Why Free News is (usually) Bad News

Pretty much everything about the next week will be unpredictable. But whatever happens on Nov. 3, I’m sure there will be much teeth-gnashing and navel-gazing about the state of journalism in the election aftermath.

And there should be. I have written much about the deplorable state of that particular industry. Many, many things need to be fixed. 

For example, let’s talk about the extreme polarization of both the U.S. population and their favored news sources. Last year about this time, the PEW Research Center released a study showing that over 30% of Americans distrust their news sources. 

But what’s more alarming is, when we break this down by Republicans versus Democrats, only 27% of Democrats didn’t trust the news for information about politics or elections. With Republicans, that climbed to a whopping 67%. 

The one news source Republicans do trust? Fox News. Sixty-five percent of them say Fox is reliable. 

And that’s a problem.

Earlier this year, Ad Fontes Media came out with its Media Bias Chart. It charts major news and media channels on two axes: source reliability and political bias. The correlation between bias and reliability is almost perfect. The further a news source is out to the right or left, the less reliable it is.

How does Fox fare? Not well. Ad Fontes separates Fox TV from Fox Online. Fox Online lies on the border between being “reliable for news, but high in analysis/opinion content” and “some reliability issues and/or extremism.” Fox TV falls squarely in the second category.

I’ve written before that media bias is not just a right-wing problem. Outlets like CNN and MSNBC show a significant left-leaning bias. But CNN Online, despite its bias, still falls within the “Most Reliable for News” category. According to Ad Fontes, MSNBC has the same reliability issues as Fox.

The question that has to be asked is “How did we get here?”  And that’s the question tackled head-on in a new book, “Free is Bad,” by John Marshall.

I’ve known Marshall for ages. He has covered a lot of the things I’ve been writing about in this column. 

“It is difficult to get a man to understand something, when his salary depends on his not understanding it.” 

Upton Sinclair

The problem here is one of incentive. Our respective media heads didn’t wake up one morning and say, “You know what we need to be? A lot more biased!” They have walked down that path step by step, driven by the need to find a revenue model that meets their need for profitability. 

When we talk about our news channels, the obvious choice to be profitable is to be supported by ads. And to be supported by ads, you have to be able to target those ads. One of the most effective targeting strategies is to target by political belief, because it comes reliably bundled with a bunch of other beliefs that makes it very easy to predict behaviors. And that makes these ads highly effective in converting prospects.

This is how we got to where we are. But there are all types of ways to prop up your profit through selling ads. Some are pretty open and transparent. Some are less so. And that brings us to a particularly interesting section of Marshall’s book. 

John Marshall is a quant geek at heart. He has been a serial tech entrepreneur — and, in one of those ventures, built a very popular web analytics platform. He also has intimate knowledge of how the sausages are made in the ad-tech business. He knows sketchy advertising practices when he sees them. 

Given all of this, Marshall was able to undertake a fascinating analysis of the ads we see on various news platforms that dovetails nicely with the Ad Fontes chart. 

Marshall created the Ad Shenanigans chart. Basically, he did a forensic analysis of the advertising approaches of various online news platforms. He was looking for those that gathered data about their users, sold traffic to multiple networks, featured clickbait chumboxes and other unsavory practices. Then he ranked them accordingly.

Not surprisingly, there’s a pretty strong correlation between reputable reporting and business ethics. Highly biased and less reputable sites on the Ad Fontes Bias Chart (Breitbart, NewsMax, and Fox News) all can also be found near the top of Marshall’s Ad Shenanigans Chart. Those that do seem to have some ethics when it comes to the types of ads they run also seem to take objective journalism seriously. Case in point, The Guardian in the UK and ProPublica in the U.S.

The one anomaly in the group seems to be CNN. While it does fare relatively well on reputable reporting according to Ad Fontes, CNN appears to be willing to do just about anything to turn a buck. It ranks just a few slots below Fox in terms of “ad shenanigans.”

Marshall also breaks out those platforms that have a mix of paid firewalls and advertising. While there are some culprits in the mix such as the Daily Caller, Slate and the National Review, most sites that have some sort of subscription model seem to be far less likely to fling the gates of their walled gardens open to the ethically challenged advertising hordes. 

All of this drives home Marshall’s message: When it comes to the quality of your news sources, free is bad. As soon as something costs you nothing, you are no longer the customer. You’re the product. Invisible hand market forces are no longer working for you. They are working for the advertiser. And that means they’re working against you if you’re looking for an unbiased, quality news source.

Amazon Prime: Buy Today, Pay Tomorrow?

This column goes live on the most eagerly anticipated day of the year. My neighbor, who has a never-ending parade of delivery vans stopping in front of her door, has it circled on her calendar. At least one of my daughters has been planning for it for several months. Even I, who tends to take a curmudgeonly view of many celebrations, has a soft spot in my heart for this particular one.

No, it’s not the day after Canadian Thanksgiving. This, my friends, is Amazon Prime Day!

Today, in our COVID-clouded reality, the day will likely hit a new peak of “Prime-ness.” Housebound and tired of being bludgeoned to death by WTF news headlines, we will undoubtedly treat ourselves with an unprecedented orgy of one-click shopping. And who can blame us? We can’t go to Disneyland, so leave me alone and let me order that smart home toilet plunger and the matching set of Fawlty Towers tea towels that I’ve been eyeing. 

Of course, me being me, I do think about the consequences of Amazon’s rise to retail dominance. 

I think we’re at a watershed moment in our retail behaviors, and this moment has been driven forward precipitously by the current pandemic. Being locked down has forced many of us to make Amazon our default destination for buying. Speaking solely as a sample of one, I know check Amazon first and then use that as my baseline for comparison shopping. But I do so for purely selfish reasons – buying stuff on Amazon is as convenient as hell!

I don’t think I’m alone. We do seem to love us some Amazon. In a 2018 survey conducted by Recode, respondents said that Amazon had the most positive impact on society out of any major tech company. And that was pre-Pandemic. I suspect this halo effect has only increased since Amazon has become the consumer lifeline for a world forced to stay at home.

As I give into to the siren call of Bezos and Co., I wonder what forces I might be unleashing. What unintended consequences might come home to roost in years hence? Here are a few possibilities. 

The Corporate Conundrum

First of all, let’s not kid ourselves. Amazon is a for-profit corporation. It has shareholders that demand results. The biggest of those shareholders is Jeff Bezos, who is the world’s richest man. 

But amazingly, not all of Amazon’s shareholders are focused on the quarterly financials. Many of them – with an eye to the long game – are demanding that Amazon adopt a more ethical balance sheet.  At the 2019 Annual Shareholder Meeting, a list of 12 resolutions were brought forward to be voted on. The recommendations included zero tolerance for sexual harassment and hate speech, curbing Amazon’s facial recognition technology, addressing climate change and Amazon’s own environmental impact. These last two were supported by a letter signed by 7600 of Amazon’s own employees. 

The result? Amazon strenuously fought every one of them and none were adopted. So, before we get all warm and gooey about how wonderful Amazon is, let’s remember that the people running the joint have made it very clear that they will absolutely put profit before ethics. 

A Dagger in the Heart of Our Communities

For hundreds of years, we have been building a supply chain that was bound by the realities of geography. That supply chain required some type of physical presence within a stone’s throw of where we live. Amazon has broken that chain and we are beginning to feel the impact of that. 

Community shopping districts around the world were being gutted by the “Amazon Effect” even before COVID. In the last 6 months, that dangerous trend has accelerated exponentially. In a commentary from CNBC in 2018, venture capitalist Alan Patricof worried about the social impact of losing our community gathering spots, “This decline has brought a deterioration in places where people congregated, socialized, made friends and were greeted by a friendly face offering an intangible element of belonging to a community.”

The social glue that held us together has been dissolving over the past two decades. Whether you’re a fan of shopping malls or not (I fall into the “not” category) they were at least a common space where you might run into your neighbor. In his book Bowling Alone, from 2000, Harvard political scientist Robert Putnam documented the erosion of social capital in America. We are now 20 years hence and Putnam’s worst case scenario seems quaintly optimistic now. With the loss of our common ground – in the most literal sense – we increasingly retreat to the echo chambers of social media. 

Frictionless Consumerism

This last point is perhaps the most worrying. Amazon has made it stupid simple to buy stuff. They have relentlessly squeezed every last bit of friction out of the path to purchase. That worries me greatly.

If we could rely on a rational marketplace filled with buyers acting in the best homo economicus tradition, then I perhaps rest easier, knowing that there was some type of intelligence driving Adam Smith’s Invisible Hand. But experience has shown that is not the case. Rampant consumerism appears to be one of the three horsemen of the modern apocalypse. And, if this is true, then Amazon has put us squarely in their path. 

This is not to even mention things like Amazon’s emerging monopoly-like dominance in a formerly competitive marketplace, the relentless downward pressure it exerts on wages within its supply chain, the evaporation of jobs outside its supply chain or the privacy considerations of Alexa. 

Still, enjoy your Amazon Prime Day. I’m sure everything will be fine.

Bubbles, Bozos and the Mediocrity Sandwich

I spent most of my professional life inside the high-tech bubble. Having now survived the better part of a decade outside said bubble, I have achieved enough distance to be able to appreciate the lampooning skills of Dan Lyons. If that name doesn’t sound familiar, you may have seen his work. He was the real person behind the Fake Steve Jobs blog. He was also the senior technology editor for Forbes and Newsweek prior to being cut loose in the print media implosion. He later joined the writing staff of Mike Judge’s brilliant HBO series Silicon Valley.

Somewhere in that career arc, Lyons briefly worked at a high tech start up.  From that experience, he wrote Disrupted: My Misadventure in the Start Up Bubble.” It gives new meaning to the phrase “painfully funny.”

After being cast adrift by Forbes, Lyons decided to change his perspective on the Bubble from “outside looking in” to “inside looking out.” He wanted to jump on the bubble band wagon, grab a fistful of options and cash in. And so he joined HubSpot as a content producer for their corporate blog. The story unfolds from there.

One particularly sharp and insightful chapter of the book recalls Steve Job’s “Bozo Explosion”:

“Apple CEO Steve Jobs used to talk about a phenomenon called a ‘bozo explosion,’ by which a company’s mediocre early hires rise up through the ranks and end up running departments. The bozos now must hire other people, and of course they prefer to hire bozos. As Guy Kawasaki, who worked with Jobs at Apple, puts it: ‘B players hire C players, so they can feel superior to them, and C players hire D players.’ “

The Bozo Explosion is somewhat unique to tech start-ups, mainly because of some of the aspects of the culture I talked about in a previous column. But I ran into my own version back in my consulting career. And I ran into it in all kinds of companies. I used to call it the Mediocrity Sandwich.

The Mediocrity Sandwich lives in middle management. I used to find that the people at the C Level of the company were usually pretty smart and competent (that said, I did run across some notable exceptions in my time). I also found that the people found on the customer facing front lines of the company were also pretty smart and – more importantly – very aware of the company’s own issues.

But addressing those issues invariably caused a problem. You have senior executives who were certainly capable of fixing the problems, whatever they might be. And you had front line employees who were painfully aware of what the problems were and motivated to implement solutions. But all the momentum of any real problem-solving initiative used to get sucked out somewhere in the middle of the corporate org chart. The problem was the Mediocrity Sandwich.

You see, I don’t think the Bozo Explosion is so much a pyramid – skinny at the top, broad at the bottom – as it is an inverted U-Shaped curve. I think “bozoism” tends to peak in the middle. You certainly have the progression from A’s to B’s to C’s as you move down from the top executive rungs. But then you have the inverse happening as you move from Middle Management to the front lines. The problem is the attrition of competence as you became absorbed into the organization. It’s the Bozo Explosion in reverse.

I usually found there was enough breathing room for competence to survive at the entry level in the organization. There were enough degrees of separation between the front line and the from the bozos in middle management. But as you started to climb the corporate ladder, you kept getting closer to the bozos. Your degree of job frustration began to climb as they had more influence over your day-to-day work. Truly competent players bailed and moved on to a less bozo-infested environment. Those that remained either were born bozos or had “bozo”ness thrust upon them. Either way, as you climbed towards middle management, the bozo factor climbed in lock step. The result? A bell curve of bozos centered in the middle between the C-Level and the front lines.

This creates a poisonous outlook for the long-term prospects of a company. Eventually, the C level executive will age out of their jobs. But who will replace them? The internal farm team is a bunch of bozos. You can recruit from outside, but then the incoming talent inherits a Mediocrity Sandwich. The company begins to rot from within.

For companies to truly change, you have to root out the bozo-rot, but this is easier said than done. If there is one single thing that bozos are good at, it is bozo butt-covering.

What Happens When A Black Swan Beats Up Your Brand

I’m guessing the word Corona brings many things to your mind right now — and a glass full of a ice-cold beer may not be one of them. A brand that once made us think of warm, sunny beaches and Mexican vacations on the Mayan Riviera now is mentally linked to a global health crisis. Sometimes the branding gods smile on you in their serendipity, and sometimes they piss in your cornflakes. For Grupo Modelo, the makers of Corona beer, the latter is most definitely the case.

As MediaPost Editor Joe Mandese highlighted in a post last week, almost 40% of American beer drinkers in a recent poll would not buy Corona under any circumstances. Fifteen percent of regular Corona drinkers would no longer order it in public. No matter how you slice those numbers, that does not bode well for the U.S.’s top-selling imported drink.

It remains to be seen what effect the emerging pandemic will have on the almost 100-year-old brand. Obviously, Grupo Modelo, the owners of the brand, are refuting that there is any permanent damage. But then, what else would you expect them to say?  There’s a lot of beer sitting on shelves around the world that is waiting to be drunk. It’s just unfortunate it has the same name as a health crisis that so far is the biggest story of this decade.

This is probably not what the marketing spin doctors at Grupo Modelo want to hear, but a similar thing happened about 40 years ago.  Here is the story of another brand whose name got linked to the biggest health tragedy of the 1980s.

In 1946 the Carlay Company of Chicago registered a trademark for a “reducing plan vitamin and mineral candy” that had been in commercial use for almost a decade. The company claimed that users of the new “vitamin” could “lose up to 10 pounds in 5 days, without dieting or exercising.” The Federal Trade Commission soon called bullshit on that claim, causing the Carlay Company to strip it from its marketing in 1944.

Marketing being marketing, it wasn’t the vitamins in this “vitamin” that allegedly caused the pounds to melt away. In the beginning, it was something that chemists call benzocaine. That’s a topical anesthetic you’ll also find it in over-the-counter products like Orajel. Basically, benzocaine numbed the tongue. The theory was that a tongue that couldn’t taste anything would be less likely to crave food.

The active ingredient was later changed to phenylpropanolamine, which was also used as a decongestant in cold medications and to control urinary incontinence in dogs. In the ‘60s and ’70s, it became a common ingredient in many diet pills. Then it was discovered to cause strokes in young women.

The Carlay Company eventually became part of the Campana Corporation, which in turn was sold to Purex. The product morphed from a vitamin to a diet candy and was sold in multiple flavors, including chocolate, chocolate mint, butterscotch and caramel. If you remember Kraft caramels — little brown cubes packaged in clear cellophane — you have a good idea what these diet candies looked like.

Despite the shaky claims and dubious ingredients, the diet candies became quite popular. I remember my mother, who had a lifelong struggle with her weight, usually had a box of them in the cupboard when I was growing up. Sale hit their peak in the ‘70s and early ‘80s. There were TV ads and celebrity endorsers — including Bob Hope and Tyrone Power — lined up to hawk them.

Then, in 1981, the Centers for Disease Control and Prevention (CDC) published a report about five previously healthy men who all became infected with pneumocystis pneumonia. The odd thing was that this type of pneumonia is almost never found in healthy people. There was another odd thing. All five men were gay. In 1982, the CDC gave a name to this new disease: AIDS.

Of all the ways AIDS changed our world in the 1980s, one was particularly relevant to the marketers of those diet candies, which just happened to be named Ayds.

You can see the problem.

Ayds soldiered on until 1988, despite sales that dropped 50%. The company tried to find a new name, including Diet Ayds and Aydslim in the U.K. It was too little, too late. The candies were eventually withdrawn from the market.

Does this foretell the fate of Corona beer? Perhaps not. AIDS has been part of our public consciousness for four decades. A product with a similar sounding name didn’t stand a chance. We can hope that coronavirus will not have the same longevity. And the official name of the outbreak has now been changed to Covid19. For both these reasons, Corona — the beer — might be able to ride out the storm caused by corona, the virus.

But you can bet that there are some pretty uncomfortable meetings being held right now in the marketing department boardroom at Grupo Modelo.

Lee Iacocca and the Celebrity CEO

The recent passing of Lee Iacocca (on July 2) got me thinking about the celebrity CEO phenomenon. This is a sign of our times — our obsession with celebrity. Iacocca was not the first celebrity CEO, but he certainly ushered in a new era of personalized corporate brand building.

With Iacocca, having a bigger than life CEO went from being an oddity to a corporate expectation. In an article on Bloomberg.com, writer Joe Nocera notes, “Yes, there had been other famous corporate chieftains before Iacocca — John D. Rockefeller and Walt Disney come to mind — but they were the exceptions to the rule that CEOs should be low-key, boring even. Iacocca made it okay for a chief executive not just to gain fame, but to desire it.”

If you read any of the tributes to Iacocca, he is credited with:

  • Introducing the concept of auto loans
  • Creating the Ford Mustang
  • Introducing the Minivan
  • Saving Chrysler

But perhaps Iacocca’s biggest legacy was paving the way for celebrity CEOs who would follow in his footsteps. By stepping out from behind the mahogany desk and in front of the camera, he created the mold that would later turn out Steve Jobs, Bill Gates and Elon Musk.

My intention is not to take anything away from these leaders. It’s just to put things in perspective.

How Much Influence Does a CEO Really Have?

We love a great story, and one of the foundations of a story has always been the hero. We find the hero’s journey a compelling narrative arc, and we tend to ascribe heroic qualities without necessarily making sure our anointed heroes have the right qualifications. This is certainly true in the corporate world.

Phil Rosenzweig’s extraordinary book, “The Halo Effect,” strips the compelling narratives away from corporate success stories. He urges us to take a more scientific approach to determining what really works. And when we apply some scientific rigor to the concept of a celebrity CEO, we find (according to two studies Rosenzweig cites in his book) that the actual influence of a leader on the success of a company is between 4% and 10%.

A 10% swing is nothing to sneeze at. It’s certainly statistically significant. And this is an average over a number of companies in the study. I suspect if one was to accurately measure the influence of a Steve Jobs or Lee Iacocca on their companies, it could be much higher.

But when we consistently confuse correlation and causation and automatically give a celebrity CEO all the credit for a company’s success, we could be making an attribution error. We are giving short shrift to all the other factors that may have led to that success. We are applying a simple answer to a complex question. And we humans tend to do that — a lot.

The Cult of Personality

When we make this mistake while looking backwards, it’s one thing. But when we move forward under this mistaken assumption, it’s quite another. We fall victim to the oversimplification of the “great man theory,” where we believe history can pivot on the capabilities of one person. We also run the very real risk of creating a cult of personality.

The idea of the personality cult came from a speech by former Soviet Union Premier Nikita Khrushchev. In it, he criticized the idealization of Joseph Stalin and Mao Zedong. When a populace believes that one person has the power to right all wrongs, it confers on that person a frightening amount of authority. It also condones the mechanisms required to consolidate power in the hands of that person.

Wikipedia outlines the typical path that leads to a cult of personality:“(it) arises when a country’s regime – or, more rarely, an individual – uses the techniques of mass media, propaganda, the big lie, spectacle, the arts, patriotism, and government-organized demonstrations and rallies to create an idealized, heroic, and worshipful image of a leader, often through unquestioning flattery and praise.” 

Mistaking Charisma for Competency

Even if we do accept that the right person may make all the difference, we then come to the issue of how we’d recognize that person when we see them. Again, we run into the fallacy of the “Halo Effect.”

When we don’t have (or want) empirical evidence of a person’s competence, we look for a proxy signal for that competence. That’s why CEOs of Fortune 500 companies are generally two-and-a-half inches taller than the average American. Its why good-looking people are assumed to be kinder and more compassionate. And — if we’re looking for a leader — it’s why we believe charisma equals competency. We are often wrong about this. In fact, there’s probably a better chance that charisma goes hand in hand with sociopathy.  Oops.

I do believe that we have been blessed with some extraordinary corporate leaders. And some of these have deservedly become celebrities. Lee Iacocca was probably one of these.

But I also believe we are walking down a dangerous path when we believe this is the rule rather than the exception. To succeed in solving complex problems — which defines almost every problem we face — we need complex solutions. And those solutions almost never come in the form of one person. To believe they do is to ignore the true scope of the issue.

Is There Still Room In Today’s Marketing World For Rick Steves?

U.S. travel writer and TV personality Rick Steves is — well, there’s no really kind way to put this — a weenie.

His on-air persona (on “Rick Steves’ Europe”) is a mix of high school social studies teacher, khaki-clad accountant cracking Dad jokes — and the guy you get stuck next to at a museum lecture on 16th century Venetian architecture that your wife made you go to.

According to a recent profile in The New York Times, he’s “one of the legendary PBS superdorks — right there in the pantheon with Mr. Rogers, Bob Ross and Big Bird.”

Rick Steves is undoubtedly a nice guy — Ned Flanders (of “The Simpsons” fame) nice. He’s not the guy you’re going to invite to your stag party in Las Vegas — not unless you were planning a prank involving prostitutes, illicit drugs and an involuntary neck tattoo. But Ed Helms already had that role.

Despite all this — or perhaps because of it — Steves is one of the most trusted travel brands in the U.S. and Canada. His name appears prominently on countless guide books, podcasts, seminars, a weekly syndicated column and the perennially running PBS series.

It was the last of these that brought him top of mind for me recently. He was hosting a fund-raising marathon this past weekend on my nearest PBS affiliate, KCTS in Seattle. And as Steves good-naturedly bumbled his way through Tuscany, I asked myself this question: “Could Rick Steves be a start-up brand today?”

Yes, he is a successful brand, but could he become a successful brand from a standing start? In other words, can a weenie still win in today’s world?

Today, everything needs to be instantly shareable. Branding is all about virality. Things that live at the extremes are the ones that spread through social networks. We are more Kanye West and Kim Kardashian than we are Danny Kaye and Doris Day. That was then. This is now.

You can’t ignore the fact that Steves’ target market is well north of their 50thbirthday. They are the ones who still remember who Danny Kaye and Doris Day were. So I ask again: Is being passionate and earnest (two things Rick Steves undoubtedly is) enough to break our collective ennui in today’s hyperbolic world?

I ask this question somewhat selfishly, for I, too, am a weenie. I have long lived on the dorkish end of the spectrum. I like me a good dad joke (e.g., People in Athens hate getting up early. Because Dawn is tough on Greece). And I have to wonder. Can nice, decidedly un-cool people still finish first? Or  at least not last?

It’s an important question. Because if there is no longer room in our jaded awareness for a Rick Steves, we’re missing out on something very important.

Steves has won his trust the hard way. He has steadfastly remained objective and unsponsored. He provides advice targeted at the everyday traveler. He is practical and pragmatic.

And he is consistently idealistic, believing that travel pries open our perspective and makes us better, more tolerant people. This mission is proudly stated on his corporate website: “We value travel as a powerful way to better understand and contribute to the world in which we live. We strive to keep our own travel style, our world outlook, and our business practices consistent with these values.”

This is no “flash-in-the pan” brand bite crafted for a social share. This is a mission statement backed by over 40 years of consistent delivery to its ideals. It’s like Steves himself: earnest, sincere, thoughtful and just a little bit dorky.

If you ask me, the world could use a little less Kanye West and a little more Rick Steves.

It’s the Fall that’s Gonna Kill You

Butch: I’ll jump first.
Sundance: Nope.
Butch: Then you jump first.
Sundance: No, I said!
Butch: What’s the matter with you?!
Sundance: I can’t swim!
Butch:  Why, you crazy — the fall’ll probably kill ya!

                                     Butch Cassidy and the Sundance Kid – 1969

Last Monday, fellow Insider Steven Rosenbaum asked, “Is Advertising Obsolete?” The column and the post by law professor Ramsi Woodcock that prompted it were both interesting. So were the comments – which were by and large supportive of good advertising.

I won’t rehash Rosenbaum’s column, but it strikes me that we – being the collective we of the MediaPost universe – have been debating whether advertising is good or bad, relevant or obsolete, a trusted source of information or a con job for the ages and we don’t seem to be any closer to an answer.

The reason is that an advertisement is all of those things. But not at the same time.

I used to do behavioral research, specifically eye-tracking. And the end of an eye tracking study, you get what’s called an aggregate heat map. This is the summary of all the eyeball activity of all the participants over the entire duration of all interactions with whatever the image was. These were interesting, but personally I was fascinated with the time slices of the interactions. I found that often, you can learn more about behaviors by looking at who looked at what when. It was only when we looked at interactions on a second by second basis that we started to notice the really interesting patterns emerge. For example, when looking at a new website, men looked immediately at the navigation bar, whereas women were first drawn to the “hero” image. But if you looked at the aggregates – the sum of all scanning activities – the men and women’s images were almost identical.

I believe the same thing is happening when we try to pin down advertising. And it’s because advertising – and our attitudes towards it – change through the life cycle of a brand, or product, or company.

Our relationship with a product or brand can be represented by an inverted U chart, with the vertical axis being awareness/engagement and the horizontal axis being time. Like a zillion other things, our brain defines our relationship with a product or brand by a resource/reward algorithm. Much of human behavior can be attributed to a dynamic tension between opposing forces and this is no exception. Driving us to explore the new are cognitive forces like novelty seeking and changing expectations of utility while things like cognitive lock in and the endowment effect tend to keep us loyal. As we engage with a new product or brand, we climb up the first side of the inverted U. But nothing in nature continues on a straight line, much as every sales manager would love it to. At some point, our engagement will peak and we’ll get itchy feet to try something new. Then we start falling down the descent of the U. And it’s this fall that kills our acceptance of advertising.

2000px-HebbianYerkesDodson.svgThis inverted U shows up all the time in human behavior. We assume you can never have too much of a good thing, but this is almost never true. There’s even a law that defines this, known as the Yerkes-Dodson Law. Developed by psychologists Robert Yerkes and John Dodson in 1908, it plots performance against mental or physical arousal. Predictably, performance increases with how fully we’re engaged with whatever we’re doing – but only up to a point. Then, performance peaks and starts to decline into anxiety.

It’s also why TV show runners are getting smarter about ending a series just as they crest the top of the hump. Hard lessons about the dangers of the decline have been learned by the jumping of multiple sharks.

Our entire relationship with a brand or product is built on the foundation of this inverted U, so it should come as no surprise that our acceptance of advertising for said brand or product also has to be plotted on this same chart. Yet it seems to constantly comes as a surprise for the marketing teams. In the beginning, on the upslope of the upside-down U, we are seeking novelty, and an advertisement for something new fits the bill.

When the inevitable downward curve starts, the sales and marketing teams panic and respond by upping advertising. They do their best to maintain a straight up line, but it’s too late. The gap between their goals and audience acceptance continues to grow as one line is projected upwards and the other curves ever more steeply downwards. Eventually the message is received and the plug is pulled, but the damage has already been done.

When we look at advertising, we have to plot it against this ubiquitous U. And when we talk about advertising, we have to be more careful to define what we’re talking about. If we’re talking specifically, we will all be able to find examples of useful and even welcome ads. But when I talk about the broken contract of advertising, I speak in more general terms. In the digital compression of timelines, we are reaching the peak of advertising effectiveness faster than ever before. And when we hit the decline, we actively reject advertising because we can. We have other alternatives. This decline is dragging the industry down with it. Yes, we can all think of good ads, but the category is suffering from our evolving opinion which is increasingly being formed on the downside of the U.

 

 

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.

 

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.