On 12th June, 2014, I will be speaking at Arena Media’s “How to Grow Brands in the Digital Age”. This is an interview I did with them before the event, which they have kindly let me repost here.
Thought leader, public speaker and editor of Gamesbrief, enviable multitasker Nicholas Lovell has a new book out. The Curve deals with the fascinating world of digital disruption, and poses the question: how do you make money out of anything when everything is free? Ahead of Nicholas’ appearance at How to Grow Brands in a Digital Age, Jon Wilks sat down with him to get his take on the world of digital marketing – and whether or not it’s still possible to make an impact.
With all of these different platforms available to marketers these days, do you think it’s harder or easier to grow a brand now than it used to be?
The answer is that it’s harder for big companies and easier for small ones. What I mean by that is that, in the old days, if you were big you had meaningful advantage. Only the big people could afford to advertise on television; only the big people could do an integrated launch that involved in-store promotion across a national supermarket chain, combined with television spots with celebrities, combined with full pagers in tabloids. You had a huge competitive advantage, because only you could reach an audience at scale, and only you could make that happen. The smaller guys could either go one by one around local shops, and it was very difficult to get involved with supermarket chains in that sense, or they could talk directly to their customers. As a very tiny brand, I’ve been able to build my website, Gamesbrief, on my own without any permission from anybody else. If you are launching a new pie brand, or a luxury soap brand or whatever, you can start with one shop and an internet presence, and you can go out and hustle and talk to people, and if somebody likes your stuff they come to your website. You can start using the web to start building audiences in a way that wasn’t possible 15 years ago.
Can you tell us a little about how you have arrived in your current position?
I started as an investment banker in the early 90s, focused on media and technology. Bill Gates’ famous quote – that we overestimate the impact of technology in the short-term, and underestimate its impact in the long-term –basically [defines] the past 20 years of history, and the past 20 years of my life. We were all very excited about what the internet was going to do, and then we saw the dotcom bubble bursting, and none of it had come to fruition. But when you look back… well, we laughed when people said they’d do online grocery shopping because people would want to pick their vegetables before they bought them, or that they could talk to anyone anywhere in the world at no cost… and that’s all absolutely happening. So, my starting point was finance, media and technology, and how those three areas interact, and pretty much my entire career has been based at the interface between different industries.
What in particular interested you?
Since 2008, I’ve been focused very much on the games industry, and I actually started putting my own thoughts about what was going to happen to the games industry on my own personal website. I was doing it for my own interests, because when you’re forced to write down your ideas they take form and you see the flaws in your own arguments as you’re trying to write. You hold on to a lot of inconsistencies when they’re in your head; it’s a lot harder to hold on to them when you’re looking at them on paper. And then I started finding that people were actually reading it! Many of them I knew from the industry, but people I respected were saying, ‘I read your blog!’ And at that point I started thinking that maybe there was a business here. So [that became] Gamesbrief, and it helped people understand new business models in the world of games.
How did those models manifest themselves as the idea behind your book, The Curve?
The most exciting and successful model at the moment is giving your game away for free, finding a subset of that audience that is prepared to pay anything at all, but then letting those people spend as much or as little as they like over days and weeks and months. It’s a very curve-like strategy. And that has been working very well, and we’ve seen some very successful companies such as King with Candy Crush Saga, and we’ve seen businesses that have done well and then fallen out of the limelight, such as Zenga with Farmville. But across the net we’re seeing this model of giving your game away for free, accepting that lots of people will spend no money on it at all, but ‘superfans’ will spend £10 a month, £100 a month, even £1,000 a month. It’s the way the games industry is going. And all of that led to the idea that it was clearly working in games, but it doesn’t seem that games are completely unique. At the heart of what’s going on, the games industry has responded to the threat of digital disruption with a method that works. If you look at the music industry, which hasn’t really responded, or books, which haven’t been properly disrupted; if you look at TV, which still has a huge advantage in terms of its territorial monopolies on broadcast platforms (but those are being eroded in the world of the internet) – I thought, well hold on, we can take these ideas that have worked in games, and start looking at how they could be applied in other industries. As we were preparing the book, I realised that it wasn’t just about digital content, it was about all content marketing. The curve comes in three parts: find an audience, earn the right to talk to them again, let the people who like what you do spend lots of money on things that they really value. Content marketing is the starting point, but it often fails on two criteria: that it’s dull, and that it doesn’t have strategy. That strategy is: now that I’ve found you, how do I earn the right to speak to you again, and how do I start moving you along this curve to a place where you’ve become a better customer?
What are the biggest challenges that you see for heads of brands and marketing out there today?
The first one is that ‘free’ is no longer a powerful marketing tool for marketing communications. So it used to be that you could sponsor a free ‘advergame’ – a game that is about the brand – and you could put it out there and, because it was free, people would play it. The competitor environment now means that there are more free games out there than you can possibly play in your entire lifetime, and the successful companies are spending $2 per customer to get people to play their game. So what does that mean in media terms? It means you’ve got to pay money to develop your advergame, but you’ve got to spend significant money on media in order to get people into it. And you’re competing with people who do this for a living and are incredibly good at it, and spend millions of dollars and have a long track record of making these games. So that’s one concrete example. But now roll it out across YouTube videos, and you’re up against TV production companies making straight-to-YouTube content, and you’re also up against hugely popular YouTube vloggers who have enormous followings. And just saying, ‘I’ve got a great idea for a viral,’ and just putting it up on YouTube… I think we’re way past that. I don’t think any brand says ‘we’re going to do a viral’ anymore… at least, I hope they don’t! We know that it doesn’t work in that way. You make an amazing piece of content, you pay money to seed it, and if you’re lucky it then goes on. So the first point is that just being free isn’t enough, because we’re competing in a very crowded marketplace
And the second piece?
The second piece is that brands have tended not to care about having the right to talk to their customers again. Now, that’s a terrible generalisation, but generally the model is that we flog our stuff at the supermarket and we do mass media awareness building, and the connection is that next time we go to the supermarket there’s an infinitesimal chance of someone buying our coffee brand over the next brand, and if we do it enough then our market share grows. The web has changed that because it enables you to build direct connections with customers. So if you’re aiming to give away a piece of free content marketing – and a high-quality TV ad is drifting into content marketing when it’s uploaded on to YouTube and you’re counting the number of times it’s been watched – you need to have a strategy that goes, right, some of those people will like what we’re doing enough to give us permission to email them, or talk to them via Tumblr or Twitter, and you can build it into a more direct relationship with people. My argument is that, in a digital age, you have a lot fewer customers, but you have a lot of people who read your content in particular, who know about your stuff, but aren’t engaging with you in any way at all; aren’t giving you any money at all. Sure, it’s important to increase the size of the funnel, but it’s ever more important to have direct relationships with people.
Nicholas Lovell will be talking at How to Grow Brands in a Digital Age, Arena’s breakfast seminar to be held at the HMG Café, 60 St Martin’s Lane on 12 June.
– See more at: http://www.arena-media.co.uk/blog/2014/05/interview-nicholas-lovell-author-of-the-curve/#sthash.m1r3DlZT.dpuf