Getting Bitch-Slapped by the Invisible Hand

Adam Smith first talked about the invisible hand in 1759. He was looking at the divide between the rich and the poor and said, in essence, that “greed is good.”

Here is the exact wording:

“They (the rich) are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society.”

The effect of “the hand” is most clearly seen in the wide-open market that emerges after established players collapse and make way for new competitors riding a wave of technical breakthroughs. Essentially, it is a cycle.

But something is happening that may never have happened before. For the past 300 years of our history, the one constant has been the trend of consumerism. Economic cycles have rolled through, but all have been in the service of us having more things to buy.

Indeed, Adam Smith’s entire theory depends on greed: 

“The rich … consume little more than the poor, and in spite of their natural selfishness and rapacity, though they mean only their own conveniency, though the sole end which they propose from the labours of all the thousands whom they employ, be the gratification of their own vain and insatiable desires, they divide with the poor the produce of all their improvements.”

It’s the trickle-down theory of gluttony: Greed is a tide that raises all boats.

The Theory of The Invisible Hand assumes there are infinite resources available. Waste is necessarily built into the equation. But we have now gotten to the point where consumerism has been driven past the planet’s ability to sustain our greedy grasping for more.

Nobel-Prize-winning economist Joseph Stiglitz, for one, recognized that environmental impact is not accounted for with this theory. Also, if the market alone drives things like research, it will inevitably become biased towards benefits for the individual and not the common good.

There needs to be a more communal counterweight to balance the effects of individual greed. Given this, the new age of consumerism might look significantly different.

There is one outcome of market driven-economics that is undeniable: All the power lies in the connection between producers and consumers. Because the world has been built on the predictable truth of our always wanting more, we have been given the ability to disrupt that foundation simply by changing our value equation: buying for the greater good rather than our own self-interest.

I’m skeptical that this is even possible.

It’s a little daunting to think that our future survival relies on our choices as consumers. But this is the world we have made. Consumption is the single greatest driver of our society. Everything else is subservient to it.

Government, science, education, healthcare, media, environmentalism: All the various planks of our societal platform rest on the cross-braces of consumerism. It is the one behavior that rules all the others. 

This becomes important to think about because this shit is getting real — so much faster than we thought possible.

I write this from my home, which is about 100 miles from the village of Lytton, British Columbia. You might have heard it mentioned recently. On June 29, Lytton reported the highest temperature ever recorded in Canada  a scorching 121.3 degrees Fahrenheit (49.6 degrees C for my Canadian readers). That’s higher than the hottest temperature ever recorded in Las Vegas. Lytton is 1,000 miles north of Las Vegas.

As I said, that was how Lytton made the news on June 29. But it also made the news again on June 30. That was when a wildfire burned almost the entire town to the ground.

In one week of an unprecedented heat wave, hundreds of sudden deaths occurred in my province. It’s believed the majority of them were caused by the heat.

We are now at the point where we have to shift the mental algorithms we use when we buy stuff. Our consumer value equation has always been self-centered, based on the calculus of “what’s in it for me?” It was this calculation that made Smith’s Invisible Hand possible.

But we now have to change that behavior and make choices that embrace individual sacrifice. We have to start buying based on “What’s best for us?”

In a recent interview, a climate-change expert said he hoped we would soon see carbon-footprint stickers on consumer products. Given a choice between two pairs of shoes, one that was made with zero environmental impact and one that was made with a total disregard for the planet, he hoped we would choose the former, even if it was more expensive.

I’d like to think that’s true. But I have my doubts. Ethical marketing has been around for some time now, and at best it’s a niche play. According to the Canadian Coalition for Farm Animals, the vast majority of egg buyers in Canada — 98% — buy caged eggs even though we’re aware that the practice is hideously cruel.  We do this because those eggs are cheaper.

The sad fact is that consumers really don’t seem to care about anything other than their own self-interest. We don’t make ethical choices unless we’re forced to by government legislation. And then we bitch like hell about our rights as consumers. “We should be given the choice,” we chant.  “We should have the freedom to decide for ourselves.”

Maybe I’m wrong. I sure hope so. I would like to think — despite recent examples to the contrary of people refusing to wear face masks or get vaccinated despite a global pandemic that took millions of lives — that we can listen to the better angels of our nature and make choices that extend our ability to care beyond our circle of one.

But let’s look at our track record on this. From where I’m sitting, 300 years of continually making bad choices have now brought us to the place where we no longer have the right to make those choices. This is what The Invisible Hand has wrought. We can bitch all we want, but that won’t stop more towns like Lytton B.C. from burning to the ground.

Why Our Brains Struggle With The Threat Of Data Privacy

It seems contradictory. We don’t want to share our personal data but, according to a recent study reported on by MediaPost’s Laurie Sullivan, we want the brands we trust to know us when we come shopping. It seems paradoxical.

But it’s not — really.  It ties in with the way we’ve always been thinking.

Again, we just have to understand that we really don’t understand how the data ecosystem works — at least, not on an instant and intuitive level. Our brains have no evolved mechanisms that deal with new concepts like data privacy. So we have borrowed other parts of the brain that do exist. Evolutionary biologists call this “exaption.”

For example, the way we deal with brands seems to be the same way we deal with people — and we have tons of experience doing that. Some people we trust. Most people we don’t. For the people we trust, we have no problem sharing something of our selves. In fact, it’s exactly that sharing that nurtures relationships and helps them grow.

It’s different with people we don’t trust. Not only do we not share with them, we work to avoid them, putting physical distance between us and them. We’d cross to the other side of the street to avoid bumping into them.

In a world that was ordered and regulated by proximity, this worked remarkably well. Keeping our enemies at arm’s length generally kept us safe from harm.

Now, of course, distance doesn’t mean the same thing it used to. We now maneuver in a world of data, where proximity and distance have little impact. But our brains don’t know that.

As I said, the brain doesn’t really know how digital data ecosystems work, so it does its best to substitute concepts it has evolved to handle those it doesn’t understand at an intuitive level.

The proxy for distance the brain seems to use is task focus. If we’re trying to do something, everything related to that thing is “near” and everything not relevant to it is “far. But this is an imperfect proxy at best and an outright misleading one at worst.

For example, we will allow our data to be collected in order to complete the task. The task is “near.” In most cases, the data we share has little to do with the task we’re trying to accomplish. It is labelled by the brain as “far” and therefore poses no immediate threat.

It’s a bait and switch tactic that data harvesters have perfected. Our trust-warning systems are not engaged because there are no proximate signs to trigger them. Any potential breaches of trust happen well after the fact – if they happen at all. Most times, we’re simply not aware of where our data goes or what happens to it. All we know is that allowing that data to be collected takes us one step closer to accomplishing our task.

That’s what sometimes happens when we borrow one evolved trait to deal with a new situation:  The fit is not always perfect. Some aspects work, others don’t.

And that is exactly what is happening when we try to deal with the continual erosion of online trust. In the moment, our brain is trying to apply the same mechanisms it uses to assess trust in a physical world. What we don’t realize is that we’re missing the warning signs our brains have evolved to intuitively look for.

We also drag this evolved luggage with us when we’re dealing with our favorite brands. One of the reasons you trust your closest friends is that they know you inside and out. This intimacy is a product of a physical world. It comes from sharing the same space with people.

In the virtual world, we expect the brands we know and love to have this same knowledge of us. It frustrates us when we are treated like a stranger. Think of how you would react if the people you love the most gave you the same treatment.

This jury-rigging of our personal relationship machinery to do double duty for the way we deal with brands may sound far-fetched, but marketing brands have only been around for a few hundred years. That is just not enough time for us to evolve new mechanisms to deal with them.

Yes, the rational, “slow loop” part of our brains can understand brands, but the “fast loop” has no “brand” or “data privacy” modules. It has no choice but to use the functional parts it does have.

As I mentioned in a previous post, there are multiple studies that indicate that it’s these parts of our brain that fire instantly, setting the stage for all the rationalization that will follow. And, as our own neuro-imaging study showed, it seems that the brain treats brands the same way it treats people.

I’ve been watching this intersection between technology and human behaviour for a long time now. More often than not, I see this tendency of the brain to make split-section decisions in environments where it just doesn’t have the proper equipment to make those decisions. When we stop to think about these things, we believe we understand them. And we do, but we had to stop to think. In the vast majority of cases, that’s just not how the brain works.

The Problem With Woke Capitalism

I’ve been talking a lot over the last month or two about the concept of corporate trust. Last week I mentioned that we as consumers have a role to play in this: It’s our job to demand trustworthy behavior from the companies we do business with.

The more I thought about that idea, I couldn’t help but put it in the current context of cancel culture and woke capitalism. In this world of social media hyperbole, is this how we can flex our consumer muscles?

I think not. When I think of cancel culture and woke capitalism, I think of signal-to-noise ratio. And when I look at how most corporations signal their virtue, I see a lot of noise but very little signal.

Take Nike, for example. There is probably no corporation in the world that practises more virtue signaling than Nike. It is the master of woke capitalism. But if you start typing Nike into Google, the first suggested search you’ll see is “Nike scandal.” And if you launch that search, you’ll get a laundry list of black eyes in Nike’s day-to-day business practices, including sweatshops, doping, and counterfeit Nike product rings.

The corporate watchdog site ethicalconsumer.org has an extensive entry on Nike’s corporate faux pas. Perhaps Nike needs to spend a little less time preaching and a little more time practicing.

Then there’s 3M. There is absolutely nothing flashy about the 3M brand. 3M is about as sexy as Mr. Wood, my high school Social Studies teacher. Mr. Wood wore polyester suits (granted, it was the ‘70s) and had a look that was more Elvis Costello than Elvis Presley. But he was by far my favorite teacher. And you could trust him with anything.

I think 3M might be the Mr. Wood of the corporate world.

I had the pleasure of working with 3M as a consultant for the last three or four years of my professional life. I still have friends who were and are 3Mers. I have never, in one professional setting, met a more pleasant group of people.

When I started writing this and thought about an example of a trustworthy corporation, 3M was the first that came to mind. The corporate ethos at 3M is, as was told me to me by one vice president, “Minnesota nice.”

Go ahead. Try Googling “3M corporate scandal.” Do you know what comes up? 3M investigating other companies that are selling knockoff N95 facemasks. The company is the one investigating the scandal, not causing it. (Just in case you’re wondering, I tried searching on ethicalconsumer.org for 3M. Nothing came up.)

That’s probably why 3M has been chosen as one of the most ethical companies in the world by the Ethisphere Institute for the last eight consecutive years.

Real trust comes from many places, but a social media campaign is never one of them. It comes from the people you hire and how you treat those people. It comes from how you handle HR complaints, especially when they’re about someone near the top of the corporate ladder. It comes from how you set your product research goals, where you make those products, who you sell those products to, and how you price those products. It comes from how you conduct business meetings, and the language that’s tolerated in the lunchroom.

Real trust is baked in. It’s never painted on.

Social media has armed consumers with a voice, as this lengthy essay in The Atlantic magazine shows. But if we go back to our signal versus noise comparison, everything on social media tends to be a lot of “noise,” and very little signal. Protesting through online channels tends to create hyper-virtuous bubbles that are far removed from the context of day-to-day reality. And — unfortunately — companies are getting very good at responding in kind. Corrupt internal power structures and business practices are preserved, while scapegoats are publicly sacrificed and marketing departments spin endlessly.

As Helen Lewis, the author of The Atlantic piece, said,

“That leads to what I call the “iron law of woke capitalism”: Brands will gravitate toward low-cost, high-noise signals as a substitute for genuine reform, to ensure their survival.”

Empty “mea culpas” and making hyperbolic noise just for the sake of looking good is not how you build trust. Trust is built on consistency and reliability. It is built on a culture that is committed to doing the right thing, even when that may not be the most profitable thing. Trust is built on being “Minnesota nice.”

Thank you, 3M, for that lesson. And thank you, Mr. Wood.

The Profitability Of Trust

Some weeks ago, I wrote about the crisis of trust identified by the Edelman Trust Barometer study and its impact on brands. In that post, I said that the trust in all institutions had been blown apart, hoisted on the petard of our political divides.

We don’t trust our government. We definitely don’t trust the media – especially the media that sits on the other side of the divide. Weirdly, our trust in NGOs has also slipped, perhaps because we suspect them to be politically motivated.

So whom — or what — do we trust? Well, apparently, we still trust corporations. We trust the brands we know. They, alone, seem to have been able to stand astride the chasm that is splitting our culture.

As I said before, I’m worried about that.

Now, I don’t doubt there are well-intentioned companies out there. I know there are several of them. But there is something inherent in the DNA of a for-profit company that I feel makes it difficult to trust them. And that something was summed up years ago by economist Milton Friedman, in what is now known as the Friedman Doctrine. 

In his eponymously named doctrine, Friedman says that a corporation should only have one purpose: “An entity’s greatest responsibility lies in the satisfaction of the shareholders.” The corporation should, therefore, always endeavor to maximize its revenues to increase returns for the shareholders.

So, a business will be trustworthy as long as fits its financial interest to be trustworthy. But what happens when those two things come into conflict, as they inevitably will?

Why is it inevitable, you ask? Why can’t a company be profitable and worthy of our trust? Ah, that’s where, sooner or later, the inevitable conflict will come.

Let’s strip this down to the basics with a thought experiment.

In a 2017 article in the Harvard Business Review, neuroscientist Paul J. Zak talks about the neuroscience of trust. He explains how he discovered that oxytocin is the neurochemical basis of trust — what he has since called The Trust Molecule.

To do this, he set up a classic trust task borrowed from Nobel laureate economist Vernon Smith:

“In our experiment, a participant chooses an amount of money to send to a stranger via computer, knowing that the money will triple in amount and understanding that the recipient may or may not share the spoils. Therein lies the conflict: The recipient can either keep all the cash or be trustworthy and share it with the sender.”

The choice of this task speaks volumes. It also lays bare the inherent conflict that sooner or later will face all corporations: money or trust? This is especially true of companies that have shareholders. Our entire capitalist ethos is built on the foundation of the Friedman Doctrine. Imagine what those shareholders will say when given the choice outlined in Zak’s experiment: “Keep the money, screw the trust.” Sometimes, you can’t have both. Especially when you have a quarterly earnings target to hit.

For humans, trust is our default position. It has been shown through game theory research using the Prisoner’s Dilemma that the best strategy for evolutionary success is one called “Tit for Tat.” In Tit for Tat, our opening position is typically one of trust and cooperation. But if we’re taken advantage of, then we raise our defences and respond in kind.

So, when we look at the neurological basis of trust, consistency is another requirement. We will be willing to trust a brand until it gives a reason not to. The more reliable the brand is in earning that trust, the more embedded that trust will become. As I said in the previous post, consistency builds beliefs and once beliefs are formed, it’s difficult to shake them loose.

Trying to thread this needle between trust and profitability can become an exercise in marketing “spin”: telling your customers you’re trustworthy, while you’re are doing everything possible to maximize your profits. A case in point — which we’ve seen repeatedly — is Facebook and its increasingly transparent efforts to maximize advertising revenue while gently whispering in our ear that we should trust it with our most private information.

Given the potential conflict between trust and profit, is trusting a corporation a lost cause? No, but it does put a huge amount of responsibility on the customer. The Edelman study has made abundantly clear that if there is such a thing as a “market” for trust, then trust is in dangerously short supply. This is why we’re turning to brands and for-profit corporations as a place to put our trust. We have built a society where we believe that’s the only thing we can trust.

Mark Carney, the governor of the Bank of England and the former governor of the Bank of Canada, puts this idea forward in his new book, “Value(s).” In it, he shows how “market economies” have evolved into “market societies” where price determines the value of everything. And corporations will follow profit, wherever it leads.

If we understand that fundamental characteristic of corporations, it does bring an odd kind of power that rests in the hands of consumers.

Markets are not unilateral beasts. They rely on the balance between supply and demand. We form half that equation. It is our willingness to buy that determine how prices are determined in Carney’s “market societies.” So, if we are willing to place our trust in a brand, we can also demand that the brand proves that our trust has not been misplaced, through the rewards and penalties built into the market. 

Essentially, we have to make trust profitable.

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.

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.

The Academics of Bullsh*t

“One of the most salient features of our culture is that there is so much bullshit. Everyone knows this. Each of us contributes his share. But we tend to take the situation for granted.”—

from On Bullshit,” an essay by philosopher Henry Frankfurt.

Would it surprise you to know that I have found not one, but two academic studies on organizational bullshit? And I mean that non-euphemistically. The word “bullshit” is actually in the title of both studies. I B.S. you not.

In fact, organizational bullshit has become a legitimate field of study. Academics are being paid to dig into it — so to speak. There are likely bullshit grants, bullshit labs, bullshit theories, bullshit paradigms and bullshit courses. There are definitely bullshit professors.  There is even an OBPS — the Organization Bullshit Perception Scale — a way to academically measure bullshit in a company.

Many years ago, when I was in the twilight of my time with the search agency I had founded, I had had enough of the bullshit I was being buried under, shoveled there by the company that had acquired us. I was drowning in it. So I vented right here, on MediaPost. I dared you to imagine what it would be like to actually do business without bullshit getting in the way.

My words fell on deaf ears. Bullshit has proliferated since that time. It has been enshrined up and down our social, business and governmental hierarchies, becoming part of our “new” organizational normal. It has picked up new labels, like “fake news” and “alternate facts.” It has proven more dangerous than I could have ever imagined. And it is this dangerous because we are ignoring it, which is legitimizing it.

Henry Frankfurt defined the concept and set it apart from lying. Liars know the truth and are trying to hide it. Bullshitters don’t care if what they say is true or false. They only care if their listener is persuaded. That’s as good a working definition of the last four years as any I’ve heard.

But at least one study indicates bullshit may have a social modality — acceptable in some contexts, but corrosive in others. Marketing, for example, is highlighted by the authors as an industry built on a foundation of bullshit:

“advertising and public relations agencies and consultants are likely to be ‘full of It,’ and in some cases even make the production of bullshit an important pillar of their business.”

In these studies, researchers speculate that bullshit might actually serve a purpose in organizations. It may allow for strategic motivation before there is an actual strategy in place. This brand of bullshit is otherwise known as “blue-sky thinking” or “out-of-the-box thinking.”

But if this is true, there is a very narrow window indeed where this type of bullshit could be considered beneficial. The minute there are facts to deal with, they should be dealt with. But the problem is that the facts never quite measure up to the vision of the bullshit. Once you open the door to allowing bullshit, it becomes self-perpetuating.

I grew up in the country. I know how hard it is to get rid of bullshit.

The previous example is what I would call strategic bullshit — a way to “grease the wheels” and get the corporate machine moving. But it often leads directly to operational bullshit — which is toxic to an organization, serving to “gum up the gears” and prevent anything real and meaningful from happening. This was the type of bullshit that was burying me back in 2013 when I wrote that first column. It’s also the type of bullshit that is paralyzing us today.

According to the academic research into bullshit, when we’re faced with it, we have four ways to respond: exit, voice, loyalty or neglect. Exit means we try to escape from the bullshit. Loyalty means we wallow in it, spreading it wider and thicker. Neglect means we just ignore it. And Voice means we stand up to the bullshit and confront it.  I’m guessing you’ve already found yourself in one of those four categories.

Here’s the thing. As marketers and communicators, we have to face the cold, ugly truth of our ongoing relationship with bullshit. We all have to deal with it. It’s the nature of our industry.

But how do we deal with it? Most times, in most situations, it’s just easier to escape or ignore it. Sometimes it may serve our purpose to jump on the bullshit bandwagon and spread it. But given the overwhelming evidence of where bullshit has led us in the recent past, we all should be finding our voice to call bullshit on bullshit.

Dear US: Start Thinking Differently about Public Broadcasting

In my ongoing discussion about how to support true and reliable journalism, there is one option I haven’t talked about: public broadcasting. 

In a previous column, I talked about the difference I saw on one day in the way the news was reported in Canada vs the U.S. Largely missing in Canada was the extreme polarization I saw in editorial tone in the U.S. 

And, as I mentioned in my previous two columns — one on why free news is bad news and one on the problems with “news” analysis — the divide between news on the right and news on the left has the same root cause: the need for profitability.

The one thing I didn’t talk about in that U.S. versus Canada column is that we have a robust public broadcaster in the Canadian Broadcasting Corporation (CBC). 

“Ah,” you say, “We have public broadcasting, too. We have PBS and NPR.” 

Well, yes, but no. There are important differences in how these institutions are funded.

Let’s take PBS, for example. PBS stations are independently operated, and each have their own financials. They are members of PBS, which is not a network but rather a programming partner. Affiliates pay member dues to belong to PBS.

For example, the Seattle PBS affiliate is KCTS, whose 2019 financials show that the lion’s share of its income, over half, comes from individual donations. Corporate donations represent another 16.5%. Just 9% of its funding comes from the Corporation of Public Broadcasting (CPB), supposedly representing U.S. taxpayers’ support of public broadcasting on PBS and NPR.

CPB has been a punching bag for Republicans for years now. What meager support public broadcasting does receive from CPB is constantly at risk of being chopped by Congress.  Most recently — and not surprisingly — Trump threatened to cut funding for CPB from its current level of $445 million to just $30 million. 

He did this after an NPR reporter asked Secretary of State Mike Pompeo if he owed an apology to the former U.S. Ambassador to Ukraine. Conservative radio jumped on the altercation, with one station tweeting, “Why does NPR still exist? We have thousands of radio stations in the U.S. plus satellite radio. Podcasts. Why are we paying for this big-government, Democrat Party propaganda operation.”

Trump retweeted, “A very good question.”

It actually is a good question, but from a very different perspective than what Trump intended. 

I am Canadian. I come from a social democratic country. I am free of the knee-jerk reactionism of many Americans (as shown in last week’s election) toward the word “socialism.” You have to start with that idea to understand our approach to broadcasting.

While the CBC does sell advertising, it’s not dependent on it. In its last financial report, just 14.5% of all CBC revenues came from advertising. Sixty-five percent of the CBC’s funds come directly from taxpayer dollars. As a comparison, the amount of money CBC received from the government last year was 1.1 billion, almost three times the total budget of the Corporation of Public Broadcasting in the U.S. 

That highlights the difference in attitude about the importance of public broadcasting in our two countries. In Canada — following the model of Britain and the BBC — we have enshrined public broadcasting as an important part of our society that we directly support through our taxes. Not only do we have the CBC across Canada, but each province also has its own public broadcaster. 

In the more capitalistic and laissez-faire U.S., public broadcasting largely depends on the kindness of strangers. What little taxpayer support it does receive is constantly being used as a pawn in political posturing between the right and left. 

So, who’s right?

I’ll be honest. There are many Canadians — not a majority, but a significant percentage — who would like to see Canada pursue a more American path when it comes to broadcasting. “Who needs the CBC?” they say. 

But I believe strongly that the relative health of Canadian journalism when compared to the U.S. is largely due to our investment in public broadcasting. The CBC sets the norm of what’s acceptable in Canada. Its biggest private competitors, CTV and Global, don’t stray far from the relatively neutral, reliable and objective tone set by the CBC. 

If we look at reliability when it comes to public broadcasters in the U.S., we see that both NPR and PBS score top marks when it comes to lack of bias and reliability on the Ad Fontes Media Bias Chart.

Unfortunately, Canadian broadcasters are not represented on the chart, so we’ll have to look for another measure. Luckily, one exists. More on this in a bit.

The doubters of my proposed hypothesis that taxpayer-funded public broadcasting means better journalism will be quick to point out that Russia, China, Cuba — heck, even Iran — all have state-owned broadcasters. These are all — as the conservative radio tweeter above said — simply “propaganda machines.” How is this different from public broadcasting?

Again, we have the conflation of democratic socialism with the U.S. right’s favorite bogeyman: communism. Y’all really have to stop doing that. 

Public broadcasting in places like Canada, Australia, New Zealand, Norway, Finland, Denmark and Sweden are all modeled after the originator of the concept: Britain and the BBC. Although there have been many British prime ministers — Winston Churchill included — who sought to co-opt the BBC for their government’s purposes, over the past century a legislative firewall has been built to maintain the public broadcaster’s independence from the government of the day. Similar legislation is in place in Canada and other democracies with strong public broadcasters. 

So, how is that working?

Pretty well, according to Reporters Without Borders, the “biggest NGO specializing in the defense of media freedom.”

The organization’s World Press Freedom Index ranks media freedom in every country in the world. The top five countries (all Nordic and northern European countries — and all social democracies) have strong public broadcasters. In case you’re wondering, Canada scores 16th on the list. The U.S. scores 45th out of 180 countries. 

Public broadcasting — real public broadcasting, with taxpayers’ skin in the game — seems to be working pretty damned well in Canada and other places in the world. (As an interesting side note, the Reporters without Borders ranking of countries bears more than a little resemblance to US News’ Quality of Life Index). 

You should think differently about public broadcasting, because the biggest problem facing journalism in the U.S. isn’t socialism or government propaganda. It’s capitalism. 

Analyzing the Problem with News “Analysis”

Last week, I talked about the Free News problem. In thinking about how to follow that up, I ran across an interesting study that was published earlier this year in the Science Advances Journal. One of the authors was Duncan Watts, who I’ve mentioned repeatedly in previous columns.

In the study, the research team tackled the problem of “Fake News” which is – of course – another symptom of the creeping malaise that is striking the industry of journalism. It certainly has become a buzzword in the last few years. But the team found that the problem of fake news may not be a problem at all. It makes up just 0.15% of our entire daily media diet. In fact, across all ages in the study, any type of news is – at the most – just 14.2% of our total media consumption.

The problem may be our overuse of the term “news” – applying it to things we think are news but are actually just content meant to drive advertising revenues. In most cases, this is opinion (sometimes informed but often not) masquerading as news in order to generate a lot of monetizable content. Once again, to get to the root of the problem, we have to follow the money.

If we look again at the Ad Fontes Media Bias chart, it’s not “news” that’s the problem. Most acknowledged leaders in true journalism are tightly clustered in the upper middle of the chart, which is where we want our news sources to be. They’re reliable and unbiased.

If we follow the two legs of the chart down to the right or left into the unreliable territory where we might encounter “fake” news, we find from the study mentioned above that this makes up an infinitesimal percentage of the media most of us actually pay attention to. The problem here can be found in the middle regions of the chart. This is where we find something called analysis. And that might just be our problem.

Again, we have to look at the creeping poison of incentive here. Some past students from Stanford University have an interesting essay about the economics of journalism that shows how cable tv and online have disrupted the tenuous value chain of news reporting.

The profitability of hard reporting was defined in the golden age of print journalism – specifically newspapers. The problem with reporting as a product is twofold. One is that news in non-excludable. Once news is reported anyone can use it. And two is that while reporting is expensive, the cost of distribution is independent of the cost of reporting. The cost of getting the news out is the same, regardless of how much news is produced.

While newspapers were the primary source of news, these two factors could be worked around. Newspapers came with a built-in 24-hour time lag. If you could get a one day jump on the competition, you could be very profitable indeed.

Secondly, the fixed distribution costs made newspapers a very cost-effective ad delivery vehicle. It cost the newspapers next to nothing to add advertising to the paper, thereby boosting revenues.

But these two factors were turned around by Internet and Cable News. If a newspaper bore the bulk of the costs by breaking a story, Cable TV and the Internet could immediately jump on board and rake in the benefits of using content they didn’t have to pay for.

And that brings us to the question of news “analysis”. Business models that rely on advertising need eyeballs. And those eyeballs need content. Original content – in the form of real reporting – is expensive and eats into profit. But analysis of news that comes from other sources costs almost nothing. You load up on talking heads and have them talk endlessly about the latest story. You can spin off never ending reams of content without having to invest anything in actually breaking the story.

This type of content has another benefit; customers love analysis. Real news can be tough to swallow. If done correctly, it should be objective and based on fact.  Sometimes it will force us to reconsider our beliefs. As is often the case with news, we may not like what we hear.

Analysis – or opinion – is much more palatable. It can be either partially or completely set free from facts and swayed and colored to match the audience’s beliefs and biases. It scores highly on the confirmation bias scale. It hits all the right (or left) emotional buttons. And by doing this, it stands a better chance of being shared on social media feeds. Eyeballs beget eyeballs. The gods of corporate finance smile benignly on analysis content because of its effectiveness at boosting profitability.

By understanding how the value chain of good reporting has broken down due to this parasitic piling on by online and cable platforms in the pursuit of profit, we begin to understand how we can perhaps save journalism. There is simply too much analytical superstructure built on top of the few real journalists that are doing real reporting. And the business model that once supported that reporting is gone.

The further that analysis gets away from the facts that fuel it, the more dangerous it becomes. At some point it crosses the lines from analysis to opinion to propaganda. The one thing it’s not is “news.” We need to financially support through subscription the few that are still reporting on the things that are actually happening.