Tag Archives: marketing

Pull marketing and new product launches

My recent post about marketing futures

http://timeguide.wordpress.com/2014/02/04/will-marketing-evolve-from-fiend-to-friend/

resulted in a request for more detail on pull marketing’s use in the context of new product launches. How can a customer find out about new products if they aren’t being pushed?

Firstly, I don’t think push will become extinct, just be substituted by pull a lot, so there could still be limited use of traditional techniques. Substitution rarely reaches 100%. A regular customer might be happy to be told about new products if a company is very careful not to bombard them with too much junk mail. But that doesn’t duck the question. New products can come from a new company. How does that work with pull?

A long time ago I used to work in computing, doing systems performance analysis, round about the time object oriented programming was becoming fashionable. One of the ideas already well established was the remote procedure call, RPC. A device somewhere, anywhere, could offer a service. Any program running anywhere could call on it using an RPC. The device new the service was available because it was noted in a directory of services. The service didn’t advertise itself, it was just listed on the directory. Programs needing it would check the directory for the type of service they wanted, essentially pull marketing. Phone directories (remember them) used to work the same way. Open source databases of products could simply mimic that. There is no need to pay for ads that way, and no need for an intermediary other than the database itself.

Directories are useful and are a big part of pull. You only see stuff when you are looking for something in the same genre. We are used to search, but using something like Google only works if you can manage to wade through a million intermediaries clogging up all the pages before you get to the provider you want. Lifestyle directories work far better, being provided by magazines or organisations or people you trust.

But perhaps the best form of pull directories for new products are shops, very familiar indeed. A shop has what you want to buy, and while you are buying it, you might see many other things you never knew even existed, some of which you then can’t resist. It is serendipity that makes the shop profitable, and that makes the outlet for new products.

So there is no new magic needed to use pull techniques to launch new products, it is just relying more on the well established channels we already have. And the best thing is that most people enjoy the shopping process when it presents new and interesting products alongside what they went out for.

I do feel that web shops like Amazon could do a great deal better in showing you other things you might be interested in. The ‘other people who bought this also looked at this’ is useful, but it isn’t very serendipitous. The filed of variation needs to be bigger. When we first considered internet shopping even before the web was here, we imagined virtual shopping malls. The graphics didn’t allow that for many years but now that the graphics is there, the shops and the malls still aren’t. OK, they are in virtual worlds, but not properly for the real world. It would be a prefect way of doing it on games consoles where pseudo 3d environments are the norm.

Will marketing evolve from fiend to friend?

Let’s start with a possibly over-critical view of marketing today, to emphasise the problem that I think needs solved.

Marketing helps to make us aware of new products and services we might want to buy, and provides some well paid jobs. That’s the good side. But marketing saps a lot of money out of the system, skimming off money as it helps move it around – like banking, or car parking fees for shoppers, without giving much back to GDP. It helps companies sell things, but adds costs to the customer that could have been spent on other products and services. We basically pay companies to tell us to buy their products. Of that money, marketers spend far too high a proportion on advertising, which is basically the lazy marketing option. They waste our time as we watch TV, cold call us, send nuisance texts and automated calls, fill our data quotas with video ads, delay downloads, force installation of applications to block them, which all requires extra computer power and maintenance. In short, we pay them to waste a significant proportion of our precious lifetime as well as our money. In fact the financial cost added to every product is dwarfed by the costs of the extra time consumed. All the extra energy used to broadcast ads on TV or the net or the extra paper and bleach and ink to put them in magazines has an enormous environmental impact too. Advertising consumes a huge amount of resources but on a per-advert basis is very ineffective at making us buy. Google makes a fortune from UK companies for its adverts but by diverting the ad sales through Ireland, manages to avoid paying UK tax, therefore pulling off an excellent vampire impression, dressing stylish and looking cool while sucking the lifeblood from industry. By using up so much air time and online bandwidth advertising directly impedes productive uses. On current form, because of excessive reliance on the lazy option, marketers are more fiend than friend.

Marketing has almost become a one-tool profession, too willing to annoy a lot of people to get a few sales. Other components of marketing such as launch events and trade shows are effective and very effectively target those who are likely to be interested, but advertising dwarfs them. Surely there has to be a better way. How do we get marketing to go from fiend to friend?

There is. Pull marketing (if done properly) gives people what they ask for, in the right form, on the right platform, when they ask for it, not what they don’t want, in their faces, all the time. Marketing will evolve from push to pull. However much the marketing industry and advertisers don’t want it to go that way, the potential value for a given spend via pull marketing is so much higher that it is inevitable. Think about it. Only an idiot would employ someone to stand in a doorway blocking the entrance, jumping up and down screaming messages at customers that are actually trying to squeeze past into the store to spend money. That is the difference between push and pull. Unfortunately for marketers, pull needs different skills, so if they don’t have them, they need to retrain or they will eventually be made redundant. They can hide and massage performance figures for a while to hide the ineffectiveness of throwing money down the drain on advertising, but not forever.

People want to know what is available that might be of interest to them. They also want clues to help filter the vast number of potential products down to a manageable choice. They don’t want silence from suppliers, but appropriate and timely information. Branding is aimed at this of course. So is PR. Marketing should be better integrated into ongoing background brand management and public relations, with excellent web sites to provide information when people want it. In that way, people will think of them when they want something, and be able to find the most appropriate product easily.

The task of providing a good website is often allocated to other groups in the company. This is a mistake. The website needs to be extremely well integrated with marketing, PR and brand. In many companies, only the brand people get a strong influence. A potential customer coming to the site from any angle of approach should be faced with extremely easy navigation, immersed in the values and styles they already associate with that brand and assisted as far as possible in what they are trying to do. They should not be bombarded with waves of ads, popups and guano that prevents them from finding what they want. Even if a customer wants to cancel a service, it should be very easy to do so. They are far more likely to come back than if they had to spend ages finding their way through a maze and over barriers to do so.

One way of keeping customers aware without ramming branding message down their throats every day is to integrate into target communities as useful members rather than just seeing them as potential sales. People will always favour their friends, so actually being a friend is a good idea. That shouldn’t be any great revelation. Big companies recognise their relative inability to engage with local communities across their range and harness an army of resellers who can better achieve this local involvement. Social networking provides a good alternative channel to local resellers, but not by using the wasteful and annoying blanket broadcasting that we usually see. It needs to be focused. A reseller wouldn’t waste time cold calling every resident in an area just in case. They focus efforts on targets that are likely to buy. They do the customer’s work for them, identifying those for whom a product is suited and then making contact. Being friends also means giving genuine discounts or exclusive deals to regular customers. It doesn’t mean using them to palm off products that you can’t shift through normal channels.

Lifestyle is an easy route too. Everyone lives differently, but many people reveal their lifestyles via magazines or newspapers that they buy, the places they visit, the things they do, and indeed the products and services they buy. These are obviously high value marketing hooks. People like their existing opinions and attitudes to be reaffirmed. Letting them know they have made a good decision buying your product makes them feel better about the spend. It takes skill to package such affirming in a way that it doesn’t come across like the lazy ‘congratulations on buying this’. Providing favourable reviews, news links and ongoing support would soon become spam if used too much, but sparingly and with appropriate products, it can be useful.

Handled properly, excluding employees with deep staff discounts, the most likely person to buy is someone who has bought from you before, then in second place, someone who has bought equivalent products from a competitor, then someone who has a strong proven interest in that field. Much further away is someone with a casual unspecified interest in the area who just happens to have chosen a particular keyword in a search for any reason whatsoever, and in the very far distance, a total stranger. Yet those last two are where most advertising revenue is spent.

Magazines are an excellent platform to reach targeted groups, but they still need the right approach. An advert in a magazine is more likely to be read than one in a newspaper, but is still likely to be ignored. An article by a trusted writer will be read, and if it mentions your product favourably, the trust in the writer transfers to your product. If they already have it, it builds the feel-good factor. Strongly themed magazines form an important part of the self-selected lifestyle choice, especially since people can only buy a few each month, and this trust and identification with its writers can go far beyond the magazine itself, into their social media and blogs, and soon, into their augmented reality as they wander around. As social media continues to expand into the high street with location-based services, that relationship will grow and winning the favour and approval of writers will become a more important part of marketing. Care is needed of course. Writers will not want to appear partial since that would compromise their trust and their following, but providing exclusive information to them and being honest about defects wins support without threatening impartiality.

As we move into the era of augmented reality, companies are already discovering how to use precise location. Today, location doesn’t just rely on GPS or mobile signal strengths. Image recognition can identify a customer and also exactly where they are, what gestures they are making, even the expression on their face. From those and various other contributing factors is evolving the huge technology field called context. Context is very important in knowing whether to give marketing information at all and if so, how and what. It helps make sure that efforts are spent to make customers want to buy rather then to make them avoid you. A family might be interested in meal vouchers when lunchtime is creeping up. If they’ve just eaten (and paid), the same vouchers may be very unwelcome. If I have just bought a car, the last thing I want is proof that I could have got it or a better one cheaper or had some extras thrown in!

As context technology develops in parallel with positioning, image recognition and augmented reality technology, we will see the air around us essentially digitised, context-sensitive messages pinned to every cubic millimetre of the air. Digital air, or virtual air, will be a major new marketing platform that will offer hugely more potential and value than advertising, with far less cost and customer annoyance. It also offers the potential to bombard customers with unwelcome blanket ads too, so it will be easy for the industry to shoot itself in the foot. Not just easy, but probably inevitable in an industry with some players who think it is smart to deliberately offend people. If that happens, spam filters will block such ads and the potential will be damaged irreparably for everyone.

Word of mouth is one of the best forms of marketing. It is free and natural and goes to companies who provide good products or services. In its simplest form, it is like ebay’s  reputation score on Facebook’s ‘like’ button. At a higher detail level, companies such as Trip Advisor make good income by harnessing the desire people have to tell others about their experiences, good or bad. People will often take guidance from strangers when there is no better alternative, and even though everyone knows some reviews are by friends, competitors or by people who have never even had any experience of the supplier, if there are a lot of strangers giving reviews, the assumed probability is that most will be telling the truth and any bias will be reduced.

Even so, these sites don’t reach the same level of trust that people have in their friends and colleagues. We should expect that to be harnessed far more in the next few years. Innovative Amazon is among the leaders as always, trying to harness this with its ‘I just bought’ social network button. However, I’m not at all interested what my friends have bought. I am far more interested in whether it turned out to be a good or a bad buy, and then only if I am looking for something similar. I certainly don’t want spam every time anyone I know buys anything. A service that lets people review stuff and then allows people to see the reviews, sorted according to social proximity of the reviewer would be far better. If such a site already exists, as it may well do, I am not yet exposed to it, so it has its own marketing to do. So what is needed would be a site like Trip Advisor, but with a social proximity selector that strips away reviews from friends and competitors, restricts to those who have actually purchased, and then sorted according to social proximity with the reader. By linking to your other social network sites, and identifying your friends and colleagues, it would be able to show you any reviews from that group.

Unfortunately, we already see a rising barrier to this kind of development. Too often, companies want access to our social networks to do push marketing to a broader community of relevance, to make personalized ads, and essentially to use our contacts to abuse us even more efficiently. That is an industry destroying its own future prospects. By misusing the potential to do its push marketing today, it is destroying the potential to do far more effective pull marketing tomorrow. It gets a tiny benefit today at the expense of a huge one tomorrow. Most of us have already become wary of allowing access to our contacts lists because we already assume for good reason that they will be abused. Spam filters quickly remove any short-term benefit they may have won, and prevent future mutual benefit.

Most of these areas of future potential share the same threat of destruction by the very industry that can benefit most. Marketing will move from push to pull whether marketers want it to or not. By trying to force the worst practices from the push era onto the areas that offer the best potential in the pull era, they will only ensure that marketing will remain an underachiever. Sadly, a few players today can and probably will ruin it for many tomorrow. The result is that marketers will marginalize themselves, making themselves relatively powerless in a world where they could have been powerful.

People will find what they want, and what their friends think of things, but they will do so via sites and intermediary companies who respect them, respect their privacy, and give them what they want, not what they try hard to avoid getting, not via push marketers. Pull marketing done well will go to new players who have no time for the old practices and values, to people who want to improve the lives of others by helping them make the right purchasing decisions, not trying to make them buy the wrong ones.  The likely mechanism for this is use of social networking sites that have a different business model than selling adverts – perhaps even ones with the primary purpose of helping the community and improving quality of life rather than making money.

Marketing will evolve from fiend to friend. Hopefully it will be by the fiends reforming, rather than simply dying.

Fake sales: death by marketing

The papers are full of stories alerting customers that massive discounts in the sales are meaningless because the original prices were highly inflated and only a few items were sold at that price to a few people who got badly ripped off. Even after a 70% discount, the sale price can often still mean an actual 45% mark-up for the retailer (to save you the mental arithmetic, that means some shoppers have actually paid almost 5 times the original price paid by the shop).

A few thoughts:

1) Why is this practice still happening? It is supposed to have been banned. Are the authorities all on holiday?

2) The banks have had several fines now and had to repay billions due to bad selling campaigns, such as in credit card insurance or mortgage protection. How long can it be before a class action against the big retailers using fake discount practices is launched on behalf of the sacrificial customers who paid far too much for something so that many others could get a fair price later under the marketing pretense of a deep discount?

3) How long after that will it be before some of the claimed discounts are enforced on a sensible original price as a punishment?

4) How long will it be before one of the big retailers seizes the obviously vacant moral high ground of playing fair and uses the advantage to blast competitors and seize huge market share. With a struggling economy, the advantage of being first mover could be huge.

5) How long will customers who have been ripped off in this way remember the companies who did it and tend to buy from their competitors instead? Has nobody in their marketing departments ever heard the expression ‘once bitten, twice shy’?

6) Has anyone in these companies done any proper agent-based modelling to study the effect of people delaying or even abandoning purchases because they don’t want to be the sacrificial customer? Many people are struggling financially, and will have huge problems buying their loved ones Christmas gifts. If they have also to worry about the exact timing of purchase to make sure they don’t get ripped off, they will struggle even more. In a recession that cause so many people so much misery already, this practice borders on inhuman.

7) Has nobody taken account of the system-wide effects of concentrating  too large a proportion of shopping into a short period such as Black Friday? It cannot possibly be optimal from a logistics point of view. It must also cause severe stress for any employees that have to work extremely hard for short periods and then be unemployed on zero hours for the other days. Again, the system-wide effects can’t be overall beneficial.

9 Why try to rip customers off as much as you can get away with? Why not instead treat customers with respect and offer relatively constant prices with a fair markup and watch your profits go up?

10) Many companies have died because of accountants thinking they were being cleverer than reality shows when their company eventually dies. Will the biggest cause of corporate demise be death by accountant or death by marketer?

Death by accountant

Some people are not very good at their jobs. Accountants are one of the critical roles in a successful company. If they are good, the company can flourish. If they are bad, it can die. I have come to the conclusion that the worst employee a company can have is an accountant who thinks they are clever but is actually an idiot. If they work with an equivalent self-regarding idiot from marketing, they can destroy a company. Again, many marketing people are essential and very talented, but some just aren’t.

Permit me one rant as a good example:

My dishwasher just broke, again. It is Hotpoint. I wasted a fortune and six hours of my time to get one of their engineers out to fix it, under guarantee, then another to repair the damage he’d done by doing it wrong. Total repair time was 3.5 weeks because they don’t have enough engineers. They cost money apparently. The 6 hours was because an accountant had decided that they should use fewer staff in the call centre to save costs, and even though their customers probably earn more than a call centre staff member, that would be their money, not Hotpoint’s. It’s OK to waste customer’s money and time, even if they never want to buy from you again as a result. And I won’t!

I would normally have trashed the dishwasher, but the girl in the call centre assured me that this model should last for several years after the repair, and they’d give me a 3 month extended guarantee. So I did. Big mistake. Now, 3.5 months later, it has broken again, £110 for 3.5 months dishwasher, not good value at all. This time I decided to fix it myself, but I’d watched a TV program about people who had dishwashers repaired by independent engineers and they wouldn’t work because they weren’t allowed the codes to reset the machine. An accountant had worked out that that blocking independent fair-priced repairs would guarantee high-priced work for their own engineers. However, this is a broken hinge, so might not be part of the control system. I found the broken part, a far-too-thin for the job bolt, which had sheared due to normal everyday forces on it. The thin bolt is cheaper than a strong one, saving several pounds a year for Hotpoint, and designed to last past the initial parts and labour guarantee. After that, the few pence for the bolt is covered by the 5 years by the parts guarantee, but changing it is a £110 call-out fee. Savings are minimal, the potential extra high value work for already overloaded engineers is actually minimal, but the cost of no more sales of white goods ever again to that customer is large. The outcome is a small short term gain, followed eventually by death as customers blacklist them one by one.

This kind of accountancy decision happens everywhere. Identifying tiny savings here and there presumably wins a little praise from a line manager, perhaps an extra bonus for the staff that thought it up, but who  checks the cost of losing the customer by thoroughly annoying them? That usually isn’t one of the beans that gets counted.

Comet went bust a while back. I remember going there. They had a price guarantee on all their products, so why would anyone need to go anywhere else? Well, an accountant and a marketer decided they could offer a price guarantee to fool all their dumb customers by adding a different letter at the end of each product code, so that they could claim that it wasn’t actually the same product, so the comparison didn’t count. So all their customers stopped buying from them. Death by accountant.

A few of our local restaurants suffered presumed death by accountant too. They were doing very well, filling the place, with lots of happy customers. One day, they look at the books and an accountant explained that if they sold lower quality food, or smaller portions, then profit per meal would be higher. But they presumably didn’t take into account the effect on sales volume of selling lower quality food or reducing portions. Customers stop coming and buying, so they went bust. Death by accountant again.

One or two well-known supermarket chains frequently tried for far too long to fool their customers with fake half price offers and selling large packs at higher price per kilo than small ones. Then it seemed to catch them by surprise that people were going elsewhere. Their accountants and marketers presumably think that customers don’t ever realise the tricks and don’t mind having their intelligence insulted and their time wasted calculating value every time they visit. Their accountants and marketers are actually by far the most valuable employees to their competitors, who see their market share increasing rapidly at their expense.

Telecoms companies, TV companies and many others who sell contract based services take confusion marketing and trick contracts to extremes, with relative novelties such as putting everything possible on their sites except links to let you end a contract, which they make as difficult and time consuming and error ridden as possible. Tricking customers by auto-renewing and making sure that the auto-renew engages a month before a contract expires, and not letting the customer know near that time is tantamount to fraud, but is apparently legal. As long as they mention it in the small print once during the entire life of the contract they can avoid punishment. Obviously their customers don’t check every service they have every week and enter diary reminders to check years ahead on everything they buy, so this is very deliberate trickery. It might make a short-term win, but once a customer is fooled once, they are very likely to avoid doing business with that company again. It may take time, but those customer migrations will eventually be death by accountant too.

Automatically increasing insurance and hoping customers won’t check also trades short term wins against long term survival. The problem seems to affect many industry sectors. This suicide-by-accountant trend seems to be an epidemic at the moment. It must surely end soon, because customers are proving that they are willing eventually to migrate their custom to companies that treat them better. Those accountants that are praising their own cleverness today are actually accumulating a huge volume of angry customers who will happily leave them to die when the market inevitably provides such a sensible competitor.

Customers aren’t stupid. You can treat them as fools for a while, but eventually they will resent it. Then you’ll lose far more than you ever gained.

Sainsbury’s marketing have lost the plot

This one is more of a rant against poor marketing, and isn’t about the future.

I won’t mention names, but I know a few marketing chiefs who think their staff are largely a waste of space. I don’t have any experience of working with Sainsbury’s marketing though so only have experience as a customer as evidence one way or another.

I am sure someone thinks their new campaign is fantastic. Lets run a TV campaign telling everyone that if they could have got stuff cheaper elsewhere, we will give them a voucher for the difference. It worked well for John Lewis didn’t it?

Well, yes it did, but John Lewis did it right. You did it the opposite of right.

P3

So, if we’d shopped in one of their competitors, we would have paid less.  But they are kindly ‘making it this easy to claim the difference back’. So, if we are still dumb enough to go back to Sainsbury’s soon, knowing we had been overcharged, and remember to take this voucher with us, we can ask for a refund of the overcharge, but only as a discount of our next purchases, which presumably, being a similar basket, will also be overcharged, so we’ll get another voucher and be locked in forever into a cycle of being overcharged and having to juggle vouchers and keep shopping there to get a fair deal. But it is only £1.31, (it was only a small top-up shop of around £20) so we’ll cut our losses and shop in Tesco’s again, where according to Sainsbury’s, we’ll presumably save even more than that every time, since we normally pay rather more than £20.

Not quite John Lewis is it? They are ‘never knowingly undersold’. If they find a competitor would have charged less, they will charge you that or less, at least that’s what I have always assumed. Not give you a voucher that you have to take back and get a discount of another overcharged shopping trip.

Sainsbury’s, you are not being clever, locking people happily into forever shopping there. First, you are telling them you overcharged and then secondly, instead of just deducting it at the checkout at the time which would be easy and fair, you are making people additionally jump through hoops before you’ll give them a fair deal, while telling them where they can get one right away. Not clever. Not at all clever.

 

The future of high street survival: the 6S guide

I do occasionally write a blog relevant to the news of the day rather than just what takes my fancy. The news today, apart from Tesco horse burgers, is the closure of another national retail chain, HMV. I learned on the news that HMV stands for ‘His Master’s Voice’. Never knew that, I thought it was a 90s chain. ‘His master’s voice’ is immediately recognisable as an ancient and trusted brand. HMV has a nice up to date logo  though so maybe their marketing department though that is more important to appeal to a generation that has mostly never bought a CD. HMV also didn’t bother to explain the difference to shoppers between what you get when you buy a CD v what you get when you download, i.e proper ownership and rights v part and temporary ownership and severely restricted rights. Still, too late for them to ask me my views. They’re dead.

Some high street shops make excellent use of the synergy between a physical outlet and web presence. As we progress into the age of augmented reality, that will become ever more important. People will expect to be able to buy via either route but still use the facilities offered by the shop. AR also adds huge potential to add virtual architecture, décor  themes and gaming. Reserving online for high street collection, or buying for home delivery while in the shop are well established; less so is using 3d printing to accessorise outfits, or laser scanning body shape so that you can use stores as try-on outlets. These are starting to generate presence and will grow in importance. And some shops are getting extra income by acting as drop off centres for other companies, so that people can collect things on their way home from work, a big thing for the many households where nobody is at home during the day to receive goods.

Socialising is best done face to face, and shopping is a social experience too. Coffee shops and restaurants have been familiar in shops for decades now, but shops could make far more advantage of social networking to offer meeting and hanging out facilities for people using social networks and who share something in common related to the theme of the shop. Clothes shops could offer fashion related events, gadget shops demos of up and coming products, and so on. Establishing shops as something more than just places to buy increases their relevance and brand loyalty, hence survival chances. So, synergy, socialising. I feel a ’6S guide to high street survival’ coming on.

Next S:  service. This should be obvious, and most shops do appreciate the importance of differentiating on service quality. While it used to be a concern that people would use the shop for service and then buy online, having good web presence and competitiveness anyway makes this less problematic. There is nothing wrong with having some premium services and charging for them in addition to free basic service. Some premium services could even be provided for competitor web sites with no high street presence, making a potential income stream even when people do use competitors. Opticians doing prescriptions for online glasses sellers, or clothes shops providing paid measuring services are good examples where this already occurs. Seeing competitors as potential market opportunities rather than just as threats is key.

Suck and see. OK, a bit contrived to get the S this time, but shops are starting to do it. The Apple Store is a good example, where you try it out in the shop but the purchase is essentially an online one. Clothes shops can let you try a garment on and then order it in your size for home delivery, using rapid customisation manufacturing and delivery systems.

Surprise is another one. It is easy to shop online when you know what you want. If you don’t, shops can offer that mixture of expected and unexpected to make you want to visit. Call it serendipity if you prefer.

The 6th S is for Special. This could be customisation or personalisation of products for customers, or it could be an extended relationship with customers in terms of pampering of regular customers, after-sales services, advice, affiliate programs, belonging to social groups… People want to feel special.

There you have it. Service, surprise, suck-and-see, socialisation, synergy and special. The 6S guide to high street survival. :)

 

Are advertising and Apple expenses we can do without?

If you wage war with someone and he gets a bigger gun, you feel pressured to get one too. It’s the same in the war to take your money. If everyone else spends a fortune on advertising, you are likely to feel forced to do so too. But it costs, heavily, and those costs ultimately have to be recovered in higher prices.

When you click on an ad on a website, an advertising company somewhere typically gets about £0.50. That 50p plus has to be recovered when you buy the product, but many of the clicks are ineffective, and there are other expenses in the whole chain apart from the actual click fee (the seller’s own staff, banking costs, accountancy, management etc). Whether you even notice ads or have ever clicked on one, the money you hand over nevertheless subsidises a great many ads, and the ultimate price you pay is much greater than the price that would be needed without advertising.

Nothing new there, but advertising has become a significant and unavoidable extra cost along with taxes and banking fees (and parking charges if you buy in town). You don’t get a choice whether to pay extra to buy via an advertising route or get it cheaper by somehow buying direct. Add up all the web ads, junk email, text messages, paper junk mail, newspapers and magazines, TV and radio advertising, and the whole advertising mark-up is big.

Advertising doesn’t just increase costs. With the exception of some wonderfully entertaining ads, many involving meerkats, adverts waste our time too. Count up all the hours people waste fast forwarding over the add breaks or even sitting through them, and consider the significant personal stress directly resulting from the irritation they cause, that may have a small but finite impact on health. Add to that the extra demands on landfill from the paper junk mail, plus the wasted time opening and sorting the waste. The negative impact on our lives, the environment, and on  the overall economy is vast. Sure, the ad industry creates jobs, but jobs in advertising don’t generate wealth (though there are obviously cash flows between regions). Like banking and the public sector, advertising is a drain on resources. It syphons money from the productive economy and impoverishes us. 

On the other hand, advertising pays for a great deal of what we use on the web, watch on TV or read in newspapers. Some of that wouldn’t exist if the advertising went away, though some would survive via other business models. We’d still have to pay for the things we want to use somehow, so any notional extra fees and administrative inconvenience can reasonably be offset against advertising’s negative impacts.

But even with that offsetting, we really should challenge the cost:benefit ratio in advertising and see if we can find better ways of letting suppliers make potential customers aware of the merits of what they have on offer.

Advertising is only one strand of marketing of course. Marketers know that people want to learn about their new products when they are potentially interested. Context is key. If I have just eaten, I am not interested in marketing from nearby restaurants. If I haven’t, I might be. Using context makes direct marketing possible, especially knowing the location of the user and their tastes and preferences. I will gladly pull information from companies willing to sell me stuff I am interested in, when I want it. They won’t have to pay anyone. Pull marketing is potentially very low cost to both parties, providing the consumer with the info on suppliers’ offerings so they can make an informed decision on what to buy. If we moved entirely to that sort of model, we could greatly reduce the price of everything we buy while saving time and stress.

It is certainly possible to build such a system and make it work well. The technology exists and we’d all be far better off. The really huge problem is that we have bought into the smartphone model, buying iphones, pads or similar, and were taken in so well by beautiful designs and features that we didn’t look under the covers. What we didn’t consciously buy, but bought nonetheless, were devices that only give us access to things on condition that Apple or another big manufacturer gets a big slice of the price, via a variety of mechanisms. A smartphone is perfectly capable of providing exactly the platform we need to save lots of unnecessary spend, but Apple has used its power to extract its own slice of our spend not just at device purchase but throughout its lifetime. Not only has it not let us avoid the expense of advertising, it has added its own extras on top. It has made the situation even worse. Most other companies also use strategies that are designed to get into the most lucrative position in the value chain, expanding the price increase industry.

As I remember it in the beginning, the web was meant to get rid of intermediaries and save costs, making the economy more efficient. What has happened is that layer upon layer of new intermediaries have become adept at selling us products and purchasing systems that allow them to skim off extra slices of revenue for themselves. Anyone working in IT is very familiar with the many layered system architectures, and each layer is another opportunity for some company to take a slice of the revenue passing through. All add ultimately to the purchase price, and companies like Apple win several times because they control several of the architectural layers that their devices are used in. But we are suckers, and keep buying them. Because the extra costs are cleverly hidden or disguised or renamed, we don’t notice them until it’s too late.

I may sound critical of Apple, but all they are doing is to maximise profits for their shareholders, whilst giving customers products they can’t resist. There is no fault there. The same goes for Google or Facebook or any other intermediary. It is the model that we need to change, not companies, who will always do what they can to make the most money. That’s what companies are for.

I’ve written often about cloud nets and digital jewellery nets and the forces of censorship and surveillance and web-based politics and the consequential likely emergence of sponge networks. Check them out in my recent articles list. Freeing ourselves of parasitic companies and advertising is another potential pressure. It may go two ways. We could simply recreate exactly the same problems all over again, just swapping one set of intermediaries for another. Sadly, that is the most likely outcome. History teaches us best that we don’t often learn from history.

But, and this is a long shot, but one that would really help make the world better, we could make devices that people buy, and are then free. No charges for making apps for them, no push advertising, completely open, highly context aware, and high powered, yet completely free to own and use after purchase. Even the comms could be free. They would be capable of everything that you do now, and more. We could use them to talk direct to suppliers and do business with them without anyone else involved. It is even possible to design a free payments and banking system. We could avoid paying anyone except the device manufacturer, once, and the companies we want to do business with using the devices. And with all the time and money we would all save, none of us would mind paying a fair price for such a device. Many people paid via advertising would have to find alternative support models, but the economy would be better off, the rest of us individually would be better off, and the environment would be better off. It is hard to see a downside.

History tells us we will still pick the other system and pay more for a worse life.