One of the most interesting marketing developments of this past decade has been watching Chris Anderson’s 2004 concept of the Long Tail play out across retail– specifically companies inviting fans to customize products.

• Recently the Wall Street Journal ran a story about Keds shoe company inviting customers to design their own shoes. Champion has also gotten into the act, but in a more limited way, by running design contests, then producing the winning design, while Nike has been in the customization business for nearly 10 years with NikeID.
• Next year Coca Cola will see a more widespread distribution of its Freestyle soda fountain that invites consumers to mix their own flavors, ultimately offering over a hundred different choices.
• Sweet-toothed consumers can even customize their own M&Ms.
• Here in the Pacific Northwest, the hipsters at Jones soda just launched an iPhone app inviting users to generate a photo for their very own customized Jones six-pack.

Customization of mass marketed goods isn’t new for brands; some would say it started with Burger King in the 70s:

Although this funky version is my favorite:

Four decades later the trend has continued with online businesses like Cafe Press, Zazzle and Threadless letting customers design and even market customized tee shirts, mugs, mouse pads and other tchotchkes. But it’s not just packaged goods makers getting into the game. Global brand Toyota recognizes that customization begets brand loyalty by offering customers the ability to customize a Scion; Ford offered tricked-out cars with the roll out of its new Fiesta at the 2009 Auto Show.

What does retail customization mean for marketing?

Many a brand manager wouldn’t dare undertake a marketing initiative that they couldn’t tie directly back to ROI, but where retail customization is concerned, they’d be missing the point. Mattel fell victim to this thinking when they tried and later sunsetted a build your own Barbie website . One guess about this site’s demise was that people spent a lot of time designing the doll, but it didn’t translate to sales. It probably didn’t help that the Friend of Barbie was only available to fans over 18. But in the end this was a missed opportunity for Mattel. After all, are sales really the point of customization?

Customization retail is really an engagement and customer service tool. It’s about brand loyalty and brand development; it should not necessarily be about sales. (Although, as Amazon could tell you, if they shared sales data, the long tail of retail becomes quite meaningful when as much revenue is derived from obscure single sales as all the best seller titles combined.)

Brands need to see customization for what it is: one more example of a marketing dialogue with customers. Will an individual’s sneaker design drive sales for a global sneaker brand like Keds? Unlikely, but customers taking ownership of a product at that level develops fierce loyalty, creates buzz and bolsters the overall impression of the brand—all of which typically lead to an uptick in sales—eventually. But what if it doesn’t? Is that a bad thing?

If you build it will sales come?

Engagement, not sales, should be the real metric of retail customization. A great case study for brand engagement in the last few years comes from Office Max. Elf Yourself, one of the most popular online viral marketing tactics ever developed, has translated to a 46% recall for the Office Max brand. By its second year online, people had spent nearly 2600 years (combined time) on the site as reported in James Othmer’s book, Adland. Any brand would be giddy over that level of engagement.

Office Max has shown that generating buzz and having customers develop a relationship with and take ownership of your brand is marketing gold. Sales were never the point.

Lose control of your brand.

As anyone familiar with the story of New Coke knows, loyal fans can bring a giant brand to a halt. When one of the most iconic brands in the world messed with its formula, Coke fans revolted. For a more recent example, watch social media circles every time Facebook announces an interface change that users don’t agree with. It’s practically chaos.

But revolt and chaos are not necessarily to be feared in brand marketing. Handled well, a company’s reaction to unpopular decisions, demonstrates a level of care that can foster more brand loyalty than any broadcast marketing campaign. Brands can’t buy loyalty, it has to be earned. As with any other relationship it’s built on trust, respect, and an ongoing dialogue.

The word customer is derived from custom, meaning “habit;” a customer was someone who frequented a particular shop, made it a habit to purchase goods there rather than from its competitors and with whom the shopkeeper maintained a relationship to keep his or her “custom” or, expected purchases in the future.

As part of your 2010 marketing plan, consider retail customization to drive brand engagement with your customers. It may not drive sales but if it helps your customers make your brand a habit and develops a relationship with an engaged clientele, what’s the downside?

A quick trip to Trader Joe’s to return an item got me wondering, how could more brands be like Trader Joe’s?  (And what would shopping be like if they were?)  Let’s look at what makes the Trader Joe’s experience so different from your everyday grocery store:

1. TRUST:   They exchanged my item with no questions asked. A company who believes and trusts their customers says a lot without them having to prove anything else.

2.  EASE:  An added benefit of the above scenario was TJ’s willingness to eliminate processes and add a little ease to a situation like a return.  No filling out forms or recording of zip codes.  Just a simple “tell the checker on your way through the line.”  Wow.  Easy.

3. INFORMED/HELPFUL:

Of course on my second trip to TJ’s within hours of one another I decided there were a few other items I should pick up while there.  The stockers not only had a handle on a myriad of products but knew exactly where they were located and what their status was.  (They were sold out, darn it.)

4.  ENGAGING:

I very rarely take the time to read my local grocery circular that comes in the mail or with the newspaper. For some strange reason (well written, fun copy) I read the Trader Joe’s “Fearless Flyer” ad every time it comes to the house.  It renews my faith in the fact that there still are people who appreciate wordsmithing and compelling copywriting.   It doesn’t hurt that, by extension, I feel my copywriter wife’s services will continue to be needed as long as there are companies out there like Trader Joe’s who place a value on the written word.

5.  FUN:  The Yeti

If you’ve never been to a TJ’s they have a stuffed Yeti that they hide somewhere in the store and the kid who finds it gets a prize.  One of the first times I went to TJ’s I missed the age qualifier for the contest and, much to the embarrassment of my wife, practically skipped to the front desk to tell them I had spotted the Yeti.  Dejected when they told me it was a a contest for kids, they directed me to the back of the store for a special prize anyway.  (The coffee sample cart.) I was pretty happy with that solution.

6.  FRIENDLY:  Someone once burst my bubble and told me the checkers at TJ’s are super friendly because it’s required.  Frankly, I don’t care.  Why?  Because, even if it is required, everyone seems to have bought into the idea that a good conversation creates a great environment for the employees and the customers.  Which leads me to my next point.

7.  PACE:   The aforementioned oversations add to the overall experience of shopping at TJ.  I never feel like I’m being ushered through as quickly as possible while the checker works against some unseen productivity quota being looked at by some unseen managerial staffer who really just wants to sell more stuff to more people quicker with less chattiness.  I’ve been in those stores. You know who you are–now, stop it!

8.  SELECTION:  It probably works this way in all grocery businesses, but TJ’s product replenishment loop (based on sales and feedback) is an interesting model that they’ve transparently made work for them.  Products have been tested, tried and are recommended by staff.  It’s like amazon.com reviews for groceries.  There are always new surprises cropping up in the store. Swiss Almond Crunch cookies?  Hmm, never seen these before.

9.  CREATIVE:

Hand drawn signs.  Why take the time and effort to hire a full time artist to draw all their signs?  A commitment to a brand ideal?  A quirk that just stuck?  I have no idea, but like their commitment to compelling copy of the Fearless Flyer mentioned above, it’s a nice touch and something about the TJ’s experience I enjoy.

10:  ENJOYING SALES:  All of the above really serves to do one thing:  Sell products.  They do it unashamedly with an ongoing sampling corner that probably pumps out as much coffee as your local Starbucks as well as nibbles of one type or another.  But Trader Joe’s does it with style.    They make it so that everyone enjoys the process.  And in the end, no one minds being sold to if it’s engaging, fun and informative.

What can your brand do in 2010 to employ some of Trader Joe’s tactics to your marketing?

Alan Brown is one of the founders of DNA-Seattle.  Just starting its second decade of business, North-Westerners will know them by their recent campaign for PEMCO Insurance.  The spots are as good as anything I’ve seen nationally in their category (or out of category, for that matter).  The campaign is smart, uniquely relevant and successful, judging by the commitment CMO, Rod Brooks has made to the work.

DNA-Seattle’s focus, according to Alan is to “help our clients achieve meaningful results in the short-term while building their long-term brand asset.”  They’re the 6th largest agency in Seattle (by billings) and employ a staff of 40 to produce work for clients ranging from BECU, University of Washington, American Express Publishing, Avon Foundation, MultiCare and, of course, PEMCO Insurance.

I’m proud to profile them in this series!

1.  What was the aha moment when you realized “our company needs to be doing things differently than we have been”?
The industry has been changing fast over the past 8-10 years.  Technology, media choices and the shift of power to consumers through social media are driving a lot of it today.  But a big moment for me was last year when my mom (who is 75 and lives in Ohio) friended me on Facebook.  The “aha” was seismic.

2.  What books are on your nightstand or great blogs on your Google reader?
I’m a political and news junkie – so I read Andrew Sullivan’s blog, the Huffington Post, FiveThirtyEight and TalkingPointsMemo.  I also check out agency news at Agency Spy.

3.  Give me an example of marketing you think is brilliant and why.
The work that Crispin is doing for Burger King has been pretty phenomenal.  Their latest promotion (Sponge Bob Square Pants) is getting quite the buzz (not all of it good) – but they’ve really found a way to make BK relevant and talk-worthy – from Subservient Chicken to the BK King – they’re using creativity, social media, promotions, event and non-traditional media in interesting ways that are really having an impact on their business.  Right now, BK has committed to increasing their media spending to get a 20-25% lift in their brand impressions.  I don’t know of anyone else who’s doing that!

4.  We’ve all read that the pitch / RFP process is broken.  Many agencies aren’t even interested in competing in pitches.  Do you see an alternative to this process?
Well, first let me say that we’re still interesting in pitching business, and do respond to RFPs that are a good fit for our agency.  However, the point is right on.  RFPs are expensive, and in many cases create an environment that isn’t best suited to finding the right agency/client match.  We try to avoid them by building our reputation with prospective clients and hopefully by getting invited to meet (or even handle a project) without a review.

5.  What does the agency of the future look like?

Right now, we’re seeing a thinning of the herd.  Larger agencies are being gutted as a result of the economy and their clients cutting back.  But I also think that it’s time for agencies to re-think what they’re doing and what their value proposition is.  I think the successful agency of the future will be smaller, more nimble, creative and versatile.  They’ll work in traditional and new media almost seamlessly – guided by a keen ear from the marketplace.

6.  What do marketers need that agencies are not giving them?
An outside perspective, insight and leadership.

7.  Who do you admire and why?
It might sound trite, but I can’t think of anyone I admire more than Barack Obama.  His campaign spoke to me on a level that none other ever has.  I believe in his message of hope, and find great inspiration in his leadership.  I also admire how his campaign utilized social media and a grassroots movement to beat all odds.  He has also reached my 5 year old, bi-racial son – he looks up to President Obama as a role model – and I hope that he has experiences and opportunities that are different because of the path President Obama has blazed.

Third in the Ad Industry Innovators series is Alain Thys from Futurelab in Brussels.  Very smart marketers in Brussels–and the beer’s not bad either.  Futurelab also has offices in Moscow, Munich, Hamburg, Shanghai, Athens, and Kiev.  

I first heard of Futurelab by stumbling on their blog.  Then through Google searches I kept finding these wonderfully insightful slideshare presentations and PDFs and quickly realized that many were coming from Alain’s company.

In Alain’s words

Futurelab is a marketing strategy consultancy focused on profit, customer-centricity and innovation.  We help marketers get a higher ROI, CEO’s to get their business focused on the customer and innovators to build innovations that make a difference in the market.

We also have a – not so secret  - agenda to make our contribution to changing the marketing landscape.  We believe that the mass-marketing era is coming to an end.  The symptoms of this can be found everywhere.  Billions are wasted. Marketers have acquired a bad reputation as “frivolous money spenders”.  Consumers are tuning out.   As a result, we believe that – as a collective – business needs to “re-invent marketing” so it can actually make the contribution it should to both the customer and the bottom line.”

Pretty smart, huh?  Keep reading, it gets better.

1.   What was the aha moment when you realized “our company needs to be doing things differently than we have been”?

When my business partner (Stefan Kolle) and I realized that the message we were spreading on a new way of marketing was actually being heard and repeated by others.  We decided we had to grow from a two-man band to a movement hell-bent on encouraging a conversation on a new type of marketing.  And that this could be profitable for all concerned.

2.   What books are on your nightstand or great blogs on your Google reader? 

Right now I’m reading Character & Viewpoint by Orson Scott Card.  On the blog front, all the contributors to the Futurelab blog, but I also have a fondness for PresentationZen.  And of course Dilbert.

3.   Give me an example of marketing you think is brilliant and why.

The bakery in my street.  They only go for unique products, know every one of their customers, actually create products on customer demand, participate in every village event with an original little detail and in the 2 years they’ve been open have taken the market (like in people standing in line outside to pay a premium of 20% over the bakery 200 meters down the street). 

 I think this is brilliant because in contrast to many large organisations these people “get” what great marketing is about: truly understanding your customers, making a promise that is relevant to them and then overdelivering against this time and time again. 

4.   We’ve all read that the pitch / RFP process is broken.  Many agencies aren’t even interested in competing in pitches.  Do you see an alternative to this process?

I don’t believe that the RFP process is broken at all.  It’s just that people needs to re-adjust their expectations of what it can deliver.  In the mass-communication culture, big budgets went to big agencies which spent them at big media.  In those days an RFP that said “run my communications” made sense. 

But today, only very few agencies are capable of delivering against 100% of a brand’s needs.  If we would compare building a brand to building a house, each agency is like a “contractor” who specializes in one part of communication or the other.  So just like you wouldn’t ask your plumber to give an opinion about the windows in your roof, you wouldn’t ask a traditional advertising agency to have an opinion about the integral structure of your brand.   But I regularly see that some brands still expect this to happen (or agencies presuming they can do this).   That is where I think the disappointment comes from.

But just like when building a house this doesn’t mean the RFP process goes away.  It just means that it becomes more focused.  In short, brands need to be much more specific in their briefings to agencies and how they fit an overall picture (or employ “architects” like us to do it for them), while agencies need to let go of the illusion that the advertisements they come up with will “move the world” for the brand that commissions them.   

5.   What does the agency of the future look like?

I think the industry will evolve to resemble the movie or construction industry.

-       A large number of micro-specialists.  Forget about the PR agency or the digital agency.  Think about the Agency specialized in leveraging short message social media for spreading positive customer experiences in the banking sector.   Just like the guy who knows how to set up a particular type of solar panel which is government subsidized, they will be contracted on a project basis.  They can be creative, they can be production oriented, it all depends

-       A medium number of project management shops.  These probably best resemble the agency of today, be it without the in-house creative and possibly even production deparments.  They take the briefing of a client and ensure that the variety of micro-specialist implement this to excellence levels.  This may include creative, but mainly in a sourcing capacity (the role of art director in these environments is to ensure that the creative that is sourced meets the client need, not “come up with new stuff” inhouse).   Just like movie houses these project management shops may have privileged relationships with micro-specialists & creatives to provide them with a competitive edge.

-       A small number of strategy shops:  These will be the “architects” of the trade.  They will be a lot smaller than the project management shops and assist brands to formulate their strategy in a way that project management shops can implement it.   They are much more “numbers” based than most agencies of today and in style probably are more comparable to the McKinsey’s and the Bain’s than the McCann’s or Ogilvy’s.

6.   What do marketers need that agencies are not giving them?

The number one thing that marketers are looking for are solutions to business and marketing issues (grow sales, protect margin, ensure customer loyalty, …) while they typically receive “campaigns”.   For other examples I happily refer to our report Bridging the Brand Agency Divide.

7.   Who do you admire and why?

Muhammad Yunus.  For not only coming up with a theoretical concept to fix poverty in a structural way, but also pushing forward to making it happen.  In short, for making a difference.

I first heard about Traction while researching interactive shops in California.  Hearing them recommended by their peers was intriguing but, I became a fan as I dug further into their work, and even more so as more we talked about their agency’s higher purpose.

Traction was recently named the #1 interactive agency in the United States by BtoB Magazine, 2009.  They call themselves a creative agency with a digital core. 

Founded in 2001, Traction is full-service and develops campaigns from strategy through every consumer touch point, but they view everything they do as interactive.  From integrated brand and social experiences to engineering strategically driven user experiences, Traction moves audiences from awareness through conversion.

Their client base is diverse ranging from Apple and Adobe to CamelBak, Virgin Mobile and Walmart.com, just to name a few.

Their twitter stream is always interesting or check out their web at www.tractionco.com or Adam Kleinberg’s blog

1.      What was the aha moment when you realized “our company needs to be doing things differently than we have been”?

I have little aha moments every day. We’re constantly being reflective about our processes and approaches to make them a little bit better.

But, if there was a big aha moment along the way, it was when we started the agency.

My partners and I had worked together at big agencies like DDB and McCann and saw that there was a real mess about how integration worked. One group would do a print ad and then the interactive guys would be told to “make your stuff look like that.” We just thought that was dumb.

When we started Traction, we were integrated from Day One. We have one team working on all our business. We expect people to be able to take a concept from an idea to execution across whatever tactics they imagine.

And you know what?  They can.

2.      What books are on your nightstand or great blogs on your Google reader?

I read voraciously. I spend a lot of time on the blogs on iMediaConnection.com and blog on that site myself. There are a lot of smart industry people using that as a platform for thought leadership—and a lot to learn.

I’m also a huge fan of Susan Bratton’s Dishymix podcast. And I read my trades every week—AdWeek, Ad Age, BtoB, Creativity, Comm Arts.

My nightstand actually has way too many books on it. Reading Death by Black Hole right now, but have a bunch of business books on deck (Good to Great, Wired to Care: How companies prosper when they create widespread empathy, Grown Up Digital and A Sense of Urgency). I also have Eckhart Tolle’s Awakening to Your Life’s Purpose. And Steven King’s Talisman. And Vonnegut’s Slaughterhouse Five. Really.

3.      Give me an example of marketing you think is brilliant and why.

Because of the ubiquity of technology, consumers can now interact with brands on their own terms. Ideas that provide relevant value to customers and get them to invite brands into their lives are what I consider brilliant marketing.

Zippo’s iPhone app is a great example. Three million downloads. Untold thousands of kids holding up their mobiles at concerts across the globe, promoting a brand because it provides them was a chance to be part of something greater. That’s brilliance.

4.      We’ve all read that the pitch / RFP process is broken.  Many agencies aren’t even interested in competing in pitches.  Do you see an alternative to this process?

Sure. We have ten active clients right now. I think we only went through a pitch “process” for half of them. I just emailed a potential client a half hour ago to tell them we wouldn’t do spec work.

It really depends what kind of work you want to do. We walked into a capabilities presentation at a major consumer software company a few weeks ago, had a great meeting and got a call from their procurement department in the midst of celebratory margaritas 25 minutes later. 

We ordered another round.

5.      What does the agency of the future look like?

Interactive, obviously.

But more so, I think agencies are going to need to move up the value chain and become true strategic partners for their clients.

If agencies make their money producing banner resizes, pretty soon clients are going to ask, “Why don’t I just hire someone to do that?” On the other end of the spectrum, more and more publishers and providing brands with unique content integration opportunities and doing creative on their own.

What we can offer that is unique and invaluable are the abilities to uncover insights, to translate them into strategically relevant creative expressions of a brand, and to uncover opportunities to get those messages in front of the right audiences at the right time with the right vehicle. That will mean giving up some creative control at times, but it will also mean greater value will be placed on the strategic process and brand innovation that the agency of the future will bring.

6.      What do marketers need that agencies are not giving them?

There’s a huge focus on ROI today and there’s good reason for that. But the result has been a slew of agencies that focus solely on performance marketing and are unwilling to take a risk. They’re afraid to fail.

Great ideas always feel like risks. They always make you nervous. Because great ideas challenge conventional notions. That’s what makes them great.

What marketers need and are not getting from agencies are efforts that bridge that gap. That offer breakthrough thinking married with best practices and a measured ROI. That’s the value we strive to bring our clients at Traction. I think we do a pretty good job.

7.      Whom do you admire and why?

Is it trite to say Barack Obama? I don’t care. He’s my hero. He’s truly a visionary on so many levels. He dares to inspire us. He thinks and he leads. Total man crush on the prez.