A tactic used by the vocal left is the threat of violence, or revolt if their needs are not met. The tactic of revolt is ancient. This modern version of revolt is a product of The Myth Of The General Strike. (I am referring to Burnham’s treatment) The contemporary version is the Economic Armageddon and Political Upheaval of the classes. The opposing argument is the libertarian argument for private property, and private capitalism, and the Randian version of Atlas shrugging. Both of these are myths of the general strike. The argument, or myth in any of it’s versions, is disingenuous. Workers will eventually relent, be replaced, or the businesses close. Entrepreneurs will be replaced by others. It is the state who would suffer it’s loss of legitimacy in the event of failure. But a new group would take over in government, and life would go on. An analysis of history tells us that it is much easier for the minority with wealth to pay another minority to violently oppress the peasantry, and to obtain their compliance going forward with commercial incentives and rewards, than it is for a peasantry to organize a movement of a general strike. In fact, the government conducts all general strikes, because without government suport and threats of government violence on business people, they would largely be irrelevant. When a ruling class loses it’s will for violence, the society loses it’s binding mythology. It simply opens it’s ranks for a different group to take over the ruling class, and redefine the existing network-map of property rights, and the dispensation of them. However, provided that the ranks of the elite are open to absorb those ambitous people from all classes, and the elite retain sufficient willingness to use violence, the myth of the revolt is specious. Because people simply need leaders in order to revolt. Before an elite allows itself to be displaced, it commits fraud. They verbally ally themselves with ‘the people’. All societies determine the scope of private and group property differently. There are limits to the scope of private property. Property is necessary because of the limits of people’s knowledge in time. However, there are points at which certain forms of private property deny service to consumers, (such as misuse of intellectual property rights) and therefore it is theft from consumers. Why? Because consumers forgo the opportunity for violence, and in doing so pay for the cost of creating that private property. So denying the market a good in order to increase prices and profits is a theft of the costs paid by consumers to create the opportunity for private property. So the limits to private property come from artificial scarcity (denying a good to market), whereas reinforcement of private property comes from the There are limits to the scope of public property, because there are limits to the amount of knowledge that can exist in any person’s mind, and limits to decision making among groups of individuals, and distortionary effects (basically, perceived risk reduction, limited by the amount of knowledge of the largest population able to exercise it’s will) and the rapidity of timely action, and because of the limits of timely action, limitations on the opportunity cost for the group. ie: increases in private property are an opportunity cost reduction for a group. The purpose of the union movement is to allow the populists to use threats against the capitalists, without fear that the capitalists can respond in kind, and thereby allow government to profit from intermediation, thereby forming an alliance between the unions and the state, regulated only by the long term (and therefore easily imperceptible) impact of their intervention on tax revenues. Violence should not be eliminated from our discourse. It is a ruse. Starting with a principle of non violence is and always shall be a ruse. The fact is, that ALL movements that presume non-violence are attempts at theft of the cost needed to create private property. Costs are the only means of honest political dialog. Both direct costs and opportunity costs. The Principle of Non-violence is fraud. Plain and simple. Period.
Author: Curt Doolittle
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A Subtle Redefinition In Opportunity Cost
I am going to redefine Opportunity Cost from the difference between one choice and another, to include the opportunity of expending violence. Because that is the FIRST cost that they pay in every transaction. I’m going to redefine Time preference from the silly Austrian implication that all purchasing decisions are made primarily by price, to the acknowledgement that all prices are in fact habits, and that decisions are made primarily by the culmination of OTHER factors, (and logically must be since prices are rarely different in any meaningful way) such that Time Preference is the aggregate approach to either consumption or capitalization. Such that a high time preference in the classical sense means consumption, and therefore is a short time preference, and that low time preference in the classical sense means capitalization, and therefore is a long time preference. A subtle difference, but the difference is meaningful: people do not care about prices between one object and another as much as they care about the other properties. In a universe of aesthetic rather than material differences, Prices simply allow people to categorize similar choices together so that they can apply other preferences, social biases, and subsidies. Because unlike the idea types to derive from marginalism’s attempt to make possible quantification, people actually ACT in the way I describe, even though that way is resistant to modeling.
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Our Different Organizational Models Keep Agencies Digital Or Traditional
December 13th, 2009
Different agencies specialize in different services such as media, direct, digital, PR, or Creative, because the risk tolerance, organizational model, financial model, and in particular the model for concentrating or distributing rewards needed to provide incentives to employees, is different in agencies that function in each channel, and that the efficiency gained by unified account management, is counterbalanced by the impediments imposed on risk, organizational, financial, and incentive models – effectively creating a division of labor that is more competitive, effective, and efficient, than monolithic organizations can be.
For example, for all our emphasis on creativity, few people in agencies have creative responsibilities. As Ogilvy stated, the majority of jobs in a media organization are clerical, and only marginally related to marketing. My view is similar: the vast majority of jobs in a digital agency are technical, and have little to do with marketing.
Furthermore, the vast majority of delivery management jobs in a media agency consist of traffic management – communication, while the vast majority of jobs in a digital agency are project management – risk mitigation. In a media agency, delivery management is concerned with customer service, and fast iteration. In a digital agency, risk mitigation, defect free code, and on-time delivery are the primary preoccupations of delivery management. The kind of people who are traffic managers are terrible project managers and visa versa. Yet they are pivotal role within each type of business.
The accidental side effect of this difference in internal processes and preferences is that digital agencies are often less likely to ‘game’ the client. For example, we have a much higher customer loyalty score than any other agency in our field, and we believe it is for three reasons: we aren’t greedy about nickels and dimes, we are very selective about clients, and we understand that delivery is what a customer is buying from us. And if there is a trend that will continue in this industry, I suggest it will be this trend toward trusting a digital agency because it’s internal processes foster that kind of trust, and they will do so because delivery success is materially demonstrable in a field where delivery success has largely been subjective. Small things in large numbers, over time, create vast differences. These differences will grow increasingly important over time.
For all our emphasis on creativity, it is not scarce and the difference between agencies is not marginal: it is not sufficiently different to be meaningful to the client. The resistance to experimentation and risk on the part of clients more than counteracts the creativity within the industry, even if that opportunity for creativity from anarchic personalities is what draws them to the field. However, the organizational biases needed to deliver creativity, marginal or not, within each particular channel of media, direct, pr, brand, or digital, is, at least over time, cumulatively marginal across channels, and the quality of execution is marginal across agencies within a channel.
For these reasons, agencies will continue to specialize. And the client will continue to select the appropriate tool from the suite of specialists to accomplish his or her objective. The problem facing the industry is the creative lottery: we sell ideas but bill for and make profits from, execution. Creativity is a loss-leader. Clients often understand this, and award the production work to agencies who present good ideas. However, many clients do not, and either buy creative from one company and production from others, or they steal creative through the pitch process, and award production to someone else. Thankfully, the market tends to end careers of these people. But that doesn’t change the fact that it’s private sector corruption.
For this state of affairs to change would require a collapse of advertising leading to the the consolidation of businesses, or a radical new technology that disrupted all existing agency models. What we are seeing instead, is a moderate consolidation of media businesses as capital is directed to digital businesses that have higher production costs, but lower distribution costs.
We have to learn to see the rise of television and the big agency, as a temporary distortion of the state of affairs. It glamorized our business. It generated wealth. But it was a bubble, and not a trend. Our agencies, our employees, and our industry publications, operate under the assumption that they are competing to participate in a bubble that no longer exists. The future is an increasing division of labor across channels, and agencies that specialize in channels, none of which are particularly dominant over the others.
Likewise, it will be difficult to produce another round of holding companies for agencies in the near term because we are unlikely to concentrate any semblance of the amount of capital produced by the rise of television.
This lack of any ability to concentrate capital and dominance in a channel, plus the long term decline in the availability of credit, as governments lose their ability to redistribute wealth using monetary policy, plus the general completion of the demographic movement of generations of people from farm and labor occupations with basic needs for consumer goods that allowed them to achieve status improvement from the possession of goods, upon which the growth of consumer products, and consumer product advertising on media depended, and upon which the current concept of brand instead of product properties depends, to suburban and urban clerical occupations that instead need to acquire increasingly differential goods to obtain the same status within small tribal networks with more granular identities than that of past mass market consumers, will mean a more competitive landscape for agencies, but an ongoing retention of our current structure as a division of labor in the process of delivering products and services to market – barring some financial or technical innovation that is as disruptive as was television.
From: www.puretheoryofmarketing.com (offline)
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What will be the biggest opportunities for agencies in the next 5 years? Displacement.
December 12th, 2009 § 0 Comments
We see opportunities for all categories of agencies. Large traditional agencies will continue to dominate the world of the large multi-national, brand portfolio–based clients because they are the only ones who can scale to the needs of those clients in the production of large volume, broad reach traditional media like broadcast and print.
Small agencies will thrive because they are the outlets of anarchistic creative talent. Small agencies also represent where the most specialization will occur. For every new technology, new media, and new channel, it will be the small specialized agencies that will blaze the trail for the rest to follow because they are the least risk averse and are not motivated by the same business drivers as their larger counterparts. These specialized agencies will be able to displace other agencies whose institutional mindsets, business organization, and cost structure reduce their ability to deliver creative value and niche expertise.
The greatest opportunity over the next five years will be in the midsize agencies like Ascentium though. The most successful of these will evolve out of the current digital agency world, although they will be complemented by the best of the midsize agency typified by Crispin Porter + Bogusky. These agencies will excel because of three distinct advantages: they will be freed of the financial handicaps placed on both the large and the small agencies, they will be able to build their reputations around demonstrated leadership in their particular area of specialization, and they will be able to execute their ideas based on deep technology skills.
Independent midsize agencies are not saddled with the high overhead, executive compensation, holding company taxes, and other built-in financial impediments that make large agencies more risk averse and less able to deliver services cost effectively. And midsize agencies hold a distinct advantage over small shops whose restricted access to capital can limit their ability to grow, scale, and, more importantly, attract top talent (especially business-oriented management).
While expertise in communicating using digital and emerging media is what is most often associated with the recent generation of high-growth, successful agencies, it is really their specialized expertise that makes them successful. Take Crispin Porter + Bogusky, for example. Whether it is their work for VW, Burger King, or Best Buy, they repeatedly demonstrate adeptness at connecting with a defined audience (young males, 18-34). In the same way, clients flock to Ideo whose tagline proclaims that they “create impact through design.” And we at Ascentium are very proud of our work with clients like Microsoft and T-Mobile, bringing their brand experiences to life for unequalled customer satisfaction and measurable results.
Deep experience, expertise, and thought leadership in technology are what wins us business and what every successful agency will need to achieve success in the coming years. Traditional agencies will find this hard to excel at because of their focus on delivering volume creative across vast, though not complex, distribution media. And it requires a sophistication of delivery resources that go well beyond what small agencies can muster. So, in the end, technology expertise will belong primarily to midsize firms that we associate with what have become known as digital agencies.
Technology is not a “nice to have” or a gimmick; it is the means for delivering meaningful customer experiences, with rich content, relevant to each micro segment of the audience through an inexpensive distribution channel with higher production costs.
We have had four generations now where the cost of distribution into major media has been artificially constricted by a highly distributed media selling to large numbers of similar consumers through a narrow distribution channel. This circumstance occurred in parallel with limited differences in the properties of major consumer products. We now live in a world of extraordinary diversity of choice, tribal micro communities, and complex dissimilar associations. It’s a world where people take the time to look for their information and find advertising entertaining or curiosity invoking but not necessarily actionable.
The information that consumers seek out on digital media, and the structure of that information and the trust they put in it, will increasingly require technology and media customized for that technology—where the brand imagery is simplistic and constant, but the content varies dramatically from channel to channel. In the past, we spent more money on distribution and less on creative. Over time, this trend will continue to reverse itself, requiring that we spend more on creative and less on distribution. Agencies that can implement diverse technologies and campaigns will continue to capture increasing amounts of the same revenue from clients.
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Digital Versus Traditional: Capitalizing Creative And Execution
December 13th, 2009 § 2 Comments
Aside from scale, the production work performed by most large agencies, is similar enough to be meaningless. Larger agencies must sell creative, and deliver and capitalize production.
To some degree this is true of Digital Advertising agencies, venus Digital Marketing agencies. (A digital advertising agency produces ads. Ads that attempt to get the consumer’s attention. This is simply a traditional business model extended to another publication platform. Digital Marketing agencies produce content. By definition, all of it is long-form advertising. If it’s really good, it entertains a consumer who is seeking it.
While we would like to say that we do, by and large, sell creative, clients buy us for execution. And that’s helpful to us, because Digital Marketing agencies can directly capitalize technology services: we can make money with JUST the technology component. Companies buy us for our execution ability. We can charge for our execution ability. And we can do so because it is frankly, more scarce than the production capability of ad building and distributing. (Note: in our business, we have a separate office that handles Digital Ads. It’s a specialty.
This difference in capitalization means that a Digital Marketing Agency can serve a larger number of accounts at lower risk, because they can afford to be hired, and to compete, purely on execution, as well as on ideas. It is, by nature, more ‘comfortable’ for a Digital Marketing Agency to participate as a peer in a large account, because we can compete on execution, because execution is simply HARD.
Technology is a wonderful deliverable, because the quality of delivery is objective.
Technology organizations must deal with risk mitigation.
Differentiation between deliverables is rarely subtle. It is the scarcity of content in the short form ad, and the impulsive emotional result that it must evoke at a very low cost in money and attention, and the subjective ‘approval’ that must be given by the client for that ad, that makes the iterative production cycle risky to the traditional agency. The Digital Marketing agency has less of this kind of risk. It has execution risk. Execution requires, usually, a learning curve, coding and testing. In fact, the problem for technologists in Digital Marketing agencies is HARDER than it is for consultants in traditional technology consulting models because the need to work with leading edge technologies increases risk dramatically.
Writing code for Facebook for example, is an odd interface to program, although the universal authentication model that it embraces is so powerful for clients that it compensates for the difficulty in using it. Making a rich internet experience on Flash or Silverlight while making sure your content is visible to search engines is painful at times, not because of coding complexity, but of keeping unlinked bits of information in sync. Certain platforms (Disney’s) are extremely rich and complex. Others (Best Buy) must handle a great deal of volume and almost entirely utilitarian. Others (Amazon Stores) are incredibly powerful, but rich and complex and not for the inexperienced technologist.
For these reasons, firms like ours can have “A, B, C, and D relationships”. AOR, Digital AOR, Digital Partner, and Point Solution Provider. We do not need to be an AOR to make money in an account. We only need to be AOR if the cost of selling into the account requires that we capitalize on a creative investment. The traditional agency can only support a client if they can capture enough work to pay for the creative cost of maintaining marginally competitive talent on the account.
For this reason, it certainly appears, that small creative agencies who are thought leaders have a long runway, DIgital agencies are just getting their feet on the ground and are at lower risk, and traditional agencies are in for a long haul of partial displacement, and holding companies are well suited, as long as they are not overly leveraged, to continue their dominance, because there does not appear to be a means of coordinating enough capital to displace them or give rise to another competitor – like most things. Wealth concentration is largely a matter of timing.
From: www.puretheoryofmarketing.com (offline)
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Riddle: “If dropped toast always lands butter side down and cats always land on
Riddle: “If dropped toast always lands butter side down and cats always land on their feet; what happens if you strap toast butter side up on the back of a cat and then drop it?”
Answer: While this is a question of probabilities not certainties, in general, the cat-force is greater than the butter-force, assuming the cat is still alive that is. But we’d have to verify it by empirical testing. I can supply the butter and toast, but you would have to supply the live and dead cat. I”m allergic to them. At least, the live ones that is.
Source date (UTC): 2009-12-12 12:51:00 UTC
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Preservation Of Status Is A Resistance To Libertarian Solutions
I was listening to a lecture by Roderick Long this morning, entitled “The Moral Standpoint” which is part of the series “Foundations of Libertarian Ethics: A Philosophy Seminar” (Available from Mises.org). In this lecture, Dr Long (who I enjoy and admire, not the least of which because he is very funny and charming in person) attempts to analyze the reasons for the popular rejection of libertarian solutions to political problems. And while I agree with Long’s arguments, as far as they go, I also understand, that the resistance to libertarian solutions, of which there are many, is the preservation of status that comes from the fog of our current, ambiguous, and unclear political order. In general, libertarian solutions propose fact-generating, and evidentiary solutions that expose causality. I tend to talk about these category of solutions as ‘calculable’ in the sense that they provide sufficient information to assist us in making decisions, and they do not permit the ‘laundering’ of causailty by the pooling of accounting information. THe problem with the clarity of libertarian solutions is that people enjoy the ‘fog of reality’. THe same way we all believe we are in the upper ten percent of our fields, we all believe we are contributing members of society, when in fact, we cannot all be in the upper ten percent of our fields, and it’s quite demonstrable that the only contribution most people make to society is to cause work for others, to provide local clerical or manual labor, to refrain from stealing so that we can create the institution of property, and to fill land so that others don’t take the earth’s potential from us. We do not want a clear mirror in which to see our true reflection, but a foggy one, that preserves our self-illusions – illusions that help us exist in a division of labor where indeed we may have little importance or relevance to one another, while at the same time, benefiting from the vast decreases in costs that such a division provides for us. We trade our ability to perceive causality for our mutual prosperity. Our status, which is, effectively, our access to mates, and often access to social groups, is more important for the political and lower classes than it is for the high performance (merchant and finance) sectors, who achieve that status by causal means in a division of labor, under the institutions of trade and exchange. My argument, which is contrary to general libertarian propositions, is that redistribution of profits from interest are the only means of resolving this status conflict – we have to pay other classes. And that the libertarian political strategy is effectively to propagate it’s value system, under the guise of moral or religious traditions, which it cannot, because it is against the status advantage of the less meritocratic classes. And while the libertarian position is to return to the gold standard, or some variation of it, the problem with that position is that, as the division of labor and knowledge increases, and especially as we urbanize, credit is the only means of preserving the social order – which means respecting property – as well as an identity for encouraging cooperation that was perviously created by nation, religion, village, tribe and family. Just as laws are a punitive system that apply to all equally (hopefully), credit is an incentive system that is more effective than law, because it does not require policing, just recording. And incentives under credit, are positive, and under law, negative. Furthermore, we need insurance provided through fiat money, or at least common money. Otherwise we are privatizing wins and socializing losses. The problem with the Rothbardian concept of banking and money is that in the end, it privatizes wins and socializes losses. This is justified in that model under a number of guises. however, what Rothbards model (and Mises as well) ignores, is that in order to create the institution of property people must forego their opportunity to employ violence. This redistributes violence across people who DO respect property. And therefore, any group of people who deny violence in order to create property, redistribute their violence and thereby pay opportunity costs. As such, a failure of profits from credit to be redistributed are a theft, and redistribution is mandated. By avoiding this conversation (or not understanding it) Mises and Rothbard, as well as libertarians in general, circumvent the problem of maintaining land, and creating the institutions of property. The poor, as long as they are not immigrants (who under this model are thieves – explaining peoples reaction to immigration) by respecting property, and denying violence, are due redistribution, which explains their use of violence (their repossession of their contributions). And a failure to redistribute a portion of profits is simply theft from them. CRedit and interest are the means by which we can do so, if, in the end, we are borrowing from them.
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About a Pure Theory of Marketing
Date: 2009
I’m the CEO, and one of the founders of Ascentium: a 600 person, $100M mixed marketing and technology agency1 that we started in 2001. We’re one of the bigger independently owned agencies, and we have grown very quickly, at from 60-100% per year.
Someone asked me a question about two years ago, when I described the depth and duration of this economy, and what it would do to the agency world. I described the failure of the trial and error method of advertising on the web. The drop in funding for media. The general economic conditions and what that did to buyers. That question was “If we aren’t marketing the way we should, then what should we do instead?”.
I just didn’t have a clear enough answer. And I decided to do something about it.
For the past year, I have been working on a way of looking at advertising and marketing. I’m calling it a Pure Theory of Marketing. It’s a little different way of looking at the world. But then, our world is different enough that we need a new way of looking at it. Not just at our tools and channels, but at what it is we’re saying to people, and how we say it. And we need to understand WHY so we know WHAT it is we should be doing instead, and why it will work.
And I started this blog to talk about it with whomever will listen.
Of course, I’m putting out a book, because, that is what one does for legitimacy in the current environment. But a book is not citizen of the web, despite the web’s effect on the citizens and book industry. It’s static. It doesn’t change quickly. It cant be revised. It isn’t a dialog. (You know some of the great philosophers didn’t write much down, and they walked and talked instead for a reason.) I’m a citizen of the web. Our business is a web-business. The world still changes too quickly for print. Blogging is so much more rewarding if you appreciate discussion.
Marketers pride themselves on building a wide audience. On appealing to many people. But that’s not what I’m trying to do. And I couldn’t if I tried. Instead, I want to reach CMO’s, CEO’s, Senior Agency talent, and frankly our own talent, and that talent that might want to join us. And I want to help people understand the future of 1-to-1 marketing, as something very different from the era of big media.
We’re in a new and different world. And it’s a better one, if you know how to make use of it.
- Think Razorfish — except they’re owned by Microsoft, and we aren’t, and we predominantly use Microsoft technology, and they don’t; a fact we find somewhat humorous at all three companies. [↩]
From: www.puretheoryofmarketing.com (offline)
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Toward A Pure Theory Of Marketing
Key Ideas:
1) Business exists in the sociological context. That means that companies, and agencies, are organized in order to sell according to both our assumptions about society, and the way society is organized, and the commonly held beliefs in society.
2) What we think of as the consumer culture, is part of the process of post-empire, post-war western european cultural dissolution. That culture emerged as a series of identities that made people very similar, and therefore easy to market to using mass media. But we are no longer living in a world of postwar consumer identities. Where people were the same. With same ambitions and beliefs about what made a better life. But we aren’t the same anymore. We’re not even similar.
3) Our citizenship today comes not from service to the state, or from religious affiliation, or even from cultural affiliation, but from debt participation. We aren’t united in any set of beliefs or myths other than as consumers. As consumers we have different consumptive and productive abilities. So we are buying our identities with goods rather than adhering to mythos and beliefs. In other words, globalization is happening in America as well as everywhere else in the world. We are finally returning to the level of globalization that we had prior to 1900.
4) Identities are not just fashionable, they’re necessary. Without a shared mythology or shared social beliefs, we literally cannot judge ourselves in such a vast division of labor, or know our status or progress in life, or even what is ‘good’ or ‘bad’ without these identities. These identities are our belief systems. Imagine we lived in a world without numbers, without clocks, without myths, without formulas. Humans beings literally can’t think. they can’t make judgements. Rational civilization has made our mysticism, our world of magic, into one that at least appears to be rational. But we take for granted advanced technologies like time and myths, without understanding that they are formulas that we use to calculate the future. Formulas that we use to make judgements. We live in a complex world where we almost never have enough information to make any decision, which forces most of our decisions to be tie-breakers. Our formulas, our myths and most importantly OUR IDENTITIES, are how we make tie-breaking decisions in real time. Without identities we literally cannot think, any more than we can think without numbers, common sense, or time.
5) Agencies think its hard to create ads and make money in major media, because of the infiltration of the web. But that’s only a symptom of the social change. The web has helped facilitate that social change. But that change was there before the web. Agencies, marketers, creatives, and even, indirectly, CEO’s, are selling products into the postwar identity, using companies, marketers, agencies, and media channels, that were specifically developed to sell into that homogenous postwar population, each of whom had the postwar identity.
6) It’s not just ads, not just campaigns, not just marketing that needs to change. We have to restructure business to sell into this new world order. We have to restructure marketing departments. We have to restructure agencies. Mass media will still have it’s place. But it will largely be for poor people, and major media will continue to become the channel for poor people, rather than postwar consumers.
7 ) Agencies need to learn how to build campaigns and creative for multiple channels, and multiple identities, and to accumulate consumer attention and loyalty, rather than sell broad big-win campaigns into the postwar narrative. We need narratives that appeal to identities. That help people build their identities. Rather than market to absurdity, which is the only common factor the fractured-identity-world we live in can comprehend, and the only campaigns that work today. We need specialized agencies that monitor identities and match them with people, and their disposable income.
8 ) Marketing organizations need to build ‘wardrobes’ of identities, and survey those identities, not their products, but the identities that those products service, rather than demographics, which are simply geographic representations of the postwar identity. These identities then become markets with measurable success criteria. In effect, giving marketers a portfoilio of measurable assets. Marketers need to learn to build campaigns that consist of multiple narratives that sell into a ’set’ of identities, each of which enriches that identity. And to build accumulating interest by consumers rather than asking for their direct attention. This creates a sense of sincerity. It may be that many marketers cannot exist in the post-postwar world of the citizenship-by-debt-participation society. It’s up to you to change. Society changed already. Campaigns need to keep a heartbeat. A lot more of your job will be to determine what’s popular in six or eight different identities rather than to simply shop popular culture for the most widely appealing message. I’ m overstating this a bit – but marketers all want to do what they did yesterday and call it creative. So we need to overemphasize the difference for a few years.
9) CEO’s need to demand that CMO’s become to the brand asset what CFO’s are to financial planning and controller’s are to cash. Balance sheets and income statements need to track brand asset on a timely, if not weekly basis. CMO’s need to have a portfiolio of identities and the measurement of how that product sells into an identithy and plans for addressing each identity and budgets for doing so. CEO’s need to hire external auditors who will audit that brand information so it’s not fudged any more than real estate values are fudged. CEO’s need to look at identities and products and services as related investments, and develop budget and funding processes. The unspoken issue here is that many marketers are campaign managers, not brand managers, and you may have to fire a lot of them, or train them with discipline to get them to perform. Conversely, the board should fire a CEO for NOT doing this because if the CEO doesn’t do it, it means he or she is behind the times, uncompetitive, ignorant of the company’s asset holding, and not fast enough to manage a company in our new environment.
10) Shareholders need to hold companies accountable for brand measurement. Most of the nonsense that is possible for CEO’s to pull off, and destroy asset value, is done because a) we measure only postwar and prewar assets (cash and real property) instead of market potential and employee potential, and b) because accounting rules exist largely to help organizations avoid taxation, or adhere to regulation that increases taxation instead of accurately reflecting the business’ performance, rather than provide accurate pictures of performance in the service of customers and investors, and c) accounting processes are mired in an ancient past, and because of the primarily manual (rather than macro-transactional) nature of the accounting processes is unsophisticated and only reinforces the antiquated culture in accounting.
11) By building our businesses around the new sociological context: the culture of citizenship by debt participation, we can make more profits, build better brands, dispose of antiquated companies, and literally change society for the better while providing an opportunity to a new generation of entrepreneurs, marketers, and creatives who, rather than sit mired in a decade long economic depression, can help raise us out of it by transforming this complex and fascinating world we live in.
12) For technologists, I have given you a glimpse of that amazing future that is very different from the engineering that you have done since 1960. Your concept of what makes ‘good’ technology is dead. Put a stake in the vampire’s heart. Pattern oriented, durable code that is deep and rich and flexible is as useless as phlogiston theory. Discreet data and documents are dead technologies. The future is perishable, not flexible. It’s where subjectivism is incorporated into the code. It’s not isolating companies from consumer subjectivity, but collecting and analyzing consumer subjectivity. Not periodicity. But non-periodicity. If you’re smart enough to guess what that means, then you have a career ahead of you. We can change the world if you’re willing to change your thinking. If not. Go find the guys who write COBOL and ask them for a job.
This set of steps will build the 1to1 marketing capability that business and consumers need today, to service their wants. And it will fix the corporation that consumers feel alienated by – because without these processes, capitalism’s core, which is to serve customers, is being undermined by market failure: ‘general liquidity’ and risk-driven bankers, result in the concentration of capital in large companies that allows businesses to get away with poorly serving customers.
There is more to it. But this is the core of A Pure Theory Of Marketing.
And there is only one company that can help you make that change: Ascentium
www.puretheoryofmarketing.com
A Pure Theory Of Marketing: December 2009Table Of Contents
1. INTRODUCTION
2. THE ECONOMY OF MARKETING
3. THE FUTURE: A THEORY OF MARKETING
4. COMMUNICATING WITH CONSUMERS: CAMPAIGNS
5. RETAINING CONSUMER ATTENTION AND LOYALTY
6. THE MARKETING ORGANIZATION OF THE FUTURE
7. THE EXECUTIVE ORGANIZATION OF THE FUTURE
– The ACCOUNTABLE CMO:
– THE CEO, AND ADDING THE FUTURE ORIENTED ASSET OF BRAND POTENTIAL
8. THE AGENCY OF THE FUTURE
9. THE ECONOMICS AND ETHICS OF MARKETING AND ADVERTISING
10. CLOSING SUMMARYComments on “A Pure Theory Of Marketing”
“This is a manual for CMO’s, CEO’s, Shareholders, and Consumers. It’s effectively a theory of marketing. And because of that, it’s a prescription for the future. It’s the biggest change in marketing MANAGEMENT since the television era. It will work not because it is a fad, or because it’s inspirational, or because it’s a tactical improvement, but because it is pure economics and sociology: because once consumers, shareholders and investors understand what I’m saying, the will DEMAND that much of it be implemented in companies. Because taking better care of customers is taking better care of investors. In other words, we can solve the problem of ‘the corporation’. It not only tells us how to market: how to talk to people, create the right narratives that will engage them, but how to organize our marketing organizations. We can solve the under-funding of marketing. we can solve the waste of marketing dollars. The problem in marketing hasn’t been marketer’s laziness, so much as their lack of a means of working in a quantitative world, and therefore their dismissal by the executive team as irresponsible. But if you follow what I recommend, the only person who can fail, isn’t the CMO. It’s the CEO. And CEO’s are pretty good at preventing failure – especially when it’s theirs.”
“I’m not so much simply confident that we should recommend our customers begin transforming their organizations, as I feel that it’s a deterministic process that will punish companies who do not.”
“I am sure somewhere, someday, someone will figure out that this theory of marketing solves not only a business problem. But it solves a social one as well. Marketers can build a better world, and make money doing it, and make consumers happier, rather than be next in the line of disrespected professionals, with the unenviable claim that at least they’re thought better of than prostitutes, politicians, journalists and lawyers.”
From: www.puretheoryofmarketing.com (offline)
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What will the role of agencies be 5 years from now? The Same, More Specialized, Less Influence
December 12th, 2009
The short answer is that the current trends will continue. The traditional AOR relationship will increasingly face being displaced by agency teams composed of specialty firms who can manage the complexities of existing and emerging channels, media, and technologies. This is for simple reasons: our organizations are different from one another, because the tasks we perform are different from one another. Even organizations like Sapient or Ascentium, which have separate business units that perform consulting or technology specialties, have them to augment their business model, not to augment the traditional agency business model.
The problem, for clients and for agencies, is overall stewardship of the brand across these specialized teams of agencies, channels, and media. Some clients will manage it themselves; others will choose agencies to specifically handle that challenge. And the talent to do so will become a primary challenge for CMOs. Should shareholders and boards begin to demand responsibility for brand performance, as an asset more tangible than our current fixed asset mythology, they will hold CEOs accountable rather than allowing them to offload this responsibility to CMOs who they regularly dispose of as a convenient distraction.
Over time, we have seen a steady reduction in the ability of any company to project and control its brand. The relative influence of the consumer, brought about by a combination of social, economic, and technological factors, is redefining the way in which marketing is used to influence a company’s brand and by extension make an impact on its sales and profitability.
And while the dependence on advertising per se to promote a company’s products or services remains unchanged, the ability of a company to influence or manipulate customers through traditional short format ads is also in general decline. There is not enough information density in the short format to develop a vision that is intimate.
We have been selling a very aspirational message, “the American dream,” for a long time. And now, in most advertisements, we are selling nihilism or sarcasm, which is the very opposite of the contemporary consumer desire for membership in communities, within a class or tribe. Brands have to help people achieve that goal. The short format can do so, but only by segment, not by the broad distribution of low content ads that was possible for general household consumer goods.
Combine this phenomenon with the change in consumption habits—that’s resulted from the major economic upheaval and that’s becoming ingrained in our culture—and technology’s ability to amplify an individual’s sphere of influence, and we will see the role of advertising shift from selling the aspiration for “the American dream” to facilitating the creation of our individual identities and our interaction with other like-minded people.
To support these shifts, marketing will become more about providing access to rich format narratives that reach out to segments or communities of individuals who share common beliefs, preferences, and consumption habits. It will be the role of agencies to produce this increasingly complex and micro-targeted narrative content that people will seek out and want to consume. And agencies will be required to execute the distribution of this highly segmented content across multiple platforms, devices, and media.
In the golden age of movies, the studios not only controlled the creation of content, but, through ownership of movie theaters, they also controlled its distribution. In the future, as agencies increasingly become sophisticated content providers, they will need to, not unlike the studios, develop and execute the means by which content is distributed to multiple screens—on the Web, mobile devices, digital out-of-home media, or via technologies we haven’t even thought of yet.
And while it is not inconceivable for a holding company to purchase a business or channel like Facebook and limit advertising on it to select customers using select messages—thereby making the Web destination a profitable as opposed to a money-losing distribution channel—it is more likely that these channels will require certain formats and types of content (Facebook apps are effective, Facebook ads are not). This requires an understanding of not only the channels that require rich content versus short form content, but also the technology required to leverage the channel sufficiently to motivate consumers to act.
It is this combination of the ability to develop and distribute highly relevant and rich narrative content that will be the primary role of the successful agencies in the future. They will be required to marry the account management skills of the large agency, the creative energy of the independent shop, and the technology prowess of the digital agency.
From: www.puretheoryofmarketing.com (offline)