Monday, December 6, 2010

Death Spiral of Commoditization

For a professional services firm, a death spiral characterized by dwindling profits and ultimate irrelevance begins once a perception takes hold in the customer community that your offering has become a commodity.

Consider the market for the provision of rather mundane technical services, such as help desk support and software upgrades.  There is a reason that business has migrated to countries in Southeast Asia and Eastern Europe as part of the global outsourcing trend. 

Competitive advantage is achieved primarily through lower cost and in cities like Mumbai, Bangalore and Prague qualified human resources come cheap.

Prior to transitioning our focus to social media marketing four years ago, Strategic Communications Group (Strategic) derived most of its revenue from public relations services.  I became desperate in my pursuit of a viable market differentiation as the practice of effective public relations is people driven.  The "my team is better than their team" argument is tough to sustain.  

Other PR shops made their play with claims of a unique and proprietary methodology.  Yet, it's also a challenge to credibly establish a branded process.

I ultimately landed on a business development offering to compliment our PR services that we referred to as Strategic's Network of Relationships.  It's impact was marginal at best. 

Like public relations, creative design and advertising services have begun the slip to commodity.  I've written about my experience with crowdsourcing and tagged it as a tenable option  for the production of marketing materials, logos, banner ads, etc.

Most recently, I stumbled across an online community of advertising professionals called AdRogues who are actively selling (or should I write "re-selling") creative concepts, designs and layouts produced for other clients and prospects.

Interested in developing a new print advertising campaign at a fraction of the budget as last year's spend?  Check out AdRogues to see what is available.

This community offers tremendous value to corporations and advertisers that desire a "good enough" creative product at a marginal budget.  Yet, for the creatives of the world I'm afraid AdRogues takes them a step further down the commodity path.

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