Thursday, January 09, 2014
As we enter 2014 with great hope and optimism, we reflect on what we have seen and learned. This post was inspired by seeing a mouse in my garage scurry away into a crack in the wall. This mouse was fat and looked like it could barely walk. Easy prey for my cat, Mac. What makes a mouse overeat, knowing that overeating will lead to its demise? This instinct cannot be a conscious decision.

 
Companies and people behave in this instinctive manner too. They strive for growth and wealth, which will ultimately lead to their demise through evil deeds, unethical acts or overconfidence. This instinct has been built into business schools disguised as market share (I want to have a monopoly), demand pricing models (look at how airlines raise prices 24 hours before a flight), planned product obsolescence (like the latest Windows XP fear tactics, using security threats to make you buy Windows 8. Call it FUD – Fear, Uncertainty and Doubt), or just plain trickery and deceit disguised as marketing.

The capital market is a classic example of Big Fat Mouse Syndrome in society, and this percolates down into the boardrooms of public companies and their business strategies. Why are there bear and bull markets, and how many times has the market crashed? There is always a stock scam lurking somewhere. Technology companies wishing for their product to be the next killer app will try to convince publishers that whatever they are selling will be the gateway to riches.

This type of marketing has been around forever, chronicled in the Bible as the sheep in wolf’s clothing. The best example of this is this recent look at an ad from 1913, and how a company used fear and misinformation to sell their breakfast beverage, telling parents that coffee is bad for kids.

 

The latest over hyped technology fads I see in 2014 are called content marketing, cloud computing and big data. Content marketing is just another word for advertorial with a digital spin. Companies assume readers will be fooled by stories written to attract people to a brand (some are even fake articles created by scammers). As this chart below suggests, the credibility of these articles is low. Magazine publishers have responded to this concept with sponsored content and run the risk of alienating readers with advertorial packaged as content. I expect this fad will die on the vine as companies realize that people are not fools and will go to brands they trust, such as magazine publishers who provide a neutral voice in the market.

Source: Forrester Research
Source: Forrester Research (Click to view large)

Now, cloud computing has been around for years also, it was just called something different. In the old days of computing, a company had a large mainframe computer with dummy terminals where staff could access info and software. Today it is on a consumer level that is global in scale. What the pundits don’t tell you about this model are the security risks. Buying products online (which is the cloud, btw), you run the risk of your credit card number being stolen, and we know banks are in constant battle with hackers. Cloud computing makes the thievery easier as data is transferred to the public internet. Plus, companies also use this data to monitor your habits and invade your privacy too.

This model has lead to software rental models that have people paying for lifetime usage without owning the product. I guess they took a page out of the water-heater playbook. Don’t be fooled as some companies have been using the cloud model to create a revenue model for life to appease capital markets and raise their stock price. Don’t buy into these rental models, as it is legalized scam in my opinion. Wait for companies to capitulate on this pricing model.

Another area with a lot of misinformation is big data. Circulators, as experts on database marketing, will know that this is just a smoke screen to sell you some technology services you think you might need to discover untapped riches. You can spin your wheels analyzing a lot of useless information that will not generate sales. The best example of big data’s limitations are economic and weather forecasts, which have lots of data and do not have a 100% success rate.

Here is what the big data pundits won’t tell you. I came across a fact that says website traffic is increasingly non-human (I wonder why the geniuses at Google have not found a way to monitor this in Google Analytics). This study shows that the growth of automated traffic is as high as 60% of web traffic, but the click-bots and click-fraud benefit digital ad networks, so they hide these facts from you. Big data has potential, but make sure you get the right data.

Source: Incapsula (Click to view large)
Source: Incapsula (Click to view large)

Publishers have had to deal with social media, digital editions, magazine apps and HTML5 websites to make their brands modern, but it has been a struggle to make money with these efforts. The web world has an oversupply of ad inventory now due to a gold rush mentality and no barriers to entry. The revenue potential is falling to as low as $3 CPM for display ads on consumer sites.

History has shown that when a gold rush mentality is created, the chance of finding gold is slim, but the people that supply the tools, accommodation and other services can make a lot of money as people chase their dream. So in 2014 read between the lines, dig deeper into the claims of technology vendors, and make wise technology choices. Happy New Year!
About Me
Martin Seto

 
Martin Seto is the principal of Reflex Media, a media consultancy practice offering media owners digital publishing, event management and ad sales help. His media expertise also include working with ad agencies as a media buyer/planner for tv, radio, print, outdoor, magazine and online. He has been in the advertising and media industry for 25+ years and he has been an instructor/speaker with Centennial College and at magazine conferences across Canada. He can be reached at marty(dot)seto(at)
reflexmediasales.com or 416-907-6562, and on LinkedIn.

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