The unbundling of bundling

Silicon Beach is an annual gathering of the UK’s leading strategic thinkers and digital innovators. Matt Desmier who runs this wonderful event asked me to come along and speak about a theory I had been ‘reckoning’ for the last three years — that there might be a regular, predictable wavelength of product bundling and unbundling, that would allow us to predict the future of a client’s category. Here is a summary of what I presented…

A historic cycle of product bundling and unbundling

There are a number categories where the cycle of bundling and unbundling is well established. These include:

The music industry, which really got going with the 45rpm 7” single. But then for 30–40 years the industry grew fat on bundling, positioning the album as the ‘ultimate expression of artistry’ and one of its organising principles with full service record labels signing artist to multi-album deals and providing every service they’d need. But of course Napster, and then iTunes, changed all that.

Banking, has arguably been bundled since the Delian Treasury moved to Athens in 454 BC, but it really hit its stride at the turn of the 18th century. At that point, banks started offering roughly the bundle of products that characterise modern banking today.

You can see the same pattern in politics, with the bundle of the Republican Party combining policies that united fiscal conservatives, social conservatives, evangelical Christians and white nationalists. Although obviously that’s being unbundled right now by Trump who isn’t religious, has no morals, and has dubious financial credentials — but is racist.

Advertising agencies in the Mad Men era were all full service, but from the 1970’s onwards, services were unbundled, starting with media. This has given clients the task of trying to coordinate those warring specialists, so now they’re asking for them to be re-bundled, with the recent example of McDonald’s ‘Agency of the Future’.

The internet unbundled industries

While there clearly was a cycle of product bundling, it wasn’t regular, so we couldn’t have predicted the future. However, there’s something much more interesting afoot. The nature of bundling is fundamentally changing.

Bundling began in the brand-led era (1950–2010) where it was often just a marketing tactic; a different way for the same old companies selling the same old products — and the bundles were often stacked against the customer.

That then gave way to the Internet-led era (2010 onwards), where unbundling was an active business strategy, using Internet technology and changes in consumer behaviour to rewire entire categories.

For example the music industry was split up into its component parts, with recording, publishing, distribution, marketing and touring all available individually. Banks were unbundled by hundreds of fintech startups. Political parties are being unbundled by propositional representation, referenda and single-issue online activism. And agencies were perhaps the most extreme example, being unbundled by thousands of adtech startups.

A new kind of bundle empowers customers

In theory, all of this unbundling is positive, giving us unprecedented choice and control, but what it has also created is a mass of different services that are incredibly hard to coordinate and connect — 126 different fintech logins to replace the one from your bank.

We believe we are now entering into the Customer Era (2015 onwards), and that a new kind of bundle is emerging. Bundles are becoming service layers, aggregating unbundled business elements in powerful new ways — that put customers in control.

A good example of this from the music industry is Kobalt, a service that stitches together all the services that were unbundled from the record company — publishing, label services, distribution, marketing, revenue collection, data, rights etc.

In banking, Monzo is building a full-stack software bank, with a current account designed to aggregate and make useful all the other fintech startups. So you’ll be able to transfer currency with Transferwise with one tap. Or put money left in your current account into a P2P ISA with one tap.

In politics, the elements that are unbundling political parties are coming together in platforms like DemocracyOS, that aim to create a more empowering form of representation, and which take a step towards delegative or liquid democracy, where on an issue-by-issue basis you can choose to use your vote directly, or delegate it to someone else.

Meanwhile in agencyland

In advertising there are platforms like Percolate that aggregate different ad networks with some planning tools, and Crew that are trying to aggregate unbundled agency talent. But you still need to be an expert to use them, to know the right questions to ask. There’s nothing yet like Kobalt for marketing.

At Albion we’ve evolved an offer that appeals to CEOs and COOs, and talks in their language. We don’t sell outputs, but collaborate on outcomes. And we’re increasingly moving to an aggregation model to deliver this, with a core group at Albion pulling teams together from associates and clients’ people around the new offers we’re developing.

So, if you’re under 45 and work in an agency, it’s time to realise you can’t simply ride out the last days of the Mad Men model. So please, quit, and start building something entirely new, empowered by the thousands of marketing tools that are now available, just waiting to be stitched together into an amazing new bundle.