May 2010


Yes I realise it doesn’t quite sound as gripping or recognisable as sustainability or cleantech (ok my fellow geeks, I’m relying on you now!), but I attended a ‘master class’ today with Professor Robert Eccles, Harvard Business School, which addressed the key environmental issue companies are facing today, i.e. how they justify and embed sustainable practices into their core business. Many boards are grappling with this question, but most appear frozen with terror at the potential size of the challenge and the fundamental impact it will have on their culture – as Bob suggests the massive leap required is one of “reconceptualising the role of corporations in society.”

The answer is Integrated Reporting, which Bob Eccles is championing through his book  and website He has studied this area for some time and has begun to see a change in the general mood music around the subject. As he says, “When an idea’s time has come it shows up independently in different places.”

And that is certainly happening among a broad group of companies spread around the world in markets as diverse as the US, UK, Japan, Brazil and South Africa.

The time is right for this concept for a number of reasons. First and foremost it is a simple one – combining financial and non-financial data to produce a consistent picture of all relevant company information. A good example of a company attempting this significant change is Ricoh, which  is treating the collection and reporting of non-financial data in a very transparent manner.

Ricoh’s aim is to integrate its reporting processes, but it recognises it has a steep mountain to climb between now and 2020, because sustainable business practices lack general social consensus. Despite the fact that consumer pressure for change is now spreading to the financial community with banks such as New York Mellon Bank highlighting its commitment to environmental, social and governance (ESG) screening there is still a long way to go.

Aside from the major issue around company culture and social consensus there is a big sticking point regarding the quality and control of non-financial data. As Bob’s presentation describes it ‘closing the books’ for non-financial information is not as rigorous, which leads to the other key challenge that of auditing non-financial statistics. Clearly if Integrated Reporting is to succeed it will require integrated auditing. BASF is an example of a company addressing this issue with its ‘materiality matrix’ outlining both economic performance and environmental/social performance.

Sadly not many companies have progressed this far and perhaps that is because there is a poor understanding of the relationship between financial and non-financial performance information. While Bob confesses to being a ‘free market man’ he does believe that the markets alone are not going to be able to encourage adoption of integrated reporting on their own, it will require legislation. There are potential blockers within organisations to look out for, especially the CFO and General Counsel, whose roles make them understandably reluctant to adopt such practices. Yet hopefully we will not have to wait for a disaster such as the Great Depression for change to happen. This led to the foundation of the Securities and Exchange Commission and initial attempts to create generally adopted accounting standards.

There are some positive steps being taken by visionaries like Bob Eccles, including the recommendation to form the International Integrated Reporting Committee by the Prince of Wales’s project team ‘Accounting for Sustainability.’  They have some ambitious goals and in the coming year they will make some significant announcements. Similarly Harvard University will be running an event on Integrated Reporting in Autumn 2010, so this is definitely an area to watch.

Yes I realise it doesn’t quite sound as gripping or recognisable as sustainability or cleantech (ok my fellow geeks, I’m relying on you now!), but I attended a ‘master class’ today with Professor Robert Eccles, Harvard Business School, which addressed the key environmental issue companies are facing today, i.e. how they justify and embed sustainable practices into their core business.

Many boards are grappling with this question, but most appear frozen with terror at the potential size of the challenge and the fundamental impact it will have on their culture – as Bob suggests the massive leap required is one of “reconceptualising the role of corporations in society.”

The answer is Integrated Reporting, which Bob Eccles is championing through his book and website. He has studied this area for some time and has begun to see a change in the general mood music around the subject. As he says, “When an idea’s time has come it shows up independently in different places.” And that is certainly happening among a broad group of companies spread around the world in markets as diverse as the US, UK, Japan, Brazil and South Africa. The time is right for this concept for a number of reasons.

First and foremost it is a simple one – combining financial and non-financial data to produce a consistent picture of all relevant company information. A good example of a company attempting this significant change is Ricoh, which is treating the collection and reporting of non-financial data in a very transparent manner. Ricoh’s aim is to integrate its reporting processes, but it recognises it has a steep mountain to climb between now and 2020, because sustainable business practices lack general social consensus. Despite the fact that consumer pressure for change is now spreading to the financial community with banks such as New York Mellon Bank highlighting its commitment to environmental, social and governance (ESG) screening there is still a long way to go. Aside from the major issue around company culture and social consensus there is a big sticking point regarding the quality and control of non-financial data. As Bob’s presentation describes it ‘closing the books’ for non-financial information is not as rigorous, which leads to the other key challenge that of auditing non-financial statistics.

Clearly if Integrated Reporting is to succeed it will require integrated auditing. BASF is an example of a company addressing this issue with its ‘materiality matrix’ outlining both economic performance and environmental/social performance. Sadly not many companies have progressed this far and perhaps that is because there is a poor understanding of the relationship between financial and non-financial performance information.

While Bob confesses to being a ‘free market man’ he does believe that the markets alone are not going to be able to encourage adoption of integrated reporting on their own, it will require legislation. There are potential blockers within organisations to look out for, especially the CFO and General Counsel, whose roles make them understandably reluctant to adopt such practices. Yet hopefully we will not have to wait for a disaster such as the Great Depression for change to happen. This led to the foundation of the Securities and Exchange Commission and initial attempts to create generally adopted accounting standards.

There are some positive steps being taken by visionaries like Bob Eccles, including the recommendation to form the International Integrated Reporting Committee by the Prince of Wales’s project team ‘Accounting for Sustainability.’ They have some ambitious goals and in the coming year they will make some significant announcements. Similarly Harvard University will be running an event on Integrated Reporting in Autumn 2010, so this is definitely an area to watch.

To many of the 400 million people who inhabit the Facebook community it has become almost second nature to freely share the minutiae of their inner-most thoughts online  for all to see. Regular status updates, photo uploads and wall posts are a great way of keeping socially connected but following the recent controversy concerning Facebook’s dilution of privacy I find myself wondering whether we should think more carefully before we share.

Youropenbook.org is a new search site that can be used to find status updates. This independent Facebook search engine exposes the information that we so happily and freely post, to all those who are interested in snooping around for it. And Facebook is not alone – Google has confessed to being remarkably lax, which led to its Street-View cameras accidentally recording personal data from domestic WiFi networks.

Is Facebook leading the way for the personalised internet of the future? And if so, is this the direction that us avid social networkers want to be headed? To quote Jemima Kiss from The Guardian; “The free lunch is over; we pay wit h money, time or behavioural data”.

My advice: Now that we are all contributing to an ‘open book’ only update it if you are happy for both those you know and those you don’t to all have a look.

http://twitter.com/natfut

We love data here at Edelman.  Technology  floats our boat and aguably we’re pretty interested in Social Entertainment.  You might have noticed that we like Trust as well.

So is there anything more awesome than a presentation of data that shows the relationship between the Entertainment Industry, Social Networks and Trust?  We think not.  Except perhaps bacon sandwiches.  We like those as well.

This morning we hosted a Social Entertainment breakfast where we launched the findings of Edelman’s fourth annual Trust in the Entertainment Industry survey.

Gail Becker, President of Edelman’s Western region, presented the results and was joined on a panel by Matt Locke – Acting Head of Crossplatform at Channel 4, Maz Nadjm – Online Community Product Manager at BSkyB and Tom Watson – Labour MP. The Naked Pheasant himself, Mr Hargreaves, did a sterling job in chairing the proceedings.

Of course, given we’re all about PR we thought we’d also put together a press release of the key findings, which we’ve shoved at the bottom here.

During the day we’ll be sharing the presentation and some insight from the panelists, so watch this space.

Study reveals shift as Social Networks become “Social Entertainment”

  • Internet is second only to TV as a frequent “source of entertainment”
  • Study reveals consumers in UK and US recognise social networks as entertainment

Research launched today by Edelman, the world’s largest independent PR agency, shows that consumers believe social networks provide a higher value experience compared with other forms of entertainment.  Edelman’s annual Trust in the Entertainment Industry survey, now in its fourth year, also reveals that the internet, as a source of entertainment, is second only to television. The survey of 1,000 18-54 year olds in the United States and United Kingdom analyses the issues that influence consumer trust in entertainment companies.

In the US, the rise of the internet as a frequent source of entertainment is most dramatic in the 18-34 group, rising from 27 percent in 2009 to 42 percent in 2010.   In the US, 32 percent of 18-54 year olds look most frequently to the web for entertainment (compared with 58 percent watching TV).  The internet also ranked second in the UK, with 30 percent turning to the web most frequently, compared with 57 percent watching TV.

Social Entertainment

Seventy-three percent of 18-24 year olds in the US and 61 percent in the UK see social networks as a form of entertainment.  Fifty percent (US) and 56 percent (UK) of respondents aged 35-49 also consider social networking sites as a form of entertainment.  Despite the growth of social entertainment, consumers do not currently identify Internet brands as entertainment companies.

Whilst social networking sites may not yet be recognised as entertainment companies, they are leading the way in terms of adding value to the consumer experience of entertainment.  The majority of respondents in both the UK and US felt that social networking sites provide better value than music, gaming and television companies.

Gail Becker, President of Edelman’s Western region comments, “While not surprising that TV tops the list, seeing the internet rank second as a source of entertainment  – evolving from its origins as a source of information – is significant.  We believe that all companies today exist in this new era that we call social entertainment and we will continue to see its influence on how consumers and companies engage with entertainment and with each other.”

The study also reveals consumer attitudes towards the exchange of personal information in return for free entertainment. Eighty nine percent of those in the UK say they would not be willing to give up personal information to access free entertainment.

Jonathan Hargreaves, Managing Director of Technology, Edelman, Europe adds: “The study shows that consumers do value privacy but perhaps they are not considering the personal information that they already distribute freely via social networks.  Social entertainment impacts the role of privacy – both in how individuals behave online but also in terms of how entertainment companies use customer information.   This new era has created a shift in the trust dynamic and businesses must consider the implications of this in order to nurture future trust in a brand.”

Additional key findings:

Freedom of Content
In the 2008 study, free content was the dominant issue.  This year’s study shows it is the ability to access content across devices, not cost, that is of significance to consumers.

  • 65 percent of US respondents think it is important that they are able to access their entertainment on a number of different devices
  • 59 percent of UK respondents think it is important that they are able to access their entertainment on a number of different devices
  • 58 percent (US) and 53 percent (UK) of consumers state they would be willing to pay for content if they were able to move it across devices

Spending
Spending on entertainment continues to stay strong according to this year’s results.

  • On average, US respondents spend $47 per month on entertainment content
  • On average, UK respondents spend £25 per month on entertainment content
  • 83 percent of US and 76 percent of UK consumers state that ease of purchase influences their decision to pay for content
  • In the UK consumers who think social networking is a form of entertainment are more likely to have spent more money on entertainment in the last year

Impact on Trust

  • Those that state that they trust entertainment companies are also more willing to pay for content
  • Quality  (65 percent US and 58 percent UK) and Pricing (65 percent US and 58 percent  UK) have the most impact on consumer trust
  • 32 percent of UK consumers and 28 percent of US consumers trust entertainment companies
  • Trust was at a three-year high among those aged 18-34:
2008 2009 2010
UK Trust: 31 percent 29 percent 34 percent
US Trust: 32 percent 17 percent 34 percent

To coincide with launching our social entertainment research tomorrow, we’ve done some analysis of the key movers and shakers on twitter talking about entertainment – top fifty list below. (you can follow these here via twitter list or here, through tweepml)

Unsurprisingly, the Huffington Post claim top spot, with the LA Times in fifth, before the Guardian takes the top spot for UK media, with music brands dominating elsewhere with MTV claiming four spots.

There’ll be more from Edelman’s Social Entertainment research tomorrow, and we’ll be tweeting from our breakfast – follow #socialent for updates and insight from 9.00am.

    Account Influence Popularity Engagement Trust
1 huffingtonpost 81.3 86.1 46.1 91.9
2 TIME 76.7 94.3 46.7 96.2
3 ijustine 75.6 90.5 56.8 73.6
4 jack 75.2 92.6 58.9 78.4
5 latimes 73.7 71.6 44.3 77.6
6 simonpegg 73.6 82.4 48.8 78
7 106andpark 73.2 90.8 48.1 78.3
8 guardiannews 71.4 71.7 8 76.9
9 ev 70.5 90.7 69.8 65.2
10 MTV 69 85.5 59.3 71.8
11 TVGuide 68.1 85.8 44.2 77.3
12 Power106LA 68.1 66.7 54.7 73.5
13 g4tv 67.9 90.3 38.5 68.9
14 biz 67.8 92.8 43.1 78.9
15 alex 66.7 57 65.9 65.2
16 PlayStation 66.7 81.2 47 73.2
17 thescript 66.6 75 58.3 58.6
18 televisionary 64.8 56.4 52.8 60.6
19 Gawker 64.8 67.2 7.7 75.4
20 THR 64.6 66.8 43.8 72.2
21 gactv 64.5 62.2 39.1 61.7
22 totalfilm 64.4 66.2 43.7 59.9
23 IMDb 64.3 73.4 37.1 75.6
24 DerrenBrown 64 84.6 42.8 67.7
25 raczilla 64 70.2 65.7 54.6
26 edgarwright 63.6 69.9 48.7 58.3
27 fuggirls 63.1 65.3 64.2 55.5
28 VibeMagazine 62.8 71 46.4 65.9
29 mtvcanada 62.5 67.3 51.4 55.3
30 mtvuk 62.5 71.1 9.3 58.4
31 PhilipBloom 62.5 61.4 69.2 61.3
32 MTVBuzzworthy 62.3 71.8 53.8 64.4
33 ninadobrev 62.2 76.5 43.8 70
34 pandora_radio 62.2 68.5 74.6 47.8
35 CrackleDotCom 62.1 58.5 59.1 60.1
36 empiremagazine 61.8 66.5 51.4 57
37 RollingStone 61.6 74.9 6.3 67.9
38 soapsindepthabc 61.3 57.8 61.8 59.9
39 CreativeReview 61.2 75 49.3 62.6
40 cinemablend 61.2 60.2 9 57.3
41 cinematical 61.1 58.7 8.3 57.2
42 trixie360 60.9 59.8 63.2 47.1
43 firstshowing 60.8 60 55.4 53
44 heyuguysblog 60.8 62.3 41.4 56.1
45 thebookseller 60.6 59.4 37.5 55.4
46 KerrangMagazine 60.5 68.9 48.1 63.5
47 Marvel 60.3 71.2 45.8 62.4
48 filmcourage 60 50.7 58.5 53.1
49 FollowCMT 59.5 65.5 46.2 60.2
50 LAWeekly 59.3 65.8 49.3 60.2

It looks like the smartphone sector is going through a bumpy patch. Google has closed down its Nexus One on-line store, while there’s disquiet amongst developers over the application store model of distributing and monetising content.

Feels to me like growing pains for a sector of the mobile market that has witnessed massive growth in a relatively short space of time.

Google’s travails in flogging actual handsets simply proves that sometimes you can have a bad idea – namely believing consumers will ditch a rational desire to physically see and touch something before purchase.

The developers bellyaching is a sign of a maturing market in which manufacturers are starting to realise that the distribution models that allowed them to build a business in the first place are not as flexible nor favourable as they once appeared.

However, while we can put these spats down to the mobile phone market’s equivalent of puberty, everyone should guard against a turn back towards closed platforms. Virtually every major handset manufacturer has either developed – or bought – some form of mobile OS and while all the talk is of open standards and interoperability, the temptation to “do an Apple” and try and build a closed platform that locks customers in must be tempting.

That would be massively against the spirit of the age and potentially damaging to the industry.

Consumers are putting a premium on choice while developers thrive on the develop-once/publish-many model. In a market where software is becoming the main selling point, manufacturers and mobile operators are fighting to remain relevant and this makes for a delicate balancing act between, on the one side, innovating on design, functionality, tariffs and service while on the other, ensuring both developers and customers have access to a broad ecosystem of applications and content.

It’s a tough task and there are bound to be more bumps along the way. For the smartphone sector to continue to innovate and thrive however, everyone needs to be kept ‘appy.

@paulwooding1973

 

Here’s a thought.  If it is not social it’s no longer entertainment.  The explosion of social media platforms and particularly twitter  in the last six months has created a new phenomena ‘social entertainment’.  Social entertainment has always existed of course.  It was banter, chat or gossip but the new thing is that this used to be a private game shared in the pub, cafeteria or school gate.  The difference now is that this private fun has become a public currency thanks to twitter and this is fundamentally different.  It creates pressures for political correctness, opportunities for inappropriate digital torrets syndrome (one of my favourite observations is why do people periodically lose inhibitions on twitter?).  But the biggest change is that in this world of social entertainment we have given up privacy rights.  The fun comes from sharing what used to be a private a joke between friends in a public way and at this point it is no longer private.  This means the rules of privacy have fundamentally changed along with the rules of what makes entertainment.

So what are the parameters of this social entertainment world. 

Private thought becomes part of a Community:   Firstly, private thoughts now have both a media content and entertainment and this works in a largely self segmenting audience.  Essentially others choose to be entertained by your inner thoughts (some people are better at this than others …). Being a celebrity helps but it’s not essential to being an idea starter.  The down side of this community is that many communities interlock and share private thoughts with other very different communities – this is when privacy and the challenge of political correctness rears it’s head.  Your friends friend may find you funny but somewhere a friend of a friend’s friend won’t.

Interaction distributes ownership:  When using social entertainment your private thoughts immediately interact with other thoughts and can become a digital conversation or even a trend.  Obviously this always happen via word of mouth the bar room gag but now it’s written down and this is different.  You may start and idea or movement but it’s ownership passes to those in the social conversation.  This ownership can be shared with someone you have never even met and may only know through 3 words on a twitter biog. Just look at how #nickcleggsfault gained traction.

Co-creation becomes an experience:  This co-creation naturally becomes a very exciting experience in it’s own right.  You can become famous for 15 retweets or even 15,000 views and often this is a collaboration with a follower or friend.  This is a good feeling and explains the growing popularity of this ‘social entertainment’.  Chidren are growing up with this experience from club Penguin onwards.  Arguably trending topics are also huge co-created project.  Admittedly these happen with no clear project manager or objective.  But the lure of the hashtag is surely being recognised for participating in a broader conversation?

Your thoughts roll into traditional media:  Traditional media are increasingly feeding off these private thoughts and ideas particularly those with a online publications an idea one day in London can be reported in wired in italy two days later (interestingly it often takes a few days) or Japan the next morning.  Your words appearing in Italian and Japanese.  Again what used to protected by privacy is now a part of the complex law and etiquette of journalistic privledge and public accountability or ptontial litigation.

You’ve become part of a culture: At it’s most fundamental you have become part of a culture.  Habbo Hotel [an Edelman Technology client] is a great example of this.  Teenagers have developed a fluid culture within the virtual world – with its own boundaries, tribes and colloquialisms.  

This here is an interesting campaign and advertising medium being rolled out by an advertising agency in Amsterdam. RAINCAMPAIGN® is an environmentally friendly technique that consists of “pavement adverts” – ultimately the images appear on the pavement only when it rains, disappearing as they dry. A percentage of profits from each project will be donated to an international rainforest project.

In my humble opinion, it’s pretty cool that even in the somewhat money-grubbing world of media; something environmentally friendly and charitable is still possible without being boringly unoriginal. A couple of brands have already used the technique for their own campaigns as well – including Continental Tires

And yes, I have considered that people are more likely to hurry along in the rain rather than mosey about checking out the pavement but sometimes it’s the concept that counts.

@GabiGarb

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