Digital Root

The Mind-Language-Physiology Link

When I was a boy, I believed that people with blue eyes could perceive the color blue more acutely than people with brown eyes.

This research doesn't exactly prove that, but it does suggest there's a mind-language-perception link going on.

It was clearly the language system interfering with a task that was presumably purely visual: distinguishing between different colors. Categories in our thinking may go much deeper than we think.

While not conclusive, this research indicates that having a greater definition of a given color enables perception to a more granular degree.  Its conceivable that this language-physiology link permeates our ability to think and perceive well beyond colors.

QR Codes and That Guy Who Uses Them

 

Forrester released a study on QR/Barcode mobile usage.  QR/2D barcode scanning is up to 5% (from 1% a year ago) for smart-phone users in the US. Earlier reports stated a total of 14MM "scanned a QR code ever", but its unknown if this was a superset of smartphone or general mobile users.

Either way, it’s still a small market – 6MM people in the US, primarily in the 25-34 "affluent" demo.  Something to consider when adding QR codes (especially if its intent is solely to redirect to a URL) to print/web materials.  In fact, if you're setting up QR codes to redirect to a simply root URL, you're wasting your time.

Because these reports rarely quantify their numbers, I pulled the latest survey data from Q3'11 US Census, CITA, ITU and Nielsen data.

 

Mobile QR Code Usage in the US

Approx Mobile accounts:                 285.0MM

Approx Smart Phones:                     114.5MM

Approx QR/Barcode Users:                5.7MM

 

Over the next 24 months I'm expecting to see a shift from QR code usage to object/image recognition as redirect markers.  Most smartphones can train and recognize an image or object in the real world as a redirect or augmentive marker, rendering the insano checkerboard that is a QR code less novel.

Does Targeted Advertising Erode Profits?

Taken at face value the report from MIT Sloan Assistant Professor Alessandro Bonatti contradicts what every computational advertising network has been saying for years.

"...as technology keeps improving, more and more web sites can sell very narrow products to very specialized audiences... with lots of people targeting the same audience the profits to be made through specialized advertising become more and more spread out... instead of competing for one large pool... you will have price war in each targeted segment as the slice gets more and more narrow."  Bonatti concludes that, "... the better the technology, the lower the profits for advertisers... "

There's more to this story than a clumsy application of the economic theory of crowding out.

A key flaw in the report is that CPM is used as the benchmark for profitability. While CPM was the preeminent metric in the days before digital, where there was little or no ability to measure beyond the impression. Not to mention the inherent elasticity of CPM as a representation of cost and reach.

Digital advertising and marketing has enabled the use of Cost-Per-Action (CPA) and full life-cycle tracking of events from consumer impression through to conversion and re-engagement.

A second point is the focus on long-tail consumables. When applying the notion of crowding and diminishing value (or utility) it's important to qualify the volume and ratio of units considered.

In the long tail, low volume goods become marketable due to targeting. Without targeting, the cost and overhead associated with selling the items is unsustainable and generally removed from consumer choice.

In the digital world, the leveraging mass scale markets and digital targeting pairs highly distributed consumers and sparsely available goods together in a cost effective manner. Essentially bridging the production gap of industrialization expressed by economists for the last two centuries.

The observation of impressions and clicks representing a fraction of outcome behaviors is also worth noting.  More sophisticated research has revealed that impressions have a profound effect on sales, awareness and consideration - even if they don't result in a click.

While the report has merit for what it measures - CPM in a long tail environment, it is missing the point of its own supposition; Targeted Advertising reflects the changing of what measures matter and creation of a new class of utility.

Measuring Past The Click

Key Insights:

• Digital Advertising will continue to grow while traditional media spend shrinks, eventually overtaking traditional
• Clicks are a poor proxy for measuring digital
• Digital impressions have a profound offline and online impact on intent, sales and dollar value
• Quality of impression, with emphasis on time (reach & frequency) is a superior measurement over clicks

In September, UK Digital Ad spending overtook TV for the first time representing approx $2.8B  of spend in the first half of 2009.   By comparison, the US market spent $10.9B but its share accounted for less than 20% of traditional media spend overall.

Proportion aside, growth forecasts predict Digital spend in the US will represent over 31% of overall advertising spend within 3 years, whereas traditional will shrink 15%.

Who's clicking?

With digital media taking a significant, if not lead role in advertising, how does the prevalent "click" measurement hold up?  Not terribly well.

From June 2007 to August 2009,  the volume of people who click shrank from 32% to 16% - and is expected to continue its deterioration.  More importantly, those that do  click, are comprised of no-to-low income people under 24, hardly the audience most brands are seeking.

The Impression Effect

Clicks clearly aren't the answer as it represents a small portion of the audience, and typically one that doesn't convert into sales.

A recent study found an interesting answer to the question. Where clicks failed to register as a proxy for sales, post-impression behavior indicated a profound impact upon sales, both online and offline.

The presence of ad's in the form of display and search combined lifted sales an average +27%, and lifted traffic at least +46% over a four week period.

 

   

When search and display ad's were coordinated, offline sales lifted up to 52% with a staggering 119% increase in dollar value.   Online numbers were even better;  173% increase in sales lifted 124% in dollar value.

When you consider the data, measuring clicks is like trying to tell if a shirt fits by counting the number of buttons on it.  

What To Measure

So, what is the answer? Most research suggests that the longer a person is exposed to an ad, the more effective it will be— until the point of diminishing returns. The future of digital measures has more to do with depth of impression (time, reach, frequency) than clicks or views alone.

Rather than simply counting the number of impressions served, the appropriate measure becomes quality (reach, time, frequency) of an impression. Using this method, you can even reduce placement by focusing on impressions that offer a quality level that may be counted as true impressions over focusing on total volume.  Utilizing real-time segmentation and coordinated digital planning, campaigns can deliver far reaching, impactful impressions to the right audience.

In light of the rapidly changing advertising landscape, it's imperative to understand the full impact of impressions, and shape your campaigns to drive your end-goals, not just rack up clicks and impressions.

Thinking With a Purpose

If you're like most people, when you encounter a new subject the first thing you do is search Goggle and 'read-up' on the subject.  You explore sites that range in topic and content until you've cast a wide net on the parameters of the topic.  Chances are you'll find yourself linking to other subjects as you progress, eventually taking yourself away from the original search.

While its refreshing to assimilate varying information in a short time frame, most people find they often can't retain much of what they read. The material being condensed to fit into web pages, skimming from site to site, and spending as much time clicking and scanning than contemplating all results in fractional learning.

In 1916, Henry Hazlitt wrote a book that addressed the subject of thinking and how to get the most from it.  Mr. Hazlitt is most remembered for his best selling, and possible the single most approachable writing on economic theory - Economics in one Lesson. His second best selling book was the one he wrote in his early 20's - Thinking as a Science.

Hazlitt's approach to thinking will be familiar to those who've taken formal computer science or mathematics classes.  Casting out preconceived notions, proving outcomes, testing for correctness, and objective-directed mapping are represented in the text.  In other words, approaching thinking and opinion building with a methodology to not only improve your critical abilities, but to retain and target the best information.  


The Process

A fascinating point Hazlitt made was that many people have difficulty with concentration. Their mind wanders - much like the wiki comic above.  Bouncing from subject to subject without pursuing any kind of knowledge goal.

In part, this is to be expected. Our psychology is designed to adapt and filter information. When we're presented with many options, we'll naturally follow a path of least resistance. That however leads to mental wandering.

Thus Hazlitt councils us not to being our task of thinking by 'reading-up' or in our day - googling.  Instead, even if you have no prior knowledge of the subject, start with defining your subject.

Redefinition can be done in a number of ways:

• Asking 'Why' until you find the essence of the subject.  For example, you wish to learn about movie making.  You ask yourself 'why' - 'Because I'm interested in cinema and how its done'.  Why?  'Because they make so much money, I want to know if I can do it myself'. Why? 'Because I'm dissatisfied with my current job and income'. Why? 'Because I can't buy the things I want'.   This course of asking why, draws out the root of the question, and in part will help you target what your looking to learn.
• Depth or Width first.  In computer science and mathematics, there's a notion of path walking - or depth/width exploration.  In a closed system of finite limits, one can seek to find the boundaries (paths) by going as deep as possible, without regard to its many branches,  or explore every branch until depth is found.   For example, if you're learning about watches, you could start with the specific construction and brand that you're focused on, and over time explore the peripheries of the topic.  Or you could mentally break out every category (construction, materials, history, brands, usability, etc) before you look into the specific item.   Both are useful approaches but its best to decide on an information gathering tactic and stick to it, rather than jump between the two methods.  Depth first will get you an answer quickly, but will be narrow in information. Width first, will take a while, but give you a broad understanding of the topic.
• Definition restatement.  Similar to asking 'why', restatement helps you uncover the essence of what you're seeking. This is particularly useful when you're researching a broad and unfamiliar concept,  For example:  You want to create an effective language.  You being by breaking down that goal through restatement.  What is effective? What is meant by language? Who will be the audience for this language? What is the best form of communication for your audience? If its written, how will it be scripted? What constitutes readable script? etc.   You continue to restate and redefine the problem until you've created a framework that explores all its aspects.
• Prioritization.  As you ask why and break down a topic, prioritize your researching into that which will get you the most authoritative and objective information. Remove data that is superfluous to the framework you've created.
• Creation of a theory and test for trueness.  Ahead of diving into the research, see if you can formulate a theory of how it may work in advance.  As your learn and think, test against that hypothesis. As you increase your knowledge on the topic, refine your theory and continue to test against it.   The rigor of theory/testing helps keep you focused on your framework - and helps prevent wandering.  It also reinforces what you've learned.

What next?

In a future post, I'll review methods for reaching decisions from thinking. Tools such as weighted decision trees, matrix categorization, and index ranking will help you measure potential outcomes or causes from your research.  I'll provide a brief tutorial on each method to illustrate the usefulness of structured thinking.

In the meantime, Hazlitt's book on thinking is available online for free, and stands as one of the most revered texts on the subject of thinking.

Are You Solving The Right Problem?

 

Anthony and Cleopatra are lying dead on the floor of a villa in Egypt. Nearby is a broken bowl. There is no mark on either of their bodies and they were not poisoned. How did they die?  

 

Morgan D. Jones describes the mind as analogical; structured to optimize the creation of shortcuts, patterns, and bias. For good reason, without shortcuts, you would mentally grind to halt – stepping through each sequential step of every activity.

 

Walk into a room; observe that it's dark; move arm to the left; feel for a light switch; flip the switch; observe that it's light….

 

Instead, your mind recognizes the situation and automatically directs your hand to the light switch. In essence, this is the principal way you experience the world; interpretation of new experiences in light of the old ones. Once the mind recognizes something, you don't have to wait to get the full picture; it will fill in blanks for you. Have you ever walked into an unknown dark room and automatically reached for a light switch as if it were your foyer or bedroom? Your mind saw a familiar pattern, and incorrectly filled in a shortcut.

 

Anthony and Cleopatra are fish; their bowl fell over. But if you're like most people, your mind recognized the characters as the infamous archetypes of ancient Rome, and cultivated a misleading image.

 

Over time, recognitions and biases compound to form "mindsets" or a distilled perspective of your accumulated knowledge on a subject. Mindsets are powerful because they synchronize emotions, senses, and information into an involuntary interpretation. For instance, the reverence one feels when hearing their national anthem. Growing up with images, music and stories accumulating into an overall sense of patriotism that is instantly peaked upon hearing a melody or seeing a familiar vignette. Or consider the mindset of prejudice, repeated exposure to information (validity aside) forms a mindset over time, resulting in a broad generalization regarding a particular race.

Mindsets and bias can become so instinctive you can ignore plainly visible evidence and solve the wrong problem. To illustrate think of a man who wakes up to find water on the frame of his water bed. He pulls the covers, drains the mattress and spends hours looking for a leak. Not realizing the source of the problem was from his ceiling which dripped water onto him while he slept. He saw water and jumped to solve the problem, failing to take note of the real cause.

This happens in organizations everyday. A relevant example is the US Treasury and Federal Reserve.  Those responsible for monetary policy have interpreted the 2008 "Credit Crisis" as a reply of the Great Depression.

Anna Schwartz, co-author of the seminal work "A Monetary History of the United States, 1867-1960" widely accepted as the cause identification and explanation of the Depression, was recently interviewed by the Wall Street Journal. She asserts that Fed Reserve Chairman Mr. Bernanke, like our water bed guy, is solving the wrong problem:

 

"This is not due to a lack of money available to lend, Ms. Schwartz says, but to a lack of faith in the ability of borrowers to repay their debts."The Fed," she argues, "has gone about as if the problem is a shortage of liquidity. That is not the basic problem. The basic problem for the markets is that [uncertainty] that the balance sheets of financial firms are credible."

"This was [his] claim to be worthy of running the Fed," she says. He was "familiar with history. He knew what had been done." But perhaps this is actually Mr. Bernanke's biggest problem. Today's crisis isn't a replay of the problem in the 1930s, but our central bankers have responded by using the tools they should have used then. They are fighting the last war. The result, she argues, has been failure. "I don't see that they've achieved what they should have been trying to achieve. So my verdict on this present Fed leadership is that they have not really done their job."

 

 

Quoting Seth Godin : "Almost without exception, organizations are run by people who want to protect the old business, not develop the new one […] they're great at running yesterday's business."

Through experience, you create mindsets for solving particular problems. As you progress in your career you draw upon those experiences to solve new problems. Done thoughtfully, it works. But you can also find yourself easily becoming the embodiment of the adage "When all you have is a hammer, everything looks like a nail".

 

 

Introduction (Aka: Why should you care?)

With the freshly cut grass rendering the morning moisture into the back of my spider-man t-shirt, my eye found its target.  A ferocious tiger leaping in slow motion onto an unsuspecting zebra… or perhaps a bush or school bus. I asked my brother if he could see it. 

"But its right there!"

"Next to the big cloud… look again"

"You still can't see it?"

Moments later the tiger transformed into an image of a barge, leisurely taking its cargo to awaiting shores.  The image had passed, but in its wake, left a question. My big brother – who was smarter than just about any other person on earth – couldn't capture the figure, Why?  Was it because he was taller and peered over the cloud? Was it because he liked dogs and I, cats, making me more perceptive of the feline profile?  Or was it that lighter colored eyes could see lighter colors with more clarity?

My 5 year old mind concluded it must be the eye color, because he wasn't that much taller than I and dogs were shaped similarly to cats. With that, the mysterious pattern was resolved. At least until I proudly explained my theory at a family get together.

You could say that I've always a held interest in discovering patterns and understanding why things work the way they do.

That's what this blog is about.

For nearly 20 years, I've had the opportunity to work with some of the best companies in America. I've been doubly fortunate to join them during periods of monumental growth – getting exposure to once, maybe twice-in-a-career projects.  I've been thrice blessed to work for amazing and inspirational professionals.

In that time, I've accumulated and shared experiences with colleagues, customers, industry giants and friends.  The lessons that particularly resonate are those that reveal hidden patterns beneath the surface.  Sometimes simple, sometimes beautiful, sometimes banal and occasionally; transcendent.  But regardless of form, they are everywhere from the way you navigate office politics to predicting economic and market cycles.

And that's what I'll write about.

"Man is the animal that draws lines which he himself then stumbles over. In the whole pattern of civilization there have been two tendencies, one toward straight lines and rectangular patterns and one toward circular lines. There are reasons, mechanical and psychological, for both tendencies. Things made with straight lines fit well together and save space. And we can move easily – physically or mentally – around things made with round lines. But we are in a straitjacket, having to accept one or the other, when often some intermediate form would be better."

– Piet Hein, (December 16, 1905 – April 18, 1996), Danish mathematician, scientist, inventor, and poet

 

Next Up: Digital Roots – What are they?