edgepolitics

…or is ‘Trust’ the last line of defense?                (part #1)

In 1971  Herbert Simon wrote:

This precient observation from the Nobel Prize winning economist sits like a corner-stone underpinning a wealth of brilliant work that has attempted to characterise both the phenomenal collapse of the cost of duplication in the digital economy, fermenting what Umair Haque calls the “Cambrian Explosion in micromedia” (blogs, podcasts, twitter etc)

with the rapacious business-models that: “work by treating consumer attention as the property of the search engine (in the case of paid inclusion) or the publisher (in the case of advertising networks).” [Src Wikipedia]

Kevin Kelly reminds us that: “In order to send a message from one corner of the internet to another, the protocols of communication demand that the whole message be copied along the way several times.” and that: “companies make a lot of money selling equipment that facilitates this ceaseless copying, [and] …The digital economy is thus run on a river of copies. Unlike the mass-produced reproductions of the machine age, these copies are not just cheap, they are free.”

However, its all too obvious that the web is far from egalitarian or homogenious. It is stratified into the have-nots and the have-lots… But curiously like the gold-rush era, the perception and the reality of rags-to-riches overnight miracles are legendary.  For every mould-breaking ‘open’ and inclusive new social-media trend that succeeds in capturing our imagination and highly valued attention, there is an army of profiteers scrambling to convert our collective attention be it in the form of ‘friends’ or ‘followers’, (the new trophies of web credibility) …the race is on.

Much of this buoyancy and fecundity in the general web marketplace can be put down to Google’s ingeniously magnanimous and enfranchising paid-inclusion system: Ad-Words which sells the user’s attention-data to Google’s own Ad-Sense system for publishers in a classic two-sided-market.

(Obama’s nominee for antitrust chief, Christine Varney, recently described Google as: “a likely antitrust problem” [and as] “…having acquired a monopoly in Internet online advertising.” Joe Nocera from the NYT, puts the phenomenon into a more internet-savvy context by saying: “…the issue isn’t that Google is a monopoly. It’s that Google has become the marketplace. It’s where we all go for information. It’s where advertisers go for us.”

The fact that Google’s business is built directly on freely-given ‘attention’ and ‘interest-data’ is an axiomatic truth that should never be forgotten

In Kevin Kelly’s classic article “Better than Free” he continues with his discussion of: ‘The Internet as a Copy Machine’

“When copies are super abundant, they become worthless.

When copies are super abundant, stuff which can’t be copied becomes scarce and valuable.When copies are free, you need to sell things which can not be copied. Well, what can’t be copied?”  “There are a number of qualities that can’t be copied. Consider “trust.” Trust cannot be copied.

You can’t purchase it. Trust must be earned, over time. It cannot be downloaded. Or faked. Or counterfeited (at least for long).

If everything else is equal, you’ll always prefer to deal with someone you can trust. So trust is an intangible that has increasing value in a copy saturated world.”

So how important and how fragile is the value of ‘trust’?

One only has to consider the quagmire that the ubiquitous and highly respected serial investor and serial Twitterer Guy Kawasaki has got himself into by his very public admission that he uses two or three ‘Ghost Tweeters’ to augment his prolific ‘tweets’ (writing through his Twitter account on his behalf). When Dave Fleet interviewed Kawasaki on the controversy via email, after promising to identify his ghost tweeters, Kawasaki responded to Fleet’s final question: “How do you feel about the ethical issues raised by ghost writing using social media tools in general?” by saying: “Surely, there are more important things to think about.”

The problem with Guy’s glib response to the big ethical question is that he has patently underestimated what his own brand-promise has come to represent in the eyes of the people who have bought his books and attentitively absorb his presentations. (it didn’t take long to find the following proposition)

The problem can also be seen in Guy’s presentation on ‘Slideshare’ - ‘Twitter as a tool For Social Media’… right there on the first slide Kawasaki states: “Nobodies are the New Somebodies”. i.e. in this new digital landscape that Kawasaki is soooo excited about, the very people he is marketing to; those who Clay Shirky identifies as: “the loosley coordinated groups [which] will have increasingly high leverage over the next 50 years,” are also the ones he is denigrating.

But let me close this off by quoting Guy Kawasaki from his ‘Art of the Start’ presentation: “My final tip is that you ask women - and only women. My theory is that deep in the DNA of men is a “killer” gene. This gene expresses itself by making men want to kill people, animals and plants. Hence…

Because as blogger Michelle Tripp has pointed out in her sensitive almost ‘bleeding-heart’ piece on the issue: “…if it’s not really you [Guy] behind the curtain, your account doesn’t have AUTHENTICITY. And I’ve lost a little trust in you.” [original Twitter post: http://tinyurl.com/cfz8k8]

In a recent post on Doc Searl’s Project VRM site, responding to a post on ReadWriteWeb, Doc says he’s  “flattered to be called an academic”, (he probably deserves that tag now, so perhaps he shouldn’t be) but plainly takes umbrage at Bernard Lumm’s observation in an interview with Richard de Silva from Highland Capital Partners, that:

“…Some recent blog chatter says that online advertising is doomed. The best reasoned case for this is made by Doc Searls (of ClueTrain Manifesto fame), who is touting his radical Vendor Relationship Management (VRM) as an alternative.”

Doc responds that: “if VRM is radical, it’s not in an oppositional way. It’s not against advertising, or CRM.” - OK… it might not be against ‘Advertising’, but my understanding has always been that VRM grew out of, and was defined as being antonymous to CRM. If its not “against CRM” what is its agenda? So, there seems to be some back-peddling going on… with Doc wanting to clarify VRM as not really so “Radical”.

(As I said in my comment on Doc’s Blog) The real problem is that VRM is not so much being ‘radical’ as ‘rhetorical’ i.e. “expressed in terms intended to persuade or impress”…

Doc takes a swipe at both Bernard Lunn and Richard de Silva (from Highland Capital) by saying:

“ReadWriteWeb is a micro medium. So is Digg, in which Highland is an investor. They may be big on the Web, but they’re micro next to the giants of mass marketing that have kept Madison Avenue in business… What keeps ReadWriteWeb and Digg in business isn’t Madison Avenue. It’s Highway 101.“

Yes, ReadWriteWeb and Digg are being driven by “Highway 101″ (if by ‘Highway 101′ Doc is referring to a mass of users themselves) however, the major problem for VRM is that it is patently NOT being driven by Highway 101…  It is ideologically concerned with “Highway 101″ without a broad validation by its claimed constituency… Therefore, its weakness is that it comes across as a ‘top-down’ prescription for a ‘bottom-up’ solution.

For Doc to make statements like: “VRM is also about Highway 101. It’s is one more stage in the not-very-seamless transition to whatever succeeds mass marketing.” actually succeeds only as a rhetorical statement, which he is not supporting by any compelling argument.

Further, to say: “Our job is to make the pudding that proves our ideas.” is very much like the statement Doc made last year in his post ‘Clues vs. Trains, cont’d’ (http://tinyurl.com/c2rld3) that: “We need the invention that mothers the necessity” - and as I pointed out that the time:

“We need the invention that mothers the necessity ~ That is an inversion of a parable, the same way that VRM is an inversion of CRM. I get it, and its clever, but… the inverted meaning really kind of messes with the logic of the original parable. The original, points to what drives human invention: ‘need’. To say that we need the invention to mother the necessity (i.e. the need) is to almost admit that ‘need’ has failed to be the driver.”
- June 2, 2008

Where is the mass bottom-up push for VRM from Highway 101? Many of us see the ‘need’ (me included)… but you can’t pronounce the solution into being, and you can’t rely on an “open-source” approach to magically provide the answer.  This is the ‘Achilles heel’ of VRM… and (I still think) The exponents of VRM have to address this ‘elephant in the corner of the room’, before they try and address ‘managing vendors’ on behalf of customers.

[note: I support the overall ideas behind the VRM movement, but have issues with the rhetoric and the process, rather than the desired outcome]

Danah Boyd had a great discussion going on her Zephoria Blog in late 2007, called: “Who clicks on ads? And what might this mean?“ There’s some really worthwhile information there, starting with some quotes from Dave Morgan (AOL Global Advertising Strategy)

“…99% of web-users don’t click on ads… and only a tiny % of those actually purchase!”

But wait… it gets worse!

Ninety-nine percent of Web users do not click on ads on a monthly basis. Of the 1% that do, most only click once a month. Less than two tenths of one percent click more often. That tiny percentage makes up the vast majority of banner ad clicks. ~ Who are these “heavy clickers”? They are predominantly female, indexing at a rate almost double the male population. They are older. They are predominantly Midwesterners, with some concentrations in Mid-Atlantic States and in New England. What kinds of content do they like to view when they are on the Web? Not surprisingly, they look at sweepstakes far more than any other kind of content. Yes, these are the same people that tend to open direct mail and love to talk to telemarketers.

That’s actually pretty revealing data, especially the rough demographic profile of the clickers themselves. This may go some way to explaining the proliferation of those really annoying gambling pop-up ads and flashing, vibrating banners proclaiming to (what would surely be) a seemingly implausibly gullible web-user who by some incredible stroke of luck, has just won a really neat prize! ~ Regrettably, market forces don’t lie… it seems these ads are apparently targeted at the only people who dependably click.

As is often the case, the blog’s commentariate kick in with some worthwhile observations:

CHRISTOPHER:

There is another aspect to the question of “who is clicking on these ads” that I don’t believe has been raised. That is, if the ads are taken as indicative of “level of interest in the population at large”, then the people who are clicking on those ads are the ones who are driving marketing decisions for the world at large.

and KEVIN:

…Its the marketer that gets hurt - HE/She advertised to the wrong person. The clicker did not buy anything- (do we know if they convert?) It means that ads in the web world are worth even less than we thought. It means that Google’s revenue and business model is a huge scam?”

[my note: even Google’s Adwords average only around a 2% CTR, and Google consultant Professor Hal Varian has stated that less than 2% of ads might get clicks and less than 2% of clicks might convert to sales, meaning that 0.04% of clicks might result in sales... ~ A $40B web-ad market might sound impressive, but according to Sir Martin Sorrell, of WPP, the wider Advertising market is a Trillion $ market; so with such dubious current ROI, that $40B might really currently be largely driven by hype, and the pressure to be 'a player']

But my favorite comment comes from CASEY:

I actually work for a company that does a lot of online advertising campaigns, so I think I can shed some light this. The honest-to-god truth is that the people in charge of these campaigns have absolutely no idea what they’re talking about. They describe their target audiences with phrases like, “Interested Non-Users,” or by using terms they’ve made up, such as the gag-worthy “prosumer.” [SUBSTANTIAL EDIT] …Of course, the punchline to all of this is the fact that most click-throughs don’t translate to actual sales. If an ad campaign is relying on accidental click-throughs, or on attracting the attention of a niche market who can’t afford what they’re selling, then the joke is on the person footing the bill. The model is clearly broken, and most people in the industry know that, but the people signing the checks aren’t in on the joke.

This all indicates a kind of grand-illusion based on volume metrics: i.e. If total number of clicks is counted in millions, even a tiny percentage will bring some users sales. However, It’s the same logic as Spam and ‘Cold-Calling’ i.e. If you call 100 people and only get one buyer, it’s a sale, but you really annoy the other 99.

A post on: mini-news.com, entitled “Bye Bye Ads” quotes Usability expert Jakob Nielsen: “The most prominent result from the new eyetracking studies is not actually new. We simply confirmed for the umpteenth time that banner blindness is real. Users almost never look at anything that looks like an advertisement, whether or not it’s actually an ad.”

These are Clayton Christensen’s ‘Non-Consumers’… ‘Non-Consumers’ of web advertising.

There’s a kind of brand-dilution that occurs when previously user-centric sites like StumbleUpon and YouTube get swallowed up by the likes of EBuy and Gobble. The valuations, and prices paid for these sites are so high, that the new bean counters inevitably force the introduction of advertising that essentially breaks the site’s unwritten contract with users. - Its been creeping in over at YouTube since the purchase, but everyone expected that. However, EBuy is making a mess of it over at StumbleVideo, because the whole proposition is more delicate… Users expect relevance.

Gambling ads??? Gee I don’t remember clicking ‘gambling’ when I set my Stumble preferences… and of course I did not; and those 4 and 4.5 star recommendations for “as she did not wear anything” and “beautiful women”… seem a bit weird. Is this the same StumbleUpon that received such rave reviews and quadrupled its user base in 2006? Well, yes and no… Same company, but after a US$75M purchase by Ebay, it has a new style and agenda. Their wikipedia entry which sounds a lot like it was written in-house, may need some updating:

StumbleUpon uses knowledge of user preferences to deliver targeted advertising. A small proportion of the ’stumbles’ users come across (typically less than 2%) are sponsored pages matching their topics of interest. For example, those signed up for photography will occasionally see an ad related to photography. Such content is vetted by humans for “quality and relevance” prior to its delivery.

Just like the sudden emphasis on aggressively building the user-base, the company is stretching the truth and the friendship with their users.

“The more friends you have using StumbleUpon, the more new websites you’ll discover”… Well, actually, Ebuy… that’s not quite true. Bringing friends to StumbleUpon has no direct correlation with one’s chance of discovering new sites, but it will help Ebay sell more advertising on the site. However, Ebay has already started soiling their own nest by allowing cheap and crass ads to break with the sites established collaborative filtering promise that user’s have become accustomed to, and which is alluded to on the wikipedia page “StumbleUpon uses knowledge of user preferences to deliver targeted advertising”

This is a sell-out, and a dangerous one. It risks alienating the existing user-base, and it dilutes the brand. The same phenomenon is of course occurring over at YouTube. In trying to achieve ROI, Ebuy and Gobble, leave themselves open for inevitable disruption.