January 29, 2009

As The Going Gets Tougher, the Toughest Companies Get Going

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Several members of my staff had a key meeting with one of our major global customers today and their new advertising agency. We built a very slick multi-channel platform for our customer to be able to deliver high-quality, segmented marketing messages to consumers throughout the United States across different media delivery channels.

The interesting part of this is that 8 years ago that very advertising agency was our customer, and I pitched the idea for them to build a very slick multi-channel platform for their customers to be able to deliver high-quality, segmented marketing messages to consumers throughout the United States across different media delivery channels.

 The agency never implemented said system.

The customer now HAS that infrastructure themselves. Who do you think holds the power in the relationship now, the customer or the agency?

One could argue that the customer always has, now and in the past. However, that isn't entirely true. Large organizations have been somewhat beholden to agencies if they need to have masses of customized materials that are versioned for different market segments, different geographies, different demographics, different affinity segments, and so forth.

Exceedingly, companies that built that infrastructure for themselves are less bound to the agency to get the work done. In fact, the enterprise can do it themselves, but they look to the agency as a partner to get high-quality creative (visual, textual, etc) work done and take the logistical busy work out of the equation on the price, legal disclaimer, imagery, and other versioning considerations.

So how come the particular agency I refer to didn't implement the solution back in 2000/01 when we pitched the concept to them? I told them at the time if they got ahead of the multi-channel distribution platform curve, they would have a strategic advantage, and customers would be able to leverage their solution. Two things happened. First, they didn't believe me. Second, as many in the ad agency industry know, they didn't have a customer funding the expensive and time consuming initiative, so those that would champion the solution could not get executive support for funding.

So today, that agency received training on the customer-built solution and they in essence were in a submissive situation to the customer's dominant one. That agency will likely be judged by the quality of their creative as well as their turnaround/project management, cost/scope balance, and general account management disciplines. The logistical work has been simplified and made less expensive, making the agency 'replaceable' if need be. Of course I wish them the best, since they had been a customer and can hopefully serve the needs of the enterprise customer with great quality.

There's so much more that ad agencies offer clients, of course, so I'm not trying to diminish the role of the agency in helping build brands. However, in the case of multi-channel delivery of content, very few agencies have really stepped up and developed modern, state-of-the-art solutions, and that is forcing their customers to build such solutions. More and more we get called upon to help enterprises with those types of media-independent content delivery platforms, and this trend is only accelerating now that enterprises are cutting staff and looking for greater automation as well as optimized marketing message delivery.

Which brings me to my next big point, which is who is spending money right now, and how's DPCI doing?

Back in October I wrote a blog on "When the Going Gets Tough" where I talked about how we were doing at the time. I wrote about how we were built optimally, how we were doing pretty well, but I didn't know what the future would bring (like everyone else).

Today the picture seems clearer. We are still doing well. We have acquired more new customers in the past few months than we have had in years. The customers seem almost desperate in some cases. Almost all of them have had layoffs or some cost-cutting measures going on at their organizations over the past few months and as recently as the past few days. Several of them are on the sale block.

So what is driving their spending with us?

First and foremost, companies that are late in building their digital brands are moving quickly to implement more state-of-the art, nimble content technologies. If they don't, they realize they may not have a brand or company in a very short time. While companies don't exactly know that building the digital brand will even help (media companies, for instance, are still struggling mightily with the business model of ad revenues online in comparison to print advertising revenues, which far exceed those of Web). Since DPCI has been implementing content technologies for a decade, we are in a strong position to help these kinds of customers. There are other companies like us in the marketplace, which is good since customers need choices. I imagine that those consulting firms are also doing well at the moment.

Second, companies are realizing that they need to deliver content to multiple channels (print, Web, mobile, e-reader, etc) and that they need to repackage offerings in custom ways to satisfy the tastes of the consumer. In order to deliver across channels and to package or mashup offerings, organizations need to get those offerings (content, goods, services, etc) 'chunked' into elemental form and separated from any presentation medium. This kind of work has also been core to DPCI's capabilities for this past decade.

So how, in the midst of cost-cutting measures and deep layoffs, are these new and existing customers of ours actually spending more money on content technology platforms?

My feeling is that the customers are falling into a few groups. The first, hard-scrabble, competitive organizations that are getting hit by the recession but who are digging deep into the till to build their brands and get more productivity out of the staff resources they've got. They're also looking to get more nimble with their content, and to do that you've got to invest in the right platform and delivery mechanisms. These companies may or may not realize the cost, time, or degree of intellect it takes to forge ahead with digital content strategies, but they're on the path and finding their way.

The second are companies that are out for blood. I speak with C-level executives fairly regularly, and some of them that are pretty well positioned on the Web and with multi-channel solutions are now investing further to "crush the competition", "seal the deal", "dominate the market when things come back." These ultra-competitive executives want to win verticals and to do so, they're spending strategically and doggedly to achieve their ends.

There's a third group of companies I am seeing out there. I get called in to speak to executives who can't seem to get funding, or don't quite understand how the pieces fall together on a content strategy. These companies seem to have been as heavily affected or more so by the current recession. The challenge and heart break of this is that it may be too late for them. Without a Web brand or value proposition, without the ability to be nimble with content and to deliver the right offering to the consumer's tastes in a manner that suits the consumer, I don't believe that companies will make it in the next economy. Perhaps they'll go out of business, or get acquired, or break up into smaller companies that actually can be more nimble. But I just don't see them surviving as-is for very long.

If you have gotten this far along in this enormous BLOG, thank you! I've had a lot to say on this subject, and, like anything, these thoughts are subject to change as the recessional economy evolves. Things could stay the same for us, or improve, or get worse. I don't know. I just thought I'd write some thoughts about what I'm seeing right now, and hope that it is helpful to the reader.

Posted at 12:11 am by Joseph Bachana

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