Don’t Bet on the Consumer

Consumers

Consumers (Photo credit: lagaleriadeARCOTANGENTE)

Being in advertising, I have a love and hate relationship with consumers. “It’s complicated” doesn’t begin to describe our feelings towards each other.

In part, I believe (or want to believe) that consumers are truly smarter and more informed than ever before. That with information at their fingertips, that decision-making should be a cakewalk for many of them.

In other parts, I am repeatedly proven wrong.

I love the consumer, but they gotta meet me halfway.

I have talked about this before, but there is a popular behavior theory out there called the Prospect Theory. In short, it suggests that people value losses more than they value gains. For example, if you have a chance of winning $10, or the chance of losing $10, consumers would give a higher value to the chance of losing $10.

Consumers then, are naturally risk-averse.

Which makes sense- that’s why word-of-mouth is still, and will continue to be, the most effective form of marketing; it shows that the product/service recommended is a low-risk venture.

When my agency compiled research about the consumers’ perception of advertising, the majority thought that more information was good. But after digging deeper into the data, they didn’t quite understand why it was good.

This is my gripe with “big data” and crowdsourcing. Will you get data, yes. Will it show you what the consumers want? Maybe. But should you base your strategy on what the consumers tell you they want?

It depends. You know how your product or service works. You know what moves you need to make to improve your product/service. Consumers don’t like risky moves, so if you’re venturing out to do something different, something a little unusual, I wouldn’t bet on them to be sage advisers.

Listen to your consumer. But don’t bet on their advice.

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2013 is Poppin’

It’s just a little over a month into 2013, and we have been making some serious waves in the ocean.

It’s been exciting.

First, I am happy to say that JDW: The Charlotte Agency picked up two new accounts. The first is the Carolina Knights, a professional summer football team in Charlotte. They will be playing in the Professional Developmental Football League (PDFL) in the National Developmental Conference. I’m serving as the VP of sales, marketing and sponsorships. Good deal.

The second account is We Are Fit to Fight, a fitness/self-defense group based in Charlotte. They are awesome. The agency is devising multiple marketing, public relations and advertising activities for them. We’re really excited about what we will be doing with them.

With that being said, we are looking for 2-3 more sizable accounts and actually begin hiring. Woo! After 4 years of hanging in there, we’re excited that we are near our goal. We are actively searching for interns, and we hope to have 2 (or so) join the team soon.

We are still with the Charlotte Batdogs, and now that spring is upon us, the pitchers and catchers are reporting in less than a week, we can become a little more relevant about baseball in Charlotte, and helping the Charlotte Baseball Clubhouse gain some momentum.

The Charlotte Agency is also in the process of adding more “digital inventory” on the web. Two things: we are re-designing our website, which is super exciting. Also, we’re creating a spec-site for our non-work, musings, and intern projects. We hope to use that space to not only explore our own creative outpours, but to also have it stem into meetups/events, workshops, and the like.

The site only has a splash page. All I can tell you right now is that its super hero oriented. Yes I know, its going to be sweet.

All of this in a little over a month. I love it.

Talent Zoo still isn’t tired of my ramblings, so my advertising “knowledge” is still roaming the interwebs.

Hope you enjoyed the update. Cheers.

 

The Practicality of Marketing Economics

Inbound marketing. Big Data. Social care. Marketing Analytics. Content marketing. Social neuroscience. Neuromarketing.

What the heck does it all mean?

It means that the evolution of our marketing and advertising landscape is speeding up. And we are all trying to keep up.

For several years now, I have championed the application of economics (both traditional and behavioral) in marketing and advertising activities. Naturally, I have been met with responses (and more, admittedly,  the lack of) from all over the spectrum. Objections and criticism stem from my “attack” on creativity, lack of focus on digital, to simply missing the point.

Forgive me for applying science to an art form.

Right.

Let’s be honest, the majority of the advertising and marketing out there cannot, with a sound conscience, be called art. In many cases, calling it advertising is a stretch.

The reason why I thoroughly enjoy economics can be attributed to the most simple definition of it:

“choice under scarcity.”

Those three words, though simply put, are absolutely profound. Consumers are thrown into a market, and producers must fulfill the needs and wants of these individuals and entities in order to survive. And sometimes, in order to survive, those producers may have to contrive needs and wants to create their own market.

How is this not applied to marketing?

Simply being creative cannot suggest a successful campaign. Running Google Analytics and deciding, based on the numbers, to push a certain product is not a sound foundation for strategy.

Yes, pretty pictures and numbers without context is not enough.

There are great brains already out there on the outskirts of marketing economics. Dan Ariely, for example (whose course on game theory I’m taking in January and am absolutely stoked about), has conducted several research projects on consumers’ “predictable irrationality”. Another author in the UK wrote about how and why consumers make decisions. William Bonner, a finance guy, wrote about how consumers and markets interact. Even Malcolm Gladwell’s books show consumer behavior in an interesting light.

But clearly, their advice falls on deaf ears. Perhaps if they added the words “engagement” and “content is king”, they would get more buy-in.

Forgive the long post, I’m almost done.

The point is, I am fascinated and disappointed at the same time on why marketing economics is failing to take off. If we want to do the lame marketing jargon, I would reckon it to be the Marketing Scientist 2.0. No more focus groups looking at ads saying if it would work or not, but more focus groups that ask consumers how they feel in certain situations, shopping alone versus with others, and making them choose items in different environments.

I’m toying with the idea about writing a white paper, or presentation about marketing economics. If you’ve made it this far, I’ll keep you updated as my idea evolves.

Cheers.

Americans: Own Up

Tax

Tax (Photo credit: 401(K) 2012)

Let’s start with a story.

 

Imagine that you just moved into a house. It’s beautiful. It’s spacious. It’s warm. Inviting, even. Of course, there is a mortgage to pay. At first, the mortgage isn’t bad.

 

“This price for all of this? Fantastic!” you exclaim.

 

Then the mortgage begins to creep in on the things you like to do. No more vacations. No more gadgets. So what do you think to do? You borrow. As you borrow, you know, some day you will have to pay it back.

 

“Someday”, you say.

 

Then someday comes. The debt is huge. Should you pay it? Should you be responsible for the borrowed money? Of course, this will mean making your overall mortgage payment a little bit more, due to your usage, and the enjoyment of your usage.

 

Why is our story so different than the situation the U.S. finds itself in today?

 

The point: Ask Your Target Market (AYTM), an online research company, released a study saying that people would rather have higher debt than higher taxes.

 

Fiscal cliff? Puh-lease.

 

Fifty-Six (56%) of respondents said that they would rather have a higher national debt, and pay fewer taxes and have government programs. Only 42% said they would rather have a lower national debt, pay more taxes and have fewer government programs.

 

We have created a society that wants everything but refuses to pay for it. People want government programs, but low taxes. People want free access to information, but no advertising. Television with no commercials. Theaters without the expensive candy.

 

Conferences without the sales pitches.

 

The list goes on.

 

In a country where the phrase “no free rides” got popular, it seems that a free ride actually isn’t all that bad.

 

We cannot go on living in a nice house and refuse to pay for the furnishings. It doesn’t make sense.

 

Ah well, I guess we’ll see what happens.

 

 

 

Back to Business Basics: Bartering

Business has taken quite the turn in the United States in the past few decades. The country went from a manufacturing-based economy to a service-based economy. From there it can be said it turned further into a consumption-based economy. Now markets plummet when “consumers aren’t opening their wallets.”

Yay industrialization?

This didn’t use to be the case. Even before the Industrial Revolution, business in the U.S. and beyond was surviving. How?

Bartering.

Yes, people made goods or provided services in exchange for other goods or services. For example, a grocer/farmer may trade their yield for clothing. In modern times, a farmer may have traded certain crops for a haircut, accounting services or even medical attention.

Would I blow your mind if I told that in 2012, yes in our modern age, bartering is making a comeback?

Harvard Business Review (HBR) blog network contributor talk about this very topic. Of course our society had to modernize the inferior term of bartering, today the activity is known as “reciprocal trade.” The article even links to the International Reciprocal Trade Association. According to the IRTA, over 400,000 businesses and $12 Billion dollars worldwide can be linked to bartering.

Is this a good thing? Is it a bad thing?

It’s hard to say. Businesses need to be diverse and adaptable in order to stay in business. Participating in barter exchanges may open businesses up to new markets and partners whom they would have missed. But it is very interesting to see that over 400,000 businesses worldwide are avoiding the use of “real currency”, i.e. American Dollar, Euro, and the like, in exchange for tangible goods and services.

I would even venture to say that barter exchanges could be more sustainable internationally than trying to figure out which currency in which to do business. Think about it; in accounting assets are always more valuable than cash-on-hand. Bartering, in that simple analogy, makes sense.

As a marketing guy, I immediately thought of how this throwback business practice would work in the marketing and advertising industry. Would I be willing to offer my services to Tesla Motors for, let’s say, its newest coup model?

I could work for that.

But then I thought, what would I do for food, utility bills and entertainment cash? As sweet as the car would be, bartering my services for a car doesn’t fulfill my needs like the Almighty Dollar.

Our society is not built for barter exchanges. But if this could serve as a “black swan“, we should stay alert for systemic changes that would better suit such economies.

I guess my Tesla Motor Model S will have to wait.

 

We Need to Talk About Injustice

Bryan Stevenson, founder of Equal Justice Initiative gave a powerful talk about how a society will not (and more importantly, should not) be judged on the technology, entertainment and design that it creates, but it should be and will be judged by how it treats those who are poor, those who are disenfranchised, those who are incarcerated.

It is a very moving, powerful speech. And he’s right, we should look at a society- a superpower- and base its superiority not on how mighty it is, but how it treats those who are weak. When growing up, young men are taught by older men that strength of a man is shown when you can walk away from a fight, or when you protect those who cannot protect themselves.

Thank you Bryan for talking about a topic that our society is so eager to push aside.