Category Archives: Behavior & Psychology

Satisficing, Bounded Rationality and Search

150px-HerbertSimonHerbert Simon came up with some pretty interesting concepts, among them satisficing, bounded rationality and chunking.

Before Simon, we commonly believed that humans came to optimal decisions in a rational manner, based on the information provided. We took all the data that was accessible, weighed pros and cons and used our cortexes to come to the best possible outcome.

Simon, in effect, said that this placed to high a load on us cognitively. In many cases, there was simply too much information available, so we had to make choices based more on heuristics, cutting the available information down to a more manageable level. He called this “satisficing”, a blend of satisfy and suffice. And Simon started saying this a half century ago. Imagine how this translates to the present time.

We have never had more information available. At the click of a mouse, we can access huge amounts of information. There’s simply no way we can process it all and come to rational decisions. And this brings us to another concept, that of bounded rationality. We’re more rational about some decisions than others. It depends on a number of factors, including risk, emotional enjoyment and brand self identification. Think of it as a chart with three axes. One axis is risk. We put more rational thought into decisions that expose us to greater risk. In consumer decisions, risk usually equates with cost, but in B to B decisions, it could also include professional reputation (related to but not always directly tied to cost). We’re going to put a lot more thought into the purchase of a car or house than that of a candy bar. Another axis is emotional enjoyment. This is a risk/reward mechanism to most decisions, and if the reward is one that is particularly appealing to us, we tend to be swayed more by emotion than rational decision. If we’re planning a holiday, we may make some irrational decisions (or at least, they might appear that way to an outsider) based on a sense of rewarding ourselves. We’ll treat ourselves to a few nights in a 5 star resort, when the 3 star resort would offer greater overall value. The final factor, and one that is usually buried somewhere in our subconscious, is how we use brands or products to define who we are. Now, no one usually admits to being defined by a brand, but we all are, to some extent. This touches on the cult-like devotees that some brands develop. Harley Davidson, Rolex, BMW, Apple and Nike all come to mind. Is a Rolex a rational choice? No. But a Rolex defines, to some extent, the person wearing it. It says something about the person.

Bounded rationality says that there are boundaries to the amount of rational thought that we can and we want to put into decisions. The amount we decide is sufficient depends on the three facts discussed.

Now, the use of Search tends to plot somewhere along this 3 dimensional chart. If risk is high and brand identification is low (buying software for the company), there is a high likelihood that search will be used extensively. If risk is low and brand identification is high (i.e. buying a soft drink or a beer) there is almost no likelihood that search will be used. In this case, the two factors usually work inversely to each other. Emotional enjoyment isn’t as directly tied to search activity. We will do as much (or as little) searching for a purchase that will give us great enjoyment as for those that won’t.

It’s interesting to watch how these factors impact search intent and behavior. Satisficing leads to a classic sort of search behavior, what I call I category search, where we use fairly generic, non branded queries that broadly define the category we’re looking at. Let me give you an example. Tomorrow my wife and I are headed to Europe for a week. We’re going to spend a few days in Portugal, then fly up to London for SMX (where I’ll be talking more about these ideas in some of my sessions). We’re flying into Lisbon, then renting a car and driving down to the Algarve region. I have GPS navigation software for my PDA, but only for North America. I wanted to get European software, but because of the limited use of it, I didn’t want to spend too much. The developer of my North American software didn’t make a EU version, so I turned to search to find a suitable candidate. Here there was no brand identification, some degree of risk (if it didn’t work in Europe, I’d be lost, literally) and no emotional enjoyment factor. My first search was what I call a “landmark” search. I wanted to find some sites to plot the landscape. Sites that listed and compared my alternatives would be ideal matches to my intent.

I searched for “pocket pc gps software”, knowing that “gps software” would be too broad. I soon found the sites were pretty much all about North American versions. Few of them offered or reviewed European versions. I spent several minutes on the TomTom site trying to order a European version from Canada but to no avail. Apparently TomTom doesn’t believe people in North America would ever choose to drive in Europe.

In classic “satisficing” behavior, I wanted to cut my research workload by setting some basic eligibility criteria: it had to work on a Pocket PC, it had to be reasonably priced (under $100 preferably) and it had to offer coverage for all of Europe (we’re going back to France and Italy next year and I’d like to use it then as well). My next search was for “pocket pc gps software europe”. This gave me what I needed to begin to create my satisficed list. Ideally, we want 3 or 4 alternatives to compare. I did find the TomTom choice, but I was already frustrated with this, and the price was over my threshold. Destinator also offered an alternative that seemed to be a little better match. It matched all the criteria, appeared to have some decent reviews and was available on eBay for about $75, including shipping. Sold! Was it the optimal choice? Maybe not. If I had spent hours more doing research, I could have probably found a better package or a better value. But it was good enough.

Chunking has to do with cognitive channel capacity, and the amount of information we can store in our heads, accessible for use. Again, we tend to maximize the available slots by creating chunks of information, grouping similar types of information together.

When you look at Simon’s work, even though the majority of it far preceded search engines, it sheds a lot of light on how we use search in a number of cases. If you want to tap into user intent, I would recommend finding out more about bounded rationality and satisficing. Chunking is probably worth a look as well.

Interfaces are only Skin Deep

Steve Haar had a great comment on my post about Ask breaking through in the search market share battle:

I agree about the interface being much better with Ask. But, what about the search results? I took a look at them compared to the others and, between sites for adsense and dead links, the results were so poor I was embarrassed for them. I wonder how many of the searches were from repeat users vs once and gone?

I think Steve points out a fundamental concept that we might tend to forget from time to time. The best interface on a piece of garbage just gives you nice looking garbage. Now, I’m not saying that Ask is garbage. But I’ve seen some cases (and heard anecdotally many more) of some issues with spam and I do think they have some work to do. Ultimately, it’s the quality of the results that will determine marketshare. In fact, a nice interface on top of poor results will kill Ask quicker than ever, as it draws more trial users (as Steve alludes to) and generates more negative word of mouth. This is exactly what Ask doesn’t want to happen.

I’m the first to speak up about the importance of the user experience, but it’s important to remember that the interface is only one small part of that. Ultimately, there needs to be enough under the hood to meet and exceed the user’s expectations. Steve (and others) are indicating that Ask might be falling short in the relevancy horsepower department.

The Other Long Tail of Search

smallcoverIn 2006 Wired Editor Chris Anderson released The Long Tail, and suddenly we were finding long tails in everything. The swoop of the power law distribution curve was burned on our consciousness, and search was no exception. Suddenly, the hot new strategy was to move into the long tail of search, those thousands of key phrases that individually may only bring a handful of visitors, but in aggregate, can bring more than the head phrases. At Enquiro, we were no exception. But lately, I haven’t heard as much about long tail campaigns. And I think it’s because our thinking was a little flawed.

One of the key elements of a long tail marketplace is that there can’t be a scarcity bottleneck. Shelf space has to be unlimited, production, distribution, etc. The economics of supporting a long tail have to make sense. There has to be little to no overhead in making a vast selection available to the market. The ideal example is digital entertainment. Once an MP3 is encoded, the only overhead for the distributor is a couple of megabytes of storage capacity.

That’s just not true in search management. It takes time to set up a campaign for a keyword. It takes time to organically optimize for it. There’s significant campaign management overhead associated with search. From a resource perspective, search marketing is expensive, and as anyone who’s tried to recruit a search marketer can tell you, there is no abundance mentality at play here. Sure there’s thousands of keyphrases that may potentially bring one or two visitors a month, and if you add them up, it would be hundreds of thousands of potential leads, but we just can’t move from the head to the tail because we don’t have the time.

Engines tried to open up the bottle neck by offering broad match, but results from broad match campaigns are dramatically less than spectacular. In many cases, we needed to go back to the more granular control that comes with exact match to keep performance levels where we needed them to be.

But in perusing some of our spreadsheets from past studies, and with Anderson’s Long Tail curve fresh in my mind, I found another long tail in search. In several studies, we’ve tracked click throughs by position. Look what happens when you take the most popular click through position, the number one organic spot, and then work down by position:

clickthrough tail

As you can see, we have another long tail. Now, due to the scale of the graph, it looks like the tail goes to zero. This isn’t the case, but by the time we get to the second page of results, we tend to hit percentages that are fractions of 1%. As long tails go, this is skinnier than most, showing the power of position on the first page of results.

But now let’s combine the two long tails. If you take the head being a #1 organic ranking for your most popular phrase, and work down from there, the results get quite dramatic. For the sake of this example, I’ll move down one position for each keyword. Here’s a table showing the numbers:

Keyword Volume Position X Click Through % Clicks
#1 46500 Org 1 26.35 12252
#2 38450 Org 2 13.05 5017
#3 32500 Org 3 10.2 3315
#4 23400 Spon 1 8.75 2047
#5 15750 Org 4 5.35 842
#6 12450 Spon 2 4.125 513
#7 8750 Org 5 3.875 339
#8 5250 Org 6 2.875 150
#9 4325 Side 1 2.5 108
#10 2750 Org 7 1.875 51

Now, let’s plot that on a graph:

clickthrough tail2

Given that search is a resource hog in terms of manpower, I argue that we’d be far better working our way up the tail rather than down it. And by moving up the tail, I mean the click through by position tail. By moving up the page, even a position or two, with relatively popular keywords, you can leverage the compounding effect of the two curves and dramatically improve your campaign performance.

Ask Beginning to Break Through

For quite some time, I’ve been wondering if my user “Spidey-Sense” was wonky. From everything I saw about the Ask 3-D interface, it should have been gaining marketshare. Also, for all my preaching about build a better user experience and you’ll reap the rewards, Ask’s reaping appeared to be a little on the grim side, lingering at about 3.5% of the market. But finally, according to a recent post by Bill Tancer over at Hitwise, my instincts seem to be back on track. Take a look at this graph:

ask

Ask is finally making a move. And their “share of search” has moved up from 3.49% of executed searches in August to 4.32% of searches in October, a bump of 23.7%. That’s huge. Bill wonders if it has anything to do with the ads Ask is running. I suspect it has a lot more to do with a great interface and some user generated buzz that’s beginning to catch some ears. Michael Ferguson and his team did exactly what they needed to do, shake things up by thinking about what users want.

Ask’s strategy has always been to be your first second choice. They don’t ever expect to knock Google out of the lead, but what they want to do is be the place you turn when you find Google just isn’t cutting it. So their move to 3D made a lot of sense. For certain types of searches, notably entertainment or discovery searches, users want something more than Google’s spartan, click and get out interface. They want a stickier, richer, more visual appearance. They want Ask 3D. We found the interface tested pretty well in our recent Search:2010 Eye Tracking study for entertainment based searches.

In fact, Marissa Mayer at Google paid Michael and his team the ultimate compliment when she mentioned the likelihood of Google moving to more of a portal, encyclopedia type format sometime in the future. So..that would make Google more like..Ask!

I will be watching with interest Ask’s marketshare numbers over the next 6 months. Again according to Hitwise, the jump regains all the marketshare they’ve lost in the last year, and puts them a lot closer to the current number 3, Microsoft, who is sitting just 3 and a half points ahead at 7.83%. Microsoft has been on a continuous slide for the past year, dropping 3 full points. Yahoo seems perpetually stuck between 22 and 23%. Google has captured most of the fallout, adding those 3 points to their marketshare numbers. But Google’s .5% drop in the last month seems to have gone directly to Ask, showing that the “First Second Choice” strategy might be paying off. Like Jim Lanzone said to me once, “Our goal is to take our 20 million users, who are currently using us twice a month, and bump that up to four times a month. That doubles our market share,” At the time Lanzone made the comment, Ask was sitting with about 2.5% marketshare. If you look at the table below, Ask has just about hit their goal.

 

Percentage of U.S. Searches Among Leading Search Engine Providers
Domain

Sept-07

Aug-07

Sept-06
http://www.google.com

63.55%

63.98%

60.93%
search.yahoo.com

22.55%

22.87%

22.29%
search.msn.com

7.83%*

7.98%*

10.87%*
http://www.ask.com

4.32%

3.49%

4.28%
Note: Data is based on four week rolling periods (ending 9/29/07, 9/01/07; 9/30/2006) from the Hitwise sample of 10 million US Internet users.

* – includes executed searches on Live.com and MSN Search.
Source: Hitwise

But I don’t think Ask is going to stop there. Within 6 months, you’re going to be reading stories all over the web about how Ask bumped Microsoft out of the #3 spot. It will be David vs Goliath, or in this case, Barry (Diller) vs Bill (Gates). Ask is on a roll, and thanks to Bill Tancer’s revisiting of the numbers, I have regained enough confidence to say, “mark my words”.

Search and the Digital CPG Shelf

First published October 25, 2007 in Mediapost’s Search Insider

Last April, James Lamberti from comScore, Randy Peterson from Procter and Gamble and I (representing SEMPO) grabbed a relatively quiet corner at the New York Hilton to talk about a potential research project. Here was our wish list:

–    A study that tied together online activity to offline purchase behavior
–    A study that identified the impact of search in a category not typically one that would be identified with search marketing
–    A study that would attempt to quantify the leveraged impact of search with brand advocates

Search and CPG: Are You Kidding?

As you can see, these were pretty lofty targets to shoot for. Choosing the product category was done at that table. What is the last category you would think of as generating significant search activity? Consumer packaged goods. After all, aren’t these either replenishment purchases, where we keep buying the same brand over and over, or a non-considered purchase, where we’re not really concerned with doing much research? Why would we need to turn to a search engine to figure out which toothpaste to buy, or which would be the right chips for Sunday’s ball game? We reasoned that CPG had the “Sinatra” Factor going for it: If search can make it here, it can make it anywhere.

To be honest, we really didn’t know what to expect, but comScore, together with a lot of help from Yahoo and Procter and Gamble, managed to come up with a workable study design. SEMPO jumped on board as a co-sponsor and we put the study out in the field. This week, with numbers crunched and charts drawn, the results were released in a study labeled The Digital Shelf. After several months of holding our collective breaths, we were about to see if people had already locked CPG brands into their brains, eliminating the need to search for product information.

Apparently not.

People went online for CPG information — in fact, to a significantly higher degree than even our most optimistic predictions.  Over a 3-month period, comScore recorded over 150 million visits to CPG websites in four categories: Food Products, Personal Care Products, Baby Products and Household Products. Those are numbers no marketer should ignore. But even more significantly, search drove significant portions of that traffic, from 23% of all visits in Household Products to 60% in Baby Products.

It’s not just automotive or travel that drive search traffic. We search for recipes, how to get the stains out of carpets, the most eco-friendly disposable diaper and yes, even the nutritional information for potato chips. We search, a lot!

And our searching sets us apart as a consumer segment. Searchers tend to be more interested in product information, comparing against competitors and what they need to make a purchase decision. Non-searchers are more interested in special offers and coupons.

Searchers spend more, about 20% more  — in all the categories in the study. In fact, in the Baby Care Category alone, people searching for information and eventually purchasing could result in almost $12 billion in sales.

Search = Opportunity

But perhaps the most compelling finding was this: People search because they’re comparing alternatives. This means they’re not locked into a brand. They could very well be your competitor’s customer right now. Non-searchers are more likely to go directly to a site because they do have a brand preference. They’re just looking for a bargain on that brand. The study found that 36% of searchers had recently switched their brand, compared to 29% of non-searchers. And, interestingly, searchers are less motivated by price. Only 27% of searchers switched because of price, compared to 38% of non-searchers.

So, the study delivered on our original wish list, and then some. It showed that search is a significant influencing factor in the most unlikely product category of all, the stuff on your pantry shelf or under the sink in your bathroom. In fact, I have yet to see a study done on any product category where search didn’t blow the doors off the competition in its effectiveness in connecting with customers. So perhaps the biggest question left unanswered by the study is this: Why are all those branding dollars still going everywhere but search?

The Wisdom of Consumer Crowds?

Following up on the theme of the rewiring of our brains, is the internet making us smarter consumers as well? There certainly seems to be evidence pointing in that direction.

A study by ScanAlert  found that the average online shopper in 2005 took 19 hours between first visiting a store and completing a transaction. In 2007, that jumped almost 79% to 34 hours. We’re taking longer to make up our minds. And we’re also doing our homework. Deloitte’s Consumer Products group recently released research saying 62 percent of consumers read consumer written product reviews on the Internet, and of those, more than 8 in 10 are directly influenced by the reviews.

In James Surowiecki’s Wisdom of Crowds, he believes that large groups, thinking independently with access to a diversity of information, will always make a better collective decision than the smartest individual in the group. Isn’t the Internet wiring this wisdom into more and more purchases? When we access these online reviews, we’re in fact coming to collective decisions about a product, built on hundreds or thousands of individual experiences. As the network expands, we benefit from the diversity of all those opinions and probably get a much more accurate picture of the quality of a product than we ever could from vendor supplied information alone. The marketplace votes for their choice, and the best product should theoretically emerge as the winner.

Of course, nothing works perfectly all of the time. As Surowiecki points out, communication can be an inexact and imperfect process, and information cascades based on faulty inputs can spread faster than ever online. But it’s also true that if a cascade leads to rapid adoption of an inferior product, we’ll discover we’ve been “had” faster and this news can also spread quicker. The connections of online make for a much faster dissemination of information based on experience than ever before, ensuring that the self correcting mechanisms of the marketplace kick into gear faster.

There’s a pass along effect happening here as well. For social networking buffs, you’ve probably heard of Granovetter’s “Weak Ties”. Social networks are made up of dense, highly connected clusters, i.e. families, close friends, co-workers. The social ties within these clusters are strong ties. But spanning the clusters are “weak ties” between more distant acquaintances. The ability for word to spread depends on these weak ties. What the internet does is exponentially increase the number of weak ties, wiring thousands of clusters together into much bigger networks than were ever possible before. This allows word of mouth to travel not only in the physical world but also in the virtual. I looked at a fascinating follow up study to Granovetter’s where Jonathan Frenzen and Kent Nakamoto also looked at the value of the information and the self interest of the individual and their “strong ties” within a cluster as a factor in how quickly word of mouth passes through a network.

Deloitte’s study graphically illustrates the weak tie/strong tie effect. 7 out of 10 of the consumers who read reviews share them with friends, family or colleagues, moving the information that comes through the weak ties of the internet into each cluster, where it spreads rapidly thanks to the efficiency of strong ties. This effect pumps up the power of word of mouth by several orders of magnitude.

But are we also becoming more socially aware in our shopping? The research by Deloitte also seems to indicate this. 4 out of 10 consumers said they were swayed by “better for you” ingredients or components, eco-friendly usage and sourcing, and eco-friendly production or packaging. The internet wires us into communities, so it’s not surprising that we become more sensitive to the collective health of those communities in the process.

What all these leads to is a better informed consumer, who’s not reliant on marketing messaging coming from the manufacturer or the retailer. And that should make us all smarter.

Are Our Brains being Rewired?

I have to start out by thanking Nico Brooks and Jess Gao. Without intending to, they both provided me more than enough fodder for a rather lengthy column in Seach Engine Land on Friday.

Nico is the Chief Search Strategist at Atlas. Jess is our intern at Enquiro, who’s currently working towards her doctorate, specializing in cognitive psychology. Through different paths, they both gave me some major brain melting ideas to chew over. I’m still digesting, but you can catch the thought process in action on my column.

But consider this. What if our brains are being rewired by the internet? Some of our behaviors are innate. They’re our OEM operating software, put there by the manufacturer. Flight or fight. The need to procreate. The appreciation of beauty. This stuff is hardwired.

But some of our behaviors are learned. We’ve developed them as we go. The things sit in our temporary memory caches, and we can adjust them if they’re no longer working. The thing that started all this was how we learn to navigate a physical environment. First we look for landmarks, then we memorize routes, then we put the two together to create a cognitive map. Nico’s suspicion (and Nico, I hope I’m capturing the essence of the idea accurately) is that our need to identify landmarks and even our ability to memorize routes is probably innate. It’s just how we are programmed to get around. But cognitive mapping, at least in the essentially rectangular grid pattern that is common in the Cartesian coordinate model, is a learned behavior. Rectangles have no place in the n dimensional space of online, so as we spend more time navigating online, will we change our mapping process?

Then, with Jess, we had a great chat about how we perceive things, especially ads. There’s a great introduction to selective perception that I would urge you to check out. In recent studies we’ve done at Enquiro, one of the interesting findings has been that the more intrusive the ad, the less it seems to work. It registers high in the first stage of perception, stimulation, and manages to succeed in the second, registration, but fails in the last two stages, organization and interpretation.

Other conversations I had this week, that didn’t make it into either of the columns. On Thursday I was in New York for Google’s B to B Summit and had a chance to chat with Mark Martel, who supports the B to B Tech Sales Vertical at Google. Mark has a healthy intellectual curiosity and I always enjoy chatting with him. We discussed schemas and how important they are in the process of perception. Then, on Friday, I was in Toronto chatting with the Yahoo Canada gang, including Maor Daniels and Adina Zointz (what a great name, literally covering everything from A to Z!) and we talked about how quickly we’re learning to judge the authenticity of content online. It’s as if our bullshit filters are more finely tuned than ever.

I’m definitely on a riff here, but there’s a lot of threads coming together. Even in someone of my ever upwards creeping years (I’m 46) I suspect my synapses are under construction. Old routes are being torn out and new ones are being built. And with my daughters, many of the paths are being built differently right from the start. The routes that were so important to me in grade school, times tables, rote memorization, etc, are becoming overgrown with weeds through lack of use. But new routes I never even thought of, like how to do homework, carry on an online chat and watch the TV with one eye, are being upgraded into major turnpikes. Multitasking is a major operational imperative now, and selective perception is kicking into overdrive.

Anyway, to further dive into some of the things on my mind, here’s some of the columns where I’m beginning to open up some of these ideas to the fresh, online air:

Infomediating a Broken Marketplace – a look at Hagel and Singers Infomediary model from their book Net Worth. Is Google aiming to be the ultimate match maker in the marketplace?

4000 Ads a Day, and Counting – Part One of the Infomediary Doubleheader, looking at the disconnect between customers who just want the facts, and advertisers that just want to control our buying habits

Some Big Ideas for a Friday – Some musings about how we perceive advertising, based on recent studies we conducted, and how we might be remapping the perception process

How We Navigate Our Online Landscape – The original exploration of landmark, route and survey knowledge and how it may map (or not) to how we navigate our online space

And please, do me a favor. This is all stuff I want to explore further in the book. If you think I’m full of bullshit, call me on it. Share your thoughts. Post a comment. Start a dialogue. I know it’s a pain in the ass posting comments on blogs because of spam, but PLEEASSSE take a few moments to do so. Or drop me an email.

Infomediating a Broken Marketplace

First published October 18, 2007 in Mediapost’s Search Insider

Last week, I explored the disconnect between how advertisers define Nirvana; the ability to control consumer and persuade them at will by inundating them with advertising; and what consumers dream about: authentic and reliable information on needed products and services. There are costs associated with both sides, the cost of advertising, and the cost of consumer research. Max Kalehoff, from Nielsen BuzzMetric, pointed out another cost: the nuisance cost to the consumer of wading through an earlobe-deep sea of irrelevant and uninvited advertising: zapped TV commercials, blaring billboards, glaring signage, email spam, ubiquitous interstitials and pop-ups, preloads… .or one of the zillions of other ways advertisers choose to scream at you.

So, with this highly inefficient, annoying and disconnected marketplace, there has to be a better way, right? Well, Marc Singer and John Hagel III think so. They call it the infomediary, a concept introduced in their 1999 book, “Net Worth.” It’s well worth the read. The one thing that struck me is that in the entire book, the word “Google” is not mentioned once. This is not really surprising, given the publication date, but for reasons that will soon become clear, the irony was not lost on me.

How to Spot an Infomediary

Here’s the basic foundation of the infomediary. Acting on behalf of the client when he’s looking to make a purchase, the infomediary takes previously gathered personal information, as well as information volunteered by the client, and searches for the best match with vendors. The client can choose to remain anonymous, saving himself from an onslaught of advertising. Or, if the client agrees, the infomediary will pass his name along to a qualified vendor, and for this privilege, the vendor will pay the prospect. In essence, the infomediary plays the role of marketing matchmaker.

There are a number of offshoots of this basic premise. The infomediary supplies privacy tools to clients, marketing intelligence to vendors, the opportunity to bargain as a group for lower prices on regular consumable products, and it also acts as an aggregator of consumer power. In effect, the infomediary takes over control of the client relationship, inserting itself squarely between the consumer and the vendor, with the ultimate goal of protecting the consumer. This is a decidedly customer-centric model.

But it’s in the basic concept of gathering information about a client, and using that to ensure a good match with a vendor, that one begins to speculate about Google’s ambitions to fill this role. In essence, at a rudimentary level, Google is already fulfilling some of the role of the infomediary. Certainly if you factor personalization into the equation, we move a big step closer to Singer and Hagel’s concept.

Disruptive Influences

There are a number of dramatically disruptive possibilities in the infomediary model:

  • It forces advertisers to surrender all pretense of control over the consumer. Persuasion becomes a non-issue. The touchpoint with the consumer is stripped of hype, ensuring that product information is authentic and factual.
  • It gives the aggregated consumer voice a level of power never seen before. Previously, the marketplace was vendor-centric: here’s what we offer, here’s how we offer it, here’s what we charge. The consumer’s choice was restricted to “take it or leave it.” Now, the balance shifts to the consumer: here’s what we want, here’s how we want it, here’s what we want to pay. Provide it or we’ll find someone else who can.
  • By gaining control of the customer relationship, it forces companies to focus on two other core processes: one, either product innovation and commercialization; or two, infrastructure management, excelling in producing and distributing a product.

Something’s Rotten in the State of Advertising

There are a number of other seismic shifts in the landscape that come out of the infomediary model, but “Net Worth” weighs in at over 300 pages, and I have a bare 700 to 800 words for this column. The sum of it all is that the infomediary model, or some variation of it, dramatically changes the rules of the marketing game. A terribly inefficient marketplace has evolved in the past century, with some very wobbly power structures. The communication disconnect is almost laughable in its dysfunction. Advertisers spend more and more, hoping to penetrate a barricade set up by increasingly militant consumers. It’s literally a war, with strategies to match. The only hint of concession to the increasing power of the consumer has been search, and that has been done reluctantly. Remember Einstein’s definition of insanity? “Doing the same thing over and over again and expecting different results.”

If you look at the characteristics of an infomediary laid out by Singer and Hagel, Google has many of them in place already, and certainly has the resources to assemble the rest. The one piece that’s missing, and this is the critical one, is a purely customer-centric approach. For all Google’s focus on the user experience, their advertising models are still primarily driven by advertisers, not consumers. But for the model to work, consumers have to have complete trust in the infomediary and be willing to share their personal information. As we’ve seen with the initial pushback to personalization, there’s still a healthy degree of suspicion on the part of users that Google will use personal information for its benefit and not the advertiser’s.

4000 Ads a Day and Counting

First published October 11, 2007 in Mediapost’s Search Insider

It’s not easy being a consumer. Current estimates indicate that the average urban dweller is exposed to between 3,000 and 5,000 advertising messages every day. That means, settling on the middle number, that every waking hour (sleep seems to be our only reprieve, and I hear they’re working on that) you’re presented with an ad every 14.4 seconds. That’s every 14.4 seconds, every minute of every day you’re alive. The frequency of this advertising barrage has doubled in the past 30 years.

“Are We There Yet?”

So, let’s imagine that your 5-year-old child interrupted you every 14 and a half seconds with “Moooommmm…” or “Daaaaddd…”. If we use my patience limits as a baseline here, that mean’s you’d last about 1.3 minutes before you went ballistic. The difference, of course, is that we’re genetically hardwired to pay attention to our children, much as we sometimes might try not to. We’ve been conditioned to ignore advertising.

But what happens when we really want to buy something? Suddenly, we’re looking for information, and we spend a lot of time doing so. At least, that’s true for some purchases. Take a computer, for instance. It’s not unusual to spend 10 to 15 hours researching a computer purchase, from the minute you decide you need one to the minute you tear open the box in your home. That’s not including the many hours needed to get your “plug and play” box actually playing after plugging.

The Cost of Consumer Research

Of course, we generally don’t put a cost on our time, but let’s say an hour of your time is worth about $40 (an average rate for someone making $75,000 per year). That means that $1,000 box of electronics cost you an additional $600, just in time spent to pick the right box.

The Internet is not making this any easier. Yes, as consumers, we’re armed with more information sources, but we spend a lot of time sorting out sense from nonsense. The explosion of information sources, both the good and the bad, mean we’re spending more time thinking about what we should buy. A study by ScanAlert found that that across many ecommerce categories, the average time to buy has increased by almost 79% in the past two years. Now, this was just the duration from first visit to purchase in the actual online store. It doesn’t include any consumer research before visiting the store. But I think we’re safe to assume that there would be a corresponding increase in the amount of online consumer “tire kicking.”

It’s No Picnic for Advertisers Either

Before you feel too sorry for yourself, let me tell you, it’s not easy being an advertiser, either. How do we get past the filters? How do we stand out from the other 3,999 messages you’ll hear today?

To recycle some research I did for a previous column (because research is a terrible thing to waste), the Ontario Tourism Board ran newspaper ads in Toronto targeting people looking to vacation in the province. The ad cost (at posted rate card rates) about $54,000. Even with an exceptional response rate, that ad might sneak though the filters of 1,700 or so people and actually catch their attention. This works out to an average cost of about $32 per introduction, or, to put it another way, $32 to tear a hole through that advertising barricade you’ve been building.

Got a Minute? I’ll Make it Worth Your While

So, if advertisers are willing to pay to get your attention, why not cut out the middle man and pay you directly? Why should the Toronto Star get all that money, when you’re the person the advertiser wants to talk to? What if every one of those 4,000 advertisers who are going to try to get your attention today (Consuummmerrr…Consummmerrr!) paid you a dollar to listen to what they have to say? You’d do okay financially, to the tune of about $1.46 million a year. Of course, your brain would explode after the first hour.

The concept is not as far-fetched as it seems. In fact, in 1999 John Hagel III and Marc Singer, both principals with McKinsey and Company, wrote a book called “Net Worth” that explored this very premise (along with a number of others) as a potential online business model. The book provided a detailed business plan for a new concept: the infomediary. Some of the details have been passed over in the last eight years since publication, but the basic premise still addresses a significant disconnect in today’s advertising marketplace. Next week, I’ll lay out the foundation of infomediaries and look at how some of our favorite search players seem to be inching their way towards Hagel and Singer’s proposal.

We now return you to your regular commercial onslaught.

On Your Search Menu Tonight

First published October 4, 2007 in Mediapost’s Search Insider

This week Yahoo unveiled a new feature. It doesn’t really change the search game that much in terms of competitive functionality. If anything, it’s another case of Yahoo catching up with the competition. But it may have dramatic implications from a user’s point of view. To illustrate that point further I’d like to share a couple of stories with you.

The feature is called Search Assist. You type your query in, and Yahoo provides a list under the query box with a number of possible ways you could complete the query. This follows in the footsteps of Google’s search suggestions in its toolbar. Currently, Google doesn’t offer this functionality within the standard Google query box, at least in North America. Ask also offers this feature.

Because Yahoo is late to the game, the company had the opportunity to up the functionality a little bit. For example, the suggestions that come from Yahoo can include the word you’re typing anywhere in the suggested query phrase. Google uses straight stemming, so the word you’re typing is always at the beginning of the suggested phrases. Yahoo also seems to be pulling from a larger inventory of suggested phrases. The few test queries I did brought back substantially more suggestions than did Google.

It’s not so much the functionality of this feature that intrigues me; it’s how it could affect the way we search. I personally have found that I come to rely on this feature in the Google toolbar more and more. Rather than structuring a complete query in my mind, I type the first few letters of the root word in and see what Google offers me. It leads me to select query phrases that I probably never would have thought of myself.

Some time ago I wrote that contrary to popular belief, we’ve actually become quite adept at paring our queries down to the essential words. It’s not that we don’t know how to launch an advanced query; it’s that most times, we don’t need to. This becomes even truer with search suggestions. All we have to do is think of one word, and the search engine will serve us a menu of potential queries. It reduces the effort required from the searcher, but let me tell you a story about how this might impact a company’s reputation online.

I Wouldn’t Recommend That Choice

Some time ago I got a voicemail from an equity firm. The woman who left a message was brash, a little abrasive and left a rather cryptic message, insisting that I had to phone her right back. Now, since I’m in the search game, getting calls from venture capitalists and investment bankers is nothing really new. But I’d never quite heard this tone from one of these prospecting calls before. So, I did as I usually do in these cases and decided to do a little more research on the search engines to determine whether I was actually going to return this call or not. I did my quick 30-second reputation check.

Normally, I would just type in the name of the firm and see what came up in the top 10 results. Usually, if there’s strong negative content out there, it’s worth paying attention to and it tends to collect enough search equity to break the top 10. This time, I didn’t even have to get as far as the results page. The minute I started typing the company name into my Google toolbar, the suggestions Google was providing me told the entire story: “company” scam, “company” fraud and “company” lawsuits. Of the top eight suggestions, over half of them were negative in nature. Not great odds for success. Needless to say, I never returned the call.

If these search suggestions are going to significantly alter our search patterns, we should be aware of what’s coming up in those suggestions for our branded terms. Type your company name into Yahoo or Google’s toolbar and see what variations are being served to you. Some of them may not be that appetizing.

Would You Prefer Szechuan?

My belief is that users are increasingly going to use this to structure their queries. It moves search one step closer to be coming a true discovery engine. One of the overwhelming characteristics of search user behavior is that we’re basically lazy. We want to expand a minimal amount of effort but in return, we expect a significant degree of relevance. Search suggestions allow us to enter a minimum of keystrokes and the search engine obliges us with a full menu of options.

This brings me to my other story. Earlier this year we did some eye-tracking research on how Chinese citizens interact with the search engines Baidu and Google China. After we released the preliminary results of the study, I had a chance to talk to a Google engineer who worked on the search engine. In China, Google does provide real-time search suggestions right from the query box. The company found that it’s significantly more work to type a query in Mandarin than it is in most Western languages. Using a keyboard for input in China is, at best, a compromise. So Google found that because of the amount of work required to enter a query, the average query length was quite short in China, giving a substantially reduced degree of relevancy. In fact, many Chinese users would type in the bare minimum required and then would scroll to the bottom of the page, where Google showed other suggested queries. Then, the user would just click on one of these links. Hardly the efficient searching behavior Google was shooting for. After introducing real-time search suggestions for the query box, Google found the average length of query increased dramatically and supposedly, so did the level of user satisfaction.

Search query suggestions are just one additional way we’ll see our search behavior change significantly over the next year or two. Little changes, like a list of suggested queries or the inclusion of more types of content in our results pages, will have some profound effects. And when search is the ubiquitous online activity it is, it doesn’t take a very big rock to create some significant and far-reaching ripples.