that giving it away for free doesn’t make sense. Kindle doesn’t give it away for free, so why should Rupert Murdoch? In my view, if the consumer can pay for content, they’ll pay for it.
And Google does seem to have modified its initial position. This is all about trying to generate revenue from all sources – traditional and new – in a world where platforms have been disintermediated, in a world where fragmentation makes it very difficult.
It’s got to change – after all, how many new media companies are actually making money? They say they are, but Mark Zuckerberg says I need to earn one cent more than my cost!
Can branded content connect with consumers the same way traditional media can?
Yes, branded content is a way forward and even the UK authorities have reversed their position against it. But fundamentally, consumers are not stupid. I’ve seen some very crude product placement in various markets, like in a soap opera where a woman opens a fridge and there’s only a can of Coke in there! It can be much more subtle than that and it will be more subtle than that. But people have to understand that it’s happening and brands have to recognize that the consumer can’t be hoodwinked.
What role will the emerging Chinese consumer class play in shaping the global travel industry?
The world has to change the way they look at the Chinese. There’s a lot of them. They’re the biggest group of visitors to France now. They’re already out there – there’s 1.3 billion of them. You’re talking about a lot of people with the disposable income to travel. People say Chinese aren’t rich but 150 million to 200 million are consumers already – with middle class habits – and there’s a lot more coming.
And don’t forget about the Indians. There’s more than a billion of them, too. Between them it’s one third of the world’s population and shortly 40 percent of the world’s GNP. So, ignore at your peril.