10 minutes reading time (2071 words)

Jonathan MacDonald: Advocurrency - an alternative trading currency for advertising

Jonathan MacDonald. Photo by courtesy of Jonathan MacDonald

 


I remember reading in Smash Hits magazine when I was young about how Keith Richards from The Rolling Stones would drape coloured scarves over lampshades to get the right ambience backstage. I'm not sure whether the photo is representative of such an environment, but you get the idea..

 

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Photo by courtesy of Jonathan MacDonald

Spin forward a few years and I found myself backstage at my own gig, setting off the fire alarm by a scarf catching fire against a bare lightbulb. It turned out the lampshade part was critical when impersonating 'Keef', due to it shielding the bulb. Mind you, that's the nearest I got.

Placing a scarf over a lampshade is a way of changing the output of a product. It's a remix, an edit – a mashup. It need not be authorised.

The lack of authorisation isn't problem unless you start a fire. However, the makers of the lamp and lightbulb most likely didn't intend, nor predict, their creation would be edited. The lamp, and any appended shade, is intended to be the de facto creation. The creators spend time making it just right, sometimes they hire people to create an accompanying story so people are engaged, the venue owners place it in just the right place, and the electricity suppliers ensure the power turns it on.

Our role as benefactors of the light is to be enlightened.

And that alone.

Now, let's use this analogy and apply the advertising world to it.

Imagine the creators of the lamps are all of the brand owner companies and the advertising agencies as the ones who create the accompanying lamp stories – making the lamps look and feel fabulous and attractive.

Imagine the media agencies as the ones who plan where the lamp should be in the room.

Obviously, it is the public who are the electricity suppliers – powering the above.

However the public are also able to throw scarves over the lamps, amending what the lamp looks and feels like... This is a secondary role that is fairly modern, has massive consequences, and is primarily due to the huge disruption that the internet brought to the commercial communication landscape.

Here's how.

 

Whereas media channels like TV are currently used for one-way broadcast, the newer channels (enabled by the internet) have a feedback mechanism; providing the ability to interact and converse.

Actually, the affordability and capability of technology has risen so significantly that many people (but not all) have a once corporate ability to create, edit, and publish information. If you like, the everyday citizen is armed with weapons of mass communication.

This world of exchangeable opinion has led to brands being democratised. Brands can be remixed, edited, and mashed up, without any authorisation from the companies that own the branded product or service, nor the representative agency.

The general public are empowered with not only the scarves to throw over the lamps, but also the technology to share their new scarf/lamp creation with the world.

To these 'brand remixers' it is now their brand. The opinion of theoretical brand owners is largely irrelevant, and if stated, is largely rejected. This is because the publicly perceived attitude and behaviour of an official brand is often one of hierarchical patronisation which worked well in the one-way world, yet plays out sub-optimally in our modern, multi-way interactive environment.

The reality and scale of brand democratisation is such that I'm often asked what the potential ways of doing business are, where the revenue will come from, and how an agency needs to operate if they are to maximise the opportunity. As a disclosure, our work at this fluid world is significantly focused in this space. And for good reason.

Advertising agencies are appointed by companies (clients) to create brands, metaphors, and stories, that (hopefully) will resonate with prospective customers, or consumers, who (hopefully) buy, and love, the product or service. Clients could do it themselves, theoretically, but most appoint an agency.

Advertising agencies are commonly paid by companies per job, on a retainer, or a mixture of the two. Agencies are mostly reactive to what a company has decided it needs (even if the agency thinks it is coming up with everything itself), and are often forced to do more work for less money as budgets are cut and/or procurement drives prices down.

Not to put too fine a point on it, when a client says jump it's not uncommon for agencies to ask "how high and for how long"? After all, an agency is funded by it's clients. Exclusively.

Rather than being paid for the value created, agencies tend to be paid for their time. Proposals are mostly constructed from an equation of how many people would be needed and for how much time. Often an agency will use existing staff and take percentages of people's time into account, for instance; 25% of Sally, 50% of Tim, and 15% of Jill. Often Sally, Tim, and Jill will be included in other things also and it is fairly normal to have over 100% of time accounted for. You can imagine where that leaves everyone.

When examining future revenue models for advertising agencies it is imperative to start from a position of clarity about existing revenue models, cost bases, and client relationships. In most cases, when dealing with an agency of pedigree, the task for constructing new ways of working isn't solely down to dreaming up other ways of doing business, but instead defining a vision, establishing a purpose, applying the existing context, then plotting a way forward between today's situation, and tomorrow's aspiration.

Within all this, the control is not within the agency – it is within the client. Thus it would be prudent to assume the future revenue models and ways of working need to be agreeable to clients and the business environment in which they trade – assuming little change in the reactive versus proactive nature of the relationship in the short/medium term.

I say this because, to my mind, advertising agencies are trading as if they are in the business of production. Reactive production rather than proactive production.

Reactive production is all about churning out adequate stuff at the cheapest price whilst retaining a margin that allows trade to continue. It is about using the resources at hand to best address instruction from on high, in the most efficient manner possible. This isn't to say the expertise isn't there but put bluntly, it's a numbers game.

In my opinion, advertising agencies should actually be in the business of representative facilitation.

It's a bit of a mouthful, but representative facilitation is the practice of making it possible for those that (in word or deed), stand up for a product or service in the marketplace – to better do so.

I think advertising agencies should be in the game of ensuring people have a wide choice or scarves to put over lamps, and to enable the sharing of creations with others.

I think advertising agencies can do their job (of making lamps look and feel fabulous) better, if they took into account the interpretations of remixers and editors who are not on the payroll. A scarf covered lamp is a clear indication of adjusted preference.

In the commercial communication world there could be firms that may feel they are sort of in this area already. PR agencies could imagine they sit here, as could Word -Of-Mouth, Social Media agencies and even Direct Marketing agencies who often take care of the Customer Relationship Management for a client.

But none of them actually do.

All of them are involved in representation but seldom in the true facilitation of representation. This isn't a criticism – just a difference in interpretation.

The PR agencies will monitor the scarf usage and ensure the key messages are repeated in a hope the users remember how important the underlying lamp is.

The WOM and SM agencies will engage in discussion about the usage of scarves to cover lamps, but ideally want some positive sentiment about the lamp itself – even if the discussion shows the scarf is actually the main thing and the lamp is a byproduct.

The DM and CRM agencies will continually target the lamp owners with very little knowledge of whether scarves where ever used. The prime objective is to sell more lamps rather than build relationships regardless.

I should state I have no bias toward advertising agencies getting more involved in the facilitation of scarf throwing and sharing – the opportunity is there for any player type, it just seems that the original creative work is the amended subject in this case, thus one would think the creatives have an option for further involvement.

If my suggested approach were to be considered, the revenue stream options would fall mostly into that of reputation and relationship management. These are loyalty based mechanisms like:

 

  • transactional commission on returning custom driven by loyalty
  • platform license fees for sharing tools that enable the spread of opinion
  • share of saved expenditure (acquisition/marketing/PR etc) due to ongoing positive sentiment

 

I call all of this Advocurrency.

This is a multi-dimensional currency that exchanges advocacy into a tradable currency, usable for buying, redeeming, and relating. Advocurrency exists already, but it's currently only used in one dimension (at the time of writing).

For instance, Uniqlo ran a campaign where the sale price of certain items was reduced each time someone on Twitter mentioned #luckycounter.

That's a really basic version of one dimension advocurrency.

The Palms Hotel in Las Vegas and the Four Seasons in New York both treat guests differently if they have a significant online influence. One gives free iPads for the duration of the stay, the other gives you an entirely separate VIP check in.

Again, one dimension.

When I started writing about advocurrency, my thinking was also one-dimensional too. The next dimension for the advocurrency will be how industry uses it to trade.

Holistically, my view is captured by Edith Wharton, the American novelist who died in 1937: "There are two ways of spreading light: to be the candle or the mirror that reflects it." I think agencies should be in the mirror industry now.

I believe we could create 'sentixchanges' which convert positive sentiment, harnessed by an agency, into real world monetary value over and above the resultant trade.

I believe we could create trading agreements where the loyalty and opinion of armies of fanatics is paid for in a similar way to market research, with a share going to every party involved on the trade and consumer side.

 

 

An example, just for starters

Agency Y co-creates campaigns with members of Brand Z's fan club. The new campaign brings more people into the fan club and the widened positive sentiment has a recognisable impact on the level of repeat engagement with Brand Z's service.

The repeat engagement shows increases purchase volumes by a certain % and Agency Y take a commission on each purchase value, thus realizing £X.

This repeat engagement also has an Advocurrency value of (e.g.) 300 that converts into £X of billing between Brand Z and Agency Y.

The Advocurrency value of 300 can be passed to members of the fanclub by way of payment, rewarding advocacy, and enabling trade between the fanclub members and Brand Z of which they become co-creators.

This is just an example. It's not exhaustive – it's simply a representation of the type of concept I envisage. I'm not proposing it replaces anything – just maybe adds to what is already happening perhaps.

I think it potentially requires adjusted payment systems, tracking systems, procedures and mindsest. I don't think it's easy to get there, but I do feel this could be a way forward.

 

 

The first step

I'd propose we start with one client and one agency agreeing on a general principle to begin with, and experiment in a small way with one campaign.

Pragmatically, a change to advocurrency will not happen overnight, and requires small iterative steps to happen, whilst learning all the time and fine tuning components as we go forward.

I have many other thoughts on how to achieve a genuine, global advocurrency-based trading environment, so feel free to get in touch.

 

 

Jonathan MacDonald is the co-founder of business and marketing consultancy, this fluid world; and co-founder of Every Single One Of Us.

His website is jonathanmacdonald.com, and he is @jmacdonald on Twitter.

 


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