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Rory Sutherland's Blog

July 2008 - Posts

Now that's what I call marketing 1774

The following is from History Magazine:

 ....           

......a similar pattern emerged across the English Channel in the Netherlands, Belgium and France. While the potato slowly gained ground in eastern France (where it was often the only crop remaining after marauding soldiers plundered wheat fields and vineyards), it did not achieve widespread acceptance until the late 1700s. The peasants remained suspicious, in spite of a 1771 paper from the Faculté de Paris testifying that the potato was not harmful but beneficial. The people began to overcome their distaste when the plant received the royal seal of approval: Louis XVI began to sport a potato flower in his buttonhole, and Marie-Antoinette wore the purple potato blossom in her hair.

Frederick the Great of Prussia saw the potato's potential to help feed his nation and lower the price of bread, but faced the challenge of overcoming the people's prejudice against the plant. When he issued a 1774 order for his subjects to grow potatoes as protection against famine, the town of Kolberg replied: "The things have neither smell nor taste, not even the dogs will eat them, so what use are they to us?" Trying a less direct approach to encourage his subjects to begin planting potatoes, Frederick used a bit of reverse psychology: he planted a royal field of potato plants and stationed a heavy guard to protect this field from thieves. Nearby peasants naturally assumed that anything worth guarding was worth stealing, and so snuck into the field and snatched the plants for their home gardens. Of course, this was entirely in line with Frederick's wishes.

How brilliant a piece of positioning is that?

Posted Jul 29 2008, 08:42 PM by Rory Sutherland with 5 comment(s)

Why I refuse to work on anything related to the 2012 Olympics

Lots of people in this business won't work on fast food, say, or tobacco. Rather prissily, AMV refused to advertise to children. Not me. Give me the briefs, I say. Tabs, Toys, Booze. Land mines, too. Not those boring campaigns complaining about them - I mean the ones which sell them to dictatorial regimes. Arms fairs? I bet they have plenty of point-of-sale they need doing. Well, I'm your man for that, too.

But I don't want to work on anything related to 2012.

It's nothing to do with the expense - even though I cannot see for the life of me why, when Cancer Research subsists on voluntary donations, the government should spend a billion on some twatting great stadium just so doped-up neanderthals can have their quadrennial moment in the sun.

No, I was prepared to overlook the expense and the morality on selfish grounds. You see I have always quite liked baseball. And here at least was a chance to see some baseball in Britain. Cricket - the world's only other major bat-and-ball sport - hasn't been an Olympic event since 1900 (in a bizarre twist which must have led to many a fiver won in pub bets, this means the French are the reigning Olympic Silver Medal Holders at Olympic cricket). But I could put up with the omission of cricket (and darts) if at least there was to be Baseball (and softball) at London 2012.

There isn't

In the first time a sport has been ejected from the Olympics since polo was ruled out of the 1936 Berlin games, some shady-looking blokes most likely called Jacques and Henri have decided (with no consultation with the organising committee of the London Games) that Baseball and softball are no longer Olympic sports from 2012 onwards. Presumably because they lack the mass appeal of events such as hammer throwing or synchronised swimming.

Well, that's me off the brief, then. How come, when Britain has invented perhaps 95% of all major team sports (polo being a rare exception, incidentally) we leave it to a bunch of foreign jackanapes to decide which sports qualify as sports? Their decision is probably veiled anti-Americanism, in any case, which is a bit of a pity since in Japan, Cuba, The Phillippines and much of S America baseball is a major national sport. And it isn't even American in origin.

Here's another pub bet for you to win: Q: Where is the first recorded mention of the sport of baseball anywhere in print? A. Jane Austen. Northanger Abbey.

 

Posted Jul 27 2008, 02:16 PM by Rory Sutherland with 5 comment(s)

Powers of Persuasion is super - except for page 253.

Once or twice towards the end of Winston Fletcher's new book, I felt a little like a cancer patient who has just emerged from an hour-long session in a $30m PET scanner to be told he is suffering from bad humours and a choleric temper and should therefore eat the gall bladders of finches during a full moon followed by an intense session of cupping.

This tremendous book is a detailed dissection of the British advertising industry, with the emphasis on the last forty years, and I am quite sure it is as accurate as it is detailed. For a business full of young people, it is also very necessary: even industry train-spotters will learn a huge amount of stuff they won't have known before, while most new recruits will be intrigued to learn that some agencies actually predate the Thatcher era. And, aside from the peculiar incident of Allen Brady & Marsh not being mentioned once within its pages, there doesn't seem to be much Mr F has overlooked. 

Do go and buy this book. You'll enjoy it, and it's important that you read it. But just be prepared once or twice to come across the odd paragraph where (hence my analogy of the PET scanner) the author's diagnosis and treatment don't quite seem to live up to the depth of knowledge. 

Page 253 is one case - in which Mr Fletcher blames the decline in British creativity on the conflict between old and new media. This seems both strange (surely this conflict would have affected many other Western countries equally) and horribly over-simplistic. Moreover it seems never to have occurred to the author (he cannot quite hide his disdain for new media) that maybe, just maybe, some of the spectacular British creativity now found on the interweb might compensate for a small decline in the quality of advertising on TV. Or that perhaps the scripts for TV commercials are not by default the only acceptable form in which a brand should do its working out while seeking to perfect its forms of self-expression.

Besides it seems fairly clear to me that most of the big campaigns Mr Fletcher loves (he never hides his belief that the 70s and 80s were a kind of Shakespearean age for British advertising) would have worked rather well in media other than TV, had people at the time wished to adapt them to other media. 

Actually I am not even sure that there has been a decline in British creativity, except that relative loss of outright superiority which is simply inevitable in any competitive field as the rest of the world catches up. And, if there has been a falling off in absolute terms, I would also suggest that a more likely culprit is the forcible separation of media and creative, which prevents many advertisements being shown at the length the subject matter deserves. Fletcher seems to think ads have become shorter and faster because young people want messages in a telegraphic form. Yet is it not also possible that ads are now shorter because nobody in any media buying outfit seems capable of justifying any length greater than 30 seconds, nor has any incentive to do so? Do young people really have such fleeting attention? The hormonal little bastards seem perfectly capable of playing Grand Theft Auto for five hours straight without even taking a piss. That doesn't look like wandering attention to me.

But let's assume for the sake of argument there has been a decline. There are other explanations, of course, which are touched on before the dreaded page 253. Strictly imposed financial targets for agencies value predictability over risk (the book is excellent on holding companies, clearly suggesting their purpose is great but not eternal). There is also a marked shift in which industry sectors are advertising nowadays (awards-rich areas such as tobacco, beer, spirits and aftershave have either disappeared on been regulated out of existence, to be replaced in many cases by new advertisers in less erotic areas). Advertising for categories - as opposed to brands - Go to work on an egg - has all but disappeared; Mr F claims this is because it rarely works, although I don't see any reason why this should be so - particularly when advertising for government issues often works very well. Finally there is media fragmentation, which may simply reduce the odds that we get to see some of that 1% of all advertising which is of genuine creative interest.

Oh - here's one more possible explanation for this creative decline - that the unbelievably simple propositions to which creatives worked in the 1970s (eg "Beer X makes you happy", "Beer Y makes you manly" etc) would today never survive the layers of overcomplication added by the protracted modern planning process. Discuss.

Outside page 253, my only other beef is that he too much uses levels of media spend to determine which areas of advertising are important. This would have been fine in 1953 when all advertising had a media cost attached, and where agency income was derived in strict proportion to media spend. But this simply doesn't apply any more.

 Today, a company may create 40% of its brand value though visits to its website at a media cost of nil: this does not mean the website is unimportant, it merely means it is inexpensive. (Perhaps 70% of my food expenditure takes place in restaurants, but this does not mean I get 70% of my nutrition there.)  An agency may now derive significant income from activities with no media component at all. I'm not an economist (though I play one on the Internet) but it would seem likely to me that the substitution effect of new media will accelerate in a recession, and may not return to old levels.

Anything else? Fletcher patently loves the IPA Advertising Effectiveness Awards, but should perhaps ask whether, through wholly unintended consequences, the cult of accountability is bad for advertising. From a recent talk by Peter Field, it suddenly became clear to me that if you only use one metric to measure the success of your advertising, and if you believe an advertisement should be devised to serve one predefined purpose only, you will be massively under-realising its potential. A great ad works precisely because it works to many audiences at many different levels, and has multiple effects simultaneously. Therefore the pretence that an ad must do one thing at a time (see my previous blog for discussion of the one-bird, one-stone bias in human activity), while developed with the best intentions, could be fatal.

"I know this ad has doubled our price premium and doubled sales to existing users, but it wasn't supposed to do that - it was supposed to bring in new users. So I'm afraid we've failed"  

This is the problem with imposing ever more metrics on a creative business. I hate to say this, but most people in advertising and many people in marketing are simply too innumerate and ungrounded in scientific understanding to be trusted with any figures more complicated that a lunch bill. They are arts graduates. They truly don't know *** about this stuff.

Posted Jul 27 2008, 11:13 AM by Rory Sutherland with 3 comment(s)

Don't bother buying TNS. Buy the University of Chicago instead.



I suppose it's probably too late to prevent Sir Martin spending another billion or so on yet another bunch of researchers. And it's not as though we can blame him. I would imagine this old research gig is pretty much a recession-proof activity, the demand for ass-covering and self-justification being largely inelastic.

My only quibble with all this stuff is - well, this. When you consider the $15bn spent each year on research (and bear in mind that our client, CR-UK, only gets to spend about $1bn a year on cancer research), I am horrified how few really useful insights into human behaviour seem to emerge.

I am, I suppose, a bit of a behaviourist. I am not all that interested in what people claim to think, or what they say they intend to do. To be honest, I have always had a lot of time for the line in the song Brownsville Girl wherein the prophet Bob claims that "people don't do what they say they believe, they do what's convenient and then they repent."

I am therefore a bit of an adland heretic in that I am not really convinced by the idea that changes in attitude necessarily precede changes in behaviour (as opposed to the other way around). I much prefer the economic concept of signalling to the adland idea of messaging, by which I mean that what an ad says about the brand seems to me far more important than what an ad actually says. I am also bemused at the extent to which marketers seek to build brands through claims rather than telling actions.

I suppose, in a sentence, I believe that, when faced with comprehensible choices, people generally act fairly wisely, though being subject to certain biases: when questioned on the reasons for their choice, however, people will invariably spout complete and utter shite.

I also believe that the best way you can add value to a client is by first looking at things from a behavioural perspective. Indeed the advertising idea I most admire from the last 20 years is the medium sized shopping trolley. When I was a kid, there were two ways to shop in a supermarket - a vast, deep trolley the size of a Hummer (which made you look a bit Catholic) or a small basket whose handles got painful once your shopping passed six items. Some genius in the early 80s must have noticed that people on entering a store were reluctant to take a large trolley as at the point of entry to the store they only intended to buy a few items. Later, half way through the store, the basket was simply too heavy for them, and prevented them from buying any but the smallest, lightest items. The medium-sized trolley has probably contributed billions in incremental retail sales.

At a more prosaic level, if you want to increase the response-rate to a mailing or email newsletter, don't always spend your time faffing about with new propositions - generally you'll get better results by improving the design of the order form.

There is thankfully now a ton of work being done in the field of behavioural economics - yet none of it seems to come from the $15bn spent on Market Research. Instead it seems to come from academia, in particular from academics such as Dan Ariely, Tyler Cowen, Richard Thaler and Cass Sunstein (authors of the excellent Nudge). The hottest place of all seems to be the University of Chicago Graduate School of Business: their Capital Ideas online newsletter being dedicated to decision research.

Let me give you just one example of this. In a paper unerotically entitled “The Dilution Model: How Additional Goals Undermine the Perceived Instrumentality of a Shared Path” Ying Zhang, Ayelet Fishbach, and Arie W. Kruglanski find an inherent human bias which resists something called goal dilution - ie using one thing to achieve multiple ends. For instance, it seems people inherently believe that a combined laser pointer and pen won't be as good as a pen or as a pointer than two separate implements dedicated to a single purpose. You can view the podcast here.

Now if the research industry had spent a bit of its time finding out useful stuff like this, rather than compiling endless pointless tracking studies, a whole industry might have been spared a few billion trying and failing to sell the idea of convergence. Actually, it seems we prefer watch telly on a TV and listen to radio on a radio. Combine these two devices, and you may even reduce the value of the multi-purpose item.

 And if we at Ogilvy had read this ten years ago, we would have realised that selling 360 services, while sometimes commendable, is always going to be a massive uphill struggle.

For years Robyn Putter has been vainly asking research staff to explain why his father bought an automatic car having spent a lifetime disparaging automatics. Perhaps he's been asking the wrong people. I suspect a couple of behavioural economists could probably explain it over a pint.

Posted Jul 26 2008, 01:37 AM by Rory Sutherland with 4 comment(s)

From Mobiadnews

This isn't bad at all. Although the photos make me look as though I am auditioning to be the first gay Dr Who, the interview (hat tip due  to the marvellous Jim Cook) is rare in that it actually makes what I said seem to make sense, which I'm not sure it did at the time.

Posted Jul 07 2008, 11:41 PM by Rory Sutherland with 7 comment(s)

Advertising's own demographic timebomb.

Demographic pyramid

This is not, as you may think, the demographic pyramid for a typical ad agency; it is in fact the demography of the Middle East. But in truth its bottom-heavy shape is just as problematic in both places.

When your entire population consists of sexually frustrated young men, it's liable to erupt unexpectedly in sudden outbursts and occasional violence. And the Middle East isn't much better either.

But we may be looking at the problem from the wrong end. The young men may be violent, irrational and unruly not because there are a lot of them. That need not be a problem at all. Perhaps instead the problem arises because there are proportionately too few old people around to restrain or direct them? "Actually, son, you and your mother have been talking, and we think you should give the suicide-bombing a miss until you've been to university."

Previously, when anyone has written about the shortage of the over-40s and over 50s in ad agencies, it has been spoken of as an individual tragedy. "Unfair..... shortsighted..... experience is valuable..... plenty of target audiences are over 50..... only a small part of advertising is youth advertising and so on." Perhaps this is entirely wrong. Perhaps it is a collective tragedy instead.

When I look back on 20 years at Ogilvy, my guess is that of all the stuff I have learned, perhaps 70% has been learned from people around ten years or more older than me. Drayton Bird, Steve Harrison, Randy Haunfelder, Reimer Thedens and several other people at Ogilvy were those without whom I might not have stuck it out at all. Elsewhere I've been fortunate enough to meet and learn from such as Jeremy Bullmore, Steve Henry, Gerry Moira, Stan Winston, Carla Hendra, Paul Feldwick and John Steel. (I would mention more women, too, but since I look ten years older than I really am, they probably would not thank me for it). And that's not including older people in production, typography, etc, where the same tendency applies.

Now this seems quite a startling example of the Pareto principle: if you gain 70% of what you learn from perhaps 4% of the people, patently older people have a value which goes far beyond what they bring to their individual work.

Why don't we appreciate this more? And keep more people after 40, even as they get a bit pricier?

Essentially there is a very simple explanation. Payment by the hour. This encourages you to reward people not in proportion to how valuable they are but how saleable they are to a client. Since a client with a job does not see any immediate benefit from the wider contribution of wiser heads to the culture of the agency, he won't pay for it.

Payment by the hour is absolutely detrimental to crating the kind of culture of learning David Ogilvy always wanted. It has eroded an old group-heads system, which helped knowledge to trickle down from one generation to the next. It ignores everything except short-term expediency. And it discounts entirely the wider contribution that an experienced head brings to all those around it.

I shouldn't give this tip away. But the single best ingredient to a successful pitch is a good 50:50 mix of age groups. The kind of mix of experience and enthusiasm which is often unacceptable to the client's procurement department once you win the business.

Posted Jul 05 2008, 10:11 AM by Rory Sutherland with 4 comment(s)

The UK at Cannes Direct: is our performance disproportionately bad?

There is of course no reason why the UK should do any better than anyone else in Cannes Direct. We have a large, prosperous population, I suppose; we are blessed with a large, competitive direct industry and relatively large budgets too. Equally, as Emma de la Fosse remarks in last week's Campaign, our production costs are high, too. In some parts of the world, mailings can be assembled individually by hand, like Panama hats.

In any case (and this applies far beyond the direct category) I'm not sure you will ever again see single countries enjoying a long and seemingly unassailable dominance in creative awards ever again. As in electronics, IT or any other innovative business, new ideas or techniques simply spread so much faster nowadays. It took the Japanese a century to match German build-quality in cars; today the Koreans have become world-beating electronics manufacturers in a decade or so. A national comparative advantage just doesn't endure for long nowadays. The one exception in our business may be Brazil, where by some miracle worked by a benevolent God, media independents are illegal. This means creatives still have a little influence over the media and forms in which their work runs. (A cynic might also remark that it makes it easier to cheat by running scam advertising in collusion with your chum in the media department next door.)

BUT

One theory I have heard from several people in the last week is that the Royal Mail's introduction of Pricing in Proportion, which heavily penalises dimensional or unusual mail ,hasn't helped the UK's performance in Cannes Direct at all. We have become a little like the US - a DM giant which produces mostly standard "flat" mail. And, like the US, we are hence winning very few Lions in proportion to the size of our industry.

Is this mere sour grapes? Or is there a grain of a validity in the excuse? Let me know.

Posted Jul 04 2008, 09:54 PM by Rory Sutherland with 3 comment(s)

A MARKETER'S VIEW ON THE UK PROPERTY MARKET

Property investors could do worse than read an article by Jeremy Bullmore.

One of the great and simple (and great-because-simple) observations of the late Milton Friedman was that there are four different kinds of purchase we can make.

1) First are those where we buy something for our own use with our own money. (Our weekly grocery shopping mostly falls into this category). Here we are concerned about price, but equally anxious about the quality of what we buy - after all, we expect to be eating it later.

2) Next come those cases where we buy something for our own use yet using someone else's money; (an example might be choosing a hotel when travelling on expenses). Here we are concerned by quality but, in truth, pretty nonchalant about price.

3) Next are those instances where we buy something for someone else to use but pay with our own money; (buying furniture for a flat which we are letting out, say). Here we are quite happy to let the quality go hang so we can save a few pence.

4) Last are those things we buy for someone else and which we pay for with other people's money; (as Milton was quick to point out, most government expenditure falls into this category). Here neither price nor quality receive the purchaser's full attention. You end up with a lot of overpriced ***.

Jeremy Bullmore developed this thought further when he suggested that, in any list of products which are successful but not very good, it is almost never the end user making the purchase decision.  The wire coat-hanger, the electric hand-dryer, musak and the lousy wine you are given at most receptions - all of these fall into this category where "the person who cares isn't the person who pays".

To which category we can add a few billion pounds of new-build UK property.

I don't know if you have noticed this, but perhaps 50% of new-build property in the UK (and, come to think of it, Spain) is in the form of of large blocks of one or two bedroom apartments. 

The only problem with all this seems to be that, in the long term, most people don't want to live in this kind of property. There are exceptions: the special conditions prevailing in the centres of very large rich cities and super-prime waterfront locations seem to justify a multi-storey approach. But, these few places aside, most Brits seem to have a strongly-held ambition to live in a conventional house. Indeed outside a few major cities, a fairly strong stigma attaches to any kind of high-rise living.

And yet developers aren't stupid. For as long as these developments were selling, they were almost certainly the most profitable way to develop a small to medium sized area of land. The only problem was that, while they were selling - and selling fast - they were not being sold to end users as places to live in. They were being sold as investments. Perhaps to people so desperate to get on the property ladder that they would buy anything. Or, more likely still, they were buy-to-let investors who were happy to accept a fairly small rent from indifferent tenants so long as the capital appreciation of the property was bringing in a nice 17% per year. With a couple of dodgy chums in the financial services industry, it was also possible to borrow sensational sums by misrepresenting your own salary and to use this money to buy perhaps four or five of these buy-to-let flats - a practice known amusingly as Lie-to-Bet.

Anyhow, if I am right, and if these apartment blocks are the equivalent of Jeremy Bullmore's coathangers - ie items for which no real love exists - then the price falls in this type of property could be quite spectacular.

Already stories are spreading of Leeds developments selling for £90,000 rather than the £250,000 asked just a few months before. A development in SE London has experienced a similar fall.

Interestingly I rather like high-rise living, and I spent five years on the eighth floor in Bayswater, loving the views this afforded of the skyline, the sunset and the approaching weather patterns.  But when I first bought this flat most people saw me as insane.

I see nothing in demography to suggest that I am anything other than an anomaly in preferring living high up. I suppose household size is shrinking a little, which may be an argument in favour of the flat. But how many people really want to pay £350,000 to live in the middle of Basingstoke?

Posted Jul 04 2008, 09:49 PM by Rory Sutherland with no comments
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