by John Winsor | 10:00 AM July 16, 2014
Last year I wrote a post titled The Dinosaurs of Cannes about the scene at the Cannes Lions Festival, the ad industry’s star-studded annual awards show. I said, “As you walked down La Croisette the rest of the week, you could see lots of dinosaurs basking in their glory while asking what all the furry and feathered things running around at their feet and flying around above them were.” This year the new mammals and birds of the industry have begun to strut their stuff.
What these new species have in common is that they’re based on open systems. These systems are digital at their core, and leverage network effects and the ability of the “digital democracy” to find the best talent and ideas wherever they exist. Unlike closed marketing systems, characterized by agencies that wall off their in-house talent (creating a scarce and expensive resource), open marketing systems seek talent from anywhere in the world to solve problems, and then curate the best answers.
Such systems are taking on incumbents in every industry. Airbnb is not only challenging the biggest hotel chains but also challenging the bureaucracy, going after the New York City housing and tax laws that stand it its way. Now, with a valuation of $10 billion, Airbnb has the capital to take on the hotel industry and its supporters globally. The app-enabled car-sharing service Uber has also become a global phenomenon with a valuation of over $18 billion. In an ironic turn, cab drivers in London, Paris, Berlin, and Madrid decided to strike in June, 2014 to protest Uber. The result: Uber gained several hundred thousand new members. Quirky is disrupting incumbents in consumer product design and innovation, Local Motors in the automobile business, Relay Rides in car rentals and Kickstarter and AngelList in the financial sector. Name an industry and there is a new open-system player leveraging the power of the networked world to build a paradigm-shifting competitor.
As established players focus on exploiting opportunities by applying their tried and true business models, these new players, especially those being built on the Internet, take the opposite approach. They start with a market opportunity and explore ways to build a new business model that can be applied. Uber, for example, saw the gap between the demand for cabs and their availability and devised a novel and disruptive car-sharing model.
This year at Cannes it felt like the light finally went on. A slew of new open-system marketing startups made an appearance, but Cannes was also jammed full of newer tech companies built on open principles, from Spotify to Jingle Punks and MoFilms. All of these are taking a piece of the traditional marketing spend.
These open-system mammals and birds have evolved to a point where they are beginning to articulate and deliver on the new paradigm while the dinosaur guardians of the old, closed marketing world are starting to acknowledge the shift. Many of these dinosaurs – agencies in particular — seemed a bit panicked about being disintermediated. They are realizing that the open marketing systems gives brands the ability to do what agencies did themselves by creating their own marketing content and media channels. Brands can now build their own agencies based on connecting to the open marketing systems.
There are a few things that brands can do to take advantage of the emergence of these new open-system species.
1. Adapt your business models to exploit new opportunities rather than try to apply your existing one. As discussed, open-system species are agile in part because they see opportunities and create new models to go after them.
2. Take more control. It used to be that brands needed an agency to communicate with customers. Today, with the falling price of media and the real time nature of the two-way conversation with consumers, brands can do more of this themselves. Some of the best-known brands including Patagonia and Apple are building their own in-house strategic agencies, taking control of strategic and creative leadership while using an open system to collaborate with great outside talent. Those brands realize that one of their most important assets is their relationship with consumers. There will still be a place in the ecosystem for lots of players and collaboration, including agencies, but brands increasingly can take the lead.
3. Seek out great ideas wherever they are. Companies and their brands need to get away from idea myopia, the notion that one outside organization, usually an agency, must be the sole creator of marketing ideas. Not only do your most passionate fans have great ideas and the tools to communicate them but there are ideas to be found from retailers, distributors and other outside partners. Likewise, internal team members have some of the best creative ideas but are sometimes afraid to participate.
This year’s Cannes Festival proved that the new, open marketing world is much more sophisticated than it was even a year ago, with many more players fighting for the same space. We can expect that Cannes Festivals to come will be filled with even more species of open marketing organizations. While some of the old guard will go extinct, as in any ecosystem, more diversity will bring more growth and vitality to brands, and create relentless pressure for the remaining ones to adapt.
JOHN WINSOR
John Winsor is the CEO of Victors and Spoils and Chief Innovation Officer at Havas.
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