Where creativity meets commerce

The role of the marketing function within the broader organisation is a much-discussed topic at industry events. And The Marketing Society Conference, organised by the UK trade body and held in London in November 2013, was no exception. As Ian Pearman – the chief executive of advertising agency AMV BBDO – put it: "We want to know the systems whereby businesses create creativity."

Marketers are often encouraged to think and act more like entrepreneurs, and then given few meaningful guidelines describing how to do so. However, several speakers on the day offered delegates constructive advice about achieving this goal, and driving business growth as a result.

Zipcar powers ahead
A major example of this came from Zipcar, the membership-based car rental service which is accessed via the web and mobile. The company’s formation was guided by broad shifts in society: the global urban population is predicted to grow by 30% over the next 20 years, meaning the proportion of city-dwellers worldwide should move decisively above 50%. But this trend puts the existing public transport infrastructure under pressure, and makes owning a car less practical.

Enter Zipcar. "We’ve turned what seemed like a sacrifice - not owning a car - into something aspirational," said Mark Norman, the company’s president. Zipcar is certainly growing quickly, and received four million reservations in 2012. It has also built up a network of 850,000 "zipsters", of which one-third are over 40 years old.

The organisation operates in 26 cities across the world, as well as on 350 college campuses. "There are now tens of millions of people within a ten-minute walk of a Zipcar," Norman said. "Our vision is a new mobility society. In the future, urban consumers will make their mobility choices by the trip. Now, the differentiation comes in how to reduce friction in these choices - to become the go-to brand. The arbitrage is for every trip you take, how many will default for your mobility service network."

Despite such high-flown words, the notion of having a "big idea" is problematic, according to the firm’s ethos. While Zipcar’s model is, in the contemporary tech jargon, deeply "disruptive", Norman was at pains to emphasise that its mission was not to eradicate dependency on the automobile. Rather, it is aiming to make life more efficient for consumers. "It’s a brand built around service, not around condescending ideas," he said. "And that appeals to my background in marketing and sales - taking a big idea and making it scalable to the mainstream."

This kind of bottom-up, incremental way of thinking is matched by a focus on the practical results of using Zipcar. Norman cited research showing that the average person living in a city spends 19% of their monthly budget on transportation; for the average "zipster", this total drops to 6%.

In order to achieve greater revenue, Zipcar has adopted a strategy of acquisitions and alliances. It launched in Europe in 2006, and has since bought out a range of smaller rivals, including Streetcar, Avancar and Carsharing Austria, before being acquired itself by Avis Budget Group, the car hire giant, in early 2013.

Norman presented this deal as a win-win for Zipcar, enabling it to keep a start-up, tech-orientated character alongside using Avis’ huge fleet to attain a wider reach. "The partnership with Avis allowed us to take a lot of the costs out in terms of supplying an infrastructure," he said. "Avis is good at what they’re good at. But they let us stay focused on what we’re good at - the technology and the user experience. We obsess about user experience."

To this end, Norman claimed that the personalised nature of its service has helped Zipcar improve both its product and its communications. Organising drinks parties with its core customers, for example, has paid rich dividends. "The biggest difference in our business is that the customer is part of the service delivery process. It’s like having customers run the plant," he said. "The feedback they give is our innovation hotline."

This point was echoed by Christopher Lukezic, marketing director of Airbnb - a travel company which has transformed the accommodation industry by allowing users to put their homes, or rooms within them, on the market for travellers to stay in, with bookings made exclusively via digital channels. "We innovate by acting as part of the community," Lukezic said. "We don’t really have focus groups. We build relationships with our users. Some of the things we put in have come about after having some drinks with customers. They tell us how to innovate."

ASOS goes global
A different company with similar principles is ASOS, the British online fashion retailer that is currently going global by opening offices in the US and Australia, as well as moving into China. For Nick Robertson, CEO of ASOS - and formerly of Y&R, the WPP-owned agency network - the company’s British roots are very important to its growth story.

"London is the global centre for ‘fast fashion,’" he told the audience. "We have all of these high-street brands that simply aren’t in other countries. So what ASOS has done is put fast-fashion brands together in one place and export it to the world. We are hoping that these brands can now go international at zero cost to them."

While the firm has attained an impressive scale, with 7.1 million users and 8.6 million orders dispatched worldwide, it was created in 2000 with a very different purpose in mind. ASOS stands for "as seen on screen", and it originally sold items that appeared in films and TV shows. Growth only came when it swapped strategies and became a more general fashion vendor.

Robertson explained that this approach was a consequence of serendipity rather than a grand, top-down scheme. "Our first buyer was ex-Top Shop," he said. "She used to come back with these bags of clothes. At the time, celeb mags with the ‘get the look’ feature were very popular. So we just put that on a web page and added a ‘buy’ button."

Although ASOS is set to generate more than £760m in revenues in 2013, above-the-line marketing budgets are restricted by a central promise of the brand: it offers free delivery and returns, a feature that, Robertson estimated, costs £100m a year. "The first pound of marketing goes into the free delivery and returns," he said.

As such - perhaps by necessity – it has embraced social and earned media in its campaigns, as well as direct-response digital, with 1.5 billion ASOS search ads having been served to date. ASOS has been particularly innovative in leveraging its 500,000 Twitter followers, too, attracting much attention - and a Cannes Lion - for its #BestNightEver campaign. The endorsement of singers Ellie Goulding and Azealia Banks, who offered their followers on the microblog the chance to win clothes they wore in media appearances and music videos, delivered £5 million in extra revenue.

The need to keep returns free has also contributed to ASOS's decision not to undergo the potentially expensive process of opening a shop in the physical world. And according to Robertson, it will never open a bricks-and-mortar outlet. "Thirty percent of our traffic is already coming from mobile devices," he said. "People into fast fashion [that] I ask already buy 70-80% of their fashion online. So why open a store?"

By contrast, ASOS has made a foray into traditional media, a move informed by the original insight for revamping the brand. From being inspired by "get the look" sections in magazines, ASOS now publishes a monthly magazine of its own, which is seen by 500,000 people a month.

Robertson was quick to distance the magazine from being a simple shop window for the company’s products. "It’s fashion journos trying to be as impartial as possible. It’s a fashion magazine - not a catalogue," he said. But, of course, regardless of the copy, the presence of the ASOS brand on the cover makes the publication a valuable advertising channel. "This is the convergence between fashion and the media," Robertson said. "Advertising revenue has become clothing revenue."

Ideas about innovation
Innovation was a buzzword across the rest of the day’s presentations. It’s also a concept and a way of working that marketers want to adopt, but which costs money and is therefore resisted by many senior executives.

Being ‘meaningfully unique’
Doug Hall, founder of Innovation Engineering, an education service, put the dilemma like this: "If you’re not meaningfully unique, you’d better be cheap."

The latter choice - described as becoming "a logo, not a brand" - is made by most operators, Hall argued. In such cases, price cutting is everything, which serves to stifle innovation and ultimately damages profits. "You are not going to cost-cut your way to growth," Hall said. "It’s not going to happen. We’re all going to die, but organisations don’t have to. Innovation is rebirth. Eternal life comes from innovation."

Hall’s solution for building an innovative business echoed the Zipcar and ASOS presentations. He was inspired by business guru W Edwards Deming’s famous dictum that 94% of corporate problems are due to the system and 6% are due to the workers. To build innovative systems, and brands that are "meaningfully unique", Hall suggested that 85% of business projects should be "core", or tried and true, while 15% should be "leap", or innovative and experimental. The "leap" group should drive much of the company’s profits over time, and those projects that do not work out will not overly damage revenue levels. "Fail fast and fail cheap," Hall said.

This last point was expanded upon by Eric Whitacre, the composer and creator of the Virtual Choir, which has become a viral sensation. "Fail big and fail often," he said. "Don't get caught up in the tyranny of detail in early stage of creative process."



Encouraging entrepreneurialism
As partly demonstrated by Zipcar, another way in which small enterprises can rapidly gain scale is through outside investment. Sir Terry Leahy, former CEO of Tesco, Britain’s largest retailer, is now just such an investor. One venture he has backed is Black Circles, the online tyre distribution specialist, which achieved £23 million in turnover in 2012, threatening its established
- and offline - competitor, Kwik Fit.

Leahy outlined some important lessons for marketers. "I’ve seen innovation both inside and outside large organisations," he said when discussing his first tip. "Entrepreneurs are wired differently. They think they can do it better."

And the ex-Tesco man had some additional recommendations for large brands which want to tap in to some of this spirit.

• Be more tolerant of people that are a nuisance; they're usually the most creative.
• "Bureaucracy has become a prisoner for people in work," he added. But a process is just "a series of steps that will turn an idea into a reality. If you can scale it, you can make it a system."
• "Marketing is a great place to lead an organisation from. But marketing has lost its confidence. Marketers have to be braver and take personal risks. If you try to manage in order to avoid failure then you will have no success."

Learning from outside
Another common theme at the conference was the need to adopt best practices that are already commonplace in the world’s biggest innovation hub: Silicon Valley. Josh Bottomley, chief digital officer at HSBC, the global bank, said London does not
lack for creative talent, but there is a dearth of iterative product testers who make innovations work by painstakingly ironing out the bugs.

"Going to Silicon Valley, you know the ecosystem," he asserted. "But what I hadn’t fully appreciated is the number of people sitting in their apartments who are MIT or Stanford grads, earning nothing, and taking months to test out their idea and make it better."

Equivalent problems extend to the C-suite, according to Saul Klein, a partner at Index Ventures, the tech investment firm. He cited statistics showing there are only four CTOs on the boards of the UK’s 100 largest publicly-listed firms, even though the nation’s 20 biggest companies alone spend over £2 billion a year on IT. "The lack of technology literacy at the top of organisations is shameful," Klein said.

A more hopeful message was provided by Paul Kemp-Robertson, a co-founder of Contagious Magazine, which highlights new marketing innovations in every issue.

He posited that customer loyalty is "becoming a micro-economy" thanks to various digital developments. One study has thus shown that 45% of 25-34 year olds would trust independent or branded currencies, with goods and services being exchanged within a brand-owned ecosystem. This can be seen in the rising popularity of Bitcoin, the "virtual currency", and in innovations like Amazon Coins. "It’s brands versus the Federal Reserve," Kemp-Robertson said.

More broadly, he advised marketers to tap into consumer loyalty by creating branded goods and services that customers positively want to use. The highest-profile example of this over recent years has been the Nike FuelBand. Popular receptivity to innovations of this sort is further evidenced by the fact that the market for context-aware computing is growing by 35% year on year, and Accenture study showing that 61% of millennials would trade privacy for greater personalisation of goods and services.

"Marketing becomes a service, a tool, a part of everyday life," Kemp-Robertson said. "Target people and create a context around what they’re doing."

In summary

• Zipcar has achieved global success from its start-up roots not through big ideas and high-flown rhetoric, but by offering a useful service with frictionless delivery. It learns from its consumers and iteratively improves its service.
• ASOS has gone global through a clever use of below-the-line advertising and branded content – and has no intention of opening physical stores.
• Innovation remains a watchword for many marketers, but large corporations are failing to encourage entrepreneurialism among their employees.

Joseph is a web producer for WARC. Follow them @WarcEditors and to learn more, visit their website.