The Split-Second Timing of Brand Trust

Two weeks ago, I talked about how brand trust can erode so quickly and cause so many issues. I intimated that advertising and branding have become decoupled — and advertising might even erode brand trust, leading to a lasting deficit.

Now I think that may be a little too simplistic. Brand trust is a holistic thing — the sum total of many moving parts. Taking advertising in isolation is misleading. Will one social media ad for a brand lead to broken trust? Probably not. But there may be a cumulative effect that we need to be aware of.

In looking at the Edelman Trust Barometer study closer, a very interesting picture emerges. Essentially, the study shows there is a trust crisis. Edelman calls it information bankruptcy.

The slide in trust is probably not surprising. It’s hard to be trusting when you’re afraid, and if there’s one thing the Edelman Barometer shows, it’s that we are globally fearful. Our collective hearts are in our mouths. And when this happens, we are hardwired to respond by lowering our trust and raising our defenses.

But our traditional sources for trusted information — government and media — have also abdicated their responsibilities to provide it. They have instead stoked our fears and leveraged our divides for their own gains. NGOs have suffered the same fate. So, if you can’t trust the news, your leaders or even your local charity, who can you trust?

Apparently, you can trust a corporation. Edelman shows that businesses are now the most trusted organizations in North America. Media, especially social media, is the least trusted institution. I find this profoundly troubling, but I’ll put that aside for a future post. For now, let’s just accept it at face value.

As I said in that previous column, we want to trust brands more than ever. But we don’t trust advertising. This creates a dilemma for the marketer.

This all brings to mind a study I was involved with a little over 10 years ago. Working with Simon Fraser University, we wanted to know how the brain responded to trusted brands. The initial results were fascinating — but unfortunately, we never got the chance to do the follow-up study we intended.

This was an ERP study (event-related potential), where we looked at how the brain responded when we showed brand images as a stimulus. ERP studies are useful to better understand the immediate response of the brain to something — the fast loop I talk so much about — before the slow loop has a chance to kick in and rationalize things.

We know now that what happens in this fast loop really sets the stage for what comes after. It essentially makes up the mind, and then the slow loop adds rational justification for what has already been decided.

What we found was interesting: The way we respond to our favorite brands is very similar to the way we respond to pictures of our favorite people. The first hint of this occurred in just 150 milliseconds, about one-sixth of a second. The next reinforcement was found at 400 milliseconds. In that time, less than half a second in total, our minds were made up. In fact, the mind was basically made up in about the same time it takes to blink an eye.  Everything that followed was just window dressing.

This is the power of trust. It takes a split second for our brains to recognize a situation where it can let its guard down. This sets in motion a chain of neurological events that primes the brain for cooperation and relationship-building. It primes the oxytocin pump and gets it flowing. And this all happens just that quickly.

On the other side, if a brand isn’t trusted, a very different chain of events occurs just as quickly. The brain starts arming itself for protection. Our amygdala starts gearing up. We become suspicious and anxious.

This platform of brand trust — or lack of it — is built up over time. It is part of our sense-making machinery. Our accumulating experience with the brand either adds to our trust or takes it away.

But we must also realize that if we have strong feelings about a brand, one way or the other, it then becomes a belief. And once this happens, the brain works hard to keep that belief in place. It becomes virtually impossible at that point to change minds. This is largely because of the split-second reactions our study uncovered.

This sets very high stakes for marketers today. More than ever, we want to trust brands. But we also search for evidence that this trust is warranted in a very different way. Brand building is the accumulation of experience over all touch points. Each of those touch points has its own trust profile. Personal experience and word of mouth from those we know is the highest. Advertising on social media is one of the lowest.

The marketer’s goal should be to leverage trust-building for the brand in the most effective way possible. Do it correctly, through the right channels, and you have built trust that’s triggered in an eye blink. Screw it up, and you may never get a second chance.

The Deconstruction of Trust

Just over a week ago, fellow Insider Steven Rosenbaum wrote a post entitled “Trust Is In Decline Worldwide.” He quotes from the Edelman Trust Barometer Report for 2021. There, graph after graph shows this decline. And that feels exactly right. The Barometer “reveals an epidemic of misinformation and widespread mistrust of societal institutions and leaders around the world.”

Here in the ad biz, the decline of trust is nothing new. We’ve been seeing it slip for at least the last decade.

But that is not a universal truth. Yes, trust in advertising is in decline. But trust in brands — at least, some brands — has never been higher. And that is indicative of the decoupling we’re seeing between the concept of brand and the practice of advertising. One used to support the other. Now, even when an ad works, it may be stripping the trust from a brand.

This decline in advertising trust also varies from generation to generation. An Ofcom study in the UK of young adults 16 to 34 found that 91.6% of all respondents had little or no trust in ads. The same study found that if you were looking for trustworthy sources, 73.5% would go to online reviews or recommendations of friends.

One reason for this erosion in trust is that advertising has been slumming. Social media advertising is the least trustworthy channel that exists. The vast majority of us don’t trust what we see on it. Yet the advertising dollars continue to pour into social media.

Yet more than ever, we want to trust a brand. The Edelman Report shows that business is the most trusted institution, ahead of NGOs, government and media. And the brands that are rising to the challenge are taking a more holistic approach to brand management.

More than ever, brands are not built on advertising. They are built on consumer experience, on ideals and on meeting promises.  In short, they are built on instilling trust. Consumers, in turn are making trust a bigger deal. Those aged 18 to 34, that very same demo that has no trust in advertising, is the first to say brand trust matters more than ever. They’re just looking for proof of that trust in different places.

But why is trust important? That seems like a dumb question, but it’s not. There are deeper levels of understanding that are required here. And we might just find the answer in southern Italy.

Trust to the north and south of Naples

Italy has an economic problem. It’s always been there, but it definitely got worse after World War Two. It’s called the Mezzogiorno Problem.

Mezzogiorno means “noon” in Italian. But it’s also a label for the south of Italy. Like many things in Italian culture, it can make even problems sound charming and romantic. It has something to do with being sunny.

Italy has two economies. The North’s economy has always been more robust than the South’s. Per capita income in the Mezzogiorno is 60% of the national average. Unemployment is twice as high. Despite repeated attempts by the government to kickstart the economy of the South, the money and talent in Italy typically flow north of Naples.

The roots of the Mezzogiorno problem go to a not totally surprising place: a lack of trust. Trust is also called social capital. And southern Italy has less social capital than the North. Part of this has to do with geography. Villages in southern Italy are more isolated and there is less interaction between them. Part of it has to do with systemic corruption and crime. Part of it has to do with something called Campanilismo — where Italian loyalties belong first to their family, second to their village or city, third to their immediate region and, lastly, to any notion of belonging to a nation. People from the South have trouble trusting anyone not from their inner circle.

For all these reasons, the co-ops that transformed the agricultural industry in the north of Italy never gained a foothold in the South. If you were to look for an example of how low trust can lead to negative outcomes for all, it would be hard to find a better one than southern Italy.

But what does this have to do with advertising? That begins to become clear when we look at the impact trust has on our brains.

Our Brains On Trust

Neuroeconomist Paul J. Zak has found that trust plays a key role in the functioning of our brains. When trust is present, our brain produces oxytocin, which Zak calls the trust molecule. It literally rewards our brain when we work together with others. It pushes us to cooperate rather than be focused exclusively on our own self-interest. This is exactly what was missing in southern Italy.

But there’s another side to this: the dark side of oxytocin. It can also cause us emotional pain in stressful social situations. And these episodes tend to get embedded in us as bad memories, leading to a triggering of fear or anxiety in the future.

We have to think more carefully about this question of trust. The whole goal of advertising is simply to get an impression to the right person. I suspect most marketers might define an unsuccessful ad as one that gets ignored. But the reality might be far worse. An ad that is shown in an untrusted channel might cause an emotional deficit, leading to the creation of future anxiety about or animosity towards a brand.

Once this happens, the game is over. You now have a Mezzogiorno of marketing.

Splitting Ethical Hairs in an Online Ecosystem

In looking for a topic for today’s post, I thought it might be interesting to look at the Lincoln Project. My thought was that it would be an interesting case study in how to use social media effectively.

But what I found is that the Lincoln Project is currently imploding due to scandal. And you know what? I wasn’t surprised. Disappointed? Yes. Surprised? No.

While we on the left of the political spectrum may applaud what the Lincoln Project was doing, let’s make no mistake about the tactics used. It was the social media version of Nixon’s Dirty Tricks. The whole purpose was to bait Trump into engaging in a social media brawl. This was political mudslinging, as practiced by veteran warriors. The Lincoln Project was comfortable with getting down and dirty.

Effective? Yes. Ethical? Borderline.

But what it did highlight is the sordid but powerful force of social media influence. And it’s not surprising that those with questionable ethics, as some of the Lincoln Project leaders have proven to be, were attracted to it.

Social media is the single biggest and most effective influencer on human behavior ever invented. And that should scare the hell out of us, because it’s an ecosystem in which sociopaths will thrive.

A definition of Antisocial Personality Disorder (the condition from which sociopaths suffer) states, “People with ASPD may also use ‘mind games’ to control friends, family members, co-workers, and even strangers. They may also be perceived as charismatic or charming.”

All you have to do is substitute “social media” for “mind games,” and you’ll get my point.  Social media is sociopathy writ large.

That’s why we — meaning marketers — have to be very careful what we wish for. Since Google cracked down on personally identifiable information, following in the footsteps of Apple, there has been a great hue and cry from the ad-tech community about the unfairness of it all. Some of that hue and cry has issued forth here at MediaPost, like Ted McConnell’s post a few weeks ago, “Data Winter is Coming.”

And it is data that’s at the center of all this. Social media continually pumps personal data into the online ecosystem. And it’s this data that is the essential life force of the ecosystem. Ad tech sucks up that data as a raw resource and uses it for ad delivery across multiple channels. That’s the whole point of the personal identifiers that Apple and Google are cracking down on.

I suppose one could  draw an artificial boundary between social media and ad targeting in other channels, but that would be splitting hairs. It’s all part of the same ecosystem. Marketers want the data, no matter where it comes from, and they want it tied to an individual to make targeting their campaigns more effective.

By building and defending an ecosystem that enables sociopathic predators, we are contributing to the problem. McConnell and I are on opposite sides of the debate here. While I don’t disagree with some of his technical points about the efficacy of Google and Apple’s moves to protect privacy, there is a much bigger question here for marketers: Should we protect user privacy, even if it makes our jobs harder?

There has always been a moral ambiguity with marketers that I find troubling. To be honest, it’s why I finally left this industry. I was tired of the “yes, but” justification that ignored all the awful things that were happening for the sake of a handful of examples that showed the industry in a better light.

And let’s just be honest about this for a second: using personally identifiable data to build a more effective machine to influence people is an awful thing. Can it be used for good? Yes. Will it be? Not if the sociopaths have anything to say about it. It’s why the current rogue’s gallery of awful people are all scrambling to carve out as big a piece of the online ecosystem as they can.

Let’s look at nature as an example. In biology, a complex balance has evolved between predators and prey. If predators are too successful, they will eliminate their prey and will subsequently starve. So a self-limiting cycle emerges to keep everything in balance. But if the limits are removed on predators, the balance is lost. The predators are free to gorge themselves.

When it comes to our society, social media has removed the limits on “prey.” Right now, there is a never-ending supply.

It’s like we’re building a hen house, inviting a fox inside and then feigning surprise when the shit hits the fan. What the hell did we expect?

The Ebbs and Flows of Consumerism in a Post-Pandemic World

As MediaPost’s Joe Mandese reported last Friday, advertising was, quite literally, almost decimated worldwide in 2020. If you look at the forecasts of the top agency holding companies, ad spends were trimmed by an average of 6.1%. It’s not quite one dollar in 10, but it’s close.

These same companies are forecasting a relative bounceback in 2021, starting slow and accelerating quarter by quarter through the year — but that still leaves the 2021 spend forecast back at 2018 levels.

And as we know, everything about 2021 is still very much in flux. If the year 2021 was a pack of cards, almost every one of them would be wild.

This — according to physician, epidemiologist and sociologist Nicholas Christakis — is not surprising.

Christakis is one of my favorite observers of network effects in society. His background in epidemiological science gives him a unique lens to look at how things spread through the networks of our world, real and virtual. It also makes him the perfect person to comment on what we might expect as we stagger out of our current crisis.

In his latest book, “Apollo’s Arrow,” he looks back to look forward to what we might expect — because, as he points out, we’ve been here before.

While the scope and impact of this one is unusual, such health crises are nothing new. Dozens of epidemics and a few pandemics have happened in my lifetime alone, according to this Wikipedia chart.

This post goes live on Groundhog Day, perhaps the most appropriate of all days for it to run. Today, however, we already know what the outcome will be. The groundhog will see its shadow and there will be six more months (at least) of pandemic to deal with. And we will spend that time living and reliving the same day in the same way with the same routine.

Christakis expects this phase to last through the rest of this year, until the vaccines are widely distributed, and we start to reach herd immunity.

During this time, we will still have to psychologically “hunker down” like the aforementioned groundhog, something we have been struggling with. “As a society we have been very immature,” said Christakis. “Immature, and typical as well, we could have done better.”

This phase will be marked by a general conservatism that will go in lockstep with fear and anxiety, a reluctance to spend and a trend toward risk aversion and religion.

Add to this the fact that we will still be dealing with widespread denialism and anger, which will lead to a worsening vicious circle of loss and crisis. The ideological cracks in our society have gone from annoying to deadly.

Advertising will have to somehow negotiate these choppy waters of increased rage and reduced consumerism.

Then, predicts Christakis, starting some time in 2022, we will enter an adjustment period where we will test and rethink the fundamental aspects of our lives. We will be learning to live with COVID-19, which will be less lethal but still very much present.

We will likely still wear masks and practice social distancing. Many of us will continue to work from home. Local flare-ups will still necessitate intermittent school and business closures. We will be reluctant to be inside with more than 20 or 30 people at a time. It’s unlikely that most of us will feel comfortable getting on a plane or embarking on a cruise ship. This period, according to Christakis, will last for a couple years.

Again, advertising will have to try to thread this psychological needle between fear and hope. It will be a fractured landscape on which to build a marketing strategy. Any pretense of marketing to the masses, a concept long in decline, will now be truly gone. The market will be rife with confusing signals and mixed motivations. It will be incumbent on advertisers to become very, very good at “reading the room.”

Finally, starting in 2024, we will have finally put the pandemic behind us. Now, says Christakis, four years of pent-up demand will suddenly burst through the dam of our delayed self-gratification. We will likely follow the same path taken a century ago, when we were coming out of a war and another pandemic, in the period we call the “Roaring Twenties.”

Christakis explained: “What typically happens is people get less religious. They will relentlessly seek out social interactions in nightclubs and restaurants and sporting events and political rallies. There’ll be some sexual licentiousness. People will start spending their money after having saved it. They’ll be joie de vivre and a kind of risk-taking, a kind of efflorescence of the arts, I think.”

Of course, this burst of buying will be built on the foundation of what came before. The world will likely be very different from its pre-pandemic version. It will be hard for marketers to project demand in a straight line from what they know, because the experiences they’ve been using as their baseline are no longer valid. Some things may remain the same, but some will be changed forever.

COVID-19 will have pried many of the gaps in our society further apart — most notably those of income inequality and ideological difference. A lingering sense of nationalism and protectionism born from dealing with a global emergency could still be in place.

Advertising has always played an interesting role in our lives. It both motivates and mirrors us.

But the reflection it shows is like a funhouse mirror: It distorts some aspects of our culture and ignores others. It creates demand and hides inconvenient truths. It professes to be noble, while it stokes the embers of our ignobility. It amplifies the duality of our human nature.

Interesting times lie ahead. It remains to be seen how that is reflected in the advertising we create and consume.

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.

What is the Moral Responsibility of a Platform?

The owner of the AirBnB home in Orinda, California suspected something was up. The woman who wanted to rent the house for Halloween night swore it wasn’t for a party. She said it was for a family reunion that had to relocate at the last minute because of the wildfire smoke coming from the Kincade fire, 85 miles north of Orinda. The owners reluctantly agreed to rent the home for one night.

Shortly after 9 pm, the neighbors called the owner, complaining of a party raging next door. The owners verified this through their doorbell camera. The police were sent. Over a 100 people who had responded to a post on social media were packed into the million-dollar home. At 10:45 pm, with no warning, things turned deadly. Gunshots were fired. Four men in their twenties were killed immediately. A 19-year-old female died the next day. Several others were injured.

Here is my question. Is AirBnB partly to blame for this?

This is a prickly question. And it’s one to extends to any one of the platforms that are highly disruptive. Technical disruption is a race against our need for order and predictability. When the status quo is upended, there is a progression towards a new civility that takes time, but technology is outstripping it. Platforms create new opportunities – for the best of us and the worst.

The simple fact is that technology always unleashes ethical ramifications – the more disruptive the technology, the more serious the ethical considerations. The other tricky bit is that some ethical considerations can be foreseen..but others cannot.

I have often said that our world is becoming a more complex place. Technology is multiplying this complexity at an ever increasing pace. And the more complex things are, the more difficult they are to predict.

As Homo Deus author Yuval Noah Harari said, because of the pace of technology, our world is becoming more complex, so it is becoming increasingly difficult to predict what the future might hold.

“Today our knowledge is increasing at breakneck speed, and theoretically we should understand the world better and better. But the very opposite is happening. Our new-found knowledge leads to faster economic, social and political changes; in an attempt to understand what is happening, we accelerate the accumulation of knowledge, which leads only to faster and greater upheavals. Consequently, we are less and less able to make sense of the present or forecast the future.”

This acceleration is also eliminating the gap between cause and consequence. We used to have the luxury of time to digest disruption. But now, the gap between the introduction of the technology and the ripples of the ramifications is shrinking.

Think about the ethical dilemmas and social implications introduced by the invention of the printing press. Thanks to the introduction of this technology, literacy started creeping down through social classes and it totally disrupted entire established hierarchies, unleashed ideological revolutions and ushered in tsunamis of social change. But the cause and consequences were separated by decades and even centuries. Should Guttenberg be held responsible for the French Revolution? This seems laughable, but only because almost three and a half centuries lie between the two.

Like the printing press eventually proved, technology typically dismantles vertical hierarchies. It democratizes capabilities – spreading them down to new users and – in the process – making the previously impossible possible. I have always said that technology is simply a tool, albeit an often disruptive one. It doesn’t change human behaviors. It enables them. But here we have an interesting phenomenon. If technology pushes capabilities down to more people and simultaneously frees those users from the restraint of a verticalized governing structure, you have a highly disruptive sociological experiment happening in real time with a vast sample of subjects.

Most things about human nature are governed by a normal distribution curve – also known as a bell curve. Behaviors expressed through new technologies are no exception. When you rapidly expand access to a capability you are going to have a spectrum of ethical attitudes interacting with it. At one end of the spectrum, you will have bad actors. You will find these actors on both sides of a market expanding at roughly the same rate as our universe. And those actors will do awful things with the technology.

Our innate sense of fairness seeks a simple line between cause and effect. If shootings happen at an AirBnB party house, then AirBnB should be held at least partly responsible. Right?

I’m not so sure. That’s the simple answer, but after giving it much thought, I don’t believe it’s the right one.  Like my previous example of the printing press, I think trying to saddle a new technology with the unintentional and unforseen social disruption unleashed by that technology is overly myopic. It’s an attitude that will halt technological progress in its tracks.

I fervently believe new technologies should be designed with humanitarian principles in mind. They should elevate humans, strive for neutrality, be impartial and foster independence. In the real world, they should do all this in a framework that allows for profitability. It is this, and only this, that is reasonable to ask from any new technology. To try to ask it to foresee every potential negative outcome or to retroactively hold it accountable when those outcomes do eventually occur is both unreasonable and unrealistic.

Disruptive technologies will always find the loopholes in our social fabric. They will make us aware of the vulnerabilities in our legislation and governance. If there is an answer to be found here, it is to be found in ourselves. We need to take accountability for the consequences of the technologies we adopt. We need to vote for governments that are committed to keeping pace with disruption through timely and effective governance.

Like it or not, the technology we have created and adopted has propelled us into a new era of complexity and unpredictability. We are flying into uncharted territory by the seat of our pants here. And before we rush to point fingers we should remember – we’re the ones that asked for it.

The Fundamentals of an Evil Marketplace

Last week, I talked about the nature of tech companies and why this leads to them being evil. But as I said, there was an elephant in the room I didn’t touch on — and that’s the nature of the market itself. The platform-based market also has inherent characteristics that lead toward being evil.

The problem is that corporate ethics are usually based on the philosophies of Milton Friedman, an economist whose heyday was in the 1970s. Corporations are playing by a rule book that is tragically out of date.

Beware the Invisible Hand

Friedman said, “The great virtue of a free market system is that it does not care what color people are; it does not care what their religion is; it only cares whether they can produce something you want to buy. It is the most effective system we have discovered to enable people who hate one another to deal with one another and help one another.”

This is a porting over of Adam Smith’s “Invisible Hand” theory from economics to ethics: the idea that an open and free marketplace is self-regulating and, in the end, the model that is the most virtuous to the greatest number of people will take hold.

That was a philosophy born in another time, referring to a decidedly different market. Friedman’s “virtue” depends on a few traditional market conditions, idealized in the concept of a perfect market: “a market where the sellers of a product or service are free to compete fairly, and sellers and buyers have complete information.”

Inherent in Friedman’s definition of market ethics is the idea of a deliberate transaction, a value trade driven by rational thought. This is where the concept of “complete information” comes in. This information is what’s required for a rational evaluation of the value trade. When we talk about the erosion of ethics we see in tech, we quickly see that the prerequisite of a deliberate and rational transaction is missing — and with it, the conditions needed for an ethical “invisible hand.”

The other assumption in Friedman’s definition is a marketplace that encourages open and healthy competition. This gives buyers the latitude to make the choice that best aligns with their requirements.

But when we’re talking about markets that tend to trend towards evil behaviors, we have to understand that there’s a slippery slope that ends in a place far different than the one Friedman idealized.

Advertising as a Revenue Model

For developers of user-dependent networks like Google and Facebook, using advertising sales for revenue was the path of least resistance for adoption — and, once adopted by users, to profitability. It was a model co-opted from other forms of media, so everybody was familiar with it. But, in the adoption of that model, the industry took several steps away from the idea of a perfect market.

First of all, you have significantly lowered the bar required for that rational value exchange calculation. For users, there is no apparent monetary cost. Our value judgement mechanisms idle down because it doesn’t appear as if the protection they provide is needed.

In fact, the opposite happens. The reward center of our brain perceives a bargain and starts pumping the accelerator. We rush past the accept buttons to sign up, thrilled at the new capabilities and convenience we receive for free. That’s the first problem.

The second is that the minute you introduce advertising, you lose the transparency that’s part of the perfect market. There is a thick layer of obfuscation that sits between “users” and “producers.” The smoke screen is required because of the simple reality that the best interests of the user are almost never aligned with the best interests of the advertiser.

In this new marketplace, advertising is a zero-sum game. For the advertiser to win, the user has to lose. The developer of platforms hide this simple arithmetic behind a veil of secrecy and baffling language.

Products That are a Little Too Personal

The new marketplace is different in another important way: The products it deals in are unlike any products we’ve ever seen before.

The average person spends about a third of his or her time online, mostly interacting with a small handful of apps and platforms. Facebook alone accounts for almost 20% of all our waking time.

This reliance on these products reinforces our belief that we’re getting the bargain of a lifetime: All the benefits the platform provides are absolutely free to us! Of course, in the time we spend online, we are feeding these tools a constant stream of intimately personal information about ourselves.

What is lurking behind this benign facade is a troubling progression of addictiveness. Because revenue depends on advertising sales, two factors become essential to success: the attention of users, and information about them.

An offer of convenience or usefulness “for free” is the initial hook, but then it becomes essential to entice them to spend more time with the platform and also to volunteer more information about themselves. The most effective way to do this is to make them more and more dependent on the platform.

Now, you could build conscious dependency by giving users good, rational reasons to keep coming back. Or, you could build dependence subconsciously, by creating addicts. The first option is good business that follows Friedman’s philosophy. The second option is just evil. Many tech platforms — Facebook included — have chosen to go down both paths.

The New Monopolies

The final piece of Friedman’s idealized marketplace that’s missing is the concept of healthy competition. In a perfect marketplace, the buyer’s cost of switching  is minimal. You have a plethora of options to choose from, and you’re free to pursue the one best for you.

This is definitely not the case in the marketplace of online platforms and tools like Google and Facebook. Because they are dependent on advertising revenues, their survival is linked to audience retention. To this end, they have constructed virtual monopolies by ruthlessly eliminating or buying up any potential competitors.

Further, under the guise of convenience, they have imposed significant costs on those that do choose to leave. The net effect of this is that users are faced with a binary decision: Opt into the functionality and convenience offered, or opt out. There are no other choices.

Whom Do You Serve?

Friedman also said in a 1970 paper that the only social responsibility of a business is to Increase its profits. But this begs the further question, “What must be done — and for whom — to increase profits?” If it’s creating a better product so users buy more, then there is an ethical trickle-down effect that should benefit all.

But this isn’t the case if profitability is dependent on selling more advertising. Now we have to deal with an inherent ethical conflict. On one side, you have the shareholders and advertisers. On the other, you have users. As I said, for one to win, the other must lose. If we’re looking for the root of all evil, we’ll probably find it here.