More on the future of cars

A few people have kindly read the blog and sent me content related to the post below about the Future of Cars.

Firstly, this article from The Guardian (The Guardian) about Mitshubishi launching a compact electric production car this year in the UK.

This car sounds like a great initiative however, I still think it's largely a token gesture. In the test drive the car ran down 50% of the battery after 22 miles (36 km) and 50 minutes of driving. It takes 6 hours on to charge thru a normal plug in, so it's really only going to be suitable as a car to get you to work or the train station and back again at night before parking in a covered garage with electricity supply for overnight recharge. With only 200 cars available this year at an estimated cost of GBP 750 (US$1250 / RMB 7,500) per month, my prediction is that they will be bought and driven very visibly by companies wanting the public to think how wonderful and green they are.

With much larger sales volume of 180,000 vehicles in 2008, BYD Co. (Build Your Dreams) seems a more interesting prospect to watch. This is ca ompany whose core business is battery technology but have diversified into electric cars - very much the prediction of the Economist analyst in the video in my earlier post. They got a big boost when Warren Buffet invested in them and the Chinese government is apparently considering offering subsidies to help offest the 150,000 RMB (GBP 15,000 / US$ 23,000) retail price.

They're not the prettiest of cars, using the old Toyota Corolla body, but with a back up petrol engine and a reasonable price, they look like a realistic in market option. They've secured distribution in Europe and recently participated in the Detroit auto show, so it will be very interesting to watch how they progress in 2009.

Here's a link to the aritcle about BYD and also thier website.

Finally, here's an interesting picture I took recently outside a mall in Shanghai. I guess you could call this a hybrid vehicle - it's a Roewe 75 (the olde Rover 75) with a Jaguar leaper glued onto the hood. I'd love to know what the owner wanted people to think when they did this.

The future of cars

I saw this fascinating documentary on Fresh Creation about the auto industry and specifically why people are not driving far more fuel efficient cars. It's a 48 minute programme but well worth finding time to watch.
It reveals how 35 years ago, Shell and General Motors adapted a standard production car to be capable of 159km on 1l of gasoline, up to 20 times more efficient than some of the most popular vehicles being sold in the US today. A combination of self serving oil companies and short-termist auto makers have done everything they can to bury any progress in this area, apart from token gestures designed for PR pieces.
There is extended segments with a big cheese at Opel (GM) who succeeds in looking totally out of date and untrustworthy, especialy in comparison to many of the other individuals in the programme who talk with such authentic passion.
An analyst for The Economist predicts that the future of the automobile could very well lie in Silicon Valley with the tech companies, rather than with the existing auto companies. This, he argues, is because the critical factors to success are about how to harness new technologies - batteries, power management, software - which are not the core competencies of Ford, Chrysler, GM, et al. Add to this the crippling debt and tiny market cap of those companies compared to many of the technology companies and it's not a difficult scenario to imagine.

It also reveals a laughable perspective on how Toyota came to lead the way with alternative fuel technology and the Prius.

Finally, it profiles a small independent company, Telsa Motors who are making gorgeous, high performance electric vehicles.

Watch the programme, it'll make you think.

Dramatic Shift in Marketing

German agency Scholz and Friends have made a really nice animation to bring to life how much marketing communications has changed.



This is very similar to a presentation i put together to try and highlight some of the problems currently in the industry in China. The industry here has developed so quickly and the challenges are so vast - geographic spread, thousands of media outlets, hugely diverse consumer groups, government regulation, lack of research and data... Over the last six or seven years, agency networks have enjoyed boom times and the biggest agencies now have dozens of clients and literally thousands of staff.
This pace of growth and change has meant that the focus for agency management has often had to be on simply managing the growth (ie. not messing up). It makes sense then that you tend to revert to what's known and familiar (and easy). The same goes for many marketing departments.
I sense though that the industry here is reaching a tipping point and the 2009 economy might just get us there a bit faster. More marketers seem to be realizing that the 'one-size-fits-all' approach actually only really fits one, and that it doesn't matter how cheap things are if they're the wrong things to invest in.
Hopefully more marketers and agencies will embrace change, building collaborative and constructive relationships with each other.

3D billboard in Russia

The images above are for a campaign PHD Russia did for Rexona men's deoderant. The outdoor environment is very cluttered in Moscow, so to stand out, they turned around 50 billboards into 3D installations with a hand thrusting out from the canvas with the bottle of Rexona.

This production technique has been around for several years but isn't often used. The product awareness from this campaign apparently rose 40% which serves as a reminder that amidst all the talk of UGC, twitters, social networks and user experiences, there are still a lot of more 'traditional' opportunities for effective marketing communications out there.

Car buyers in Shanghai

The video shows a young Chinese couple in a Buick dealership in Shanghai. She is furious that he won't buy her the car and has a tantrum. The words at the end of the video translate to 'rich person'.

Social Media Threatens the Corporate Ad Agency
by: Scott Goodson

The corporate ad agency has been around since J Walter Thompson founded his company in 1864. After WWII, American and British agencies opened offices in cities around the world to advertise products to greater number of consumers. In the 50s TV transformed the industry and money made off the TV was astronomical. Smaller players were gulped down. Medium size players were merged and expanded all in the interest of maximizing profit derived from the expansion of TV advertising.

"Ok, ok," you say "enough of the history lesson". Trends in advertising, the economy, and the rise of the internet are all transforming the industry in ways never before seen and at a pace that is leaving many faces flushed. Most of the corporate agencies have been punished on Wall Street. IPG is down around $3.68 per share.

Emerging innovation driven agencies are influencing things beyond their size, doing huge campaigns with greater efficiency and doing things faster and with more flexibility while the corporate agencies do what they can to protect their revenue from TV advertising.
The Financial Times today reports that two-thirds of advertising agencies are not prepared for the industry changes prompted by social networks and new forms of digital media.

“The Institute of Practitioners in Advertising, which will publish the “Social Media Futures” report compiled by Future Foundation next week, has warned that advertising agencies face growth of just 1.2 per cent a year by 2016 if the industry fails to tackle the changes to the media created by sites such as Facebook, YouTube and Twitter. Social networks enable consumers to pass on information about products and services, and recommendations from friends are more influential than traditional forms of advertising.”

The article goes on to quote Moray MacLennan, chief executive of M&C Saatchi Worldwide:
“The current downturn will accelerate these trends in agencies as everyone is looking to innovate and stand out from the crowd.I don’t think [social media] is a replacement for paid-for media, it is just going to be a challenger for [consumers’] time and attention.”

Social networks themselves are still figuring out how to make money from advertising on their sites. Pricing for generic banner advertising on social networking is relatively low compared to other sites, because their users are logging in for communication rather than commerce. In this brave new world, advertising’s most prized accomplishments are suddenly being seen as corporate milestones of a bygone era.

Will the legacy corporate agency model survive in its current form? A few remain competitive. Some are doing better than others. Most continue to derive much of their revenue from TV advertising.

Corporate agencies in the industry have reacted to the collapse of the traditional model by laying off staff and restructuring. Taking traditional advertising’s place of course is the internet. The net is the media to be reckoned with and to build the marketing business of the future around. Among the most significant aspects of this transformation is the fact that the web does not offer the same financial booty TV advertising once did.

So how will the large corporate agency be able to sustain itself on the business model being born in January 2009?

Clients have changed and what they’re demanding of an agency has fundamentally changed. Clients have seen how nimbler and more innovative agencies can do what the big guys do more efficiently. In these economic times, they can certainly capitalize on the problems confronting the corporate agencies.

For someone like myself who runs an independent agency, the challenge is sustainable growth. And this is where the legacy agencies have always had one considerable advantage. They have been able to rely on long-term relationships for consistent revenues. But these days, with all that's going on, clients are more open to alternative agencies - agencies that they may never have considered for a huge account.

Original post
http://scottgoodson.typepad.com/my_weblog/2009/01/social-media-threatens-the-corporate-ad-agency-.html