Jun 6, 2007

The Real Digital Revolution

Remember you heard it here first ;)

The Real Digital Revolution has nothing to do with advertising or marketing. In fact, it's the mortal enemy of advertising and marketing.

Because the real digital revolution is about consumer empowerment, the ability to research and learn about products and services and make decisions independent of marketing and advertising.

The car companies are the ones who are hardest hit by this development. Given that a car is the second most expensive purchase you'll make in your life (your home being the first), sophisticated consumers are flocking to review sites, message boards and the like to get the real deal on the car they plan to buy. And even to find out what kind of car someone like them should buy. A pretty shocking development in a market that was shrouded in mystery and misinformation for years.

Sure there was Consumer Reports and the car magazines. But CR attracted a very specific, Naderesque demographic and the car magazines were rarely concerned about the sorts of things the average car buyer was concerned about, especially if the average car buyer had kids.

Now what all this information does is destroy the power of advertising. I might see some new VW ads and think they're great, so great that I decide I want to buy a Jetta for my next car. But, if I go online and read about how much the Jetta sucks and how much better the Nissan Sentra is, I'm buying the Sentra. No matter how much Marc Horowitz (the guy who lived in a Sentra for seven days) bugs me.

The informed digital consumer is a threat to any business where there are objective standards for judging the product. So while certain foods may be immune (you either like Oreos or you don't, there's not much objectivity there) even packaged goods like laundry detergent can fall vicitm too, since there's an objective standard for how clean your clothes are getting.

All the BS you hear from the New Media wing about "conversations" is just a fancy word for people sharing objective opinions of products on review sites, blogs and other digital media. The "conversation" is when the marketer responds to criticism with a pledge to try harder or some such. Which, as I've told Joseph Jaffe, is just common sense. But enough "conversations" about how bad your product is, no amount of clever advertising or clever media placement is going to save it.

The people have spoken.

To give you an example: I want to buy an iPod adapter for my car. So I went to the online Apple store, Amazon and CNET and read a bunch of reviews. Winnowed them down, listened to the experts, eliminated the clear whiners and the "can you believe how cool technology is" know-nothings. And learned that (a) the category's improved a lot over the past several years (it seems static was a big issue) and that (b) the Kensington adapter enjoys a very slight advantage over the Monster one, and while both would be fine choices, the Kensington is $20 cheaper. So Kensington it is.

And while I may be more advanced than your average consumer, I see more and more purchase decisions being made this way. Clever ad campaigns be damned.

15 comments:

Anonymous said...

dude, you nailed it! i've been thinking EXACTLY this for ages!!

remember the hypothetical Rational Economic Man from economics in college? (he had perfect knowledge and always acted rationally in his purchases, ie he was immune to hype). well he's rapidly becoming a reality thanks to the interwebs. so advertising is fucked.

nice blog btw.

Toad said...

Thanks. Glad you liked it. I'm always convinced that about 4 people read this blog, so it's nice to get comments like this. Feel free to invent a handle for yourself if you plan on commenting with any degree of frequency.

And I do remember the Rational Economic Man. Whom I have not thought about is something like 15 years.

bender said...

This is an interesting thought. I work at an interactive shop, so I see how the space changes consumer behavior...but I disagree that "more information = more rational behavior."

Maybe just my view of human nature, that we're all irrational bastards who aren't getting any more rational over time.

And I think as long as we're emotional/irrational, you're going to have conversations where people debate products/brands on an emotional level...all the while claiming "I wasn't influenced by marketing, it was just the smartest choice."

My .02

Oh, and as one of your 4 readers, I like it when you dive into the "how digital is changing the advertising world" topics. I don't share most of your opinions, but you generally have an interesting (if luddite-ish) take on things. Keep it coming.

Anonymous said...

bender,

i agree with you. ie, people haven't changed and will always be a bit silly.

my point was that information on everything all the time = less room for bullshit in advertising. particularly in big ticket items. so the role of ad-created "image" is greatly diminished. image thrives on mystery and distance.

people will still be status-hungry, insecure jackasses, myself included. but thanks to the internet, my purchases have become more informed by fact and less by hype.

Toad said...

Agree 100% with Anonymous. Could not have said it better myself.

Where two products are fairly identical, then of course brand image will help sway decisions.

But the automobile industry comes to mind as somewhere consumer knowledge makes a huge difference-- there's so much me-too-ism in that industry and once you get past styling, there are lots of objective standards (fuel mileage, trunk size, headroom, etc.) to judge by.

Bender: Thanks (I think!) I don't see myself as a Luddite as much as a realist. So much of interactive is people giving names to common sense. Take the whole "conversation" thing your friend Jaffe is always going on about. It's called "customer service" and it predates the internet. Companies just need to remember to extend it to the internet. Responding to a blogger is no different than responding to a reporter.

But you can look forward to more internet-related posts in the near future.

Toad

Anonymous said...

Toad,

Staggeringly good post. I never thought about how "information wants to be free" has really impacted marketing.

I wonder if this newfound honesty/transparancy might somehow lift the level of advertising generally.

Nah.

If you find yourself with some free time, look up Malcolm Gladwell's article (reprinted on his website) about the real innovation which has made the internet and e-commerce possible. A little old thing called the post office.

Anonymous said...

Oh, BTW, which Kensington thingy did you buy? I'm looking for same.

Toad said...

Anonymous: I'll have to go out to the car and check - I'll post back later. Probably shouldn't leave it in the car, but...

Interesting article from Gladwell, who I like a lot (reading him; I've never met him.) He usually has a unique and common-sensical approach to things. So many of the web zealots truly believe that everyone spends hours on Second Life and Friendster and the like. (See upcoming post on that.)

KBAM said...

Incisive, Toad. Still, it's uncivilized to honor--or vilify--digital media, social networking, and consumer empowerment as cosmic strikes to advertising's soul. These are but furnishings of 21st century culture.

As a case in point, consider US wireless service, a $130B+ industry with 233mm+ subscribers. For no consumer expenditure is there a greater digital dynamic. In addition to traditional media, countless Web properties are devoted to levitating and trading in a bounty of information and opinion on every aspect of mobility. Just one Web forum, HowardForums.com, is a repository of more than 9.1mm posts.

Do these media "destroy the power of advertising?" Not at all. They call for its accountability.

The need for strategic positioning and tactical deployment of carriers' wireless value propositions--advertising's heavy lifting--has never been greater. Just look at the ignominy of Sprint, a beached whale of 53.6mm subscribers and 27.6% annualized churn.

What does the Sprint brand stand for and why should anyone care? Currently, nobody knows and nobody does.

Digital avengers did not beach Sprint. Sprint did. While its product is worthy, its culture is not. Sprint lost 220,000 customers in Q1.

After customer service, no investment can better lead Sprint to redemption and results than authentic advertising messages--for analog and digital worlds. It must create traction in a hurry and then, survive its legacy. Without a Hail Mary from advertising's finest, Sprint's relevance is doomed, its management unemployed and its independence over.

--BAM

Toad said...

First off KBAM, thanks for re-posting this on here. (He'd first replied on Adscam.)

Now for my response: I'm not sure I agree with you on this 100%. The cell phone industry is pretty unusual. I don't think anyone understands the difference between all those plans and the various models of phones, etc. Which is why, I suspect, you've got millions of posts on the matter.

Having worked on a cell phone account before, I can tell you that there are certain truths that consumers are aware of. Call it the "conventional wisdom" if you will: Verizon has the best reception and service (in many locations, I can personally vouch for NYC) but never has the coolest phones.
So it was basically a choice between getting reception inside restaurants and train stations and having the new Razr 6 months earlier.
I mean right now most articles about the iPhone focus on whether Verizon customers will give up the better service and system to get an iPhone on AT&T. And how many of them will switch back in frustration over dropped calls and the like.

Now this perception is not the result of Verizon's advetising. It's the result of trial and error, word of mouth, etc. Of being somewhere and seeing that your friend with the Verizon phone was able to make calls while you were stuck with no bars.

You are correct in saying that Sprint needs to do something- right now they essentially stand for nothing. And starting with the truth is always a good place. It's just that their problem seems much bigger than advertising: they really don't have a place in the market right now. And they need to find one.

KBAM said...

Would merely suggest that--for most consumer purchases--digital "self-help" resources, even when prodigious, do not discredit or displace the role of advertising. They recast the burden.

Certainly, none of the wireless networks is a joy.
As our 55th House Speaker, the late Tip O'Neill, aptly put it, "All wireless is local."

And indeed, you're right that VZW did not assume the mantle of mobile leadership on the back of great ads. (While rarely cited, its #1 hook was arguably "FUD"--and the inertia of Baby Bell wireline incumbency.)

Just to weigh in on iPhone, the potential spoiler here isn't so much AT&T's network as it is the device's baffling absence of 3G broadband data support (e.g., Web, multimedia, etc.), called HSDPA for GSM systems. Jobs' bad call. With unprecedented expectations, iPhone users seem headed for letdown.

And as to Sprint, we agree it's rudderless. Even as the #3 carrier, it lurks in shadow. Management willing (and clearly, along with other imperatives), a great agency can point Sprint toward enlightenment. Is Goodby, Silverstein the fixer? Your call.

Enjoying your blog.

--BAM

Toad said...

Glad to hear you are enjoying it. Your commentary is always welcome.

I agree that the web recasts the burden of advertising- it forces it to be honest and forces the brand to back up the claims it makes.

But for a lot of products, that's going to be a death knell- they don't have anything to set them apart from their competitors.

Take Sprint, for instance. While I think Goodby is a great agency, they can't perform miracles. If Sprint isn't the company with the best network and it isn't the one with the coolest phones, then what is it? Maybe they can beef up their customer service and be the friendliest, but again, that's the sort of change that needs to come from the top- not from the ad agency. (In an ideal world it would come from the ad agency, but that's another story.)

Interesting about the iPhone, btw. I hadn't known anything about that. The Journal did run an article last week about how corporate IT departments are denying user requests to switch from Blackberry to iPhone. So I'll be curious to see where they go next with it.

Toad said...

@KBAM: re: iPhone, David Pogue reviews it in today's NY Times and says:

>>The bigger problem is the AT&T network. In a Consumer Reports study, AT&T’s signal ranked either last or second to last in 19 out of 20 major cities. My tests in five states bear this out. If Verizon’s slogan is, “Can you hear me now?” AT&T’s should be, “I’m losing you.”>>

But also adds:
>>Then there’s the Internet problem....you have to use AT&T’s ancient EDGE cellular network, which is excruciatingly slow. The New York Times’s home page takes 55 seconds to appear; Amazon.com, 100 seconds; Yahoo. two minutes. You almost ache for a dial-up modem.

A said...

"The informed digital consumer is a threat to any business where there are objective standards for judging the product."

Why does Apple seem to be able to avoid this? If by objective you mean environmentally hospitable, I guess. Well, I can groan with the best of them about the inability of Macs to perform over PCs, but generally Apple avoids this topic all together.

Anonymous said...

Hi Alan,

This is an excellent post, and I'm surprised there isn't more discussion of these ideas in other forums.

I suspect it's because traditional advertising is becoming less effective, thereby making the services that most agencies offer less relevant.

Have to be honest, I didn't hear this idea here first though : ) Rishad Tobaccowala of Publicis had been discussing how consumers are now marketing to themselves back in 2006. His ideas are very similar to yours.

I must say, though, you are one of the few who truly understand the shifts in the communications model brought about by the democratization of information.