Why are there a disproportionate numbers of agencies based in London?

Probably part of the answer is the same explanation as to why there were so many cotton mills in Manchester – geography.  The cotton mills were near raw materials. London agencies are near to an unrivalled (in Europe) array of production resources.

But computers and digital networks make physical proximity to production resources increasingly irrelevant. In theory, production can be done anywhere…just squirt the artwork or the video down the line!

So what factors will explain agency clusters going forward?  London’s always going to have the advantages of access to a huge pool of talent and the kind of cultural influences I discussed in my last post.

But the decline in the importance of being physically close to production facilities means that the distribution of agencies throughout the UK could well become more proportionate over time.

In an industry that’s increasingly influenced by technology, it seems to me that more and more agencies will cluster around hubs of innovation. Gaining personal access to the latest developments in technology could become a significant competitive advantage for the smart agencies of the future.

It could also give those agencies a much better chance of securing the next Google as a client when the founders are still in their garage rather than going for their initial IPO!

If I’m right, then this is good news for Bristol.

McKinsey with the World Economic Forum have just published a global map that identifies the world’s most important innovation hubs.

Bristol comes out as a “hot spring” – a small, fast growing hub on track to be a world player. London is labelled a “silent lake” – an older, slower growing hub with a narrow range of large established companies.

In fact, when I come to think about it, part of the reason I setup 3Sixty was my contacts at HP Labs in Bristol back in 1994. Some of the technical team working there at the time were real Internet pioneers, and when I got chatting to them I was fascinated by the possibilities that this new innovation had for advertising and marketing (I was working in a conventional agency at the time).

So there’s one small example of how an agency got started because of proximity to a centre of innovation.

I’d be interested to hear if anyone else has got other examples.

Right, time for me to nip round the corner to Bristol University to see if I can find the next Sergey Brin.

P.S. Off to South Devon for a week’s holiday on Friday…so no blog next week.

Apparently there’s no such thing, yet I swear I never picked up the tab on all those long forgotten media lunches (nostalgic sigh). The cost, of course, comes through in the endless phone-calls that follow looking for the chance to get on a schedule, in short acquiring a new best friend. 

The same is true of anything that initially appears free. 

It was just a few weeks ago that the world was up in arms at Facebook’s policy change – an attempt to keep user’s data even in the event that the user permanently leaves the network – until it was swiftly reversed and Facebook suddenly just wanted to  be everyone’s mate again.  You could argue the back-tracking was the right move in light of the fact that even Facebook’s founder, Mark Zuckerberg, is now on Twitter but people are missing an important point here: there is still no such thing as a free lunch. 

What does this all mean?  Behavioural targeting is here to stay and advertising sure as hell isn’t going anywhere, evolving definitely but disappearing never.  This isn’t driven by a dogmatic passion for buying ads but as someone who wants to use websites. 

When Ted McConnell, P&G’s  Marketing Chief, tried to lambast brands for trampling over consumer’s social environments last year and said social networks have no right to monetise its users’ conversations he missed the point – users of social media need those ads, whether they know it or not, just as they need Facebook to sell on their data. 

I keep reading about the emergence of the value consumer, who, once driven by quality and exclusivity is now busily coupon cutting for cheap or largely incentivized offers. Luke Johnson in the FT recently said that businesses must adapt and embrace this new order or asphyxiate.

Like most things there are two sides to this. Whilst discounting undoubtedly holds the strongest voice in today’s economic opera there is a concern over the level of customer commitment generated. Whilst the aria at the moment is purely about ‘bums on seats’ it is worthwhile considering the longer-term objective of loyalty and customer commitment.

I recently read ‘Neuro Web Design’ which refers to research by Caldini in 2007 showing that if a public commitment is not ‘owned’ by a person, and is mainly made to gain a large reward, the individual is not deeply committed and will not show deep commitment in future behaviour. However, if the action is made voluntarily because of ‘inner beliefs’ then the person will feel much more committed to the action. Crucially, to get commitment we need to engender ‘inner responsibility’.

To build ‘inner responsibility’ Caldini goes onto to say that it’s worthwhile giving a mild admonition or small threat of punishment as this can encourage us to behave in certain ways. Afterwards we’re more likely to display a tendency to want to be consistent and take responsibility for our behaviour. The pressure for consistency causes the commitment to deepen.

Let’s be clear – I don’t think that Caldini is advocating that you treat your customers as Basil Fawlty would, but sometimes making the customer conversion process more like joining an exclusive club may actually improve loyalty by making the customer emotionally engaged with the decision.

Many people have experienced this process over the last few years as they ditch their PC’s and embrace Apple Macs’ – it’s not easy making the change, and you avoid making the decision for quite a while until you are convinced that it’s really something you want to do. Once you make the choice, you expect pain on the way, but ultimately you believe the choice will be worthwhile and it’ll be for life….

Ouch, this one hits a little close to home. Reporting media redundancies is becoming a wearisome task, one has to ask where the bottom is? However, news out of the US that the excellent digital website Ars Technica is slashing nearly 50% of its staff is like pouring scalding lemon juice on a salty, open wound.

Part of the media empire that is Conde Nast, which is seriously, seriously in trouble, ad revenue down 30% in Q1 ’09 and seemingly cutting staff every other day (folding its hip-hop rag King just yesterday), Ars Technica appeared to be immune from such shenanigans, simply for the high quality of its content.

Seven of Ars Technica’s 17 staff were sent packing yesterday, unfortunately not a cruel April Fool’s day joke, but a harsh reminder that the digital media’s crooks and crannies are as open for perversion as those poor saps still working in print.

The layoffs were buffered with an unknown number of cuts from Wired’s digital team too, although rumours say the Wired.com layoffs were limited to about three.

Is quality not enough anymore? Surely the cuts will have a dramatic effect on the website’s editorial output, and what does it say for the highly anticipated launch of Wired UK when they are shuddering employees stateside?

Conde Nast’s digital arm, CondeNet, purchased Ars Technica for $25m last May and merged it with its Wired digital business, which also included popular aggregator website Reddit.

Seemed like a decisive move for Conde at the time, for in 2008 Ars Technica was pulling in about 4m unique visitors every month.

It’s assumed the acquisition resulted in some sort of redundant titles, and Conde Nast made its intentions clear in January that it was planning to drastically streamline its digital business, even consolidating the long-standing CondeNet, which had impressively remained independent since its launch in 1996.

The new entity, Conde Nast Digital, had an impressive roster and over 50m unique users, but represented an unproportionately small amount of big brother’s revenue, less than 5%.

It appear Conde Nast was intent on ‘waiting-out’ the recession before making any drastic cost cutting measures… well the wait is over.

And it’s a damn shame, because Ars Technica is a quality publication, and as Conde Nast makes it’s moves, it’s now us in the digital community who play the waiting game, to see how badly staff cuts like these effect editorial content.

Sound the bugle, is that Taps I hear lilting along the warm Spring air?

Follow me on Twitter