Rory Sutherland's Blog

A few lessons from Elvis, Jacko and Johnny Cash.

Rory Sutherland — Wed, 01 Jul 2009 22:19:00 GMT

When my grandfather was a doctor in South Wales, the local hospital proudly unveiled its first X-Ray machine. At the official opening ceremony, the mayor removed his chain and all other metallic objects to christen the device as its first ever “patient”. This was only intended as a publicity stunt. Unfortunately the inaugural X-Ray revealed a cancer somewhere in the mayor’s chest. They operated almost immediately but he was dead within a month.

As my grandfather wryly observed, he would have survived another five years without the operation.

One of the big unspoken topics of medicine is the proportion of deaths which are in some way caused by the treatment not the disease – the technical term is “iatrogenic”. Deaths as much or more the result of medical intervention as of any illness. Or entirely new illnesses that only happen as a result of prior treatment.

You would probably assume that, by and large, the better funded your country’s health provision, the longer people will live. Actually, this seems not to be true. Above a certain level of expenditure, the benefits stop coming. Some economic theorists, among them Robin Hanson, believe this is because once you spend more than a certain amount on medical treatment, the problems arising from excessive intervention – because “we must be seen to do something” – outweigh the benefits.

What’s certainly interesting is that Elvis and Michael Jackson, two people both with personal physicians, died so young.

I can imagine what it must be like to be a personal physician. Every day you must feel you have to do something to justify your existence. Yet, in truth, most of the time people are better off being medically left alone most of the time. And most illnesses may be best treated with rest and a little warmth. All the same, the urge to do something must become overpowering. We are, as several Darwinian experts have observed, over-wired to display conscientiousness and effort. And sensible non-intervention can always risk appearing like laziness or stupidity. So we always intervene.

The whole process of creating advertising needs to be very alert to the risks of iatrogenic illness. We – and our risk-averse clients even more - tend to assume that more research, more tissue sessions, more inputs, more opinions will make the outcome better. Yet, as with medicine, beyond a certain level they are more likely to be damaging than beneficial.

You learn this as a creative director. Some of the time, you need to look at work and resist the urge to justify your salary. “It’s great, “you force yourself to say. “Don’t change a thing.”

But many people involved in the commissioning and approval of advertising don’t realise this. The whole idea is that research, reworking, endlessly protracted approval processes are all contributing to the end product. As likely as not, they are killing it.

Have any doubts? Try this experiment. Next time you are asked for an opinion, don’t give one. Say you don’t know. Say it’s fine. Say “I couldn’t have done it better myself.”

It’s difficult, isn’t it?

The result of this tampering is that simplicity gets lost. Clarity gets muddied. Most likely of all, a certain charm gets killed off. For the hardest thing sometimes isn’t to do something good. It’s to leave well alone. To get it simple and have the courage to keep it simple.

Which brings me to Johnny Cash.

He was once asked by another guitar-player to justify himself. “Look”, said the struggling guitar-player, “Here I am playing, busting my arse, making my fingers bleed while playing painful chords and complex riffs – while all you do is stand there all evening and go dum-ditty, dum-ditty, dum-ditty, dum-ditty ding.”

“I know”, said Mr Cash. “That’s because you’re still looking. I’ve already found it.”

This is worth 20 minutes......

Rory Sutherland — Mon, 22 Jun 2009 20:00:00 GMT

The best kept secret of the Internet for Brits may be American Public Radio. The initials NPR usually are taken to stand for National Public Radio, unless you are right of centre (in which case you claim they stand for National Pinko Radio) or perhaps Zionistically minded (in which case it's known as National Palestinian Radio). Which said, regardless of your politics, the quality of the best programming is spectacular and an instant riposte to Europeans who see Americans as unintellectual or even sometimes a bit thick.

Think Radio 4 times ten.

A lot of the best programming seems to be produced by WGBH in Boston, KQED in California and WFMT and WBEZ in Chicago. Much of it is podcasted. Including this fascinating fifteen minutes (start from 8'45" in) which I heard in the car on the way to Bluewater this morning (I love the disjointed feeling you get listening to overseas media when driving). In this segment, the daughter of Julian Koenig (he of Papert, Koenig Lois) celebrates her father's genius (and rather disparages that of George Lois). In the interests of balance, I should point out that Sarah Koenig is a Producer of This American Life for WBEZ, and it seems a bit odd using your employer's airtime to settle old family scores. On the other hand I never knew JK invented Earth Day or thumb-wrestling (in its way just as great an achievement as writing Think Small).

200 years after his birth, will marketers discover Darwin?

Rory Sutherland — Mon, 22 Jun 2009 17:10:00 GMT

The great Drayton Bird once related a rather damning criticism of advertising once made by a client of his. "You advertising people.... you go very deeply into the surface of things, don't you?"

It is of course true. Yet half of me feels no need to apologise for this bias. The importance of the superficial is hugely underrated. As Matthew Taylor remarked last week at the IPA's 44 Club, we can talk about quantitative easing as much as we like, but Gordon brown's electoral fate has been sealed not by his macroeconomic policy decisions but by a tendency to display bizarrely demented face movements which appear like some early failed attempt at Supermarionation.

Yet there is one form of shallowness in our business that does pain me. The fact that, as I remarked in my IPA inaugural speech, our models of human behaviour and persuasion are so pathetically shallow and make no attempt to place our discipline within any evidence-based scientific framework. "Rather like astrologers," I said, quoting my colleague Alasdair Graham, "we use a language which is convincing to fellow converts but sounds suspiciously like bollocks to anyone else."

Or, as I wish I had said, "Marketers still use simplistic models of human nature that remain uninformed by the past twenty years of research into human nature - research by evolutionary anthropologists, evolutionary biologists and evolutionary psychologists..... as a result, they don't have access to a good map of the human mind, or of the brave new semiotic world in which it dwells. What marketers need is Darwin."

The reason I did not quote this sentence - along with many others by its author - is simply that they had not been published when I made the speech. This needle-sharp assessment (though I would add behavioural economists and information economists to his list) comes from Spent, by Geoffrey Miller, a Darwinian Professor of Behavioural Psychology who has decided to investigate (with a healthy mixture of fascination and horror) the deeper origins of consumerism.

Alongside Steve Harrison's, this in the one book on marketing and advertising you should read this year. (In fact it is interesting that Steve Harrison's book also includes a plea for better human insight and cites both Alex Bogusky's and Bill Bernbach in their preference for anthropologists over trend-spotters and other surface-skaters).

Now, in our defence (and Miller acknowledges this), it is only in the last few years that economists and psychologists have been prepared to speak to marketers. For years, the right wing within academia (often economists) didn't like to acknowledge us because we disturbed their neo-classical model and the idea of the perfectly rational agents who operated within it. So much so, that The Economist for years employed an advertising correspondent who seemed to despise advertising. On the other hand, the Left (usually social scientists) didn't like us because they thought we manipulated people into buying Hummers. It is only in recent years that a few people outside marketing have been prepared to overcome their initial distaste to discover that our job is an area worthy of study.

But in my view it is vital that we extend a hand of welcome to these people. Not least because we have quite a lot to contribute, as well as even more to learn. But also because it will be impossible for us to preach the value of marketing beyond the choir if we continue to speak only Marketingese - a language unintelligible to outsiders - rather than finding a shared vocabulary with people whose frame of reference stretches a little further than ours - and which is grounded on some solid scientific foundations rather than on mere marketing case-law.

I should reveal a few prejudices here. I am a bit right wing, and also a bit Anglocentric. If I am asked to connect what we do to the world of big ideas, for me that means Adam Smith not Marx, Darwin not Freud, Dawkins not Derrida. I would be perfectly happy to accommodate testable theories from elsewhere. But we must realise that, while we may be obsessed with the superficial, this does not mean that what we do is trivial or should driven by the fleeting whims of fashion.

Bernbach was convinced that the fundamentals of human nature don't change much; in fact they may be even older than he thought. In a passage that will fascinate Mark Earls, many herd animals (including dogs) exhibit many of the personality types of humans, as do most higher primates, cats, ferrets and (weirdly) hedgehogs. This stuff is older than us.

As if that wasn't enough, Miller also socks it to demography and that old planner's crutch Maslow. Not before bloody time.

Buy this book.

Another book recommendation

Rory Sutherland — Thu, 11 Jun 2009 16:03:00 GMT

Open source brief number one. Solve the "problem" of saving.

Rory Sutherland — Wed, 10 Jun 2009 18:05:00 GMT

I have just been reading Animal Spirits. Subtitled: How Human Psychology drives the economy and why it matters for global capitalism. It's a surprisingly readable book - and coauthored by George Akerlof, a man who won the Nobel Prize for economics in 2001 for a 1970 paper entitled "The Market for Lemons: Quality Uncertainty and the Market Mechanism".

Akerlof's Lemons paper should be interesting to marketing folk on two counts.

For one thing, the article spawned a discipline known as information economics - along with useful concepts such as signalling, this field has created an area of study invaluable to anyone who wants to present the economic case for building brands.

The second interesting thing about the Nobel-prize-winning paper is that, before it was finally published, it was repeatedly rejected by academic journals on the grounds that its subject-matter was too trivial to be worth printing. Which suggests that, just as advertising does, high-level academia has that category of work which somehow straddles the line between infantilism and genius. I suppose Compare the Meerkat, Shake 'n' Vac and (greatest of all) www.rainhamsheds.co.uk would all be examples of this kind of work. A magical type of work which, incidentally, the planning function in advertising, with its tedious reliance on logic, tends to destroy. But I digress.

Reading the book above, I came across this interesting paragraph, in which the authors ask why, if we are all so driven by rationality, personal rates of saving in China are nearly 20% of GDP while in the US they are near zero.

"The Governments of both the United States and China have wanted to promote personal saving for many decades. Since the early 1950s the US has promoted saving with special tax incentives, such as individual retirement accounts, 401(k) and 403(b) plans and savings bond campaigns.

"In communist China, where there was no income tax, efforts to spur saving took the form of propaganda campaigns.... A 1953 paper shows a group of happy, smiling workers turning in cash for government bonds at the People's Bank of China. A 1990 poster shows a smiling Lei Feng...writing the word 'save' on a money box. In the 1990s big red banners were hung in the streets: 'Saving is Glorious'. These campaigns, which made saving everyone's patriotic duty, set the stage for today's high savings rates."

This raises a few questions. First of all, why - other for psychological reasons - do the Chinese save more than even fairly wealthy Americans? If logic were the driver, would it not be the other way round? After all, perhaps more than 50% of Americans have more material possessions than they can possibly need, while many of the frugal Chinese are living in meagre circumstances. This is a massive behavioural difference - it drives the entire world economy - and yet it is not merely affected by "animal spirits", it is exclusively driven by them.

A second question. Why is it considered ethically acceptable for the government to use tax-payers' money to create tax breaks for savers, whereas it would be considered wasteful for the government to spend a fraction of this money advertising the virtues of saving? Especially when the Chinese approach seems to be many times more effective at changing behaviour.

But another, more important question: what is behind this staggering behavioural difference, and is there anything you can do to change it? To make Americans and Brits save even adequately.

It may be that there is nothing we can do. That the whole Chinese behaviour is rooted in Confucianism and hence is impossible to replicate without a few thousand years of cultural indoctrination.

Or it may be a very different reason: one theory I have even seen advanced is that, because the Chinese are indiscreet about money (you can routinely ask someone their salary without seeming rude) they don't need to buy expensive goods in order to convey their wealth to other people: you don't need to buy a BMW when you can just go around like Harry Enfield's Brummie character telling people how rich you are. Or is it perhaps a question of choice architecture - that Westerners are faced with so many competing investment opportunities they just can't be bothered to choose between them? Or is it simply that their dictators are more trustworthy than our bankers?

Whatever your answer, the difference is psychologically driven, and could submit to marketing-led approaches?

There may even be a very simple stimulus required to change things.... Tesco letting you save at the checkout? Social networks making your savings visible?

The fact is that indidual savings levels are amazingly arbitrary. And marketing is good at influencing the arbitrary.

You're a marketer. What's your answer?

Why creatives should wear ties occasionally

Rory Sutherland — Mon, 20 Apr 2009 09:43:00 GMT

One of the most disturbing advertisements of the last few months is the single page ad for the iPhone. "Solving life's little problems one app at a time."

Frankly this advertisement contravenes all the guidelines for contemporary press advertising. It contains a large shot of the product so you know what it looks like, carries a headline which discloses a consumer benefit and, worst of all, it contains a series of little captions (old direct marketing hands will know them as "call-outs") wherein a number of words are arranged in some grammatical order to convey to the reader useful information about what the product does.

Jesus, I hope this sort of thing doesn't get out of hand. Where could it end? If you're not careful, you'll have readers going to the shops in their droves and exchanging their money for iPhones.

Fortunately, I don't think this will last for long. Soon we'll be back to sanity - with shaven headed women leering out of the page displaying their tongue-piercings beneath incomprehensible two-word headlines.

Why is this perfectly sensible kind of advertising so rare? One problem may be that the same creative brief is often written for print as for TV. I'm not sure this makes sense - perhaps the kind of low-involvement, image-intensive brief which works well in film may be ill suited to the high involvement medium of print. Another problem may be that the "brevity is always best" assumption that has become a reasonable rule-of-thumb in poster advertising has by now completely infected press.

But there may be a simpler question at stake here. Are we trying too hard to make press ads cool? Perhaps the best thing you can do when writing a good press ad is to abandon any attempt at being even remotely hip. Put on a suit and tie. Read the Daily Mail. Go foxhunting for a day. Visit Croydon.. Push Pineapple. Shake the tree. Push Pineapple. Grind coffee. To the left, to the right, jump up and down and to the knees. Come and dance every night, sing with a hula melody. But do not, even for a second, consider going to Magma.

You can do almost anything in press. You can do intelligent, witty, urbane, posh, intelligent, popularist, large breasts, innuendo, informative, helpful, educational, belly-laughs, puns, logic, outrage. But it's hard to do cool. Or, to be more precise, you can do cool, but the line in print between being cool and being a self-indulgent twat is perilously narrow. Remember, too, that when you fail to be cool you alienate everyone - the cool people who hate you for failing and the uncool people who hate you for even trying.

At which point a bigger question. Is it even sensible for most brands to try to be cool at all? Just remember that in pursuing cool-hunters you are chasing the most fickle market that exists. Cool people do not even form a market that is even specially large or wealthy - and it is by definition fragmented. It may or may not be influential - that varies. But usually the best financial return to be derived from brands is best achieved by having, in Tim Harford's words, "a strong brand in a conservative market".

The single most important financial and social role which brands play is that they create new possibilities - for brand owners and consumers alike. People who are fashionable and experimental will try new things anyway. But strong mainstream brands radically change the behaviours of the many millions of people who are temperamentally less adventurous.

You wouldn't have got a few million people to buy the Focus, the S-Max or the Ka (all radical designs) had they been branded Alfa Romeo. And, if it weren't for Sainsburys, olive oil would still be sold only in chemists' shops.

If we were true to our belief in brands, the dress code for the D&AD awards would stipulate M&S suits.

Are you a capitalist or a creativist?

Rory Sutherland — Fri, 10 Apr 2009 22:02:00 GMT

Recently, practitioners of experimental philosophy (trendily known as x-phi) described two different scenes to a randomly selected audience.

In the first, the vice president of a company explains to the president he has a new plan for the company that will maximize profits but will harm the environment. The president replies that he understands the environment will be harmed but doesn’t care; he tells the vice president to proceed.

The selected audience are then asked whether the president is harming the environment intentionally. On the one hand, his intention is only to maximize profits but he is conscious that this also involves harming the environment. 82% said “yes”.

The second scene is identical to the first except the word harm is replaced with help. The vice president of a company explains to the president he has a new plan for the company that will maximize profits and will help the environment. The president replies that he understands the environment will be helped but doesn’t care; he tells the vice president to proceed. The people are then asked whether the president helped the environment intentionally. Interestingly, only 23% say “yes”.

There is a huge discrepancy here since, to a philosopher at least, the two examples are identical.

One interpretation of this is that, while an action based on self-interest that has bad effects is (unsurprisingly) seen as a bad thing, an action based on self-interest which has good effects is NOT seen as a particularly good thing.

This reveals an essential asymmetry in human perception.

What it seems to show is that people are overwhelmingly intentionalists, not consequentialists. In other words, once they suspect an individual’s intentions are largely self-interested, it colours how they perceive the outcome. Hence they are far readier to attribute a bad outcome to self-interested behaviours than a beneficial one.

To anyone working in business, and in particular to those working in the many thousands of organisations which have spent the last fifteen years in thrall to a narrow, reductionist obsession with short-term shareholder value, this seems an important – and worrying – finding.

For it suggests the spectacular achievement of capitalist free markets in producing cheaper, better goods is often perceptually wasted, since most of us simply don't much respect the selfish motivation behind the achievement.

To Adam Smith's "It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest." We should add "But don't expect anyone to like the butcher very much."

In short we have an economic system that is much better at delivering efficiency than it is at inspiring affection. The obsession with shareholder value has perhaps created autistic businesses – of a kind that nobody much wants to work for or buy from.

By nakedly pursuing a narrow obsession with profit, companies are damaging brand value – and ultimately shareholder value. Or, to put it another way, the problem with all this naked greed isn't the greed, it's the nakedness.

At a societal level, it means the benefits of competitive free market economics (choice, low prices, innovation) don’t really translate into happiness, gratitude or affection – as they are tainted by the self-interest with which they have been obtained.

And if you have ever wondered why people show such affection for public-sector brands (such as the BBC, the Post Office, the NHS) even when their levels of service are, um, questionable, there’s your answer – for all their failings, they are untainted by perceptions of greed.

The perception of a non-selfish motivation seems inherently valuable. Or, put another way, nobody buys German cars because the Germans are greedy – they buy German cars because they believe that Germans are obsessively, indecently, neurotically obsessed with cars.

In the words of Jack Welch, widely seen as the father of the Shareholder Value movement, but now one of its harshest critics. “Shareholder value is an outcome – it’s not a strategy.”

Or as Eddie Izzard remarks, "I'm not a capitalist, I am a creativist. I want to make money so that I can create things. Suddenly all these people have come along who want to create things so they can make money."

It’s an important distinction. Which are you?

Certainly the best brand owners are creativists. Nike, Ford, Kellogg, Apple, Virgin were all created by people whose ambitions went far beyond self-enrichment.

There's an interesting lesson here. Maybe greed is bad for business. It's certainly bad for brands.

The cuddly side of BBH

Rory Sutherland — Sun, 05 Apr 2009 21:26:00 GMT

Undoubtedly the best idea to come from an ad agency this month is BBH's decision to allow staff to vote on a 3.5% voluntary pay cut - in the shape of a day's unpaid leave every month. Certainly the people at BBH seem to think so, since they voted 99.5% in favour, a kind of unanimity you don't usually see outside a North Korean election result.

BBH staff vote for pay cut over redundancies

I can't quite understand why this isn't more common.

For a start, it isn't quite accurate to describe this as a pay-cut at all. A pay cut would involve less money for the same amount of work. Here staff are being offered the chance to trade a 3.5% cut in pay for a near 50% increase in their holiday allowance. It would be interesting to find out how many people would have willingly made this trade-off even before the downturn. Nearly all studies show that employees would like to translate some of their wage gains into greater leisure, but are reluctant to do so for fear of seeming uncommitted. Unless you are a banker, and see your life's purpose as nothing other than a matter of self-enrichment, most people realise that the value of your money is enhanced when you have time enough to enjoy it.

However, in a recession, the trade off makes especially good sense. For one thing, this is a disproportionately bad time to lose your job. But it is also a disproportionately good time to keep your job. Prices are falling, and mortgage costs are probably low enough to offset the loss in pay for many people. Moreover the leisure is also offered in an intelligent form - single days off. What always struck me as moronic about the French attempt to enforce a 35-hour working week as part of their bid to reduce unemployment was that there is very little benefit to anyone in a marginally shorter working day. Once I have gone to the trouble of getting up, dressed, washed, shaved and then have to make the journey to and from work, I might as well give it a full nine hours. No, the minimum (or "quantum") unit of worthwhile leisure is the single day off.I might also add the fact that (as my self-employed father always loved to point out) a day off during the week is twice as valuable as a day off on Saturday or Sunday.

It is far cheaper for an agency to engage in this arrangement than to lose or hire people every time the climate changes. In fact, given that advertising is becoming a slightly seasonal business - with some months routinely busier than others - it's possible future agency contracts should allow for a certain flexibility of employment as a matter of course. Leisure, incidentally, can be a very tax efficient perk.

But there's a final reason this is such a good for our industry. You see it isn't clear that BBH will be much worse off for everyone's one-day absence. One of the fabulous things about this business, for all its annoyances, is that you can become better at your job by doing just about anything. Actuaries or lawyers don't become better at their jobs by reading a novel, listening to a conversation on a bus, watching a film, going to an exhibition or sitting in a park. We do. Rather as Google has found, the odd day for staff to pursue their own interests may pay back in more than mere cost savings.

Beyond advertising, we also need to ask ourselves whether BBH may have pioneered one possible answer to the economic downturn. Reading about this issue the other day, I stumbled on a few articles on the five-day week and the shorter working day. Until then, I had always assumed that Saturday had become a day of leisure through the efforts of social reformers. Not so. In the US, at any rate, it was pioneered by Henry Ford, driven by a mixture of philanthropy self-interest.

In his article Why I Favour Five Days' Work for Six Days' Pay Ford explains that a well paid and more leisured working man will have time and money enough to create significant demand for manufactured goods.

With a two-day weekend, it might even be worth buying a car.

Why didn't anyone say anything?

Rory Sutherland — Sun, 29 Mar 2009 17:17:00 GMT

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.

Rory Sutherland — Mon, 09 Mar 2009 11:21:00 GMT

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.

______________________________________

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.
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."
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....

Rory Sutherland — Sun, 01 Mar 2009 13:36:00 GMT

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?

_____________________________

* 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."

On the appeal of prostitutes, consultants and Starbucks

Rory Sutherland — Tue, 10 Feb 2009 15:38:00 GMT

This post on the excellent Freakonomics blog by Ian Ayres provides an alleged quotation from Charlie Sheen. It is at once frightening and an immensely valuable marketing insight.

When Sheen was being sentenced for using a prostitute, the judge asked him why a man like him would have to pay for sex. And Sheen reportedly replied: “I don’t pay them for sex. I pay them to leave.”

The business executive who relates this story to Ayres then points out that it is for this same no-strings-attached reason he likes employing consultants. When the job is over, you simply tell them to go. Ayres goes on.....

This story got me thinking about the demand for non-relational contracting. .....Sheen’s (possibly apocryphal) quotation has me thinking that there may be contexts in which people would pay a premium to avoid a relationship.

Some people may at times prefer A.T.M.’s to tellers in part because they don’t want to speak to tellers. Some people may prefer Merry Maids to a regular housekeeper (or may prefer to be absent when the cleaning is done). Or some people may prefer buying at Amazon.com in part because of the lack of human contact.

I suspect, in fact, that a surprising amount of the success of large corporations is down to the fact that, they offer the kind of perfunctory, impersonal transactions family-owned firms simply can't match. Although it agonises about becoming "part of the community", I actually like Starbucks because I can sit around there for hours using the wifi on the strength of having bought one small coffee, yet without feeling a hint of emotional discomfort -- something I can't do at my local family-owned coffee shop. Anyone ever cancelled a Travelodge the night before you stay? You're hardly tortured by the pangs of guilt, are you?

The same horror of personal contact explains the popularity of Argos. And the marked enthusiasm for online shopping found among emotionally repressed northern peoples like the British, as opposed to over-wrought Mediterranean types (who are generally incapable of having an oil change without first embracing the car-mechanic like a long-lost brother).

There's a lesson here for eBay, who paid over a billion for Skype on the outlandish premise that we didn't only want to buy a novelty baseball cap from a bloke in Akron Ohio, we also wanted to become his best friend. There's a lesson for hotels - "No I don't want some *** to carry my bag to my room - I've just brought it 6,000 miles on my own, why do you think I can't carry it along a corridor". And there's also a lesson for some loyalty-scheme devotees. No, we don't always want a relationship.

And there's a lesson for anyone who things automated service is always a poor substitute for personal service. It may be a massive improvement.

More kittens: Or how Sir Martin Sorrell can end the recession overnight.

Rory Sutherland — Wed, 28 Jan 2009 11:12:00 GMT

One of the things that has long baffled me about the advertising industry is that, although we pay for most of the media, we make no active attempt to influence its output.

No other large-scale buyer of goods or services acts in this shamefully wimpish way.

We have endlessly talked about the need to consolidate media buying power, and then all we do is to use this power to drive down prices. At present, this is a completely misdirected effort.

Because, at the moment, it doesn't really matter whether you are paying £20,000 or £10,000 for a full page in a British newspaper. What matters is that 50% of your £10,000 is being spent on paying journalists to write doom-laden articles discouraging consumers from doing anything except to cower inside their homes waiting for redundancy and repossession.

In short we are currently using our clients' money to pay newspapers to destroy our clients' businesses.

It reminds me of a Viz bus-side advertisement that reads "Smoke Tabs." Underneath is written "HM Government Health Warning: Don't Smoke Tabs"

What is the point in spending £10,000 to buy an advertisement in the Daily Mail that says "Buy Stuff" if that £10,000 merely pays for the three adjacent articles which tell readers "Don't Buy Stuff!"

In the good old days before CSR, when large American Fruit companies saw their supply-chain threatened by pinko governments in Latin America, they didn't sit around wringing their hands. Not a bit: they paid their chums in the CIA to start a little insurrection and install a more fruit-friendly regime in the Presidential Palace. We should do something similar now.

Group M and the other large media buying houses should simply withhold all advertising money from British media until they learn to cheer the f*** up. And, correspondingly, we should lavish advertising money on feel-good media.

Imagine the phone calls. "Hello, Daily Telegraph, we were going to give you £100K to run a series of ads for IBM, but unfortunately you ran an article on repossessions yesterday. So instead we're going to put all the money towards sponsoring "Dogs do the Funniest Things on ITV3 and a gatefold pull-out in Hello! Now, don't do it again, right."

That would sort the bastards.

We should also withhold all money from Rupert Murdoch until he launches Sky Good News, a 24 hour channel featuring kittens doing amusing things with wool - perhaps occasionally interspersed with stories of people who've survived cancer.

The economic problem - what Keynes calls the paradox of thrift - would be solved in a month.

A dog that doesn't bark in the night.

Rory Sutherland — Mon, 19 Jan 2009 19:45:00 GMT

Social media are desperately important, as we all know. It is wildly exciting that, without having to hand over large sums to Rupert Murdoch, you can now reach millions of people simply through what is now called the "amplified word of mouth" which is made possible by social networks. Great content now does not necessarily need a media budget at all to reach thousands of new eyes and ears - for, the moment it appears online, it acquires its own kind of centrifugal force.

In a way, what we are doing with viral content is outsourcing the job of media buying to the public. And a wonderful thing it is too. Even when we acknowledge that there are inherent problems in this model (only the very best content acquires this magical momentum, and there is probably a natural limit to the extent to which people are willing to play unpaid message-boy for large corporations) we cannot deny that frictionless content is a vitally significant development in media.

All the same, it occurred to me yesterday that there is a completely different approach to social networks which is potentially even more important - but has been utterly neglected to date by an industry still besotted with mass audiences and reach.

This new approach is almost the opposite of the first, "viral" approach. For, rather than using networks effects to reach a lot of people indiscriminately and cheaply, it uses network effects to reach very few people precisely and expensively.

And rather than outsourcing media buying to the public, it works by outsourcing media planning to the public.

It works not by reducing the cost of distribution (as with conventional virals) but by totally eliminating its usual inefficiency and wastage.

I'll give you an example of how this might work. Let's say you and your wife/mistress/boyfriend/husband/sheep have just spent a lovely weekend in a hotel in the Cotswolds (rather you than me, frankly - I find the place a bit up its own *** - but no matter). Anyhow, you get home and you receive a thank-you letter or email from the hotel. And inside the thank-you letter is a voucher for three nights for the price of one at the hotel. It's not for you, you understand, but it's to give to any one person you choose.

Or suppose you go to the cinema and particularly enjoy the film. As you leave you are given one two4one offer to the cinema to any showing of that very same film. And you can give that to any one person you choose.

Or suppose American Express writes to you and says that you can nominate one person you know for free American Express Platinum Cardmembership for a year?

Or a car company writes to a happy owner allowing them to lend a new car to anyone for a weekend's test-drive?

In each case the incentive to pass this on is not bribery or self-interest. It is instead generosity and the desire to display a certain munificence. And, to maximise the value of your giving, you naturally pass on the offer to the one person out of the hundreds you know who would value it most.

Now, what you do is this: you mentally scan your address list of perhaps fifty to a hundred people and choose the one person who would most enjoy The Upitsownarse Arms in Upper Slaughter. In making this choice you factor in taste, wealth, age, geographical location, marital status, size of household and ability to spend time in Gloucestershire without vomiting. Or you apply everything you know about their taste in films, cards, airlines, etc.

Now the amount of intelligence which is applied in that act of individual selection simply surpasses any level of targeting you could achieve through databases or other automated means. It is as though you could interview the entire country for five minutes individually to decide whether or not they belonged in your target audience.

I suppose the idea here is a kind of open-source targeting. Certainly, in some sectors, the efficiencies achieved could justify remarkably generous offers. Yet this practice doesn't much happen.

There are referral programmes, obviously. But all of them seem to make three mistakes. They aren't all that generous. They ask you to recommend as many people as possible, which sounds like too much effort. And they reward the recommender as well as the recipient - to me this introduction of an element of self-interest seems to devalue the social currency of the gift.

Does anyone know of a successful instance of this. Answers on a generous postcard, please.

Getting off at Edge Hill.....a defence of shopper marketing.

Rory Sutherland — Sun, 18 Jan 2009 13:56:00 GMT

Vrb phrs. To perform coitus interruptus. A catholic Liverpudlian expression derived from the symbolic use of the railway station before the Mersey tunnel and the last stop. Also heard phrased as jump off at Edgehill. Other UK cities also have their own variations, such as get off at Paisley, used in Glasgow; get off at Gateshead, used in Newcastle-upon-Tyne; get off at Haymarket, used in Edinburgh.

Every part of the country seems to have one of these phrases - the London version being "to get off the Eurostar at Ashford" (or perhaps now Ebbsfleet).

Marketing, of course has something similar. Those campaigns where everything about the initial brand promise is good, but where it never quite goes, er, "all the way" to purchase.

I must admit I "got off at Edge Hill" when it came to the Sony Bravia.

It began well. The Bravia advertising drove me to investigate large LCD TVs in the first place and I was even on the point of ordering one; yet somehow, both online and in-store, I failed to find that one little factual sentence, in writing or from a salesman, which justified what seemed to me a fairly outlandish price premium. I also had an unresolved fear that Sony TVs were in the habit of displaying a large green "2" on the screen which was difficult to make go away. Lacking any reassurance that this would not be the case with the Bravia, I went and bought a Toshiba instead.

So far, so anecdotal. What makes this all the more interesting is recent research evidence of just how many retail decisions do take place in store. This fine post references a worldwide survey conducted by my chums at OgilvyAction suggesting that in some categories the majority of purchase decisions happen in the shop. As many as 10% of customers may enter a store intending to buy a specific brand only to leave completely empty-handed, even though it is in stock.

My TV-buying experience may not be all that unrepresentative. While many marketers base their strategies on US research, this study shows key differences between shopper habits in the US and the UK. For example, men in the UK are more fickle in their shopping habits than women and more influenced by in-store activity, so less likely to stick with their original purchase plan than their colonial counterparts.

“Dominance outside the store does not guarantee you sales instore ,” says Andrew Aylett, Planning Director at OgilvyAction. In fact, high-profile ad campaigns often drive sales for other rival brands. One campaign for a leading brand in the confectionery sector, for example, drove consumers to the corresponding aisle in the supermarket, giving smaller brands the chance to “hijack” these shoppers and capture their spend.

To prove this is not only an Ogilvy obsession, you will also find a very interesting piece on Shopper Marketing by Simon Moore and Marina Foxlee in the latest Market Leader. As with the Ogilvy piece, it is keen to dissociate the art of shopper marketing from price promotion. This seems to me a really essential distinction - especially now.

At the moment, there is, quite rightly, a spate of articles and think pieces from the advertising industry disparaging a recessionary tendency for clients' expenditure on measurable short-term activities to supplant investment in the immeasurable long-term value of brands. This is what Tess Alps calls "confusing countability with accountability."

This is, I think, a very fair criticism to make. But it needs a little qualification. Just because spending money close to the moment of sale is indeed highly measurable (search would be another example of this) does not mean it is necessarily short-termist. In fact it is only by getting elements such as shopper marketing or search marketing right that it is worth spending money on longer-term brand building at all. After all, if you are going to fall at the last fence, why bother even starting the race?

There are, of course, short-term transactional practices which damage brands. But people have a dangerous habit of conflating the transactional with the short-termist. This is simply wrong. Packaging design, search marketing, shopper marketing are all measurable and weighted towards the moment of purchase - but this does not mean they cannot help build brands. They also have another virtue; they are relatively cheap.

Although that's actually a disadvantage in agency world. One of the most frustrating things about working in any below the line capacity is that money is apportioned to your agency not in accordance with the value you can add, but in proportion to how much your discipline costs overall. Anything without huge media costs attached generally ends up with the ***-end of a budget. Maybe that will start to change this year. But I doubt it.