AUGUST 23, 2011

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What Do The Fork And The iPad Have In Common?
According to a recent Forrester report, they both exist as a result of the same process of innovation. Forrester claims that the fork and the iPad are perfect illustrations that true innovation is a result of the convergence of many cultural and technological factors that come together at the right time: a perfect storm, or as Forrester calls it, the convergence of “adjacent possibilities.” Most people think of product innovation as a process of seeing a void in the marketplace and filling it. Forrester claims that this linear approach is misleading and not how true innovation takes shape. Take the fork, for example. A linear model would suggest that when you looked at the spoon and knife, you could immediately sense that a fork was lacking. But in fact, the paper takes us through a long history of the fork whereby it took hundreds of years to be accepted, valued, and utilized by society. Today, we cannot live without it. Forrester makes similar claims about the iPad. When Apple introduced the iPad in 2010, it heralded the device as magical and revolutionary, suggesting it was a complete break from past technology, as if there were a hole to be filled that only Apple could see. Yet none of what the iPad offered was particularly new. It succeeded because a host of other factors were converging at the right time. The paper outlines key principles that allow product strategy pros to effectively assess, maneuver, and master these “adjacent possibilities” to create products that will succeed.
So what? As we develop new products that are adjacent to our existing brands, an historical perspective can be provocative.
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eMarketer: Despite Recent Economic Difficulties, Global Ad Recovery Will Continue Through 2015
Despite difficult economic issues ranging from unemployment in the US to the debt crisis in Europe to repercussions from the March 2011 earthquake and tsunami in Japan, the global advertising industry has rebounded more quickly from the worldwide recession than eMarketer and other analysts had anticipated. eMarketer (an aggregator of data that compiles and distills projections from several industry analysts) now predicts advertisers will spend nearly $500 billion in 2011—a growth rate of 4.5%. Online ad expenditures are fueling the recovery, with internet ad spending increasing 17.2% this year alone. eMarketer predicts that online’s share of total media ad spend will increase from 16% in 2011 to 22% in 2015, second only to TV.
So what? Despite doom and gloom predictions elsewhere, this roundup of industry projections remains relatively optimistic.
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Study: “Above The Fold” And Frequency Are Keys To Online Advertising Success
According to a new study by media technology company Casale Media, increasing traffic or targeting on your site isn't necessarily going to bring in more clicks on banner ads. The study supports that where ads are on a page and when they're delivered is key to campaign performance. The research looked at how attributes like page positioning, the order in which ads are viewed, and the frequency with which ads are delivered can affect click-throughs and other actions taken. The analysis confirms general knowledge about ad placement. For example, ads “above the fold” (or when scrolling is not required) were almost seven times more effective at generating a click than ads delivered below the fold. In addition, ads shown repeatedly were in fact effective. Click and action rates increase dramatically for ads viewed five or more times, compared to ads viewed less than four times.
So what? Studies like this remind us that an online ad campaign needs to have more than eyeballs to be successful.
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2020: Still The Year Of The iPad
Competing against Apple’s iPad has been a fruitless endeavor for most who have tried, and sadly for the company’s rivals, that’s not going to change any time soon, according to Needham analyst Charlie Wolf. In fact, Wolf predicts that the iPad is probably going to claim a materially larger share of the tablet market than anyone expects. According to Wolf, the iPad will end this year with an 85 percent share, and while that percentage will decline gradually over the ensuing years, it will never fall so much that Apple loses the lead it claimed when the device first debuted. Wolf projects that in 2015, for example, the iPad will still have a 72.5 percent share, with more than 101 million units shipped.
So what? Although this is among the more aggressive projections for the iPad's dominance in the tablet market, it is clear that Apple will continue to enjoy a significant lead in market share for the foreseeable future.
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M-Commerce A Priority For The Fashion Industry
E-commerce has established itself as a key selling tool in retail. But m-commerce (mobile commerce) is gaining traction quickly, especially for the fashion industry. Companies like Tory Burch, Net-a Porter, Rue La La, Coach, and Swarovski all have mobile apps and claim that m-commerce is among their fastest growing revenue channels. Some see m-commerce as potentially the most important source of electronic sales, one day usurping desktop and laptop access. “We see mobile as the true bridge between online and offline. The once-siloed experiences of shopping in stores versus shopping online are now completely integrated through a device that our customer keeps with her at all times,” says Miki Berardelli, Tory Burch’s CMO.
So what? As mobile continues to grow in importance (witness Google’s recent purchase of Motorola), we need to consider m-commerce capabilities that go beyond delivery of magazine content.
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Yankelovich: 1970's Malaise Is Back
According to a recent paper by The Futures Company/Yankelovich, as the roller-coaster ride on Wall St. continues, as the languishing recovery limps along, as Congress remains mired in gridlock and partisanship and as US debt gets downgraded, the spirit of the American consumer is undeniably suffering. According to Yankelovich, a “1970s-grade” malaise has overtaken over half off American consumers today, with 60% agreeing that the “land of opportunity” is becoming the “land of disappointment.” Because few product and service categories are malaise-proof, what can marketers do to help alleviate the situation? Yankelovich suggests that there are two choices: 1) attempt to re- ignite a belief in the traditional American Dream, or 2) bypass the American Dream and stoke the individual dreams that continue to survive. The paper suggests that for those that have utterly lost faith in America, marketers should try tapping into the faith those consumers still have in themselves. Individual dreams can be a strong source of energy even in difficult times.
So what? The essence of most Condé Nast brands lies in pursuing one’s dreams and individual passions. How will this play out if the malaise hypothesis is correct?
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Deloitte Consumer Spending Index Rises in July
Signals concerning consumer spending and retail continue to be mixed. A bit of bright news amidst all the recent doom and gloom: bolstered by a rise in home prices and a slight improvement in real wages, the Deloitte Consumer Spending Index rose in July 2011 for the first time since January. The Index tracks consumer cash flow as an indicator of future consumer spending. “The housing market is showing multiple signs of stabilizing and that is helping to ease a significant drag on consumer spending,” explains Carl Steidtmann, Deloitte’s chief economist and author of the monthly Index. ”A decline in energy prices drove an increase in real wages, perhaps giving consumers more money to spend and restoring confidence despite a weak labor market and the recent debt ceiling debate.”
So what? “One should take care not to paint a market profile with a single brush. There are still sectors with vitality, and therefore there are still opportunities out there for savvy marketers.“ – Peter Clarke, Senior Manager, Condé Nast Research & Insights
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Quick Takes
This Is The Business Google Just Bought
Google is paying $12.5 billion in cash to land Motorola Mobility. What exactly is it getting for all that cash? Other than the patents, Google is getting an old school manufacturing business that has less than desirable margins. Google earns almost as much in profit on a quarterly basis as Motorola generates in revenue.
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CHART OF THE WEEK: Apple - The Most Valuable Company In The World For The First Time Ever
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Tablet Wars
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Worldwide Mobile Device Sales (Market Share)
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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 |

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