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Increasing Profits for U.S. Corporations is a Social Good

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With all our flaws, the world is a better place for having the U.S. in it. We make our share of mistakes but our intentions are always good. We are trying to help out the world as best we can.

Not that we are alone in this. More and more nations every year are awakening to a viewpoint of enlightened self-interest that recognizes our connectedness and the fact that in order for any of us to succeed as nations, we must pretty much all succeed.

It hasn’t always been this way. The world was neatly isolated into silos as recently as a few hundred years ago. No more. All the world economies are linked like dominos.

Companies that used to be American have been bought by others outside America. The surviving American Red White and Blue companies are getting better. Reducing waste. Improving products. Improving processes. Improving marketing and sales. Their profits are going up. As they become less likely to be bought by a foreign company, the U.S. becomes stronger.

With pressure on our jobs and our homes, and everybody working harder than ever before, it sure would be great if we could find ways to pull together and uncork that good old American ingenuity to make our businesses more profitable, to benefit all of us, worker and owner alike.

It sure would be great if we could find a way.

There is a way.

Having moved from the Industrial Age into the Information Age, we now live with an emerging and ever-growing mountain of information we never had before. From which we can learn things. Some of what we learn will make our companies more efficient. Especially in marketing, where we (and the rest of the world) have been terribly inefficient. Yes, we know half of it is wasted effort. Actually, IRI studies years ago showed that 60% of marginal advertising spend and 80% of marginal promotion spend is wasted. We are talking about the better part of a trillion dollars a year being wasted. Even on the scale of a war, we are talking serious money.

What is the bug in the system? We postulate it is the emotionalization of privacy. Certain elements of the press and the government have made hay – sold papers so to speak – with an emotional appeal to make privacy so sacrosanct that balanced rational decisions (vs black-and-white, yes or no choices) are no longer an option. I guess it helped elect a few of them so I can understand from their point of view. But there is a social good to making our research/information/learning backbone more efficient.

The extra bonus to being a columnist who writes about privacy as a protector of his/her readers is that one is not just being entertaining, but is helping the reader and the world.

The irony is that a columnist can be seduced by hidden ego motives into adopting the savior role on the privacy front and wind up consequently working against the needs of the reader, and the electorate. We need two things: privacy protection and a successful U.S. economy, capable of supporting lots of well-paid workers who don’t have to kill themselves to make ends meet and own a home.

Whoever persuaded a large chunk of the American public that privacy protection and obtaining good information to make businesses more efficient were mutually exclusive? We can have our cake and eat it too. It does require data handling methods to be improved far beyond their current state of practice – to the level of the few companies certified by ISO 27001*, who prove we have the technological capability. It also requires the elimination of personally identifiable information except in actual customer relationships where buy-in has been established, and other such warranted cases.

This is not rocket science, but rather a matter of disciplined processes. It is achievable. And the prize is an accelerated economic recovery with a very long growth phase. Nothing has to be sacrificed in the process except long-winded rhetoric.

These points are made definitively in a 62-page tour de force citing chapter and verse entitled “Tragedy of the Data Commons” by Yale graduate Jane Yakowitz, a law professor at Brooklyn Law School. Among the many salient findings: there has been an intellectual effort to paint anonymization as pragmatically impossible, which it clearly is not. Anonymization is achievable through mathematics. The number of data points required to re-identify a person or a household is the science employed today on a daily basis by HIPAA consultants. If we rigorously employ the mathematical science, anonymization cannot be defeated except by the old bugaboo that affects everything and can never be legislated away: human error.

“Tragedy of the Data Commons” is available at http://ssrn.com/abstract=1789749

Best to all,

Bill

*ISO 27001 is a standard set by the nonprofit International Standards Organization, and covers every aspect of maintaining information security from the procedures one uses when non-employees enter the office to the self-locking of computers and other devices after a few minutes, from the types of firewalls one uses to the way new employees are checked out, and much more.

Note: As we had mentioned, the plan had been to post our thoughts on The Future of Media Research on 4/24, but we are still working on it so it will post on 4/29.

 

Can We Sense The Extremisms In Our Own Culture?

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We are what we become used to. Having become used to something, it is taken for granted. Then we don’t notice it any more.

All cultures have extremisms; that’s what makes them cultures*. A perfectly balanced culture would be, by definition, boring. There could be no drama. Who would caonvene such a culture? Not human beings, certainly.

In the Cheyenne culture, courage and leadership are cultivated to the point that the individual is expected to stand against authority. This is their rite of passage. What is ours?

In what way is our culture extreme?

 

This is interactive; you can answer the question for yourself.

Rather than tell you what my view is, let me give you a clue. See if you can guess it – or better yet, see what you get when you cogitate the following riddle.

When and why did it become acceptable for there to be a ‘bug” – the channel’s logo – and sometimes text promoting other programs – over our TV shows?

What does that tell you about what (one of) our culture’s extremism(s) is?

What I get is that ours is such a mercantile culture, everything has to have a brand on it. We get branded as if with an iron when we pay to buy clothing that advertises some brand we may or may not care about. We should charge on a CPM basis. Finally we had to put the brand on the TV screen to stay there forever and only be relieved by commercials. This may increase commercial effectiveness and reduce program effectiveness accordingly.

Seriously, would Hollywood put a bug over their movies? Even in this mercantile culture, cinema remembers its roots, that in drama one wants to immerse and suspend disbelief, become the protagonist. The bug is a rude interruption to the self-pretend and that bubble bursts or never forms. So we watch to some measurable degree less immersed than we would have been years ago.

For non-drama programming, the bug is to some extent less intrusive.

Biometrics should be easily able to detect this difference.

First Neuroscience Research Company to Submit Validation to BillHarveyBlog.com:

Neuro-Insight

What makes N-I different from all other suppliers is SST: Steady State Topography, the company’s own method being used worldwide today in cognitive neuroscience but in advertising research only by N-I. SST is a measure of neural processing speed at specific sites corresponding to parts of the brain, and metrics are calculated by indexing certain key relationships across sites – such as the SST relationship between left and right prefrontal cortexes, revealing approach-avoidance.

Because commercials involve split-second action, the otherwise superb fMRI (Functional Magnetic Resonance Imagery – similar to the MRIs we get taken of us for medical purposes) technique is too slow to capture changes occurring in response to these fast-changing stimuli, leaving as choices only EEG and SST. EEG uses electrodes the same as SST but is capturing different information – not neural processing speed but the size or magnitude of various EEG components such as alpha activity. These give different information.

For one thing, EEG is a noisy signal. Its low signal-to-noise ratio requires testing by repeating the commercial and then averaging results, ignoring the fact that what one then has is no longer the effect of one exposure. Surprise is no longer present in the repetitions. In Herb Krugman’s terms (Herb is a researcher famed for his work in advertising frequency), the subject after the first exposure is no longer asking What is that, but is now asking, What of it?

SST has a far higher signal-to-noise ratio than EEG so one picture is all the researchers need. The high resolution low noise signal is also obviously ideal in terms of research accuracy while remaining insensitive to factors that can affect EEG such as head movements, muscle tension, blinks and eye movements.

At last year’s ARF Audience Measurement Symposium 5.0, I was serving on the ARF Program Committee and was selected to chair the session on Neuroscience.  Burt Manning, former Chairman/CEO of J. Walter Thompson and one of the industry’s great copywriters and thinkers, had introduced me to Dr. Richard Silberstein, founder/CEO of Neuro-Insight and Professor of Cognitive Neuroscience at Swinburne University in Melbourne. I invited Dr. Silberstein along with Innerscope’s Carl Marci, Sands Research’s Steve Sands, and CBS’s David Poltrack to become the neuroscience plenary panel for that symposium, moderated by Ameritest’s Chuck Young.

During that lively panel the neuroscientists all presented slides and Dr. Silberstein showed three case studies validating SST against sales, online traffic and correct product recall (financial services) respectively. In the most relevant sales case (Bird’s Eye frozen fish), the SST research suggested that a split-second change at a single point during the commercial caused a 130% increase in actual sales ROI.

Based on the extensive scientific validation evidence sent to me by N-I, and the cases shared at ARF last year, I would be interested as a researcher in using SST to help refine nearly-finished commercials before using them on air.

I hope more copy testers will come forward and send me your piles of evidence too, which I will give equal space here.

Best to all,

Bill

*Here’s one definition of “cultures” from Wikipedia: the distinct ways that people living in different parts of the world classified and represented their experiences, and acted creatively. I am characterizing “distinct” as “extreme”.

Where Will Neuroscience Make Its Greatest Contribution to Advertising?

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At the recent Advertising Research Foundation (ARF) Re:THINK 2011 conference, ARF reported the results of its study of nine different suppliers’ tests of the same commercials. All nine suppliers utilized their own approach to the measurement of involuntary psychophysiological response to stimuli.

Later that day, two other suppliers who had decided against participation were probably patting themselves on the back for staying out of the study. Why? Because the report had the result of (slightly) dialing back what had been the industry’s excitement about these new tools. The general picture painted was: (1) there is still a lot of work to be done; (2) at least some of the suppliers had not done their homework to become better informed about the test campaigns themselves; and (3) counter to expectation, these practitioners in general appeared to be less rather than more scientific than the existing state of the art in copy testing.

The folks at ARF certainly didn’t set out to pour cold water – they went into this with high enthusiasm about the promise of neuroscience for advertising. What happened?

Perhaps the problem was that the ARF, in order to gain cooperation, promised not to identify the pros/cons of individual suppliers. This protocol had worked well for the Council on Research Excellence (CRE) in their study of set top box (STB) data/analysis suppliers last year, which probably would not have gained enough cooperation to go forward otherwise.

Now the learning experience for industry leadership is that composite supplier descriptions/evaluations is a technique that must be carefully adapted on a case-by- case basis. In fact, the key difference between the two studies is that CRE did not cross the line from description into evaluation, whereas ARF did cross that line.

Possibly this was because the STB data analysis companies were willing to disclose techniques more so than were the neuroscientists. Perhaps ARF felt there would be nothing to report without evaluation, since in-depth technique description was not available. (Although I know of one supplier than provided 40 pages of such documentation.)

Today’s blog posting is motivated by the desire to see no slowdown in the development of the neuroscience field for the advertising industry and in general. Some years ago we did some advertising neuroscience of our own in company with Dr. Richard Davidson, today one of the most respected and quoted neuroscientists in the world, and Dr. Daniel Goleman, best known for his best-selling book series on emotional intelligence, a term he coined. That work convinced this writer that neuroscience can be of great value in advertising and media.

For example, in the research Drs. Richardson, Goleman and I conducted, we succeeded in using neuroscience to solve a conundrum that had baffled a leading drug company for years:

One of their big-spending TV over-the-counter brands had run a commercial years earlier that rang the bell so strongly there was no denying it had caused a substantial sales increase. For years, the agency tried to replicate the results with new commercials but never succeeded.

Neuroscience, however, was able to identify why the commercial was so effective, with such clarity that the agency was able to create a new commercial nearly as sales effective as its progenitor.

This case study is instructive in terms of how to derive greatest value from neuroscience in the context of advertising: instead of using biometrics to evaluate the power of a commercial, we used it to dissect the reason for a commercial’s power.

In other words, we used neuroscience diagnostically rather than evaluatively.

Instead of trying to answer the question “How well does it work?” we set out to answer a different question, “how (or why) does it work?”

Which is not to say that neuroscience cannot be used both ways, just that it’s possible the greatest increase in knowledge might come diagnostically. This is at least something worth looking into.

In the case just described, part of how the commercial worked is that it created the brain signature of the pain state in the viewer. By then segueing to a shot of the product package and the use of the product ending with a pain-free actor, the commercial ended with removal of the pain signature in the viewer’s brain.

Hence the viewer when next in the real pain state would subconsciously remember the product that removed the pain state. Classic problem-solution at the involuntary level rather than at the rational level.

So what is the generalizable clue? The concept of brain signatures for more complex states.

What if we as an industry are able to become aware of the brain signatures of brand gratitude, brand affinity, persuasion, purchase intent – signatures that can be validated against the same person’s change in brand purchase behavior?

What if we can also learn the brain signatures of specific blocks to a commercial’s success, such as lack of comprehension, disbelief, and distrust?

Neuroscience commercial testers are using the concept of brain signatures, but many seem to be stopping at purely evaluative signatures such as attention, arousal, and approach/avoidance, rather than the more complex diagnostic signatures suggested above, which tell more about why a commercial is or is not working.

In the interest of perhaps making a modest contribution to industry knowledge, and to  supplement ARF’s composite report, we will provide a venue in upcoming blog postings for any interested neuro (and non-neuro) copy testers to communicate their validation work, which we will present with individual supplier identification and our own editorial commentary.

 

Briefly Observed News in the Media

  • On April 4, in an interview regarding Libya on Fox News, Dr. Henry Kissinger enunciated his recommended policy for US intervention in such situations. Because US resources are not infinite and are already overstretched in Iraq and Afghanistan, he proposed that the US only become involved in other countries that meet both of the following two criteria:

    • Humanitarian concerns e.g. people being killed by their own government
    • US national strategic interests
  • On April 5, the media reported that because of the situation in Japan, it is being considered that the evacuation zone for the Indian Point Nuclear Power facility in case of an emergency be expanded from ten miles to fifty miles – which would mean the necessity of evacuating New York City. (Need I say more?)
  • Also April 5, it was reported that Muammar Gaddafi is considering a deal to step down. Miraculously, he reached out to Pennsylvania Congressman Curt Weldon, one American he trusted (we have written about the importance of trust before), who flew into Libya to meet with Gaddafi. Weldon is the American that Gaddafi had spent more time with than any other American. I have heard it said that one person does not matter, but obviously that is not always the case. In the words of John Fitzgerald Kennedy, “One person can make a difference, and everyone should try.”

 

Best to all,

Bill

Gratitude Reach Units (GRUs)

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“Quality Of Life (QOL) advertising/promotion… advertising/promotion designed to trigger a feeling of appreciation or gratitude as the audience realizes that the advertiser has made a positive contribution to the quality of life, either in the advertisement/promotion itself, or in a separate event that the advertising/promotion recounts.” —Media Science Newsletter, June, 1979

Since 1979, there has been an upsurge in the use of Cause Marketing to the point of overload, as pointed out in the June 1, 2010 AdAge blog by Mike Swenson, CEO of Barkley, whose Cause agency clients include H&R Block, Lee Jeans, and the March of Dimes. Mike comments that when Cause is done right, the emotional partnership with the audience is achieved, but this emotional connection is missed when Cause is just another incentive to buy a product right away. He more broadly observes that Cause is in danger of being moved into the promotions department where its practitioners will have no in-depth appreciation for how it works or what it is meant to be, hence they will eliminate its effectiveness both for social good and for profits.

The only way for gratitude marketing to work is for it to be motivated by social good as much as by company good. The reason is that the public is so cynical and suspicious, they will root out insincerity even if it is artfully concealed. As if a great law of karma were at work: gratitude can only be an effective strategy if it is done with real intent for social benefit. Therefore the selling must be side-stepped, if not left out entirely.

Have these ideas ever been empirically tested, that a gratitude strategy can work if the  advertising does not try to sell, and merely provides a gift of some kind to its audience? There are 28 cases summarized in an ARF paper I co-authored in 2006, reporting that Internet sponsorships can generate extremely high persuasion scores and ROIs when there is no selling at all, and when the content is something that the audience can reasonably be expected to perceive as an unexpected gift.

Such as what? What kinds of communication content have been proven to generate these high metrics? Objective product information that is not entirely positive (gift of honesty), yet is utilitarian and not-overworn; information of interest to specific target audiences (e.g. Volvo sponsors Yahoo coverage of The NY Auto Show — Volvo paid so buyers could see Volvo competitors too — again gift of honesty, this time also showing confidence in one’s product); and educational content (e.g. how to be a great digital photographer). These are the dominant three content types across those studies.

Not included in that ARF paper but learned elsewhere we also know now that gratitude strategy can work with true sponsorship (“true”=no selling) of:

  • content that is hard to come by (e.g. jazz),
  • a report of some act of good corporate citizenship (Cause),
  • content that is inspiring and/or educational, and so on — the possibilities are endless, depending on the interests and lifestyles of the people in the target audience.

The idea of Gratitude Reach Units (GRUs) — which I had referred to as “QOL spots” in the 70s — resurfaced in my work for Internet publishers using the gratitude strategy. These publishers were achieving high CPMs and renewal rates with their advertiser clients, because marketing mix modeling and persuasion scores were so high. However, their Internet work for these advertisers remained a very small part of the total marketing pie for these same advertisers, because a gratitude-producing site on the Internet has very low reach. Yet the right sorts of people come to the site, the very ones that the brand is most interested in reaching, and they leave with an increased trust and liking for the sponsoring brand — because the brand did not ruin the moment by selling.

The Internet publishers were happy with Next Century Media's work in gratitude effect. But they wanted to find a way to become more important to their advertiser clients, and to somehow release their powerful gratitude method on a larger audience.

Hence the idea of Gratitude Reach Units — use some of a brand’s 30-second TV spots as GRUs, miniprograms with zero brand-sell, just with well-produced useful and/or inspiring content. Reports of humanitarian work in some cases; 9-year-old girls who sing opera as if trained for decades; true stories of everyday unsung heroes who go on every day nonetheless — whatever it might be. Again, the content is endless.

Not in a low-reach (“pull”) Internet site, but a 30- second (“push”) TV spot where high reach can be achieved.

For most brands’ targets, the content will mirror the kinds of content that ANA’s Family Friendly advertiser effort — led by folks like Barbara Bacce-Mirque — has been seeking and putting on the air for many years. In GRU form it will only be 30- (actually anywhere in the range of 20-120) second form rather than 60 minutes.

For a smaller number of brands aimed at younger people, GRUs may need to be edgier.

This is a testable concept. A brand can take a small percentage of the inventory it has already been allocated in an upfront buy — say 3% of the brand’s inventory — and use it for GRUs. Marketing mix and singlesource (and holdout geo areas) can be used to accurately measure the ROI impact of GRUs. If it lifts ROI, further testing can then optimize the percentage that should be GRU. It will undoubtedly differ by brands — more GRUs being desirable where the brand itself is perceived by most buyers to be at parity without significant advantages, fewer GRUs where the brand has a compelling and evident competitive edge.

Affinity/liking for the brand, respect, trust, appreciation, gratitude, “the brand is my friend”, experiential connections with the brand, inspiration — these will be the main diagnostic metrics to be used in creating and pre-testing program content for GRU sponsored miniprograms to run in commercial inventory. Neuromarketing measures should go beyond arousal and approach/avoidance, attempting to find a detectable signature for the gratitude effect. Frontal lobes, and smile/frown muscle electromyography, are two of my hunches, in the search for gratitude detection. Obviously the better we can pre-test and improve GRUs the more effective they will be in terms of financial ROI.

Who knows how great the ROI might turn out to be in terms of social good?

Best to all,

Bill