The Gap Between People and Platforms

I read with interest fellow Spinner Dave Morgan’s column about how software is destroying advertising agencies, but not the need for them. I do want to chime in on what’s happening in advertising, but I need a little more time to think about it.

What did catch my eye was a comment at the end by Harvard Business School professor Alvin Silk: “You can eliminate the middleman, but not his/her function.”

I think Dave and Alvin have put their collective thumbs on something that extends beyond our industry: the growing gap between people and platforms. I’ll use my current industry as an example – travel. It’s something we all do so we can all relate to it.

Platforms and software have definitely eaten this industry. In terms of travel destination planning, the 800-pound Gorilla is TripAdvisor. It’s impossible to overstate its importance to operators and business owners.  TripAdvisor almost single-handedly ushered in an era of do-it-yourself travel planning. For any destination in the world, we can now find the restaurants, accommodations, tours and attractions that are the favorites of other travellers. It allows us to both discover and filter while planning our next trip, something that was impossible 20 years ago, before TripAdvisor came along.

But for all its benefits, TripAdvisor also leaves some gaps.

The biggest gap in travel is what I’ve heard called the “Other Five.” I live in Canada’s wine country (yes, there is such a thing). Visitors to our valley – the Okanagan – generally come with 5 wineries they have planned to visit. The chances are very good that those wineries were selected with the help of TripAdvisor. But while they’re visiting, they also visit the “other five” – 5 wineries they discovered once they got to the destination. These discoveries depend on more traditional means – either word of mouth or sheer serendipity. And it’s often one of these “other five” that provide the truly memorable and authentic experiences.

That’s the problem with platforms like TripAdvisor, which are based on general popularity and algorithms. Technically, platforms should help you discover the long tail, but they don’t. Everything automatically defaults to the head of the curve. It’s the Matthew Effect applied to travel – advantage accumulates to those already blessed. We all want to see the same things – up to a point.

But then we want to explore the “other five” and that’s where we find the gap between platforms and people. We have been trained by Google not to look beyond the first page of online results. It’s actually worse than that. We don’t typically scan beyond the top five. But – by the very nature of ratings-based algorithms – that is always where you’ll find the “other five.” They languish in the middle of the results, sometimes taking years to bump up even a few spots. It’s why there’s still a market – and a rapidly expanding one at that – for a tour guided by an actual human. Humans can think beyond an algorithm, asking questions about what you like and pulling from their own experience to make very targeted and empathetic suggestions.

The problem with platforms is their preoccupation with scale. They feel they have to be all things to all people. I’ll call it Unicornitis – the obsession with gaining a massive valuation. They approach every potential market focused on how many users they can capture. By doing so, they have to target the lowest common denominator. The web thrives on scale and popularity; the rich get richer and the poor get poorer. Yes, there are niche players out there, but they’re very hard to find. They are the “other five” of the Internet, sitting on the third page of Google results.

This has almost nothing to do with advertising, but I think it’s the same phenomenon at work. As we rely more on software, we gain a false confidence that it replaces human-powered expertise. It doesn’t. And a lot of things can slip through the gap that’s created.

 

Why We’re not Ready for AI to Take the Wheel…Yet

It’s interesting to see how we humans assign trust.

Consider the following scenario. At any time, in any city in the world, you will put your life in the hands of a complete stranger in an environment you have no control over without a second thought. We do it every time we hail a cab. We know nothing about the driver or their safety record. We don’t know if they’re a good person or a psychopath. We place trust without any empirical reason to do so.

Yet a number of recent surveys indicate the majority of us don’t trust self-driving cars. A recent survey by AAA found that 71% of us would be afraid to ride in a fully self-driving vehicle. I’m one of them. I’m not sure I could slam the door on a self-driven Uber and relax in the back seat while AI takes the wheel. Yet I pride myself on being a fairly rational person and there are plenty of rational reasons why self-driving cars should be far safer than the human powered equivalents.  Even the most skeptical measured comparisons call it a toss-up.

And that brings us to key point- we don’t assign trust rationally. We do it emotionally. And emotionally, we have a tortured relationship with technology.

The problem here is two-fold. First, our trust mechanisms are built to work best when we’re face-to-face with the potential recipient of trust. Trust evolved to be a human-dependent process. And that brings us to the second problem. Over the last thousand years or so, we have learned how to trust in institutions. But that type of trust is dissolving rapidly.

Author and academic Rachel Botsman has spent over a decade looking at how technology is transforming trust. In an interview with Fast Company, she unpacks this notion of imploding institutional trust, “Whether it’s banks, the media, government, churches . . . this institutional trust that is really important to society is disintegrating at an alarming rate. And so how do we trust people enough to get in a car with a total stranger and yet we don’t trust a banking executive? “

I think this transformation of trust has something to do with the decoupling phenomenon I wrote about last week. When we relied on vertically integrated supply chains, we had no choice but to trust the institutions that were the caretakers of those chains. But now that our markets have flipped from the vertical to the horizontal, we are redefining our notions of trust. We are digitally connecting with strangers through sharing economy platforms like AirBnB and Uber and, in the process, we are finding new signals to indicate when we should trust and when we shouldn’t.

There is another unique aspect to our decision to trust. We tend to trust when it’s expedient to do so. Like so many things in human behavior, trust is just one factor wrapped up in our ongoing risk vs reward calculations. Our emotions will push us to trust when it’s required to get what we want. The fewer the alternatives available to us, the more we tend to trust.

Our lack of trust in self driving vehicles is a more visceral example. I don’t think anyone believes the creators of self-driving technology are out to off our species in a self-driven version of a Mad Max conspiracy. We just aren’t wired to trust machines with our lives. There is an innate human hubris that believes that when it comes to self-preservation, our fates are best left in our hands.

Self-driving proponents believe that with time and exposure, these trust issues will be resolved. The trick to us trusting machines with our lives is to lull us into not thinking about it too much. Millions of us do it every day when we board an airplane. The degree to which our airborne lives are dependent on technology was tragically revealed with the recent Boeing Max incidents. The fact is, if we had any idea how much our living to see tomorrow is dependent on technology, we would dissolve into a shuddering, panic-stricken mess. In this case, ignorance is indeed bliss.

But there are few times when we have to make the same conscious decision to put our lives in the metaphorical hands of a computer to the extent we do in a self-driven car. If we look at how we decide to trust, this an environment strewn with psychological landmines. Remember, we tend to trust when we have no options. And in this case, our option couldn’t be clearer. The steering wheel is right there, begging us to take over. It freaks us out then the car pulls away from the curb and we see the wheel start turning by itself. It’s small wonder that 71% of us are having some control issues.

 

The Decoupling Effect – And How Regulators Struggle to Keep Up

What happens when you take a world divided by distance and connect it with technology?

If you said massive disruption, you’d be right, but perhaps this is just symptomatic of an even bigger shift. What you have is a world that is becoming decoupled. In a world subject to the whims of physicality, you had tremendous amounts of transactional friction that was caused by the infrastructure required to make things happen. This infrastructure created long logistical value chains that were required to make markets function.

Let’s say you had to plan a family holiday in 1979. Realistically the only way was to use a travel agent, who was the required link between you and all the separate silos required to book plane tickets, reserve a hotel, arrange for transfers and get your tickets to Disneyland. There was a long value chain with you at one end and all the disparate pieces of your vacation on the other. That chain has since been blown apart and reconnected in a much more direct way by technology. This is the nature of decoupling.

This process introduces an interesting paradigm shift that sits at the heart of disruption. It takes a vertical chain dictated by the physical and logistical friction of a marketplace and shifts the axis 180 degrees to a number of stacked horizontal markets – all directly connected to the end customer – each of which opens up tremendous new opportunities. Take, from the example above, the process of booking a hotel room. When we pick this out of the vertical chain and rotate it to a horizontal market directly connected to consumers, suddenly there is whole new universe of options, with room for AirBnB, Couchsurfing, VRBO, Flipkey and a host of other emerging platforms.

It’s this flipping of axes that lies at the heart of the decoupling that is redefining our notion of a marketplace. According to Harvard professor Thales Teixeira, it’s here – not technology – where we find the true center of disruption. He has just written a new book, “Unlocking the Customer Value Chain,” that explores this notion of decoupling.  In it, he shows how once a “decoupled link” flips from the vertical to the horizontal, there is plenty of room for new start-ups to emerge and disrupt the incumbents. In an interview for the Knowledge@Wharton podcast, he points out that for start-up, “decoupling is looking at one activity in the customer value chain and deciding to do it much better than the incumbent.”

Teixeira also reminds us of a vital point in all of this market upheaval. This decoupling and pivoting from the vertical to the horizontal brings with it a new wave of benefits for the customer. It takes a previously necessary pain point away from them and instead opens up a huge range of new options.  He notes, “My key finding in the book, after looking at many industries, is it’s the customer who is disrupting these businesses. The changing needs and wants and behaviors of customers are actually the root cause of this huge shift away from large retailers into other startups and other online retailers.”

But if the benefits of decoupling tend to accrue to the customer, there are equal and corresponding pain points that fall on other parties. I’ve already mentioned the market incumbents. But legislators and regulator also feel the impact of disruption. It’s in the nature of a customer value chain to be fairly cohesive and somewhat stable. These chains formed to overcome the physical market logistics that introduced transactional friction into the process of buying something. The chain was the only way to overcome this friction. And that friction introduced some degree of stability into the market. Chains take time to form and this stability allows for regulators and legislators to eventually introduce governing checks and balances to address loopholes and unintended consequences in the market.

When markets become decoupled, however, they move at a speed that soon leaves governance in the dust. These emerging opportunities and the start-ups that jump on board rely solely on the “Invisible hand” to bring balance to a dynamic marketplace. That tends to work fine to balance forces of supply and demand, but markets exist within ecosystems and it’s these ecosystems that can be negatively impacted by the disruptions that come with decoupling.

Again, let’s take AirBnB as an example. I live in the Canadian province of British Columbia. The biggest city in B.C. is Vancouver, which represents an ecosystem uniquely vulnerable to the sources of disruption. First, Vancouver prides itself on both sustainability and liveability. It’s one of Canada’s most popular tourist destinations. It also happens to be one of the world’s hottest real estate markets. The emergence of AirBnB dropped like a bombshell into the midst of this fragile triangle, unleashing unintended consequences in all directions. Predictably, the incumbent players felt the strain. Hotels and motels struggled to respond to the flood of new options in the market. But less predictably, residential neighborhoods were transformed into extended accommodation villages. Municipal taxes went from being an investment in the common good to a business expense to be kept under control. Zoning bylaws were ignored en masse. City legislators are just now cracking down on new legislation to try to corral the forces of disruption. And AirBnB is fighting back on multiple fronts.

This decoupling of the world is a Pandora’s box. Now that it’s opened, it will never again be closed. The links of the chain that are being decoupled will continue to get more granular, opening up more and more market opportunities. Teixeira gives the example of Sephora, who uncoupled something as minute as trying a sample of a lipstick or blush and turned it into a market opportunity.

It’s the Fall that’s Gonna Kill You

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

                                     Butch Cassidy and the Sundance Kid – 1969

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

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

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

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

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

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

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

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

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

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

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

 

 

Influencer Marketing’s Downward Ethical Spiral

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

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

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

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

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

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

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

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

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

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

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

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

 

Marketing Vs. Advertising: Making It Personal

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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