Apple bets on reputation to drive streaming success

This week’s news that Apple is expanding into multiple new markets, including TV, gaming and finance is not unexpected. The market for iPhones is becoming saturated, with revenue from iPhone sales dropping 15% in the last quarter. So, increasingly Apple wants to be seen as a services company – it already has a successfully streaming product (Apple Music) and generated $10.9 billion of revenue from services, more than from selling Macs or iPads, in Q4 2018.

The announcement is also unsurprising for two other reasons. We now live in an experience economy, where people are more likely to rent or stream products and services than to buy them. And it joins a stampede of companies that want to be the digital provider of choice, for everything from entertainment and news to healthcare and control of your smart home.

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This trend is turning digital companies that previously co-existed relatively harmoniously, such as Amazon, Apple, Google and others, into competitors. Combined with the rise of Netflix, this is disrupting the business models of existing content providers/film studios, leading them to scale up (witness Disney’s purchase of Fox) to try and compete.

Apple’s glitzy launch featured a host of A-list celebrities, from Oprah to Steven Spielberg and Big Bird from Sesame Street as it promised to spend $1 billion a year on original content. However, it is up against the likes of Netflix (which spent a reported $12 billion last year), and Disney, which counts best-selling franchises such as Marvel and Star Wars amongst its properties.

So can Apple succeed in streaming? After all, its existing Apple TV service has never really taken off. There are two factors it is betting heavily on:

1.Reputation as the champion of privacy
Throughout all the storms that have hit tech companies around privacy and use of personal data, Apple has aimed to position itself as the champion of the consumer. It has repeatedly stressed that it won’t share user data with advertisers, and even refused to allow the FBI to access locked iPhones belonging to criminals and terrorists. Apple boss Tim Cook continually reiterated the focus on privacy at the launch event, and clearly it is one of the ways it is looking to differentiate itself.

2.Market power
As Oprah said of iPhones “they’re in a billion pockets”, and Apple clearly has a huge, loyal fanbase to appeal to. That’s what has driven its services success to date, and even if it can only convert a small percentage of customers to its new offerings, it will be in the money. However, an awful lot of iPhones are in markets, such as China, where the new services are unlikely to be available, while most customers already have subscriptions to the likes of Netflix. The new Apple TV+ will allow consumers to bundle some existing services (such as HBO and Hulu), but not Netflix. And while it will be available on other hardware (such as Sony TVs), making it appeal to non-Apple owners may prove difficult.

So, when it comes to services and effectively its future revenues, Apple is essentially betting on its reputation rather than the deeper content reserves of its rivals. Can it take a bit out of streaming? Whatever happens expect a long and bruising battle as more and more companies try to differentiate themselves from the chasing pack and use communications and reputation to dominate the market.

4 ways that tech giants can turn their image around in 2019

Its fair to say that tech giants had a shocker PR-wise in 2018. Vilified for how they treat consumer data, spread malicious/fake news, fail to protect privacy, low tax payments and underhand PR methods (as in the case of Facebook hiring a firm to spread dirt on George Soros), they’ve so far come up with a poor defence. In fact, senior management has either ducked out of governmental hearings or spouted platitudes that placated no-one.

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And the early indications are that 2019 will be equally challenging for the likes of Facebook, Google and Amazon, as they are publicly attacked on multiple fronts. Countries such as the UK and France are proposing ‘tech taxes’ to claw back money, while competition authorities are taking a keen interest in the idea that these organisations have too much power and need to have their wings clipped. It seems a long time ago that they were hailed as innovators changing the world by connecting people in new ways and providing easy access to untold information and opportunities.

So, what should the tech giants New Year PR resolutions be? Here are four to start with:

1.Confess
One of the biggest issues facing Facebook et al is that they are taking an overly legalistic approach to dealing with their problems. Essentially, they are denying everything with the aim of protecting themselves from potentially eye-watering fines. As the growing number of legal cases show, this isn’t working as the public mood has very much turned against them. It isn’t an easy step, but they have to change their attitude, confess to past misdemeanours (even if inadvertent) and wipe the slate clean. Think Lance Armstrong on Oprah, but with Mark Zuckerberg replacing the drug-taking cyclist.

2.Match words with deeds
We’ve all seen the adverts from social networks telling us that they are committed to protecting our privacy and online lives. They need to go further, and change how they operate, such as making default privacy settings much tighter and being clearer on the code of conduct that they will follow, with proper independent oversight.

3.Be more open
Ironically for organisations that rely on people being free and open with their most personal data, Google, Facebook and Amazon are extremely secretive in many areas. Clearly, no one expects them to give away commercial advantage, but they need to show how they operate to satisfy regulators, consumers and current and potential employees. By demonstrating that openness they will show they’ve not got a secret agenda and that Mark Zuckerberg is not a lizard.

4.Invest
The rise of Google and Facebook has hoovered up huge amounts of advertising spend, particularly affecting local and regional newspapers. Alongside the reports of cats stuck up trees, these provide a powerful method of supporting local democracy, holding elected councils to account. Investigating vested interests costs money, and national newspapers have also seen budgets slashed, despite the importance of exposing malfeasance. At the same time, Amazon has led an ecommerce boom that has decimated the high street, again hitting communities across the UK. While there’s no legal obligation to pay for these problems, it is time for tech giants to dip into their pockets. Google already funds some media initiatives and Facebook invests in local journalism, but they all need to go further if this is to redress the balance. Paying a fair share of their tax bill would also help.

Clearly not every tech company is in the same position as Facebook, Google, Amazon and Uber, but the current ‘techlash’ threatens the entire industry. This isn’t just about perception or slowing user growth – share prices have fallen as nervous investors cash out, while many talented employees are looking elsewhere for their careers. 2019 promises to be a watershed year for tech’s public image – lucky that Facebook has got Nick Clegg on board to turn it all around……….

Time for PR to change its name?

I’ve lost count of the number of times I’ve had to explain exactly what public relations is (and what it isn’t) to generally well-informed and otherwise clued-up friends, relatives and people at events. No, it isn’t just Absolutely Fabulous, Max Clifford-style celebrity scoops in the tabloids or undercover lobbying on behalf of big business. Instead it should be a core business function – a way of getting your messages out to the right audiences, through the right channels and at the right time, with the aim of engaging people, managing reputation and achieving business goals.

That’s why the CIPR’s new #PRPays campaign is a welcome step in the right direction. It aims to demonstrate the strategic value of PR to organisations through interviews with senior managers at some of the UK’s biggest companies. The first video, with John Holland-Kaye, the CEO of Heathrow Airport is great. It shows that he sees and understands what PR brings to his business in multiple areas, from communicating change to supporting expansion.

However, there is a big ‘but’ coming. Holland-Kaye keeps talking about communications in its widest form, from talking to passengers and other stakeholders to getting key messages across to employees and politicians. This got me thinking – why are we even talking about PR at all? At best it is a loaded term (see examples in the first paragraph), and at worst it puts a barrier up between the industry and the people we are trying to talk to. Why don’t we simply replace Public Relations with Communications? I can see four good reasons why we should:

1          It is simpler
Everyone communicates – it is one of the key human characteristics. So, people understand what the term means and the skills that it involves. Yes, that could be said to remove mystique (and as the saying goes, where there is mystery, there is margin), but to be honest the barriers to entry in PR are low to non-existent anyway. All you need is a phone, a laptop and an internet connection, and despite the admirable efforts of the CIPR to professionalise PR, that is unlikely to change soon.

2          It is comprehensive
“No, I don’t do that – that’s internal communications/public affairs/social media (delete as applicable).” That’s been the response of many PRs when clients ask for something that it outside their skillset. But rebranding PR as communications gives us the legitimate right to extend what we do into these neighbouring fields, at both a strategic and tactical level. The basic idea of understanding a company’s aims, and then creating and communicating messages that will successfully deliver these objectives is common to many areas of business – as communicators we should be applying our skills to help organisations in all of them.

 3          It is clearer to business
John Holland-Kaye’s interchangeable use of PR and communications shows exactly the issue that the profession has. Even those that champion what we do are a bit vague about exactly what the borders of our work are. Therefore, if we want to be seen as a strategic imperative for businesses, it makes sense to be clear in our own messaging and language. Talk about communications, and business leaders will see the value, helping the profession to be seen as a key part of successful organisations and ultimately boosting status and budgets.

4          It gives us room to grow
The rise of the internet has clearly transformed communications and given rise to wholly new disciplines such as Search Engine Optimization (SEO), and social media. Agencies mushroomed to take advantage of the budgets that clients were looking to spend in these areas. Lots of PR companies missed out, either because they didn’t see the opportunity or didn’t understand the technology. Communicating is now more important than ever – and at the same time no-one knows what the future will bring. Will brands need to convince the likes of Amazon or Google to feature their stories on voice assistants? How will AI transform how organisations communicate with their publics? No-one really knows, but if PR acts now and widens its scope, it will at least have a fighting chance of being at the forefront of future changes, rather than looking back in 20 years time to find it has been marginalised.

As I said, I applaud the CIPR’s efforts to demonstrate the strategic value that public relations brings. But I think the whole profession needs to go further – we’re communicators, so let’s be upfront and adopt a name that reflects what we do and gives us room to expand in the future. From now on, I’m not a public relations consultant, I’m a communications consultant.

Taking a stand – and the risks to brand reputation

Brands today face significant challenges when it comes to marketing themselves. Competition is growing, particularly from smaller, nimbler and often cooler players. We also live in an increasingly polarised world, where consumers demand that the brands they engage with stand for something. That’s relatively easy for quirky startups – the trouble for established multinationals is that ‘something’ varies radically between different groups and cuts across their existing customer demographics.

The current debate over Nike’s latest marketing campaign demonstrates this perfectly. It has recruited American footballer Colin Kaepernick to narrate its new ad, which features athletes from a range of backgrounds who have overcome adversity to achieve success. The slogan, “Believe in something, even if it means sacrificing everything”, sums up Kaepernick’s role as leader of the movement to kneel during the US national anthem to protest against police violence.

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Burning rubber
Predictably, the campaign has drawn ire from both sides. Photos and videos of people burning their Nike shoes and clothes went viral on social media, and the Nike stock price initially dropped. Donald Trump complained on Twitter. The body responsible for buying uniforms for the Mississippi police force announced that it would now longer purchase Nike products. At the same time, commentators have complained that Nike is simply hijacking a key issue to essentially sell more trainers. And given their previous poor record on issues such as ethical sourcing, child labour and more recently complaints of a culture of sexual harassment, people may well have a point.

Nevertheless, Nike clearly feels that its core buyers are going to respond positively to its position. In a similar vein, the CEO of Levi’s announced a partnership with gun violence prevention groups, causing the National Rifle Association to complain about “corporate virtue-signalling.” On this side of the Atlantic, Lush had to drop a campaign focused on undercover police who infiltrated activist groups to spy on their members.

So how can brands make sure that taking a stand doesn’t alienate the people they want to appeal to? Essentially it comes down to answering four key questions:

1.Does it fit with your brand values?
One of the reasons Lush received so many complaints was that its campaign didn’t fit with its brand values. Yes, it was seen as alternative and studenty, but being seen to attack the police was a step too far. Companies need to live their brand values – but not over-extend them in pursuit of cheap headlines, as it will damage their reputation.

2. Does it fit with your target audience?
For Nike, its core audience is overwhelming young, urban and involved. Therefore, while it might lose some sales (will Donald Trump switch to Yeezys?), they are clearly confident that the positive impact outweighs the negative. In the same way, UK stationery chain Paperchase pulled promotions from the Daily Mail after its customers complained about the difference between the paper’s editorial stance and their own views. So start with demographics and listening to your customers – after all, there’s a world of social media to help you hear their voice.

3. Are you seen as genuine?
For me, this is where Nike falls down, though it isn’t as bad as Pepsi’s infamous Kendall Jenner advert. I simply can’t see them as genuinely believing in the issues raised – and their own record on worker’s rights undermines their case for promoting fairness. Obviously this is an issue for any major corporation as most have skeletons in their closet of some sort. However, in contrast, Levi’s campaign on gun control looks much more genuine as their CEO is an ex-US army captain who has spoken out on the issue before.

4. Is it cohesive?
If you take a stand, it has to run across your business. You can’t complain about police brutality and then treat your own employees poorly, for example. That’s one of the reasons that tech giants such as Facebook and Amazon are currently in trouble. They talk about an innovative future based on technology and openness, and then create labyrinthine corporate structures to minimise the tax they pay and (in the case of Amazon) face accusations of sweatshop conditions for their warehouse staff. In today’s world failing to live your brand will be quickly discovered and publicised.

We’re in a position where more and more brands are being forced to make a choice – Trump or Democrat, Leave or Remain

? To do this successfully is a balancing act – but starting from genuine brand values built on trust with your audience is a key starting point.

 

Going direct – and the impact on marketing

The rise of the internet was meant to usher in a new, more direct way of communicating, including the removal of middlemen. We’d buy goods and services directly from their producers, rather than having to go through shops or brokers, cutting costs for consumers and opening up new opportunities for companies. It would be the end of the package holiday, the supermarket and the insurance broker, amongst other business types.

It is fair to say that things haven’t worked like that. While small companies can sell direct on the internet, the majority of goods and services are still bought from middlemen who bring products together, allowing consumers to compare them in a single place and then make their choice. Think of Amazon, ebay or insurance comparison sites, which are essentially old-style brokers with an updated business model.

Why has this happened? Partly because people find it difficult to cope with too much choice – there is always the worry that you’ve made the wrong decision and also because these companies have ensured it is as easy as possible to buy from them. Amazon has one-click ordering, buttons to press that automatically send new stocks of household essentials, and voice ordering via Alexa.

However, this model is changing, at least in part, due to the rise of Direct to Consumer (D2C) brands. Companies like Dollar Shave Club, Harry’s and a plethora of mattress start-ups are all selling via the internet without any middlemen involved. They often use a subscription model – i.e. you get a delivery of shaving products, beer or food kits on a regular basis, backed up by generous introductory discounts and strong guarantees of quality (if you don’t like the mattress we’ll come and collect it and give you a full refund). They may be relatively small in the UK at present, but they tend to target younger, more affluent consumers and are therefore likely to continue to grow and spread.

These brands are also having an impact on marketing, particularly as many are start-ups that need to establish themselves before similar rivals appear.

1.Name recognition is all
It could just be that I’m their target demographic, but I see adverts for D2C shaving brands such as Harry’s everywhere I go online, in the podcasts I listen to and offline in the press. You need to create and sustain strong name recognition if you are to succeed – given the number of challengers in particular markets it is a question of first mover advantage. This impacts traditional brands, whether that is the likes of Gillette, Tesco or Amazon – they need to respond if they are to keep customers loyal.

2. Marketing is constant
Subscriptions do give some security when it consumer retention, particularly as there is an inertia effect when people don’t get round to cancelling them – look at the number of people who failed to cancel their free Amazon Prime trial before it started charging them. However, consumers, particularly of D2C brands, are savvy and are likely to be constantly checking that they are getting a good deal. So customer marketing has to be tailored, personalised and constant if you are to stay front of mind and engage with your existing consumers.

3. You need a story
You can’t create a D2C brand by just moving your product online or to a subscription model. Not only would that be likely to cannibalise existing revenues, but it wouldn’t generate the appeal of an exciting, new, internet-first brand. People want to get more than a product – they want the story behind it. That means highlighting your credentials, why you are different and what sets you apart. This could be that you buy the finest Japanese steel for your razor blades or donate mattresses to charity – whatever it is, it needs to be clear, differentiated and appealing to your target audience.

4. You need to build a tribe
Business guru Seth Godin pointed out the opportunities that the internet provides to build your own tribe – a group of people that follow your brand, understand what makes you different, act as ambassadors and ultimately buy from you. The most successful Kickstarter campaigns are those where someone with an existing following launches a product. Podcasts that spawn books or tours are another example. Essentially your tribe feels a personal connection to you, believes in your ethos and will both sign up for your new offering and spread the word to others. Building a tribe takes time, but creates a lasting customer base for your brand and all of its products.

None of these marketing tactics are new – and importantly none of them are out of the reach of traditional brands. If you want to protect your products against the rise of the D2C brand you need to look at how they are operating, what you can learn from them and how you can improve your marketing and engagement with customers and prospects.

Making it work – the marketing challenge behind smart technology

We’re now in the midst of the Consumer Electronics Show (CES), which sees more than 170,000 people descend on Las Vegas to view and play with the latest technology. And with consumer electronics now covering everything from connected cars to smart appliances and household robots, it provides a real glimpse into the future of how we will live, work and play.

And if people think that this is hyperbole, just look at the speed at which innovations such as Amazon’s Alexa digital assistant and electric cars have entered the mainstream. Morgan Stanley predicts that 22 million Echo devices, which feature Alexa, were sold in 2017, while countries such as the UK and France have banned the sale of new petrol and diesel cars from 2040. You can even buy those sci-fi staples jetpacks and hover boots.

That’s why the issues tat LG’s new Cloi robot suffered at its CES debut should be a wake-up call to marketers. The device, which is designed to help consumers manage their smart homes, initially co-operated at an onstage demo, but then simply gave up and refused to do anything apart from blink when asked when the presenter’s washing would be ready and what was for dinner. As the owner of an Amazon Echo Dot, I know exactly how the poor chap feels, and have to commend him for not shouting abuse at Cloi in public.

But what this shows is that complicated technology is exactly that – complicated. It can be difficult to get it set up correctly in the first place, to then get the best out of it or link it to other devices in the home. Compare this to the analogue products that most people are used to interacting with, and you can see the problem. They work straight from the box and are designed to be simple to use and get value from.

In many ways this follows the classic framework set out in Geoffrey Moore’s Crossing the Chasm, setting out how new technology is adopted. This is the order it provides:

• A small group who don’t care about things going wrong and have the skills and knowledge to fix them
• Early Adopters – a bigger group that simply wants the latest thing and puts up with idiosyncrasies
• Early Majority – pragmatists who adopt the technology when it is mature
• Late Majority – conservatives who adopt the technology late on, perhaps within existing products that they are familiar with
• Laggards – sceptics who will only adopt new technology when absolutely essential

This model worked in the past, but I think the acceleration of tech means it is no longer accurate. We all have constant exposure to technology, such as smartphones, and the falling cost of devices, and their omnipresence, means that the majority/laggards often don’t have a choice about adopting them. This potentially divides society into the technologically-skilled and the Luddites who cannot manage to stay on top of innovation, and consequently miss out on the advantages it brings. In turn this leads to resentment and, I believe, drives frustrations which can be manifested in concerns over the future and consequent support for populism and insularity.

What does this mean for marketing? Essentially, we need to stop just pitching technology at the Early Adopter, but make sure that it appeals to everyone. We have to be clear on the advantages, clear on how it used and provide the support to assist people in getting the most from it. And by support I don’t mean an impenetrable, jargon-filled manual or a premium rate phone number – I mean tailored assistance that shows how users can benefit.

No doubt CES 2018 will see a whole raft of wonderful technology innovations unveiled – but in order for them to be really successful companies have to address the fundamental marketing question of “What does it do for me?” in a much better, more understandable way.

Why ARM’s acquisition shows that Cambridge is changing

Like a lot of people I was initially shocked by the recent £24 billion takeover of ARM by Softbank of Japan. Not only was it the biggest acquisition ever of a European IT company, but it was also widely seen as the jewel in the crown of the Cambridge/UK tech scene.

A few years ago Cambridge had three stock market listed companies worth over a billion pounds each – ARM, Autonomy and Cambridge Silicon Radio (CSR). All have now been acquired, with varying degrees of success – HP, Autonomy’s purchaser is still suing the previous management about alleged overstating of accounts.

At the same time a large number of the next tier of Cambridge companies, such as Jagex, cr360 and Domino Printing Sciences, have also been bought, leaving many people wondering where the next tech superstar will come from. This is particularly true as an increasing number of earlier stage businesses in exciting markets have been acquired by tech giants – Internet of Things startup Neul was bought by Huawei, Evi by Amazon and Phonetic Arts by Google. And that’s just the acquisitions that were announced. I’m sure that in many cases promising technology has been snapped up without making it into the press, as the deal size has been relatively small.

So, as someone involved in the Cambridge tech scene, should we be worried? Is Silicon Fen going to turn into an offshoot of Silicon Valley – a bit like the tech towns around Heathrow, but with a bit more IP? Thinking about it more rationally, there are two main reasons for the flurry of acquisitions, particularly of smaller businesses.

1          Cambridge’s reputation
All of these acquisitions are actually recognition of the strength of the Cambridge tech sector. Big companies are attracted to the area because of the talent and innovation on show, and are increasingly willing to take a punt on earlier stage businesses to get in first and lay their hands on new technology and IP. They’ve realised that not every acquisition will work, but that the wins should outweigh the losses. So, Cambridge’s PR has worked in attracting the largest tech companies to the area.

2          Changing mix of companies
Traditionally, a lot of Cambridge startups were built on biotech, science and engineering, either from the University or the innovative consultancies that differentiate the city from many other clusters. As Cambridge grows, a greater number of companies are software-based, which means that developing their technology is faster than when trying to commercialise a product from an interesting piece of lab research. Therefore, they are likely to have a steeper growth curve, and potentially a shorter lifespan as they reach maturity (and acquisition) quicker.

A further reason for optimism is given by the new Cambridge Cluster Map, which lists the nearly 22,000 businesses based within 20 miles of the city centre. With a turnover of £33 billion, the map demonstrates the range of companies and the strength of the local economy. A third of this turnover is made up of knowledge-intensive businesses, employing nearly 60,000 people. That’s a lot of innovation, whoever ultimately owns the companies concerned.

Looking back, I think commentators will see that the ARM acquisition is part of a change in Cambridge as it matures and becomes a recognised part of the global tech sector. The economy will continue to grow, but more of the capital will come from outside the city. While this means we will have fewer ARMs and CSRs, and more outposts of Amazon, Apple and Google, it won’t stop growth and innovation, which means the Cambridge Phenomenon is likely to go from strength to strength.

Is there space for Google Spaces?

Today our internet use is dominated by just a few tech giants – Google, Amazon, Facebook and Apple (GAFA) in the UK and US, with the likes of Baidu, Tencent and Alibaba leading the way in China.

What is particularly interesting is that generally each of these is good at one thing, or group of things. We turn to Google for search and email, Amazon for ecommerce, Facebook for social and Apple for mobile apps. There is obviously some competition – Google’s Android versus Apple iOS for example, but in general each giant has stuck to its knitting.

That’s not for want of trying – Google has tried to get into social media several times with projects such as Wave, Buzz and Google+, while Apple tried to launch Ping, a music-focused network. All failed, although Google+ limps on as everyone with a Google account automatically has a logon.

It isn’t all Google’s fault – the most successful social media networks tend to start small and grow from there, such as Facebook, Twitter, Instagram and WhatsApp. Users are attracted by the features, rather than the brand name, and then it grows exponentially through the network effect – essentially the more people who join, the more value everyone involved gains from being part of it. Social media starts at the grassroots, and that’s one of the reasons that people join particular networks. Mark Zuckerberg at Facebook understands this, hence splashing out on Instagram and WhatsApp rather than trying to develop clones of them from scratch. This neatly neutralises the competition while keeping users within your orbit when it comes to the time they spend online.

So that’s why Google’s latest attempt at a social media network, Spaces, looks like it is unlikely to take off in a big way. Described as a cross between WhatsApp and Slack, it allows users to have conversations and share information around specific topics with groups of people, avoiding, Google says, the need to hop between apps or cut and paste links. The trouble is it means installing/learning another app, and as far as I can see there’s no compelling reason for this to make it to the mainstream in its current form. Sure, people will use it to share information, such as when planning a holiday or big event, but it is hardly a threat to WhatsApp or Slack at present.

What would be more interesting is if Google used it as a basis for more complex, artificial intelligence driven services, such as bots that could be sent off to gain information. So, keeping with the holiday idea, you agree where you’d like to go and use Google to collect and sift relevant information, such as accommodation, weather and flight times, and present it in a single place. Given how long it can take to find all of this normally, that would attract users – and of course provide Google with much deeper data on what users are looking for, enabling them to sell more targeted advertising and hence boost overall revenues.

It is early days for Spaces, but it looks like it needs a bit more of a wow factor if people are going to use it seriously. Google has been burned before on social projects that have been well designed, but fallen short when it comes to getting consumers excited – so time will tell if Spaces joins the likes of Buzz and Wave in the failure column or carves out a loyal user base. However at the moment Spaces risks being seen as neat, but non-essential – hardly the best way to attract us from existing applications.

Has Twitter spawned Jeremy Corbyn?

Amidst all the column inches written about the election of Jeremy Corbyn as Labour leader, there are a couple of factors that people seem to be forgetting. True, he is probably now the most famous Jeremy in the country (according to an unscientific Google search I just carried out, links to stories about him outrank Clarkson and Kyle), but he is actually part of a wider protest movement across the Western world. Far left Greek party Syriza has just been re-elected, despite backtracking on its promises to free Greece from onerous bail-out terms. Spanish left wingers Podemos have also shown well in opinion polls while Catalan nationalists won a majority, albeit a slim one, in this week’s regional elections. Going back to the UK, look at the success of the Scottish Nationalists at the election and the continued high profile of Nigel Farage.

Across the pond, non-politicians such as Donald Trump and Carly Fiorina have been leading polls amongst Republicans, while Bernie Sanders, who describes himself as “the only elected socialist in Congress”, is keeping Hillary Clinton honest in the Democratic contest.

So why are voters across Europe and the United States supporting mavericks on the right and left, even if in many cases there is little chance that they will be able to carry out their policies?

No dead pig bounce
The easy answer is that they are sick of career politicians who seem keener on hanging onto power than actually connecting with voters. Many people think politics itself is broken. Even David Cameron’s alleged assignation with a dead pig just makes us shrug and doesn’t really impact his ratings either way. At the same time many people still don’t see the good times coming back after the recession – real wages in the UK are still below those of before the crash for many people, hurting confidence. Globalisation and the rise of ever-more intelligent computers is eating into traditional middle class occupations, causing uncertainty for those with skills that can be potentially automated or offshored.

Obviously, any alternative to this combination of depression and drabness has a chance to stand out from the crowd. And challenger politicians can get away with half-baked policies or even, as in the case of Donald Trump, a promise that he’ll come up with some “really good ideas” when he is elected.

But I think there is a more fundamental force at work – the internet and social media has completely changed how we consume our news and form our opinions. We live in Andy Warhol’s era of everyone being famous for 15 minutes, from a man captured on camera abusing a motorcyclist to celebrities reciting music lyrics with a Shakespearean twist.

What the likes of Corbyn and Trump share, despite their radically different views, share is a combination of solidity, outsider status and an ability to come up with inspiring (or eyecatching) soundbites that suit social media. They don’t appear stage managed but at the same time are reassuring while not being part of the establishment.

Politics 2.0
In many ways they are the start-ups of the political world, promising radical change to shake up a traditional market, in the same way that the likes of Google, Amazon and Uber have changed the industries they operate in. Perhaps voters believe that politics can be re-invented, just like retail and telecoms.

What will be interesting to see is how traditional politicians respond – will they continue to operate as before, like many of the companies that digital start-ups displaced, or can they re-invent themselves successfully and build a brand that fits with the internet electorate? Or will we see a new generation of less radical, but more social media savvy, politicians come through to replace the likes of Corbyn and Trump? One thing is for certain, in politics as in every other sector, those that cope best with today’s social, mobile world will be those that engage with voters and ultimately win their loyalty and power.

The battle for banking – Amazon enters the fray

In a previous post I talked about how the big four internet companies Google, Apple, Facebook and Amazon (GAFA) had quickly developed their businesses. They’ve all moved beyond the sector they started in, extending what they offer to compete with each other in areas such as ecommerce, social networks, mobile devices and mapping.

How have they done this? They’ve used the four strengths that they each possess:

1. Agility
With the exception of Apple, GAFA was born on the internet meaning they aren’t burdened with long-established corporate structures compared to their traditional rivals. So they can make decisions quickly, unhindered by the warring departments and turf wars that characterise first and second generation technology companies.

2. Data
Rather than purely physical assets, GAFA’s USP is data and what it does with it. From selling our search histories to monetising our personal pages, the four companies have built up extremely detailed pictures of their users and their lives. This allows them to accurately predict future behaviour – how many times have you bought something suggested by Amazon even though you had no idea it existed until the recommendation popped into your inbox? The advent of even cheaper machine learning and potentially limitless cloud-based resources to crunch data means that this is understanding is only going to get more precise.

3. Focus on the customer experience
Even though the majority of interactions don’t offer the personal touch of a bricks and mortar shop, these companies have gone out of their way to create a simple to use customer experience. Compare the Apple iPhone to previous ‘smartphones’ – the only difficulty for users was unlearning the convoluted way you had to access information on Microsoft or Nokia devices. I know, I had one of the first Windows phones – the user experience was terrible. Innovations such as one click ordering, reviews and simple sharing all mark out internet companies from their rival.

4. Scale
The final differentiator is scale – and the speed at which it is possible to grow on the internet. Rather than taking 20 years to become dominant in an existing market, companies can create a sector of their own and expand globally within months. Part of this is down to the network effect, but scale has also been achieved by moving into adjacent markets and just adding them onto the offering for existing users. This lowers the cost of entry for the company with the user base and creates a barrier to entry to rivals.

Taking these four factors into account, banks should be worried about Amazon’s latest move as it builds on all four of these strengths. Amazon Lending will make loans to small businesses in the UK that sell through the company’s Marketplace platform, after the service was successfully launched in the US. The beauty of the scheme is that Amazon knows exactly how the small business is performing as it can track their sales, and then use this data to offer selected companies short term working capital to improve their business. As it handles all the billing and cash collection for Marketplace sellers it can even take repayments directly from their profits, before they it pays them, minimising risk.

Adding to this data advantage, it is also offering the same simple to use customer experience that sellers are already familiar with. Compared to faceless or unhelpful banks, this is just the sort of thing that expanding small businesses are looking for.

The ironic thing is that, on the face of it, there is nothing to stop banks offering something similar. Their merchant services arms handle online and offline debit and credit card transactions, so they have access to data that could be used to work out creditworthiness. They have a network of branches to provide loans through, as well as a significant online presence. But all of these are separate departments and banks don’t have the agility to bridge the silos and provide the one stop shop that businesses are looking for.

In the same way that Apple Pay is disrupting payment services, Amazon Lending will take another bite out of the traditional business of big banks. And, as more and more of such services launch that nibble away at banking profits, then they face being outmanoeuvred by nimbler, more customer-focused and cleverer competitors. It is therefore time for retail and business banks to get joined-up or face becoming low margin commodity businesses in the future.