Friday, August 22, 2014

What Marketers CANNOT Learn From The #IceBucketChallenge

Credit: slgckgc via photopin cc
I love internet memes, but I hate the way each one gets turned into fodder for advertising publications and agency bloggers to (try to) turn the event into a "teachable moment" for marketers. While a trend is hot, news sites and agencies strive to build more attention and traffic with a form of newsjacking, leveraging interest in a trending topic to create attention for themselves. Right now, this is happening with the Ice Bucket Challenge, with dozens of news, blog and LinkedIn posts telling marketers what they can learn from this meme. I do not agree with much of what has been written, so at risk of engaging in newsjacking myself, I am going to write about this program and hope that it encourages more dialog and consideration about this craze and what it may or may not mean for marketers.

Sometimes, a meme can furnish a few lessons that marketers might consider when developing their marketing strategies. At other times, the connection between the event and brands is tenuous, at best. And on occasion, the effort to turn current events into something relevant for brands and marketers blows back.

Many recently criticized PR agency Edelman for publishing a blog post immediately after Robin Williams' suicide suggesting brands "Seize the day" and use the tragedy "as an opportunity to engage in a national conversation." While the Edelman blog post was worthy of criticism, it was really just a symptom of a larger issue: Marketers' and agencies' continued promotion and use of dubious tactics such as "real-time marketing" and "brand newsrooms." These schemes attempt to hijack consumer emotion and interest in a current event to make otherwise irrelevant brands more relevant.

Business leaders must recognize that companies build relevance not by hopping from one trending topic to another but with concerted and ongoing effort in specific and discrete issues that resonate with consumers. Edelman should know--better than most--that the time for a company to demonstrate care for depression and suicide is before a celebrity death brings these topics to the forefront and not after Twitter is abuzz. One way tells consumers that your organization stands for something more than profits; the other tells consumers your brand is a vulture willing to exploit any tragedy or event to try to boost the bottom line.

It is happening again--while the world is busy dumping buckets of ice water over their heads, ad industry news sites and agency blogs are lighting up with posts about what marketers can learn from the #IceBucketChallenge. Alas, I believe many of these posts and articles are simply wrong, drawing arguable connections between what worked for this charitable effort and what will work for brands. Here is what I believe marketers can (and cannot) take from the success of the Ice Bucket Challenge:

  • The #IceBucketChallenge demonstrates the power of social media, not the power of social media marketing. (Tweet This): Almost every article and blog post I have read calls this a "campaign." It is not. A campaign is a planned series of marketing events launched by an organization to achieve a goal, but the ALS Association did not plan, launch or manage this (although they have eagerly jumped on the bandwagon). The Ice Bucket Challenge was a spontaneous and viral happening created and spread by individuals; in fact, had the ALS Association attempted to launch this themselves, they likely would have been criticized for manipulating and asking too much of people. The Ice Bucket Challenge succeeded not because it was a carefully crafted campaign but because it wasn't.
  • The Ice Bucket Challenge didn't succeed because it is easy but because it is difficult. I have read several times that brands can learn from this program that making participation easy for consumers is vital. Excuse me--the Ice Bucket Challenge was easy?! Most brands would do backflips simply to get 15 seconds of consumers' time to post a rating or positive comment. Meanwhile, the Ice Bucket Challenge required people to find a bucket, fill it, lug the heavy bucket somewhere convenient, fill it with ice, set up a smartphone to capture everything, lift the heavy bucket, douse themselves in ice-cold water, dry off, change clothes and post the video online. And, oh yeah, donate money! If that is your idea of easy, I wonder what a difficult activity might be!

    Ironically, had the challenge been something easy--"I dare you to post a video doing a duck face!," for example--it would not have worked. Because the Ice Bucket Challenge was difficult, it gave people an opportunity to demonstrate their willingness to make the effort--and no, your brand probably cannot get people to do heroic activities in support of your product or service. 
  • Credit: gwen via photopin cc
    The Ice Bucket Challenge was not a program about caring but about pride and shame. Before you react negatively to me calling out ego and humiliation as drivers, let me point out that this is not a criticism. The program succeeded, and there is nothing wrong with a charity with using the human emotions of pride and shame to achieve a positive end; after all, those are exactly the same mechanics that work in many charitable programs. Take, for example, the VFW fundraising program where volunteers stand with cash buckets in front of store entryways and give away little flowers to those who donate. If you cough up cash, you get a Buddy Poppy to wear around that day, showing pride in your small sacrifice; but if you make eye contact and walk past without donating, you feel shame. (You know you do!)

    The fact that people could show off how creative they were (with Bill Gates building a dousing contraption and Stephanie Izard doing an ice bucket Flashdance) was a big part of the success of the Ice Bucket Challenge. So was the part of the program that demanded people call others out by name; this was the charitable equivalent of a chain email, but because of the social media elements, people could not break the chain privately and quietly but only by humiliating themselves with silence and inaction. While some have claimed this program was about pulling at the heartstrings, I can recall seeing just one video that was legitimately emotional. The lesson of the Ice Bucket Challenge is that pride and shame are powerful human emotions, but brands should be very wary of trying to activate these emotions as part of a for-profit marketing campaign. 
  • Lou Gehrig's farewell speech, when he declares himself the
    "luckiest man on the face of the earth," moves me to tears.
    The Ice Bucket Challenge was not successful as a cohesive marketing effort, but it was a great first step. As I write this, the ALS Association has received $41 million of donations thanks to the Ice Bucket Challenge, more than double what the organization raised in its last fiscal year. But while this clearly had a terrific fundraising impact in 2014, will it build future success for the ALS Association?  For example, I would suggest the Ice Bucket Challenge did little to raise awareness. Most people had heard of Lou Gehrig's Disease before the Ice Bucket Challenge, and afterwards, how many of the participants would be able to identify its symptoms, when it strikes, its prevalence or anything else about ALS? Very few of the Ice Bucket videos made even passing reference to ALS, and without awareness and knowledge, this one-time event cannot be turned into a lasting driver of success in the fight against ALS.

    Of course, the ALS Association now has the names and contact data for more than 700,000 new donors. If the charity fails to educate those individuals, few will donate again and the association will not build upon this success for future fundraising benefit. With additional concerted effort, the ALS Association may convert this successful acquisition program into an effective awareness, loyalty and repeat donation effort. The point that marketers should take from this is that no single campaign or program can be a soup-to-nuts success delivering on every marketing goal; instead, building deep, strong, and long-lasting consumer relationships takes a cohesive brand journey. 

It takes nothing away from the generosity of many or the rewards accruing to the ALS Association to point out that this was not an effective marketing program but another example of the way social media lightning can strike unexpectedly. This is what brands can learn: Consumers are fickle and crowds are hard to predict or motivate. They can ignore your carefully-crafted and expensive viral video campaign then turn around and make the Harlem Shake the next big thing. 

Kudos to the ALS Association for seeing the Ice Bucket Challenge rising out of the crowd and being agile enough to capitalize on the opportunity. In the end, that may be the most important message of all for brands--your brand succeeds not with what you plan and post but with what consumers think and do. If brands did more worth talking about and concentrated less on broadcasting content, they would have a better chance of building relevance and loyalty in the social media era. 

Friday, August 15, 2014

New York Times Admits Its Native Advertising Violates FTC Rules

Photo Credit: Me!
Two weeks ago, John Oliver's bit on Native Advertising went viral--at least in marketing circles--but it was hardly the most disturbing thing to be published that week on the alarming and growing practice of sponsored content in mainstream media. While I enjoyed the humorous (and accurate) critique on Oliver's "Last Week Tonight," featured an even more troublesome item, entitled "New York Times Tones Down Labeling on Its Sponsored Posts."

The New York Times, long considered a U.S. national "newspaper of record" due to its professional ethics and reporting standards, has decided to appease advertisers desperate to bypass consumers' natural aversion and avoidance of advertising. The newspaper "shrunk the labels that distinguish articles bought by advertisers from articles generated in its newsroom and made the language in the labels less explicit."

What is so disappointing about The New York Times' action is that studies demonstrate a substantial level of confusion on the part of consumers about sponsored content. Consumers do not recognize Native Advertising as paid media, nor do they understand what "promoted content" means:
  • The IAB published a study last month that found business and entertainment news audiences could generally identify sponsored content, but "the general news audience had more trouble, with less than half (41%) recognizing that the material was advertising."
  • A 2013 study by David Franklyn, law professor at the University of San Francisco, found that people “didn’t remember seeing ‘sponsored by’ posts when asked to read a web page and the majority (over 50 percent) also didn't know what the word ‘sponsored’ actually meant.”
  • A recent study by Contently found that "while a plurality (48 percent) of respondents believe that 'Sponsored Content' means that an advertiser paid for the article to be created and had influence on the article’s content, more than half (52 percent) thought it meant something different." The study further found that:
    • Two-thirds of readers have felt deceived upon realizing that an article or video was sponsored by a brand.
    • 54 percent of readers don’t trust sponsored content.
    • 59 percent of readers believe a news site loses credibility if it runs articles sponsored by a brand.
    • Every single age group would prefer news sites stick to banner ads versus sponsored content. (This may be the first study in history to find a preference for banner ads, which makes evident consumers' perspective on Native Advertising.)
Advertising ethics and Federal Trade Commission (FTC) disclosure rules demand more disclosure, not less. The FTC does not set standards for disclosures but determines the effectiveness and legitimacy of the disclosure based on whether or not it succeeds in informing consumers. Simply put, if consumers cannot distinguish that content is sponsored nor understand what the disclosure means, it is illegal under the FTC Act, which prohibits "unfair or deceptive acts or practices."

This is made explicit in the FTC's ".com Disclosure" guide, which the agency created to help marketers and media outlets understand the law in the digital world. It states, "The ultimate test is not the size of the font or the location of the disclosure, although they are important considerations; the ultimate test is whether the information intended to be disclosed is actually conveyed to consumers." Today's Native Advertising undeniably fails to meet this standard (and it is a shame the FTC is burying its head in the sand rather than enforcing the rules it has established.) 

While it is sufficiently disturbing that The New York Times would diminish disclosures to make them less "clear and conspicuous," it was this line in the Ad Age article that left me dumbfounded:
"Several marketers have bristled at all the labeling, suggesting it turned away readers before they had a chance to judge the content based on its quality."
If this were a legal drama, that statement would cause the courtroom to erupt as the judge bangs his gavel demanding "Order in the court." That sentence is is an admission of guilt; a confession that The New York Times is violating both FTC guidance and advertising ethics.

The entire point of the FTC's "clear and conspicuous" disclosure rules is to ensure consumers recognize content as sponsored before engaging with it so that they can make an informed decision to read, watch or listen to the brand-sponsored media. In the old days of printed "advertorials," those fake "articles" were surrounded by a special border with the word "advertisement" repeated so as to provide a clear and conspicuous disclosure to consumers before they began to read the ad. On television, the FTC requires infomercials to "clearly disclose that 'THE PROGRAM YOU ARE WATCHING IS A PAID ADVERTISEMENT FOR [NAME OF PRODUCT]' at the beginning of an infomercial." (The italics are mine, but the capitalization is the FTC's.) 

The admission that The New York Times and its advertisers are actively attempting to deceive consumers into engaging with paid content before disclosing it is sponsored content is startling. It is also upsetting, because this demonstrates the wholesale failure of the news industry, marketers and regulators to uphold well-established, long-standing ethical advertising guidelines.

Some may argue I am overreacting--that Native Advertising can be done legally and ethically. I agree it can--with clear and conspicuous disclosure that plainly informs consumers the content is paid media. If the readers choose to proceed after seeing and understanding the disclosure, everybody wins! But absent that level of disclosure, Native Advertising is dangerous for all parties. It undermines the trustworthiness and independence of the news media; causes brands to look deceptive, untrustworthy, desperate and disrespectful of customers; deceives consumers who may not realize the content is influenced or written by a brand; and makes the FTC look toothless and opens the door to further violations of its rules.

To appreciate the potential damage caused by Native Advertising, put yourself not in the shoes of a marketer with sales or market share goals to deliver; instead, consider this from the perspective of a parent, spouse or customer. We can forgive David Ogilvy for a bit of sexism given the era in which he said it, but his famous admonition to advertisers demands we see our practices from both sides: "The consumer is not an idiot. She is your wife." How would you feel if a "respectable" news site buried a disclosure and encouraged you or your family to read:
  • "The Five TV shows You Can't Miss This Season" (sponsored by a production company that only included its own shows)
  • "Danger: Eating Tainted Chicken Sickens Children" (sponsored by the beef industry)
  • "Researchers: Fracking Completely Safe for Environment" (sponsored by a petroleum lobbying group)
  • "US Falls Behind As Regulation Stifles American Competitiveness" (sponsored by a bank trying to get Washington to loosen banking regulations)
  • "Human Rights Abuses Mount in Fill-In-The-Blank-Country" (sponsored by a top Pentagon contractor that will make billions if the US intervenes with military action) 
"First NYTimes frontpage (1851-9-18)"
 by The New York Times - ProQuest
Database. Licensed under Public
domain via Wikimedia Commons.
Native Advertising (without clear and conspicuous disclosure) is not a slippery slope; it is a single step onto a banana peel. I certainly understand the appeal of this new form of advertising to The New York Times, whose stock has declined 70% in the last decade (while the Dow has risen an equal percentage); nevertheless, the future of the Times (and of news, in general) is not improved by violating FTC rules, undermining trust and raising suspicions in consumers' minds that what they read was written by the highest bidder.

The current leadership of The New York Times would be wise to head the message that was printed in its inaugural issue in 1851:
We shall be "Conservative", in all cases where we think Conservatism essential to the public good;—and we shall be Radical in everything which may seem to us to require radical treatment and radical reform. We do not believe that "everything" in Society is either exactly right or exactly wrong;—what is good we desire to preserve and improve;—what is evil, to exterminate, or reform.
It is hard to imagine how obfuscating paid media is in the "public good." In fact, actively minimizing disclosures to deceive readers is clearly evil, and the Times' leaders would be well advised--not just for ethical reasons but for its own future--to "exterminate" or "reform" its Native Advertising practices. 

Sunday, August 10, 2014

The Innovation Imperative: Customer Loyalty Won't Save Your Company From the Collaborative Economy

“Because the purpose of business is to create a customer, the business enterprise has two–and only two–basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”
                                      ― Peter F. Drucker
One of the mistakes that successful companies make when faced with profound change in the business environment is to believe that their loyal customers will stay loyal, both to the brand and traditional business processes. Of course, building customer devotion is a necessity for brands nowadays, but leaders must recognize that today's strong brand loyalty offers no protection against significant changes in consumer expectations and behaviors.

This is an especially vital message now as we witness the birth and growth of the collaborative economy. No brand, regardless of existing consumer preference and loyalty, can avoid innovating to meet consumers' evolving expectations around sharing, renting, collective consumption and P2P (peer-to-peer) commerce.

I love the Drucker quote that leads off this blog post, although I would change one word, replacing "marketing" with "Customer Experience" (CX). At the time he said it, Drucker was referring to the old "Four Ps" model of marketing--product, price, place and promotion; nowadays, too many marketers are concerned with Promotion, leaving the other Ps to different parts of the organization. Nonetheless, what he says is that today's success is not enough; marketing and CX can create strong customer relationships today, but innovation is what creates strong customer relationships tomorrow.

Of course, studies demonstrate Drucker was correct. For example, in "The Living Company," Arie De Geus shares a study completed by Royal Dutch/Shell Group. Researchers examined similarities in companies that have existed since the nineteenth century. The study found that companies that enjoy long-term success share four attributes. Two do not pertain to innovation, but are important nonetheless--successful companies are fiscally conservative and have strong cultures with a firm sense of identity. The remaining two factors speak to the way innovation is baked into the core of their business:

  • Successful companies are sensitive to their environment: "As wars, depressions, technologies, and political changes surged and ebbed around them, they always seemed to excel at keeping their feelers out, tuned to what-ever was going on around them." These companies "managed to react in timely fashion to the conditions of society around them."
  • Successful companies are decentralized: De Geus later rethought the word and redefined it as "tolerant." He notes, "These companies were particularly tolerant of activities on the margin: outliers, experiments, and eccentricities within the boundaries of the cohesive firm, which kept stretching their understanding of possibilities."

Source: Econsultancy
History teaches us that today's brand strength furnishes no protection against the need to innovate. This has never been more true than today; while innovation has always been important, as the pace of change increases, the demand for business innovation grows. That companies today struggle with the quickening pace of innovation is apparent, as the average age of organizations in the S&P 500 has dropped from 60 years to less than twenty in the course of the past five decades.

We can examine what has occurred over the Internet era to see many obvious examples of companies that quickly failed despite very strong brand preference and customer loyalty. This loyalty meant little once the companies could not provide a product that met the changing needs and expectations of customers:

Study after study demonstrate that Customer Experience is a powerful driver of brand financial success, so what happened to Borders (and NBC and the New York Times)? Brand loyalty can drive success from today's consumers based on today's expectations and today's business models. It also gives brands a leg up in terms of introducing new products and services. But what history has taught us is that no amount brand strength and customer loyalty can save a company that fails to innovate. It does not matter that a TV network is the most popular in real-time broadcasts if consumers continue to want greater diversity in on-demand and time-shifted viewing, nor does being the most popular store in the mall save a company if fewer consumers walk through the mall entrance. 

Today, the collaborative economy is growing. What this means is that being the most popular seller of goods will not matter if consumers choose to rent more, nor will having loyal customers protect your company should consumers decide to procure more P2P. If your model is based on selling goods and services to consumers who own and consume them individually, the time has come to consider and test collaborative business models. 

Having loyal customers is not enough. No company can rest on its laurels--it must constantly innovate or it will get left behind. Success is it's own problem, because it prevents companies from seeing new risks and trying new things. To reinforce this point, I will end this blog post as I started it, with a Peter Drucker quote:
“The people who work within these industries or public services know that there are basic flaws. But they are almost forced to ignore them and to concentrate instead on patching here, improving there, fighting the fire or caulking that crack. They are thus unable to take the innovation seriously, let alone to try to compete with it. They do not, as a rule, even notice it until it has grown so big as to encroach on their industry or service, by which time it has become irreversible. In the meantime, the innovators have the field to themselves.”
                                       ― Peter F. Drucker

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Monday, August 4, 2014

New (and Very Old) Consumer Attitudes Support Rapid Growth in the Collaborative Economy

Many people assume that the sharing or collaborative economy is something new and innovative, and as a result, it is subject to caution and skepticism, but is this really the case? I often wonder if people considered today's burgeoning collaborative economy models in a historical context, might their caution and skepticism be lessened? Airbnb, LendingClub and Zipcar are new, but the collaborative economy is not; in fact, when considered in a historic context, it is not collective consumption that is new but the idea of private ownership and individual consumption that are quite recent developments.

Ownership was a relatively alien concept for most of human history. For millennia, we lived in tribal societies that pooled resources, skills and output. During the time of the Roman Empire and feudal society, the common man had little right to anything more than tools, with land ownership reserved for nobility who doled out property rights and protection in return for fees and loyalty.

Ideas of personal liberty and private ownership really only flourished following the Reformation, and even then, modern attitudes of ownership and individual consumption were not truly possible until the Industrial Revolution. It was then that the mass production of consumer goods and rise of a middle class to purchase, own, collect and consume those goods led to today's attitudes about private ownership and consumption.

Advertisement from September 1957
"The American Home" magazine
Our current perspective on individual ownership and consumption is really only a few generations old. Still, even as private ownership flourished, collective consumption never truly evaporated. Government services represent a form of collaborative economy, where mass transit and libraries offer people alternatives to the individual ownership of cars and books. Private enterprise also found rare ways to furnish alternatives to ownership, such as laundromats that allow people to rent washers and dryers one load at a time versus owning (and finding room for) expensive appliances.

For much of the last century in the US, collective consumption has been caught up in attitudes about class and standards of living. While poorer urbanites lived in apartments and waited at bus stops, richer suburban dwellers from single-family homes zipped past the straphangers in private cars (or, more likely, over them on the new freeways that connected the suburbs to city centers). While those with more means could avoid sharing walls or rides with others, they could avail themselves of P2P (peer-to-peer) services to avoid doing tasks that were messy or unpleasant, from cutting hair to painting nails to maintaining lawns to cleaning their homes. The ability to privately own more stuff while paying others to do your chores was as much a symbol of status as it was an economic necessity.

"Keeping up with Joneses" became a thing, as families demonstrated their economic power by consuming as much and as obviously as possible. "The Joneses got a new Chevy," said the Smiths with envy, before rushing out to buy the newest model, egged on by mass media advertising that associated ownership and consumption with status and achievement.

Source: Wikimedia
This sort of conspicuous consumption brought benefits such as employment, rising income, economic growth and improved products and services, but it also came at a cost, both personal and to society. We moved further from work, accumulated more debt and spent more time commuting and more hours working. Meanwhile, garbage dumps and automobile scrapyards grew due to the continuous cycle of private purchase, ownership, consumption, disposal and repurchase.

Sharing economy circa 1893; families sharing their homes
for visits. H/T +Jeremiah Owyang Source: Airbnb
In the last several decades, a new word has entered our vocabulary: Sustainability. In 1987, the Brundtland Commission of the United Nations issued a report in which variations of the word "sustainable" appeared 400 times. It defined sustainable development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”

What started as a buzzword for environmentalists and advocates has now become business as usual in corporate America. Almost two-thirds of businesses say, "My organization makes public our environmental and social goals, and publicly reports progress against those goals." (Alas, only one in five report that the leadership team’s compensation is driven in part by sustainability performance.)

Reviewing the history of ownership, consumption and sustainability is important for two reasons. First, it puts in perspective that our attitudes about individual ownership and consumption are relatively new and that we humans have a rich history of collectively sharing and consuming goods and services. Second, history demonstrates that significant and broad change in consumption habits results from two parallel trends: Technical revolutions (efficient industrial production, available mass media, etc.) and attitudinal changes (adoption of different modes of living and commerce).

The new wave of collaborative economy sites are succeeding not simply because they use technology in innovative ways. No web site or app can encourage people to embrace new behaviors unless they are ready to change--the foundation for change must be present at the same time the capability for change is presented. (That's what found in 1997 when it tried and failed to bring open sharing of one's social networks to a population that would not embrace this sort of behavior for another decade.)

Today, the foundation for a change in attitudes and behavior toward ownership and consumption is in place. Many point to the 2008 economic downturn as a turning point in terms of people's attitudes, but there are many trends that were occurring prior to the Great Recession and are still continuing well into our slow recovery:

Keeping up with the Joneses is simply not as appealing as it once was to Americans, while sustainability is a growing imperative in every corner of our personal and professional lives. These changes in attitudes are beginning to fuel changes in purchase behavior, setting the stage for continued growth in new (and very old) collaborative economy models.

I will continue to explore the data and trends supporting the Collaborative Economy in future blog posts.