09.30
Before you nail me, I absolutely agree that there ARE a lot of great and innovative digital things going on in Canada, which is why I’m happy to take the time to run a non commercial blog like this to showcase some of it. The issue here, as was raised a few times last week through some very prominent channels is if our current level of digital innovation is enough?
As reported by the CBC on Sept 24th, Nikesh Arora, Google’s No. 4 executive, said that Canadian companies aren’t grasping the full potential of the web to grow their businesses. He went further to say
Based on the technological savvy of the market, [Canada] should be in the top quartile.
but we are far from it. Given that Google rarely makes as critical a statement as that of a whole country without some solid empirical evidence (although not necessarily disclosed) we should take this as seriously we would an evaluation from any international economic institution (even if there is an obvious bias with Googles perspective).
Then on Sept 25, the National Post’s Hollie Shaw declared “Slow progress in digital marketing“ siting industry powerhouses such as Quizative’s Adrian Capobianco and Capital C’s Tony Chapman (both candidates for my Canadian Digital Power 20 list in November) whom agreed that market fragmentation, poor ROI modeling methods and unfamiliarity amongst the 30+ marketing decision makers were contributors to the problem. That problem being the significant gap between digital media consumption (estimated to be 30%+ of our time) and advertising money spent on digital marketing (estimated to be less than 12% of all media spending in 2009).
In the early to mid 90’s Canada was well known international for early successes on the internet (I’m sure people are going to send me reminders of whom some of them were). The rapid growth of the independent ISP market, a technology rich k-12 education system as well as an affluent and educated middle class allowed young geeks to start early and fast. The results were evolution of institutions like U of Waterloo and an explosion of Canadian companies that went global with their abilities, services or intellectual properties.
However, over the last two years (even before the economic meltdown began) we’ve seen a slowing down and in some cases regression in our global leadership. In August we saw the contraction of Sympatico, Canada’s largest portal as MSN left it to go alone. Yahoo Canada earlier this year shed half it’s Canadian staff and handed editorial control mostly over to the US operations. Other traditional Canadian portals dodge rumors of being on the ropes and have shown little if any innovation beyond superficial interface clean ups.
Additionally, non media companies seem to be stepping backwards. Over the last year we have seen retail giants such as HBC and Canadian Tire abandon their eCommerce programs, while many others have chosen not to pursue the development of new ecommerce strategies at all. This can only be leaving Canadian business vulnerable to a growing number of international organizations that have taken the chance to restructure their business with eCommerce as the core from which both on and offline revenues can be maximized.
But enough complaining, if you are to believe that there is an issue from my little sample of anecdotal evidence, then the question is what is going wrong and what do we need to do about it? Most people I have spoken to on the issue of getting organizations to be more aggressively digital fall into one or more of three causes; shortage of knowledge, shortage of talent, shortage of financial resources.
Shortage of knowledge is probably the most common issue we see causing digital business initiatives to be stalled, shelved or killed. A lack of solid Canadian market research that leads senior decision makers to believe the results of new digital investments can exceed the current ROI’s from activities that are already in use are rare. Although many organizations have this data at hand most don’t have the tools or skills to materialize it.
The first step is investment in appropriately sized metrics strategies. Far too many businesses invest a disproportionate part of their online budgets on design or user experience and then treat measurement as an afterthought. What little is invested in measurement often stops at the software, leaving analysis and insight as a part time task of unqualified marketing or web staff who don’t have the analytical or mathematical backgrounds.
What we need to do in increase the level of understanding and accesses to information about what can be done with metrics and how effective a tool they can be when implemented properly and analyzed professionally in dramatically increasing ROI, not just for online, but offline as well. More of our industry conferences need to create more robust metrics and analytics workshops with deeper dives into how to choose, plan, implement and resource online measurement strategies
Shortage of Talent has been another issue that has dogged this industry from day one. The challenge facing this industry has been that a vast majority of practitioners are self educated and continuously self educating. This creates a large gap between those who have been around for a while and those just enterning the market. There are really no “softmores” with a solid base who are working their way up to create a continuous ramp of talent to draw from at all levels. Newcomers to the digital industry either have to find a mentor or jump into the deep end and try to swim. The result is a wide range of actual skills levels that are not related to time spent in the industry.
Although organizations such as The IAB, The CMA as well as a few colleges have come a long way over the last few years in providing better training programs, digital media still lacks a national institutional base from which to grow and incubate talent. If digital media is to move to the next level of maturity as an industry, it will need to have an academic base the ensures a standard and consistent base of knowledge for digital media professionals as is created in other industries such as broadcasting, journalism, etc.
Shortage of financial resources falls into two issues; access to money and access to digital transaction services. In the case of access to online transaction services, many small and medium business have complained that the lack of online banking and transaction support from our few major banks has made it very difficult and in some cases prohibitively expensive to develop low cost or new non standard transaction models.
Although several startups have attempted to offer interesting aggregate transaction applications for these companies, they lack the reputation and credibility that is needed in Canada if you want to get people to trust you with their money. What the community wants is a highly accessible and flexible self service platform provided by one or more of the major banks that allows easy of set up for small companies and also has a sophisticated API for developers to create new transaction modes.
Access to money isn’t just an issue facing the digital media industry. Recently there have been a number of concerns raised regarding the condition of the Canadian Venture Capital industry and it’s ability to support Canadian innovation. Gregory Smith, President of the Canadian Venture Capital Association said earlier this year in response to the January 2009 Federal budget
Unfortunately, the budget has failed to address the current shortage of venture capital financing, which presents a significant challenge to near-term job creation and to Canada’s future prosperity in the important knowledge-based economy.Read more
According to the CVCA, venture capital investment and fundraising levels have been declining for years and are now reaching critical lows. In the fourth quarter of 2008, venture capital investment was down 40% from the same period in 2007. Although Digital media is not alone in this shortage, it is one of the few industries that can easy seek funding in other jurisdictions without changing their business models. This results not only in a drain on Canadian ideas, but limits the economic returns back into Canada.
What is needed is not only a revised tax credit and policy program to help investors better mitigate the risks of getting involved in these kinds of ventures, but a program that encourages a more active mentoring participation from these investors.
Back in1968 the Canadian government created the Canadian Film Development Corporation (later to become Telefilm Canada) followed by a growing program of production tax credits through the 70’s that contributed to Canada becoming recognized as a leader in international film and cinema up until this day. What the government should be exploring is the same kind of agency that is mandated to work with the digital industry, investors and leaders to create a unified digital industry in concert for the world stage.
The digital media sector is one of the fastest growing industries in the knowledge economy, expected to reach US$2.2 trillion worldwide in the next five years. Although Ottawa recently invested $10MM in The Corridor for Advancing Canadian Digital Media (CACDM) a regional research and development centre based around Waterloo, the remaining $50MM came from a small group of organizations with vested interests in the region. Relative the the scale of the opportunity this is a good start, but still seems like a drop in the bucket compared to the scale of the opportunity and limited in it’s value to the larger national community.
As a nation with the luxuries of a highly educated and affluent middle class, extraordinary access to internet connectivity, an innovation oriented education system and an almost unlimited access to technological information and resources, there’s no reason we should be lagging behind the world with digital innovation.
If we wish to remain a country that can afford such luxuries, we can not afford to fall behind other countries who have made digital innovation a core principle of their economy and a point of national pride In fact, as our ability to rely on traditional industries fades, we should endeavor to be the worlds “GO TO” nation for digital innovation.
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