Curt Doolittle

Form: Mini Essay

  • Agency Must Become A Consumer Advocate Rather Than Ally Of ‘The Man’

    January 6th, 2010

    Throughout history, innovative groups have formed an alliance with ‘The Man’. Bankers have done it forever. In fact, bankers don’t exist where they DON”T ally with ‘The Man’. Capitalists allied with ‘The Man’. They concentrated wealth, by borrowing from bankers to develop ships, machinery, manufacturing, and other increased forms of production. They became ‘The Man’. Entrepreneurs allied with bankers, capitalists and ‘the man’ to distribute goods to the common man, for the first time in history, at such low costs that almost everyone could afford to have more than one pair of clothes for the first time. They became ‘The Man’. Advertisers helped market these goods to consumers, and for 150 years, they helped convert society from religious and nationalistic, to a society of consumers, and urban and suburban tribes. With the advent of technology, Advertising agencies became ‘The Man’. Creatives, who were generally hired craftsmen serving the nobility in most of history, flocked to the movies and advertising, and and allied with ‘The man’. And the demand – the boom – in demand for creatives, allowed the entry of more and more people into the creative industry, albiet, with the acknowledgment that the number of really good creatives, as well as the number of really good academics, or really good high-art artists, seems to remain constant. Like the tech boom, that made room in technology for lots of people who were not that good at it, there was a creative boom. Creatives, allied with ‘The Man’ to take advantage of the increase in available capital that allowed them to experiment with other people’s money.

    Now what’s important here is understanding what makes you ‘The Man’. Being ‘The Man’ means that you have control over resources. Kings, thugs, and brigands controlled passes, trade routes, and taxation. Bankers controlled access to money. Capitalists controlled access to production. Entrepreneurs controlled access to goods. Agencies controlled access to media.

    The tech boom deflated in just over a year, because it was fueled by speculative capital. The agency boom deflated along with the population that concentrated capital. concentrated production. Concentrated distribution. concentrated media. It deflated at the same rate the demographics deflated, and at the rate the mythos deflated that was held by that population.

    There is no concentrated population now. That’s the important message. It’s not a moral message. It’s simply a

    There is no concentrated common-aspiration, like the american dream. Instead we have tribes with little status identities.

    There is no concentrated access to media now. Instead we have more media than we have content that people desire. We have a shortage of mythic content to feed identities and tribes with to replace traditional, and postwar, and consumer, and american dream mythologies.

    There isn’t any concentrated culture any longer. There isn’t any concentrated trade route any longer. There is no ‘Man’ to ally with. There is no general consumer mythos to exploit. And the disappearing boom

    There isn’t the problem of getting attention for a product, using a frame of reference like a mythos, so much as the problem of understanding some tribe’s mythos and figuring out how to insert your frame of reference into their mythos.

    A long time ago, there were castles on passes. Because the government was formed by brigands charging taxes, or protection racket fees, for people to take goods and services through a geography to reach markets. There are no media-channel protection rackets any longer. Just markets. There is no tax to levy on reaching those markets, that will fund ‘The Man’. The Agency Man.

    We have no ‘The Man’ any longer. We have only these small tribes of consumers who have rejected The Man, in all his forms, because he doesn’t need him. He doesn’t need The Man. and he doesn’t need the stories that Creatives have written to serve The Man, to enter into, and he doesn’t want them either. He has his stories. He has his suite of tribal myths. He sees them as his property. He sees them as his identity. And he acts as if these myths are his identity and property. And by acting as if they are real, he makes these abstractions real things. He sees society through the lens of his identity and his myths, and judges his success at finding his place in society by using them – he has nothing else to go by. He obtains his status from using those myths, not from myths created by agencies and creatives on behalf of ‘The Man’.

    The Man concentrated people for us. That’s what The Man has always done. We made popular messages for distribution on The Man’s distribution channels. We served ‘The Man’.

    Our job is not to ally with The Man, and claim it’s our talent that made a difference rather than his control over passes and people because of it. Our job is to build relationships between brands and tribes. To find out who is passionate and motivate them to create status symbols from our products if possible. If that is not possible, then to create lower status reasons for social interactions. And if that is not possible the to create simple utility.

    Advertising, is, and will always be, part of this process. But advertising is no longer the process of concentration people and their purchasing power using available myths and demographics. It is the process of separation and service of identities. Advertising can’t easily inspire any longer on it’s own. It isn’t intimate or meaningful enough. It can legitimize a message. It can tie messages together. It can create awareness, but not change consumer behavior, unless you apply an awful lot of money to the problem.

    While vast consumer brands appealing to the low end of the market, will always need to create myths of consumer homogeneity, those myths are limited in their ability to compel consumers to aspiration rather than to the ideas of suffrage, or sarcasm or nihilism. These are negative identities. And a brand who crates homogenity is like a politician who advocates fear: it works in the short term, but it doesn’t make people love you and stick with you. And it doesn’t make them respect or trust you.

    Aspirational brands must create niche appeal, with increasingly tribal identities, in order to seem sincere, and in order to make the consumer feel passionate enough to appeal to a brand whose marginal difference in utility is extremely limited if not entirely aesthetic.

    Yes, those large retailers will control distribution, because of the capital that they concentrate with the use of debt – debt that they may have a hard time getting ahold of now. But brands must exist within those retail identity myths. And the retailer, like a government, will allow only so much difference between one brand and another – they don’t want intra class conflicts. So they are a resister to excellence.

    But our clients, and our brands need to understand that there is no concentration of identity or mythos, or channel which we can exploit.

    Creatives no longer can ally with the man. They have to ally with the consumer, and use the man for the consumer’s benefit.

    In a world where there is no concentration, no homogeneity, we have succeeded in building the consumer society. There is no real scarcity. We are not afraid of running out of rice and beans, or laundry detergent for that matter. We are only afraid of being lost in society because we cannot judge our status in it – our success or failure in it, our mating ritual in it, without identities and myths that help us do so.

    The consumer is The Man.

    from: www.puretheoryofmarketing.com

  • Women Dominate The Veterinary Field and Not Technology. This Isn’t A Mystery.

    On Carpe Diem there is a posting that references a series of articles on the state of women in the employment figures. Primarily as a result of the disappearance of risk capital, which led to a disappearance of risky, high reward careers, which will not come back (possibly ever) unless risk tolerance returns.

    It’s no secret to anyone in Silicon Valley that math, science and technology fields remain dominated by men, despite some progress by women in recent years. Women make up 46% of the American workforce but hold just 25% of the jobs in engineering, technology and science, according to the National Science Foundation. To Sally K. Ride, a former astronaut, that persistent gender gap is a national crisis that will prove to be deeply detrimental to America’s global competitiveness.

    Or this one

    Why are there so many women veterinarians? In part because educated women are drawn to professions that are providing flexibility to combine work and careers, Harvard University economist Claudia Goldin said in a lecture at the American Economic Association in Atlanta. The increase of women in various professions since 1970 has been spectacular. But why do highly educated women enter some professions and fields more than others? “Women are 77% of all newly minted veterinarians, but they were a trivial fraction 30 years ago,” she noted.

    How about a more obvious answer: In a free society, people freely pursue their careers of preference. Isn’t that the purpose of a market? To provide for people’s wants and preferences? Women prefer to empathize with all kinds of animals (human and otherwise) the way men prefer to empathize with tools and abstractions. Women have a higher preference for empathic interactions. Men have a higher preference for tools, abstractions and physical experiences. A predominantly female field (and there is good data for this) becomes a negative status symbol for men. If a field becomes predominantly feminine, ambitious men avoid it. Visible excellence , which is a status symbol for men, is a function of time and specialization. What is hard to understand about this set of fairly obvious circumstances? That once women are no longer prohibited from the workplace, that they will dominate the fields of their preference rather than distribute evenly across careers? Men dominate the physical, risky, combative, material, and abstract roles. Because they prefer to, because it increases their status. On the other hand, if we managed by some feat to make dressmaking a masculine status symbol they’d dominate that too. Men certainly dominate the restaurant industry, despite cooking being the dominant specialty of women since the dawn of time. Empathy is not valuable in objective testing, which is what most technical jobs require. This is NOT true of customer service in technology, consulting with technology, or sales of technology, or administration of technology. It is true ONLY of the craft of technology design, development and experimentation. Empathy is a function of understanding people’s views. Science is the process of objectivtly ignoring those views. These are two ends of a spectrum. Women accuse men of seeing women as objects. but it’s not that they see women as objects, they see the world as objects, because they are tool and object makers. If women did not have empathy, or the ability to ‘experience’ other people’s emotions, they could not empathize with children it would be impossible for them to be mothers, or to cooperate in groups to raise children, who must learn over very long periods, how to articulate by verbal means, their wants and needs. If men did not empathize with tools, or ‘experience’ tools they would not be able to craft them or sit forever waiting for the one moment in which they must focus all mind and body on thirty seconds of danger. WHile it is possible to train humans to do almost anything, that is not the question free people ask. It is, how to satisfy their wants and preferences. And CETERIS PARIBUS, women, given the opportunity to excel, will do so in fields where they gain most enjoyment – where the empathy of life experience , which to which they are more ‘sensitive’, just as men would most often prefer to empathize with tools and abstractions, to which they are more ‘sensitive’. Doing otherwise is simply illogical. Why would someone pursue his or her weaker perceptions and preferences unless it was of very material benefit to them? Furthermore, and this is the important question, why should society subsidize women and penalize men, for the fulfillment of women’s’ preferences at the expense of men’s preferences? That’s the real political question here. GIven equal opportunity, if we each choose these things and men choose one set of careers and women another, and if women have a preference for child rearing and men do not, then why should men be penalized, to support child rearing, when the problem that the world faces is overpopulation, not pollution, not global warming, not scarcity of resources, but overpopulation. There is an ocean of data on this, which is why these silly little surveys about women in technology are ridiculous. Of course women are a minority in technology, because they prefer to be a minority in technology. Giving women equal legal status, equal political status, and investing in them equally so that they have equal access to THEIR OPPORTUNITIES OF PREFERENCE, all are means by which we ensure that women are not politically, or economically discriminated against. However, it is not an ambition of political equality to engineer equal PREFERENCES among men and women. That would simply be some form of slavery. Society may have an optimum that we can consistently pursue, but Men and women are unequal. We are unequal in our preferences, and unequal in our abilities, at least at the margins. We are unequal in our rate of development and unequal in our rate of maturation, and unequal in our verbal and spatial reasoning. We are unequal in the physical activity we need. We are unequal in our social development, in that girls learn to care about society by testing and developing expressions of empathy and empathic dominance, and boys to care about society by testing and developing the expression of the physical world, and physical and political dominance. We are unequal in our intelligence distribution, with men over-represented at the margins. While we are equal in productivity in the majority of the work force, because the majority of the work force is clerical and administrative. We are unequal in our ability at the margins of the work force where ability is ether physical or extraordinarily abstract and specialized. We will not build a society that is durable post the American Empire by assuming that political and opportunity equality should result in career-distribution equality, because career development is a preference among free people. Men and women are not equal in their preferences, and they are very different in meaningful ways. Even small differences like the difference in male and female daily word budgets, or how we relax or experience stress, or how we empathize with people or objects, will simply show up in the distribution. Fixing a problem of oppression is one thing. Utopianism, Platonism, and social engineering are simply a different form of oppression. If you want to look at data, then lets get away from this positivism, and back to some causal analysis. There is plenty of data out there. Not the least of which is that no matter how we engineer society, the mating ritual will prevail. And in that mating ritual, women want certain things and men do, and that dance will never change, ever, absent the application of chemistry during the natal process. Again, there is an ocean of data supporting this. A not insignificant portion of men would prefer to hunt and fish all day, and build things. Another not insignificant portion of men would prefer to hang out on street corners and drink or make tea, or something simple. Another not insignificant portion of men would rather fight, rape, murder and steal, than do an ordinary job if they could get away with it. Plenty of others would be perfectly happy to spend their lives in military service if it tolerated collateral damage. Not all, but many men live painfully dull lives instead simply to participate in the status and mating rituals. If you change that process, you will not get the utopia that you dream of. Especially if it’s in a heterogenous empire like ours. You will get the Mediterranean, or eastern european, which is that men simply check out of society, and practice corruption, and interpersonal dominance, because they feel society is against their interests. Our men are doing it right now with video games and prescription drugs. The redistribution of western technology, and western calculative technologies in particular (what we call capitalism), which have been our institutional advantage against other cultures, is eroding that western historical advantage and redistributing production, and and skills worldwide. Capitalism slows birth rates and creates aging populations. Aging populations are less productive, have less military power, and are less capable of maintaining trade routes. Therefore less capable of maintaining a justice system, and less capable of maintaining a dominant currency, and less capable of maintaining social programs that are debt financed. Aside from debt, social insurance programs have been designed not to be funded by saving, but by having the younger generations (which will be smaller, and more likely immigrant, and often from different classes and races who will eventually want political power) pay for the services of the older, rather than having the older lend saved money to the younger, as we have done for all of human history. The role changes that we see, the distribution of jobs, are all temporary functions of the conversion of world society from agrarian cooperative, to urban capitalist. They are minor temporary variations in the ebb and flow of that process of calculative urbanization, and population peak followed by population decline. They do not necessarily represent a trend toward an egalitarian utopia. If you want to know if men and women are equally productive in the work place then, except at the margins, in similar jobs, they are so. If you want to make sure that women have the same rights as men, that is only sensible. And current legislation would demonstrate tat they have MORE legal rights than do men, just as minorities have special rights against the dominant culture. To the point where, at least, economically, it appears that women now “Marry The State”, and use that state apparatus to extort money from men, replacing the interpersonal violence of man against woman, with the political violence of the state against men. Men are beginning to understand this. All men have a limited advantage over women, because they do not have to bear children or rear them. SOME men have an advantage because it appears that men can more easily specialize and dominate a field than can the same number of women. MOST men have a disadvantage over MOST women, in that they must specialize in some skill inorder to have value in the mating ritual, and that their social status, and access to mates, as well as their possible male alliances, is determined by that specialization. At some point, lazy statisticians and social science amateurs would do better to study ALL the data and then make determinations, rather than think that some subset of simple ‘vulgar’ statistics are sufficiently informative that they may draw conclusions from them: otherwise it’s not using the scientific method. It’s not even the error of positivism. It’s ignorance and idealism.

  • The Threat Of Revolt, The General Strike, And The Myth Of Non-Violence

    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.

  • 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)

  • 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)

  • 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.

  • 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.

    1. 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)

  • 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)

  • What is the role of agencies in today’s marketing landscape? The Same.

    December 12th, 2009 § 0 Comments

    Agencies play the same role they have for the last century. they create and distribute specialized content in an attempt to increase revenue, create and maintain relationships and ultimately profits for client organizations. What has changed during the last decade is not so much the purpose for which agencies exist, but the relative importance they play in relationship to one another at any given account. The diversity of clients’ content needs in today’s marketplace has led to a greater diversity in agency players who work with one another on any given account. Clients are no longer necessarily looking to one agency of record to fulfill all their marketing needs. And agencies continue to specialize in the service of those diverse needs.

    Historically, agencies were responsible for creating short format “ads” to reach the broadest possible audience and to be distributed across the narrowest channels—broadcast and print media. These short format “ads” still dominate, but with the advent of database marketing, email, the Web, and now social media, content has shifted to richer, more interactive “experiences.” This new content is increasingly influential in consumer decisions because short format advertising is proving less effective at creating loyalty to a company, product, or brand image.

    Response to the demand for and impact of these new forms of content has resulted in the evolution of a new class of “digital” agencies. Starting with the presentation of static content on the Web, followed by the emergence of rich media, and amplified by the emergence of social media—now including multiple applications, devices, and tools—these agencies are connecting consumers with clients and often consumers with each other, all wrapped in the banner of particular brands.

    Today, there are too many areas of expertise, and the organizational methods needed to produce and distribute the content are too diverse, for any single AOR to manage.

    For example, the creative team responsible for innovation using any particular medium requires a high level of mastery to exploit that medium sufficiently to influence consumers who scarcely have the attention to devote to any particular bit of advertising.

    Not only is there a limit to the degree of excellence that can be produced, but then reward must be distributed to these creative people according to the excellence produced. This means again, that excellence favors organizational diversity, which is not typically found in large traditional agencies.

    And finally, the organizational structure that is needed to produce excellence in each medium is somewhat different. While creative people exist in each type of agency, and with differentially specialized talent, the majority of the employees are in delivery focused roles specific to the medium in which they work. As Olgivy states “…about 60% of ..(agency staff) … do clerical work.” a similar trait exists in technology focused agencies where the vast majority of employees fill technical rather than creative roles..

    And the operating principles are very different across each of these cultures. In a traditional agency for example, traffic management is nowhere near as complicated as project management is in a technical or digital agency. While the difference may not be as significant in digital advertising, since it is effectively placing ads according to a process similar to offline ads, it is quite different in digital marketing firms, where the content is both interactive and participatory, and the problem is not the marginal quality of the work as determined by subjective and momentary emotional response, i.e. did I like it, but by sustained attention from the interaction, i.e. did it work.

    Most companies continue to look to traditional agencies to do their advertising: one to many communications that drive brand awareness and when applied to direct response influence propensity to purchase. These agencies are best suited for this work. They are organized around efficient production, from their business models to their talent acquisition, retention, and compensation strategies. But while these large agencies and networks can provide the scale and account management needed by large enterprises, they tend to be more risk adverse in their creative and excel more in their abilities at production than in their disruptive ideas.

    When corporate marketers really want to make an impact, they increasingly turn to small shops that are usually built around a single creative force—likely a refugee from the large agency world who was constrained by his employer’s risk aversion. These smaller agencies are willing and able to take much larger risks with their work, in part because they tend to be lifestyle businesses (specifically compensating the risk taker) rather than growth and profit-oriented firms. While they can deliver groundbreaking ideas, they tend to be limited in their ability to execute and are unable to scale. This is usually the result of limited access to capital and a dearth of business-driven management talent.

    And then there are those agencies in the middle. In today’s agency world, the opportunities for newcomers and growth has been centered around new technologies—this is the area where most new successful agencies are coming from and are generally lumped together under the category of digital agencies. Up until the recent economic downturn, these agencies were attracting new customers, new talent, and most importantly, new investment dollars that allowed them to grow and expand their scope of services and clients much faster than their large and small counterparts.

    Their financial success is owed more to not being saddled with the institutional constraints, high overhead, and aversion to risk associated with the large traditional agencies than to the innate superiority of their ideas. And on the other end of the spectrum, they are free from the limitations to growth and scale that hamper the small creative shops that have less access to investment capital and less operationally talented executive management.

    From: www.puretheoryofmarketing.com (offline)

  • A Convert: Winterspeak and the Public Purpose Of Banking

    Over on Winterspeak, I found another convert.

    ….a bank should be required to keep all loans it makes on its books until maturity.

    In under six hundred words he provides a solution to a great deal of the problem. I’ve extended this basic line of reasoning to explain WHY banking should be run this way, WHY the public should and must insure banks, and WHY we can provide redistribution using these institutions, and HOW to look at government differently. But then I’m trying to solve the broader problem. To determine how we must govern, we must agree on what life we desire. To agree on that life we must understand what kind of creatures we are. These two statements are as old as philosophy itself. However, these ancient questions are formulated with an assumption about our power of decision making: we may not be able to make decisions with out the institutions that help us do so. The civic republican tradition of political participation assumes we can make such judgements, or that we need only philosophical knowledge or religious tradition to do so. When, at some level of complexity we cannot sense the data with which to make these decisions in any possible way. I’ve included the article here in it’s entirety for posterity.

    Winterspeak The Public Purpose Of Banking THURSDAY, NOVEMBER 12, 2009 The Public Purpose of Banking While Lloyd Blankfein claims bankers are worth Billions, even as they destroy Trillions, it’s worth taking a look at what the public purpose of banking is. Chicago economists, sit back down, the public purpose of banking is not to enrich their shareholders any more than the public purpose of pharmaceutical companies is. Capitalism works by enriching owners as they compete to provide some value to customers. So, what is the value that banks deliver to their customers? First, what is a bank? My definition is simple and goes to the heart of their public purpose: a bank is an entity that has a reserve account at the Fed. That is it. If you have a reserve account at the Fed, it means you can lend unconstrained by your reserve balance. Briefly, this is how it works: 1. You make a loan. This debits your reserve account, and you credit a receivable account. 2. The loan gets deposited, which credits that reserve account, and credits a liability. Note how the loan created the deposit, not the other way around. 3. If the loan and the deposit are made at the same institution, that institution has no net change to its reserve levels. If the loan and deposit were made at different institutions, then the institution short reserves borrows what it needs from the institution long reserves overnight. That’s it. If you or I make a loan, we cannot use the reserve credit that the corresponding deposit creates to top up our own reserve levels. Thus this clear, operational difference between banks and non-banks. Ultimately, the Govt creates all reserves, so why not just have the Govt make loans directly? Because we do not want the Government to make credit decisions, they are too likely to dole out money to politically connected constituencies, while starving worthwhile, but unconnected borrowers. You can see this today, as banks and unions get Billions, while shop keepers, dry cleaners, manufacturers, and restauranteurs shutter their businesses and go on the dole. An institution that makes loans it knows will not be paid back is not making loans at all, it is making gifts, and the operational bankruptcy of the FHA is a great example of this in action. Many adjectives come to mind: corrupt, wasteful, abominable, unfair, fraudulent, etc. This is the opposite of Responsible Governance. Barry, we really expected more. So, to keep responsible lending, we put private capital infront of public capital and ask that private capital take the first loss on loans it makes which turn out to be bad. Ultimately, taxpayer money is there as backup, but it should not be directing investment. We call this institutional arrangement a “bank”. This simple sensible construct is utterly lost on policy makers and the commentariat alike. For banking to do the job it is meant to do (ie. make loans that will be paid back), a bank should be required to keep all loans it makes on its books until maturity. It should be forbidden to participate in any secondary markets, in any way. It should not run a prop trading desk. It should not sell insurance. It should not have a fee-for-service business. It should simply conduct its own credit analysis, make loans, and service them. And in return for providing this public purpose, a bank shall have a reserve account at the Fed.