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Game On: Influencing Behaviors

Sunday, May 11th, 2014

high-tech-lures-01-0413-lgnThe weekend edition of The Wall Street Journal features an article titled, “Traponomics.” It’s a fascinating essay, adapted from the book to be published, “Think like a Freak,” by Steven Levitt and Stephen Dubner (of “Freakonomics” and “Superfreakonomics” fame).

The title is unfortunate, given the potentially constructive power of thinking shared in the article. While it does not mention the words marketing or branding anywhere, the premise is founded on human behavior and economic “game theory.” As a model to explain the idea, the writers use examples of forecasting potentially destructive actions, or sorting through cheating, or lying, behaviors. The same predictive analytics and modeling could be used to encourage positive actions, like volunteerism, or donating for a good cause — and yes, purchasing products.

Incentivization is nothing new to marketing, but consider the somewhat indirect — even Machiavellian — way that it takes place according to this article:

David Lee Roth
By the early 1980s, Van Halen had become one of the biggest rock bands in history. Their touring contract carried a 53-page rider that laid out technical and security specs as well as food and beverage requirements. The “Munchies” section demanded potato chips, nuts, pretzels and “M&M’s (WARNING: ABSOLUTELY NO BROWN ONES).”

When the M&M clause found its way into the press, it seemed like a typical case of rock-star excess, of the band “being abusive of others simply because we could,” Mr. Roth said. But, he explained, “the reality is quite different.”

Van Halen’s live show boasted a colossal stage, booming audio and spectacular lighting. All this required a great deal of structural support, electrical power and the like. Thus the 53-page rider, which gave point-by-point instructions to ensure that no one got killed by a collapsing stage or a short-circuiting light tower. But how could Van Halen be sure that the local promoter in each city had read the whole thing and done everything properly?

Cue the brown M&M’s. As Roth tells it, he would immediately go backstage to check out the bowl of M&M’s. If he saw brown ones, he knew the promoter hadn’t read the rider carefully—and that “we had to do a serious line check” to make sure that the more important details hadn’t been botched either.

From biblical references of King Solomon, to employee orientation at the company, Zappos, to Middle Age judicial systems, this article goes into case after case to demonstrate how one can devise a “self-weeding garden.” Or in other words, how to create situations to our benefit through subversive planning.

Another example refers to the work of Dr. Cormac Herley, a computer scientist at Microsoft, who sought to understand the dynamics behind the ubiquitous Nigerian email fraud. Why, he wondered, would scammers in Nigeria always refer to Nigeria in their offers, when the world is so completely saturated with the scam, immersed many times over with the email experience and subject line, “Your Assistance Needed.”

All marketers are aware of the cost to earn new customers. There’s always a cost metric that takes into account the investment over time to solicit new, loyal customers from among a larger universe of broadly defined prospects. In the realm of surveying and speculation, the article refers to this as sifting out false positives.

As it turns out, even scammers have a cost-to-benefit analysis to consider. The Internet may serve as a low-cost environment to spam millions, but as soon as those hooks are cast, the ones that take the bait require time and attention — a cost to lure them further. So how can a Nigerian scammer minimize his false positives?

Nigerian Internet Scam
Dr. Herley, while modeling this question, identified the most valuable characteristic in a potential victim: gullibility. Who else but a supremely gullible person would send thousands of dollars to a faraway stranger based on a kooky letter?

But how can a Nigerian scammer tell who is gullible and who isn’t? He can’t. Gullibility is, in this case, an unobservable trait. But the scammer could invite the gullible people to reveal themselves.

How? By sending out such a ridiculous letter—including prominent mentions of Nigeria—that only a gullible person would take it seriously. Anyone with an ounce of sense or experience would immediately trash the email. “The scammer wants to find the guy who hasn’t heard of it,” Dr. Herley says. “Anybody who doesn’t fall off their chair laughing is exactly who he wants to talk to.” Here’s how Dr. Herley put it in a research paper: “The goal of the e-mail is not so much to attract viable users as to repel the nonviable ones, who greatly outnumber them.”

There is yet another example that I think is brilliant, which refers to a trick that Zappos actually devised as a way to ensure that they have made the right hires. It involves an offer to pay a bonus of $2,000 to new employees who have just completed their training — if they simply quit the company and agree to an exit interview. It’s a sorting process. The ones that do leave the company provide the confidence needed by management that the ones who are left have a deeper commitment to their new roles at Zappos.

Smart? Without question. Sneaky? Perhaps, but when applied with the right intentions, game theory would seem to be a vastly untapped methodology to achieve results for all kinds of successful business initiatives and even philanthropic, socially redeeming goals.

How to Trick the Guilty and Gullible into Revealing Themselves

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Branding America

Thursday, May 1st, 2014

made-america-logoThere’s been a lot published about the U.S. trade agreements lately, about the growing deficit in U.S. trade with other countries. President Obama realized a setback in Tokyo with the Trans-Pacific Partnership when Japan failed to commit to opening its markets in rice, beef, pork and poultry.

At the same time, McKinsey Global Institute (the think tank within McKinsey Consulting) just published a report that the view of global trade changes that we all have — cheap manufacturing in Asian countries landing on store shelves at Walmart, at the expense of more manufacturing jobs in the U.S. — is not exactly correct. According to Susan Lund, an author of the report, that image is less and less relevant with each passing year.  “In fact, the growing and larger share of global trade right now is about knowledge-intensive goods and services,” said Lund.

Growth in Global Trade Is in Ideas, Not Stuff

The report apparently details the full range of “global flows” which reflect interconnections of any type around the world. This means that it looks not only at the trade in goods and services, but also the flow of currency among countries, as well as information being shared through digital channels.

According to The New York Times, “What it shows is a world in which the fastest-growing forms of interconnection are not the ones that fit a lot of those preconceptions.”

In a recent opinion piece authored by the editors at The Times, the Obama administration and the U.S. should learn lessons from the North American Free Trade Agreement and use that knowledge to forge better agreements in the future.

This Time, Get Global Trade Right

Our country has lost about 5 million manufacturing jobs over the last 20 years, even as we all embrace the benefits of outsourced jobs through less expensive products. As we move more deeply into a truly globalized economy, it’s clear that we are truly ambivalent about the process and results. We lose jobs, and wages are much lower now as we work to compete with labor in other countries. But we also understand that we can reap tremendous benefits, especially if the U.S. is able to equitably manage the ratio of imports to exports, opening up new markets for goods, services — and yes, ideas and information — created here.

It has me thinking: How would my industry make a significant contribution to the epic, Goliath-proportioned challenge of trade for our country? It seems apparent that the U.S. is not at all well liked in some countries, and for reasons that require no research. A history of imperialism, military aggression, and a strong sense of nationalism has created a deeply entrenched image problem that no American company or industry could possibly weather.

★★★ We can talk all we want about putting America back to work, but no one will see much change until we manage to build a desire for what we make here. It’s a global economy, and our goods are not getting the best store placement.

It starts with creating a desire to want American things. What are the opportunities to correct global perceptions of the U.S.? Also, what can we build on, as we aim to package brands for products created in the U.S.? One can easily imagine a consortium of leading advertising, branding, and marketing companies playing a role to define and solve the problem. Like any large scale branding initiative, the methodology is the same: Baseline performance. Architect a global scale of research that would inform and guide the strengths, weaknesses, opportunities, and threats to U.S. brands. Execute and implement a system of solutions. To rally a strong sense of support, I would even create an internal label and communications to share the goal of the work, the importance of its success, the critical need for everyone to pitch in, back our nation as one collective interest, determined to make our own goods, services, and information all desirable in other economies.

How does all this get paid for? Simple. The U.S. Federal government is one source, of course. The other is an incentivized program for funding through industry associations who represent these trades. The American public and U.S. based businesses would also respond in an unprecedented way, given the opportunity.

A recent article even illustrated how U.S. hotel brands are being faked, or emulated in order to win customers in Asia. Hotels like the Haiyatt in China have nothing to do with the Hyatt brand, but the marketing is successful as customers are drawn to the impression of that kind of luxury. The Peninsula Hotel in Yangcheng has nothing to do with the Peninsula brand in the U.S., but also enjoys similar success.

Welcome to the Haiyatt. In China, It’s Not the Hotel It Sounds Like.

How can we best capitalize on the equity of our current image? Is there a mandated, common national label that could accompany every U.S. product and service abroad? Are there other “change-image” campaigns that could build interest in our goods? What ideas would the world’s best advertising minds generate, in order to change the fixed image of our country and its people? Unlike the impressions that many people have of advertising, not all of it is fake or finessed in some way. There are indeed successful campaigns that change a perception — opportunities to enlighten us, educate us, about the benefits of a particular product or idea.

The politicians and academics can and should look at policy and international agreements. As for me, I would welcome the challenge, even at a pro bono level, to contribute to the problem through enacting change of large-scale bias, empowering our country through affecting global impressions of our national brand. U.S products and services are indeed viable on the world stage. One idea can be a powerful thing, and the right endeavor would seem to transform a world of opinion, which is always an inspirational thing.

Obama Suffers Setbacks in Japan and the Mideast

 

 

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Rainy Days and Nesteggs

Monday, April 7th, 2014

“The recovery still feels like a recession to many Americans and it also looks that way in some economic statistics.”   — Janet Yellen

The agency business continues to be slow these days. For that matter, I’m well connected with a lot other businesses and as far as I can discern, it’s most every part of the business services category that seems to be plodding along.

Why? Well, I’ve asked a lot of people and the consensus seems to point to a new set of priorities in corporate governance at all those Fortune 1000 companies — the ones that used to dole out business to research firms, advertising agencies, and marketing consultants. The new trend favors building cash, buying back stocks, and increasing shareholder value. There’s been some dispute among the economically elite as to whether this is wise, as we saw with Citigroup trying to buy back over $1 Billion of its own stocks, and being denied by the SEC last month. Citigroup just announced that it will miss its profitability targets for this reason.

Aple_HQ

Apple: At $159 Billion, an equity value that could rival and exceed the GDP of many nations.

The Times says that according to Moody’s Investors Service, American companies outside the financial industry were sitting on a combined $1.64 trillion of cash by the end of 2013. And tech giants like Apple, Google and Microsoft had the most.

In fact, in The New York Times today, Apple is reportedly sitting on $159 Billion, saving it for a rainy day — i.e., opportunities for acquisition or to cushion a downturn. In the meantime, unlike Google and Facebook — which have shown themselves to be purchase-happy, almost drunk from public cash injections — Apple has never spent more than $1 Billion on any acquisition, and in the last decade it has only purchased AuthenTec, Siri, and Topsy. That’s a financial conservatism that mattress-loving misers could love.

What Apple Could Buy With Its $159 Billion

In the meantime, if the corporate tax attorney that I met last month has any credibility at all, I’m to believe that Apple pays exactly 2% in taxes to the U.S. government each year. For me, this drudges up memories of the Occupy Wall Street demonstrations in recent years. The protesters opposed greed and pointed their fingers at the very institutions that drive business success and enable companies to employ millions — all while documenting, tweeting, and posting with their store-bought Apple products, purchased with on their self-proclaimed meager wages. Knowing that this iconic company avoids its corporate economic responsibility to our own government — even as we fight an epic deficit problem, isn’t it interesting to see such product worship by these protesters? How ironic, really.

http://www.forbes.com/sites/leesheppard/2013/05/28/how-does-apple-avoid-taxes/

In the meantime, we’re managing well at our firm. We’re delivering to a group of loyal clients and focused on improving our own operations and capabilities, continuing to forge new relationships. I’m especially proud of the new website we have, and most recently the new Resources page we have created, a work in process that we aspire will be an entertaining, educational look at corporate and nonprofit brands:

http://iridiumgroup.com/resources/

We have also relaunched a smart industry newsletter, element, which is poised to feature some compelling senior executive VPs in the coming months. We set out to dismiss any and all urges to promote Iridium, and to make this an objective source of ideas for marketing professionals. This is an effort I’m especially pleased with, all expertly managed by Ali Hoffman on the IridiumGroup team:

http://iridiumgroup.com/element/0414/

 

 

 

 

 

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Redefining the Corporate Video

Monday, March 24th, 2014

I love watching companies innovate. It wasn’t long ago, a few short years really, when we were all amazed to see the power of the web whenever someone uploaded a cute video of a kitten, or the global, breathtaking speed of a Facebook post that went viral in seconds. The spectacle with PR exec Justine Sacco at IAC comes to mind — she had no more tweeted and boarded her plane when the tweet went viral; reporters were waiting in South Africa to get comments as she landed. From its humble grassroots in consumer expression to the Boardrooms of major multinationals, viral content has grown up.

Advertisers are just beginning to imagine and redefine the opportunities available to them through viral digital marketing, specifically in video format. In fact, many of the top companies are studying Twitter trending in order to develop a better understanding of what works.

It was to be expected. The opportunities are clearly there and the cost-to-benefit is a no-brainer when marketers weigh the cost of purchasing traditional media space. Corporate video reminds me of all those dated hallmark cards that seem so stale and dusty in my local stationery stores; it’s a market that is ripe and just begging to be reinvented. I predict that branded content in video — the really good, smart kind with sophisticated production values — will be making its way onto social venues in the coming months and years, a wise way to get customers engaged that is infinitely more effective than broadcast and print, or those ubiquitous, digital tombstone ads.

Advertisers Use Social Media to Promote Brands in Real Time

From Virgin Atlantic, the good folks who always seem to set a new standard and lead the way for the rest of us, we have a customer/passenger video that presents us with something we could never fathom: An in-flight safety video that is actually entertaining.

Amazingly Good Branding Lessons From Virgin America’s New Dance Video (Yes, Dance)

It’s not only the choreography and performances that are impressive.  Virgin also made it interactive. When passengers (and everyone watching who isn’t on a plane) sees the video, there’s a box asking if you would like to participate in the making of the next video. Virgin committed to creating four videos per year and saw the chance to make this a fun exercise for anyone wishing to play a part. In doing so, they have engaged a far larger audience of customers than anyone could have imagined with an in-flight safety video. Some might argue, that reach is broader than a traditional 30 second spot which would have far more fleeting, less memorable, and more expensive. The in-flight series has a much longer shelf-life and can be repurposed for years across infinite channels.

Audition contests for performing arts? Inclusivity? Videos with exceptional entertainment value that also engages everyone in their brand, and gets customers to learn about safety? It’s not just a best-in-field execution — it’s innovation, a smart application of a new medium that should have marketing executives everywhere working to emulate the experience.

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DWAYNE FLINCHUM
Founder & President,
IridiumGroup Inc.

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