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Blink of an eye

Marketers wishing to harness digital opportunities must be alert to innovation and regulation

BLink of an eye"Never before in history has innovation offered the promise of so much to so many in so short a time."

Bill Gates said that, way back in the 20th century.

That sounded like a typically bullish '90s sound bite turned out to be something more prescient, prophetic even. New ideas, technological evolution and a few brilliant individuals have seen innovation become the single most important business differentiator, beyond Gates' wildest dreams and, indeed, nightmares.

Microsoft's previously unchallenged dominance of the marketplace, for example, has vanished. Open source operating systems such as Linux and Google's Chrome OS vie for Windows' market share; Apple's iPhone and Google's Android dominate the smartphone market; Google Docs and Open Office are snapping at MS Office's heels; Facebook is a user black hole that is doing MSN no favours (aside from allowing Microsoft a piece of it). No wonder Microsoft CEO Steve Ballmer has lost all his hair.

Constant change
Microsoft's changing fortunes are one small piece of a puzzle that has constantly reformed and rebuilt itself over the last 10 years — the evolution of the internet and proliferation of broadband access has seen the online environment morph into something barely recognisable from its 20th century incarnation.

Not only has it pulled the rip cord on its waist-line (an estimated 27 million URLs in 1997 have ballooned to over one trillion today) previously non-existent players now dominate.

It's difficult to make sense of the magnitude of it all, but as a vague indication, Facebook now has over 500 million active users, effectively making it the third largest country in the world. Its inhabitants share 30 billion pieces of content every month. Around 24 hours' worth of video is uploaded to YouTube every minute. On Monday November 29 2010, $1bn was spent online in the US. These figures will be out-of-date before I've even finished typing this sentence, let alone before this article is published. That's what innovation means in 2011.

So far, so good — the dot com billionaires can sit back and light cigars with £50 notes while we enjoy their services. But what impact has this pace of change had on advertisers and consumers, in particular from a regulatory standpoint?

In the world of bits versus atoms, digital businesses like Google and Facebook can make changes that affect hundreds of millions of people instantly.

These changes are rarely unannounced, but they are often unanticipated by the majority of their audience. More often than not, they are also made with one thing in mind — the bottom line. With success comes accountability, with accountability comes pressure, and that pressure is to keep cash flowing.

Changes aren't necessarily controversial. Google's decision to move its ads to position them closer to the main 'natural search' listings happened without any fuss. The largely unnoticed change allegedly resulted in a 14 per cent rise in click through rate — not bad for a money making machine that makes 96 per cent of its 10-figure annual revenue through clicks on ads.

The whole thing happened in the blink of an eye; Google lined their coffers and the end-user continued unperturbed. What's the problem?

The problem is that this triple combination — a lack of user awareness, a product that is updated simultaneously for all users and the need to keep shareholders happy — means modern digital behemoths end up sanctioning new versions and features that in the slower, less frantic world of atoms wouldn't have been let out the door.

"We live in an age when pizza gets to your home before the police." Comedian Jeff Marder probably didn't have Gates's quote in mind when he made this wry observation, but in our brave new world of rampant progress, the reality is that these updates have the potential to leave advertisers and brands on the phone to their lawyers, while Googlers chow down on their American Hots.

A pertinent example of this is the hot water Google has found itself in around patent law. Consider the dispute with Louis Vuitton. The fashion house claimed Google had infringed trademark law by allowing advertisers to purchase the keyword 'Louis Vuitton'. When users Googled the term, not only did the natural search listings and a Louis Vuitton advert appear, but advertisements for competitors' brands too.

Louis Vuitton's argument was that competitors should not benefit from its brand equity. But in March 2010, the European Court of Justice ruled in favour of Google. In September, Google upped the ante, updating its AdWords policy so not only could competitors buy brands' keywords through the online auction, they could also include brand terms in the copy of their ads.

Ben Novick, head of advertising public relations for Google in Europe, justified the change by claiming: "Our focus is first and foremost the user. We believe that showing more ads relevant to a search will benefit users."

This was (and remains) far from certain for most industries, but when applied to a highly regulated environment such as pharmaceuticals the implications are even harder to justify, in particular if we consider a major on-going issue within the sector: counterfeit.

Regulated environment
Permitting the use of trademarks in ad copy enabled counterfeiters and other illegitimate providers of prescription medicines to increase significantly their visibility online, increasing the likelihood of potentially harmful products being purchased and consumed by unwary searchers. In this instance, Google's changes in policy may have driven choice, but they also exacerbated an already serious public health problem.

A few weeks after the update was made, a post appeared on Google's official blog that dealt directly with the issue of rogue pharmacies. In an effort to deter counterfeiters from advertising on Google, the search giant filed a lawsuit against advertisers they believed had 'deliberately broken' rules designed to prevent rogue pharmacies from advertising.

While the post went on to admit the lawsuit was essentially a token effort, this specific example does come with a solution: pharma companies need to work alongside Google, pooling their respective knowledge and expertise to ensure the pinpointing and policing of counterfeiters are handled as quickly and effectively as possible.

The bigger problem is that the inherent risks digital innovation presents to a regulated environment are much farther reaching than PPC counterfeiting. The rising costs of R&D and the increased difficulty of patenting molecules have seen companies exploring new DTC avenues as they focus their efforts on maximising profits from branded drugs. This, combined with the sudden ubiquity of social media, has seen a gradual rise in the willingness of pharma to engage more fully with the new digital paradigm; where once shoes and socks were removed and toes dipped, more recently clothes have been discarded and swimming has started.

Growing engagement
At the time of writing, Dose of Digital's Pharma and Healthcare Social Media Wiki lists 58 Facebook accounts, 41 YouTube channels and 55 Twitter accounts — all numbers that are rising on a weekly or even daily basis. Through an investment in new technologies and services has come a corresponding dependency on them, which in turn necessitates a deeper awareness of how and when they will evolve. While it is now common practice to implement internal governance structures, establish goals for social media projects and to analyse and interpret successes and failures, what is often missing is the ability to anticipate the evolution of the digital channels being used, and to interpret the implications of each new iteration.

Whether the expertise is internal or external, brands must ensure they are aware and agile enough to react to any significant changes in the digital environment, whether in a precautionary or opportunistic capacity.

While there is no doubt that the pace and nature of digital innovation presents an entirely new kind of challenge for any marketer, it is not all doom and gloom.

As we all know, the developments seen over the last decade offer huge opportunities for companies to engage with their consumers in a way never before thought possible. Guardian editor Alan Rusbridger gave a speech about the splintering of the fourth estate, in which he warns of the dangers digital innovation brings with it, but also enthuses passionately about its power both to disrupt and benefit conventional media.

Within the speech he referenced Michael Massing's comparison between the advent of the printing press and the rise of the internet, an information revolution that helped pass control from the privileged few to the masses.

As Rusbridger notes, many have argued the digital revolution of the last decade has seen a similar or even more significant shift in the way we interact with information. I would take this a step further and suggest that it is not only a communication revolution that has been playing out, but a societal revolution that is happening digitally. Juggernauts such as Google and Facebook are fundamentally altering the way we seek, find, consume and propagate information.

It is up to digital marketers to harness this potential, not be consumed by it.

The Author
James Atherton is an associate consultant at Blue Latitude

To comment on this article, email pm@pmlive.com

10th February 2011

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