Catching Travel by the Long Tail

It’s been 13 years since then-Wired Editor in Chief Chris Anderson wrote his book “The Long Tail.” His analysis of the “Amazon Economy” completely flipped our notions of supply and demand. In theory, The Long Tail should have ushered in a democratization of the marketplace, spreading the wealth among a greater number of participants. And, in a perfect implementation of the Long Tail, that would be true. But bits and pieces of Long-Tail economics have ported over to a number of markets — and sometimes, an imperfect fit creates some undesirable consequences.

Long-Tail Economics

In order to create an effective Long-Tail market, three conditions have to be met.

Unlimited inventory: Products that can be delivered digitally with no manufacturing costs free markets from the physical restraints of production and warehousing. Inventories are unlimited and fulfillment can be on demand.

Unlimited shelf space: Similarly, products in the digital domain allow for infinite shelf space — simply because no actual “space” is required. Spotify, Netflix and Amazon can make millions of digital copies available.

Perfect information: The last requirement is sometimes the most problematic. In order for the Long Tail marketplace to be the most effective, consumers need perfect information about their options. They need to know everything about anything that’s available and be able to make their choice accordingly.

This is impractical in the real world. Even the most effective search platform falls well short of providing perfect information.

Theoretically, if all three prerequisites are met, demand flows down from the head to the tail, shortening the first and extending the second. But Long-Tail economics don’t necessarily apply equally to every marketplace. Take travel, for instance.

Too Much of a Good Thing

In a recent MediaPost column looking at marketing travel, Harvey Chipkin outlined the problems being felt worldwide by “overtourism.”  Barcelona is a cautionary tale of what happens when consumers are deluded by the illusion of a Long-Tail market and suppliers are dealing with the realities of an infrastructure held back by physical constraints.

First, let’s deal with the delusion. We travel a lot differently than our parents did. Back in the ’80s, travel to Europe was the sole domain of the rich and famous. If one of us mere mortals did hit the continent, chances were we were doing the European Bus Tour Trifecta: London, Paris and Rome. For most of us, Disneyland was about as exotic and adventurous as our travel plans got.

But then we started craving authentic experiences. We wanted the thrill of unearthing the hidden gem. That was about the time we discovered Barcelona.

No one went to Barcelona in 1990. But then the city hosted the Olympics in 1992. This exposure on the world stage boosted tourism, effectively doubling it by 2000. Barcelona was cool, it was hip — and, most importantly, our next-door neighbors had never been there.

But it was the Long Tail of travel that really broke the back of Barcelona when it came to tourism. From 2000 to 2010, with the advent of the web and the explosion of available travel information, tourism to Barcelona again doubled and almost tripled.

Today, about 20 million annual visitors flock to a city with a population less than one tenth that number. The city is groaning under the weight of all those sun-burned bodies desperately searching for authenticity, to the point that Barcelona’s mayor, Ada Colau, is threatening to slam the door on those gringo turistas in order to make the city livable again.

The delusion of the Long Tail leads us to believe there’s a smorgasbord of authentic travel options just waiting for us. But the reality falls far short of that. If we look at the prerequisites of a Long-Tail market, we begin to see why.  We can argue that there is unlimited shelf space. There is no corner of the world we can’t travel to if we have the budget and inclination. Destinations we never heard of just a few decades ago are now the new hot spots.

Perfect information is a little more of a challenge. When the options are limitless, we run into the limits of our own cognition. Working memory being what it is, we can’t endlessly juggle potential destinations. We rely on a search and suggestion engine like TripAdvisor. And there we run into the realities of the Matthew Effect: The rich tend to get richer and the poor get poorer. This can be otherwise stated as the Rule of Google: “No one goes past the first page.” Shelf space may be unlimited, but screen real estate is anything but.

Finally, as Barcelona is painfully discovering, there are definite limits to the inventory of authentic, one-of-a-kind travel experiences. Once, visiting La Sagrada Familia Basilica was an awe-inspiring, soul-stirring spiritual journey. Today, it’s a highly manufactured tourism machine that usually sells out for the day by 9 a.m.

This means that rather than the trickle-down effect we would hope to see in a Long-Tail market, demand tends to bunch up due to network effects. A new “authentic” experience climbs to the top of the listing and is suddenly inundated with new demands.

As Chipkin said in his column: “After a few people get the privilege of cooking with a Contessa in her ancestral home or taking in a remote tribal village … these “authentic” locals (and their neighbors) begin to catch on and think like entrepreneurs. In come the value engineers and the souvenir shops … and out goes the authenticity.”

Seeking Sustainability

The Barcelona effect is beginning to be seen everywhere, including my own little corner of Canada. Forward-thinking tourism marketers are trying to get ahead of the deluge by finding ways to push traffic to the less-popular margins, artificially creating a Long-Tail effect. Labels like “slow tourism” and “immersive travel” are emerging to try to encourage a different mindset among visitors. But, in the end, most tourism operators are still trapped within the tyranny of TripAdvisor mindset, hoping to climb to the top of the rankings. They feel the potential trade-off is worth it.

To them, being “too popular” sounds like a tomorrow kind of problem.

Lee Iacocca and the Celebrity CEO

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

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

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

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

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

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

How Much Influence Does a CEO Really Have?

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

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

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

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

The Cult of Personality

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

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

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

Mistaking Charisma for Competency

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

The Dilemma of the Middle Aged Marketer

Today is my birthday. I still call myself middle-age, but truth be told, I passed being middle-aged some time ago. I would more accurately be called two/thirds-aged (hopefully).

 That’s not the only half-truth I’m hanging on to.

When new people I meet ask me my profession, I like to say I’m a “reformed marketer.” In addition to being somewhat untruthful, I also realize now that this response is pretentious on many different levels.

First of all, it gives off this “holier than thou” vibe that’s a little off-putting.

Secondly, if I regret being a marketer so much, why am I still hanging on for dear life to that particular epithet? The people I’m being introduced to now often have no idea of my past. The fact that I once called marketing my career has no relevance to them. They could care less. I’m just saying it for effect.

That’s a little sad.

If I dig way down to the truth, I have to admit being a marketer defined me for most of my life. I loved influencing people. I adored my career. And I’m not ready to let that part of me go.

Calling myself a reformed marketer gives me the illusory comfort of still hanging on to something important to me, but holding it at arm’s length, like a disease I’ve recovered from. I’m trying to play both ends against the middle.

And thus comes the Middle Aged Marketer’s Dilemma. It hit me in my 40s.

In last week’s column, I started talking about “Why” vs the other 4 Ws: “Who, What, When and Where.” I have a love/hate relationship with “Why.” It was that damned “Why” that ushered in the Dilemma.

As I said, I loved “What” I did as a marketer. It was endlessly challenging and fascinating. And if you love “What” enough, you don’t really care so much about “When” and “Where.” You’ll work ridiculously long hours in whatever location your career takes you.

I even came to terms with “Who.” I loved most of my clients. The few I didn’t, I managed to either cut loose or build a big enough buffer so that they didn’t make my life too miserable for too long. Those 4 Ws allowed me to carve out a pretty fantastic life for myself.

But then came along that damned “Why.” It was innocent at first. My “whys” had a limited and very applied scope. They were specific to the work I did for my clients. They allowed me to add another dimension to the market research we were doing for others. The more I asked “why,” the more I wanted to learn about how people ticked. I loved “what” I was doing even more.

Then my “why” flipped on me and went for the jugular. It has a habit of doing that. I made the mistake of asking myself why I was doing what I did for a living.

It’s a tough question. I don’t think many of us want to go gentle into that good night without having sussed for ourselves a pretty good reason why we have lived our lives.  And when middle-aged marketers asks themselves “why,” a satisfying answer does not immediately spring to mind.

“So I could help profit-obsessed companies sell more shit to people who don’t need it” is not exactly a sterling argument for canonization.

And yes, I did just toss everything about marketing into the same over-generalized bucket. Quibble if you will. I know there are exceptions. If you navel-gaze long enough, you’re sure to find them. But I’ll stand by my struggle with “why,” if you can stand by yours.

Today, I’m still struggling with the Dilemma. The fact that I’m still writing this column week after week speaks to my inability to let the past go. I remain totally in love with the “what” of marketing, but have ethical issues with the “why.”

I do believe marketing is built upon the questionable edifice of consumerism — and I’m not sure there’s a lot of moral high ground we can lay claim to.We work (or, in my case, did work) in an industry that depends on humans having baser instincts.

Data does NOT Equal People

We marketers love data. We treat it like a holy grail: a thing to be worshipped. But we’re praying at the wrong altar. Or, at the very least, we’re praying at a misleading altar.

Data is the digital residue of behavior. It is the contrails of customer intent — a thin, wispy proxy for the rich bandwidth of the real world. It does have a purpose, but it should be just one tool in a marketer’s toolbox. Unfortunately, we tend to use it as a Swiss army knife, thinking it’s the only tool we need.

The problem is that data is seductive. It’s pliable and reliable, luring us into manipulation because it’s so easy to do. It can be twisted and molded with algorithms and spreadsheets.

But it’s also sterile. There is a reason people don’t fit nicely into spreadsheets. There are simply not enough dimensions and nuances to accommodate real human behavior.

Data is great for answering the questions “what,” “who,” “when” and “where.” But they are all glimpses of what has happened. Stopping here is like navigating through the rear-view mirror.

Data seldom yields the answer to “why.” But it’s why that makes the magic happen, that gives us an empathetic understanding that helps us reliably predict future behaviors.

Uncovering the what, who, when and where makes us good marketers. But it’s “why” that makes us great. It’s knowing why that allows us to connect the distal dots, hacking out the hypotheses that can take us forward in the leaps required by truly great marketing. As Tom Goodwin, the author of “Digital Darwinism,” said in a recent post, “What digital has done well is have enough of a data trail to claim, not create, success.”

We as marketers have to resist stopping at the data. We have to keep pursuing why.

Here’s one example from my own experience. Some years ago, my agency did an eye-tracking study that looked at gender differences in how we navigate websites.

For me, the most interesting finding to fall out of the data was that females spent a lot more time than males looking at a website’s “hero” shot, especially if it was a picture that had faces in it. Males quickly scanned the picture, but then immediately moved their eyes up to the navigation menu and started scanning the options there. Females lingered on the graphic and then moved on to scan text immediately adjacent to it.

Now, I could have stopped at “who” and “what,” which in itself would have been a pretty interesting finding. But I wanted to know “why.” And that’s where things started to get messy.

To start to understand why, you have to rely on feelings and intuition. You also have to accept that you probably won’t arrive at a definitive answer. “Why” lives in the realm of “wicked” problems, which I defined in a previous column as “questions that can’t be answered by yes or no — the answer always seems to be maybe.  There is no linear path to solve them. You just keep going in loops, hopefully getting closer to an answer but never quite arriving at one. Usually, the optimal solution to a wicked problem is ‘good enough – for now.’”

The answer to why males scan a website differently than females is buried in a maze of evolutionary biology, social norms and cognitive heuristics. It probably has something to do with wayfinding strategies and hardwired biases. It won’t just “fall out” of data because it’s not in the data to begin with.

Even half-right “why” answers often take months or even years of diligent pursuit to reveal themselves. Given that, I understand why it’s easier to just focus on the data. It will get you to “good,” and maybe that’s enough.

Unless, of course, you’re aiming to “put a ding in the universe,” as Steve Jobs said in an inspirational commencement speech at Stanford University. Then you have to shoot for great.

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.