Influencer Marketing’s Downward Ethical Spiral

One of the impacts of our increasing rejection of advertising is that advertisers are becoming sneakier in presenting advertising that doesn’t look like advertising. One example is Native advertising. Another is influencer marketing. I’m not a big fan of either. I find native advertising mildly irritating. But I have bigger issues with influencer marketing.

Case in point: Taytum and Oakley Fisher. They’re identical twins, two years old and have 2.4 million followers on Instagram. They are adorable. They’re also expensive. A single branded photo on their feed goes for sums in the five-figure range. Of course, “they” are only two and have no idea what’s going on. This is all being stage managed behind the scenes by their parents, Madison and Kyler.

The Fishers are not an isolated example. According to an article on Fast Company, adorable kids – especially twins –  are a hot segment in the predicted 5 to 10 billion dollar Influencer market. Influencer management companies like God and Beauty are popping up. In a multi-billion dollar market, there are a lot of opportunities for everyone to make a quick buck. And the bucks get bigger when the “stars” can actually remember their lines. Here’s a quote from the Fast Company article:

“The Fishers say they still don’t get many brand deals yet, because the girls can’t really follow directions. Once they’re old enough to repeat what their parents (and the brands paying them) want, they could be making even more.”

Am I the only one that finds this carrying the whiff of moral repugnance?

If so, you might say, “what’s the harm?” The audience is obviously there. It works. Taytum and Oakley appear to be having fun, according to their identical grins. It’s just Gord being in a pissy mood again.

Perhaps. But I think there’s more going on here than we see on the typical Instagram feed.

One problem is transparency – or lack of it. Whether you agree with traditional advertising or not, at least it happens in a well-defined and well-lit marketplace. There is transparency into the fundamental exchange: consumer attention for dollars. It is an efficient and time-tested market.  There are metrics in place to measure the effectiveness of this exchange.

But when advertising attempts to present itself as something other than advertising, it slips from a black and white transaction to something lurking in the darkness colored in shades of grey. The whole point of influencer marketing is to make it appear that these people are genuine fans of these products, so much so that they can’t help evangelizing them through their social media feeds. This – of course – is bullshit. Money is paid for each one of these “genuine” tweets or posts. Big money. In some cases, hundreds of thousands of dollars. But that all happens out of sight and out of mind. It’s hidden, and that makes it an easy target for abuse.

But there is more than just a transactional transparency problem here. There is also a moral one. By becoming an influencer, you are actually becoming the influenced – allowing a brand to influence who you are, how you act, what you say and what you believe in. The influencer goes in believing that they are in control and the brand is just coming along for the ride. This is – again – bullshit. The minute you go on the payroll, you begin auctioning off your soul to the highest bidder. Amena Khan and Munroe Bergdorf both discovered this. The two influencers were cut for L’Oreal’s influencer roster by actually tweeting what they believed in.

The façade of influencer marketing is the biggest problem I have with it. It claims to be authentic and it’s about as authentic as pro wrestling – or Mickey Rourke’s face. Influencer marketing depends on creating an impossibly shiny bubble of your life filled with adorable families, exciting getaways, expensive shoes and the perfect soymilk latte. No real life can be lived under this kind of pressure. Influencer marketing claims to be inspirational, but it’s actually aspirational at the basest level. It relies on millions of us lusting after a life that is not real – a life where “all the women are strong, all the men are good-looking, and all the children are above average.”

Or – at least – all the children are named Taytum or Oakley.

 

Reality Vs Meta-Reality

“I know what I like, and I like what I know;”
Genesis

I watched the Grammys on Sunday night. And as it turned out, I didn’t know what I liked. And I thought I liked what I knew. But by the time I wrote this column (on Monday after the Grammys) I had changed my mind.

And it was all because of the increasing gap between what is real, and what is meta-real.

Real is what we perceive with our senses at the time it happens. Meta-real is how we reshape reality after the fact and then preserve it for future reference. And thanks to social media, the meta-real is a booming business.

Nobel laureate Daniel Kahneman first explored this with his work on the experiencing self and the remembering self. In a stripped-down example, imagine two scenarios. Scenario 1 has your hand immersed for 60 seconds in ice cold water that causes a moderate amount of pain. Scenario 2 has your hand immersed for 90 seconds. The first 60 seconds you’re immersed in water at the same temperature as Scenario 1, but then you leave you hand immersed for an additional 30 seconds while the water is slowly warmed by 1 degree.

After going through both scenarios and being told you have to repeat one of them, which would you choose? Logically speaking, you should choose 1. While uncomfortable, you have the benefit of avoiding an extra 30 seconds of a slightly less painful experience. But for those that went through it, that’s not what happened. Eighty percent who noticed that the water got a bit warmer chose to redo Scenario 2.

It turns out that we have two mental biases that kick in when we remember something we experienced:

  1. Duration doesn’t count
  2. Only the peak (best or worst moment) and the end of the experience are registered.

This applies to a lot more than just cold-water experiments. It also holds true for vacations, medical procedures, movies and even the Grammys. Not only that, there is an additional layer of meta-analysis that shifts us even further from the reality we actually experienced.

After I watched the Grammys, I had my own opinion of which performances I liked and those I didn’t care for. But that opinion was a work in progress. On Monday morning, I searched for “Best moments of Grammys 2019.” Rather quickly, my opinion changed to conform with what I was reading. And those summaries were in turn based on an aggregate of opinions gleaned from social media. It was Wisdom of Crowds – applied retroactively.

The fact is that we don’t trust our own opinions. This is hardwired in us. Conformity is something the majority of us look for. We don’t want to be the only one in the room with a differing opinion. Social psychologist Solomon Asch proved this almost 70 years ago. The difference is that in the Asch experiment, conformity happened in the moment. Now, thanks to our digital environment where opinions on anything can be found at any time, conformity happens after the fact. We “sandbox” our own opinions, waiting until we can see if they match the social media consensus. For almost any event you can name, there is now a market for opinion aggregation and analysis. We take this “meta” data and reshape our own reality to match.

It’s not just the malleability of our reality that is at stake here. Our memories serve as guides for the future. They color the actions we take and the people we become. We evolved as conformists because that was a much surer bet for our survival than relying on our own experiences alone.  But might this be a case of a good thing taken too far? Are we losing too much confidence in the validity of our own thoughts and opinions?

I’m pretty sure doesn’t matter what Gord Hotchkiss thinks about the Grammys of 2019. But I fear there’s much more at stake here.

Marketing Vs. Advertising: Making It Personal

Last year I wrote a lot about the erosion of the advertising bargain between advertisers and their audience. Without rehashing at length, let me summarize by simply stating that we no longer are as accepting of advertising because we now have a choice. One of those columns sparked a podcast on Beancast (the relevant discussion started off the podcast).

As the four panelists – all of whom are marketing/advertising professionals – started debating the topic, they got mired down in the question of what is advertising, and what is marketing. They’re not alone. It confuses me too.

I’ve spent all my life in marketing, but this was a tough column to write. I really had to think about what the essential differences of advertising and marketing were – casting aside the textbook definitions and getting to something that resonated at an intuitive level. I ran into the same conundrum as the panelists. The disruption that is washing over our industry is also washing away the traditional line drawn between the two. So I did what I usually do when I find something intellectually ambiguous and tried to simplify down to the most basic analogy I could think of. When it comes to me – as a person – what would  be equivalent to marketing, what would be advertising, and – just to muddy the waters a little more – what would be branding?  If we can reduce this to something we can gut check, maybe the answers will come more easily.

Let’s start with branding. Your Brand is what people think of you as a person. Are you a gentleman or an asshole? Smart, funny, pedantic, prickly, stunningly stupid? Fat and lazy or lean and athletic. Notice that I said your brand is what other people think of you, not what you think of yourself. How you conduct yourself as a person will influence the opinions of others, but ultimately your brand is arbitrated one person at a time, and you are not that person. Branding involves both parties, but not necessarily at the same time. It can be asynchronous. You live your life and by doing so, you create ripples in the world. People develop opinions of you.

To me, although it involves other people, marketing is somewhat faceless and less intimate. In a way, It’s more unilateral than advertising. Again, to take it back to our personal analogy, marketing is simply the social you – the public extension of who you are. One might say that your personal approach to marketing is you saying “this is me, take it or leave it!”

But advertising is different. It focuses on a specific recipient. It implies a bilateral agreement. Again, analogously speaking, it’s like asking another person for a favor. There is an implicit or explicit exchange of value. It involves an overt attempt to influence.

Let’s further refine this into a single example. You’re invited to a party at a friend’s house. When you walk in the door, everyone glances over to see who’s arrived. When they recognize you, each person immediately has their own idea of who you are and how they feel about you. That is your brand. It has already been formed by your marketing, how you have interacted with others your entire life. At that moment of recognition, your own brand is beyond your control.

But now, you have to mingle. You scan the room and see someone you know who is already talking to someone else. You walk over, hoping to work your way into their conversation. That, right there, is advertising. You’re asking for their attention. They have to decide whether to give it to you or not. How they decide will be dependent on how they feel about you, but it will also depend on what else they’re doing – ie –  how interesting the conversation they’re already engaged in is. Another variable is their expectation of what a conversation with you might hold – the anticipated utility of said conversation. Are you going to tell them some news that would be of great interest to them – ask for a favor – or just bore them to tears? So, the success of the advertising exchange in the eyes of the recipient can be defined by three variables: emotional investment in the advertiser (brand love), openness to interruption and expected utility if interrupted.

If this analogy approximates the truth of what is the essential nature of advertising.  Why do I feel Advertising is doomed? I don’t think it has anything to do with branding. I’ve gone full circle on this, but right now, I believe brands are more important than ever. No, the death of advertising will be attributable to the other two variables: do we want to be interrupted and; if the answer is yes, what do we expect to gain by allowing the interruptions?

First of all, let’s look at our openness to interruption. It may sound counter intuitive, but our obsession with multitasking actually makes us less open to interruption.

Think of how we’re normally exposed to advertising content. It’s typically on a screen of some type. We may be switching back and forth between multiple screens.  And it’s probably right when we’re juggling a full load of enticing cognitive invitations: checking our social media feeds, deciding which video to watch, tracking down a wanted website, trying to load an article that interests us. The expected utility of all these things is high. We have “Fear of Missing Out” – big time! This is just when advertising interrupts us, asking us to pay attention to their message.

“Paying attention” is exactly the right phrase to use. Attention is a finite resource that can be exhausted – and that’s exactly what multi-tasking does. It exhausts our cognitive resources. The brain – in defence – becomes more miserly with those resources. The threshold that must be met to allow the brain to allocate attention goes up. The way the brain does this is not simply to ignore anything not meeting the attention worthy threshold, but to actually mildly trigger a negative reaction, causing a feeling of irritation with whatever it is that is begging for our attention. This is a hardwired response that is meant to condition us for the future. The brain assumes that if we don’t want to be interrupted once, the same rule will hold true for the future. Making us irritated is a way to accomplish this. The reaction of the brain sets up a reinforcing cycle that build up an increasingly antagonistic attitude towards advertising.

Secondly, what is the expected utility of paying attention to advertising? This goes hand in hand with the previous thought – advertising was always type of a toll gate we had to pass through to access content, but now, we have choices. The expected utility of the advertising supported content has been largely removed from the equation, leaving us with just the expected utility of the advertisement itself. The brain is constantly running an algorithm that balances resource allocation against reward and in our new environment, the resource allocation threshold keeps getting higher as the reward keeps getting lower.

Minding the Gap: How Amazon Mastered the Market by Being Physical

This week, two would-be challengers to Amazon’s e-tail crown were humbled in one fell swoop. When Walmart pulled their products off Google Express – the position of Amazon as the undisputed owner of online sales was further consolidated.

When Google introduced Express in 2013 and then expanded the delivery service to the primary US metro areas in 2014, they were aiming directly at Amazon’s Prime service. But in the past 5 years, Prime has flourished and Express – well – appears to be expiring. It may join a growing list of other shuttered Google projects: Google Plus, Google Glass, Google Waves, Google Buzz – you get the idea.

Walmart, for its part, has certainly grown their online sales – thanks to a buying spree to help beef up it’s online marketplace – but according to the most recent numbers I could find (July of 2018) Amazon owns 50% of all Retail ecommerce sales compared to just 3.7% for Walmart. What is probably even more discouraging for the Big Box from Bentonville is that Amazon’s Year over Year growth kept pace with theirs, so they weren’t able to make up any lost ground.

Why is Amazon dominating? In my humble opinion, this is not about technology or online platforms. This is about what happens on your doorstep. Amazon knows the importance of the Customer Moments of Truth.

The First Moment of Truth, as they were laid out in 2006 by the former CEO of Proctor Gamble, A.G. Lafley, is the moment a customer chooses a product over the other competitors’ offerings

The Second Moment of Truth was when the customer makes the purchase and gets their hand on the product for the first time.

The Third Moment of Truth is when the customer shares their experience through feedback or – today – through social media.

Since Lafley first defined these moments of truth, there have been a few others added that I will get to in a minute, but let’s focus on Moment One and Moment Two for now. Remember, a marketplace is really just a connection between producers and consumers. It is the home of the Moment One and Two – especially Moment Two. This is where Amazon is re-imagining the Marketplace.

Amazon has out “Walmarted” Walmart at their own game. It has been all about logistics and consumer convenience in the Second Moment of Truth. Amazon has assembled a potent consumer offer that is very difficult to compete against – based on making the gap between Moment One and Moment Two as seamless as possible.

That brings us to another addition to those Moments of Truth – The “Actual” Moment of Truth – as defined by Amit Sharma, CEO and founder of Narvar. According to Sharma, this is the gap in online retail between when you hit the buy button and when the package hits your doorstep. Sharma has some street cred in this department. He helped engineer Walmart’s next generation supply chain before heading to Apple in 2010 where he oversaw the shipping and delivery experience.

Why is this gap important? It’s because it is the black hole of customer intent – a pause button that has to be hit between purchase and physical fulfillment.  It’s this gap that Amazon has grabbed as their own.

Google hasn’t been able to do the same. Why? Because Google failed to connect the physical and digital worlds. Amazon did. They reinvented the marketplace. And they did it through branded fulfillment. That was the genius of Amazon – getting brown boxes with the ubiquitous Amazon Smile logo on your doorstep. Yes, they also ushered in the long tail of product selection, but that is an ephemeral ground to defend. It’s their branding of the moment of delivery that has made Amazon the most valuable brand in the world. And now they can extend that into new areas – seemingly at will.  This is not so much a pivot as a sprawl. It’s a digital land grab.

The final moment of Truth is the ZMOT – The Zero Moment of Truthdefined by Jim Lecinski who was with Google at the time. According to Jim, the Zero Moment of Truth is “the precise moment when they (the customers) have a need, intent or question they want answered online.” This is – and will continue to be – Google’s wheelhouse. But it remains firmly anchored in the digital world, far on the other side of the Actual Moment of Truth.

For Amazon, winning in online retail is all about Minding the Gap.

The Psychology Behind My NetFlix Watchlist

I live in Canada – which means I’m going into hibernation for the next 5 months. People tell me I should take up a winter activity. I tell them I have one. Bitching. About winter – specifically. You have your hobbies – and I have mine.

The other thing I do in the winter is watch movies. And being a with it, tech-savvy guy, I have cut the cord and get my movie fix through not one, but three streaming services: Netflix, Amazon Prime and Crave (a Canadian service). I’ve discovered that the psychology of Netflix is fascinating. It’s the Paradox of Choice playing out in streaming time. It’s the difference between what we say we do and what we actually do.

For example, I do have a watch list. It has somewhere around a hundred items on it. I’ll probably end up watching about 20% of them. The rest will eventually go gentle into that good Netflix Night. And according to a recent post on Digg, I’m actually doing quite well. According to the admittedly small sample chronicled there, the average completion rate is somewhere between 5 and 15%.

When it comes to compiling viewing choices, I’m an optimizer. And I’m being kind to myself. Others, less kind, refer to it as obsessive behavior. This is referring to satisficing/optimizing spectrum of decision making. I put an irrational amount of energy into the rationalization of my viewing options. The more effort you put into decision making, the closer you are to the optimizing end of the spectrum. If you make choices quickly and with your gut, you’re a satisficer.

What is interesting about Netflix is that it defers the Paradox of Choice. I dealt with this in a previous column. But I admit I’m having second thoughts. Netflix’s watch list provides us with a sort of choosing purgatory..a middle ground where we can save according to the type of watcher we think we are. It’s here where the psychology gets interesting. But before we go there, let’s explore some basic psychological principles that underpin this Netflix paradox of choice.

Of Marshmallows and Will Power

In the 1960’s, Walter Mischel and his colleagues conducted the now famous Marshmallow Test, a longitudinal study that spanned several years. The finding (which currently is in some doubt) was that children who had – when they were quite young – the willpower to resist immediately taking a treat (the marshmallow) put in front of them in return for a promise of a greater treat (two marshmallows)  in 15 minutes would later do substantially better in many aspects of their lives (education, careers, social connections, their health). Without getting into the controversial aspects of the test, let’s just focus on the role of willpower in decision making.

Mischel talks about a hot and cool system of making decisions that involve self-gratification. The “hot” is our emotions and the “cool” is our logic. We all have different set-points in the balance between hot and cool, but where these set points are in each of us depends on will power. The more willpower we have, the more likely it is that we’ll delay an immediate reward in return for a greater reward sometime in the future.

Our ability to rationalize and expend cognitive resources on a decision is directly tied to our willpower. And experts have learned that our will power is a finite resource. The more we use it in a day, the less we have in reserve. Psychologists call this “ego-depletion” And a loss of will power leads to decision fatigue. The more tired we become, the less our brain is willing to work on the decisions we make. In one particularly interesting example, parole boards are much more likely to let prisoners go either first thing in the morning or right after lunch than they are as the day wears on. Making the decision to grant a prisoner his or her freedom is a decision that involves risk. It requires more thought.  Keeping them in prison is a default decision that – cognitively speaking – is a much easier choice.

Netflix and Me: Take Two

Let me now try to rope all this in and apply it to my Netflix viewing choices. When I add something to my watch list, I am making a risk-free decision. I am not committing to watch the movie now. Cognitively, it costs me nothing to hit the little plus icon. Because it’s risk free, I tend to be somewhat aspirational in my entertainment foraging. I add foreign films, documentaries, old classics, independent films and – just to leaven out my selection – the latest audience-friendly blockbusters. When it comes to my watch list additions, I’m pretty eclectic.

Eventually, however, I will come back to this watch list and will actually have to commit 2 hours to watching something. And my choices are very much affected by decision fatigue. When it comes to instant gratification, a blockbuster is an easy choice. It will have lots of action, recognizable and likeable stars, a non-mentally-taxing script – let’s call it the cinematic equivalent of a marshmallow that I can eat right away. All my other watch list choices will probably be more gratifying in the long run, but more mentally taxing in the short term. Am I really in the mood for a European art-house flick? The answer probably depends on my current “ego-depletion” level.

This entire mental framework presents its own paradox of choice to me every time I browse through my watchlist. I know I have previously said the Paradox of Choice isn’t a thing when it comes to Netflix. But I may have changed my mind. I think it depends on what resources we’re allocating. In Barry Schwartz’s book titled the Paradox of Choice, he cites Sheena Iyengar’s famous jam experiment. In that instance, the resource was the cost of jam. In that instance, the resource was the cost of jam. But if we’re talking about 2 hours of my time – at the end of a long day – I have to confess that I struggle with choice, even when it’s already been short listed to a pre-selected list of potential entertainment choices. I find myself defaulting to what seems like a safe choice – a well-known Hollywood movie – only to be disappointed when the credits roll. When I do have the will power to forego the obvious and take a chance on one of my more obscure picks, I’m usually grateful I did.

And yes, I did write an entire column on picking a movie to watch on Netflix. Like I said, it’s winter and I had a lot of time to kill.

 

Why Disruption is Becoming More Likely in the Data Marketplace

Another weak, another breach. 500 million records were hacked from Marriott, making it the second largest data breach in history, behind Yahoo’s breach of 3 billion user accounts.

For now. There will probably be a bigger breach. There will definitely be a more painful breach. And by painful, I mean painful to you and me.  It’s in that pain – specifically, the degree of the pain – that the future of how we handle our personal data lies.

Markets innovate along paths of least resistance. Market development is a constantly evolving dynamic tension between innovation and resistance. If there is little resistance, markets will innovate in predictable ways from their current state. If this innovation leads to push back from the market, we encounter resistance.  When markets meet significant resistance, disruption occurs, opening the door for innovation in new directions to get around the resistance of the marketplace.  When we talk about data, we are talking about a market where value is still in the process of defining itself. And it’s in the definition of value where we’ll find the potential market resistance for data.

Individual data is a raw resource. It doesn’t have value until it becomes “Big.” Personal data needs to be aggregated and structured to become valuable. This creates a dilemma for us. Unless we provide the raw material, there is no “big” data possible. This makes it valuable to others, but not necessarily to ourselves.

Up to now, the value we have exchanged our privacy for has been convenience. It’s easier for us to store our credit card data with Amazon so we can enable one-click ordering. And we feel this exchange has been a bargain. But it remains an asymmetrical exchange. Our data has no positive value to us, only negative. We can be hurt by our data, but other than the afore-mentioned exchange for convenience, it doesn’t really help us. That is why we’ve been willing to give it away for so little. But once it’s aggregated and becomes “big”, it has tremendous value to the people we give it to. It also has value to those who wish to steal that data from those who we have entrusted it with. The irony here is that whether that data is in the “right” hands or the “wrong” ones, it can still mean pain for us. The differentiator is the degree of that pain.

Let’s examine the potential harm that could come from sharing our data. How painful could this get? Literally every warning we write about here at Mediapost has data at the core. Just yesterday, fellow Insider Steven Rosenbaum wrote about how the definition of warfare has changed. The fight isn’t for land. War is now waged for our minds. And data is used to target those minds.

Essentially, sharing our data makes us vulnerable to being targeted. And the outcome of that targeting can range from simply annoying to life-alteringly dangerous. Even the fact that we refer to it as targeting should raise a red flag. There’s a reason why we use a term typically associated with a negative outcome for those on the receiving end. You’re very seldom targeted for things that are beneficial to you. And that’s true no matter who’s the one doing the targeting. At its most benign, targeting is used to push some type of messaging – typically advertising – to you. But you could also be targeted by Russian hackers in an attempt to subvert democracy. Most acutely, you could be targeted for financial fraud. Or blackmail. Targeting is almost never a good thing. The degree of harm can vary, but the cause doesn’t. Our data – the data we share willingly – makes targeting possible.

We are in an interesting time for data. We have largely shrugged off the pain of the various breaches that have made it to the news. We still hand over our personal data with little to no thought of the consequences. And because we still participate by providing the raw material, we have enabled the development of an entire data marketplace. We do so because there is no alternative without making sacrifices we are not willing to make. But as the degree of personal pain continues to get dialed up, all the prerequisites of market disruption are being put in place. Breaches will continue. The odds of us being personally affected will continue to climb. And innovators will find solutions to this problem that will be increasingly easy to adopt.

For many, many reasons, I don’t think the current trajectory of the data marketplace is sustainable. I’m betting on disruption.

 

 

It’s Not Whether We Like Advertising – It’s Whether We Accept Advertising

Last week, I said we didn’t like advertising. That – admittedly – was a blanket statement.

In response, MediaPost reader Kevin VanGundy said:

“I’ve been in advertising for 39 years and I think the premise that people don’t like advertising is wrong. People don’t like bad advertising.”

I think there’s truth in both statements. The problem here is the verb I chose to use: “like.” The future of advertising hangs not on what we like, but on what we accept. Like is an afterthought. By the time we decide whether we like something or not, we’ve already been exposed to it. It’s whether we open the door to that exposure that will determine the future of advertising. So let’s dig a little deeper there, shall we?

First, seeing as we started with a blanket statement, let’s spend a little time unpacking this idea of “liking” advertising. As Mr. VanGundy agreed, we don’t like bad advertising. The problem is that most advertising is bad, in that it’s not really that relevant to us “in the moment.” Even with the best programmatic algorithms currently being used, the vast majority of the targeted advertising presented to me is off the mark. It’s irrelevant, it’s interruptive and that makes it irritating.

Let’s explore how the brain responds to this. Our brains love to categorize and label, based on our past experience. It’s the only way we can sort through and process the tsunami of input we get presented with on a daily basis. So, just like my opening sentence, the brain makes blanket statements. It doesn’t deal with nuance very well, at least in the subconscious processing of stimuli. It quickly categorizes into big generic buckets and sorts the input, discarding most of it as unworthy of attention and picking the few items of interest out of the mix. In this way, our past experience predicts our future behavior, in terms of what we pay attention to. And if we broadly categorize advertising as irritating, this will lessen the amount of attention we’re willing to pay.

As a thought experiment to support my point, think of what you would do if you were to click on a news story in the Google results and when you arrive at the article page, you get the pop up informing you that you had your ad-blocker on. You have been given two options: whitelist the page so you receive advertising or keep your ad-blocker on and read the page anyway. I’m betting you would keep your ad-blocker on. It’s because you were given a choice and that choice included the option to avoid advertising – which you did because advertising annoys you.

To further understand why the exchange that forms the foundation of advertising is crumbling, we have to understand that much of the attentional focused activity in the brain is governed by a heuristic algorithm that is constantly calculating trade-offs between resources and reward. It governs our cognitive resources by predicting what would have to be invested versus what the potential reward might be. This subconscious algorithm tends to be focused on the task at hand. Anything that gets in the way of the contemplated task is an uncalculated investment of resources. And the algorithm is governed by our past experience and broad categorizations. It you have categorized advertising as “bad” the brain will quickly cut that category out of consideration. The investment of attention is not warranted given the expected reward. If you did happen to be served a “good” ad that managed to make it into consideration – based on an exception to our general categorization that advertising is annoying – that can change, but the odds are stacked against it. It’s just that low probability occurrence that the entire ad industry is built on.

Finally, let’s look at that probability. In the past, the probability was high enough to warrant the investment of ad dollars. The probability was higher because our choices were fewer. Often, we only had one path to get to what we sought, and that path lead through an ad. The brain had no other available options. That’s no longer the case. Let’s go back to our ad-blocker example.

Let’s say the pop-up didn’t give us a choice – we had to whitelist to see the article. The resource – reward algorithm kicks into action: What are the odds we could find the information – ad-free –  elsewhere? How important is the information to us? Will we ever want to come back to this site to read another article? Perhaps we give in and whitelist. Or perhaps we just abandon the site with a sour taste in our mouth. The later was happening more and more, which is why we see fewer news sites offering the whitelist or nothing option now. The probability of our market seeing an ad is dropping because they have more ad-free alternatives. Or at least, they think they do.

And it’s this thought – precisely this thought – that is eroding the foundation of advertising, whether we like it or not.