INNOVATION
Future-focused innovation is no longer just a ‘nice-to-have’
Author
Experimentation cultures are an important element in fueling business performance and with 88% of U.S. CEOs anticipating an improvement in global economic growth, investment in innovation has never been more important.
Looking Back at 2021: Moments That Created Demand for Greater Innovation
Interaction, interest and inspiration: the major axes brands rely on to build meaningful relationships with their customers are undergoing paradigm shifts.
Interaction
For years, brands have relied on data capturing online behaviors to assess what content and experiences should fuel their interactions with different audience segments. In 2021, Google’s announcement that it plans to phase out third-party cookies from the Chrome browser continued to make waves when the tech giant said in March that no alternative system to track individuals would be offered to advertisers. Brands need to find alternatives to cookie-based targeting and have to address the fact that 81% of people feel that the risks they face due to data collection outweigh any benefits. [1]
Interest
When it comes to creating interest in products and services, interruptive advertising has now become a considerably less powerful channel. New entertainment habits among consumers, including the migration to entertainment platforms not supported by advertising, continues to make it harder for brands to command consumer attention. For example, Disney Plus, which doesn’t air commercials, grew its worldwide audience to 116 million paying subscribers by July and expects to reach at least 230 million by the end of 2024. [2] Today, there are more than 200 streaming services and at least a quarter of internet users have one or more ad blockers installed.
Inspiration
The trust crisis (in institutions, technology, and brands) reached new levels. A significant share (40%) of people say that there are brands that they have loved but no longer buy because they don’t trust the brand owner. [3] The elevated social mandate that consumers are assigning to brands as they expect them to behave with purpose and the expectation of authenticity are redefining the canvas on which brands can inspire the public and earn trust.
2022 Predictions: Where Brands Should Invest to Become ‘Future Ready’
Innovation takes time, energy and expertise, yet so many brands and agencies have struggled to dedicate effort to innovation in a meaningful way. This is a situation that has only been exacerbated by the pandemic, with commitment to innovation declining 32% due to a focus on shorter-term issues. [4] To succeed, organizations need to accept innovation in their DNA and embrace failures along the way, as they invest in building trust, earning consumer attention and enabling interactions in new digital ecosystems.
Experience innovation is at the heart of disruption
There is a clear opportunity for business leaders to develop strong levels of innovation through their organizations by designing their culture and teams around three distinct types of effort:
Emotional Innovation
This element of innovation comes from marketing and positioning. A good example of an established brand achieving this to good effect is Lego, which relaunched itself to appeal to a new, younger audience, creating humour and a unique narrative in the category. The growth of gaming and esports and the explosion of social commerce are indicators that consumers are seeking a sense of community and expect brands to engage in a conversation with culture.
Process Innovation
Reinventing the processes that bring products and services to market is also a main source of innovation. For instance, Wonderbread figured out a way to get its bread more quickly, and more often, to the supermarket, so it’s always the freshest of any of the breads there. Customers value convenience and exclusivity and innovative processes that improve the delivery of value live at the intersection of both.
Experience Innovation
This is the meeting place for what people want, what is technologically viable and makes good business sense. Prime examples of businesses and cultures based on this are UBER, Airbnb, and Wealthsimple, which are all disruptive platforms in their categories. The challenge for business leaders is that the re-imagination of a category or experience takes creativity and too many organizations make the mistake of focusing on the tech canvas instead of brilliant ideas. Emotional innovation opens up new conversations with consumers and process innovation delivers better value to them, but experience innovation changes the conversation and redefines what is valuable. This is why it’s the field where brands have the opportunity to create the biggest advantage.
Three focus areas to cultivate future-readiness
Route one to trust and attention
Trust is becoming more important but when people trust institutions, technology companies and media outlets less, really understanding people becomes even more critical. A recent Edelman study reports that trust in both media, government and non-governmental organizations is in decline, while trust in businesses is higher. [5] Creative is by far the biggest driver of attracting people’s attention: the difference between good creative and poor creative can impact recall by 17%. [6] Work on identifying the trust gap with consumers and find the opportunities within that to authentically build engagement with specific audiences. Then, if you have a right to play in that space, evidence it in products and services.
Living in the Metaverse
We need to pay more attention to the ways in which consumers are connecting with each other and with brands. Blockchain technologies, virtual engines and a new creator economy starring NFTs are converging in the emergence of the Metaverse, an open ecosystem made of hybrid, shared spaces that blend physical, digital and virtual realities. Some of these experiences are not yet mainstream but they will soon be, so now is the time to get ready, lead the way and experiment how the communities taking part in them expect to be engaged.
Adventures in corporate venture and DTC
During the pandemic larger organizations invested greater amounts in start-up companies and spin-off ventures - funding hit a new high in the first half of 2021, reaching $79 billion across 2,099 deals. At the top level, this is innovation backed by high market capitalizations: the number of $100 million-plus deals has boomed recently and the likes of Samsung and SoftBank are big players. Brands are committing significant investments here and those with growth potential include PepsiCo’s PantryShop and Heinz to Home, signaling a trend among enterprises in experimenting with DTC models through their venture plays. Brands and agencies investing in emerging companies can propel their innovation agenda acquiring capabilities that have been developed with a digital-first mindset and in a more flexible environment unburdened by legacy structures.
Closing thoughts
Beyond the trends listed above, organizations can look at building a clear pathway to future innovation by focusing on their current business model and asking whether it’s fit for 10 years from now. Every industry is being disrupted in one way or another and in this climate siloed marketing and business services have a limited impact when it comes to addressing the needs of modern brands. What are the areas where your customers’ needs are transforming the most? Are there integrated capabilities that can help your brand fast-track innovation in those areas and create true differentiation?
Contributors
Simren Deogun, SVP Solutions, dentsu Americas
Christina Martucci, VP Strategy and Commerce, dentsu Canada
Jeff Greenspoon, President, Solutions Americas
Doug Ray, Chief Product Officer, dentsu Americas & Global Media
