I spent an amazing morning today at Media Kitchen’s annual Venture Capital Conference in New York City listening to leaders in media, investing and banking talk about “new TV”: the merging of broadcast TV, social video and everything in between.
This is the 11th year that Media Kitchen CEO Barry Lowenthal has put on the event to help drive critical thinking, inspiration and innovation for our industry.
In my remarks, I focused on what I thought would the key drivers of the advertising industry over the next five years. Here they are — and AI is not one of them:
Direct to consumer. All marketers and media companies that want to be relevant into the next decade are working hard to build direct consumer relationships.
Most incumbents here are in a bad spot. If you are Proctor & Gamble or CBS, you are basically in a B2B business. You make your sales in multiyear agreements with Walmart or Comcast, not to the Sally Browns or Joe Smiths of the world.
Not so a Warby Parker or Amazon Video. They create products and sell them directly to consumers. They know their customers’ names. They can and do talk to them directly.
This is the fast-emerging direct-brand economy — and nobody has done a better job laying out its potential than the Interactive Advertising Bureau’s Randy Rothenberg, in a must-read for all who care about the future.
ROI. For decades, legacy brand companies have been managing their advertising as a cost center. That’s why they focus so much on outdated media measurements like gross rating points, and are maniacal about per-ad unit pricing and cost-per-thousands.
Not so if you sell direct to consumer. In the world of the Dollar Shave Clubs or Casper mattresses, advertising is a profit center. For them, sales has an ROI for each and every ad. As more companies go direct to consumer, more and more advertising will be managed as profit centers and measured by ROI.
Identity. Cookies, device IDs and IP addresses aren’t identity, even if they help ads follow you across the web. In the world of direct selling, people buy things — and it’s very important for marketers to know who those buyers are. That’s why we are seeing the rise of customer data platforms (CDPs), where companies aggregate customer data sets to make them more accessible and actionable to drive their advertising and marketing.
Critically, these systems contain ways to make data available to drive action-based systems — ad servers, email servers, TV planning systems — without leaking private data, keeping personal data within the walls of the marketers. This area is growing fast, with this week’s Facebook hearings only adding urgency.
TV advertising. What’s old is new again. Nothing sells like sight, sound and motion, and television is unrivaled in reaching more people faster, with more impact, cost-effectively. That’s why so many of the new direct brands like Dollar Shave Club, Warby Parker, Peloton, Wayfair and Ring are building their businesses with TV ads.
As we learn from research by the Video Advertising Bureau, not only does 80% of all video viewing today still occur on linear TV, but digital brands that use it see spikes in their website traffic of hundreds of percentages.
As these drivers take hold, they will have significant implications for our industry. Here are a few:
— Data management platforms and customer relationship management systems will subsumed by CDPs.
— Privacy-safe, software-based identity matching will overtake traditional “safe havens.”
— Analog media wlll become data-optimized, performance-focused and coordinated with digital.
— Platforms will take over TV media analytics/planning/activation/optimization.
— We will see true leverage created relative to the digital walled garden duopoly.
Spurred by the recent outrage over the misuse of Facebook’s data by Cambridge Analytica, Adblock Plus has introduced a feature that lets users disable social media buttons.
These ‘like’ buttons allow Facebook to track users’ browsing behaviour beyond its walled garden, even if users do not touch them.
“What most people don’t realise is that buttons used to share content on social media platforms such as Facebook, Twitter, Google Plus and others are placed on almost every website that you visit,” Ben Williams, director of operations at Adblock Plus, said.
“Even if you don’t click them, these buttons send requests to the social network’s servers, which then uses the information to create a profile based on your browsing habits. This is one of the key ways that social media sites such as Facebook are able to access consumers’ private data.”
Adblock Plus promotes this feature as a way for consumers to have more control over their online data, without having to quit social media altogether.
“For consumers, this scandal highlights how easy it can be for their information to be gathered and misused without their consent. The social media giants’ policy of self-regulation is clearly not working as it should, and is making users’ data more vulnerable; it has therefore never been more important for consumers to demand their power back,” Williams added.
Spark new interest in your brand among new and current customers.
Technology has forever changed the way we learn about new brands and interact with our favorites. With smartphones always at our fingertips, we are constantly being bombarded with information, and brands are battling it out to earn our attention. This competition puts increased pressure on marketers to cut through all the noise and keep their brands top-of-mind and relevant with customers.
If your customers are not engaging with your current marketing message and approach, consider these steps to give your brand a competitive advantage in the marketplace.
Try a reverse.
If marketers in your industry all gravitate toward a particular strategy or tactic, here’s the question you should ask yourself: Is this really the best way to reach your own customers?
In the insurance industry, for example, fear-based marketing is a common approach. Much of the insurance advertising you see focuses on fear and the need to minimize risk. At Hiscox, we believe that nothing great can happen without risk. We don’t fear risk, rather we fear not taking the risk. Our “Encourage Courage” brand platform has resonated with business owners because it celebrates the positive power of risk-taking. We communicate to our customers that insurance helps alleviate fear and risk, and it gives you the freedom to pursue your dreams. Breaking with the norm and taking an alternative approach makes people sit up and take notice.
If everyone in your industry operates from the same playbook, how can you demonstrate your unique value to your customers? In the case of Hiscox, we focused our efforts on a long-term relationship built on courage rather than a potential short-term sale driven by fear. You could take a similar approach and run a new play that challenges conventional wisdom.
Be a conversation starter.
If the industry thought leaders and influencers all talk about the same topic, there’s a good chance it’s already a trend and yesterday’s news. While it’s important to be able to weigh in on the trends that impact your industry, if you don’t the join the conversation early, you’re not going to be heard amid all the noise. It’s sort of like talking at a rock concert. The people you’re speaking to won’t be able to hear you and there’s a good chance they may not even try.
If you want to separate yourself from the pack, you need to start a new conversation. Identify the topic gaps in current discussions and offer a social-by-design topic that everyone should be talking about. You’ll move the conversation in a new direction, and you’ll be credited as a thought leader who can introduce fresh topics rather than one who regurgitates stale talking points.
Teach your team to be storytellers.
We all know how important storytelling is in marketing. Customers will remember powerful stories about your brand if they’re compelling and shareable. And while this strategy and practice sounds good on paper, it’s not so easily executed.
When I worked on the agency side, I once had a meeting with client to discuss the pitch we were sharing with the media. We had tweaked the pitch the client had originally created, and turned it into a captivating story. While the company’s original pitch may have worked well in a conference room, our practical experience gained in pitching stories to the media provided us a unique advantage in recognizing that it would not resonate with the intended audience.
Let’s face it: There are people on your team who are great storytellers. Whether it’s the way they talk about the product or the company culture, or the way they recount the employee basketball team’s epic comeback to win its first (and only) game of the season, these people know how to get and keep your attention.
Pull this group together and turn them into your “storytelling ambassador network.” Give them ownership over a particular topic or “beat,” such as customer service, product marketing, culture and innovation. This team of storytellers should meet with groups across the organization to teach other employees how to tell that story, so they can effectively bring these topics to life on their own. If everyone is working from the same script to tell these compelling stories, the messages will start to have an effect on your company’s perception over time and will impact sales in a positive way.
Your audience is out there and they’re listening. If you have the courage to say something new, you just might surprise them and welcome a new batch of customers.
Personal executive branding continues to evolve. What was in vogue in 2016 is becoming outmoded in 2018. Executive branding has become a lot more personal to you and the reputation are you are trying to project. Gone are stuffy formalities.
This post explores personal branding in 2018 and provides tips to help you define your own personal executive brand.
Language
If you have defined your personal brand in 2015 the chances are the language you used was very formal. You would have used words like “motivated” and “self-starter.” In 2018 the language is more about you as a person so you have a bit more creative freedom to bring your executive brand to life. It all depends on what kind of image you want to portray.
So if you want to present formal professionalism, then it’s a good idea to stick to “motivated”, and “self-starter.” It is fine, now, however, to use less formal language to bring your brand to life. “After graduating in management accountancy I learned the ropes in the tech industry helping start-ups expand and grow.”
Voice
Today’s thinking on executive branding puts a strong emphasis on bringing your voice alive. Yes, you have lots of experience and have no doubt plenty of successes under your belt. Hiding your experience and successes behind a wall of formal speak, however, can be argued to be off-putting. Whatever way you want to spin it, somebody who has taken an interest in your career will not get to know the person behind the LinkedIn profile or the blogs if your voice is lost informality.
Using your own voice, which is really writing as you speak, you will give your output and updates character. Not everyone will necessarily take to you but there will be plenty that will. Obviously, you don’t want to write anything inflammatory.
The more memorable bloggers are known for their voice and have been for years.
Specialise
The better brands become more memorable if you write about your speciality. So if you help start-ups in some capacity you can write about it. If your experience is working with the world’s biggest corporations, or local government, the same applies. Writing through the specialist lens gives you the platform to talk about issues outsiders will not have experienced and how you overcame them. This is not only interesting reading but gives you an opportunity to position yourself as an authority in your field.
Tell your Story when Branding
Everyone has a story and telling yours is important. Your contemporaries will emphasize, recruitment managers and headhunters will be engaged, and you will probably enjoy writing in this style and feel a bit freer.
As you write you will be showcasing your achievements and your insights and this is an important part of successful personal branding.
A heavy-handed approach to the latest privacy breach may damage its fast-growing social media platform.
As Facebook(NASDAQ:FB) reels from its latest privacy scandal, and global government regulators investigate the possibility that it violated privacy laws by allowing personal user data to be collected by third parties, the social media platform is seeking to wall off its sibling apps, Instagram and WhatsApp, from a similar backlash.
A blanket approach
Tech journals reported that Instagram last week abruptly cut off developer access to the site’s API while limiting how often others can use its API to collect data on users. APIs, or application programming interfaces, are programming instructions for accessing a software application by other software; they’re not user interfaces. Sites like Facebook and Instagram open them to developers who use the API to build third-party apps that are able to function with the site.
Image source: Getty Images.
What Facebook did with Instagram was apparently limit the number of times a developer can use the API to ping the site for updated information, reportedly dropping the number of calls per user per hour from 5,000 down to just 200.
Because there was no warning that the limits were being imposed, developers were caught flat-footed from angry users who reported the apps were no longer working properly with the site. Industry site Recode notes that some industries such as customer service or brand marketing need near-constant access to Instagram data if they want to keep up with customer complaints or posts, but the limits are preventing them from doing so.
It seems Facebook took a ham-fisted approach to a problem it had and layered it on top of the rest of the organization to prevent its recurrence, without thinking through the intricacies of what it was doing.
A history of privacy woes
Instagram is Facebook’s billion-dollar baby. Purchased in 2012 for $1 billion, Instagram has quickly become a cash cow for Facebook. It had some 30 million users when it was bought, and no revenue, but it has since grown into one of the premiere social media platforms. Every day, 500 million people log into the site, some 800 million people log in at least once a month, and Instagram is expected to generate $10 billion in revenue by 2019.
User privacy has seemingly long been an afterthought for Facebook, which has weathered numerous criticisms over the years with the way it’s played fast and loose with user privacy. Because it has grudgingly modified its settings at different times as concerns flared up, it may not have realized how serious the current situation was.
Yet in something of an apology tour to media outlets, CEO Mark Zuckerberg now admits that most users have probably had their personal information “scraped” by third parties, and Facebook has since estimated that as many as 87 million people had their information exposed to Cambridge Analytica, the political analysis firm. That is a much greater number than the 50 million that was estimated before.
The risk here is that the company faces a backlash not only from regulators and politicians, but now from users who will be leery about sharing information on social media, whether it be Facebook or Instagram, and also developers who may become leery about developing apps for the platforms.
Trust is hard to regain
Almost all of Facebook’s revenue is derived from third-party advertising on Facebook and Instagram. For the past three years, advertising accounted for 98%, 97%, and 95%, respectively, of its revenue. If users aren’t using the platforms to engage with friends, families, and companies, advertisers may very well shut down their advertising streams.
Warren Buffett once noted, “It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” Having held such a cavalier attitude for so long, Facebook may have damaged its reputation and broken the bonds of trust between it and its users. Yet in trying to rectify the situation all at once, Facebook may also be throwing the baby out with the bathwater.
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Aleksandr Kogan, the academic who harvested the Facebook data improperly obtained by Cambridge Analytica, also had access to some users’ private messages.
He collected private messages sent from and received by “a small number” of people who downloaded his app, This Is Your Digital Life.
Facebook hinted earlier this week that inboxes may have been compromised, and further reporting from The Guardian confirmed it. It is unclear whether Cambridge Analytica obtained the private messages.
The app that gathered private information later improperly obtained by the political consulting firm Cambridge Analytica also collected some users’ private messages, The Guardian reported on Friday.
This Is Your Digital Life, a quiz app developed by a University of Cambridge academic named Aleksandr Kogan, pulled in both incoming and outgoing messages from several thousand accounts of people who downloaded the app.
The number of people who had messages taken is a small portion of the estimated 87 million users whose data was exposed, but it represents a much more intrusive collection than the page likes, birthdays, locations, and personality traits and so forth that were taken from other profiles.
Aleksandr Kogan, the academic who harvested the Facebook data obtained by Cambridge Analytica.CNN
Kogan denied handing over that information to Cambridge Analytica; it is unclear exactly what data the firm obtained and how it was used.
Facebook and Britain’s Information Commissioner’s Office are still investigating the situation. The fallout from the scandal precipitated Facebook CEO Mark Zuckerberg’s appearance before three US congressional committees this week.
Consumer outcry surrounding the global overuse of plastics has caused multitudes of FMCG, retail and food companies to rapidly readdresses their packaging strategies. But is the drastic jettisoning of PET plastic really the best route for brands to take?
If David Attenborough is the prophet of the anti-plastic generation, Chris Griffin is the pragmatist. As multinationals from Evian to Adidas scramble to reduce the amount of plastic in their supply chains in response to consumer outcry, the chief executive of the Museum of Brands, Packaging and Advertising is quietly cynical with regards to brands’ efforts.
“From the consumer’s point of view, the plastic debate is so complex that I don’t think they can engage in anything other than the top line soundbite,” he says. “The consumer is going to be fed many lines – like ‘we’re going to make all our new bottles out of sugar cane’ or something. That’s probably not going to happen worldwide on the scale of a global brand.”
The reason, Griffin believes, is because product lifecycles are complicated. Designers spend years understanding the end-to-end process of packaging – from conception to burial in either landfill or recycling plant – and therefore the choice of whether or not to use plastic should not be one made by a PR department.
“Brands have to be very careful not to respond too quickly to media pressure,” he says. “If they say … ‘We’re going to go for all sugar cane-based packaging’, that’s going to be dangerous for them because they won’t be able to deliver it.
“What might work as a comment this year, could get them in trouble next year.”
Yet there’s no doubt the pressure on brands to do something about the amount of plastic they produce is enormous. Last month saw a brigade of passionate, if not militant, protestors launch a ‘plastic attack’ on a Tesco store in Bath (they ripped off wrapping and left it dumped at the tills), ‘reduce plastic waste’ brings up 38m+ results on Google and online vitriol spun towards Whole Foods over selling orange segments in plastic boxes caused the retailer to pull the product almost instantly.
Since David Attenborough urged humanity to halt plastic use in order to save ocean ecosystems in Blue Planet II, the list of brands promising to reduce or jettison plastic from their packaging has extended exponentially. Commercial pressure has given plastic a bad name – but that’s not entirely a good thing, argues Griffin. Plastics, after all, evolved with and as part of the notion of the 20th century brand.
“Plastics do some incredible things: preserving by using the absolute minimal amount of material,” he explains. “The moldability, the formability … you can get shape and character, you can get brand attributes into your packs.”
The Museum of Brands’ Pack The Future
Griffin’s appreciation for the material is slightly ironic considering his museum has launched an exhibition dedicated to sustainable and, largely, plastic-free packaging. Yet his favourite exhibit is of two cucumbers, one wrapped in plastic and one naked: while the green skin of the cucumber is cited by many anti-packaging activists as natural packaging, it’s the unwrapped fruit that goes mouldy first.
“The energy that goes into food production is phenomenal,” Griffin says. “And if we don’t get it from the field to the plate because it’s wasted [because of a lack of packaging], that’s a huge waste of energy.”
A similar argument was made by The Genuine Coconut Company when it was lambasted for wrapping its coconuts in film; its retort was the packaging helps the milk stay fresh for longer, and plastic is fully recyclable. Additionally, disability campaigners have defended the accessibility of pre-chopped and wrapped vegetables, which have also been much maligned since the Blue Planet II episode aired.
A food industry without plastic may then be unobtainable – or even undesirable, at least for the time being. But as countries such as the UK continue to wait for a comprehensive national recycling system, it’s brands that are leading the charge in researching sustainable solutions. Unilever announced last week (4 April), for example, that it’s collaborating with Dutch startup Ioniqa, which has developed a technology to break down PET plastic to a molecular level.
“That means we can take any type of PET waste, then break it down to remove colour and impurities,” said Sanjeev Das, the conglomerate’s global packaging director, in a statement. “We can then turn it back into pure, clean, transparent PET plastic that’s food-grade ready.”
Coca-Cola has promised to help collect and recycle a bottle or can for every container that it sells by 2030, alongside aiming to manufacture plastic containers with 50% recycled content by the same date. On a smaller scale, rival P&G is working with the recycling company Terracycle to manufacture Head & Shoulders bottles made partially of plastic washed up on beaches and waterways.
Interestingly, Terracycle has found gaining support from big multinationals, such as P&G, to have been easier than garnering it from the NGOs it relies on to collect the beach plastic.
“P&G wanted to do something sustainable, something to make a difference,” explains Stephen Clarke, head of communications at Terracycle Europe. “And although there’s quite a lot of work to get buy in from various departments from within a company, our biggest problem was actually getting the NGOs to buy into it. It’s getting them to do something different.”
While the FMCG multinationals (which have budget and scale on their side) lead on recycling innovation, Griffin sees potential in the luxury sector when it comes to the development of sustainable plastic alternatives.
“As a designer, some sustainable materials are just fabulous to work with,” he says. “Corrugated cardboard looks beautiful, materials come from crustaceans have fabulous textures and some [materials] that come from various plant materials are wonderful to work with and wonderful to design with. But they’re not on the scale that will be economical for volume. So I think luxury’s a whole new area where sustainable thinking is necessary.”
The potential for luxury, sustainable packaging to double as a proof point for the wider industry is a sentiment shared by a number of design houses.
“As with any aspirational market, the luxury packaging sector is a platform for materials and innovations to be revealed and translated into other areas,” says Toby Wilson, chief operating officer at MW Luxury Packaging. “Naturally, the more a new technology, technique or material is used, the more accessible it becomes.”
However Wilson is cognisant that the luxury sector has, thus far, been immune to the pressures of sustainable packaging due to the assumed long lifespan of its products. A consumer is more likely to keep and reuse a beautiful Fortnum & Mason chocolate box, for instance, than a Milk Tray.
“But this is changing,” he says. “Quality and brand aspiration is critical and therefore innovation in high quality and high-performance materials is essential. Materials that perform and present need to be developed to maintain the luxury credibility that a brand demands.
“This will come through innovation and material development.”
Progress Packaging’s totes for Tom Dixon featured natural canvas wrapped in a clear biodegradable bag
The current trend for minimalism (little to no branding on packaging) in the luxury sector has also meant for easier experimentation with avant-garde, sustainable materials, says Victoria Walmsley, media developer at Progress Packaging. The agency has been working with recycled cottons, canvas and hessian, as well as corrugated board and recycled boards.
“There is definitely a strong wave of encouragement [for more sustainable materials] that comes from designers, manufacturers, and the consumers, too,” she says. “We do see more enquiries asking us how they can make things pretty but also reusable. I think reusability once a product has been opened is the key requirement. The market doesn’t just want to provide bags and boxes that will get used once and then thrown away anymore.”
Yet environmental charities, quite understandably, aren’t ready to rest the future of the world’s oceans on the luxury sector’s ability to innovate alternatives to plastic. For Julian Kirby, lead plastic-free campaigner at Friends of the Earth, the onus is on a number of actors to make change.
“Currently the companies that make and market packaging only contribute about 10% of the costs of collecting and processing it, meaning the remaining 90% is borne by tax payers through cash-strapped local authorities,” he says. “A mix of sectors working together could rapidly provide answers we need to the plastic pollution crisis, with big companies having the power to make alternatives to plastic the mainstream choice.
“However, for this change to come about on a mass corporate scale we need central government action.”
Glossier, Reformation, and Seamless have all tapped into it, for better or worse.
Another day, another complaint I feel compelled to lodge against brands in a public forum. Brands feed us, and they clothe us. And yet they betray our trust! Again and again we are forced to reckon with the fact that brands are not our friends. They never have been, and they never will be.
Today I would like to discuss the phenomenon that is brands trying to dupe people into opening their marketing emails by putting “FWD:” or “Re:” in the subject line. The message looks like it’s coming from a friend or like you’re already engaged in the conversation, which can be incredibly alarming when the subject is something urgent. Here are a few real emails that members of the Racked team have received recently:
A weirdly sexual message from Seamless.
What? I didn’t request time off! Is my boss mad at me? A moment of professional stress brought to you by Reformation!
SHEER PANIC!!! (From Barry’s Boot Camp.)
An OOO riff from Glossier
This tactic totally works, especially if you’re not paying close attention to who sent the email. (I often am not.) What makes it doubly annoying is that brands have been doing it for years, and shoppers have been complaining about it for just as long. Yet nothing has changed.
Let’s look at some historical tweets.
Given how clogged most people’s inboxes are, brands have to get clever with their email marketing. Fair enough. And the results can be effective: President Obama’s re-election campaign famously used subject lines like “Wow,” “Rain check?” and “Hey” to get people to click through. (Some people found Obama’s approach charming. The Hairpin compared them to notes from a stalker.) What’s definitely not cute, though, is making your customers feel stressed, dumb, or distrustful. The world is overwhelming enough already.
Perhaps one day brands will go around the bend and over-deliver by sending marketing emails with subjects like, “No rush on this,” “We’re having a sale right now, but you have a week to get to it, so take your time,” and “Would you like to unsubscribe? There is a large link at the top of this email.”
Until then, our cortisol levels will lurch into overdrive, we will angrily tweet, and we will get distracted and forget to unsubscribe.
Facebook executives often talk about their mission as “bringing the world closer together.” With more than 2 billion users, it’s true that the platform does connect people. But one thing CEO Mark Zuckerberg’s congressional testimony highlighted is that simply connecting people is not how Facebook reached a market cap of nearly $500 billion.
At its core, Facebook is an advertising company. In 2017, 98 percent of its $40 billion in revenue came from advertising. It’s not your data that Facebook is selling; it’s your attention.
Facebook’s ad platform translates your clicks and posts into “user attributes,” and places you in certain categories for advertisers. For example, your activity could suggest that you recently had a child, that you’re a Bernie Sanders fan, or that you have an “affinity” for certain racial groups.
One of the most powerful features, “Custom Audiences,” allows an advertiser to target individuals based on offline information such as email address and phone number. An advertiser can upload that data to Facebook, which will match it with its user base to find who that information belongs to. Then there are so-called “dark posts,” a feature Facebook is now changing, which only show up in the news feeds of specific audiences and are completely hidden to everyone else.
Full disclosure: VICE News (along with almost every other major news organization) uses some of these advertising tools.
The tools can be used by anyone who wants to advertise on Facebook, and critics say that’s an open invitation to malicious actors. Watch this video to learn more about how Facebook’s ad targeting works, and why it’s so effective.
Gabriel Connelly and Michael Shade contributed to this report.
We need to all agree on what a ‘disrupter’ is. The more accurately we can describe business concepts, the better we’ll understand our own markets and ideas.
For a while, “disruption” was a powerful word, first used to indicate a company that demonstrated innovation at such a high level, it created a new industry or truly reshaped an older one. Next, tech journalists, entrepreneurs and consumers started using the term to describe any business with a unique idea that had a chance to grow and succeed.
This isn’t to say that these companies weren’t valuable or worth exploring. It just means they weren’t good examples of what it truly means to be “disruptive” or to “change the game.”
Take, for example, the following companies, which have been popularly labeled or touted as disruptive, but aren’t truly as game-changing as we’ve come to believe:
1. Uber
Uber is known as the tech powerhouse that disrupted the transportation industry. Attracting $10.7 billion of funding, and with a valuation of $69 billion as of December 2017, it can accurately be described as an industry leader and an innovative, visionary one at that. So, why can’t we qualify it as a disruptor?
Clayton Christensen, the Harvard Business School professor who actually popularized the term “disruptive” in a 1997 book called The Innovator’s Dilemma, addressed this question in a recent Harvard Business Review article. He described true disruption as building a business by taking advantage of a low-end market that’s previously been ignored by dominant competitors chasing profits. Alternately, Christensen wrote, true disruption could entail creating an entirely new market — generating customers where there weren’t any before.
Uber doesn’t fall into either category of disruption. It emerged as an alternative solution for taxi services, where customers already existed. Though generally less expensive than a taxi ride, the “Uber” solution is still comparable enough in price that it didn’t open up a new market, and therefore didn’t “change the game” from the ground up.
Another hallmark of disruptors, according to Christensen, is a company that originates as a low-quality alternative, with a gradual transition to a more competitive, higher-quality offer.
Uber came into the field with a high-quality alternative — a better product — which made it a clearly superior competitor. So this third “disruptor” definition by Christensen did apply, either.
2. Google
Technology has provided the groundwork for disruption; its advancements make things cheaper and more readily available, and they simultaneously introduce new products and services that haven’t been explored before. That’s why, when most people think about true game-changing technologies, they think of Google — the world’s favorite search engine.
But Google isn’t and never was a disruptive company. Google wasn’t the first company to invent and capitalize on the search engine model; back in 1990, a search engine called Archie started taking user queries and matching them to websites. By 1993, alternatives were already making use of bots and search crawlers to build indexes of the web.
By the time Google got started, there were already dozens of mainstream options for search, including Yahoo! and Ask Jeeves. Google didn’t create a new market; it just capitalized on an existing one by building a better product.
Beyond that, Google isn’t truly disrupting in other areas, either. Email was mainstream by the time Google developed its popular and innovative Gmail product; and even its futuristic ventures, like autonomous vehicles, are built on the notion of improved solutions for existing customer bases.
3. Tesla
Tesla Motors’ approach to business relies on constant, and at times ruthless innovation. Since its launch, it’s been become the most valuable automaker in the United States. It’s unveiled new and affordable models of electric vehicles, and has helped introduce the concept of semi-autonomous driving to mainstream consumers.
In fact, the company is innovating at an astounding pace, is differentiating itself from its competitors and is enjoying a significant level of success as a result — but it still isn’t disruptive.
Tesla isn’t disruptive because its vehicles have been serving a market that already exists. Electric and hybrid cars weren’t new to Tesla; instead, Tesla merely improved on an existing design. Accordingly, existing car purchasers are merely upgrading to Tesla, rather than emerging from a period as non-customers.
Plus, consider the fact that even Tesla’s least expensive model runs for about $70,000, putting it well outside a price range we might consider for a disruptor that’s trying to target underserved portions of the market.
So, think about this: Before you use the term “disruptive” to label a business, carefully consider what that business is really doing. If it’s taking an existing concept and making it better, it has a high chance of access to “disrupter” status. But it isn’t creating a new market. If it’s merely capitalizing on existing customers and giving them more of what they want, it will likely trounce the competition, to be sure. But it isn’t creating customers where there weren’t any before.
In sum, these thoughts on the D-word aren’t an empty exercise: The more accurately we can describe and learn from business concepts like these, the better we’ll understand our own markets and our own ideas.
Feature Image credit: Chris Ratcliffe | Getty Images
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