Consumer empowerment is now part of de-average day

Crowdstorm.com is a new social shopping site (still beta testing), where shoppers can access reviews of products from other users and ask questions about things to look out for. The Privacy Preference Service (still in private beta) lets users specify the communications they are prepared to receive from who, about what, when and how.

One common feature of Jellyfish, Crowdstorm and the Privacy Preference Service is consumer empowerment. Yesterday, “consumer empowerment” was a private DIY consumer activity resulting in a general, amorphous trend. Now start-ups like these are turning consumer empowerment into organised business opportunities. Lots of money can be made marketing products and services to consumers, but lots of money can also be made by empowering consumers in their dealings with these marketers.

Underlying this common feature is something else – de-averaging.

In the old days of mass media, advertisers purchased eyeballs as an amorphous, averaged bulk commodity via “cost per thousand” opportunities to see. Then Google replaced cost per impression with cost per click separating out those who did, and did not, act on seeing the ad. Now Jellyfish is trying to de-average cost per click by replacing it with value per action.

Crowdstorm is de-averaging information content/ separating out impartial and hopefully more expert information and advice from the unqualified information you get in answer to general searches. The Privacy Preference Service separates out those who are positively saying “Yes” to certain messages from those who are positively saying “No”.

ULTIMATE AVERAGING MACHINE
This trend towards de-averaging is not confined to the internet. It’s well advanced in mainstream media too. Some 20 years ago, ITV was the ultimate averaging machine offering all its programmes to everyone free of charge, and paid for by advertisers who got access to everybody. Then this world began to de-average with the fragmentation and proliferation of media channels and titles, coupled with the consumer database and the resulting quest for ever more “relevant” marketing communications. The more information becomes available – along with the ability to act efficiently on it – the more it is possible to separate the valuable from the less valuable.

But the full implications of de-averaging will only reveal themselves with the rise of a digital media environment. It is adding a new ingredient to the mix – bottom-up, “pulled” information. Downloaded video on demand is one form of pull (now given a massive boost with Apple’s entry into the market). Searched-for information is another. Developments like these are poised to de-average the entire industry.

Already today, the main source of funding for TV in the UK is not advertising but consumer payments in the form of subscriptions and the licence fee. As downloaded music, video and text moves mainstream (the ultimate in audience de-averaging) consumers will increasingly resist paying for “content” in general. They’ll pay only for the content they use.

PROPENSITY MODELS
Search is meanwhile transforming the meaning of relevance. Until very recently, “relevance” was delivered to consumers (for the most part, very badly) by marketers on the back of data-mined, number-crunched targeting and propensity models. Increasingly today, this form data-ameliorated guesswork competes directly with the consumer himself, who knows exactly what he’s interested in and when, and can act on this information without having to be wait to be “targeted”.

Together, these two developments are demolishing two illusions that have sustained the advertising industry for decades. The first illusion goes right back to the days of the cowboy, who “branded” an image on to the cow’s hide, to last its lifetime. Stripped of its many sophistications, this model forms the basis of our underlying theories of branding and advertising. Advertising brands a message into the consumer’s mind which, in conjunction with other pokes such as price and promotion, prods him to move in the right direction: to purchase. The consumer is a passive recipient, an “audience” receiving “messages”. The only active ingredient is the advertiser, issuing stimuli to elicit responses. “Effective” advertising gets lots of responses, “ineffective” advertising doesn’t.

What this misses is consumer reality: a self-directed, active agent searching for and sifting the information he needs to suit his own purposes. If the consumer “responds” to an advertisement, it appears that the ad has successfully “influenced” the consumer. In reality, the consumer has simply used the ad because it happened to be useful to him: advertising is only really “effective” when it serves the consumer’s agenda.

The second illusion is that advertisers pay for advertising (so therefore the acid test of ROI is whether it earns a payback for the advertiser). This illusion is generated by the fact that the advertiser actually writes the cheques for the ads (often for painfully large amounts). But it doesn’t alter the underlying economic reality. The consumer pays for all advertising via the prices of the products and services he buys, and if the consumer is paying for this advertising, then logically speaking, there should be some return in it for him (which Jellyfish is now promising to deliver).

These two illusions were acceptable proxies for reality in the days of top-down, averaged media: having a more rounded view didn’t open the way to new behaviours. But in the emerging environment they’re a mental deadweight. Look at today’s quest for a new holy grail of “media neutral” and “integrated” marketing, for example. It addresses yesterday’s question of media fragmentation but not tomorrow’s question of the empowered “pulling” consumer.

So is this Armageddon for brands and advertising? Not at all. First, there is an open question as to exactly how much pulling consumers will actually want to do. Second, consumers want – and actively seek out – information about products and services if it is about the right things, in the right form at the right time. Third, there’s benefit for the consumer in trading attention for value, and this can be organised in countless different ways. Fourth, the amount of data about actual consumer behaviours – the “fuel” of de-averaging – is exploding: registered users of online services, digital and cable subscriptions, supermarket loyalty data on newspaper and magazine purchases, and so on.

This means “the consumer” is de-averaging too. She is not an “ABC1 housewife aged between 25 and 44”. She has a name and an address. And she is a member of a variety of different “self-organising” clusters of similar consumers, emerging bottom-up “atom by atom”. These clusters are identifying and defining themselves via a range of common signals: which media she consumes when; what she buys, how and where; what permissions she gives – the doors she opens and closes – and the “I’m interested in this” hands she puts up via services such as the Privacy Preference Service.

These clusters also vary widely by nature and timing. She is simultaneously a member of the short term cluster of home movers, the medium-term cluster “mother of toddlers”, and long-term clusters “passionate about horse riding” and “passionate about tennis”. Brands and marketing communications will increasingly organise themselves not around “product attributes” but around the attributes of these clusters, focusing not on one-sided “messages” and “audiences” but win-win exchanges of information for the purposes commercial exchange.

To be sure, there’s a huge gap between this and today’s world media of separate and isolated media silos, each selling their own wares to top-down “campaigning” messaging engines via a series of incommensurate currencies. But it’s where we seem to be heading. And, as ever, those who adapt best are likely to flourish the most.