Economic Conditions Snapshot, August 2009: McKinsey Global Survey Results

Executives’ optimism about the economy has continued to grow over the past month and a half, according to the results of a McKinsey Quarterly survey in the field during the week that US stock markets hit their highest point so far in 2009.

More companies are pursuing a range of growth initiatives than were doing so six weeks ago, and the proportion expecting increased profits this year has risen to 40 percent, from 33 percent. Similarly, the share of those saying that their nations’ economies have improved since September 2008 has risen, though only to 26 percent, from 20 percent.

More executives—42 percent—pick the description “battered but resilient” for the global economy than any other. Yet their other responses indicate that they see the economy as battered enough to prevent a large-scale economic recovery from arriving anytime soon. The share expecting an upturn to begin in 2009, for example, has fallen to 20 percent, from 28 percent, over the past six weeks, and the percentage of respondents who think that their national economies will be better at the end of the year—37 percent—equals the percentage who think their national economies will be worse.

Your Medical Information in the Digital Age

by John D. Halamka, MD

The U.S. is moving toward electronic health records. Here’s how to make that work for you.

You probably take for granted that you should manage your own résumé. After all, it catalogs your professional history and accomplishments—who else would manage it well? But chances are you don’t oversee your own medical records. Until now, doing so has been difficult because bits and pieces of your information are probably scattered across the files of several doctors, hospitals, labs, and pharmacies. That’s an inconvenient—and potentially dangerous—state of affairs, but one a new federal law may help to remedy.

The American Recovery and Reinvestment Act is providing about $30 billion to improve the exchange of health care information. One trickle-down effect will likely be greater access to your lifetime medical information through a personal health record in electronic form. The underlying idea is simple: Compiling your medical data in one place lets you be the steward of your health information.

Like first writing up a résumé, creating a personal health record takes time, but there are several payoffs. Having the record can prevent unnecessary testing and treatment (and, in turn, save you money), reduce the chance of a medication error, and instantly provide vital information in an emergency. It also can be used to keep track of your weight, blood sugar, and much more.

So far, four types of electronic personal health records are available:

• Hospital- and clinician-hosted records are great if all your information resides at a single institution. One example is PatientSite, used by more than 40,000 patients of Boston’s Beth Israel Deaconess Medical Center to view their hospital records, send secure e-mails to doctors, make appointments, refill prescriptions online, and the like. But this kind of service is not widespread. A recent study in the New England Journal of Medicine found that only 9% of the acute-care hospitals surveyed had an electronic-records system in place in even one clinical unit.
• Payer-hosted records, such as HPHConnect from Harvard Pilgrim Health Care, give you access to claims information relating to your medications, doctor visits, and hospitalizations. Some let you share information with family members or doctors. On the downside, you may not be able to access all of your lab and radiology results, and there’s no guarantee that you can take your record with you if you change insurers.
• Employer-sponsored records are typically hosted by a trusted outside firm, creating a firewall between the employer and the medical data. For example, computer storage giant EMC partnered with WebMD to offer claims-based personal health records to all of its employees. Employer-sponsored systems aim to keep you healthy and productive by, say, recommending an exercise program if you are overweight. They can also help you manage your health care–spending account. However, you may not be able to take yours with you if you change jobs.
• Commercial offerings, such as Google Health and Microsoft Health- Vault, allow you to link to your electronic records stored at participating hospitals, pharmacies, and laboratories. In addition to collecting existing data, you can add your own, search for information about medical conditions and drug interactions, and share information with your doctors and other appropriate parties. These services let you keep your health record for life, regardless of your job or insurer. Google recently implemented secure “social networking” for personal health records. Call it Facebook for health care. It allows you to invite caregivers or family members to access your personal health information. Invitees can be removed at any time.

What about privacy? Each of these products has strict policies stipulating that the host companies will not mine personal health data, share them, or use them for targeted advertising. Hospital and payer data are covered by rules in the Health Insurance Portability and Accountability Act of 1996. Google’s and Microsoft’s offerings are outside HIPAA’s scope, but both firms have developed policies that are even stronger than the legislation mandates. I trust those policies enough to have stored my lifetime medical record on Google Health and Microsoft Health- Vault. (I share it with you on my blog – http://services.bidmc.org/geekdoctor/ johnhalamkaccddocument.xml – at my own discretion.) Whatever record system you choose, make sure it has robust privacy policies that keep you in control of your information at all times.

This new world of connected health care has tremendous potential to increase both personal and systemwide efficiency. What’s in your interest complements what’s in the interests of the larger health care system as we all try to reduce costs and improve care.

Unprepared for changes in health care: McKinsey Global Survey Results

Only 30 percent of executives representing the health care industry in the United States say their companies are ready for reform and changing economic conditions, according to a McKinsey survey on how prepared industry players—payers, providers, and pharmaceutical companies—are for change.¹ However, 76 percent say the impact of reform on the industry will be significant, and 54 percent say the same about the effects of the current economic crisis.

The survey asked executives where their innovation efforts are focused, which areas are likely to provide the greatest benefit to their companies in the near term, how the importance of innovation has changed within respondents’ companies since the financial crisis erupted, and how ready they are to adapt to ongoing reform and the new economic environment.

The minority of companies whose executives say they are ready to adapt have a different strategic focus than the others. Their top priority is to increase the value of health care by, for example, reducing the misuse, underuse, and overuse of care or increasing the quality of care received. In contrast, at most companies, the top priority is increasing revenue or membership growth. Also, companies prepared for change innovate differently: they can count on leadership’s support, for example, and drive innovation in a wider range of areas, including product design, customer service, and IT.

Traditional Marketing Budgets Lose to Interactive

Traditional Marketing Budgets Lose to Interactive

According to Forrester Research, reported by Richard H. Levey at Directmag.com, 60% of marketers surveyed will increase their interactive marketing budgets by shifting funds from traditional media. Direct mail was cited by 40% of marketers as being one being cut, outranking newspapers (35%), magazines (28%) and television (12%).

Among the interactive channels, the study finds social media and mobile marketing spending expanding between 2009 and 2014, with social media jumping by 34% on a compounded annual basis and mobile marketing increasing by 27%. Social media starts at $716 million in 2009, increasing to $3.11 billion by 2014. Mobile marketing expenditures stand at 319 million this year, and goes to $1.27 billion by 2014.

Online display advertising, which currently stands at $7.83 billion, will rise by 17% annually, ending up at $16.9 billion in 2014. Search marketing, which currently accounts for $15.39 billion in spending, will jump by 15%, to $31.59 billion, and e-mail, now at $1.25 billion, will increase 11%, to 2.08 billion.

Shar VanBoskirk, Forrester analyst, says "Email marketing is having a banner year as marketers:

• Grow their lists with the promise of ‘green marketing'
• Turn on more and smarter programs to boost sluggish sales
• Shift money to email from direct mail
• Improve email effectiveness by linking it to other channels like search or user-generated ratings and reviews."

And, while social and mobile media expand, a corollary report from Forrester shows marketing officers reporting that budgets for traditional media, such as television, print, radio or magazines, along with staff and training spending and branding and advertising expenditures had been cut by two-thirds from last year's levels, and more than half of their direct mail budget was gone.

Budget reductions from the 2008 level include:

• 29% reduction in marketing technology
• 27% in online advertising
• 22% in Web site development budgets were reduced
• 21% reduction in loyalty program spending
• 11% reduction in E-mail marketing
• 7% in social media spending from the 2008 level

Among CMOs facing lower budgets:

• 19% said they cut branding and advertising because "I can't track its results"
• 26% said the same about their TV, print, radio or magazine expenditures
• 19% reduced their direct mail spending because it delivers the lowest ROI

On the other hand, 47% of CMOs whose budgets have been cut are increasing their spending on social media, while another 44% are increasing spending on Web site development. 40% will spend more on online advertising, and nearly that amount will increase financial resources in e-mail, considering these functions critical to their businesses, or needed to maintain competitive advantages.

In a glimpse into how marketing is viewed throughout a number of organizations, just over half of the CMOs see it as a revenue enhancer that needs to be supported. But 41% indicated marketing efforts are under increasing scrutiny from all levels of the company, and 18% are working in firms where marketing is seen as a cost center that needs to be cut.

To read more about the interactive budgets, visit Direct here, and for more on the continuing Forrester report on marketing budget reductions, please go here.

Prizes: a winning strategy for innovation

Good article in McKinsey on the value of innovation:


Prizes: a winning strategy for innovation

Personalized medicine: An interview with Esther Dyson

Personalized medicine: An interview with Esther Dyson

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Marketers Moving to Social Media - eMarketer

Marketers Moving to Social Media - eMarketer

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Best-in-Class Companies More Likely to Use Social Media Monitoring

BEST-IN-CLASS ORGANIZATIONS ARE MORE THAN 680% more likely than laggards to improve their ability to predict customer behavior through the use of social media monitoring and analysis tools, according to a new report conducted by Aberdeen, a Harte-Hanks Company, and underwritten by word-of-mouth measurement company Andiamo Systems.

The report was comprised of 250 companies surveyed to determine how companies can successfully compete in a world in which Web-based consumer-generated content is marginalizing the value of traditional media channels.

By blending the use of social media monitoring solutions with marketing dashboards (57%) and campaign management tools (60%), Best-in-Class companies were able to gain a clear insight into the effect of marketing promotion on consumer sentiment, according to the report.

The Client-Vendor relationship

Preventing a ghost town community

Good article from BazzarBlog where the author analyzes how some communities work and others don't.
Gartner reports that 50% of brand communities will fail. And by fail, they mean ‘shut down’. That leaves the other 50% still live. But are they successful? How many “ghost town” communities are out there? Over the past couple years many progressive brands have explored social media and community marketing initiatives — Twitter, Facebook, blogs, viral videos, forums or fully-fledged online communities.

The Community Concept Isn’t to Blame

Communities succeed if they solve a need, share an interest/passion and/or connect me with people I care about.

Facebook works because most of your and my friends are there, so it solves the need to connect, stay up to date and carries more weight as a “social resume”. Dell support forums work because they allow asynchronous conversations to solve a technical problem for a a frustrated computer user.

There are many more examples like these of successful communities. So what's the recipe for success?

What’s a Community For?

Brand communities are configured to create social interactions between customers, allowing them to share opinions and interact via blogs, wikis, polls, forums and private messages. There are a lot of technological bells and whistles that the product manager can get excited about, but let’s look at it from the customer’s point of view.

People participate in communities to:

1. Solve a problem / need (or help others)
2. Share an interest or passion
3. Connect with people I’m interested (develop social capitol)

#1 is the reason support forums exist, and they reduce support costs, not sales. #2 and #3 are usually what Brands are looking for, expecting community to drive engagement and sales. But when the community audience is small and unfamiliar with one another, a prospective visitor’s motivation to build social capital or help others dissolves. If visitors are not passionate about the topic, they are less likely to jump in.

A study from Deloitte reports that two of the top three obstacles to make communities work has to do with getting people to engage or visit (and the #2 issue doesn’t help solve this problem!):

1. Getting people to engage
2. Finding enough time to manage
3. Attracting people to the community

Research from Communities

A hundred or a thousand participants in a community may not make a sizeable impact on your sales, but they can provide valuable insight. If your objectives are for research or product co-creation, than a community that facilitates that interaction between your brand team and your customers can be very successful. Customers are much more engaged when they know the purpose of the community is for the company to listen to their ideas. The measures of success there are insights gathered in a much more scaleable and frequent way than traditional market research.

To read more: http://www.bazaarblog.com/2009/05/31/ghost-town-brand-community/

Online community beats ads for P&G

CINCINNATI: Beinggirl, the online community created by Procter & Gamble for its feminine hygiene brand Always, has proved "four times as effective per dollar spend as advertising" in encouraging sampling and driving sales, says Forrester analyst Josh Bernoff.

Speaking at the IAB's Social Media Conference, Bernoff, who is the co-author of Groundswell – which is reviewed here – argued that brands like Always constitute an "obvious" example of a product that faces the challenge of communicating with a young, hard-to-reach audience about a difficult topic.

Despite this, Procter & Gamble's community portal for the product only had a "little subtle branding message," and focused instead on "problems of being a teenage girl," from relationships with parents to healthcare issues.

The success of the site in generating interest around the Always brand meant it was rolled out to 21 markets, from the UK and Canada to Saudi Arabia.

More broadly, Bernoff, argues this examples shows that "engaging in conversations can actually generate sampling and sales."

He thus advised marketers that with most brands, as was the case with Always, "people don't really want to talk about your product."

Rather, he said, "unless your product is incredibly exciting, what you really want to talk to people about is their problems. That will give you the opportunity to talk to them about your products."

Data sourced from AdAge; additional content by WARC staff, 25 May 2009

New Influencers in Social Media

New Influencers in Social Media - introductory remarks Conference Board keynote presentation from Francois Gossieaux

New Influencers in Social Media - introductory remarks Conference Board keynote presentation

View more presentations from Francois Gossieaux.

Are some profits bad for companies?

Why do companies bind customers with contracts, bleed them with fees, and baffle them with fine print?
Because bewildered customers, who often make bad purchasing decisions, can be highly profitable.
Most firms that profit from customers' confusion are on a slippery slope. Over time, their customer-centric strategies for delivering value have evolved into company-centric strategies for extracting it. Not surprisingly, when a rival comes along with a friendlier alternative, customers defect.
Adversarial value-extracting strategies are common in such industries as cell phone service, retail banking, and health clubs.
Overly complex product and pricing options, for example, may have been designed to serve various segments. But in fact they take advantage of how difficult it is for customers to predict their needs (such as how many cell phone minutes they'll use each month) and make it hard for them to choose the right product.
Similarly, penalties and fees, which may have been instituted to offset the costs of undesirable customer behavior, like bouncing checks, turn out to be very profitable. As a result, companies have no incentive to help customers avoid them. Tactics like these generate bad publicity and fuel customer defections, creating opportunities for competitors. Virgin Mobile USA, for example, has lured millions of angry cell phone customers away from the incumbents by offering a straightforward plan with no hidden fees, no time-of-day restrictions, and no contracts.
ING Direct, now the fourth-largest thrift bank in the United States, offers accounts with no fees, no tiered interest rates, and no minimums. In industries where squeezing value from customers is commonplace, companies that dismantle these harmful practices and design a transparent, value-creating offer can head off customer retaliation and spur rapid growth.

A need for change in Agencies

Are ad agencies destined for some significant changes? Structural changes are coming to the industry, and we may very well see some of them start playing out.

The holding companies have not been able to change as fast as the landscape has changed around them. What needs to change:

• New competencies - In the recent ANA, IAB and 4A's study on the Marketing & Media Eco-System 2010 conducted by Booz Allen, brand marketers identified their most critical needs in marketing today to be the acquisition of consumer insights, behavioral targeting and brand strategies. They are looking for leadership from agencies, not just execution. This is good news for agencies, but will require that they make significant investments in competencies and technologies to deliver these insights, targeting and strategy capabilities. Over the past year, we have seen WPP buy 24/7 Real Media and Publicis buy Digitas, but it will probably take much more. Let's not forget that it was Microsoft that paid $6 billion for aQuantive, not a marketing services company.

• Talent - Service businesses run on talent, and when those services involve the Internet, technology or data and marketing analytics, that talent is in extraordinary high demand and expensive. Digital marketing may not command the lion's share of ad spending today, but it will at some point in the not-so-distant future. This means investing in that talent now, knowing that it won't fully pay off until the future. Obviously, this is hard to do in digital media buying, since the margins are so thin and the projects aren't always very scaled, but that is the cost of market entry. Of course, it may mean using geography as an advantage. Some of the hottest ad agencies today are not in one of the traditional media metropolitan markets. The Martin Agency is in Richmond, Va. Crispin Porter is in Miami. Wieden Kennedy is based in Portland, Ore

• Consumer generated content - agencies will need to incorporate consumers not just in the validation of their deliveries, bur also in the creation process as well as in the distribution.

Listen, Learn, Engage

User-generated content has clearly changed the shape of the online environment we live in today. In fact, the growth of UG content so far is turning the Internet into a non-interactive medium. It’s created the quagmire we’re in today because the industry is treating all information the same — meshing UG content with professionally produced brand content.

The publishers and marketers who climb to higher ground, who see above the fray looking at all online content the same way - combining UG and professionally produced - know that to build brand equity, to move product, to engage your customers, you must meet or exceed their expectations, and online that means being interactive.
On the Internet, consumers expect to be able to interact with the content.
Brand marketers have the opportunity to use the brand to directly sell products by allowing the consumer to interact with the brand message, its products, characters and presentation — putting consumers in control to make a decision.

People want information: What’s behind the curtain? Who is that? Where are they? What are they wearing? To show the same commercial online as they saw on television doesn’t answer any of those questions.
It doesn’t even meet their expectation. The compelling advantages of the internet should be used to open the door and invite the consumer in to explore additional content and get more information related to the ad, i.e., product, brand or service.

Online marketers and publishers heading in the race should be thinking about what they need to do to build relationships with their customers and create loyalty. The top priority will be to deliver the consumer an interactive experience knowing it will lead to transactions, sales and revenue.