How will well-known brands cope with the increasing number of challenges posed by new and disruptive technologies, asks David Finlay, managing consultant, digital, Purple.
This year, and particularly in recent weeks, there has been an incredible amount of activity in the world of mobile, social media and technology. There have been product launches including smartphones, tablets and other computers coming to market and creating a buzz.
As well as hardware, there are improvements and upgrades going on in software technology too which could affect many computer users. More specifically, with the recent unveiling of the Apple iPad Mini, Amazon’s Kindle Fire, Microsoft’s Surface, and Google’s 10-inch Nexus tablet, there is an ongoing, and increasingly spirited debate about which tablet will ultimately emerge victorious.
As observers of all this frenetic activity we can’t help feeling slightly unnerved on behalf of the established market leaders. Traditional digital brands have been moving into the world of hardware development and therefore the market leaders, such as Apple, are shaken into producing competing products which are being welcomed but getting mixed reviews.
Also, traditional hardware manufacturers, such as Samsung, have moved from television and hi-fi equipment into the highly competitive world of mobile and tablet development in recent years, with their hands being forced by consumer buying power.
It seems to us that the shifting sands of technological development are pushing the biggest brands in the world into areas that they are uncomfortable with and unprepared for. Bringing in the right people with the right skills sets is the obvious quick-fix but the big, future picture remains tantamount to big brand survival. Resource and talent will be the key to winning the battle of the big brands and never has it been so important.
In many ways, the problem that Google and Facebook have is that their foundations were built on an ‘advertising for revenue’ model, but the model just didn’t take into account the changes that the penetration of smart phone has fraught on the sector.
Mobile as a medium is now massive. If we look at some of the recent figures that have been published we can see that nearly 20% of consumers in the UK have researched products on a mobile phone or tablet prior to purchasing them in store.
Advertising space that was taken for granted on desktop or laptop screens just isn’t available on a phone, and that is how more and more people are accessing their search engines and social media platforms. Revenue streams on sites such as Facebook and Google are therefore becoming marginalised.
Google is facing an additional problem of fighting legal action which suggests that they have been anti-competitive in their algorithm search mechanisms.
If such a pre-eminent brand were to be proven to be pushing their own products to consumers when consumers have assumed a level of impartiality in using Google to search products, it could be disastrous for the brand’s reputation, and could impact on both search engine use and its new hardware line. After all there is competition out there which consumers could move over to and feel more confident in if they believe them to be more ethical in their practices.
Speculation about this issue has, along with the challenges of increased mobile use, played a big part in Google’s share price plunge last week, but Sir Martin Sorrell has argued that the "market got it wrong" on the release of the search giant’s third quarter results which failed to match analysts’ expectations.
He has been advising Facebook of caution and steadfastness in the current climate and that they should proceed with their vision of building a social network, regardless of what the detractors are saying.
Google reported that 3Q profits slid 20% from a year earlier to $2.18bn, which led to a tumble in its share price. Sorrell said a strong dollar and Google’s acquisition of Motorola were partly to blame for the profit decline. He added "I’m sure the revenue generation will come. They might have to be anxious about it in the short term, because analysts want to see revenues from mobile, but [they should] not [be anxious] in the long term."
The arrival of 4G will also no doubt spur on developments as people take full advantage of faster access to the internet while they double or triple-screen at home.
The fascinating thing for us at Purple, as providers of people and resource and as consultants on how to manage both those things, is how these well-known, household brands will manage themselves moving forward.
How will they rise to the challenge of providing the best of themselves, but still compete with their evolving peers who are forcing them to move into unfamiliar areas? Will they encroach on the mainstream digital talent pool and bring specialists into their new product development departments or will they grow organically?
The huge financial figures that are at stake, and which keep getting published by the national press, demonstrate the potential impact on these brand names (Google, Facebook, Apple etc) if they fail when faced with this evolutionary challenge.
Competition is essential if consumers are to be able to buy new products at the best price, but who the competition is becomes increasingly hard to tell when the lines are so blurred between hardware, software, technology and online brand development.
It is a fascinating marketplace to watch at the moment, but a marketplace which could also implode under so much pressure to supply everything, everywhere... hang on a minute, wasn’t that a brand name? Well it was, but even that has now changed to EE. Are you keeping up? We are watching changes with great interest.