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Financial Stardumb?  Celebrities Endorsing Investments

12/4/2022

23 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 

Famous people have promoted products for centuries, encouraging others to buy everything from cereal to cigarettes.  Cryptocurrencies recently tapped celebrity associations with great success, but a notable bankruptcy and the industry’s slide have led to serious financial fallout for many investors.  Such unfortunate events beg the question:  Should celebrities ever play the roles of investment advisors?
 
Babe Ruth promoted tobacco products.  Doris Day endorsed a steamroller. George Foreman may be better known for his namesake grills than for his storied boxing career.  Over the past couple of years, many celebrities inked endorsement deals in the new and fast-growing realm of cryptocurrency.  Those who have attached their names to the digital dinero include:
  • UFC superstar Connor McGregor with Tiger.Trade
  • Tennis great Maria Sharapova with MoonPay
  • Rapper Snoop Dog with a variety of crypto exchanges
  • Actor Matt Damon with Crypto.com
 
However, probably the most infamous crypto partnerships have been between the now bankrupt Bahamas-based cryptocurrency exchange FTX and a lineup of all-star athletes and A-List celebrities, including: Tom Brady, Gisele Bündchen, Stephen Curry, Kevin O’Leary, and Naomi Osaka.
 
Even when products have little connection to celebrities’ specific talents, star-studded endorsements are often very effective for a few reasons: 
  • Celebrities grab attention.  If you’ve ever seen a celebrity in an airport or walking down a city street, you probably watched them for at least for a moment.
  • Individuals are very interested in the lives of famous people and those who know them.  That’s why there are crowds of royal watchers and television shows like Basketball Wives.
  • People often want to pattern their lives after those of celebrities.  Gatorade famously capitalized on that inclination a few decades ago with its “Be Like Mike” ad campaign, and most other celebrity-based promotion includes a similar inference – if you buy this product, you’ll be at least a little like the star who’s selling it.
 
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While I know a little about advertising endorsements, investing and cryptocurrency are not my wheelhouse, which led me to reach out to two colleagues who have both that skill set and knowledge.  I asked each to share his thoughts about celebrities endorsing financial products.
 
Jansen Hein, is the chief financial officer and chief operating officer at Illinois State Board of Investment (ISBI) where he actively manages all portfolio operations, business operations, and finance/accounting related functions and processes for ISBI, a $24B+ state pension asset investment agency.  Before joining ISBI, he served as a certified public accountant and consultant for more than eight years with Ernst & Young.
 
Dwayne Safer is a finance professor at Messiah University where he teaches courses in Financial Management, Corporate Finance, Security Analysis and Evaluation, Financial Institutions Management, and Investments.  He holds the designations of CFA, CFP, and CAIA.  Before entering higher education, he was a senior vice president of corporate strategy & development for Citizen’s Financial Group and a director of investment banking at Stifel Financial Corp.
 
As their brief bios suggest, both men have extensive financial backgrounds that make them well-qualified to discuss what constitutes reliable investment advice, as well as who should offer it.  Given those credentials, I was somewhat surprised that in their initial responses, neither expressed absolute objection to celebrities endorsing financial products:
 
Hein:  “An ethically run business could see benefit from getting their message/product out through the use of celebrity endorsements, and I have no issue with that.”
 
Safer: “I don’t have a problem with celebrity endorsers of financial products and companies; however, the public oftentimes has difficulty separating the popularity and likability of the celebrity personality from their lack of expertise and knowledge in the company or product they’re endorsing.”
 
While both of these experts are open to the possibility of celebrities endorsing financial products, the preceding qualified responses foreshadow their more fully articulated beliefs, which detail significant criteria to meet in order for such sponsorships to be good for consumers.  Together they construct three main hurdles that effective and ethical financial product purveyors must clear:
 
1) Transparency
To illustrate what celebrity spokespeople shouldn’t do, Safer references the recent case in which the SEC fined Kim Kardashian $1.26 million for her failure to disclose that EthereumMax paid her $250,000 to promote EMAX tokens on her Instagram account.  He contrasts her incomplete communication with that of Barstool Sports founder Dave Portnoy, who was upfront that he received an ownership stake in the ETF BUZZ in return for promoting it in his tweets.
 
Safer similarly contends that organizations must be transparent in terms of whether they are investing individuals’ money, like mutual funds, ETF’s, and hedge funds do, versus simply serving as custodians of those funds, like brokerage firms and banks often do.  As an example, he points to FTX, whose clients thought the exchange was only acting as a custodian of their money, when in reality it was investing it in a crypto hedge fund of a sister company, Alameda.
 
2) Trust
That kind of transparency is key to earning investors’ trust, as Hein shares: “To me, decisions regarding financial services providers must come down to personal trust. Regardless of the product/provider.”  He adds that although he is not personally inclined to extend such trust for financial decisions to celebrities, he recognizes that some consumers are, in which case they must understand and accept the risks, while the celebrities and the businesses that employ them are culpable for any deception, intentional or not.
 
Hein believes that trust of service providers is especially important in the case of investing because laws often lag behind industry practices, legal enforcement is sometimes lax, and many organizations simply choose not to self-regulate.  He also emphasizes how the unique nature of investment risk necessitates more than typical trust:
 
“We are not talking about buying a $100 product, with limited downside, but about investing in ways that may materially impact a consumer's current and future stability. The scrutiny of consumers should be different for any financial services marketing than for other products.” 
 
Safer also underscores consumers’ responsibility for determining who to trust, referencing FTX and suggesting that the exchange’s use of a large number of high-profile “finfluencers,” e.g., Kevin O’Leary and Larry David, appeared to be “a ploy to engender the trust of the public so that they would invest in the growing crypto craze through FTX without doing basic diligence on the company.”
 
3) Technical Competence
Deciding who to trust is an age-old social challenge that extends far beyond investment relationships.  The character of the other person is certainly one of the main trust criteria.  Another is their competence, i.e., Are they able to do what their role in the relationship requires?
 
In the case of celebrities promoting investments, their financial competence is a very legitimate question.  It’s not surprising that both Hein and Safer, whose extensive experience and education have provided them with such expertise, wonder whether most celebrities know what’s needed to competently endorse financial products.  The two agree that, unfortunately, celebrities’ popularity often appears to be more persuasive to consumers than any financial proficiency they may possess:
 
Hein says, “Consumers must accept that their willingness to be persuaded to make financial transactions based on a celebrity endorsement may have little/no meaningful merit on the quality of the product or service. Is Steph Curry a financial professional? Is Kim Kardashian an investment professional? I am not saying that these two individuals are foolish or unwise (both are extremely successful at their crafts/professions).”
 
He continues, “What I am suggesting is that it is very possible that either (1) they are making these endorsement determinations themselves and we must acknowledge their limitations in doing so or (2) they themselves are relying on the advice of other financial professionals regarding the products/companies they choose to endorse — individuals we as general consumers do not know or necessarily trust.”
 
As shared above, Safer says he has no problem with celebrities endorsing investments, but he is concerned that “the public oftentimes has difficulty separating the popularity and likability of the celebrity personality from their lack of expertise and knowledge in the company or product they’re endorsing.”
 
He expands that belief with a more specific example: “I may think Tom Brady is the best QB of all time, but I’m pretty sure he knows very little about crypto and how crypto assets should have been custodied at FTX.  In fact, he’s likely just collecting a big check from FTX and not caring about the details.” 
 
Should celebrities endorse financial products?  Neither Hein nor Safer offer an unequivocal, “No,” but together they use the tools of transparency, trust, and technical skills to paint an exacting picture of investment advice done right that’s undoubtedly very challenging for most famous spokespeople and their firms to replicate.
 
However, in the rare cases in which such a portrait can be perfected, celebrity investment endorsers can play a supporting role to “Mindful Marketing.”
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23 Comments

Marketing Must Fight Fakes

11/6/2022

4 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 

I recently received LinkedIn connection invitations from two different recruiters – It’s nice to be wanted; although, it’s nicer when the people pursuing you actually exist, which I’m certain wasn’t the case for either.  As rapidly advancing technology helps blur lines between fact and fiction, does marketing have any obligation to stand for truth?
 
Deception has been part of human history since the serpent misled Adam and Eve.  Over millennia, certain marketers have misguided consumers, whether they were ancient merchants using rigged weights and measures, snake oil salesmen pawning impotent elixirs, or auto dealers turning back odometers.
 
In recent years, the growth of social media and advances in digital technology have helped deception proliferate like never before, both in volume and sophistication.  Most of us are all too familiar with fake news, clickbait, and other forms of deceptive communication that cross our paths dozens of times a day.
 
The two LinkedIn invitations from imaginary people I mentioned above are cases in point; I’ve received many more, as others reading this piece probably have also.  Some telltale signs of the fakes are the model-worthy headshots, scarce background info, few existing contacts, and no recent posts.
 
These forgeries are fairly easy to spot, but others can be much more challenging.  Really good photoshopping can be completely undetectable.  Although someone occasionally sees and points out part of an image that was secretly altered, such as a celebrity’s unusual narrow waistline, these detected cases are only a fraction of those in which pictures are materially changed and which sometimes deceives others.
 
As a user of graphic design software since the mid-90s, I know these techniques firsthand.  One of my earliest photoshops involved our family’s promotional products business, which was based in a century-old Victorian house.  Unfortunately, a large telephone pole with wires projecting in four different directions made it impossible to get a clean picture of the building, so I used Photoshop’s clone stamp tool to make the pole and wires magically disappear.
 
While digital manipulations of static images have some potential to portray alternate realities, they pale in comparison to what deepfake video can do.  Driven by “deep learning,” a form of artificial intelligence (AI), and using face-swapping autoencoders, these extremely realistic videos can make their subjects seem to say and do things they’ve never done or said, which might be completely out of their character.
 
Most of us have seen lifelike deepfakes, which are easy to find on the web, but the most eerily realistic ones likely have been created by the Belgian company Metaphysic, whose viral videos employing American actor Miles Fisher to deepfake Tom Cruise were highlighted in an illuminating NBC Today segment about the technology.
 
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In the segment, NBC reporter Jacob Soboroff asks Fisher about the ethics of deepfake video and whether it could be a threat to democracy.  Fisher replies that the technology is “morally neutral,” adding, “as it develops, the positive output will so far outweigh the negative nefarious uses.”
 
Fisher’s response is reassuring, but how believable is it given that he does deepfakes to advance his career, and he has a business relationship with a firm that’s monetizing the trend?
 
As Business Insider has reported, others are also rightly questioning the potential repercussions of deepfakes:

“Many experts believe that, in the future, deepfakes will become far more sophisticated as technology further develops and might introduce more serious threats to the public, relating to election interference, political tension, and additional criminal activity.”
 
A recent New York Times article shared similar social and political concerns about deepfakes specific to their unsettling spread on TikTok.  Times reporter Tiffany Hsu also suggested another very important reason for pumping the brakes on deepfakes:
 
“But more than any single post, the danger of manipulated media lies in the way it risks further damaging the ability of many social media users to depend on concepts like truth and proof.”
 
It sounds cliché, but honesty is a foundation of every strong relationship and of every highly functioning society.  Productive interactions become impossible when people are unsure who’s lying and who’s telling the truth.
 
While it’s true that any individual can potentially get ahead by lying, no one gets ahead if everyone lies.  As purveyors of what might be the world’s most pervasive communication, marketers should understand the magnitude of their influence and be resolute guardians of truth, for their own livelihoods as well as for the preservation of society. 
 
Here are three ways marketing should fight falsity:
 
1.  Ensure no harm:  Not all digitally altered content is created equal.  Some is much more likely to significantly change people’s beliefs and actions, often in undesirable ways, while other tactics are more benign.  My analysis is biased, but I would put my telephone pole removal example in the harmless category.  It’s doubtful that anyone saw the building photo without the wires and developed a significantly different impression of the business.
 
2.  Reveal the truth:  If there’s a compelling reason to alter reality, let people know what’s been done.  In cases like the Tom Cruise deepfakes that are so good they fool most people, there should be clear disclaimers, e.g., “This is a deepfake.”  In other instances, the unrealistic or playful nature of the altered content is enough of a signal.  For instance, this past July I wrote an article titled “Cultures of Corruption” for which I photoshopped a winking/smiling Ben Franklin on the front of a $100 bill.  It’s doubtful that anyone believed the comical counterfeit.
 
3.  Avoid a deception arms race:  Unfortunately, marketing often involves one-upmanship, e.g., if one advertiser employs sexually provocative content that’s effective in attracting attention, other advertisers will insert even more explicit elements in their ads.  Meanwhile consumers’ thresholds of tolerance get pushed higher and higher.  There’s a real danger of the same kind of advance occurring with deepfakes unless firms follow the previous two prescriptions and refrain from pushing the envelope on realism past the point of easy recognition.
 
Fortunately, I’m still able to tell when a LinkedIn invitation is a fake.  Regrettably, I shouldn’t have to.  Organizations that resort to any form of deception in order to change people’s beliefs or cause them to take actions they wouldn’t otherwise choose are truly practicing “Single-Minded Marketing.” 
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Buy BRADY, But Don't Be Like Brady

9/24/2022

4 Comments

 
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by David Hagenbuch - professor of marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 

Tom Brady is one of few professional athletes who transcend their field.  While many football players and fans revere him, even those who pay little attention to sports know his name.  In a new video ad, Brady surprisingly suggests that aspiring athletes shouldn’t aim to be like him.  That advice sounds self-effacing, but how does it fit with other messaging surrounding Brady’s brand?
 
Sports analysts love to debate who’s the GOAT—greatest of all time.  When talking football, it’s easy to make a case that it’s Tom Brady.  No one has come close to his seven Super Bowl wins in what might be the most challenging position in all of sports, NFL quarterback.  He’s also the all-time leader in passing yards, completions, and touchdowns.  Then there’s his incredible longevity—still going strong at age 45.
 
It’s not surprising that Brady, like other top-tier athletes, has also been a prolific product endorser.  He’s promoted brands that include, but aren’t limited to, Beautyrest, Disney, Snickers, UGG, and Visa.  Most Brady ads garner little extra exposure, but his most recent commercial for Under Armour has captured added attention.
 
The ad includes another legend, actor Morgan Freeman, who reads a letter that Brady has purportedly penned to a hypothetical football prodigy who some are calling “The Next Tom Brady.”  Brady says to reject any such associations and instead to “compare yourself to nobody but the kid in the mirror.”
 
One can imagine at least a couple reasons why the GOAT might give that advice:  1) He genuinely wants young players to chart their own unique course and not be saddled with expectations to be someone they’re not; or, more cynically, 2) He doesn’t want anyone matching or exceeding his accomplishments, thus dimming the light of his star.
 
Each of these motivations is possible, but given that the celebrity friendship and letter are almost certainly contrived, the most plausible motive is the one that drives virtually every commercial — selling product.
 
Both Brady and Under Armour want people to buy the brand’s athletic equipment and apparel.  It’s been their common cause for more than a decade and a partnership that has rewarded Brady handsomely: in the ballpark of $10 million to $15 million a year.
 
In fact, one might even say that NFL quarterback is Brady’s side-hustle and product endorser is his day job, at least in terms of income.  In 2021-2022, Brady’s compensation from quarterbacking was $31.9 million while his endorsement earnings totaled $52 million.
 
To his credit, Brady has positioned himself well for life after football, as an endorser and in other ways.  His ever-expanding business portfolio includes such ventures are TB12, 199 Productions, and Autograph.  There’s also his namesake BRADY brand, which takes us back to the central question of this piece:
 
Does the living legend really want aspiring athletes to avoid comparisons to him?
 
BRADY, which calls itself “The Next Generation Apparel Brand,” seems intent on living up to that label.  From the website’s photos, the brand appears to be targeting young male athletes.

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The brand features a wide variety of athletic apparel from underwear and socks, to t-shirts and sweatshirts, to complete training, golf, and lifestyle collections.  The common component on each article is the BRADY trademark, embroidered on the front panel of hats, heat-pressed on the left shoulder of training Ts, and silkscreened in 4” high letters across the chest of sweatshirts and hoodies.
 
Therein lies the advertising irony.  Through Under Armour's commercial and the BRADY brand, Tom Brady passes mixed messages to young athletes, telling them:
 
“Don’t let anyone compare you to me, but please wear my name across your chest.”
 
Just as basketball players who sport #23 on their jerseys encourage comparisons to another GOAT, Michael Jordan, any high school or college quarterback who wears BRADY emblazoned on his football training shirts invites comparisons to Tom.
 
These associations aren’t unique to athletics; they occur most times famous people put their names on products.  Virtually every celebrity endorsement benefits from such classical conditioning as the admiration that people have for the celebrity transfers onto the product they’re promoting.
 
Whether it’s verbalized or not, the celebrity in the ad suggests, “I use this product, so you should buy it and be like me.”  The consumers' emulation can extend to other products the celebrity endorses as well as to other 
attitudes and actions.
 
When I was growing up, some young basketball players wore white and red Converse sneakers, #6 jerseys, and patterned their game after Dr. J, while others wore similar shoes with green trim, #33, and imitated Larry Bird.  Aspiring athletes have likely been doing the same for more than a century.  So, it’s no stretch to suggest that many young football players who wear the BRADY brand emulate #12 and welcome comparisons to him.
 
It's fine for Tom Brady and other famous athletes to serve as spokespeople for products they genuinely believe in and that benefit those who follow in their footsteps.  However, telling young athletes to buy their branded merchandise but not be like them is disingenuous and a trick play that should be flagged for “Single-Minded Marketing.”
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Are There Rules When Everyone's an Endorser?

8/13/2022

3 Comments

 
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by David Hagenbuch - professor of Marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 

There was a time when only celebrities and aspiring actors were spokespeople.  Now the friend you’re having lunch with tomorrow may, unbeknownst to you, have an endorsement deal.  It’s nice that company sponsorship has been democratized, but with so many people pushing products, how can consumers survive the promotional onslaught?
 
The great expansion of spokespeople hit home for me a few months ago during a discussion about personal branding in our university's capstone marketing course.  As we considered the notion that those present might be future endorsers, a student in the front row spoke up, “Do you know Rachel Delate?  She’s already endorsing products.”  A classmate quickly added, “Yeah, she has a deal with Body Armor.”
 
A year earlier, Rachel was in my intro to marketing class where she distinguished herself as a strong student.  She’s also a very good lacrosse player, e.g., first team All-Conference, first team All-Region, third team All-American.  After the NCAA’s recent relaxation of rules involving name, image, and likeness (NIL), that talent put her in a position to accept endorsement deals.
 
Besides Body Armor, Rachel also has enjoyed sponsorship experiences with TreadBands, Barstool Sports, and LiquidIV, which have provided her with a variety of branded gear.  She says the experiences have been very worthwhile, as she summarizes in a sentence, “I’ve had the opportunity to connect with awesome brands and people and receive cool stuff!”
 
Knowing Rachel, I’m confident she’s a responsible influencer, but what about many others who have suddenly become spokespeople and might be looking to make quick money, not caring much about what they’re selling or to whom.  How should they see their roles?  But first, how did we get to this point of influencer inundation?
 
The rapid rise in number of endorsers has been the result of a perfect storm of at least three interwoven social trends and economic incentives.
 
First, over the last several years, new ecommerce platforms and tools have made it relatively easy and inexpensive to operate online shops, which has encouraged many people to start, run, and promote their own businesses.
 
Second, there’s been a steady increase in influencer marketing due mainly to the seismic shift from traditional media to social media.  Advertisers have always needed to be where consumers are, which has recently meant firms moving money from the likes of NBC and the New York Times to an up-and-coming influencers’ TikTok and YouTube channels.
 
Third, crypto currencies and NFTs, two new categories of virtual products that were virtually unknown a few years ago, have offered an array of endorsement opportunities not only because they’re new but because many people still don’t know exactly what they are and, therefore, lean on endorsers to guide them.
 
It’s this third trend that recently grabbed product endorsement-related headlines, but not for good reasons:
  • Bloomberg described “the disastrous record of celebrity crypto endorsements,” such as that of actor Matt Damon who plugged cryptocurrency exchange Crypto.com, only to see Bitcoin’s price plummet by 60%.
  • BuzzFeed News reported that the watchdog group Truth in Advertising warned Jimmy Fallon, Gwyneth Paltrow, and fifteen other celebrities that they violated Federal Trade Commission guidelines by failing to disclose on social media their money-making connections to certain NFTs.
 
The proliferation of new and experienced influencers playing fast and loose with their referral power, makes me wonder:  Have we entered the Wild West of product pitching where laws are lacking and consumers must take their protection into their own hands?
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Hopefully, most influencers will have the conviction to self-regulate.  For those who are so morally and professionally inclined, here are four best practices for product endorsement:
 
1. Know the product:  An endorsement is basically a recommendation.  People want recommendations because there’s something they don’t know well, and they’d like someone who’s more knowledgeable to guide them.
 
For that reason, every endorser should be very familiar with the product and/or company they’re recommending; otherwise, they’ll fail to offer value or worse, they might mislead the people who are trusting them for help.
 
2. Believe in the product:  Although information is very important, head knowledge is only half the product-endorsement equation.  Spokespeople should also believe in the merits of what they advocate.
 
Several years ago, a reporter asked basketball great LeBron James how he had improved his game and physique over the off-season.  James unwittingly replied that he stopped eating at McDonalds, which was one of his main sponsors at the time.  James’ slip underscores the fact that knowing about a product is not the same as believing in it.  Endorsers shouldn’t recommend to others products they wouldn’t want for themselves.
 
3. Ensure the product is a good fit for the target market:  Notwithstanding the previous point, there are instances in which endorsers don’t use the products they’re recommending because they’re not in the target market.  In those cases, it is especially important that influencers understand the needs of those who do use the product.
 
For example, doctors often prescribe pharmaceuticals they’ve never tried.  They can recommend them with confidence, however, because they’ve read the drug studies and believe in the companies that provide them; then, knowing their patients’ medical histories and symptoms, they can project with some certainty that their patients will benefit from them.
 
4. Disclose your relationship with the organization:  From native advertising to salespeople acting as if they’re customers, one of the greatest deceits in business occurs when marketing promotion tries to pretend it’s not.
 
Advertising and personal selling are useful tools from which consumers can gain very helpful information; however, people need to know when the information source is objective (e.g., a fellow transit rider) versus compensated by a company (e.g., an online product reviewer who receives the items for free).  It’s difficult for anyone to be unbiased about an organization that’s paying them, which isn’t necessarily a problem provided consumers know the relationship.
 
Developments in areas such as deepfake video, the metaverse, and NIL, give reason to be both excited and anxious about the future of marketing influence.  Endorsers who see their roles as involving both individual opportunity and social responsibility will likely be promoters of “Mindful Marketing.”
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3 Comments

Should AI Impersonate People?

7/1/2022

2 Comments

 
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by David Hagenbuch - professor of Marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 


“Imitation is the sincerest form of flattery”—it is a high compliment when people respect someone’s work enough to replicate it.  But, when one of the world’s largest companies’ smart speakers start imitating people’s voices, has flattery drifted into deceit?
 
It’s difficult to keep pace with innovation in artificial intelligence (AI), but one particular advance that's certainly worth attention is the impending ability of Amazon’s Alexa to mimic voices.  After hearing no more than a minute of audio, the smart speaker reportedly will be able to deliver a plausible impersonation.
 
Alexa’s voice is apparently one that appeals to a very large number of consumers:  A 2021 Statista study showed that Alexa was the most widely used assistant across four of six age demographics. So, why would Amazon want to mess with the sound that’s helped it sell so many smart speakers?
 
According to Amazon senior vice president Rohit Prasad, the change “is about making memories last,” particularly remembrances of those who’ve passed.
 
In many ways that motive makes the voice mimicking technology seem like a great idea.  For those who have lost loved ones, one of the greatest blessings would be to hear their dearly departed’s voice again.
 
Since my father passed away last August, I’ve thought several times how nice it would be to talk with him again—to hear his opinion about the latest news, to ask him questions that only he could answer.
 
On a lighter side and also related to Alexa’s voice imitation, I’ve always enjoyed good impressionists.  It’s fun to hear comedians who can act and sound like famous people.  One of my favorites is Frank Caliendo, who is best known for impressions of famous sports figures; his John Madden and Charles Barkley impressions are great!
 

Frank Caliendo impersonating John Madden on the Late Show with David Letterman
 
So, I can see why Alexa doing impressions of people we knew and loved could be popular.  However, AI impersonations should also give us pause for at least four reasons:
 
1.  More than a voice:  Of course, just because someone, or something, sounds like a person we know, doesn’t mean they are that person.  Every individual is a unique curation of beliefs, affections, and experiences that influence what they say and even how they say things.
 
Frank Caliendo may sound like Charles Barkley, but he obviously isn’t the NBA legend and popular sports broadcaster.  Consequently, Caliendo can never truly say what Barkley would say and neither can AI.  Only a person knows what they themself would say.
 
2.  Respect for the deceased:  Per the previous point, if AI speaks for anyone, beyond playing back a recording of them speaking, it’s putting words in that person’s mouth.  A living person could conceivably give such permission, but how would a dead person do the same, short of adding some kind of addendum to their last will and testament, allowing AI impersonation?
 
I’m not sure it would be fair to ask anyone before their passing to give a smart speaker carte blanche use of their voice.  As hard as it is to let go of people we loved, it’s something we must do.  The longer we’d allow AI to speak for a loved one, the greater the probability that the technology would say things to tarnish their memory.
 
3.  Vulnerable consumers:  Given how good machines already are at imitating life, it will likely become increasingly easy for techno fakes to fool us.  However, there are certain groups of people who are at much greater risk of being duped than the average individual, namely children and older people.
 
It’s scary to think how those with heinous motives might use AI voice imitation to make young children believe they’re hearing the words of a trusted parent, grandparent, etc.  Similarly, the Mindful Marketing article, “Preying on Older People” described how senior citizens are already frequent targets of phone scammers pretending to be someone they’re not.  AI voice imitation could open the flood gates for such abuse.
 
4.  Distorting the truth:  Thanks to fake news, native advertising, deepfake video and the like, the line between what’s real and what’s not is becoming more and more difficult to discern.  University of Maryland professor of psychology Arie Kruglanski warns that a truthless future is not a sustainable one:
 
“Voluminous research in psychology, my own field of study, has shown that the idea of truth is key to humans interacting normally with the world and other people in it. Humans need to believe that there is truth in order to maintain relationships, institutions and society.”
 
“In the extreme, a lost sense of reality is a defining feature of psychosis, a major mental illness.  A society that has lost its shared reality is also unwell.”
 
While examples of the innovation in imitation are fascinating, it’s concerning that in the not-too-distant future, fakes may become undetectable.  At that point, it seems like our world will be well on the path to what Kruglanski  forewarned: ‘losing its sense of reality’ and becoming ‘unwell.’
 
In the 1994 movie Speed, Sandra Bullock and Keanu Reeves try to stop a city bus that’s triggered to explode if it drops below 50 mph.  AI deception can feel like that runaway bus, barreling forward with no way to stop it or even slow it down.
 
However, large corporations like Amazon share the driver’s seat and have some control over the AI vehicle.  Although having them put the brakes on innovation may be too much to ask, they can at least integrate some forms of notification to clearly indicate when people are seeing/hearing a fake and not the real thing.
 
Even with such notifications, Alexa’s application of voice impersonation is wrought with potential for abuse.  For the four reasons outlined above, Amazon should shutter plans for its smart speaker to imitate people and thereby avoid talk of “Single-Minded Marketing.”


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The Real Beef About Burger Ads

5/22/2022

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by David Hagenbuch - professor of Marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 


While Ukrainians mourn their war dead and Buffalo residents grieve victims of a hate crime, a guy in New York cries foul because his hamburgers aren’t bigger.  Of course, not every real problem is a matter of life and death, but  could some seemingly frivolous lawsuits challenging fast food promotions portray broader communication concerns? 
 
On May 17, Long Island resident Justin Chimienti filed a legal action in a Brooklyn federal court, accusing both Wendy’s and McDonald’s of “defrauding customers with ads that make burgers appear larger than they actually are.”
 
The lawsuit alleges that the restaurants’ use of undercooked beef in photo shoots leads to promotional pieces with burgers that appear 15% to 20% larger than those customers actually receive.  The suit also suggests that Wendy’s exaggerates the toppings that embellish its sandwiches.

Burger King, the third of the big three fast food competitors, was slapped with a similar lawsuit just over a month ago.  In fact, the same law firms that sued BK are also representing Chimienti in the most recent litigation.
 
To many, these lawsuits are the epitome of money-grabbing lawyers eager to profit from a first-world problem--With so many truly important events happening in our world, why should anyone worry that Whoppers aren’t as juicy as they appear in their pictures?
 
However, Anthony Russo, one of the main attorneys representing the plaintiff, argues that there’s a bigger issue at play--corporate accountability.  He maintains that these legal actions will make the companies mend their ways, stop false and misleading advertising, and ultimately give consumers a better idea of the food they’re eating.
 
That justification sounds good, but it does come from one of the people who stands to gain the most from the litigation.  In fact:
 
“A detailed examination of eight years of consumer class actions in federal court found that consumers received only a tiny fraction of the money awarded in those cases while plaintiff lawyers frequently claimed a bigger share of the settlement than their clients.”

Still, legal action can be an effective way to bring about corporate change, and it usually takes attorneys to move such proceedings through the courts.
 
Imagining the burger court cases, the defendants might offer a counterargument like:

"When it comes to promoting themselves, don’t individuals and organizations have a right to ‘put their best foot forward,’ and doesn’t everyone expect others to do the same?"
 

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Most people don’t have sections of their resumes labeled ‘Main Flaws’ or ‘Greatest Failures’; instead, we list our ‘Special Skills’ and describe ‘Awards and Recognitions.’  Likewise, no one reviewing resumes expects to see those self-deprecating categories.  That’s why interviewers often ask job candidates things like, “Tell me about one of your weaknesses.”
 
So, shouldn’t companies also be allowed to brag a little and show their best examples versus humiliate themselves with mediocre or bad ones?
 
Curating top quality products for promotion certainly isn’t unique to fast food chains.  Grocery store flyers rarely feature misshapen fruits and vegetables, car commercials don’t use vehicles with scratches or dents, and clothing ads don’t show shirts that are wrinkled or frayed.
 
As consumers, not only do we routinely see such examples, many of us are involved in the same sort of careful curation of ourselves and the organizations we serve.
 
During my two-plus decades in higher education, I’ve often helped select ‘best’ examples to help promote my department and university.  For instance, when asked to suggest students or alumni who might provide a testimonial, I take plenty of time to think before offering names of individuals who I believe have had very positive experiences.
 
However, just because we engage in such selective promotion doesn’t mean that we should, i.e., we need to be careful about reasoning from ‘is’ to ‘ought.’

The main moral questions to ask are whether the recipients of the promotion are deceived and harmed.
 
Personally, I don’t feel misled by pictures of perfect peaches, super clean cars, or spotless shirts.  Most people also probably expect the actual items they buy to have at least some minor imperfections when compared to their pictured counterparts.
 
Depending on the nature and cost of the product, there’s a level below perfect condition that we readily accept knowing that we live in an imperfect world.  Furthermore, in terms of food, visual imperfections probably don’t matter as much as they do for many other products because although we eat with our eyes, the appearance of what’s on our plates is short-lived.
 
That takes us back to burgers and the main moral questions:
Do differences between what Burger King, McDonald’s, and Wendy’s depict in their ads and sell in their stores deceive and harm consumers?
 
First, it’s important to recognize that for the vast majority of consumers, these fast food restaurants’ ads represent reminder advertising, i.e., most people have already eaten in one or more of the chains, possibly multiple times, so they’re well aware of what they’ll receive the next time they visit.
 
Second, fast food is a rather low-involvement, low-risk purchase.  When deciding what to order, people typically spend a minute or less, not hours, days, or weeks, as they might when selecting some products.  Likewise, the average McDonald’s Big Mac Meal costs only $5.99, and customers can buy two cheeseburgers for just $2.00.  So, if the beef patties don’t look quite as pretty as the pictures, it’s no big loss.
 
All that said, there is a difference between misrepresenting quality and misrepresenting quantity.  Whether burgers look more or less appealing than their pictures is a somewhat subjective matter.  Size is not.  People almost always want to get more product for their money, not less, so it’s a problem if a burger’s picture looks 50% bigger than the one we actually receive.
 
In this sense, the burger lawsuits have more teeth.  Consumers will quickly forget whether the Big Mac Meal looked as good in person as it did in the picture, but they won’t forget if they’re still hungry after eating it, especially if they have no more meal money to spend.
 
Although that’s not a life-threatening problem on par with those mentioned at the outset of this piece, it is a legitimate consumer concern, particularly in inflationary times.  Whether they’re spending a lot or a little, people should always receive the amount of product they’re promised.
 
So, there is a plausible and practical component to the burger lawsuits; however, their bigger contribution is their call for accountability, which also may  mean modeling more genuine communication.
 
It’s not to say that people take their communication cues directly from fast food ads, yet there’s an unsettling resemblance between the idealized product promotions and the utopian pictures many individuals paint of themselves in social media.
 
When people see large, heavily advertised corporations like Burger King, McDonald’s, and Wendy’s freely exaggerating and glamorizing their truths, it implies permission for others to do the same.  
 
The world becomes a better place when individuals and organizations take care to represent themselves realistically.  It’s okay to put our best foot forward, but it must be our foot, not some fantastical version of it.  Those who walk with realism are stepping into “Mindful Marketing.”


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Mascot Madness

3/27/2022

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by David Hagenbuch - professor of Marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 

When people mention products they see advertised all the time, “insurance” is often top-of-list.  Insurance ads are virtually inescapable and stick because of clever humor and silly brand characters.  One lesser-known competitor now claims to be better because it forgoes such foolishness, but is throwing shade on the big players’ branding the way to ensure it wins?
 
Today, the mascots of insurance companies are better known than those of many colleges.  To test that claim, try the following two-part quiz.  The answers appear a few paragraphs below:
 
1) What are the mascots of the five largest U.S. public university campuses by enrollment?
  • Texas A & M University
  • University of Central Florida
  • Ohio State University
  • University of Florida
  • Florida International University
 
2) What are brand characters of the following insurance companies?
  • Aflac
  • Allstate
  • Geico
  • Liberty Mutual
  • Progressive
 
If you’re like me, you know more on the second list than the first.  Granted, I pay more attention to commercials than most people do, but I’m also a significant fan of college sports who works in higher education, which are good reasons why I should know list #2 too.
 
So, here are the answers:
1)  Aggies, Knights, Buckeyes, Gators, Panthers
2)  Duck, Mayhem, Gecko, Emu, Flo
 
The point of this exercise is to underscore how effective many insurance companies have been at  familiarizing us with their brands’ personalities.
 
Despite the old adage, “You can’t argue with success,” one insurance provider is doing just that, making a very public case that all the time and energy its competitors spend building brand characters is wasted.
 
Unlike Geico or Allstate, the company with the hot take is not a household name for most people.  It’s New Jersey Manufacturers Casualty Insurance Company, or NJM.
 
NJM began in 1913 by providing worker’s compensation to New Jersey businesses and a couple of decades later started to offer commercial and personal auto insurance and homeowners insurance.  Over the last 100+ years it’s expanded its offerings even more, while extending into other states.

Only recently, though, did the company decide to redefine the acronym that’s represented its name for more than a century.  Now, at least for the purpose of some contrarian marketing communication, NJM purportedly stands for “No Jingles or Mascots, Just Great Insurance.”
 
Why would  NJM want to throw shade on several of America’s most successful insurance providers?  The easy answer is it wants to be big like them but believes that its path to greatness must come not by copying their recipe for success but by being different.
 
NJM is a sizeable insurer; however, it’s scope and scale are small compared to the mascot-using competitors mentioned above.  NJM only markets its products in New Jersey and five nearby states.  Similarly, while NJM has about $8 billion in assets, the other firms boast much bigger asset totals:
  • Aflac:  $165 billion
  • Allstate:  $126 billion
  • Geico:  $71 billion
  • Liberty Mutual:  $145 billion
  • Progressive:  $64 billion
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Positioning against the brand, as it’s called, is not necessarily a bad idea.  Avis succeeded with the strategy in the early 1960s, using the tagline “We try harder,” –a clear slight against the number one car rental company at the time, Hertz.  Similarly, in 1967 Seven-Up tapped into countercultural sentiment by branding itself as the “Uncola” versus the soft drink “Establishment” that was Coke and Pepsi.
 
However, there are two important factors that dilute NJM’s claim to be different by not using ducks or geckos.
 
First, there are plenty of other insurance companies that can make the same claim that they’re more serious about insurance because they don’t use mascots.  In fact, they represent the nation’s five largest insurers:
  1. Prudential
  2. Berkshire Hathaway
  3. MetLife
  4. TIAA
  5. AIG
 
To be clear, Berkshire Hathaway does own Geico; however, it also owns these mascot-less insurance firms: National Indemnity Company, General Reinsurance, and Berkshire Hathaway Life Insurance Company of Nebraska.
 
Also, in case you’re thinking that Snoopy is MetLife’s mascot, the dog is gone.  The company dropped the beloved beagle more than five years ago in an effort to reflect “a clean, modern aesthetic.”
 
Second, in its television commercials trumpeting its decision to not use mascots, NJM uses, of all things, mascots!
 
To be clear, the mascots in NJM’s commercials are not its own but ones it’s fabricated for  fictitious competitors.  The commercial characters include an alpaca, a jingle-singing entertainer, an elephant-giraffe-eagle-horse-octopus, a big blue bear, a narwhal, and a ferret.
 
Again, none of the mascots belong to NJM, but by using them in its humor-infused ads, the company is not so subtly doing the same thing it accuses its competitors of doing—prioritizing playfulness over serious insurance.
 
It’s kind of like one person scolding another for their profanity by swearing at them, “You s#@% h#@%, you’ve got to stop the b*#&#% cursing!”  The point, of course is if the words are bad, no one should be using them.
 
So, if mascots don’t make for serious insurance, why is NJM using them in its ads?
 
That question is kind of a rhetorical one, but I can’t resist trying to answer it.  It could be that NJM suffers from some mascot-envy and may even be using its commercials as a way of auditioning characters to see if any stick.
 
More generally, NJM must recognize that using mascots in marketing works.  This piece began by identifying several insurance competitors’ well-known characters.  Over the years, organizations in other industries also have reaped similar branding benefits from their own creations, such as:
  • Energizer – Energizer Bunny
  • Keebler Company – Keebler Elves
  • Kellogg’s Frosted Flakes – Tony the Tiger
  • McDonald’s – Ronald McDonald
  • Michelin – Michelin Man
  • Pillsbury – Dough Boy
  • Planters – Mr. Peanut
  • Procter & Gamble’s Mr. Clean – Mr. Clean
  • StarKist Tuna - Charlie
 
Of course, characters aren’t good fits for every industry.  We don’t see luxury brands like Cartier, Gucci, or Mercedes employing mascots because they want to be seen as elegant and refined—images that characters can undermine. Likewise, some organizations’ missions are simply too serious to be connected with anything that might come across as irreverent, e.g., the American Lung Association.
 
But for many companies, mascots serve helpful purposes like giving brands more personal connection and communicating whimsy.  But even more basic, the characters often capture our attention, keep our interest, and help us remember what can be easily forgotten products . . . like insurance.
 
Given the quest for Mindful Marketing, the other important question to ask is whether mascot use is ethical.  Two areas that demand special attention are how certain mascots portray people groups and how some characters are used in marketing to children.  Otherwise, it’s hard to identify any broad prohibition of mascots for branding.
 
NJM’s claim that ‘We’re more serious about insurance because we don’t use mascots,’ doesn’t make much sense since its own ads have mascots.  Some might call that use disingenuous or deceitful, but it’s unlikely there’s any ill intent. 
 
No, NJM is just searching for a strategy that can lift it to the level of Aflac and Progressive, but such a leap won’t happen by using an eclectic cast of ‘other insurers’ mascots’ and talking more about what the company isn’t than what it is.  This specific claim for positioning against the brand should be assessed as “Simple-Minded Marketing.”


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Marketing Ideology

2/27/2022

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by David Hagenbuch - professor of Marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 


Principles of marketing professors teach that “products” are more than tangible goods; they’re also services and ideas.  While it’s easy to identify organizations marketing goods and services, noticing idea marketing takes more discernment. Recently, the world witnessed one of the most blatant examples of idea marketing ever.  It worked but unfortunately not for good.
 
In the annals of persuasion, one of the hardest ‘sales’ must be convincing one’s country to start a war, given the likelihood of loss of life, property, political allies, and more.  In persuading Russia to invade Ukraine, Vladimir Putin, achieved such a seduction, while providing an example of idea marketing at its worst.
 
Of course, Russia’s largely autocratic regime doesn’t require the consensus-building demanded in a democratic state.  Still, Putin was undeniably successful in marketing a momentous idea by convincing other government officials, military leaders, and to some extent the Russian populace to embrace the notion that invading Ukraine served a national security interest while accomplishing historically based cultural and ethnic reunification.
 
Mindful Marketing rarely tackles politics.  I’m addressing this situation not just because it’s a poignant example of idea marketing but because of its significant human and economic impact, as well as its potential to become one of history’s biggest geopolitical events.
 
Russia’s incursion into Ukraine is also personal for me.  Both of my wife’s parents were born in Ukraine, where they endured extreme hardships during WWII.  Consequently, my wife and our children share Ukraine’s rich cultural heritage by birth, as I do by marriage.

The necklace in the picture above is my wife's tryzub, which her father brought back for her from one of his many return visits to his homeland.
 
Of course, millions of others also have personal connections.  In fact, as I was writing this article, I read a post by one of my LinkedIn connections, Cait Mack who wrote:
 
“This has been one of the worst days of my life.  The war in Ukraine feels like it’s pulling at the very fiber of my being.  For those who don’t know, I’m Ukrainian.  My grandparents came over during WW2, fleeing from Nazis.  I am sick with grief.  Everything feels so stupid and trivial in comparison to what’s going on over there.”
 
“I think of my grandparents.  Our extended family in Ukraine.  All the innocent people.  The parents with their children.  The harsh reminder that we can’t really keep our families safe.”
 
As Mack mentions, the secondhand angst that any of us feel can’t compare to the fear and horror that those in Ukraine are experiencing, which reminds me of the focus of this piece—Putin marketing the idea of invasion.
 
Rather than commending his cunning, the intent here is to extract something edifying from the unfolding tragedy—to identify how individuals and organizations should market ideas responsibly. 
 
Autocratic leaders have the advantage of superior political power.  Marketers enjoy information superiority, i.e., they naturally know more about their organization and its products than do consumers.
 
Because of their very intangible nature, the information imbalance involving ideas becomes even more skewed, which means marketers are under even greater moral compulsion to carefully steward their influence on the conceptions of others.  The following are five steps toward marketing ideas responsibly:
 
1. Seek Understanding
It’s hard to understand when uninformed, which is why the first act in understanding is gaining information by researching the issue at hand and, above all, listening to those closest to it.
 
Courtroom dramas sometimes culminate with an attorney introducing a new witness or piece of evidence, which unexpectedly changes the minds of jurors.  Such are likely violations of legal discovery, but the examples are helpful reminders that additional and possibly more accurate information can help change our minds for the better.
 
2. Explore Other Perspectives
As implied above, it’s helpful to lean on others, not just because they can provide additional facts but because they might offer their own experienced and informed interpretation of the information.  Whether at the boardroom level or shop floor level, the best leaders always avail themselves of others’ insights.
 
It sometimes seems that people avoid other perspectives, fearing they’ll change their opinions.  That may happen, which is not necessarily a bad thing.  However, seeking others’ perspectives is often like a fan who's loyal to a certain football team watching two other teams play.  Watching them will probably not change the fan’s team loyalty, but they may see in the other teams things that enhance their understanding of the game, as well as things their team does well or could do better.
 

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3. Present a Rational Argument
People can be persuaded in different ways, including by deception (painting an inaccurate picture of facts) and coercion (compelling an action from a position of power).  Neither of these alternatives allows people to exercise informed consent, or freely choose to adopt an idea based on its logical merits.
 
Although we occasionally act otherwise, people are rational beings who can understand and make sensible decisions based on logical arguments.  Even young children comprehend reason—‘If you eat your whole meal, you’ll get to have dessert.’  People of any age deserve clear, logical, communication.
 
4. Don’t Play on Emotion
However, humans aren’t simply rational beings.  Our complex psychology also includes emotion, which makes us even more interesting.  Yes, we should make most decisions by reasoning with objective information, but sometimes it’s appropriate for people to choose things that they enjoy or that make them happy, like playing a favorite game with a friend.
 
What’s unacceptable is to use others’ emotions against them, e.g., to persuade them to do something out of an irrational fear or a sense of guilt.  Although good in moderation, too much emotion can cloud people’s thinking and cause them to do things that they otherwise would not rationally choose.  The outcome is like a doctor tapping a patient’s knee with a reflex hammer:  Their leg will move involuntarily no matter how much the patient may reason that it shouldn’t.
 
5. Be Truthful
The fifth act encapsulates the preceding ones and should go without saying; however, even when people fulfill the first four steps, they still must ensure follow-through of this final one, particularly to avoid selective presentation of facts.
 
For example, I could support the morality of advertising by referencing Gallup’s annual poll about the honesty and ethics of various occupations and accurately report that advertising practitioners ranked in the top 20 of all occupations.  That may sound impressive, but the statement would be misleading because the survey only asked about 22 occupations and advertising practitioners ranked 18th.
 
What we don’t tell people is often as important as what we tell them.
 
Again, the point of this piece has not been to detail Putin’s tenuous argument for the invasion of Ukraine; however, this website, among others, provides a window into how his rationalization evolved.  In short, Putin appears to have violated more than one of the preceding five steps; for instance, he played on his own people’s emotion with a “rousing speech” in which he called Ukraine a U.S. colony ruled by a “puppet regime.”
 
From my own reading and experience, Putin’s biggest breach of the steps of responsible influence has been of #5, by being untruthful, particularly with respect to his denial of Ukraine’s historic statehood and his claim that Russians and Ukrainians ‘are one people.’

Soon after my wife and I started dating, I learned two important facts involving her family’s ethnic heritage.  First, the nation is not “the Ukraine;” it’s “Ukraine.”  Adding the definite article “the” diminishes the country’s stature to that of a territory or colony, (e.g., the Louisiana Territory, the Yukon), which Putin directly suggested in his “rousing speech” referenced above.
 
Second, my wife’s family and their friends frequently reinforced that ‘Ukrainians are not Russians.’  I experienced firsthand that Ukrainians have a unique language, history, food, customs, and other rich cultural distinctives that distinguish them from their homeland’s northern neighbor.
 
My evidence spans more than three decades, but it is personal and, therefore, anecdotal.  The most compelling proof of Putin’s misinformation is, regrettably, what’s happened during the invasion, as a 2/26 New York Times Breaking News headline read, “Ukraine, outmanned and outgunned, has slowed Russia's advance on Kyiv and two other cities as its forces wage a ferocious resistance.”
 
If Ukraine were just a Russian territory, if the majority of Ukrainians wanted unification with Russia, and if Ukrainians and Russians were one people, why are so many Ukrainians valiantly fighting and giving their lives to stop the invasion and maintain their nation’s sovereignty?
 
The disconnect stems from a lack of truthfulness, which many of Putin’s own people have recognized, hence widespread protests by Russians against the “war without a cause.”
 
Tragically Putin was effective in selling the idea of invasion to some, at the cost of many lives and the freedom of a peaceful people.  That underlying deception and unimaginable destruction makes his strategy the worst example “Single-Minded Marketing.”


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Should Social Responsibility be Selfless?

1/16/2022

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by David Hagenbuch - professor of Marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 


While people gave gifts to loved ones last month, the world’s largest pizza chain was providing presents to some very surprised recipients—other restaurants.  True, “it is more blessed to give than to receive,” but was Domino’s philanthropy actually aimed at putting itself on the receiving side?
 
As you may have seen in the 60-second spot from its feel-good campaign, Domino’s bought over $100,000 in gift cards from local restaurants and gave them to its own customers.
 
It doesn’t take much business background to know that the goal of an enterprise is to build market share for itself, not competitors.  Even Vickie Corder, one of the restaurant owners who appeared in Domino’s commercial, was astonished by the action: “I can’t believe one restaurant is buying another restaurant’s gift certificates.”
 
Why would Domino’s want to support its competitors’ sales by buying their gift cards, and even worse, giving them to its own customers, making them less likely to buy Domino’s pizza?  Some of the ad text suggests an altruistic reason:  “Domino’s wants to help the people and restaurants in our local communities.”
 
One might take that explanation at face value.  After all, the firm did fork over $100,000.  However, for a company with annual revenues of $4.37 billion and operating income of $801 million, $100,000 is immaterial.  There’s also some understandable skepticism--Why haven’t we heard before of Domino’s feelings of responsibility for other restaurants?
 
Instead, some of the chain’s social responsibility has looked more like ‘marketing gimmicks,’ such as its “Paving for Pizza” program, aimed at filling potential pizza-delivery-wrecking potholes, and its “carryout insurance,” guaranteeing free replacements for customers who inadvertently fumbled their pies.
 
The vast majority of people probably never had a poor pizza experience resulting from either of those issues and never will, so it’s realistic to suggest that in both instances Domino’s was making much ado about nothing, positioning for the free publicity that each unconventional campaign elicited.  So, is gifting other restaurant’s gift cards just another attempt to gain exposure through oddity?
 
The gift card campaign certainly seems like it could be another gimmick; yet, there are some notable differences, namely that COVID has put unprecedented pressure on restaurants, causing many to shutter their doors permanently.  In fact, Domino’s commercial mentions that “over 110,000 U.S. restaurants have closed since March 2020.”
 
That to say, unlike the exaggerated ideas of potholes pummeling delivery vehicles and consumers carelessly dropping carryout orders, the pandemic’s negative impact on restaurants has, unfortunately, been very real.
 
The ad also mentions a related phenomenon that COVID didn’t cause but did increase:  the use of third-party delivery companies.  During the height of the pandemic when most restaurants’ sit-down dining was paused, more and more people started getting restaurant food delivered to their homes and offices by providers like Grubhub, Uber Eats, and DoorDash.
 

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Although selling food, whether for dine-in or delivery, seems like a good thing for restaurants, apparently the math doesn’t work well when third-party delivery companies are involved.  Irene Li, another restaurant owner interviewed in Domino’s ad, affirms the profit predicament: “[Third-party delivery fees] take a huge chunk of our bottom line; all of that comes out of our pocket and goes to them.”
 
Others have echoed her concern, including NPR, which reported that apps often charge commissions of 17% or more, in addition to delivery fees.  Likewise, the LA Times found that one local restaurant paid $35,000, or roughly a third of its annual rent, in delivery fees, which led the Times to recommend, “The next time you order takeout, call the restaurant [directly].”
 
Domino’s suggestion that delivery apps wreak havoc on restaurants’ bottom-lines is on-point; however, the pizza chain is also very well-known for doing its own deliveries.  Does that mean that Domino’s is selflessly looking out for others?  Not exactly.
 
Apparently, some of the many people who have grown accustomed to the third-party apps for food delivery have also used them to place orders for pizza, doing to Domino’s the same fiscal damage described above. In fact, another Domino’s ad has suggested such delivery difficulties, warning consumers that third party delivery firms charge “surprise fees,” but it will reward certain loyal customers who use its app with “surprise frees,” or, free food.”
 
Likewise, during an interview on CNBC’s Mad Money, Domino’s President and CEO Ritch Allision suggested that third-party delivery apps have, to some extent, stunted the company’s growth.
 
All this to say, by buying and giving away other restaurants’ gift cards, Domino’s has brought added attention to an issue that doesn’t just hurt its local restaurant competitors.  It also  bruises Domino’s own bottom line.
 
The question, then, becomes, Is it right for Domino’s to help itself while helping others?
 
Before considering the ethics of this query, it’s worth noting that Domino’s strategy does seem to be effective marketing.  The unconventional approach gains attention, and the corporate social responsibility builds goodwill.
 
What’s more, because delivery is both the focus of the ad and a key component of the company’s value proposition, the promotion is more meaningful and memorable.  When people consider Domino’s brand, the company wants them to think of food delivery, which the commercial accomplishes.
 
So, what about the marketing’s morality?  One consideration could be the amount Domino’s spent on the gift cards ($100K+) versus how much it’s paid for the ads.  Excluding  production expenses, U.S. television broadcasting costs alone, average about $115,000 per 30-second spot, which means the campaign’s promotional budget certainly far exceeded the value of the gift cards.
 
The extreme imbalance may make some rightly question the company’s motives.  Although Domino’s franchisees did assume some risk by giving other restaurant’s gift cards to their own customers, most people who eat out probably patronize multiple restaurants, making it unlikely that Domino’s lost business.  In fact, free gift cards may have led some of their recipients to reciprocate by buying more pizza.

All said, it’ hard to paint Domino’s promotion as selfless:  The company benefited from the tactics as did the other restaurants and those who scored the free gift cards.  So, is such mutual benefit problematic?
 
Most business exchanges result in win-win outcomes.  From the clothes we wear to the computers on which we type, we’re usually very glad we have those products and not the money we paid for them.  Meanwhile, the marketers are grateful for our money and don’t want back their products. 
 
Mutually beneficial exchange, in commercial and noncommercial contexts, is a very good thing. Some may argue that such a philosophy shouldn’t extend to corporate social responsibility, but why not?
 
Several years ago, two colleagues and I conducted research in which we identified three unique types of corporate social responsibility: donation, volunteerism, and operational integration.  In the study we affirmed that helping others was very good, but implementing philanthropic acts that simultaneously furthered the economic goals of the organization was even better.  The positive response to this article and another like it suggests that many others share the same viewpoint.
 
The reality outside business isn’t much different.  When individuals give of their time, money, etc., benevolence in some form usually comes back to them.  The stories found in the Go Giver artfully describe that phenomenon.
 
Domino’s did a good thing by buying and giving away other restaurants’ gift cards.  Although it wasn’t a major act of corporate social responsibility, it was a meaningful one.  The fact that the philanthropy also benefited the pizza chain, doesn’t stop the strategy from being "Mindful Marketing."


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Two Lessons TikTok can Teach Facebook

10/10/2021

2 Comments

 
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by David Hagenbuch - professor of Marketing at Messiah University -
​author of 
Honorable Influence - founder of Mindful Marketing 

Most of us have used social media to learn how to do something, from making bread to remodeling a bathroom.  We often turn to such media for new skills, but what if these sites could educate each other?  In the wake of the latest revelations about negative social media impact, it seems there are at least two lessons the up-and-coming platform could teach the seasoned pro.
 
It’s been hard to find news feeds recently that haven't featured Facebook.  The iconic social network that’s often been the focus of questions from citizens and senators, was back in the spotlight after a former Facebook employee-turned-whistleblower appeared on 60 Minutes and exposed a series of alleged corporate abuses, most impacting consumers.
 
Francis Haugen is a 37-year-old data scientist and Harvard MBA who has worked for a variety of top-tier social media firms for 15 years, including a two-year tenure at Facebook.  In her October 3rd interview on 60 Minutes, she didn’t pull punches in portraying what she believes is her former employers’ danger to society.  Among her accusations were:
  • Facebook’s algorithms systematically amplify angry and divisive content, which are rewarded with more revenue, as other content doesn’t receive adequate returns.
  • Facebook employees are compelled to curate polarizing posts in order to drive site traffic, maintain user engagement, and ultimately keep their jobs.
  • “Facebook has set up a system of incentives that is pulling people apart.”
 
Two days later, Haugen testified before a Senate subcommittee, where she made several other stinging revelations:
  • Facebook has ways of determining people’s ages and could be doing much more to identify users younger than 13.
  • Hate speech and misinformation boosts meaningful social interaction (MSI), a key Facebook metric to which employee bonuses are tied.
  • Facebook’s “amplification algorithms” and “engagement-based ranking” drive young people to destructive online content, resulting in bullying, body image issues, and mental health crises.
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Facebook has responded to Haugen’s accusations, including with a written statement to 60 Minutes in which it claims that polarization has decreased in countries where internet and Facebook use has risen.  Also, in a Facebook post, CEO Mark Zuckerberg has suggested that Haugen’s revelations represent “a false picture of the company” and that the idea that the firm prioritizes profit above safety and well-being is “just not true.”
 
Unlike Haugen and Zuckerberg, most of us have no window into Facebook’s innerworkings.  At best, we’re just one of world’s largest social media platform’s 2.7 billion monthly active users, meaning we have no way of knowing whose representations are really true.
 
Human nature and history tell us that both sides are likely right in some ways, and perhaps responsible for certain misrepresentations.  That said, many people have experienced firsthand Facebook feeds strewn with angry and polarizing posts.  Likewise, the company’s recent decision to pause its work on an Instagram product for children under age 13 seems to reflect some sense of mea culpa.
 
In short, it’s becoming ever-more-apparent, even to nominal social media users, that there are important issues Facebook needs to address more effectively.  The question, then, becomes, “Who can teach Facebook how to rehabilitate its social impact?”
 
It must be hard for one of the largest and most influential companies in the world to accept advise from anyone, including members of congress, as evidenced during Zuckerberg’s many visits to testify on Capitol Hill.
 
That doesn’t mean that government regulation isn’t effective.  It plays a critical behavior-modifying role.  However, there are natural delays in passing legislation, and those lag-times are often exacerbated by the speed at which social media and related technology change.  Furthermore, members of congress typically don’t understand an industry as well as those who work in it, particularly when the industry involves high-tech.
 
So, who also lives at the cutting edge of technology and could influence Facebook toward more positive social impact?  One particular competitor could—TikTok.
 
I admit; on the surface, this suggestion seems almost ridiculous:  With its own algorithms driven by artificial intelligence, isn’t TikTok part of the same problem?
 
In fact, I’ve expressed my misgivings about the influence of the widely-popular app that Search Engine Journal describes as having “the fastest growth of any social media platform.”  In the end, however, I concluded that users’ abilities to restrict or stop using TikTok suggested that it was not truly addictive.
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Of course, ‘not being part of the problem’ doesn’t necessarily mean that TikTok can be part of a Facebook solution.  However, the social media upstart has recently taken two initiatives that align squarely with two of the main principles that Haugen suggested Facebook must learn:
 
1.  To discourage bad behavior:  Compared to the millions and millions of videos available on TikTok, it was admittedly a minor move when the app recently began to ban posts that referred to stealing school property—a disturbing late-summer trend among teens.  Still, the moral stand that the company took shouldn’t be diminished.  A TikTok spokesperson explained the ethos:
 
“We expect our community to stay safe and create responsibly, and we do not allow content that promotes or enables criminal activities.”
 
2.  To support users’ mental health:  Also about a month ago, TikTok unveiled “a slew of features intended to help users struggling with mental health issues and thoughts of suicide.”  Among the app-related resources are well-being guides for those struggling with eating disorders and a search intervention feature that activates if a user enters a term like “suicide.”
 
Facebook’s challenges to more effectively discourage bad behavior and to support mental health may be somewhat unique, both in terms of their nature and magnitude.  Still, TikTok now has 1 billion monthly users, up from 700 million just a year ago, and those users seem to deal with many of the same social concerns that Facebook users do.
 
Businesses routinely learn from others, often by observing and emulating them (e.g., developing new products).  Facebook certainly can and likely does already do that, but maybe there’s another level of within-industry education that could occur.
 
This suggestion may be the most ridiculous one yet, but what if Facebook and TikTok cooperated?  What if the two companies ‘compared notes’ and in some way worked together to address the physical, emotional, and social challenges that threaten both their users?
 
Of course, imaging any cooperation between such large and close competitors is practically unthinkable, but it's not unprecedented.  Several decades removed, both Harvard Business Review (1989) and Forbes (2019) published articles citing such partnership examples, like General Motors and Toyota, and explaining the win-win outcomes that accrued from such “coopetition.”
 
What might Facebook and TikTok’s motivations be for cooperating?  Perhaps they both would like to avoid probable government regulation.  Or, they may want to see how they can advance themselves, without compromising their competitive positions.
 
Moreover, maybe Facebook and TikTok can recognize that personal and societal well-being are what matter most, and together they have the power to shape it like few others can.  Actually, all three of motivations have merit and together they certainly represent “Mindful Marketing.”
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