Gun(s out of) Control

Ok, forget "watch this space."

The second amendment is a legitimate thing.

     However, we can amend the Constitution.   Remember how black people couldn't vote, or that booze was once illegal, and is now legal again?  Just fix the amendment, if it isn't working. The NRA, who represents the main obstacle to such a change, doesn't represent the majority of gun owners, but there isn't a current alternative.  The politicians and the American people need to break the back of the NRA and create a more moderate group.

     That said, just banning assault weapons would not have necessarily stopped many of the mass shootings in American history.  Handguns are responsible for most US killings, assault weapons just happen to be used in some of the more high profile killings of white people.  That comment aside, don't consider this a race argument (though the perpetrators of mass shootings also tend to be white).  My point is just that $200 .32 caliber pistols flood the streets, while $1,200 bushmaster rifles tend to be a bit more rare (and not concealable enough for every day crimes)

Understand the following caveats:
     1.) I am a gun owner, and I enjoy hunting and target shooting
     2.) If the government said that they were banning handguns, I would turn mine in.

     A heavily armed society isn't good or bad in a vacuum, but it will lead to more violence.  Period.  For some reason people seem to think that "leveling the playing field" will cause criminals to think twice.  Of course, if they were thinking twice about consequences, they wouldn't be criminals in the first place.  This is an Occam's Razor situation.  More guns means more people being shot.  While it may not be true in every society, it is true in ours.

     We need to do a lot of things to reduce gun violence, and obviously a lot of those things have nothing to do with the guns themselves, but solving social issues.  Still, there are a few things that just make sense:

1.) Make it harder to get a gun legally.  We have to take multiple tests and have a learner's permit for months and demonstrate responsibility to drive cars, because they are dangerous.  Why is a gun any different?  Make a person take shooting lessons, pass a written and practical exam, and interview with the police in order to have the ability to buy a gun.

2.) Close the gun show loopholes.  This should be self-evident.

3.) Ban the assault rifles (or at least the high-capacity magazines) because it makes sense, not as an emotional reaction to a particular incident.  On this note, it is important to recognize that it really is the magazine that's the issue here, not the gun itself.  Which looks scarier?


 or
 
But both can take a 30-round clip and are semi-automatic rifles.  Appearance should have nothing to do with the debate, aside from the psychological make-up of people who feel the need to own a "military-style" weapon as civilians.

4.) Get rid of guns that are out there now.  By the best scientific estimates out currently, there are about a zillion guns in America, give or take a few.  Changing any existing laws about new ownership or purchase won't change that.  We need to get guns back out of circulation.  One of the best ways to deal with that is the Japanese model, under which the right to ownership of a firearm isn't something you inherit.  If a man dies, his kids don't inherit his guns (for which only he was licensed), they get turned in by the estate.  Tie the specific gun to a specific license.

5.) Limit the number of guns you can own/purchase.  Again, this is about angering the few to protect the vast, vast majority.  I'm not suggesting an unreasonable limit, how about 6?  8?  10?  Let the people decide, who make up this new non-NRA gun owner's group.  But don't let the extreme members of the community hold common sense hostage.  This goes for clip size as well.  Hunting and target shooting don't require more than 5-7 shots (in fact, most ranges and fish & game departments don't allow more than that).  Let the nuts make a compelling argument for why they would need more.

There's a lot more that could/should be done, but that's a reasonable start.

Update:  Off topic, but I solved America's taxation and economic problems.  I have a solution that will address both the revenue generating and spending problems.  The solution will appear here shortly.

p.s. - Happy Holidays

Ladies an gentlemen, after nearly a year in absentia, there will be a new post soon.  Watch this space.

Income Inequality is the New Market Inefficiency (aka "Marketing Moneyball")

I think that there is a good chance that the new market inefficiency is income inequality. 

                There is no question that the distribution of wealth, as well as income in this country has grown more uneven over the last couple of decades.  Whether or not you care about this or find it “bad” is irrelevant to this discussion and a topic I am not going to touch, but the fact that the gap is widening is not a debate, it’s a matter of public record (the government is good at keeping track of other people’s money).  All I care about here is what the effect is on brands and advertisers.

Here is a table of income distribution in the US over the last 30 years:

	Top 1%	Next 19%	Bottom 80%
1982	12.80%	39.10%	48.10%
1988	16.60%	38.90%	44.50%
1991	15.70%	40.70%	43.70%
1994	14.40%	40.80%	44.90%
1997	16.60%	39.60%	43.80%
2000	20.00%	38.70%	41.40%
2003	17.00%	40.80%	42.20%
2006	21.30%	40.10%	38.60%

                What we are seeing is that the bottom 80% of the country has seen their share of income decrease by 20% over a period when the US as a whole saw strong economic growth as well as a population increase.  The amount of purchasing power lost when over 200 million people see their relative income decline is staggering.

Before you say that it is misleading because it is relative to the total growth in wealth, the answer is that it’s not.  Professor G. William Domhoff of UC Santa Cruz pointed out that from 1983 – 2004:

“Of all the new financial wealth created by the American economy in that 21-year-period, fully 42% of it went to the top 1%. A whopping 94% went to the top 20%, which of course means that the bottom 80% received only 6% of all the new financial wealth generated in the United States during the '80s, '90s, and early 2000s (Wolff, 2007).”

How does this all tie back to brands?  I mean, there is more money in the country, so does it matter who is spending it?  Well, that depends on your brand.

BMW is going to be just fine.  The number of people who had the buying power to get a luxury car remains the same as before, even in a down economy.  If you are a brand that relies on a broad consumer base from the upper-middle class and down however, there is a good chance that this is a paradigm shift, rather than just a short-term cycle.

Brand managers are not economists, so it is understandable that a lot of them would look at poor sales data over the last few years and think, “Well, the economy is down, so everyone hurts, but we will come back with the recovery.”  There are several problems with this though, and the biggest being that despite what the man on the street might think, there has been positive, though slow, growth for the last several quarters.  Like our hypothetical brand manager though, this assumes that the growth is evenly distributed, but the reality is that it is focused on several sectors. 

The recent market troubles provided a volatility that muddied the economic waters to a degree, obscuring long-term trends by drawing focus to the post-2008 environment, focused on housing and finance.  The problem is that overall GDP growth and wealth creation is no longer increasing the buying power of the widest part of the consumer base in this country, and brands need to recognize this.

Think about it this way:  You make Tide, or Gain, or some other name brand laundry detergent.  Total amount of money in the system is increasing, but primarily flowing towards a small number of people who already hold a disproportionate amount.  The vast majority of your consumers have actually seen their real buying power (based on income levels pegged to an inflation index) decrease, so they move to cheaper store brands, or buy your product only when there is a coupon/discount offer.

For your brand to just break even, the top 20% of earners in America would have to suddenly start consuming more of the same product, without adding any new consumers.  So the well-to-do family, which has gone through 1 bottle of Tide per week forever, suddenly has to start using 3 of them per week.  Rich babies will need to start dirtying their diapers at a much higher rate inexplicably.  This isn’t going to happen.

We have seen an explosion in interest in savings, discounts, and couponing.  There are huge blogs dealing with the subject, and even multiple television shows.  Cable subscriber rates fall along with telephone landlines, lagging by ten years.  The important thing is realizing that this behavior is not symptomatic of short-term economic slowdown, but long-term trends that started well before the banking crisis.

Growth will slowly increase over the next 6-12 quarters, and unemployment will slowly drop, but probably not to pre-2008 levels any time soon.  Meanwhile, population continues to increase, almost entirely in the bottom 80% of the income scale, which still possesses the lion’s share of purchasing power in this country.  For a lot of brands, krazycouponlady.com is more relevant to their consumers than BMW, and they need to embrace that.  When the economy comes back, they can’t be surprised that their sales never fully returned, and that their profit margins actually shrank.

The flipside of this is that there is a huge opportunity for brands that recognize the shift and respond to it first.  If General Mills stubbornly tries to stay the same, and cover their cereal boxes with QR codes that drive to an altered-reality experience (which is not cheap), while Kellogg suddenly cuts overhead and production costs, accepts a slimmer margin but positions themselves as the middle ground between store brands and premium brands, they will reap the benefits. 

The majority of buying power as a market group has shifted down a step, roughly 20%, compared to the post-WWII era which saw the growth of the middle class and a large industrial/manufacturing sector when many marketing practices and brand identities were established.  We have entered a new reality, and the brands that accept this first will have a vital head-start in dominating the “new middle-class.”  Advantage is gained by exploiting market inefficiency, and failure to differentiate between overall economic market conditions versus buying power demographic shifts is that inefficiency.

Is Marketing Really "Data-Driven?" Pt. 1

               No matter what you call it, the clear trend in marketing today is towards a model that depends on consumer data collected digitally to inform both online and offline media strategy.  Terms like “data-driven” and “fast-moving data” are bandied about, conjuring up an image of an agile, precise campaign that links brands to individuals, rather than demographics.  Marketers know that the shift from art to science is already in progress, and I should say that I wholeheartedly agree with this approach.

                The problem is that there is a danger in a job only half done, and at times I fear that we as an industry talk about “data-driven marketing” like experts, but that there is no rigor to the approach.  Additionally, using digital data to inform traditional media, both in terms of planning and creative, when the same statistical approach isn’t applied to those channels, will return misleading results.  No matter how cleverly you apply your digital learnings to traditional performance, if the metrics by which we measure TV are inaccurate, or not properly tied to business goals, then we risk just painting a picture that is different but no more insightful.

                To truly claim a data-driven approach, you need to collect data at every step of the marketing process systematically, and analyze it methodically, adhering to sound statistical procedure.  Just as importantly, you need to know what data to gather, and how it helps you to achieve your goal.

                Let’s start looking at an example of how this can affect measurement at every level of a campaign.  Starting with the broadest, what is the goal of marketing?  To increase the sales/services provided of the client.  How is that measured?  Brand loyalty?  Market share?  Sales in dollars?  Profit?  Units sold?  The first thing that an advertising agency has to do (ideally) is identify what the client goals are, and frankly, the media agency should be the one that determines the goal, as it is part of the marketing process.

                Why is that?  Let’s look at the list of client goals that I mentioned above, all of which at first blush appear to be totally normal, reasonable ways to judge a marketing agency, but all of which have some issues from a statistical and/or business standpoint.

Brand Loyalty: This is probably the worst measure for a number of reasons, over and above the fact that it is a vague concept.  Anything that is survey or panel based can be looked at, but the methodology and sampling issues make it less scientific. 

Market Share:  Better than brand loyalty, but because the information has to come from a number of outside sources makes the gathering of this data ponderous, and more importantly there is a long time lag for reporting.

Sales (dollars): On its own this number is somewhat useful because it is an absolute 1-to-1 value, but it really should be adjusted to account for the market environment of the client’s particular category, rather than taken raw.

Profit: Terrible.  I don’t think that anyone would actually measure a company’s marketing success based on profits, but it is something that clients think about and a useful illustration about what stats you don’t want.  Too many uncontrolled variables go into profit and revenue numbers.  If a company sells more product but the cost of raw materials increases as well, it shouldn’t be factored into any measure of advertising.

Sales (Units): This is probably the best way to measure overall advertising success over a long period of time, once again normalizing the number to the broader market conditions.  By using sales in units you remove some of the variables around pricing and competitive environment (aside from the ones that can adjusted for).

The key to any good statistical measure of success or ability is removing as many uncontrolled variables as possible, and not crediting/blaming advertising for things it can’t control.

Since I often use baseball as examples for statistics and how to use them, the perfect analogue here is using ‘wins’ to judge a pitcher.  Conventionally, people looked at wins to determine how good a pitcher is, but that number is quickly falling out of favor, because it has very little statistical relevance to how well a pitcher performs.  Think about it, if a pitcher gives up 5 runs but his team scores 8, he gets a win.  If another pitcher gives up 2 runs but his team is shut out, he gets a loss.  Who did a better job?

The lesson is not that we shouldn’t measure things and use the data as much as possible, but that not all stats are created equal, and that we need to make sure that what we are collecting is telling us what we think it is.  Right now I would say that marketing is getting good at amassing data, but still extremely infantile in terms of manipulating it properly.  We are still at the stage of evaluating pitchers based on wins, as it were.

Some of this is also based on assumptions, and how many of them are based on traditionally held marketing beliefs that we take for granted, despite never seeing empirical evidence for them.  Every marketer should be a gadfly.  Poke holes in theories or justifications that don't make sense.  If you see a test that doesn't account for uncontrolled variables in the results, point it out.  If a conversation is centered around an idea that everyone accepts but no one has proved, ask why.  

Next up, it might be worth looking at TV, and the relationship between digital/social and offline, in order to challenge some of the preconceived notions.

We Need to Make Digital Measurement Easier

[Editor’s Note:  Sorry for the long layoff, I am going to be better about posting starting today]

To be clear, I don’t mean that we need to make it easier for us digital marketers, but that we need to make it easier for the brand representatives that we have to report to.

When I go through plans and recaps for marketing programs, the problem becomes very clear.  People who have been dealing with traditional marketers for a long time expect just a few things from TV, print, and radio: Reach and Frequency.  These are estimates, and they are provided by the people selling the media, so they don’t need to be calculated by those buying it.

It’s simple, and clean, though it does nothing to tell you about the effectiveness of the channel after the fact.  How many people saw the ad, and how often.  Move on.

Sometimes you will see a brand lift study built into a buy, which basically just consists of polling some consumers to see how the ad made them feel (with varying degrees of scientific rigour).

Then we get to digital, and suddenly the performance metrics increase exponentially.  The breadth and depth of data that we have available to us in the digital space is both a blessing and a curse in that sense.

First of all, we subdivide “digital” into myriad channels of increasing specificity.  There is display, search, social, in-text, and more.  Each of these sub-channels has multiple ad unit types, and in turn, each ad type has multiple statistics that can be tracked.

(For instance, display ads can be static units or interactive units (and static units can be further broken down by size, so there are standard banners, skyscrapers, etc.), and so you have reach in terms of unique users, then interaction rates, time spent in the ad unit for rich media, click through rate, video plays in unit, and more.))

You can measure attributes of the ads themselves, like click through rate, impressions, cost per impression/click, etc., and you can also measure on-site actions and behavior, like conversions, bounce rate, time on site, and so on.

We haven’t even talked about the social metrics like Facebook likes, tweets, +1s, ‘conversations, and additional followers/friends.

The upside of all of this is that obviously the data gives us visibility and optimization options that traditional marketers can only dream of.  The downside is that we are actually held to performance standards unlike traditional offline media channels, and moreover, that the people who we report to get lost in all of these metrics.

Traditional media channels don’t provide brands with much in the way of data or measurement options, and maybe the answer is that they should be forced to come up with better ways to justify their value.  More likely however, we as digital marketers need to find ways to simplify our reporting.

This may mean actually giving brands less raw data, and it’s possible that Pandora’s box has been opened and it is too late.  However, I think that the only possible outcome is the creation of a weighted composite number that is based on an equation taking into account a variety of metrics across digital channels, pegged to an index.  The million dollar problem is just figuring out how to do it, but you can bet that I will be working on it, as I am sure others are.

Expect a 'part two' of this entry in the future.