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Gerd Leonhard is CEO of The Futures Agency, and has been described as "one of the leading media futurists in the world" for his views on the development of next-generation business models in the content, communications & technology industries.
He will be giving one of the keynote speeches at Econsultancy's Future of Digital Marketing event on June 16.
I've been speaking to Gerd (he can be found on Twitter here) about his upcoming keynote, as well as his views on the Times paywall and the future of the music industry.
You have stated that social media beats search 10:1, can you explain this?
One emerging and very recent trend is that traditional search is losing out to what people are doing on social networks. Brands are getting more from social media. I believe in the long run, social media will be ten times more influential than search.
This will change companies' attitude over time, and they will hire more people with experience of social, as social creates a kind of polling mechanism.
The companies that have been used to controlling their environment will have to adapt to this. There has been a shift from this control to a situation where trust and engagement is more important for customers. The difference here is that trust and engagement are ‘soft factors’; ones that brands can have an influence on, but ultimately cannot control.
Brands need a two-way model, and conversation is a big part of this mix. This in turn means that marketing changes; old style advertising is becoming useless, it’s no longer about simply pushing something at people; this is not what consumers want on the web.
Do you have examples of this happening?
There are lots. For example, a move towards applications being used to engage people rather than just selling, so brand like Kraft have cooking apps, and this is part of a shift towards providing a service instead of just opting to pay for skyscraper ads to promote their products.
Some car manufacturers, such as Volkswagen, are being even more creative, and actually trying to engage users into doing part of their R&D for them.
In previous presentations you have said that 'data is the new oil' - can you explain this analogy?
Because of the fact that we are all connected, and constantly creating mountains of data; bookmarks, links, uploads, tweets, and more.
The data that users are creating is growing and growing while that created by content and media companies is staying the same. I call this user data meta-content, and this is something that every marketer wants to get to.
This data is valuable, and so the user becomes the oil sheikh, making them as powerful as OPEC. The user can say: you can have my data, but I want things in return; free content, music, something of value.
This empowers the users, and also means that anyone that can figure out how to use this oil can make money. With oil, people can profit from transporting and pipelining it, and the same principle applies to this user data, we have ISPs, search engines etc that make use of this data, and a whole food chain is developing around this data oil where people can use it and add value to it.
If you are a marketing agency, this will be a big part of your job. For example, by measuring what people are saying so tools are being created to allow brands to monitor this without having to go to Twitter search or elsewhere. It’s not just about asking: what does Google think of me? There is also that 'nowness' rating that comes from social media. If you can understand this, you can mix up the two.
Marketing is more like listening now, and this is something that will require a major change in the attitudes of large companies and corporations. I think perhaps we need a new word for this – while marketing and advertising is all about selling, this is more about building networks.
The old watering can approach of attempting to tell everyone on earth that you exist will become less and less effective. The fragmentation that exists on the web and media generally means that this kind of approach will be too expensive and less effective. The social graph is needed, not the watering can.
How will mobility affect marketing in future?
In the past, marketers have thought of the internet as a kind of static box, people using their PC or laptops in a single location, but that is over.
Everything is going to be mobile; people might be in their living rooms using an iPad, or anywhere accessing the internet on a mobile phone. Most marketing dollars will shift over time towards reaching people on these mobile channels.
Every form of media and marketing will need to take account of this mobility, even things like outdoor marketing will need to adapt. This convergence has been talked about for years, but it is finally happening, and mobile can act as that remote control for people.
Do you see the Times paywall as a backward step?
I’m pragmatic, and if someone like Murdoch has an idea of how he can make money like this, it may well work. However, I think the incentive to pay will decline because there are so many ways to sidestep paywalls.
Impeding the flow like this is generally a bad idea, though it does work for companies such as Apple, though Apple has done this by creating its own networks which have attracted a cult following.
In the long-term though, the idea of forcing people to pay is a non-starter, it’s better to take the approach that the Guardian uses and to give users enough free content that they will become hooked, and entice them to pay for extras.
You can give something for free that is not as expensive for you to create, and then try to convert them as well as you can, without pissing off your followers.
This is nothing new, it's just more pronounced online as consumers have more power in this environment. It enables content producers to offer content and services at a low cost in order to get more followers. The only thing that matters here is conversion.
The trend here for marketing is that we cannot force people to buy. People hate this; the case of the music industry is one example of this attitude in action.
Instead of charging for everything, by providing a low-cost or free products but adding paid extras for those that want them, then you can get the same money by charging in the first place
So Spotify would be a good example of this?
Spotify knows that this needs to be done, and this is the model that can work, but they cannot do this outside the UK as the labels think the ad money is not enough to cover their costs.
It is the right model; instead of offering the service for £10 from the start, and perhaps getting 1% of the population to sign up, providing a free ad-supported version, gets more users in, which gives you the chance to then say: we have a paid version here which allows you more access, no ads, mobile etc, compelling reasons for people to pay more.
By taking this approach, you have the chance to convert more users to the next level, as they are already engaged, and this is one reason why marketing cannot be too separate from business in future.
Publishers, TV and film people all get this, as they are not as cartel-orientated as the music industry. The record companies will die eventually if they fail to catch on.
You cannot force consumers to act differently than they do In future, we will see big brands, as airlines have done, giving more authority to customers. Besides, this engagement leads to buying.
How does this affect the role of ad agencies?
This is not marketing in the traditional sense, and it means that the job of agencies is diminished in one way, but it is enhanced in another since they have the job of getting brands to understand the changes that are happening and help them to adapt.