Opinion: Amazon is coming

Gordon McNenney
By Gordon McNenney | 18 March 2014

In 2005, the Economist published, “Crowned at Last”, an article about how digital had finally made customers king. It quoted a range of marketing professionals attesting to customers’ new pre-eminence. Kevin Roberts, then CEO of ad agency Saatchi & Saatchi, said, “For the first time the consumer is boss, which is fascinatingly frightening, scary and terrifying, because everything we used to do, everything we used to know, will no longer work.”

Nearly a decade later, when looking at how customer empowerment has evolved and how marketers have responded, the shifts appear both seismic and tectonic.

Digital customer experience wins in the game of seismic shifts
Digital’s faster, deeper ‘seismic’ changes have happened where structural barriers to competition, especially distribution, have disappeared. A good example is The Trading Post. In March 2004 Telstra paid $636 million for what it described as “the market leader in Australian classified advertising”. Ten years later, its ‘iconic’ status (as a Telstra exec recently described it) is primarily nostalgic. Telstra’s significant investments in improving The Trading Post’s digital customer experience came too late to change the direction of the business. eBay and its classifieds site Gumtree have largely won the day with users.  

Tectonic shifts come from improving the customer value proposition
The Trading Post’s decline was connected to its once neglected (and now much improved) web user experience. Yet other Australian classifieds sites that invested early in best-in-class experience, notably SEEK, carsales.com.au and realestate.com.au, may be up against a more ‘tectonic’ shift related to their customer value proposition.

Advertisers are increasingly creating their own sites, such as the real estate industry’s realestateview.com.au, to compete with online media companies. Businesses can pool their resources, aggregate information and get into the digital media business. The Industry Super network has taken the BYO media approach to an impressive extreme by bankrolling The New Daily. This general interest free online newspaper gives users an alternative to Australia’s pay-walled dailies (who are partners, in a sense, since much of the content is sourced from news agency AAP, owned by Fairfax, News Corp. and Seven West).

Digital challengers need to think bigger and traditional brands need to get smarter
Beyond information and entertainment, there are only a few prominent Australian digital challenger brands, mainly in retail. Kogan is Australia’s best-known digital challenger. Ruslan Kogan’s ambition is to become “the biggest consumer electronics retailer in the country,” with sales of $2 billion by 2017. But Kogan’s low-cost value proposition faces fierce competition from fast-growing newcomers like Costco, as well as Australia’s mass merchandiser giants. ‘Click and collect’ from brick and mortar retailers may be as much of a game changer as pure-play eCommerce.

The idea that “everything we used to do, everything we used to know, will no longer work” doesn’t reflect brand marketers’ reality. Rather than leaving old skills behind, marketers need to ‘upskill’. Digital is creating powerful, customer-centric tools, such as predictive analytics and marketing automation, which have fueled the growth of companies like Amazon. At Amazon today, user data not only drives business optimisation, it’s helping Amazon create TV shows and other original content. Amazon’s mission is to be “Earth’s Most Customer-Centric Company”. Aussie brands need to be on notice: with the recent launch of Amazon.com.au, Amazon’s earth unequivocally encompasses Australia.

Marketing transformation has always been customer, not channel-centric
As new media such as TV catch-up apps blur the difference between digital and traditional, brands need to look beyond channel-centric thinking. Smart brands are moving quickly to win with unique digital brand benefits, such as NikeiD and Nike+ products and experiences, game-changing communications, such as Red Bull’s approach to content, or simply market-leading value and convenience.

These changes are part of a customer-centric continuum that pre-dates computers and smartphones. Long before the net, tools, technologies and systems such as cars, planes, supermarkets, shopping centres, telephones and global supply chains profoundly shifted consumer options and brand propositions. The tagline ‘Let Your Fingers Do the Walking’ is just as relevant today as it was in 1964 when it first promoted AT&T’s Yellow Pages business. Now our fingers are also doing the talking and we can access millions of phone books’ worth of information.

Digital’s ascendancy has enabled ‘customer kings’ (that is, you and me) to expect much more from the brands we value. To keep us happy, brand marketers need to continuously challenge themselves to elevate that perceived value. CMOs need to be Chief Customer Advocates, guiding and improving all aspects of brand experience.

In the Harvard Business Review, Kenneth Dameron wrote, “Customers are becoming better educated and organised” with a “growing familiarity with the mechanics of advertising”. These changes, said Dameron “have tended to make consumers more critical and to enhance their importance.” The HBR published Dameron’s article in 1939. Seventy-five years later, I couldn’t say it better.

Gordon McNenney
Content and communications director

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