I Still Hate the Word "Consumer"

Jim Nail from Cymfony takes issue with AdAge's piece declaring "The Consumer" agency of the year.  He's right.  AdAge doesn't get it. Here's my beef with it.  Not only is the piece overly focused on YouTubesterbation, but it's also way too focused on the notion of creating advertising rather than a dialogue.  AdAge thinks it's all about people creating ads, rather than all the stuff that happens in the background as people discuss their experiences with products and brands. Rather than concentrate on everyman's ability to compete with the artsy-fartsy creative director at a Madison Avenue agency, AdAge should be talking about customer dialogue.

Plus, I liked it better when it was Time Magazine electing everyone "Person of the Year."

Standards

As I'm working my way through the new house, replacing things that need replacing and fixing things that need repair, I'm coming to the awful realization that the previous owner did a lot of things completely half-ass.  I'm also realizing that for some reason, if there's a standard way to do something, the prior owner didn't do it that way. I had a list of projects this weekend I only got halfway through.  I didn't finish partly because the last time these things were done, the prior owner didn't do them the standard way.  Case in point, the kitchen sink appeared outwardly to be a standard 25X22" kitchen sink fitting into a standard hole on a standard countertop.  It needed replacing.  Badly.

When I did get the original sink out, it turns out the hole was anything but standard.  It was quite a bit smaller, and from the looks of things, carved out half-ass with a saws-all.  Getting a new sink in required widening and lengthening the hole with a jigsaw.  Of course, the hole had to go all the way back to the backsplash, and when I got that far I figured out the guard on the bottom of the jigsaw wouldn't let me cut that closely to an edge.  So I improvised, cutting out sections with a Dremel (setting off the smoke alarm in the process) and knocking pieces out with some precision percussive maintenance (whacking the hell out of them with my channel locks).  In the end, it got done, albeit with a few chips in the formica I'll need to figure out how to cover next weekend.

There's a metaphor for the media business here, believe it or not.  I'm not one for blindly following standards, but standards exist not only to streamline things and make them easier for us, but also to let everyone know what to expect when you get down to the nuts and bolts of things.  With standards, there are fewer surprises, delays and improvisation.

Yes, the Buy Side Does Know

I was talking about online ad networks the other day with a friend who works for one, and he was a bit surprised to hear about some of the network horror stories and underhanded tricks I knew about.  Behind the scenes of a network ad buy, quite a few of the networks will try to wring every last ounce of performance out of a campaign by using certain tricks of the trade that they'd prefer buyers didn't know about. They range from the slightly unethical (adding targeting filters to ensure ads get served to people with a higher propensity for clicking on ads in general) to out-and-out fraud (the use of click farms or incentivized clicking).  What surprised me about my friend was his surprise - Did he honestly think that these things would stay buried in the ad ops dungeon forever and never see the light of day?  In this day and age, with hyperlinks subverting heirarchy and all that happy crap, all secrets like this eventually become known to anyone who is interested.

Putting aside the Internet's effect on secrecy for a bit, online media is a social industry.  We all go out after work and see one another at industry get-togethers.  Does anyone expect that ad sales and ad ops people never go out and have alcohol-fueled conversations about, say, buying inventory on a non-affiliate for 10 cents a click and then getting 25 cents a click for it from network advertisers?

Certainly these things don't happen on every network buy.  But people on the buy side aren't stupid.  We know something's up when a campaign dogs it for six weeks and then suddenly comes alive with click activity two weeks before the end of the flight.  We listen to network folks, especially when you let stuff slide about behind-the-scenes manipulation of campaigns.

Maybe you won't always get caught.  Sometimes you will.  When you do, it won't be pretty.  I like to tell people about the vendor we caught a couple years ago who took apart our ad tags, developed some unapproved creative of their own and then used the clicktag to artificially inflate their click rates.  They could have called the agency and asked for an ad tag so that they could serve some bonus inventory - we would have been happy to give it.  Instead, they got busted when we noticed the unapproved creative running and called the vendor on the carpet.  We haven't bought from them since.

My point is that we're not as stupid as we sometimes look over here on the buy side.  Some of the little tricks vendors use to get their click rates up are almost indetectable, but not impossible to pick up on.  And it's not as if every sell-side ad ops person is sworn to secrecy about the stuff they do behind the scenes.  We overhear things, IRL and in online forums.  There are no secrets in this business.

Check 21: Good for bank customers?

It's been more than two years since Check 21 legislation passed in the U.S., and what has it done for bank customers?  Not commercial customers, mind you, but folks like you and me who have regular checking accounts with or without online bill paying. Take me for example.  I pay the vast majority of my bills online and write only one or two checks a month.  I have direct deposit for my paycheck, but also collect several checks a month from my writing gigs and other sources of income.  What has Check 21 done for me?

Let's look at the accounts receivable end for a sec.  My paycheck (almost) always hits my account on payday.  No real issue there, but when I get checks for deposit, out of state checks still take five business days to clear.  In-state checks typically take 3-5 days (usually closer to five).  The float period hasn't changed one bit from the time this legislation passed.

As for the accounts payable end, as I mentioned I tend to pay my bills online.  I write one check a month.  Everything else is electronic.  As soon as I send an electronic payment, that money comes out of my account immediately.  So the bank is getting more of a float period on my money than it would if I had used a check.

Now, let's take a look at what benefits the bank gets from Check 21:

1. The costs for shipping physical checks from location to location is greatly reduced, since Check 21 created a new negotiable instrument that can be transmitted electronically.  There's also some savings for the banks built into the notion of not having to give me canceled checks with my statement anymore.
2. Banks take money out of the hands of the customer sooner (see above) and hang onto it for the same length of time before clearing it to the receiving party, so they're getting a longer float period and thus, more money.
3. Deposited checks take the same length of time to clear, but the electronic transmission happens much faster, so banks get to hang onto money longer, get a longer float period, and thus get more money

With all of this extra money and more efficient processing in the hands of the banks, you'd think customers would see decreased fees, faster clearing of deposits and better service.  Anyone seeing that?  Not me.  The deposit line at my bank today was at least two dozen people deep, and took half an hour.  My bank fees have increased, not decreased.  It still takes the exact same length of time for banks to give me access to a deposit.

So somebody please explain to me how Check 21 was anything but a giant gift to banks.  They're making more money.  We're stuck with the same (or worse) level of service.

One of the things I'm learning running a small business is that the invisible hand of capitalism can't always be counted on when one of the forces working against it is institutional inertia.  If banks, as an industry, are used to making money the way they do, a reduction in their costs of doing business often isn't enough to guarantee that customer service will improve or that savings will be passed on to the customer.

A parallel can easily be drawn to the advertising industry.  Agencies and marketers alike know that greater efficiencies can be had by revamping advertising plans to include a higher percentage of online advertising.  Do all companies do this?  No, because they're combatting institutional inertia - it's more profitable to go with the status quo until it becomes a distinct competitive disadvantage to continue to avoid change.  There's always a sizeable gap involved between the time an efficiency is identified and when it becomes reality, and that's largely driven by institutional inertia.

So how long will it be before banks start passing on the savings and profits they're getting due to Check 21?  Will it take as long as it took online advertising to hit its stride?  10 years?  15 years?  More?