Category Archives: Online Trends

The Cathedral and Bazaar Cycle of Mar -Tech Innovation

Each year my friend Scott Brinker sits down to update his marketing technology landscape and each year he is amazed by the explosion of vendors he has to fit on a single slide. Last year’s version clocked in at 3874 Mar Tech solutions – almost twice as many as 2015. He started in 2011 with about 150 and it has effectively doubled with each iteration. While everyone has expected eventual consolidation this hasn’t happened to date.

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Scott’s Marketing Technology Landscape – 2016

Why?

For a possible answer, we can look at a fascinating study conducted by a UCLA team looking at the fossil record of cars. Since 1896, there is a reliable record of the introduction of new automobile makes and models. In essence, this creates a “fossil” record, similar to biology, where we can look at the evolution of a technology over an extended time period. In this case, the researchers were looking to isolate the factors that led to the greatest introduction of new models and the discontinuation of old models. When many new models were being introduced, the evolution of the automotive technology accelerated. The researchers wanted to see if this pace of evolution was tied to strength of the economy, changes in oil prices or the number of other cards on the market. What they found was that competition in the marketplace played a bigger role in the variety of car models than either economic growth or oil prices.

However, these periods of rapid innovation didn’t last forever. Inevitably, there was a period of consolidation, where the major manufacturers focused on a few models to increase profitability. It’s a lot more profitable to produce a popular model with relatively few changes over a long period of time.

Once again, we have an oscillation or wave happening.

What is interesting about this is that these periods of rapid innovation always come from an open market with many competitors – exactly what is happening in marketing technology right now. That is because open markets always drive more innovation than can be achieved within hierarchal organizations. As Eric Raymond showed in his brilliant essay on the open source movement – The Cathedral and the Bazaar – the evolutionary forces of a distributed open market (or “Bazaar”) always trump vertical integration (“Cathedrals”) when it comes to spinning off fresh ideas.

In their book “Creative Destruction,” authors Richard Foster and Sarah Kaplan show that organizations (cathedrals) tend to favor incremental innovation with occasional forays into substantial innovation. But markets (bazaars) unleash transformational innovation. The unpredictability and risk increases by a factor of ten as you go from one version of innovation to the other, but so do the rewards. Innovation in markets grow on a logarithmic scale. It’s why some players – like Tesla and Google – have espoused the open-source “Bazaar” approach in areas like sustainable transportation and artificial intelligence where rapid innovation is essential.

There is another critical factor at play here as well. The market/bazaar, being ruthless, quickly culls the competitors down to those that have the best market potential. This explosion of innovation and the subsequent winnowing need a brutally competitive market environment – a rugged landscape in evolutionary terms. Organizations/Cathedrals are reluctant to pull the plug on losers as they fall victim to the sunk cost fallacy and loss aversion. Markets/bazaars operate like nature – “red in tooth and claw” – with a brutal efficiency in dispatching the less fit.

After this explosion of innovation and the subsequent purge, there is a period of consolidation where the biggest players benefit. Let’s call this the Cathedral phase. Here, operational efficiency takes over, looking for greater profitability. Here, market tested innovation is acquired by the largest organizations and systematically incorporated into a replicable template that allows for scalability. Here, the Cathedral model does what it excels at, maximizing profits. Of course, there is a trade off. Innovation withers and dies in this environment, leading to eventual stagnation, which triggers the need for break out innovation all over again.

Will marketing technology follow the Cathedral/Bazaar pattern? In his last landscape, Scott mentioned that rather than coalescing around an “a small oligopoly of platform providers competing for that starring role” the Mar-Tech ecosystem seems to be embedding plug and play compatibility allowing for a longer “Bazaar” phase. Perhaps, with the elimination of market friction, we’re getting to a point where profitability can be uncoupled from the need for scale. I guess we’ll have to wait and see how many mar-tech vendors end up on the 2017 version of Scott’s slide.

 

 

 

 

Back to the Coffee House: Has Journalism Gone Full Circle?

First, let’s consider two facts about Facebook that ran in Mediapost in the last two weeks. The first:

“A full 65% of people find their next destination through friends and family on Facebook.”

Let’s take this out of the context of just looking for your next travel destination. Let’s think about it in terms of a risky decision. Choosing somewhere to go on a vacation is a big decision. There’s a lot riding on it. Other than the expense, there’s also your personal experience. The fact that 2 out of 3 people chose Facebook as the platform upon which to make that decision is rather amazing when you think about it. It shows just how pervasive and influential Facebook as become.

Now, the next fact:

“Facebook users are two-and-a-half times more likely to read fake news fed through the social network than news from reputable news publishers.”

There’s really no reason to elaborate on the above – ‘nuff said. It’s pretty clear that Facebook has emerged at the dominant public space in our lives. It is perhaps the most important platform in our culture today for forming beliefs and opinions.

Sorry Mark Zuckerberg, but not matter what you may have said in the past about not being a media outlet, you can’t duck this responsibility. If our public opinions are formed on your private property that is a unimaginably powerful platform then – as Spidey’s Uncle Ben said (or the French National Convention of 1793; depending on whom you’re prefer to quote as a source) – “With great power comes great responsibility.” If you provide a platform and an audience to news providers – fake or real, you are, ipso facto, a media outlet.

But Facebook is more than just an outlet. It is also the forum where news is digested and shared. It is both a gristmill and a cauldron where beliefs are formed and opinions expressed. This isn’t the first time something like this has happened, although the previous occurrence was in a different time and a very different place. It actually contributed directly to the birth of modern journalism – which is, ironically – under threat from this latest evolution of news.

If you were an average citizen London in 1700 your sources for news were limited. First of all, there was a very good chance that you were illiterate, so reading the news wasn’t an option. The official channel for the news of the realm was royal proclamations read out by town criers. Unfortunately, this wasn’t so much news as whatever the ruling monarch felt like proclaiming.

There was another reality of life in London – if you drank the water it could possibly kill you. You could drink beer in a pub – which most did – or if you preferred to stay sober you could drink coffee. Starting in the mid 1600’s coffee houses started to pop up all over London. It wasn’t the quality of the coffee that made these public spaces all the rage. It was the forum they provided for the sharing of news. Each new arrival was greeted with, “Your servant, sir. What news have you?” Pamphlets, journals, broadsheets and newsletters from independent (a.k.a “non-royal”) publishers were read aloud, digested and debated. Given the class-bound society of London, coffee houses were remarkably democratic. “Pre-eminence of place none here should mind,” proclaimed the Rules and Orders of the Coffee-House (1674), “but take the next fit seat he can find.” Lords, fishmongers, baronets, barristers, butchers and shoe-blacks could and did all share the same table. The coffee houses of London made a huge contribution to our current notion of media as a public trust, with all that entails.

In a 2011 article the Economist made the same parallel between coffee houses and digitally mediated news. In it, they foreshadowed a dramatic shift in our concept of news:

“The internet is making news more participatory, social, diverse and partisan, reviving the discursive ethos of the era before mass media. That will have profound effects on society and politics.”

The last line was prescient. Seismic disruption has fundamentally torn the political and societal landscape asunder. But I have a different take on the “discursive ethos” of news consumption. I assume the Economist used this phrase to mean a verbal interchange of thought related to the news. But that doesn’t happen on Facebook. There is no thought and there is little discourse. The share button is hit before there is any chance to digest the news, let alone vet it for accuracy. This is a much different atmosphere of the coffee house. There is a dynamic that happens when our beliefs are called on the mat in a public forum. It is here where beliefs may be altered but they can never change in a vacuum. The coffee house provided the ideal forum for the challenging of beliefs. As mentioned, it was perhaps the most heterogeneous forum in all of England at the time. Most of all it was an atmosphere infused with physicality and human interaction – a melting pot of somatic feedback. Debate was civil but passionate. There was a dynamic totally missing from it’s online equivalent. The rules and realities of the 18th century coffee house forced thoughtfulness and diverse perspectives upon the discourse. Facebook allows you to do an end run around it as you hit your share button.

The Calcification of a Columnist

First: the Caveat. I’m old and grumpy. That is self-evident. There is no need to remind me.

But even with this truth established, the fact is that I’ve noticed a trend. Increasingly, when I come to write this column, I get depressed. The more I look for a topic to write about, the more my mood spirals downward.

I’ve been writing for Mediapost for over 12 years now. Together, between the Search Insider and Online Spin, that’s close to 600 columns. Many – if not most – of those have been focused on the intersection between technology and human behavior. I’m fascinated by what happens when evolved instincts meet technological disruption.

When I started this gig I was mostly optimistic. I was amazed by the possibilities and – somewhat naively it turns out – believed it would make us better. Unlimited access to information, the ability to connect with anyone – anywhere, new ways to reach beyond the limits of our own DNA; how could this not make humans amazing?

Why, then, do we seem to be going backwards? What I didn’t realize at the time is that technology is like a magnifying glass. Yes, it can make the good of human nature better, but it can also make the bad worse. Not only that, but Technology also has a nasty habit of throwing in unintended consequences; little gotchas we never saw coming that have massive moral implications. Disruption can be a good thing, but it can also rip things apart in a thrice that took centuries of careful and thoughtful building to put in place. Black Swans have little regard for ethics or morality.

I have always said that technology doesn’t change behaviors. It enables behaviors. When it comes to the things that matter, our innate instincts and beliefs, we are not perceptibly different than our distant ancestors were. We are driven by the same drives. Increasingly, as I look at how we use the outcomes of science and innovation to pursue these objectives, I realize that while it can enable love, courage and compassion, technology can also engender more hate, racism and misogyny. It makes us better while it also makes us worse. We are becoming caricatures of ourselves.

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Everett Rogers, 1962

Everett Rogers plotted the diffusion of technology through the masses on a bell curve and divided us up into innovators, early adopters, early majority, late majority and laggards. The categorization was defined by our acceptance of innovation. Inevitably, then, there would be a correlation between that acceptance and our sense of optimism about the possibilities of technology. Early adopters would naturally see how technology would enable us to be better. But, as diffusion rolls through the curve we would eventually hit those for which technology is just there – another entitlement, a factor of our environment, oxygen. There is no special magic or promise here. Technology simply is.

So, to recap, I’m old and grumpy. As I started to write yet another column I was submerged in a wave of weariness.   I have to admit – I have been emotionally beat up by the last few years. I’m tired of writing about how technology is making us stupider, lazier and less tolerant when it should be making us great.

But another thing usually comes with age: perspective. This isn’t the first time that humans and disruptive technology have crossed paths. That’s been the story of our existence. Perhaps we should zoom out a bit from our current situation. Let’s set aside for a moment our navel gazing about fake news, click bait, viral hatred, connected xenophobia and erosion of public trusts. Let’s look at the bigger picture.

History isn’t sketched in straight lines. History is plotted on a curve. Correction. History is plotted in a series of waves. We are constantly correcting course. Disruption tends to swing a pendulum one way until a gathering of opposing force swings it the other way. It takes us awhile to absorb disruption, but we do – eventually.

I suspect if I were writing this in 1785 I’d be disheartened by the industrial blight that was enveloping the world. Then, like now, technology was plotting a new course for us. But in this case, we have the advantage of hindsight to put things in perspective. Consider this one fact: between 1200 and 1600 the life span of a British noble didn’t go up by even a single year. But, between 1800 and today, life expectancy for white males in the West doubled from thirty eight years to seventy six. Technology made that possible.

stevenpinker2Technology, when viewed on a longer timeline, has also made us better. If you doubt that, read psychologist and author Steven Pinker’s “Better Angels of Our Nature.” His exhaustively researched and reasoned book leads you to the inescapable conclusion that we are better now than we ever have been. We are less violent, less cruel and more peaceful than at any time in history. Technology also made that possible.

It’s okay to be frustrated by the squandering of the promise of technology. But it’s not okay to just shrug and move on. You are the opposing force that can cause the pendulum to change direction. Because, in the end, it’s not technology that makes us better. It’s how we choose to use that technology.

 

 

 

The Mindful Democracy Manifesto

 

The best argument against democracy is a five-minute conversation with the average voter.

Winston Churchill

Call it the Frog in Boiling Water Syndrome. It happens when creeping changes in our environment reach a disruptive tipping point that triggers massive change – or – sometimes – a dead frog. I think we’re going through one such scenario now. In this case, the boiling water may be technology and the frog may be democracy.

As I said in Online Spin last week, the network effects of President-elect Donald Trump’s victory may be yet another unintended consequence of technology.

I walked through the dynamics I believe lay behind the election last week in some detail. This week, I want to focus more on the impact of technology on democratic elections in general. In particular, I wanted to explore the network effects of technology, the spread of information and sweeping populist movements like we saw on November 8th.

In an ideal world, access to information should be the bedrock of effective democracy. Ironically, however, now that we have more access than ever that bedrock is being chipped away. There has been a lot of finger pointing at the dissemination of fake news on Facebook, but that’s just symptomatic of a bigger ill. The real problem is the filter bubbles and echo chambers that formed on social networks. And they formed because friction has been eliminated. The way we were informed in this election looked very different from that in elections past.

Information is now spread more through emergent social networks than through editorially controlled media channels. That makes it subject to unintended network effects. Because the friction of central control has been largely eliminated, the spread of information relies on the rules of emergence: the aggregated and amplified behaviors of the individual agents.

When it comes to predicting behaviors of individual human agents, our best bet is placed on the innate behaviors that lie below the threshold of rational thought. Up to now, social conformity was a huge factor. And that rallying point of that social conformity was largely formed and defined by information coming from the mainstream media. The trend of that information over the past several decades has been to the left end of the ideological spectrum. Political correctness is one clear example of this evolving trend.

But in this past election, there was a shift in individual behavior thanks to the elimination of friction in the spread of information – away from social conformity and towards other primal behaviors. Xenophobia is one such behavior. Much as some of us hate to admit it, we’re all xenophobic to some degree. Humans naturally choose familiar over foreign. It’s an evolved survival trait. And, as American economist Thomas Schelling showed in 1971, it doesn’t take a very high degree of xenophobia to lead to significant segregation. He showed that even people who only have a mild preference to be with people like themselves (about 33%) would, given the ability to move wherever they wished, lead to highly segregated neighborhoods. Imagine then the segregation that happens when friction is essentially removed from social networks. You don’t have to be a racist to want to be with people who agree with you. Liberals are definitely guilty of the same bias.

What happened in the election of 2016 were the final death throes of the mythical Homo Politicus – the fiction of the rational voter. Just like Homo Economicus – who predeceased him/her thanks to the ground breaking work of psychologists Amos Tversky and Daniel Kahneman – much as we might believe we make rational voting choices, we are all a primal basket of cognitive biases. And these biases were fed a steady stream of misinformation and questionable factoids thanks to our homogenized social connections.

This was not just a right wing trend. The left was equally guilty. Emergent networks formed and headed in diametrically opposed directions. In the middle, unfortunately, was the future of the country and – perhaps – democracy. Because, with the elimination of information distributional friction, we have to ask the question, “What will democracy become?” I have an idea, but I’ll warn you, it’s not a particularly attractive one.

If we look at democracy in the context of an emergent network, we can reasonably predict a few things. If the behaviors of the individual agents are not uniform – if half always turn left and half always turn right – that dynamic tension will set up an oscillation. The network will go through opposing phases. The higher the tension, the bigger the amplitude and the more rapid the frequency of those oscillations. The country will continually veer right and then veer left.

Because those voting decisions are driven more by primal reactions than rational thought, votes will become less about the optimal future of the country and more about revenge on the winner of the previous election. As the elimination of friction in information distribution accelerates, we will increasingly be subject to the threshold mob effect I described in my last column.

So, is democracy dead? Perhaps. At a minimum, it is debilitated. At the beginning of the column, I quoted Winston Churchill. Here is another quote from Churchill:

Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time.…

We are incredibly reluctant to toy with the idea of democracy. It is perhaps the most cherished ideal we cling to in the Western World. But if democracy is the mechanism for a never-ending oscillation of retribution, perhaps we should be brave enough to consider alternatives. In that spirit, I put forward the following:

Mindful Democracy.

The best antidote to irrationality is mindfulness – forcing our Prefrontal cortex to kick in and lift us above our primal urges. But how do we encourage mindfulness in a democratic context? How do we break out of our social filter bubbles and echo chambers?

What if we made the right to vote contingent on awareness? What if you had to take a test before you cast your vote? The objective of the test is simple: how aware were you not only of your candidate’s position and policies but – more importantly – that of the other side? You don’t have to agree with the other side’s position; you just have to be aware of it. Your awareness score would then be assigned as a weight to your vote. The higher your level of awareness, the more your vote would count.

I know I’m tiptoeing on the edge of sacrilege here, but consider it a straw man. I’ve been hesitating in going public with this, but I’ve been thinking about it for some time and I’m not so sure it’s worse than the increasingly shaky democratic status quo we currently have. It’s equally fair to the right and left. It encourages mindfulness. It breaks down echo chambers.

It’s worth thinking about.

Mobs, Filter Bubbles and Democracy

You know I love to ask “why”? And last Tuesday provided me with the mother of all “whys”. I know there will be a lot of digital ink shed on this – but I just can’t help myself.

So..why?

Eight years ago, on Mediapost, I wrote that we had seen a new type of democracy. I still think I was right. What I didn’t know at the time was that I had just seen one side of a more complex phenomenon. Tuesday we saw another side. And we’re still reeling from it.

It’s not the first time we’ve seen this. Trump’s ascendancy is following the same playbook as Brexit, Marine Le Pen’s right winged attack in France and Rodrigo Duterte’s recent win for the presidency of the Philippines. Behind all these things, there are a few factors at play. Together, they combine to create a new social phenomenon. And, when combined with traditional democratic vehicles, they can cause bad things to happen to good people.

The FYF (F*&k You Factor)

Michael Moore absolutely nailed what happened Tuesday night, even providing a state-by-state, vote-by-vote breakdown of what went down – but he did it back in July. And he did it because he and Trump are both masters of the FYF. Just like you can’t bullshit a bullshitter – you can’t propagandize a propagandist. Trump had borrowed a page out of Moore’s playbook and Moore could see it coming a mile away.

The FYF requires two things – fear and anger. Anger comes from the fear. Typically, it’s fear of – and anger about – something you feel is beyond your control. This inevitably leads to a need to blame someone or something. The FYF master first creates the enemy, and then gives you a way to say FY to them. In Moore’s words, “The Outsider, Donald Trump, has arrived to clean house! You don’t have to agree with him! You don’t even have to like him! He is your personal Molotov cocktail to throw right into the center of the bastards who did this to you!”

What Michael Moore knew – and what the rest of us would figure out too late – was that for half the US, this wasn’t a vote for president. This was a vote for destruction. The more outrageous that Trump seemed, the more destructive he would be. Whether it was intentional or note, Trump’s genius was in turning Clinton’s competence into a liability. He succeeded in turning this into a simple yes or no choice – vote for the Washington you know – and hate – or blow it up.

The Threshold Factor

The FYF provides the core – the power base. Trump’s core was angry white men. But then you have to extend beyond this core. That’s where mob mentality comes in.

In 1978, Mark Granovetter wrote a landmark paper on threshold models of behavior. I’ll summarize. Let’s say you have two choices of behavior. One is to adhere to social and behavioral norms. Let’s call this the status quo option. The other is to do something you wouldn’t normally do, like defy your government – let’s call this the F*&k You option. Which option you choose is based on a risk/reward calculation.

What Granovetter realized is that predicting the behavior of a group isn’t a binary model – it’s a spectrum. In any group of people, you are going to have a range of risk/reward thresholds to get over to go from one behavioral alternative to the other. Being social animals, Granovetter theorized the deciding factor was the number of other people we need to see who are also willing to choose option 2 – saying F*&k you. The more people willing to make that choice, the lower the risk that you’ll be singled out for your behavior. Some people don’t need anyone – they are the instigators. Let’s give them a “0”. Other people may never join the mob mentality, even if everyone else is. We’ll give them a “100.” In between you have all the rest, ranging from 1 to 99.

The instigators start the reaction. Depending on the distribution of thresholds, if there are enough 1, 2, 3’s and so forth, the bandwagon effect happens quickly, spreading through the group. It isn’t until you hit a threshold gap that the chain reaction stops. For example, if you have a small group of 1’s, 2’s and 3’s, but the next lowest threshold is 10, the movement may be stopped in its tracks.

Network Effects and Filter Bubbles

None of what I’ve described so far is new. People have always been angry and mobs have always formed. What is new, however, is the nature of this particular mob.

As you probably deduced, the threshold model is one of network effects. It depends on finding others who share similar views. It you can aggregate a critical mass of low thresholds; you can trigger bigger bandwagon effects – maybe even big enough to jump threshold gaps.

Up to now, Granovetter’s Threshold model was constrained by geography. You had to have enough low threshold people in physical space to start the chain reaction. But we live in a different world. Now, you can have a groups of 0s, 1s and 2s living in Spokane, Washington, Pickensville, Alabama, and Marianna, Florida and they can all be connected online. When this happens, we have a new phenomenon – the Filter Bubble.

One thing we learned this election was how effective filter bubbles were. I have a little over 440 connections in Facebook. In the months and weeks leading up to the election, I saw almost no support for Trump in my feed. I agreed ideologically with the posts of almost everyone in my network. I suspect I’m not alone. I am sure Trump supporters had equally homogeneous feedback from their respective networks. This put us in what we call a filter bubble. In the geographically unrestricted network of online connections, our network nodes tend to be rather homogeneous ideologically.

Think about what this does to Granovetter’s threshold model. We fall into the false illusion that everyone thinks the same way we do. This reduces threshold gaps and accelerates momentum for non-typical options. It tips the balance away from risk and towards reward.

A New Face of Democracy

I believe these three factors set the stage for Donald Trump. I also believe they are threatening to turn democracy into never ending cycle of left vs. right backlashes. I want to explore this some more, but given that I’ve already egregiously exceeded my typical word count for Online Spin, we’ll have to pick up the thread next week.

America, You’re Great (But You Might Be Surprised Why)

The first time I went to Washington D.C. I was struck by the extreme polarity I saw there. That day, the Tea Party was staging a demonstration against Obamacare on the Mall in front of the Capitol building. But this wasn’t the only event happening. The Mall was jammed with gatherings of all types – from all political angles: the right, the ultra-right and left, the rich and poor, the eager and entitled, the sage and stupid. The discourse was loud, passionate and boisterous. It was – in a word – chaos.

That chaotic polarity is, of course, defining the current election. After the second presidential debate, commentator Bob Schieffer said, with a mixture of incredulity and disgust, “How have we come to this?” The presidential debates may have hit a new low in presidential decorum, but if you dig deep enough, there is something great here.

Really.

A recent PR campaign has asked Canadians to tweet why America is great. I’m going to do it in a column instead.

You’re great because you argue loudly, passionately and boisterously. You air out ideologies in a very messy and public way. You amplify the bejeezus out of the good and the bad of human nature and then put them both in a cage match to battle it out in broad daylight. You do this knowing there will be no clear winner of this battle, but you hope and trust that the scales will tip in the right direction. There is no other country I know of that has the guts to do this in quite the way you do.

You personally may not agree with Donald Trump, but there are many that do. He is giving voice to the feelings and frustrations of a sizable chunk of the US population. And as much I personally don’t like how he’s doing it, the fact is he is doing it. Your country, your constitution and your political system has allowed a man like this to take a shot at the highest office of the land by questioning and attacking many things that many Americans hold to be inviolable. It’s scary as hell, but I have to admire you for letting it play out the way it has and trusting that eventually the process will prevail. And it has for 240 years. Candidates and elections and campaign rhetoric will all eventually disappear- but the process – your process – has always prevailed.

The polarization of the US is nothing new. It defines you. For a quick history lesson, watch The Best of Enemies on Netflix; a documentary on the televised debates of William F. Buckley and Gore Vidal clashing on left vs. right during the 1968 Nixon vs. Humphreys vs. Wallace election. What started as an intellectual dual ended with Buckley threatening to smash Vidal’s face in after being called a neo-proto-Nazi on live TV.

If you look at the US from the outside, you swear that the whole mess is going to end up in a fiery wreck. But you’ve been here before. Many times. And somehow, the resiliency of who you are and how you conduct business wins out. You careen towards disaster but you always seem to swerve at the last minute and emerge stronger than before.

I honestly don’t know how you do it. As a polite, cautious Canadian, I stand simultaneously in awe and abject terror of how you operate. You defy the physics of what should be.

You’re fundamentally, gloriously flawed..but you are unquestionably resilient. You are an amazing example of emergence. You, in the words of Nassim Nicolas Taleb – are Antifragile:

“beyond resilience or robustness. The resilient resists shocks and stays the same; the antifragile gets better.”

You are discordant, divided and dysfunctional and somehow you’re still the most powerful and successful nation on the planet. I suspect you got there not in spite of your flaws, but because of them.

Perhaps you’re embarrassed by the current election cycle. I understand that. It has been called “unprecedented” many, many times by many, many commentators. And that may be true, but I would say it’s unprecedented only in the vigor and volume of the candidates (or, to be frank, one candidate). The boundaries of what is permissible have been pushed forcefully out. It may not be what certain constituents think is proper, but it is probably an accurate reflection of the diverse moods of the nation and, as such, it needs to be heard. You are a country of many opinions – often diametrically opposed. The US’s unique brand of democracy has had to stretch to it’s limits to accurately capture the dynamics of a nation in flux.

I don’t know what will happen November 8th. I do know that whatever happens, you will have gone through the fire yet again. You will emerge. You will do what needs to be done. And I suspect that, once again, you’ll be the stronger for it.

Why Millennials are so Fascinating

When I was growing up, there was a lot of talk about the Generation Gap. This referred to the ideological gap between my generation – the Baby Boomers, and our parent’s generation – The Silent Generation (1923 – 1944).

But in terms of behavior, there was a significant gap even amongst early Baby Boomers and those that came at the tail end of the boom – like myself. Generations are products of their environment and there was a significant change in our environment in the 20-year run of the Baby Boomers – from 1945 to 1964. During that time, TV came into most of our homes. For the later boomers, like myself, we were raised with TV. And I believe the adoption of that one technology created an unbridgeable ideological gap that is still impacting our society.

The adoption of ubiquitous technologies – like TV and, more recently, connective platforms like mobile phones and the Internet – inevitable trigger massive environmental shifts. This is especially true for generations that grow up with this technology. Our brain goes through two phases where it literally rewires itself to adapt to its environment. One of those phases happens from birth to about 2 to 3 years of age and the other happens during puberty – from 14 to 20 years of age. A generation that goes through both of those phases while exposed to a new technology will inevitably be quite different from the generation that preceded it.

The two phases of our brain’s restructuring – also called neuroplasticity – are quite different in their goals. The first period – right after birth – rewires the brain to adapt to its physical environment. We learn to adapt to external stimuli and to interact with our surroundings. The second phase is perhaps even more influential in terms of who we will eventually be. This is when our brain creates its social connections. It’s also when we set our ideological compasses. Technologies we spend a huge amount of time with will inevitably impact both those processes.

That’s what makes Millennials so fascinating. It’s probably the first generation since my own that bridges that adoption of a massively influential technological change. Most definitions of this generation have it starting in the early 80’s and extend it to 1996 or 97.   This means the early Millennials grew up in an environment that was not all that different than the generation that preceded it. The technologies that were undergoing massive adoption in the early 80’s were VCRs and microwaves – hardly earth shaking in terms of environmental change. But late Millennials, like my daughters, grew up during the rapid adoption of three massively disruptive technologies: mobile phones, computers and the Internet. So we have a completely different environment for which the brain must adapt not only from generation to generation, but within the generation itself. This makes Millennials a very complex generation to pin down.

In terms of trying to understand this, let’s go back to my generation – the Baby Boomers – to see how environment adaptation can alter the face of society. Boomers that grew up in the late 40’s and early 50’s were much different than boomers that grew up just a few years later. Early boomers probably didn’t have a TV. Only the wealthiest families would have been able to afford them. In 1951, only 24% of American homes had a TV. But by 1960, almost 90% of Americans had a TV.

Whether we like to admit it or not, the values of my generation where shaped by TV. But this was not a universal process. The impact of TV was dependent on household income, which would have been correlated with education. So TV impacted the societal elite first and then trickled down. This elite segment would have also been those most likely to attend college. So, in the mid-60’s, you had a segment of a generation who’s values and world view were at least partially shaped by TV – and it’s creation of a “global village” – and who suddenly came together during a time and place (college) when we build the persona foundations we will inhabit for the rest of our lives. You had another segment of a generation that didn’t have this same exposure and who didn’t pursue a post-secondary education. The Vietnam War didn’t create the Counter-Cultural revolution. It just gave it a handy focal point that highlighted the ideological rift not only between two generations but also within the Baby Boomers themselves. At that point in history, part of our society turned right and part turned left.

Is the same thing happening with Millennials now? Certainly the worldview of at least the younger Millennials has been shaped through exposure to connected media. When polled, they inevitably have dramatically different opinions about things like religion, politics, science – well – pretty much everything. But even within the Millennial camp, their views often seem incoherent and confusing. Perhaps another intra-generational divide is forming. The fact is it’s probably too early to tell. These things take time to play out. But if it plays out like it did last time this happened, the impact will still be felt a half century from now.

Prospect Theory, Back Burners and Relationship Risk

What does relationship infidelity and consumer behavior have in common? Both are changing, thanks to technology – or, more specifically – the intersection between technology and our brains. And for you regular readers, you know that stuff is right in my wheelhouse.

drouin

Dr. Michelle Drouin

So I was fascinated by a recent presentation given by Dr. Michelle Drouin from Purdue University. She talked about how connected technologies are impacting the way we think about relationship investment.

The idea of “investing” in a relationship probably paints in a less romantic light then we typically think of, but it’s an accurate description. We calculate odds and evaluate risk. It’s what we do. Now, in the case of love, an admittedly heuristic process becomes even less rational. Our subliminal risk appraisal system is subjugated by a volatile cocktail of hormones and neurotransmitters. But – at the end of the day – we calculate odds.

If you take all this into account, Dr. Drouin’s research into “back burners” becomes fascinating, if not all that surprising. In the paper, back burners are defined as “a desired potential or continuing romantic/sexual partner with whom one communicates, but to whom one is not exclusively committed.” “Back burners” are our fall back bets when it comes to relationships or sexual liaisons. And they’re not exclusive to single people. People in committed relationships also keep a stable of “back burners.” Women keep an average of 4 potential “relationship” candidates from their entire list of contacts and 8 potential “liaison” candidates. Men, predictably, keep more options open. Male participants in the study reported an average of over 8 “relationship” options and 26 liaison “back burners.” Drouin’s hypothesis is that this number has recently jumped thanks to technology, especially with the connectivity offered through social media. We’re keeping more “back burners” because we can.

What does this have to do with advertising? The point I’m making is that this behavior is not unique. Humans treat pretty much everything like an open marketplace. We are constantly balancing risk and reward amongst all the options that are open to us, subconsciously calculating the odds. It’s called Prospect Theory. And, thanks to technology, that market is much larger than it’s ever been before. In this new world, our brain has become a Vegas odds maker on steroids.

In Drouin’s research, it appears that new technologies like Tinder, What’sapp and Facebook have had a huge impact on how we view relationships. Our fidelity balance has been tipped to the negative. Because we have more alternatives – and it’s easier to stay connected with those alternatives and keep them on the “back burner” – the odds are worth keeping our options open. Monogamy may not be our best bet anymore. Facebook is cited in one-third of all divorce cases in the U.K. And in Italy, evidence from the social messaging app What’sapp shows up in nearly half of the divorce proceedings.

So, it appears that humans are loyal – until a better offer with a degree of risk we can live with comes along.

This brings us back to our behaviors in the consumer world. It’s the same mental process, applied in a different environment. In this environment, relationships are defined as brand loyalty. And, as Emanuel Rosen and Itamar Simonson show in their book Absolute Value, we are increasingly keeping our options open in more and more consumer decisions. When it comes to buying stuff – even if we have brand loyalty – we are increasingly aware of the “back burners” available to us.

 

 

 

“Affix Label Here”

Labelability – adjective. Possessing traits, an appearance or personality that makes a person easy to label without knowing him or her well (or at all).

I saw Kate and Will this past weekend. Yes, I’m on a first name basis with them. You might be too. After all, we know them so well. For those of you not in the Royal’s inner circle, you might know them better as the Duke and Duchess of Cambridge.

William is the second-in-line heir to the throne of England. His full name is William Arthur Philip Louis Mountbatten-Windsor. But I just call him William – or Will, if it’s just the two of us. He and his wife Catherine (Kate to me) were in town (Victoria, BC) the other day and I swung by to say hi. Okay, so it was me and about 40,000 other people lined up 30 deep in front of the BC legislature building, but we all knew them on a first name basis.

Will is a quiet but smart guy, well mannered and deferential – pleasantly handsome and he’s a good husband and father. He probably inherited many of these traits from his mom, the late Princess Diana. I also knew her quite well.

Kate is undeniably hot but in that elegant, prom princess kind of way. She also seems quite nice and is a doting mom. I think she’s probably smart too.

I like them both. They’re good people.

Both Kate and William have a quality I’ll call “labelability.” It makes us think we know them without really knowing them at all. John Fitzgerald Kennedy had labelability. Ronald Reagan had labelability, as did Bill Clinton. Our current Prime Minister, Justin Trudeau, has it.

Richard Nixon did not. Ironically, William’s father; Prince Charles, also lacks labelability. His grandfather – Prince Phillip – certainly doesn’t have it. But as I said, his mother, Princess Diana, had it in spades. She was beautiful, generous and vulnerable. We all knew that. We could see it plain as the nose on her beautiful, generous and vulnerable face.

This open door for us to connect emotionally with a total stranger takes on new import thanks to the world we live in. First mass media and then social media have amplified the power of labelability. When we can connect emotionally with someone without having to invest the time to get to know him or her, we generally jump at the chance. Ground swells of support can form instantly.

The Royals learned a hard lesson about the power of labelability when Princess Diana tragically passed away in 1997. Instantly, all those who “knew” Diana started grieving. In their grief, they were shocked at the lack of emotion that came from Buckingham Palace. The Queen was called “cold,” “heartless” and “aloof.” What they really meant is that the Queen didn’t possess labelability. We don’t know the Queen. We can’t quite pin her down. Sometimes she’s our kindly grandmother and sometimes she can be a real cold-hearted hard ass. She’s funny that way.

The power of Labelability will come into sharp focus as we move towards Tuesday, November 8th. Donald Trump has labelability. Hillary Clinton does not. This is not passing any type of judgment on their actual qualities or lack of same. That’s the whole point. Love him or hate him, we all think we have Donald Trump nailed. What you see is what you get. But there seem to be depths to Hillary Clinton that remain off-limits to us. We’re always holding back judgment, waiting for her to surprise us.

She’s kind of got that Queen of England thing going on.

 

The Bermuda Triangle of Advertising

In the past few weeks, via the comments I’ve received on my two (1,2) columns looking at the possible future of media selection and targeting, it’s become apparent to me that we’re at a crisis point when it comes to advertising. I’ve been fortunate enough to have some of the brightest minds and sharpest commentators in the industry contributing their thoughts on the topic. In the middle of all these comments lies a massive gap. This gap can be triangulated by looking at three comments in particular:

Esther Dyson: “Ultimately, what the advertisers want is sales…  attention, engagement…all these are merely indicators for attribution and waypoints on the path to sales.”

Doc Searls: “Please do what you do best (and wins the most awards): make ads that clearly sponsor the content they accompany (we can actually appreciate that), and are sufficiently creative to induce positive regard in our hearts and minds.”

Ken Fadner: “I don’t want to live in a world like this one” (speaking of the hyper targeted advertising scenario I described in my last column).

These three comments are all absolutely right (with the possible exception of Searls, which I’ll come back to in a minute) and they draw a path around the gaping hole that is the future of advertising.

So let’s strip this back to the basics to try to find solid ground from which to move forward again.

Advertising depends on a triangular value exchange: We want entertainment and information – which is delivered via various media. These media need funding – which comes from advertising. Advertising wants exposure to the media audience. So, if we boil that down – we put up with advertising in return for access to entertainment and information. This is the balance that is deemed “OK” by Doc Searls and other commenters

The problem is that this is no longer the world we live in – if we ever did. The value exchange requires all three sides to agree that the value is sufficient for us to keep participating. The relatively benign and balanced model of advertising laid out by Searls just doesn’t exist anymore.

The problem is the value exchange triangle is breaking down on two sides – for advertisers and the audience.

As I explained in an earlier Online Spin, value exchanges depend on scarcity and for the audience, there is no longer a scarcity of information and entertainment. Also, there are now new models for information and entertainment delivery that disrupt our assessment of this value exchange. The cognitive context that made us accepting of commercials has been broken. Where once we sat passively and consumed advertising, we now have subscription contexts that are entirely commercial free. That makes the appearance of advertising all the more frustrating. Our brain has been trained to no longer be accepting of ads. The other issue is that ads only appeared in contexts where we were passively engaged. Now, ads appear when we’re actively engaged. That’s an entirely different mental model with different expectations of acceptability.

This traditional value exchange is also breaking down for advertisers. The inefficiencies of the previous model have been exposed and more accountable and effective models have emerged. Dyson’s point was probably the most constant bearing point we can navigate to – companies want sales. They also want more effective advertising. And much as we may hate the clutter and crap that litters the current digital landscape, when it works well it does promise to deliver a higher degree of efficiency.

So, we have the previous three sided value exchange collapsing on two of the sides, bringing the third side – media- down with it.

Look, we can bitch about digital all we want. I share Searls frustration with digital in general and Fadner’s misgivings about creepy and ineffective execution of digital targeting in particular. But this horse has already left the barn. Digital is more than just the flavor of the month. It’s the thin edge of a massive wedge of change in content distribution and consumption. For reasons far too numerous to name, we’ll never return to the benign world of clearly sponsored content and creative ads. First of all, that benign world never worked that well. Secondly, two sides of the value-exchange triangle have gotten a taste of something better- virtually unlimited content delivered without advertising strings attached and a much more effective way to deliver advertising.

Is digital working very well now? Absolutely not. Fadner and Searls are right about that, It’s creepy, poorly targeted, intrusive and annoying. And it’s all these things for the very same reason that Esther Dyson identified – companies want sales and they’ll try anything that promises to deliver it. But we’re at the very beginning of a huge disruptive wave. Stuff isn’t supposed to work very well at this point. That comes with maturity and an inevitable rebalancing. Searls may rail against digital, just like people railed against television, the telephone and horseless carriages. But it’s just too early to tell what a more mature model will look like. Corporate greed will dictate the trying of everything. We will fight back by blocking the hi-jacking of our attention. A sustainable balance will emerge somewhere in between. But we can’t see it yet from our vantage point.