Category Archives: The New Marketplace

Still Live (But Slightly Bruised) from Park City, Utah

First published December 14, 2007 in Mediapost’s Search Insider

Yesterday at the Search Insider Summit in Park City, I was precariously perched out on a limb. I kicked off the summit by defending my position that big agencies won’t “get” search. Given that the Summit attracts a fair number of attendees from the world of big agencies, I’m wondering if the organizers of the show (thanks, Nick… thanks, Ken) were setting me up for an unfortunate ski jump accident.

My opponent in the debate was Mike Margolin. If you’ll check the comments on the blog from the previous column, you’ll see that Mike and I started the debate there, and have now brought it to the ski hills of Utah.

“Doing” and “Getting” Are Two Different Things

My position is that search is something big agencies will “do” because they have to, but they’ll do so reluctantly. Search is not aligned to the cultural or creative DNA that defines a big agency. So, they’ll never “get” search.

Mike’s position is that big agencies will absolutely “get” search, because they have no choice. The big agency table is where the brand strategies are determined, and search will play an integral role in that. In fact, if you’re not at the table, you’ll be shut out.

What Does History Teach Us?

The argument is a good one. It’s logical and seeming inevitable. But if you look at history, it’s also without much precedent.

When discontinuous innovation happens (and search is definitely a discontinuous innovation) it’s almost never the established power players that adopt it and capitalize on it. I previously used the example of the adoption of electricity by corporate America, another discontinuous innovation. Then, the big, established companies had invested heavily in steam power. It took them 50 years to adopt electricity, even though the advantages of electrical power were obvious. By the time they made the move, younger, smaller, faster-moving and more nimble companies had passed them by. Many of the industrial dinosaurs never recovered and died away.

That’s how evolution works. The succeeding species replaces the previously entrenched one because of a change in DNA — but also because the existing power species underestimates the importance of that change.Why would the dinosaurs change? From their vantage point, towering over the mammals, they were invulnerable. It was inevitable that they would prevail. Or so it seemed at the time.

How’s the View Up There?

From the big agencies’ perspective, high atop their vast media-buying empires, the agency monoliths seem invulnerable. It’s only if you’re scurrying around down here at ground level that you see the cracks in the ground underneath them.

Finally, let’s touch on the fact of just how important search is. Search is just the thin edge of the wedge that’s forever changing the nature of marketing. Mass marketing is gone. Micro marketing is here, but the thing that makes search so fundamentally important is pull versus push. It’s about people (as fellow columnist Kaila Colbin pointed out in Tuesday’s column ), but more than that, it’s about knowing them and meeting them halfway, one person at a time. That’s what search does, and what it will do with increasing effectiveness over the next decade. This market doesn’t lend itself to mass campaigns. Instead, it means millions of micro campaigns.

But here’s the fundamental reason why agencies won’t embrace search and its pull versus push paradigm. Agencies persuade. It’s why they exist. Their jobs are to use everything at their disposal — creativity, cleverness, research, targeting, emotional appeals — whatever it takes to get us to buy something. That fits well with their push mentality. That’s why agencies love TV. At this point, TV is still the most persuasive medium out there.

But you can’t persuade someone in search. Advertisers have tried, and it’s failed miserably. Search is, at best, multiple-choice. Pick from A, B, C or D, based on which you think is the best match for your intent. There’s no room for persuasion. There’s only what’s present, and picking, and the last of these, the fundamental outcome of search, is totally in the user’s control. We spend a few seconds making our decision. We don’t even read the text. We don’t need to be persuaded to learn more. We’ve already made that choice. So we’re immune to persuasion when we’re on a search engine. In fact, we’ll purposely ignore it. By trying to do search, agencies are going against their most fundamental nature.

The Evolving Whiff of Authenticity

I have a theory. Actually, I have several theories, but one in particular at the top of my mind today. I believe we are getting much better at sniffing out BS online.

In face to face encounters, we’re remarkably good at determining if someone’s authentic or not. We pick up cues, consciously and subconsciously, that allow us to make pretty accurate judgements as to the integrity and honesty of an individual. This “gut feel” that seems so vague is actually a sophisticated interplay of activity in various parts of our brain. Although we may not believe it, we’re all pretty good judges of character most of the time. It’s a survival mechanism. It’s not perfect, but it’s pretty good.

But what if we’re not face to face with someone? That is one of the challenges of the Internet. Often, we have to make judgements about information and the validity of opinions when we can’t see the person eye to eye. There is no editor on the internet, making sure everything we read is accurate and verified. It’s up to us to make the call. We have to act as our own editorial filters, reading between the billions of lines of HTML that are available to us.

Which leads us to something that was a little troubling to me that I heard this week. Every morning here at Enquiro, we have a “huddle” where we each share any news that we have heard that may be of interest to the team. Yesterday morning, Kyle Grant, who just returned from PubCon in Vegas, said he met a representative from a company that fakes blog posts. Basically, you feed the story you want spread about your product or service, and they hire a army of bloggers to post about it. It’s manufactured “buzz”.

Now, it’s not really surprising. As another team member mentioned, you can do the same thing with review comments, forum posts and other forms of commercial consumer generated comments. The door is open, so it’s natural that someone will figure out a way to squeeze through it and game the system. That too is part of human nature.

So, that really puts the onus on each of us to judge how authentic the content is we’re relying on online. And that get’s us back to my theory. I think we’re pretty good. I believe, in the relatively short time we’ve been online, we can pick up the “whiff of authenticity” or, conversely, the “whiff of BS” on most sites. We can tell what’s real and what’s manufactured. We can sort out the meat from the Spam. Like our face to face filters, they’re probably not perfect, but they work most of the time. We will be taken (as Lonelygirl15 showed) but sooner or later, we’ll get to the heart of what’s real.

The other thing that’s unique about the web is that we don’t have to rely just on ourselves to do this. For some reason, there’s still an unspoken law online that we will be diligent (in fact, virulent) about uncovering bogus garbage online. We revel in exposing the seedy underbelly of our culture. The internet has let a breath of fresh air into the previously stiffled world of media control. Before, we were expected to believe anything that came to us through the supposedly pre filtered channels that feed us our view of the outside world. The nightly news, the daily newspaper, the weekly news magazine. As was proven when Dan Rather’s journalistic integrity (or lack of same) was exposed online, we’re probably safer trusting the crazy patchwork quilt of information we get online than we are with the carefully spoon-fed news items we’re get every night through the networks.

Ultimately online, right will prevail, and it will do so much quicker than was true in the power controlled world of just one generation ago. We are less trusting and we are developing a much healthier cynical streak. Every time a door is open for all of us to have a voice, we will see parasitic companies scrambling to push through it, trying to capitalize on our collective gullability. And they’ll thrive, for awhile. But it’s a short term game, because I believe strongly that most times, we’re not as stupid as we look.

Brand Live and Die Face to Face

iStock_000004520845XSmallThe more I dig, the more I’m convinced that a big part of a brand’s success is the quality of its customer touch points, specifically, the face to face ones. Consider this overwhelming evidence:

The more emotion there is in an experience, the more vividly we remember it. It’s known as imprinting. So if we have very positive or very negative experiences, we remember them longer and more completely. Let’s say we visit a restaurant. If we have a terrible experience, we’ll remember it forever. If it was an amazing experience, again, we’ll remember it forever. If it’s mediocre and falls in the middle, it will tend to fade away.

Our memories are altered by the context in which we remember them. Let’s go back to our restaurant example. Whatever our experience, we will tend to alter it if we’re talking to a person who also had an experience with the same restaurant. If they had a great experience, but ours was negative, we’ll tend to alter our memory to make it more positive. Alternatively, if we had a positive experience, but someone else’s was terrible, suddenly we’ll alter our memory to make it less positive. This doesn’t tend to swing memories all the way from good to bad, but it alters and reshapes memories to better fit the context of recall. And over time, it can erode a once very good memory, or build up a rather negative one. Memory is not an accurate snapshot of an event, it’s a malleable story. So consistency of experience is important.

We get a much richer channel of communication when we’re face to face with a person. Studies have shown that receive only 7% of our communication from the words that are used. The other 93% is a combination of body language and tone of voice. So no matter how carefully you script your frontline customer encounters, the success will depend on the person delivering the message. We have very finely attuned credibility detectors.

The quality of the face to face interaction is the biggest factor in how satisfied we are in a product experience. Malcolm Gladwell used the example of doctors being sued for malpractice.

“Believe it or not, the risk of being sued for malpractice has very little to do with how many mistakes a doctor makes…. Patients don’t file lawsuits because they’ve been harmed by shoddy medical care. Patients file lawsuits because they’ve been harmed by shoddy medical care and something else happens to them.

“What is that something else? It’s how they were treated, on a personal level, by their doctor. What comes up again and again in malpractice cases is that patients say they were rushed or ignored or treated poorly. ‘People just don’t sue doctors they like,’ is how Alice Burkin, a leading medical malpractice lawyer, puts it. ‘In all the years I’ve been in business, I’ve never had a potential client walk in and say, “I really like this doctor, and I feel terrible about doing it, but I want to sue him.”

Medical researcher Wendy Levinson found that doctors that weren’t sued spent 3 minutes more with patients than those that were (18.3 minutes versus 15). But it wasn’t just time, it was the quality of time. More simply, it was the tone of the doctor’s voice. Recordings of interactions with doctors were recorded and then were played back for study participants, who then put the doctors into two groups, those that would be sued and those that wouldn’t be. The recordings were altered so participants couldn’t hear what was said, all they could judge was the tone of the voice. And even with this, they were able to judge with amazing accuracy which doctors would be sued. It wasn’t what was said, it was how it was said.

When you look at corporate examples, the power of person to person connections are clear in cases like JetBlue and Saturn. In both cases, the extraordinarily high level of customer satisfaction was due primarily to the quality of the face to face encounters. JD Powers rated the Saturn among the highest vehicles in terms of satisfaction not because it was a better car. It was because their dealer network didn’t follow the typical industry model, which was more like a school of piranhas. JetBlue’s employees had a mandate: make flying coach suck less.

Why is this important to remember? Because of the coming workforce crisis. The baby boom is shifting the majority of our workforce to the end of their working lives, and there’s a severe shortage at the entry level, typically the recruitment bed for service based businesses. This means good people are going to get tougher and tougher to find.

Also, there’s a move to cut costs by streamlining and outsourcing those vital customer touch points. Self serve customer service models are becoming more common, and in many cases, they’re backed up by a customer help line that’s been outsourced to an overseas call center. The call center has been provided the appropriate scripts, and, in most cases, adequate training on how to field a complaint. But, as we’ve seen, that’s really only 7% of the problem. The other 93% is connecting with a person who really cares about your problem and is trying to help you. That’s something you can’t script.

Let me give you an example. My wife and I recently flew to Lisbon on British Airways. We had to connect through Heathrow. I booked my flight directly through BA, but my wife flew on points, so that flight was booked through a partner airline. Both flights had less than an hour layover in Heathrow, and we had to change terminals. I didn’t really notice this at the time of booking, but soon, my partner airline notified us that they had moved my wife back to a later flight to allow her to make the connection. As anyone who has connected through Heathrow will tell you, the odds of making a connection with less than one hour is slim to nil.

I called British Airways to get my flight pushed back and was connected to what was obviously an overseas call center. The person on the other end, if they were considering a medical career, would be a sure bet to be nailed with a malpractice suit. The manner was brusque and indifferent. He informed me that they could change the flight, but there would be a $200 change fee, about 1/3 of the total cost of the flight. Plus, I would have to pay any difference in fares. I tried to explain to the person that the layover time wasn’t adequate and that BA screwed up with the initial booking, but to no avail. Finally, I hung up in frustration, to allow myself to cool down a little.

I resigned myself to the fact that I was going to have to cough up the extra $200, and phoned back a week later to make the change. This time, I got a much friendlier person who looked up my reservation and informed me that my flight had automatically been pushed back because an hour wasn’t an adequate connection time. I asked when this had happened and what had triggered the change. They said it was a flag that was automatically put up in the system so many days prior to a flight and had nothing to do with my previous call. It was the system correcting itself.

Everything worked out okay with BA, and the flight was actually one of the best transatlantic flights I had. But the poor quality of one encounter left an overall negative impression rather than a positive one. And, as reinforcement of it, when I was talking to a friend who had recently flown to Spain on British Airways, they had had exactly the same problem. Our respective memory retrievals quickly turned into a BA-bashing spree.

Realize the importance of person to person, and if you have to short cut anywhere, don’t short cut here. It’s the most important part of your business.

Edison Also Asked: “When Will People Get It?”

First published November 15, 2007 in Mediapost’s Search Insider

Over the past few weeks, my general theme has been “why don’t more people get it?” Why don’t agencies get search. Why don’t CEOs get search? Why don’t more search portals get that it’s the user that determines your success? Why don’t more people get that the world is changing, quickly? What’s with us, anyway?

Well, this week, I gained a little insight; thanks to a paper by Paul David called “The Dynamo and the Computer.” Maybe we just need some time. It’s not the first time this happened. Let me tell you the story of the light bulb.

Lighting Up the Industrial Age

Edison introduced the first practical incandescent light bulb in 1879. The first generating stations in New York and London started their dynamos spinning in 1881. Profound changes were to follow. Productivity was to grow by leaps and bounds.

Factories in the 1800’s were dark, noisy and not particularly pleasant places to spend a day.  At the center sat the steam engine: a huge, hungry and finicky behemoth, connected by an extended system of belts to the operating machinery of the factory. Even the early electrical engines were smaller, cleaner and much more efficient. Electric lighting made 24 hour shifts more practical. The benefits were obvious. Electricity was the ultimate “no-brainer.”

Still in the Dark

But by 1899, almost two decades after the introduction of the light bulb, only 3% of homes were “wired.” And the much-predicted impact on the North American industrial engine would have to wait until the 1920s to take hold. It took a half century for electricity to make much of a difference in America.

You see, technology tends to move fast, but people move slowly. It’s because transition tends to be dependent on many factors. It’s not like the flicking of (quite literally, in this case) a light switch. It’s more like waiting for a long series of dominos to fall into place, each drop contingent on the previous one.

In the case of electricity, significant money had been invested in steam power. You don’t just rip it all out and start over again, no matter how compelling the advantages might be. So factory owners waited for things to break down, and then retrofitted with new electric engines. But even this retrofitting had to wait for the supply of electrical engineers to catch up. In 1899, not many people knew how to design an electrical delivery system. The skill gap had to be eliminated. And this lack of expertise also showed up in less direct ways. America also had to wait for a new generation of factory architects to appear, who could design factories built to be powered by electricity. For every obvious benefit of electrification, there was a long series of factors that had to fall into place first. That’s why it took five decades to turn on the light.

History Repeating Itself

This technology adoption curve has been repeated over and over. The replacement of horsepower with steam power. And more recently, the information technology revolution. We can get as frustrated as we want with the snail’s pace reluctance of many to grasp the realities of the new world, but the fact is, we’re just being human.

Technology adoption usually follows a predictable path: introduction of technology, commercialization of technology, layering the technology onto what preceded it, and finally, throwing out the old completely and building from the ground up to embrace the technology. Each step depends on the step before it. And in every case, legacy investment slows the speed at which we move from one to the other.

If we look at the adoption of Internet technology and compare it to previous technology adoption curves, we’re just starting up the beginning of the long and steep part of the “S” curve. There’s no doubt we’ll get there, but it will take time.

Android and Pondering the Future from Portugal

AlgarveSagresThis afternoon, I saw what was, at one point, probably the most exciting and terrifying place in the world. Sagres is the southwest corner of Portugal. From this point, sailing west, you leave the Mediterranean and enter the vast expanse of the Atlantic. Beyond Sagres was no man’s land. Everything safe and familiar was behind you. New worlds of discovery and vast expanses of the unknown lay beyond. It was a powerful personal experience. Sitting on a rock overlooking the cliffs, looking at nothing but water, you discover something primal in yourself.

It was also metaphorical. We’re on the cusp of our own voyage. In our world, there’s a lot of unknown that lies ahead. For anyone that has pondered where we’re at, and what it might mean for us in the future, the possibilities are as exciting and frightening as they must have once appeared from the vantage point of Sagres.

It was somewhat fitting that the day I visited Sagres was the same day that Sergey Brin announced Google’s support of Android developers, to the tune of $10 million. No one doubts the potential of mobile. We all know that ubiquitous computing and access to the Internet will change everything. It will put the world in our hands.

And Google’s move into the space is interesting to think about as well. They’re betting on the power of community and open source to be the best way to reduce the friction so prevalent in the mobile space. Lack of standards, in fighting between telcos, convoluted politics between hardware manufacturers and service providers: Google is saying to hell with it, opening the door and letting things fall where they may. It’s a greenfield ripe for exploring, so the more the merrier! If our bets pay off (and in the grand scheme of things, $10 million is less than a pittance) there’s more than enough potential here for everyone. Forget control, let’s just get the ball rolling.

So, not to get all metaphorical on you, but if you compare it to the exploration of the new world, with many of those voyages rounding the point of Sagres, you’ll find a lot of similarity. Unlimited potential, a lot of unknowns, great odds that somebody’s going to get rich and, if you really think about it, scary as hell. But then, that could just be the Madeira talking.

Caution Will Kill You in the Search Game

First published November 8, 2007 in Mediapost’s Search Insider

A strange thing started happening to me in the last two years or so. As I became more vocal about my opinion, people started seeking it out more often. The more I shared it, the more people nodded their heads. And the more obnoxious I got about it, the more people jumped on my own little opinion bandwagon. It you look at comments to this column as an indicator of striking chords, it seems like I touch cords either when I’m being a total dickhead (increasingly frequent) or introspective and emotionally deep (a much rarer occurrence). But other than a “right-on” post or comment, and the vigorous nodding of heads, I’m not sure it will go much further than that. Inside, we all like to be smarter than our bosses and a little bit revolutionary. But on the surface, where we live and work, we go with the flow. I call it the Cluetrain Conundrum.

The Cluetrain Manifesto was posted in 1999, when the Internet was still new and bold and gritty. Much of the initial grass-roots appeal that tweaked the interest of Messrs. Locke, Weinberger and Searles has since been paved over to make room for commercial storefronts. At the time of publishing, as an in-your-face, spit-in-your-boss’s-coffee and laugh-all-the-way-to-the-corporate-bathroom call to action against the cluelessness of the command and control establishment, it attracted its own rush of “right-ons.”. In fact, since it went online, thousands have signed the Manifesto. It seemed like the world could change. But now, eight years later, we’re still waiting.

You see, it’s one thing to say you’re ready to change. It’s another to convince the rest of the people in all the cubicles in all the offices in all the world that you’re right. You know it, and the person in the next cubicle knows it, but the chowderheads in the X-0 suites seem intent on running the company off the cliff. Why? In a word, caution.

No, Really, Tell Me what You Think…

In the last few months, I’ve been asked for my opinion on how to improve certain search properties. I think the people asking me are hoping for an answer like this: “You see all these ads you’re trying to get people to click on? Well, all you have to do is move them here and put this colored box behind them, and people will sprain a finger trying to buy from your advertisers. It’s that simple!”

Of course, it’s not. It’s understanding all the things that the Cluetrain authors were trying to get across. It’s understanding that markets are conversations, that we’re sick of advertising, that we long for authenticity and transparency, and that we can sniff insincerity and BS a mile away. It’s saying that you have to worry about users first, build up truckloads of trust, and then figure out how to make money. And that’s just not likely to happen when you already have an existing search property.

The problem is that you’re already somewhat successful. There’s existing revenue and advertisers. Generally speaking, although attrition is higher than you’d like, most of the advertisers keep coming back. And as long as they’re doing that, management won’t be very motivated to change. Because the changes required are not simple fixes. They’re stripping things down to the foundations and rebuilding for the user. And that means a lot of money, and almost certainly lost revenue in the short term, against the remote possibility of long-term gain. That’s a ton of risk, and it’s not surprising that someone in the C-level executive wing is unwilling to stake their corporate reputations on this particular roll of the dice. There’s a lot better chance you’ll go down in flames than be crowned a hero.

The Illusion that You Have a Choice

But the irony here is that while it appears you have a choice, you really don’t. Because if you don’t take this chance, someone with a lot less to lose will. And eventually, that someone else will win. They’ll win, and you’ll lose, because Web traffic is a zero-sum game. Just ask every search engine who’s not Google. So while it appears there’s way too much to lose by reinventing your business model, it’s much, much riskier not to. Because as much as you think you’re in control of your business, you’re not. The users are, and you have them now by the simple virtue of there not being a better place to go — yet. In the Internet world, there will always be a better place to go, eventually. Either you build it or someone else will.

Last month, in a hotel lobby, I was having this conversation with somebody who had asked me my opinion. I basically told him what I’m telling you today and asked him if his company had the courage to do this. He wasn’t sure, and asked how important it was. I said it depends on the competition. He was a little reassured, because their competition is even more cautious. The reassurance was short-lived when I replied, “Ah, but that’s the competition you know about. Chances are, this is going to come completely out of the blue and you won’t know what hit you.”

I suspect people are going to stop asking my opinion.

Why Do We Keep Buying from Bad Businesses?

There’s an Italian grocery store in the town I live in. In fact, there are two. Most of our family, including my wife, shops at the one. They very seldom go to the other. Yet, I constantly hear how bad the service is at the store they frequent. I’ve heard hair raising stories (I’m not sure how true they are because I don’t personally shop there) of repackaging outdated products so the best before date didn’t show, rancid cheeses, repackaging produce so the rotten ones were out of sight at the bottom of the package and the owner cruising other grocery stores, buying outdated products from them and then selling them in his own store. And if you happen to take something back and complain, you’re immediately questioned as someone who is trying to scam the store. At best, the store takes a “you should know better, buyer beware” attitude. Now, it’s a generational thing as well. The owner ascribes to the “whatever it takes to get ahead” school of business, where his children, who are gradually getting more involved, seem to be a little less clueless about the importance of happy customers and are trying to change things.

But my wife keeps buying there. Why?

The competition doesn’t seem to have the same problems, or at least, not to the same extent. My wife never shops there. Again, I ask, why?

Well, according to my wife and the few other family members I asked, it comes down to three things. Convenience, price and some twisted sense of obligation to the family that runs the offending store. I suspect the last one has a lot to do with Italian culture, so may not be applicable in all circumstances. (Incidentally, they used to know the family that ran the other store but stopped patronizing it when they sold to store to owners they didn’t know).  But the other two, price and convenience, are, I suspect, more universal motivations.

I’ve seen it myself. I hate shopping at Walmart. Most people I know hate shopping at Walmart. It’s too big, too messy, too loud and the service generally sucks. But I shop there. Why? Because of price and convenience. It saves me a stop somewhere else, because it has a little of everything. And the prices are generally lower than the competition’s.

Seth Godin himself, the king of the Purple Cow and remarkable products, regularly blogs about bad experiences he’s had with businesses he’d rather not frequent. Bad airlines, bad theme parks, bad hotels. And I use Seth as an example purposefully. There’s probably no one on the planet more active in exposing bad business, but even he’s still giving them his money, and then bitching about it after. Why? I suspect convenience and price are the culprits.

Now, sometimes, there’s literally no alternative. One of the worst airline experiences I ever had was on United. Try as I might, I just couldn’t find another flight from Chicago to Toronto that got me there anywhere close to the times I needed, so I had to suck it up and fly United. And sure enough, United delivered the experience I was expecting. In fact, they exceeded my expectations, but not in a good way.

We keep crowing about the new control consumers wield. But with that control comes responsibility. We complain about bad advertising and bad businesses, but we continue to patronize them. We absolve ourselves of any blame for the twisted, greedy, profit crazed culture we’ve spawned over the past century. But it wouldn’t be this way if we simply stopped buying from bad businesses. Ultimately, we’re to blame. We might have to pony up 10% more on occasion, or go a little out of our way so we don’t have to worry about getting two rotten tomatoes at the bottom of the package or a bag of rancid pasta. One of the beautiful things about our free market economy is that if people stop buying, companies go out of business. If you’re bitching about a business, remember, it’s you that’s keeping them in business.

A Cautionary Tale about Friedman’s Flat World

the_world_is_flatI’m just plowing my way through Thomas Friedman’s “The World is Flat”. The “plowing through” comment is no reflection on Mr. Friedman’s writing ability, just on the sheer heft of the book. It’s several hundred pages long. Friedman talks about several dirty little secrets that are holding America back from maintaining it’s lead position in the global market, amongst them an education gap and an ambition gap. I tend to agree. I think North America is becoming complacent and is falling victim to an overwhelming sense of entitlement. I’ve always believe we have a rude awakening coming, and all signs are pointing it being just around the corner. One only has to visit China or India to feel the sheer momentum, driven by ambition and capitalist desire, to be struck by the difference in intensity you feel there and here. The immigrant fueled work ethic that made our society the leader is barely an ember now. Up until recently, that drive was fueled by a flood of top level immigrants from China, Korea, and India, but increasingly, those candidates are choosing to stay home, thanks to the connectiveness of Friedman’s Flat World.

But we also have to realize that we do have some tremendous advantages still in North America, thanks to a highly developed and largely transparent market, relatively free from the friction of bureaucracy or corruption. It’s not perfect, but it’s much better than in some other markets. This point was made clear to us with our recent foray into China.

We won a contract to do an eye tracking study in China, but it meant taking our eye tracking equipment with us. Knowing this could cause undue interest on the part of a Chinese customer official, we did our due diligence and spent several minutes on the phone with our local Chinese consulate to make sure this wouldn’t be an issue. We were assured over and over again that this would be a simple case of taking equipment in and out of the country, just like taking a lap top. “No problem” we were told.

So, we sent off our researcher, who luckily is Chinese and who speaks the language, and anticipated no problems. This, of course, was naive on our part. Sure enough, the customs official in China took one look at the large case with the odd looking monitor inside and threw up a red flag. The monitor was impounded. Jess, our researcher, with the help of the client, quickly got a government clearance form with all the appropriate stamps in place indicating that “one eye tracker” was cleared for entry into China. Jess went back to the customs official with paper in hand. She actually had the case in her hands when the official wanted to take another look at the equipment. “Hold it”, he said, “that’s not an eye tracker, that’s a monitor.” Jess tried to explain that the monitor was an eye tracker. It was too no avail. Tears, long explanations, pointing out a brochure, it was all for naught. Once Communist bureacrats make up their mind, there’s precious little wiggle room.

So, the eye tracker is still impounded. The study if 4 days behind schedule. The client is frustrated. We’re frustrated. And it’s all because of a petty bureaucrat and a serpentine system that no one, certainly not a westerner, can figure out. The world may be flat, but that doesn’t make it any less convoluted and complex. In fact, the flattening just brings the ugly mess inside closer to the surface.

 

Infomediating a Broken Marketplace

First published October 18, 2007 in Mediapost’s Search Insider

Last week, I explored the disconnect between how advertisers define Nirvana; the ability to control consumer and persuade them at will by inundating them with advertising; and what consumers dream about: authentic and reliable information on needed products and services. There are costs associated with both sides, the cost of advertising, and the cost of consumer research. Max Kalehoff, from Nielsen BuzzMetric, pointed out another cost: the nuisance cost to the consumer of wading through an earlobe-deep sea of irrelevant and uninvited advertising: zapped TV commercials, blaring billboards, glaring signage, email spam, ubiquitous interstitials and pop-ups, preloads… .or one of the zillions of other ways advertisers choose to scream at you.

So, with this highly inefficient, annoying and disconnected marketplace, there has to be a better way, right? Well, Marc Singer and John Hagel III think so. They call it the infomediary, a concept introduced in their 1999 book, “Net Worth.” It’s well worth the read. The one thing that struck me is that in the entire book, the word “Google” is not mentioned once. This is not really surprising, given the publication date, but for reasons that will soon become clear, the irony was not lost on me.

How to Spot an Infomediary

Here’s the basic foundation of the infomediary. Acting on behalf of the client when he’s looking to make a purchase, the infomediary takes previously gathered personal information, as well as information volunteered by the client, and searches for the best match with vendors. The client can choose to remain anonymous, saving himself from an onslaught of advertising. Or, if the client agrees, the infomediary will pass his name along to a qualified vendor, and for this privilege, the vendor will pay the prospect. In essence, the infomediary plays the role of marketing matchmaker.

There are a number of offshoots of this basic premise. The infomediary supplies privacy tools to clients, marketing intelligence to vendors, the opportunity to bargain as a group for lower prices on regular consumable products, and it also acts as an aggregator of consumer power. In effect, the infomediary takes over control of the client relationship, inserting itself squarely between the consumer and the vendor, with the ultimate goal of protecting the consumer. This is a decidedly customer-centric model.

But it’s in the basic concept of gathering information about a client, and using that to ensure a good match with a vendor, that one begins to speculate about Google’s ambitions to fill this role. In essence, at a rudimentary level, Google is already fulfilling some of the role of the infomediary. Certainly if you factor personalization into the equation, we move a big step closer to Singer and Hagel’s concept.

Disruptive Influences

There are a number of dramatically disruptive possibilities in the infomediary model:

  • It forces advertisers to surrender all pretense of control over the consumer. Persuasion becomes a non-issue. The touchpoint with the consumer is stripped of hype, ensuring that product information is authentic and factual.
  • It gives the aggregated consumer voice a level of power never seen before. Previously, the marketplace was vendor-centric: here’s what we offer, here’s how we offer it, here’s what we charge. The consumer’s choice was restricted to “take it or leave it.” Now, the balance shifts to the consumer: here’s what we want, here’s how we want it, here’s what we want to pay. Provide it or we’ll find someone else who can.
  • By gaining control of the customer relationship, it forces companies to focus on two other core processes: one, either product innovation and commercialization; or two, infrastructure management, excelling in producing and distributing a product.

Something’s Rotten in the State of Advertising

There are a number of other seismic shifts in the landscape that come out of the infomediary model, but “Net Worth” weighs in at over 300 pages, and I have a bare 700 to 800 words for this column. The sum of it all is that the infomediary model, or some variation of it, dramatically changes the rules of the marketing game. A terribly inefficient marketplace has evolved in the past century, with some very wobbly power structures. The communication disconnect is almost laughable in its dysfunction. Advertisers spend more and more, hoping to penetrate a barricade set up by increasingly militant consumers. It’s literally a war, with strategies to match. The only hint of concession to the increasing power of the consumer has been search, and that has been done reluctantly. Remember Einstein’s definition of insanity? “Doing the same thing over and over again and expecting different results.”

If you look at the characteristics of an infomediary laid out by Singer and Hagel, Google has many of them in place already, and certainly has the resources to assemble the rest. The one piece that’s missing, and this is the critical one, is a purely customer-centric approach. For all Google’s focus on the user experience, their advertising models are still primarily driven by advertisers, not consumers. But for the model to work, consumers have to have complete trust in the infomediary and be willing to share their personal information. As we’ve seen with the initial pushback to personalization, there’s still a healthy degree of suspicion on the part of users that Google will use personal information for its benefit and not the advertiser’s.

4000 Ads a Day and Counting

First published October 11, 2007 in Mediapost’s Search Insider

It’s not easy being a consumer. Current estimates indicate that the average urban dweller is exposed to between 3,000 and 5,000 advertising messages every day. That means, settling on the middle number, that every waking hour (sleep seems to be our only reprieve, and I hear they’re working on that) you’re presented with an ad every 14.4 seconds. That’s every 14.4 seconds, every minute of every day you’re alive. The frequency of this advertising barrage has doubled in the past 30 years.

“Are We There Yet?”

So, let’s imagine that your 5-year-old child interrupted you every 14 and a half seconds with “Moooommmm…” or “Daaaaddd…”. If we use my patience limits as a baseline here, that mean’s you’d last about 1.3 minutes before you went ballistic. The difference, of course, is that we’re genetically hardwired to pay attention to our children, much as we sometimes might try not to. We’ve been conditioned to ignore advertising.

But what happens when we really want to buy something? Suddenly, we’re looking for information, and we spend a lot of time doing so. At least, that’s true for some purchases. Take a computer, for instance. It’s not unusual to spend 10 to 15 hours researching a computer purchase, from the minute you decide you need one to the minute you tear open the box in your home. That’s not including the many hours needed to get your “plug and play” box actually playing after plugging.

The Cost of Consumer Research

Of course, we generally don’t put a cost on our time, but let’s say an hour of your time is worth about $40 (an average rate for someone making $75,000 per year). That means that $1,000 box of electronics cost you an additional $600, just in time spent to pick the right box.

The Internet is not making this any easier. Yes, as consumers, we’re armed with more information sources, but we spend a lot of time sorting out sense from nonsense. The explosion of information sources, both the good and the bad, mean we’re spending more time thinking about what we should buy. A study by ScanAlert found that that across many ecommerce categories, the average time to buy has increased by almost 79% in the past two years. Now, this was just the duration from first visit to purchase in the actual online store. It doesn’t include any consumer research before visiting the store. But I think we’re safe to assume that there would be a corresponding increase in the amount of online consumer “tire kicking.”

It’s No Picnic for Advertisers Either

Before you feel too sorry for yourself, let me tell you, it’s not easy being an advertiser, either. How do we get past the filters? How do we stand out from the other 3,999 messages you’ll hear today?

To recycle some research I did for a previous column (because research is a terrible thing to waste), the Ontario Tourism Board ran newspaper ads in Toronto targeting people looking to vacation in the province. The ad cost (at posted rate card rates) about $54,000. Even with an exceptional response rate, that ad might sneak though the filters of 1,700 or so people and actually catch their attention. This works out to an average cost of about $32 per introduction, or, to put it another way, $32 to tear a hole through that advertising barricade you’ve been building.

Got a Minute? I’ll Make it Worth Your While

So, if advertisers are willing to pay to get your attention, why not cut out the middle man and pay you directly? Why should the Toronto Star get all that money, when you’re the person the advertiser wants to talk to? What if every one of those 4,000 advertisers who are going to try to get your attention today (Consuummmerrr…Consummmerrr!) paid you a dollar to listen to what they have to say? You’d do okay financially, to the tune of about $1.46 million a year. Of course, your brain would explode after the first hour.

The concept is not as far-fetched as it seems. In fact, in 1999 John Hagel III and Marc Singer, both principals with McKinsey and Company, wrote a book called “Net Worth” that explored this very premise (along with a number of others) as a potential online business model. The book provided a detailed business plan for a new concept: the infomediary. Some of the details have been passed over in the last eight years since publication, but the basic premise still addresses a significant disconnect in today’s advertising marketplace. Next week, I’ll lay out the foundation of infomediaries and look at how some of our favorite search players seem to be inching their way towards Hagel and Singer’s proposal.

We now return you to your regular commercial onslaught.