JUNE 21, 2011

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Is America Losing Its Innovation Edge?
According to a recent McKinsey Global Institute paper, the answer is NO; despite several historical challenges, the United States has remained the home of innovation. From the internet to mainframe servers to pharmaceuticals, major innovations are still “Made in the USA.” However, McKinsey suggests that the larger, more important question should be whether or not this innovation directly translates into economic leadership. Innovation may create profits and headlines, but it is only part of the economic engine. McKinsey claims that a true global economic leader must be at the center of cutting-edge technologies, market demand, talent, and entrepreneurial spirit. Is the US winning across all of these traits, or are other countries taking over? McKinsey used their recent research on productivity, US multinationals, and a series of interviews with CEOs of advanced industrial companies to try and answer this question. The answers they came up with may surprise you.
So what? Innovation is an important driver of economic growth and prosperity on which we depend. This paper points out that we need more.
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eMarketer: Online Branding Ads Gaining On Direct Response
Search advertising still takes the greatest share of online ad dollars, but display spending is posting solid gains. eMarketer attributes the growth of display advertising (including video) to an increase in brand advertising online. Online advertising, long considered primarily for direct response, still leans in that direction. But branding is increasing in importance as bigger, more diverse ads develop for this purpose and marketing dollars flow. According to eMarketer, spending on branding-oriented online ads will grow more quickly than direct-response spending throughout the forecast period, and by 2015, 44.4% of online advertising spending will be devoted to branding.
So what? Our piece of the pie is getting bigger.
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Forrester: “Customer-Centricity” OUT, “Customer- Obsession” IN
According to a new report by Forrester, companies must now be “customer-obsessed,” not just “customer centric” in order to survive and thrive. We’ve entered a new era that Forrester calls the Age Of The Customer. While companies have always, to a greater or lesser extent, called themselves “customer-centric,” this is different. This is not about “customer-centric” thinking or “the customer is always right” — instead, the new power of customers means that a focus on the customer now matters more than any other strategic imperative. Forrester claims that in this age, brand strength, manufacturing, distribution, and IT capabilities are all just table stakes. The only true source of competitive advantage is the one that can survive technology- fueled disruption: an obsession with understanding, delighting, connecting with, and serving customers. In this age, companies that thrive, like Best Buy, IBM, and Amazon, are those that tilt their budgets toward customer knowledge and relationships. Specifically, companies should invest in four priority areas: 1) real-time customer intelligence; 2) customer experience and customer service; 3) sales channels that deliver customer intelligence; and 4) useful content and interactive marketing. Those that master the customer data flow and improve frontline customer touch points will have the edge.
So what? This report is a clarion call for executing on our consumer-focused corporate strategy.
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More Bad News For PCs: Analysts Cut Sales Growth Forecasts
In February, International Data Corporation (IDC) said worldwide PC shipments were likely to grow by 7.1 percent during 2011, but on June 6th, the analyst house revised that forecast down to 4.2 percent. The company cites tablets, smartphones and e-readers as the culprits. "Consumers are recognizing the value of owning and using multiple intelligent devices and because they already own PCs, they're now adding smartphones, media tablets, and e-readers to their device collections," IDC vice president Bob O'Donnell said in a statement. "This has shifted the technology share of wallet onto other connected devices." According to IDC, consumers are also increasingly aware of the prolonged recession and mindful of the fact that many of the latest technological innovations in PC design — thinness, longer battery life, instant-on capabilities and touch — will not be mainstream before 2012.
So what? Content providers take note: tomorrow’s PCs will be very similar to today’s tablets.
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Study: To Wealthy Millennials, Apple Is The New Dom Pérignon
The Luxury Institute recently examined what influences the attitudes and loyalty of wealthy millennials (defined as consumers between 21-35 years of age who earn at least $150,000 per year) towards luxury brands. The study found that wealthy millennials are most likely to define a luxury brand by its “superior quality” and “superior design,” as well as the personalization it delivers (special offers, pre-sale priority access, unique packaging, etc). Without prompting, Apple was chosen by far as the leading luxury brand (by 45% of respondents), followed by Rolex (30%), Coach (30%), BMW (29%), and Mercedes (26%). The Luxury Institute suggests that the prominence of Apple in the study may be indicative of how wealthy millennials view luxury more for the experiential factors associated with it, rather than relying excessively on brand heritage or residual prestige earned long ago. The study also found that wealthy millennials want to interact directly with luxury companies across all platforms- in store, online, and on mobile devices. LI claims that this interaction leads to richer experiences, deeper relationships and boosts sales on an ongoing basis.
So what? Luxury brands can no longer rest on the laurels of their names and reputations alone. They need to establish personal connections, deliver quality products, and provide valued experiences to keep or gain the loyalty of wealthy millennials.
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Yankelovich: Connecting With Today’s Man
With the economic downturn hitting male-dominated fields hardest and women becoming more educated and, in many cases, out-earning men, provocative cover stories in some national magazines (“Man Up!”, Newsweek; “The End of Men”, The Atlantic) have concluded that masculinity is in crisis and that the traditional man is becoming an “endangered species.” As a result, many marketers have been seeking to connect with men by appealing to the more traditional macho version of masculinity that implores men to “Wear the Pants” or make a “Last Stand”. A recent Futures Company analysis claims that this approach will most likely fall flat with today’s man. Two-thirds of men say that “very little” of today’s advertising and marketing is relevant to them. The analysis suggests that the majority of men are taking the changing gender roles in stride and are looking for more, not less, freedom from rigid and increasingly out-of-step visions of masculinity.
So what? This analysis aligns well with some of our brands’ positioning in the marketplace.
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Quick Takes
Apple Execs: It Doesn't Matter That Android Is Beating iPhone In Marketshare
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STAT OF THE WEEK: Connected Devices Show Impressive Year Over Year Growth
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Condé Nast
Feedback, questions, ideas for future issues? Please contact:

Phil Paparella
Condé Nast Research & Insights | Associate Director
1166 6th Avenue, 14th fl. | NY, NY 10036 | office 212.790.6044 | philip_paparella@condenast.com

Tamar Rimmon | Senior Manager, Digital Analytics
Robyn Hightower | Manager, Research & Insights