The WHAT principle and the WHO effect
Extract from “My Digital Footprint”, this is from the Chapter 8 “Converged Services”
The WHAT principle
The focus of today's higher value services is personalisation – the making of your user experience, creating value from the reduction in churn and incremental service revenue, assuming that any incremental margin is not eroded by competitive pressures. The focus on personalisation is a focus on WHAT: what you as a user want to do; what service you want; what is needed now? The sole benefactor is the individual, but does this create any new value? The assumption is that personalisation provides focus, and that this focus leads to the ability to deliver engaging and personalised services, including advertising. This advertising being derived from the same advertising budgets, which is now redirected from other display channels. Therefore, does personalisation actually create any new value and will it actually grow the overall spend of the entire market?
Commentators, consultants and media sellers will provide convincing evidence to back their own propositions. The purpose of this viewpoint is not to debate the personalisation opportunity, but to introduce the WHO effect. Whilst personalisation will increase value for the provider [more effective marketing and efficient sales]; assuming that there is value for the user, it does not itself create new value for the entire converged industries. However, personalisation could create value, if the focus is on WHO and not WHAT.
The WHO effect
Personalisation has been about the WHAT principle. This has focused on a single customer: 'you'. The WHO effect is the multiplier. The focus shifts from WHAT to orientate on WHO you are doing something with. In simple terms, when you go out for dinner, who are you with? When you are in a business meeting or seminar, who are you with? When you are at a concert, in school, or on holiday, who are you with? The opportunity is that these 'WHOs' are gravitating towards and enjoying the same experiences as 'you'. The additional profiles of those who you are 'with' can combine to create a new and incremental market value, assuming, as a company, you are able to reach these customers and deliver services that they want.
Consider the advertising issue created through personalisation, it reaches you – one person in two billion. The world is divided into two billion personalised worlds, only relevant to one person at any given time, and each person with an unequal bite of the advertising spend. The WHO effect would suggest that as you are enjoying something with others, even though it is outside of their personalised preference, it is possible that it would be worth providing information on products and services to the group. The WHO effect is the electronic 'word of mouth'. It assumes and depends on the fact that we adopt at different rates, and some not at all. These issues provide the limitation to personalisation and the WHAT principle, but also the opportunity to the WHO effect.
How WHO works
WHAT-based decisions are not using information in a sophisticated enough way. To move to the WHO-based system, customer data needs to be understood in a more nuanced way. We think of data on two main axes: how 'active the data is' (static to dynamic) and the 'type of data' (factual to behavioural) as per Figure 39.
Factual vs. behavioural
· Factual data is just that – date of birth, where you live, etc.
· Behavioural data is what you do, your digital footprint (www.mydigitalfootprint.com) over time.
Dynamic vs. static
· Static data is data that doesn't change (e.g. your date of birth). Highly dynamic data is what is changing every minute – movement, current location, etc. Some data is dynamic, but over long time periods (e.g. place of work, home address, etc).
· Some dynamic data is repetitive (there are patterns in it, such as the daily commute) that allows one to predict behaviours and events.
Clearly, if a service provider has a grasp of this information, they would be able to make better decisions about the user context and thus serve up better information or services to the user – critical for the limited real estate on even the smartest of mobile devices.Creating advantage
This WHO effect is not open to the traditional broadcast, TV and entertainment companies, although they are the traditional home of the display advertising budgets. This is because they have no real feedback loop. This service could be offered by web companies; however, as your profile and personalisation has a dependency on your web access time, it could be difficult. The major benefactor of the WHO effect will be mobile-orientated providers, as the mobile device becomes the platform to collect data, interrupt the connection and deliver the value (Mobile Web 2.0).
It should be noted that there are a few caveats to this value growth model which include:
First: the opportunity to exploit the WHO effect is not open to companies who want to 'control' the user experience and developer environment, such as Apple, they can only enjoy the WHAT principle. Open mobile platforms, open access services and developers whose services work across all devices will be able to exploit the WHO effect. The multiplier value of mobile is not just knowing WHAT you are doing (location, time and attention), but WHO you are doing it with.
Second: user pre-acceptance and buy-in is critical. ‘Snooping’ behaviour has already blown up in a number of companies' faces, Facebook, Phorn, Google and MySpace are known examples. Users need to be certain that data will not be misused, sold on or otherwise exposed.
Third: trust is critical. Is your brand value one of trust, and what will the user trust you for?
Fourth: regulation and law. This is a black hole of debate currently, and differs by country, we would say the key here is to adapt – and actually practice – the mantra of ‘don't be evil’. If you wouldn't like people to do something to you, don't do it.
Fifth: this concept is deeply embedded in ‘web as a platform concept’ and AAS (As A Service). This is a change from domains, destinations and portals. A way to understand this is to view that owning a top level domain such as www.news.com is not important. Users will rarely visit this site, but rather interact with the data that comes from this source via Twitter, RSS feeds, readers, blogs and social sites. The stats on your site are not important, but rather where your content is consumed and how? Customer ownership, as per caveat one, is not important – owing the customers’ data is.
Sixth: Although both the originator and user of MY DIGITAL FOOTPRINT is the user / consumer, where the WHO effect applies the user actually consumes data that relate not just to themselves but also to others with whom they interact. How we collectively address the privacy issues around this involvement of others in the key feedback loop, which is a rather important point, is somewhat overlooked.