October 22, 2014

Four Principles Of Quantum Advertising

This is the second part of a 3-part series about the duality of consumer behavior and its importance to the people who create ads. It is also, perhaps, the most pretentious title for a post in the history of blogging.

One of the aspects of advertising that make it fascinating is that we never seem to make much progress in understanding it. The arguments raging today about the nature of good advertising are the same ones that raged 50 years ago.

While we have much deeper analytical tools for making media choices, we still have no reliably accurate method for predicting the success of the material the media is carrying -- the ads.

Just when we think we know what will successfully motivate a consumer, we launch an Apple "Genius" TV campaign or a Pepsi "Refresh" social media campaign, and everything we thought we knew turns out to be wrong.

In the first part of this series we decided that neither the rational nor the emotional model of consumer behavior seems to be adequate in describing the contradictions that advertisers and marketers are constantly confronted with.

We likened this problem to the enigma physicists are faced with in the study of sub-atomic particles. Sometime these things behave like particles and sometimes like waves. These behaviors are contradictory -- yet together they form a remarkably good description of what's going on. This duality is confusing and counter-intuitive, but it has proven to be accurate.

If you were to suggest some kind of similarity between quantum physics and consumer behavior, most people (including me) would roll their eyes and think you were nuts. And yet, the analogy seems to work -- sometimes consumers behave like one thing, and sometimes like another.

Without putting too fine a point on it (and getting way off into psycho-babble voodoo-land) if consumers really do exhibit a dual nature, maybe we can derive some principles about this that resemble the "quantum" principles of physics. Otherwise the whole thing is just another bullshit marketing contrivance.

Though perhaps a little far-fetched, I thought I would see if I could develop some language which would make this theory resemble the quantum theory of physics.

So here we go: Four "quantum" principles of consumer behavior:

1. All purchasing behavior can be described as either emotional or rational.
Consumers are not logic machines, nor are they puppy dogs. The processing that goes into a buying decision is complex and imprecise. It can be described as either logic or emotion. Just as E=mc2 told us there is an equivalency between matter and energy, consumer behavior contains an equivalency (somewhere) between logic and emotion that we don't quite understand.
2. When developing advertising or marketing strategies, the closest we can get to predicting consumer behavior is to quantify probabilities and likelihoods.
There are no absolutes about consumer behavior.
3. By its nature, consumer research must always contain a substantial degree of uncertainty.
Studying a consumer's "rational" response to advertising will affect her "emotional" response. Studying her "emotional" response will affect her "rational" response. You may be able to understand either response, but you cannot know both simultaneously.
4. We can quantify the emotional or rational basis for a purchasing decision, but we can't quantify the relationship between the two.
We can know the factors, but we can never know the formula -- how much logic compared to how much emotion.
These are new ideas to me and I need to let them marinate a little before I can be sure I like them (or even understand them.) I don't have an ounce of data to support any of this, but I do find these ideas interesting, and they do seem to describe and explain a lot of the mysteries and puzzles I have encountered in my hundreds of years in the ad business.

The big question is this: if these ideas have any real value and are not just a bunch of ponderous bullshit, they ought to have practical applications to the creation of advertising.

Next time I'll take a stab at it. I'll describe what the implications of all this windy carrying-on might actually mean to the most important people in our business  - those who create the ads.

October 20, 2014

The Duality Of Consumer Behavior

Today we begin a 3-part series that will attempt to develop a "theory of everything" for advertising. Okay, maybe not a "theory of everything", but...a theory, anyway. Or maybe it will be just another load of bullshit. Who the hell knows? After 7 1/2 years of writing this blog, I think I've finally figured out what the hell I'm trying to say. It's going to get a little heavy on hypotheses and philosophy, so buckle-up and hang on tight.

As we sit here today, we have two competing models of consumer behavior.

The first model suggests that consumer behavior is basically logical. This theory asserts that people behave rationally and do not throw their money away on stupid crap. There is a lot of persuasive evidence for this model. A good example is in retailing. Retailers know that they can stimulate sales by lowering prices, offering discounts, and utilizing other types of promotional activities. This is clear evidence for a rational basis to consumer behavior.

The second model asserts that consumer behavior is essentially irrational. This theory, brilliantly demonstrated by Daniel Kahneman, holds that people are not really aware of their motivations and are ruled by emotions. The evidence for this model is equally persuasive. In this space, I have previously related the story of the Toyota Corolla that was the exact same vehicle as the Chevy Geo Prism, cost $1,500 more, and outsold it 3 to 1.

So we are faced with a problem. We have contradictory models of consumer behavior that both seem to be valid. Either there is another model which we cannot see underlying them both, or we need a more comprehensive explanation that unifies the two.

In quantum physics an elementary particle can be understood as either a particle or a wave. I am going to suggest that in marketing consumer behavior also has a dual character.

Also in quantum physics there are no certainties -- just probabilities and likelihoods. I am going to suggest that in marketing, advertising, and media our strategies have no inevitability about them. Just probabilities and likelihoods.

On the nature of light, Einstein said:
"We are faced with a new kind of difficulty. We have two contradictory pictures of reality; separately neither of them fully explains the phenomena of light, but together they do".
Another type of duality is described in the uncertainty principle which posits that you can know a particle's position or its velocity, but you can't simultaneously know both.

I believe this type of duality and uncertainty is true in advertising and marketing as well.
  • Under certain circumstances, a brand can be described as having a powerful effect on a consumer. And in certain circumstances it may have little to no effect.
  • The same person may buy a brand whose advertising she likes, as well as a brand whose advertising annoys her.
  • The same person may buy products that are clearly differentiated, and products that are generic.
  • The same person may buy products that are exceptionally good values, and some that are hideously overpriced.
This is not unusual. This duality is typical of consumer behavior.

In other words, there is an inherent contradictory duality that confounds us and mocks our most cherished beliefs about consumer behavior.

I'm going to invent an obnoxious term here, but it's necessary to communicate what I'm trying to say. The term is "behavior-plasticity."
  • A customer may behave as if she is strongly attached to a brand, but she can also be easily detached from it. It seems contradictory, but my experience tells me it's true.
  • A customer who seems to be perfectly targeted by a media type, may turn out to be completely immune to it.
  • In the same product category, an emotional message or a logical message may be equally effective, or equally ineffective.
The point is that because of the duality of consumer behavior, people who think they can describe it as either this or that are wrong.

"Behavior-plasticity" -- or the duality of consumer behavior -- is the most mysterious and confusing element of marketing. It is the one factor that marketing people continuously misunderstand in their struggle to describe and predict consumer behavior.

Believing in the orthodoxy of one marketing philosophy, one media philosophy, or one creative philosophy is a trap that disguises the mysterious and fascinating real-world behavior of consumers.

Human beings are both particles and waves. Their behavior can be described in ways that are contradictory, but equally true.

I know what you're thinking...
" ...Okay, Mr. Big Shot, so now you have me all fucking confused with all this uncertainty crapola. So what the hell are we supposed to do?"  Well, stay tuned for our next two exciting episodes and all will be revealed.

Big thanks to Maria Winston for the germ of this idea. 

October 15, 2014

Amazing Tale Of Online Ad Fraud

There ain't much fun left in the ol' ad business. Thank goodness we can still get a good laugh out of watching advertising dimwits get royally sodomized by the crooks in the online ad industry.

If you're as entertained as I am by the astounding dumbness of online advertisers, and amused by watching them piss away billions of dollars, you're going to love this story.

MediaPost ran a piece yesterday in which a video appeared that claimed that just one reasonably sized bot-net could be responsible for one billion fraudulent ad impressions every day.

This is just too good to be true.

It must also be said that the video was produced by a company that sells ad fraud protection, so they are not a disinterested party.

But if this is even close to true, it is beyond mind-boggling.

I am reluctant to post the video because it is clearly a commercial for the company in question. But it gives us such a lovely picture of how clueless online advertisers are being screwed that, on balance, I'm going to post it.

Online ad fraud is completely out of control and, incredibly, no one is taking it seriously.

I can see why ad agencies and online producers and ad networks aren't taking it seriously -- they're cleaning up. But how fucking dumb can the idiot clients who are flushing billions of dollars down the digitoilet be? I guess the answer is astoundingly fucking dumb.

Earlier this week, in a piece about digital ad fraud Rance Crain, president and editor-in-chief of Ad Age (who wisely referenced yours truly) had this to say...
"...marketers are in the most denial...despite the overwhelming evidence that there is massive fraud in the digital marketplace....It's gotten so out of control that ad trade associations are stepping in to save marketers from themselves."
Of course, no one wants to kill the golden goose. Everyone's making too much money. As Crain says...
"But why change? Fraud pumps up publishers' traffic, exchanges get paid a percentage for trading it -- the more clicks the better -- and agencies can bring those great results to clients."
This will never change as long as brain-dead advertisers keep feeding the fraud machine.

The really fabulous thing about all this is that advertisers are not just getting passively penetrated, they are insisting that agencies give it to them deeper and harder. They can't get enough of this stuff. "Thank you, sir, may I have another?"

As I wrote here over a year ago...
Not only are marketers ignoring the awful truth about the ineffectiveness of online advertising, they are turning a blind eye to the fact that they are being skinned alive by crooks and their willfully corrupt accomplices in the ad world...Fortunately for the thieves, charlatans, and hustlers, nobody seems to give a shit.
It is a truly amazing story.

Thanks to Dave Kissel for the link.