Campaign

Why didn't anyone say anything?

In a few months' time everybody will be at it. Slagging off the Shareholder Value model, laughing at the witless preoccupation with quarterly reporting and with a business culture that refused to recognise the value of anything which could not appear on a spreadsheet.

 In fact the Shareholder Value idea is now so badly holed beneath the waterline that even Jack Welch - for a long time believed to be its parent (although he denies paternity) refers to the idea as "dumb".Shareholder Value, he says inarguably, "is an outcome not a strategy."

There are some fairly good causes to criticise the Shareholder Value concept. Not least being the fact that it has done untold damage to brand value over the past decade or so. Referring to "The Black Hole of Shareholder Value" in the latest Market Leader, Hugh Davidson describes it as "encouraging short-term profit maximisation and financial manipulation."

"At its heart," says Davidson, "is the narrow financial accounting model, which 'reports spending cutbacks as increases in income, even when the reductions have cannibalised opportunities for future capabilities for creating future economic value'."

There are a few other reasons to find fault with this approach from a marketer's point of view. For a start, it has often led marketers to concentrate on easily measurable things (market share gains, say) at the expense of things that are difficult or slower to measure (such as justifying a price premium), even when it may be in the less measurable areas where marketing works best. And - I am saying this as a direct marketer, too - it has led to an unhealthy preoccupation with with transactional forms of advertising, since visibly generating numbers has become a kind of proxy for creating value.

The fact remains that there are plenty of healthy business activities whose ROI cannot be accurately measured. R&D, Market Research, Customer Service, HR, Knowledge Management - and let's not forget the finance function itself - never seem to be asked to justify their every penny of quarterly cost with one-point-three pennies of return. There are also activities (R&D, relationship marketing) whose overall return might be measurable but where it is a fatal mistake to attempt to assign value separately to every component part. Most human relationships, and the generation of human trust, depend on a level of value exchange over time - they are not founded on immediate reciprocation. For instance, you might be able to report on the overall health of your marriage, but it might not be wise, say, to attempt to isolate the contribution of floral purchases to raised levels of sexual activity. Marketing, rather like seduction, requires the art of concealing your self-interest. One of the problems of making everything so accountable is that company body-language becomes unnatractively self-serving and predatory, resulting in a massive erosion of trust and affection. 

But, as Davidson says, the worst aspect of this period of obsession with Shareholder Value is the extent to which all of us in marketing completely acquiesced in it. To me it seemed a little reminiscent of Stockholm syndrome, where we almost seemed eager to take on the characteristics of our abusers - becoming "more accountable than thou". I can't remember a single voice really fighting what was in many ways an attempt by the finance function to seize control of the levers of business by banning non-numerical measures from the business vocabulary. Why were we all so feeble? To me this seems to suggest a crisis of confidence which we need to solve.

However, it's one thing to criticise a metric, and quite another to propose its replacement. What measure should replace Shareholder Value? And what measures should marketers devise to replace the current regime. Net Promoter Score? Some other balanced scorecard?

I have absolutely no clue. But I have one suggestion - whatever happens, you need more than one measure to evaluate what you are doing. And the reason for this comes down to something (thanks to Mike Hoban for introducing me to this) called Goodhart's Law. Goodhart formulated this when a senior economic advisor to the Bank of England in the late 1970s.

Put at its most simple, Goodhart's Law states that "any metric which becomes a target will over time lose its value as a metric." In other words, the very pursuit of the value renders the value meaningless.

And this is the problem with any attempt to express value in a single measure. In truth Shareholder Value wasn't that dumb a measure - and Milton Friedman's assertion that a company's primary duty is to its shareholders is possibly philosophically correct. However what made the measure so damaging in its effects was the fact that it was pursued to the exclusion of all else. If pursued to its obvious conclusion, it would have created businesses which nobody ever wanted to work for or to buy from.

However, don't take this as a left-brain bashing piece. It occurs to me that Goodhart's Law applies just as much to creative awards as well. The moment an awards tally becomes a target, awards lose their value as a metric. Worth remembering when the Gunn Report comes out. 

Oh hell - I've just gone and solved the problem the wrong way.

A few years ago I was digging through some old copy test questions from the 1970s. I can't remember where they came from, but we might as well assume they were from J Walter Thompson, who seem to have been by far the best practitioners of this form of recruitment [1].

The question was as follows: "Using as few words as possible, write a notice to be placed at the entrance to a country-club [2] swimming pool requesting that members who have been previously been playing squash shower before entering the pool."

Now I imagine most people would have spent their time attempting to convey this message visually, since using no words at all does rather tick the box of "as few words as possible", none being just about as few as you can get. And they would have been half right.

But, a few weeks later, it occurred to me that this isn't primarily a creative question at all. It's a media and targeting question. For the brief contains a bad assumption. Since your only target audience is squash players, the place to put this notice is not at the entrance to the swimming pool but at the exit to the squash courts.

There are several good reasons to move the sign.

1) First of all, it is likely to be more effective, since it reaches people at a point where they still have time to change their behaviour. By the time the sweaty squash player has changed into his bathing trunks and is walking towards the pool, it's probably too late. (Read Nudge for more on this).

2) There is less wastage. Sometimes wastage is a good thing: but here I suspect you do not want to remind non-squash-playing bathers about the possible presence in their pool of sweaty people. It's a little like entering a restaurant and seeing a notice in the window reading "Staff required: no experience necessary." This is a case where spillover is bad.

3) When the ad is placed contextually at the exit to the squash courts, it can be more efficient as a piece of communication. You no longer have to waste part of the communication singling out your target audience. No need for "Been playing squash?".  It lets you be more concise - for instance "Please use our showers before using our baths." Or, if you are using pictures, you can use simpler pictures.

The value of this kind of media-creative solution (and the greater opportunity for devising them in the new media world) may explain the resurgence of the full-service agency. If the media and creative specialists are separated, this valuable kind of holistic problem solving is harder to do [3].

That said, having encouraged you all to solve problems in as broad a way as possible, I should now add a note of caution. Often, clients don't much like it when you do. There are quite a few reasons for this.

First, you regularly find - generally too late - that you are presenting your work to the swimming pool manager, who has no authority to put up notices in the squash-courts. To make things worse, in client-world you usually find the swimming pool manager and the bloke who runs the squash courts hate each other, because five years ago one of them tried to get the other one fired.

Then there may be the problem of metrics. The research methodology used at the country club involves asking random people in the pool how "aware" they are of the shower rule for squash players. Since only squash players would be aware of this rule under the proposed new media plan, it would completely ruin these measures, and the client's bonus would be badly reduced. It would also make his media buying measures look poor, because while the sign would cost the same, its superior relevance would mean that fewer people would actually see it, damaging his lovely CPM figures and getting him into trouble with media auditors for his excessive efficiency.

But a bigger problem still may be psychological. There's a slight feeling that, if you brief someone to come up with a press campaign and they come back with a solution involving text message reminders, they are somehow cheating. It looks like a cop-out - a  bit of a chiz. I remember a campaign we presented to a prospective client where we largely solved their business problem through several ingenious ideas which incurred almost no media cost at all. We thought we'd be heroes. They never even rang back.

If you think this issue is confined to the ad industry, remember the story of John Harrison and the £20,000 Longitude Prize. The great clockmaker was in his eighties before he was properly rewarded for his contribution; the full £20,000 promised was never awarded at all. Why? Because the Board was expecting an astronomical solution to the navigation, not a horological one. Harrison's clocks (H1 to H4 are on display in Greenwich) were seen as a cheat, because while they solved the problem beautifully, it wasn't in the way the brief writers imagined. 

You might call this John Harrison syndrome. The peculiar bias which means that, the more lateral the solution to a problem, the less likely it is to be adopted.

One small way of addressing this problem is to ensure every brief contains at its heart a single sentence definition of the problem, agreed by everyone involved.  (If I may be allowed a quick plug, I think the new Ogilvy briefing format does this well.) In recent years, I felt so much of a creative brief was consumed with vague speculation about the nature of a solution, that the problem at its heart was liable to get lost. By the time the brief reached the creative team, the problem may have been almost invisible beneath a heap of surrounding verbiage.

Guy Murphy was the first person to make this point, appropriately enough at the launch of the book commemorating Stephen King.   "We all spend too long quibbling about the solution and far too little time defining the problem."

Never forget, if you can find a new way of defining the problem, you've gone most of the way to solving it.

Just don't expect anyone to thank you for it. Or pay you.

In fact John Harrison spent more of his life trying to get paid than he did building clocks. I suppose he would have felt at home in a modern agency.

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1. I am delighted to say that the IPA is currently looking to resurrect this exellent idea, thereby allowing us to recruit copywriters from a wider pool than at present.
   
   
   
2. It might have been a "leisure centre" not a "country club", but remember this was the JWT of the 70s, where people may not have known what a leisure centre was. This was an agency where one distressed account director telephoned from home at the last minute to postpone a client meeting because "his horse had fallen into his swimming pool."
   
   
   
3. In fact what would often happen nowadays is that, while the creative agency were busily trying to work out what to put on the sign, the media agency would have already commissioned a seventeen-part soap opera for the Nintendo Wii set in a municipal swimming pool in which the protagonist's girlfriend dies from contracting a fatal disease from an insanitary squash-player - thereby cutting out the sign-writer altogether and pocketing the content budget. But, hey ho!

The great unasked question of the age....

And, interestingly, it is a comedian who finally asks it.

Here you see the famous Boston somedian "Louis CK" appearing on the Conan O'Brien show. He is making fun of the "generation of assholes" who "feel the world owes them something they knew existed only ten seconds ago". The 500,000 views this clip has received on YouTube suggest I am not the only person who thinks he may have a point.

And he is asking the very question which should rightly prepoccupy the waking hours of anyone who works in technology marketing, indeed anyone who works in marketing..... actually make that anyone who lives in a market economy.....

What in God's name is the point of all this brilliant innovation if it brings so little enduring joy? 

Bill Gates voiced a similar concern when he observed that "people don't how to want the things we can offer them". But I don't have so much of a problem with people not embracing innovation - that's their right, after all. I'm more concerned with the indifference they show towards innovations two weeks after they have adopted them. You could call it the Paul Arden* question: "How can people more fully appreciate the magic and wonder they already have around them?" As advertising experts, we are supposed to be the authorities on adding perceived value to things. So we should ask ourselves why the public's appreciation of most things (especially those things provided by private enterprise)  is so woefully low. Ask people about their mobile phone, their Sky+, their broadband connection.... goods which would have seemed miraculous to our grandparents.... and within a minute or so you'll be listening to morose complaints about the monthly bill.

It seems to me that, if we were seeking graitude rather than money, most capitalists would have given up the game decades ago. Sixty years ago, under communism, a few million Russians were happy to die for the right to queue for a potato. Today, in a market economy, people who buying a microwave oven for £70 at two o'clock in the morning complain if they have a three-minute wait.

It also occurs to me that the premise of most consumer journalism may be completely wrong. Implicit in the activities of organisations such as "Which?" or programmes such as "You and Yours" is the assumption that consumers are blameless and rational individuals who are in permanent danger of being misled by evil corporations. I am reluctantly coming to the conclusion (as are a few scientists, I might add) that corporations do an okay job: it's the individual human who needs more serious investigation. 

The rich (or anyone richer than average) are worse offenders than most, here. If you are wealthy, you will find the price of almost all consumer goods set at a level to sell in large quantities to a mass market - in other words at a price aimed at people much poorer than you. This means that a man earning £50,000 a year pays a price for his new flat-screen LCD TV that has been set be within the reach of people earning £20,000 a year - a price typically several hundred pounds lower than the rich man would be prepared to pay. This difference (known as the consumer surplus) seems to bring no added happiness at all. It's as if rich people were given a £200 refund every time they bought a major puchase, and merely shrugged it off. I recently asked a professor from Caltech and a couple of other behavioural economists why this is no. No-one seems sure - but they admitted it is a major loss of potential happiness.

The brutal question underlying all this is simple. For all the talk about "value not price", do people have any genuine appreciation of value at all? Or is our only conception of weath and fortune not absolute but merely relative (do we inhabit a world where, as one economist famously observed, "a rich man is anyone who earns more than his wife's sister's husband.")

This is a vitally important area of study for us. Partly because, if only at a small level, brand value might be one rare example when products are successfully imbued with a certain amount of added emotional enjoyment. But we need to know much more about this issue.

Do you think the problem is societal? Or is it innate? And, either way, what can we do about it?

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1.  * I call this the Paul Arden question after a story from William Burdon, which appears on the tributes page to Paul Arden ".....On the way home, we were getting pissed at Bordeaux airport, and asked each other what could be the greatest gift you could give your children. Moray and I gave some kind of inane account-man answer - "Ferrari", I suspect. Paul's answer was "a sense of wonder."