Sunday, November 28, 2004

Big changes still to come

When I started in the advertising business only 15 years ago we still did things by hand. The tools of the trade were very different then. Tech pens, T-squares, french curves, compasses - we carried around these instruments in a toolbox as if we were master mechanics.

Then came the first big change to revolutionize our industry. It seemed kind of gradual at the time, as small incremental change always does. Looking back, though., it changed everything.The first to go was only the entire typesetting industry. Companies with a hundred employees, in business for decades, closed down overnight.Then the death of the colour separation business. Their huge investment in lab equipment could not protect them. Their ‘assets’ became liabilities - they were no longer needed.

Many large graphic design and production houses are gone, too, mostly because they could not change fast enough. All of this fallout from a pretty innoculous looking, inexpensive ‘toy’ called the Macintosh. Thousands of multi-million dollar businesses were toppled, and tens of thousands lost their jobs.

Is this a unique event in our society today? Surprisingly, no. Business has changed forever. The Internet may not have everyone in the world shopping from home yet, but it has certainly changed many businesses forever. Is the book selling business the same now that we have Amazon? Will the music industry ever return to normal in the post Napster world? Even the ‘new’ business of retailing computers seems to be short lived because of the Dell phenomenon.

Computers, and then the computer network, have changed many businesses and industries forever. Yet, it is not over. The temptation is to believe that as long as we have not been adversely affected, or have already adapted to deal with the changes that have already come, then we have nothing to worry about.

Living with incremental change makes it really difficult to see the larger changes taking place over slightly longer periods of time.OK, so computers were a super big change and it changed everything, but what about businesses that have nothing to do with computers? How about the department store, for example? How has Wal-Mart changed the business of retailing? The statistics of small store owners that have closed shop because of Wal-Mart moving to town are scary.

It’s not the advent of computers and the network that are driving the changes, but the advent of the information age that is changing everything. Companies like Wal-Mart are dominating not because of their huge size and their valuable assets, but because of their new processes. It is the efficiency and timeliness that they transfer information from one area of the business to another that gives them the edge. They have become more efficient than any organization in history because of what is made possible with the computer network.

It is not slowing down
Is it over? Are the changes slowing down? Not a chance. The Internet has been asleep for a few years as far as investors are concerned, but in the ‘real’ virtual world, things have never been more interesting. The technology is better, the usage is way up and the thinking has evolved. What new ideas or new processes are going to change what industries next?In sales and marketing the changes are enormous.

Customer Relationship Management (CRM) has not delivered on the big promises of reduced costs and improved profits for every organization, but it has been a huge improvement in information flow that just hasn’t stopped evolving yet.

Sales Force Automation (SFA) is in now runaway growth mode. Salespeople can have access to their entire company’s database online from anywhere in world, even wirelessly. The efficiency and productiveness of a fully wired salesperson has gone way up.

The death of advertising
Advertising prices are being killed by increased media choice and segmentation. Marketers are demanding measurable return on investment and the smart marketing companies are delivering it. The use of the Internet for consumer research is affecting every business, whether they know it or not. Yellow pages use are down every where, and Internet searches are rising every month.

Recent research suggests that 86% of Internet users perform searches to find what they are looking for. Direct marketing via the post is dieing a slow death, and e-mail marketing (while often misunderstood and criticized wrongly) is hailed as the ‘killer app’ of modern marketing.

Smart marketing costs are dropping and measurability is rising, while the old methods of marketing and advertising are struggling with their old business models. Will they survive? Any un-measurable medium will have a hard time competing with one that offers a measurable return on investment (ROI).

ROI Marketing
There is a whole new industry evolving called Internet Marketing. It is about understanding, innovating and leveraging the strengths of the Internet to find and retain new customers. Even more accurately, it is about being more connected then your competitor, so when your prospects are looking for your product or service, they find you. This is a powerful change in the way people look for information, the way people shop, and the way marketers think about finding new customers. Doubtless, there will be more changes in the coming years that may have far reaching effects on your business and your industry, but the shift to ROI marketing affects us all.


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