A few months ago, during a podcast recording, Jem Fawcus of the innovative Firefish was asked about his attitude to risk. I naturally assumed that as an entrepreneur he would be pro risk-taking. After all, he and business partner Allison had taken big personal risks to establish their agency. But Jem surprised me with his anti-risk stance: “agencies are there to minimise client risk”.

It took me a few moments to realise he was right. But, as someone who’s an advocate of experimenting to drive innovation, which invariably involves risk, I believe that I was also right, and that risk-taking and the tolerance of mistakes should be an essential characteristic of the industry.

In the words of Sir Ken Robinson, the inspirational educator and innovator, “If you’re not prepared to be wrong, you’ll never come up with anything original.”

Managing risk
I am essentially calling for researchers to be given a license to innovate and be creative. In effect, for management in research organisations, as well as in client marketing, product and MR teams, to explicitly and sincerely tolerate risk and mistakes. Because until we find the perfect approach to addressing client issues, we should always be looking to improve through trial and error.

But that’s not to advocate risk-taking at all costs. That would be silly. Even the most ardent supporters of innovation would agree to sensible limits. In fact, when I recently emailed a prolific industry innovator a story about how someone at Google managed to lose the company $1m by mistake, something that one of the founders brushed off as a cost of their experimentation culture, my contact remarked that “luckily for them $1m is neither here nor there”.

It comes down to culture
There’s no fast track to creating a culture of innovation. It takes time. It takes persistence. It takes top level support.

“I believe a creative culture comes from combining skills that don’t normally come together and making sure that people don’t become too habitual in their working practices,” Derek Leddie, The Leading Edge

In time, though, the benefits do flow through:

“We were looking for a new way of measuring the equity of our brands. Repères took the risk of researching and developing a completely new approach. They asked for minimal development investment. Today we have undertaken 15 different projects with them and they have a licensed product that is selling well to other clients,” Mark Whiting, Moët Hennessy.

The client factor
Some naysayers among you may point to the power of clients to kill innovation. While that is true, the good news is that an increasing number of brands are picking up on the innovation vibe, including P&G, Tesco, Apple and Google, to name but a very few. Brands that not only like their agencies to exhibit similar traits but in many cases expect them to.

And the interesting thing is that as online brands proliferate and grow in influence and prominence, so does a culture of experimentation as symbolised by the term ‘beta’ (a label designed to warn users that websites/applications are not in final form and may contain errors).

As Mark Jones, managing director of travel and entertainment brand lastminute.com explains:

“One of the things that the lastminute.com brand represents is innovation. We don’t claim that everything put out there works first time…we’re not afraid of innovating and even getting it wrong amongst certainly a closed user group.”

Finance brand egg.com shares a similar culture, as profiled at last year’s Congress.

The pay-off
But can risk-taking and innovation lead to financial prosperity? Well, let’s take a look at an extreme example, Google, only eight years old, but already making around $6bn in annual profits. All driven by a culture built on systemic innovation. A culture that attracts and retains the best engineers, by giving staff 20% time to design and develop their own initiatives (most of their new products originate from this source), and ensuring that ideas are only ever internally shot down on the basis of robust, quantitative, objective data. A culture that embraces risk and mistakes, and sees them as the inconsequential cost of progress, a bit like a child trying to walk despite continually falling down.

But, you say, that’s hardly a relevant reference for the research community. Well, that’s the kicker. Google and the MR industry share the same mission: both are designed to quickly get people to the information they need. The only difference is, MR currently adds meaning.

Remember ‘The Cluetrain Manifesto’? It’s the book co-authored by pre-eminent marketing practitioners including Harvard University’s Doc Searls. It coined the phrase “markets are conversations”.

Well, Mr. Searls is at it again. Not satisfied with inspiring consumers to use the web to redress the balance between marketers and consumers (e.g. via blogs), he wants to move things up a gear. And web strategist Adriana Lukas is along for the ride.

VRM…what?
VRM stands for Vendor Relationship Management. Put simply it’s the opposite of CRM.

Put less simply, says Lukas, the intention is “to equip individuals and vendors with tools to enable mutually beneficial transactions and to readdress the balance between demand and supply. It doesn’t get your pulse racing!”

The impetus for change, she adds, comes from an intuitive sense of what people prefer.

Consider a street market. Commerce here comprises three elements: conversations, relationships and transactions.

By contrast, online commerce tends to be just transactions, without meaningful conversations or relationships. “Online advertising isn’t really about conversations [it’s one-way shouting], and CRM isn’t really a relationship [it’s about hoarding and potentially mis-using data],” says Lukas.

VRM is therefore predicated on the notion that empowering individuals to take charge of their data (i.e. giving them the ability to decide who to share it with, when and how) will foster better relationships between consumers and brands, and ultimately lead to healthier markets.

A New Era
The inspiration for ‘Cluetrain…’ apparently came from Searls et al ruminating about the different dynamics and rules in the online world, and the inability of brands to adapt. A well-known example is where Dell gave a high profile blogger poor service. Dell’s reluctance to ‘join the conversation’ when the blogger posted about the experience resulted in a major backlash which, thankfully, Dell seems to have learned a painful lesson from.

Perhaps the tide is turning in favour of VRM given the growing support for somewhat related initiatives such as OpenID (single sign-on) and data portability. The latter is designed to ensure vendors do not lock-in consumer data to unfairly prevent or discourage switching. When Searls speaks to marketers he likens data lock-in to people lock-in (slavery), clearly hoping to elicit an emotional reaction! “We have to think about whether lock-in is necessary to managing relationships,” says Searls.

New types of data are also moving online, and vendors may be wise to consider VRM principles. Take Google, Microsoft and their recently launched health initiatives. These are ultimately aimed at holding medical and health records in one place – very scary. Both stress the security of their systems and the benefits for both health organisations and individuals. But these may not go far enough for VRM proponents.

Own Terms
These are early days for the VRM movement. Although Searls is sponsored by his employer, he is open-sourcing development to attract the best and most passionate minds to the cause.

Spearheading progress from her London base is Lukas, member of the Project VRM steering committee: “VRM is a culmination of what I see the web and the social web doing to individual empowerment, taking it further from conversations to transactions.”

Through regular meetings at her VRM Hub, Lukas is developing a web-based protoype to put a practical face to the concept. But further down the road, is there is a risk of VRM stalling if marketers and consumers fail to buy into the concept?

Lukas promotes VRM as win-win. She expects brands to be able to transact far more with those consumers who take charge of their own data. The example she cites is based on her love of wine. If VRM enables her to create a ‘feed’ of information reflecting her wine likes (say drawn from her blog and various websites), and then offer this to a series of wine merchants, she would in effect be providing vendors with both the ability and permission to sell her relevant items. If anyone misbehaves (by spamming, etc.), she could remove them from the feed. The rest would benefit from seeing continually updated needs.

But all this seems a lot of work for the average consumer. Lukas agrees and says that the answer is, once the infrastructure is built, to encourage developers to build compelling VRM applications that individuals want to use.

Breaking news: as far as advertising goes, the internet’s not quite the bad boy it may appear to be.

As Richard Knubben, policy & compliance manager at EASA, the European Advertising Standards Alliance, puts it: “On the whole, internet and new media-related complaints have made up a relatively small percentage of total advertising complaints over the last couple of years, but are slowly rising.”

And according to Christopher Graham, director general of UK advertising regulator the ASA, that’s because people see traditional media including TV as ‘push’ and so uncontrollable by the recipient, whereas new media is more ‘pull’. He adds: “…people have an expectation about the internet. If they encounter some nastiness they just go away… in context, they would probably expect some advertising to be, frankly, raunchier or sexier than on TV.” A conclusion supported by a 2005 research study commissioned by the ASA.

If it ain’t broke…
But while complaint levels are relatively low, complaints do exist. And according to Knubben, half of Europe-wide complaints about advertising on the internet relate to spam and the remainder to everything else internet/new media.

Spam, by definition, is tricky for authorities to control given its pernicious nature.

But it is parts of the ‘everything else’ category that self-regulatory organisations (SROs) are looking to manage. Most complaints here, according to Graham and Knubben, relate to misleading consumers, e.g. airlines not displaying fully inclusive prices.

And where such infractions are committed in conventional forms of paid-for online advertising (banner ads., search listings, etc.), Knubben believes that eCommerce-related cases can be resolved across Europe through the UCP (unfair commercial practices) directive which is in the process of being implemented.

However, one of the issues being debated is whether or not to include corporate websites. In the UK, Graham says, “We’re in the embarrassing position that our third most complained about non-broadcast medium has 90% of complaints that are out of remit [because they relate to corporate websites]…if this continues, it will erode the relationship we have with consumers because they regard it as advertising.”

The fact that corporate websites are not regulated has offered companies a back door. For example, while being banned from airing an ad. on conventional media can impact brand reputation, the free publicity may drive traffic to the company’s website where the ad. can be shown in full, uncensored. Moreover, the reach and low cost of websites like YouTube only makes online even more attractive.

Graham believes that corporate websites being outside a regulatory framework “is a threat to effective enforcement.” But regulating corporate websites could prove controversial. As well as going against the spirit of the internet, opponents would cite freedom of speech arguments over editorial content. Graham is quick to recognise the sensitivities here: “…is it clever for advertising self regulators to say ‘no we don’t go there’ if that’s where the action is in respect of claims or material on those websites that’s clearly advertising…we don’t want to be making judgements on editorial claims in the website.”

Maintaining public trust
It’s not just online advertising’s rise in importance that has driven these deliberations. Pressure from regulators over HFSS (high fat, sugar and salt) advertising has also been a factor.

So the EASA has created a new media initiative to spearhead Europe’s advertising self-regulation efforts. The EC Directorate General for Health and Consumer Protection, DG Sanco’s director general Robert Madelin has organised an advertising roundtable with EASA, the EC and interested NGOs. And in a recent meeting, according to Graham, Madelin “challenged [the SROs] to see what they were doing about new media”.

In the case of the UK, the Advertising Association, responsible for furthering the interests of all advertising stakeholders, has created a working group including a diverse set of experts and specialists to look into future-proofing new media.

Mainak Mazumdar, VP of Measurement Services at Nielsen//NetRatings, probably sums it up best: every time, he notes, someone steps on a Google property, Google gets a bit more insight into their behaviour and, as a result, a bit smarter.

And as attention continues to shift online, and Google solidifies its position as a dominant destination, it is clearly becoming more adept at understanding not only consumer behaviour but also intention – i.e., when you enter a search query, you’re telling Google what you want to see, read, buy, do etc. And Google takes advantage of that to give you ever more relevant results.

So could this understanding one day trounce what MR has to offer?

Google vs. MR
The short answer is probably not. Note the use of the qualifier ‘probably’.

That’s because having canvassed a variety of folks in the sector, none believes Google to be a direct threat to MR.

For example, Gian Fulgoni, chairman and co-founder of online measurement provider comScore, says that Google is more client than competitor, because that’s the only way it can get that all-important demographic profile of its audience.

Plus, Max Kalehoff, VP of marketing for Nielsen BuzzMetrics and a widely respected marketing blogger, believes ultimately that the biggest brake on any Google ambition to know everything about everyone will be a natural distrust of large institutions: “While I admire and trust the many Google people I’ve met over the years, I don’t fully trust the big institution. In fact, there are very few big institutions I trust, though Google does rank pretty high… you just can’t be a true infomediary without unequivocal trust.”

And that’s something that does not work against MR firms because they are many, many times smaller than Google. In fact, 2007 was yet another milestone for Google’s growth. Having floated on the stock exchange in 2004 at $85, it is now well over $600 with a market value of over $200billion. That’s bigger than the next four largest media companies combined. And now temptingly close to it’s arch nemesis, Microsoft.

In Google We’d Like To Trust
To its credit, Google realised the importance of trust early on. And it’s something CEO Dr. Eric Schmidt mentions on a regular basis at events and during Q&A sessions. Along with the ‘don’t be evil’ moniker it proudly displays as it’s informal motto, Google seems to have worked hard to maintain user trust.

When you look under the hood, you soon realise that Google’s ethical and ‘be good’ stance is more than skin deep. But as with any profit-making organisation, there are times when the economic motive conflicts with the desire to do right by the user and society.

Take the controversy over its email product, Gmail. A product that automatically reads the content of user messages to display relevant advertising. Privacy groups had a field day when it launched. Google’s attempts at reassurance were not well received (it emphasised that computers, and not humans, read the emails). The Gmail product lives on and it’s interesting how its popularity is undiminished by the privacy issue: it’s almost as if users are prepared to trade some privacy for utility.

Increasing Footprint
The reality is that Google’s online presence and influence shows no sign of abating. When Mazumdar talks about people stepping onto Google property, many still largely think of Google the search engine. But Google’s portfolio of services has grown rapidly and it’s becoming very difficult to avoid the plethora of highly regarded and largely free services, many the result of acquisitions over the last 12-18 months.

Services such as the number one video platform YouTube; the number one feed syndication platform, Feedburner; Microsoft Office competitor Google Docs (online word processing, spreadsheet, presentation) – all totally free. And the biggest acquisition to date, display advertising provider DoubleClick, is currently awaiting regulatory approval as a result of Google’s perceived dominance of the online advertising market.

And then there’s Google foray into arguably the biggest online phenomenon of the time, social networks. But Google’s Orkut is not perceived as big a success as its other products since it’s only really popular in Brazil. And it’s recent attempt to tie up with the wunderkind Facebook was snubbed.