When I was 19, before I left for college I worked at the Jolly Rancher factory in Wheat Ridge, Colorado (before it was closed down and shipped off to Canada) to save money for school. Like most recent high school graduates I wasn’t too motivated to do much and thought the $11.95 an hour sounded like a pretty sweet gig. Turns out working at the Jolly Rancher factory was the most mind numbing job I’d ever had. Watching candy go by on conveyor belts for 10 hours straight (I was working overtime to get paid time and a half) made me think I was going to go crazy. And then I realized that most of the people I was working with had been doing this for 10 to 20 to 30 years! It caused an identity crisis. Like a ton of bricks I realized that working in a factory was not me and from then on I was that much more incentivized to get an education.

One’s sense of identity is a huge motivator for change, and brands are constantly trying to get people to buy their stuff for the first time, or persuade them to buy their stuff instead of their competitor’s stuff. A major factor in opening the mind to change is the realization that you are no longer the person you wish to be and discovering the person you do want to be.
I recently finished reading the book Switch by Chip and Dan Heath (a good read) where they point to research by James March who says:

When people make choices they tend to rely on one of two basic models of decision making: the consequences model or the identity model. The consequences model assumes that when we have a decision to make, we weigh the costs and benefits of our options and make the choice that maximizes our satisfaction. In the identity model of decision making, we essentially ask ourselves three questions: Who am I? What sort of situation is this? What would someone like me do in this situation? Notice what’s missing: any calculation of costs and benefits.

Bad marketing uses rational, analytical incentives. When I say bad I mean it will train your customers to be eager to switch brands to save a buck.

Good marketing will cause an identity crisis: “I do not want to be the kind of mother who always nags her kids.” “I want to be a person my colleges can depend on, not a procrastinator.” “I want to be a size 8 again–size 16 is just not me.”

And then what happens next is identity theft, (because of this brand’s product or service I see myself as): “I’m the kind of mother that nurtures her kids to be amazing people.” “I’m the kind of dedicated professional that makes things happen.” “I’m the kind of person who cares about their outer beauty and inner beauty”.

Once you cause the identity crisis and identity theft you move onto earning and cultivating attention on top of a movement. People don’t want to connect with brands, they want to connect with other people. So brands need to seek out groups (people who have committed the same identity theft) that want to be connected and work to become the connecting the point. Brand marketing can facilitate that. So…

How do customers use your product to tell the world (and themselves) about who they are and their point of view? How can you give the audience ways to connect through the brand?

Sorry for the lack of “data driven-ness” in the last couple posts, this is stuff I’ve been thinking about lately and wanted to get it written down.

There are many people who blame doctor’s fee-for-service compensation models as one of the reasons of increasing health care costs; costs which are pushing the country towards bankruptcy. The problem is that doctors are incentivized to do more than is actually needed, since the more care they provide, the more money they get. In addition, expensive procedures earn them even more money which drive costs higher still.

Are advertising agency’s incentives also poorly structured in a way that is causing unhappy clients and poor results? Paying a percentage of the total media cost to the agency can incentivize agencies to choose media that is more expensive rather than effective. Paying an hourly fee means the agency is rewarded for the amount of time spent on the work, not the quality of the work. And just like a doctors expensive procedures, agencies like to pick big expensive ideas to wow their clients even if it’s not the best fit for their needs.

In a recent article in Businessweek, John Windsor of Victors & Spoils explained where he sees the current state of advertising:
“Advertising is all about relationships, and at the heart of the client/agency relationship is trust. That trust has been eroded by a lack of transparency and, often, resistance to change. Over the past few months, I’ve spent a lot of time with the chief marketing officers of Fortune 500 companies. The theme is consistent. They tell me stories of being charged $10,000 per second of video editing for clips to go on YouTube, $1,000 for a single foamcore presentation board, and $25,000 for event banners; an unwillingness to collaborate; and myriad indirect charges for parties and travel.

Somewhere along the way, the big-agency business became a lifestyle. But clients, who want the best creative work, don’t want to pay for it anymore. And they’re figuring out that they don’t have to. Smart agencies need to adapt their business models and fast, or they won’t have the opportunity to rebuild these relationships.”

I get the feeling that agency compensation models are outdated and the majority of agency/client relationships are steeped in an “us versus them” mentality rather than a trust mentality like John talks about. How to fix this? What about pay-per-performance? Or an agency could be treated more like an in-house marketing department where they are paid a set amount and expected to reach a certain level of results. I think an agency should leave the client better off than they were before, not just in terms of increased marketing share, but in terms of organization of company goals and direction, higher level of education and understanding of the market and better ability to take care of themselves. These ideas aren’t without their problems but eventually someone is going to figure out the right mix and make a lot of money adding value to the client, not just ideas and spent money.