Category Archives: Media

What you say is not what you do

There is a bit of ruckus at the moment about the power of Australia’s supermarket duopoly – Coles and Woolworths.

In the past the criticism was that the two supermarket chains had too much market power – over 80% of the Australian market. That percentage probably remains the same today despite all the brouhaha about market dominance over the past decade (i.e. there were lots of protestations at all levels of the community, and a number of government inquiries, but there has been little tangible action to reduce this market dominance).

The main brunt of the criticism relates to market concentration (the duopoly has reduced competition in the market) and has too much market power on the buying side (the duopoly can squeeze suppliers to almost unsustainable levels). In addition, supermarkets can cross-subsidise their products when it suits them, thereby using their market power to artificially lower prices in “competitive” products.

In 2008 there was the Australian Competition and Consumer Commission (ACCC) inquiry into the competitiveness of retail prices for standard groceries. In September 2002 there was the Report to the Senate by the Australian Competition and Consumer Commission on prices paid to suppliers by retailers in the Australian grocery industry.

One of the interesting snippets of information from these public inquiries is that there was evidence that showed a difference in pricing at the supermarkets depending on whether the duopoly was in the one location and where the duopoly had a third supermarket in competition in the one geographic location. In the scenario where a location had three competing supermarkets, the Coles and Woolworths retail prices were generally lower than at locations where it was just Coles and Woolworths in competition. Well, as Michael Porter identified, businesses try to avoid price competition wheneve they can because it directly affects margins.

The impact on suppliers is clear enough. It was loud and clear when I worked at Rabobank throughout the first half of the naughties. I would hear how the supermarkets were screwing agricultural suppliers through reduced prices and increased compliance costs. For example, one banana producer told me that the bananas had to be packed in a box in a very specific way otherwise Woolworths would not accept delivery.

Nowadays, farmers have the same concerns but there are increasing demands from the duopoly concerning on-farm activities. Recently, one berry producer told me that having a dog on a berry farm was unacceptable because the dog may have been washed in a chemical bath that could get onto the berry fruit!

The supermarkets say that driving down consumer prices shows that a competitive market exists. Driving down the retail cost of milk to one dollar a litre makes a lot of sense if one wants to sell lots of milk but milk has a relatively inelastic demand – the lowering of the price does not necessarily see an increase in consumption. For the duopoly, however, a low price for a food staple like milk makes a lot of sense because it attracts shoppers to the supermarket rather than the corner store. If a shopper perceives the saving on milk is large enough, the shopper will alter his/her shopping behaviour to shop at the duopoly at the expense of other food retail providers and small businesses. Instead of going to the local convenience store to pick up milk and some ancillary groceries, the shopper will concentrate their total grocery shopping activity to the supermarket.  The duopoly wants consumers to stop buying any skerrick of grocery items from alternative convenience stores and grocery retailers. The milk war is less about increasing consumer demand for milk, but increasing the market power of the duopoly.

Currently, there is a lot of concern over the duopoly supermarket chains driving down supplier margins even further through “home brands” (also called private labels).  This article and this one sum up the private label issue nicely.

Everyone is out there saying how dreadful it is that the supermarket duopoly can do all these terrible things. However, the supermarket duopoly reduces prices on grocery items at the checkout for consumers (the same consumers who are equally screaming about the high cost of living).

A recent poll in the Sydney Morning Herald found that over 70% of people are against home brands because they limit variety (i.e. consumer choice). There is plenty of chatter to indicate that a similar percentage (or more) of people think that the supermarket duopoly has too much power.

But what does the behaviour say? Talk is cheap when there is no direct and tangible linkage to benefits or costs (i.e. there is no benefit or sanction as a consequence of our response to a survey or to give an opinion). A poll or a survey asks us what we think and we say so. We really believe what we say as well – Coles and Woolworths are bad.

However, it is likely that the very same people do their weekly grocery shopping at Coles or Woolworths. Mums and dads have Coles and/or Woolworths shares as an investment; either directly or via a superannuation fund. Our actions really do speak louder than words.

Whilst the supermarket duopoly is an important economic and marketing case study, the implications of saying one thing and doing another are huge. Are opinion polls really worth anything at all? The monthly tabloid treats of political opinion polls tell us the Gillard government will be wiped out if an election was held today – but it’s not. The next federal election (the real poll where an outcome actually happens) isn’t for another couple of years. Opinion and speculation are now touted as fact in the media. However, these same opinion-makers are not held accountable when the future unfolds in real-time and they are proved wrong.

If we are to make any sense of opinions linked to action, we need to actually examine the behaviours. This applies equally to marketing, economics, and knowledge management. It’s the logic behind behavioural economics, real-life behavioural research, and user experiences. Mark Hurst’s Good Experience is a good example of looking at what actually happens as distinct from what reportedly happens.  It’s the logic that we need to apply in our knowledge management research as well.


Gov 3.0 Conference 2011

Tomorrow (Thursday 24th November) I will be attending the Gov 3.0 conference in Canberra. The tagline for the conference is “the future of social media and public sector communication”.

I am looking forward to what the speakers have to say, albeit I remain to be convinced that governments in Australia are serious about openness, citizen dialogue, and the full use of social media both inside and outside of Departments.

With respect to openness, the observable evidence in Australia and the United Kingdom seems to suggest that uploading millions of documents onto government websites is the solution. In many cases, there is little (if any) contextualised meaning applied to these documents. Documents written for specific purposes are placed into the public domain without that context being explained. There is still the issue over timeliness and relevance.  And the internal approval mechanisms to authorise (and disallow) the publication of certain government documents on the web can be trying. But really, is the average Joe Citizen in the mood to spend oodles of time scouring government websites to read through public-service-speak documents when all they really want to do is ask a knowledgeable person for an answer? Of course, not. There is therefore a need to consider the real needs of the citizenry beyond the selective publication of government documents on the web by government departments. After all, if publishing government documents is what open government is about, then we may as well ask Julian Assange to project manage the whole government openness agenda.

That is not to say that government documents on the web don’t have a place in providing information to the world. However, selective document availability is not the answer to openness without at least providing the necessary assistance and feedback mechanism for real citizen engagement. If I can download a government report but cannot discuss the meaning of the report with anyone inside government (i.e. the public service), then openness and dialogue are rather hamstrung.

When it comes to dialogue with citizens, the general polity likes to think that spewing forth tweets and answering constituent emails is enough. But the reality is that there is not much conversation and two-way dialogue in these type of exchanges. I remember Neil Postman saying in “Amusing ourselves to Death” that in the US in days of Lincoln and co., political dialogue was much more personal and immediate through public gatherings and political campaigning than what it has become now. Sure, I appreciate the issues of scale and technology, but citizen dialogue remains something that the political machine (and the administrative servants in the Public and Civil Service) are yet to achieve.

Social media is also important. There are plenty of politicians using social media – US President Obama and a number of Australian politicians are good examples. But there remains a certain disquiet about social media in the hallowed halls of the Public Service. The main concern is around risk (although there is also a good deal of ignorance about communication in general, let alone via web 2.0 technologies within a Department or with an external audience). The argument goes that social media represents a loss of control, is subject to unknown responses in the public domain, and acts as a diversion to the real work at hand. I’d like to have some sympathy for these concerns because I see some intelligent people using these arguments to say “No” for even the slightest of reasons.

However, there are many risks that can be mitigated against through proper procedures, through establishing organisational trust, and in the recognition that the benefits outweigh the risks. There also needs to be a recognition that organisations need to adapt to a changing world; where stakeholders have different needs and aspirations, than in previous times.

In the corporate world there are also communication risks associated with social media but, for the most part, the corporate world is more willing than the public sector to use social media in positive and interesting ways.

It is therefore of immense interest to me to hear tomorrow and on Friday what the speakers have to say about open government and connectedness; about particpatory discussion and citizen dialogue; about the transformative effects of social media; and about how information, knowledge and learning can flow more effectively in the digital economy than ever before.

In particular, I am keen to hear the experiences from the US about the use of social media and web 3.0 (?) communication channels to distribute information and enhance public engagement with stakeholders. I will also be interested to hear how social media fosters improved communication and participation from both citizens and within the public sector. There is much to learn – I hope that the conference provides those thinking and learning opportunities.

Online selling is here to stay

No doubt you have heard the mad ravings of big store retailers like Harvey Norman, Myers, and Borders complaining about unfair competition from online retailers.

Please note that much of their ranting fails to distinguish between online sellers in Australia and overseas, although the propaganda campaign really targets non-GST payments of overseas retailers. Mind you, Gerry Harvey has had a long-time spat with Australian online retailer Ruslan Kogan who sells televisions in direct competition to Harvey Norman. Perhaps Gerry Harvey has had it so good for so long he has forgotten what competition is all about.

The GST exemption is for goods under A$1000 in value purchased by Australian consumers overseas. At 10%, the maximum tax that could be applied is a pretty paltry A$100.

But of course most people who buy from online retail (about 2% of all retail sales)  don’t do it for tax reasons and don’t necessarily spend big. For example, I buy the odd book or CD from overseas when I cannot source the items in Australia. If  my purchases come to A$60, then the GST exemption saves A$6. I bet it would cost more than A$6 to manage the application of GST to such small individual purchases. But then, the big Australian retailers don’t have to fork out for the costs of administering the tax – the Australian taxpayer does.

The PR campaign from big Australian retail is a whinge that reflects more their lack of adaptability in the market than enything else. Business journalist Michael Pascoe sums it up here and Michael Fox here.

More fundamental to the attack by dinosaur retail in Australia on new methods of consumer shopping is the fact that consumers have far greater visibility on choice of product and price. Whereas before, Australian consumers pretty much had to take what retail offered in their stores. Nowadays Australian consumers can buy what they want and when they want from anywhere. Moreover, Australian consumers can see the different prices for the same goods from many, many different retail suppliers.

Along the same lines, but at least a dinosaur moving into the 21st century, is newspaper mogul Rupert Murdoch with his proposed Ipad newspaper. The digital newspaper will be called the “The Daily”, but the launch has been delayed slightly. Murdoch has in the past vociferously complained about news media’s failure to generate income from news on the internet. This new venture is obviously something Murdoch is pinning his hopes on for the future.

The content will be important if it is to generate big sales.  Murdoch’s News Corporation has often been criticised for right-wing bias (Fox News in the US is a classic example). It will be interesting to read the tone of the content on the digital newspaper and what that means for online sales.  If Murdoch gets his content and pricing structure right, then this will be a huge success.

One of the myths about online is the belief that people want everything for free. The massive increase in online shopping over the past five years belies this myth. The fact is that people will pay for a service or a good online (like anywhere else) when they see it delivers what they want at a price they find acceptable.

It will be interesting to watch the digital newspaper take-off in the same way it will be interesting to watch loud-mouth big Australian retail adjust to the new shopping realities brought about through online shopping. (It seems that the Australian big retail bully boys will persist with their campaign – read here. A more sensible response can be found here).

All of this will have a huge impact on online marketing and communications; a trajectory that continues to advance online media over the traditional forms of media communication.

On media needing multiple platforms

Hot on the heels of my blog post yesterday, an AFP syndicated article on the Sydney Morning Herald (SMH) website today says that media companies must look at multiple publishing platforms to enhance revenue streams. 

The article, Media need multiple platforms: execs, says that “with advertising revenue eroding and free content abundant, media companies are going to need to adapt their strategies to the new environment ushered in by the internet, they said at the Bloomberg BusinessWeek 2010 Media Summit.   Hard to believe it has taken the media companies this long to work out this very fundamental change to publishing and content creation!

And why is it that media companies have been so slow?  Perhaps it comes down to sticking one’s head in the sand and pretending change isn’t happening. Or perhaps a media company might like to think it can bully alternative publishing and content creation providers out of the media business.  But perhaps it all comes down to the fact that changing traditional media publishing means doing new things.  And doing new things means thinking very hard about a changed publishing environment where control is no longer the sanctity of media company monoliths.  We already see how traditional and control-centred companies like to work in the music industry; desperate to hold onto oligopolistic control of music content and distribution despite a rapidly networked digital world.

However, change is inevitable and some media companies are actively looking at all the opportunities.  Julie Michalowski, vice-president for business development at Conde Nast, was quoted in the SMH article as saying:  “What we want to continue to do is to build digital relationships so that we can have a multi-channel relationship with our consumers that includes print and includes other ways that they want to access us”.  Hooray for that!

On the media tsunami

Readers may recall a blog post I wrote last December called On sailing ships and dodos.  The post was about traditional media moguls trying to keep control of media publishing and content.  In the new distributed world of publishing and content generation, this traditional strategy of publisher control is breaking down.

Indeed, traditional media will face even greater competition as the media tsunami hits in 2010, according to media commentator Tom Foremski in this recent online article.  Foremski is a former Financial Times journalist who started a news blogging service in 2004, called Silicon Valley Watcher.

Foremski writes that “the many different forms of media will continue to flourish and splinter and to compete with each other in 2010, only at a far greater scale.  This is all made possible because of the availability of very powerful and inexpensive self-publishing tools and services”.  These new self-publishing tools includes blogs, Twitter, podcasting, Facebook, etc.  Whilst many of these tools for self-publishing have been around for a few years now, they are becoming easier to use, with improved functionality and integration.

Not only will all this self-publishing have an impact on tradtional media empires, but it will also impact on advertising and public relations.  Dilution of advertising and public relations messages within the media space will become a real problem as more self-publishing and user-generated content competes for eyeballs.

In my opinion, media and PR will need to be far more focused and targeted, using the right communication tool and content, to reach the right audience.  A one-size fits all publishing model won’t work.   Moreover, companies will need to better understand all the different types of media, communication tools and channels, to work out how best to integrate their media campaigns, and support (rather than compete) the different types of media channels.

In other words, a more networked publishing model needs to develop to take advantage of different forms of media publishing and content generation.  And more attention needs to be given to the re-creation of content in different forms in order to tailor information and content in ways more useful and specific to individual consumers.  The web 2.0 “mashup” approach is something to consider by making a range of information available to be reconfigured in different ways.

The times are a changing. Organisations, especially media companies, better get used to the idea.

On sailing ships and dodos

Dave Snowden told a good story at a knowledge management conference a couple of years ago about the sailing ship.  In the early 19th century, mighty sailing ships with giant masts and sails were the dominant form of sea transport in the modern world at that time.  Along came ships constructed of iron and powered by motorised engines which were more efficient (they could power along whether the wind blew or not) and became more reliable and versatile shipping vessels.  The sailing ship industry responded with even bigger ships with more masts and more giant sails but in the end the sailing ships were doomed by a new technology that made sea transport more efficient and effective.  Perhaps the sailing ship may make a return in an oil-depleted and global greenhouse environment in the 21st century but that’s another story…

And that poor old bird, the dodo, was no match for the slaughter by humans, and by invading pigs plundering their nests and territory.  Alas, they were unable to adapt to the ravages brought upon them in such a short space of time and they became extinct.

Which brings me to this article in the Sydney Morning Herald about a conference in India at which the media moguls of the 21st century are battling to stay in the game in a world enriched and informed via the World Wide Web.  The World Newspaper Congress is hearing from embattled media moguls about how unfair the internet is making the news and information business since they haven’t been clever enough to work out a successful business model for the changed world media environment.

Like the 19th century sailing ship industry, the newspaper moguls are desperate to keep alive a form of business that is actually being surpassed by more modern and disruptive technologies. The internet and social networking are changing the way content is published, consumed, and valued.  Content on the internet is more immediate, more personal, more varied, and more versatile compared to traditional newspaper publishing.  Not only that, but people these days do not have to rely on newspapers for their dose of worldly information since much of the information out there on the internet is provided by people for free and can be accessed for free! Even newspapers and television news programs seek out these stories from ordinary folk who witness events first hand or who have some other form of newsworthy story.

Of course, the newspapers are indeed part of the problem.  Over the past twenty years (at least) newspaper proprietors have dumbed down journalism and investigative reporting so much that newspaper content is hardly superior to much of the informed news and information provided by ordinary people. In fact, it is ordinary people who actually have something interesting to say, without the caveat of having to say something that will generate advertising revenue or hanker for the bouquets from supporting ideologues.

Reading newspapers these days is like reading a bevy of opinion pieces; the opinions being no more informed or relevant than that of bloggers and social networkers.  Instead of lifting quality and gaining some comparative advantage this way, newspapers have taken the easy route and proffered a multitude of opinion, loose reporting and drivel that can be easily replicated anywhere. 

At the same time, newspapers continue to search for more “eyeballs” to convince advertisers that newspapers are still relevant.  Newspapers still want to be found on the internet to capture these “eyeballs”, yet they want to determine and control the method and channels of being found. They want to use the 21st century technology but only in the manner of their 20th century world view of dominance and control of the news. Even advertisers are shifting their world view.  Advertisers are increasingly using new methods of messaging and advertising utilising the new communication mediums available via the internet, social networking, and other forms of communication channels.

At least the newspaper industry hasn’t had it as bad as the dodo. The dodo had relatively little time to adjust to the ravages of invading species before they finally met their final and irrevocable end. Newspapers have had plenty of time, and had plenty of warning about the competitive content available via a host of alternative sources.

Newspaper organisations are like the 19th century sailing ships trying to battle their way forward using their existing tired techniques and old-century attitudes, and failing to confront the new realities of a brave new world.  Like those 19th century sailing ships, newspapers as they exist today will die off and be replaced by a more efficient and effective form of  news communication that does not rely on old thinking and old technologies.

Newspaper moguls can whine all they like but they need to accept the new communication realities and make the necessary adjustments, or go the way of the sailing ship and eventually, the dodo.

On advertising and web 2.0 for knowledge management

Just received my latest UTS Alumni email newsletter.  I completed two postgraduate degrees from UTS.   I was pleasantly surprised to hear that the The Fred Hollows Foundation won the world’s best not-for-profit television advertisement at the International Fundraising Congress in the Netherlands.  Readers may recall that I did a nine month contract with The Fred Hollows Foundation before coming to AusAID earlier this year.

The full excerpt from the UTS alumni newsletter is here:

Fred Hollows’ ad voted best in the world

An advertisement featuring the late Professor Fred Hollows has been named the world’s best not-for-profit television ad at the International Fundraising Congress in the Netherlands. Heading up the advertising campaign was BA Communication (Hons) graduate Joe Boughton-Dent, The Fred Hollows Foundation’s Communications and Community Engagement Manager.

“The 90-second advertisement started out as a YouTube clip… It got a great response and was viewed over 50,000 times, so we knew people were interested in Fred and what he achieved,” says Boughton-Dent.

“People really respond to a positive message that one person can have a real impact,” he says. “This award shows that Fred Hollow’s message is as powerful today as it was when he passed away in 1993.”

The other finalists in the best not-for-profit advertising category included Action Aid, RSPCA and Operation Smile.

The award-winning Fred Hollows ad has been aired on Australian television since June this year. To view it, [visit the clip on] YouTube.”

The knowledge management take from this success is that YouTube clips can make a difference. I firmly believe that such clips are an excellent way of getting important organisational messages and information across, whether internal or external to an organisation.

There really is no excuse for organisations NOT to consider YouTube and other web 2.0 technologies as a legitimate part of the knowledge management and communication armoury. Importantly, web 2.0 technologies like YouTube and audio podcasts should be key considerations for effective knowledge and information management within an organisation’s strategic and functional  information architecture.