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?

I think I first heard Charlene Li say it at last year’s SXSWi in Austin:  Web search will continue to move toward real time. Today, Google made it a reality with the announcement of Real Time Search.

Just one of the many tectonic shifts continuing to happen in communications.  Everything is integrated and the  Google fellows give more detail on their blog than I can ever hope to explain here.

Real time search:  it’s exciting.  It’s cool.  It’s amazing.  But I do have 2 gnawing questions:

This is an excerpt from a guest post on B2B Bloggers.com.  To read entire post, click here.

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.

A blog post I read today about the fate of agencies in a digital world sent me scurrying back to my bookmark of the Cluetrain Manifesto I had saved years ago.  

This slideshare I also found will pretty much give you the gist; because if there’s one critcism I’ve heard about Cluetrain, it’s that they could have made their points more succinctly.  This slideshare does that brilliantly.

It reminded me what a forward-looking document the Cluetrain was.  Interesting how it means even more now than when it first came out.  Could it be that so much of it has come true?

What do you think?

Finally this weekend, I had the time to re-read my notes from SXSW and what a ton of insightful stuff.

Charlene Li (who’s one of the most brilliant people I’ve ever had the privilege of hearing speak) said:

Organizational stuctures and social media maps do not look alike.  Silos are being blown apart.  We’ve now got to place the customer inside the organizational chart; ideally at the top and center.”

Brilliant.

And if you’d like to see Charlene’s entire presentation it’s here: