PlanningFallacy

This blog has now moved..

2010-08-31T08:50:00.000-07:00

... to here

http://planningfallacy.posterous.com/

(I like the way it looks better)

Awareness Fallacy

2010-08-27T10:31:00.000-07:00

I've been making a bit of a return recently to some of the basics of advertising and research theory. In particular I wanted to address the resilient popularity of recall mesasures as an assessment of effectiveness in the US market.

Here's a consolidation of the main arguments against its use:

Awareness fallacy

View more presentations from Mark Lester.

If Murdoch doesn't 'get' online, online still doesn't 'get' business

2010-08-09T13:07:00.000-07:00

I am definitely no fan of Rupert Murdoch but to me it seems to me that some of the reaction to the erection of paywalls on the Times’ website is one sided and naive. We might all want all websites like the Times to be free but either we need to find ad models that work or accept that they must cut costs, and hence quality, significantly.

A lot of online business models are still unsustainable and many websites are hemorrhaging money; even Facebook has only just started to break even and it takes about 20% of all online display revenues. Murdoch’s competitors are well aware that the current media business model is broken, they can see their own balance sheets after all, so vilifying him as a greedy traditionalist who doesn't ‘get’ the web seems unhelpful. ‘Getting’ the web still appears to mainly involve convincing wealthy venture capitalists to prop up a popular site which generates little to no revenue (a la Twitter).

It’s all very well for the likes of Chris Anderson to hold the shimmering example of the almighty Google as a model for how to make ‘free’ services work online but its a bit like comparing vending machines with shops. Google is basically a clever piece of automated maths with low outgoings (relatively speaking), enormous reach and an ad model which is considered extremely effective. Content producers such as newspapers on the other hand are facing large production bills, smaller. defined audiences and persistent concerns from advertisers about the effectiveness of online display advertising.

Given the poor results, Murdoch’s pay-wall is clearly not the answer, and the blanket nature of the paywall does seem naive but more serious businesses need to get involved more seriously in the business of sorting out the online revenue deficit.

Early signs from the iPad suggest it may have some of the answers and users are more willing to pay for similar content served on it. This raises some interesting questions as to why this is, perhaps because the iPad provides an experience closer to magazines, maybe consumer price anchors for websites were simply set too low initially for online leading to a massive gap between consumer expectations and business reality. Either way total iPad sales, whilst encouraging, are some distance from being sufficient to adequately fund websites alone.

Personally I wonder if the largest consumer barrier with paywalls might not be actual cost but rather inconvenience. In the same way that text donations were a revelation for Haiti Relief perhaps a simpler automated payment system online based around a Paypal style operator might provide an answer?

Babybarista, the blogger that quit the Times left the following parting shot “There are so many innovative ways of making cash online and the decision to plump for an across-the-board blanket subscription over the whole of their content makes them look like a big lumbering giant”.

Maybe, but in the big business world of volatile stock prices and large employee payrolls, simple dependable solutions are needed. No competitor is doing any better than Murdoch at finding them right now.

Is US Politics Fit for Purpose?

2010-07-06T08:48:00.000-07:00

The recent budget crisis in New York has put an unfortunate spotlight on a seemingly particulalrly inept branch of local government. Whilst the Greek crisis rolls on and the new Tory government in the UK tries to solve its problems with an austerity budget, some feel that the US is currently poorly set up to tackle it’s own significant deficit, particularly at a State level.

In a recent This American Life podcast Richard Ravitch, a consultant sent in several times to try and rescue NY State from financial meltdown, claims that “there’s a new economic paradigm out there, a very unpleasant one...and the political paradigm has not yet changed enough to accommodate the fundamental changes that have happened to our economy”. His principle criticism is that the Legislature doesn’t appear to understand the urgency of the budget deficit and how it is spiralling out of control.

He’s supported in his views by the leading Democrat Liz Krueger who claims legislators “don’t feel the same sense of urgency as a governor” as well as, unsurprisingly, the current embattled governor who notes that the only people who seem to understand his position are other governors.

This problem may be explained by the common behavioral bias called the ‘Bystander Effect’, it indicates that people are much less likely to help out in an emergency when they are in large groups. Effectively personal responsibility for a problem seems to be diluted across the members of the group and leads to inertia.

This might have troubling conclusions for a lot of governmental structures which often employ large groups to make decisions.

Obviously being decisive isn’t the only consideration in democratic government. For example, clear and responsive decision making must be offset by the need for policy to be representative of a spectrum of public opinion. Another factor in the favorability of large committee structures must also surely be the commonly held view that more heads are better than one.

Whilst the former of these rationales is an almost indisputable foundation of democracy we should perhaps look to question the viability of the latter. Richard Wiseman outlines a wealth of evidence against the perceived benefits of group decision making in his book 59 seconds. Rather than groups making better decisions, these studies indicate that groups are over influenced by dominant members and more likely to make decisions that are more extreme than sensible.

Perhaps therefore the autocratic nature of Britain’s First Past the Post system is in fact the type of politics needed to solve the public funding crisis we’re in.

Why Philosophy Blows

2010-06-28T18:03:00.000-07:00

There has been Philosophy since the creation of civilization, it took a lot longer for humankind to invent Science.

It grew from the seeds of what was once known as Natural Philosophy, blossomed in the hands of 11th Century Arabic thinkers such as Ibn al-Haytham and took root in Western Culture during the Enlightenment thanks to the likes of John Locke.

The Scientific Method is one of the most important ideas we have ever had. It’s principle tenets are simple: hypotheses are tested through observation and experimentation. Any conclusion must be testable and able to accurately predict future results; any piece of work will be peer reviewed to ensure it is correct.

There is no such thing as a single ‘Philosophical Method’ but endemic in the nature of Philosophy is the fact that people are trying to solve problems simply by thinking about them. Terms such as ‘thought experiment’ may try to add a little more robustness to the discipline but are somewhat of a fig leaf.

Generally the two have operated in separate fields of study, the physical and non-physical (moral), avoiding any potential clashes. However with the increasingly sophisticated nature of Neuroscience an important battleground has been set: the brain (and the mind).

For centuries Philosophers have speculated that the physical processes of the brain are at least partially, if not entirely, separate from the non-physical processes of the mind. The legitimacy of this view is being rapidly eroded as more and more evidence emerges showing physical processes for what we experience as the mind. One can’t help but be struck by the resemblance to Science’s ongoing feud with Religion.

Some, known as Eliminative Materialists, have gone as far as to challenge Philosophy’s entitlement to comment given the flaws in it’s methodology. Pat Churchland, one of the leaders of this movement, can be heard taking the fight to Philosophers themselves on Philosophy Bites.

Perhaps those of us in the media and advertising industries have something to learn from this debate. How rigorously do we always examine the methodologies behind the behavioral theories we propose to clients? How strong for example is the evidence behind Mazlow’s Hierarchy of Needs, surely one of the industry’s most frequently quoted models?

Neuroscience, Behavioural Economics, and different fields of Psychology have very different methodologies. They shouldn't be given equal credence.

Can the real world learn from video games?

2010-06-22T11:20:00.000-07:00

In the immediate aftermath of the annual E3 show there will be a reasonable degree of attention on the gaming world from mainstream media. The focus will most likely be largely centred on Microsoft’s new gestural interface, Kinect, alongside the latest raft of visual and audio advancements.

Much of this coverage will, however, be missing an important broader perspective, in the last two years the gaming world has undergone what appears to be an evolutionary leap. Not only has the gaming sector thrived whilst other media sectors around it have crumbled but, more importantly, the brave new world of online social gaming has arrived and it is melding virtual and real environments.

Many are trying to decode the drivers behind gaming’s success; their findings go right to the core of human nature and underline the legitimacy of some of the principles of modern psychological theory. Whilst we’re too early in the process to understand fully how these models of behaviour might be applied, the possibilities seem incredibly exciting.

1. The inexorable rise of video games

The success of video games is mind boggling. As Tom Chatfield notes, despite the fact that they are around 70 years the junior of cinema and recorded music their revenues are making a mockery of these venerable giants of the entertainment industry. In the UK, in 2007, the videogame industry hauled in a substantial £1.7bn, pushing past physical music sales which dropped to £1.4bn and eclipsing total cinema box office revenue which stood at a paltry £904m.
Videogame manufacturer share prices may have taken somewhat of a hammering during the recent recession but otherwise business is booming and, in many ways, in accordance with very traditional business models.

Whilst those working in the Newspaper, Broadcast or Music industries are grappling with the seismic changes caused by increased Internet usage, the video gaming sector is selling product through traditional retail environments by the bucket load. As a result it’s one of the last great bastions of the traditional blockbuster, flying in the face of Chris Anderson’s theory of the Long Tail, individual video games still have the ability to generate mass appeal.

All of which is interesting, if not mind blowing, stuff. However it is the explosion of social gaming which is (successfully) reinventing revenue models, extending the appeal of video games to previously unimagined degrees and bringing virtual and real worlds closer together.

2. Social gaming: an evolutionary leap in video games?

Video games may be still in nappies relative to their cousins in the entertainment industry but playing games is as old as humankind and a fundamental part of our nature. Jon Radoff’s history of gaming illustrates this point wonderfully.

Whilst video games have traditionally been pilloried as the exclusive province of spotty teenagers, this looks like an increasingly unfair representation of the real video gaming audience. It may be that early video games’ appeal to a limited set of young males comes to be seen as a temporary blip in the shift of gaming from real to virtual environments.

This change in video gaming demographics can be explained partially by the aging of those who grew up with games but two seemingly interrelated trends emerging in the industry are also playing a big role;

User interface innovation on consoles. The Wii, Guitar Hero, and Singstar have all revolutionized the console market from a repetitive arms race over processing power to a more complex battleground over user experience. No-one’s sure what the right answers are yet but a closer relationship to reality, low price entry points and social experiences appear to be some of the key unifying themes.

The explosion of social games on Facebook. There are now more Farmville players than there are Twitter users. Similar to the Wii, Mafia Wars and Farmville confounded the market by succeeding with incredibly basic gameplay and graphics. Once again a close link to the real world, low (or non existent) price entry points and social experiences seemed to win out over advanced graphics and complex gameplay.

Of the two, the latter is no doubt the more intriguing. The Wii may have moved video games from the bedroom to the living room but combining them with Faceboook intertwines them with everyday life. This shifts gaming from a designated slot in the day like most hobbies to a constant habit that overlaps considerably with a person’s normal social life.

Equally significant are the revenue models that these games are pursuing: free entry with micro-payments aiding advancement through the game. This is a fundamental re-imagining of games from being a product into a service; simultaneaously turning game development into an iterative process linked to user feedback. The videogame blockbuster may still be sitting pretty but this new model appears to be able to happily co-exist alongside it. These new types of micro-payment, combined with users willingness to trade real money in exchange for virtual goods with each other further pulls virtual worlds nearer to reality.

Also worthy of a entire blog post of it’s own (or the world’s second largest wiki) is the World of Warcraft where the average player commits 21 to 22 hours of time a week, a habit some might describe as an addiction.

Those still in doubt as to whether this really adds up to a trend with real social and economic significance should check out this report from the Journal of Virtual Worlds Research which identifies the number of people “participating in virtual worlds in the hundreds of millions, and the money spent on virtual assets numbering multi-billion US dollars per year”.

What we’re witnessing is described by economist Edward Castranova as an “exodus from virtual to real worlds”.

3. What can the real world learn from video games?

These trends beg the question; what are video games getting so right, why are people increasingly choosing the virtual over the real?

Jane McGonigal at the Institute for the Future offered some potential explanations in a compelling talk at TED. She argues that the following are key components of video games;
- There is a mission, i.e. a clear sense of purpose
- Tasks are always challenging but achievable
- Games foster environments where people are more willing to collaborate
- There is constant positive feedback through rewards
- ‘Epic Wins’ (successes greater than previously imagined) are not only possible but relatively common

Anyone with a cursory knowledge of modern Psychology will be struck with similarities between McGonigal’s model and observations from the fields of Behavioural Change Theory and Behavioural Economics.

A view that a challenging task is personally achievable also goes under the guise of self efficacy, positive feedback on progress could be described as reinforcement and the unexpected nature of Epic Wins can be compared to other types of random rewards that lead to resilient forms of behaviours (gambling is an example).

The point being that the reason that gaming has been around for so long is that it feeds some of our most fundamental psychological biases, video games specifically have simply started to get better at tapping into them on a larger scale.

So what are the potential applications of these findings?

Jane McGonigal is doing some fascinating work in trying to develop games that harness users into solving real world problems, her latest attempt is called Urgent Evoke and is available for sign up now.

Tom Chatfield, writing in prospect magazine, outlines examples of how video games have been used successfully in both the military and education

Personally I struggle to imagine that gaming can so literally be used to solve issues, rather I think that the underlying principles, which have effectively been proven by gaming’s success, can be taken and applied elsewhere.

Tom also provides an example from IBM, who argue in their paper “Leadership in a distributed world: Lessons from online gaming” that the ideal business environment and the gaming world share the following characteristics
- Bring together large numbers of participants in highly complex virtual environments
- Enable participants to self-organize, develop skills and take on changing roles
- Require constant risk taking, iterative improvement and the ability to accept failure
- Provide incentives that are clearly linked to contribution and performance
- Make participants’ capabilities openly known
- Require collaboration and a leader who can influence collaborative approaches
- Provide sophisticated and varied communication channels.

If social gaming truly does turn out to be an evolutionary leap in the world of video games and beyond then we are very much at the start of the process. Where it goes next should be fascinating.