VRM: Turning advertising upside/down

Doc SearlsFrom his office at Harvard, Doc Searls is working on tools and systems that he and his co-workers hope will help further enable and empower everyday people. He wants nothing less than to turn the whole relationship between business and customer on its head. Instead of businesses sending signals to customers about what they’re selling (a.k.a. advertising), Searls envisions a vast system where customers can send signals to businesses about what they wish to buy. Instead of customers responding, therefore, businesses would respond. It’s nothing short of revolutionary.

What makes something like this possible is horizontal connectivity among human beings, which is the most disruptive element of the age we’re entering. What does it disrupt? Anything and everything that counted on top-down connectivity to sustain the value of scarcity. The fact that we’re connected both ways by technology is what makes all of this so incredibly dangerous to the status quo of the age before it existed. A lot of people are going to lose everything as this plays out, and it’s really just beginning.

If Doc Searls is successful, for example, it’ll mean a major cultural shift away from advertising, something Doc has dreamed about for many years. His disdain for traditional marketing is well-documented. It’s one of the forces that led to the publication of “The Cluetrain Manifesto,” the seminal document for the new age of media. Searls is one of its authors, and long after we’re all gone, historians will point back to “Cluetrain” as the thought piece that jump-started the Internet revolution.

Cluetrain’s prime clue is this: “We are not seats or eyeballs or end users or consumers. We are human beings, and our reach exceeds your grasp. Deal with it!”

Doc Searls thinks the word “consumer” is a demeaning insult, and I referenced his negative description of “passive opens mouths crapping cash” in my 2005 essay, “The Economy of Unbundled Advertising:”

The language of mass marketing is all about warfare. We “target” this; we “launch” a thrust here; we “attack” and “saturate.” It’s all so exciting. Ries and Trout called their seminal book, “Positioning: The Battle for Your Mind” — a battle with victory being sales.

But the advertising industry forgot to ask people for permission to play war games in their minds, and now things like DVRs and the Internet are enabling people to simply shut the door. Nobody wants to be targeted. Nobody wants to be positioned. Nobody wants to be manipulated. The consumer is now the one with the power, and people with goods and services to sell need to start thinking of them again as customers.

Hugh MacLeod cartoonDoc Searls’ latest venture is Project VRM, which stands for “Vendor Relationship Management.” While vendors have lots of tools to help them “manage” customers, who speaks for the customers? This is what Project VRM is all about.

VRM tools provide customers with both independence from vendors and better ways of engaging with vendors. The same tools can also support individuals’ relations with schools, churches, government entities and other kinds of organizations.

VRM development work is based on the belief that free customers are more valuable than captive ones — to themselves, to vendors, and to the larger economy. To be free —

  1. Relationships must be voluntary.
  2. Customers must enter relationships with vendors as independent actors.
  3. Customers must be the points of integration for their own data.
  4. Customers must have control of data they generate and gather. They must be able to share data selectively, voluntarily, and control the terms of its use.
  5. Customers must be able to assert their own terms of engagement and service.
  6. Customers must be free to express their demands and intentions outside of any one company’s control.

VRM research work probes the willingness and ability of customers to assert and enjoy independence from vendors — and of vendors’ willingness and ability to value and engage with independent customers. It also follows changes in the marketplace as VRM tools come into use.

It is this desire for customers to own and manage their own data that led Searls to inform his followers that “the tide turned today” on July 31, 2010, when the Wall St. Journal published a series of articles about the depth and breadth of the online data tracking business. Stating that there is no demand for tracking data from customers, only from advertisers or people selling to advertisers, Searls wrote that customers aren’t going to stand for it much longer.

Here is the difference between an advertiser and an ordinary company just trying to sell stuff to customers: nothing. If a better way to sell stuff comes along — especially if customers like it better than this crap the Journal is reporting on — advertising is in trouble.

Here is the difference between an active customer who wants to buy stuff and a consumer targeted by secretive tracking bullshit: everything.

Two things are going to happen here. One is that we’ll stop putting up with it. The other is that we’ll find better ways for demand and supply to meet — ways that don’t involve tracking or the guesswork called advertising.

I’ve said it before: Improving a pain in the ass doesn’t make it a kiss.

While all of this anti-advertising talk may seem like a doomsday scenario for media companies, I view the insight as an opportunity. And so potentially vast is this opportunity that it could become, in fact, the new “business” of media. We’ve always viewed ourselves as a portal for all sorts of messages — or signals — to the public. Those with the most cash could obtain the most messages, while we practiced journalism as the lure.

But what if we could do it backwards? Would the people formerly known as the advertisers pay to have their products and services respond to the signals from customers? Of course they would. Isn’t search, after all, such a signal of desire?

The money exchange would be the same, but the flow of the signals would be both horizontal and vertical.

Seem far fetched? You bet, but unless media companies get busy creating value independent of the old one-to-many, top-down advertising paradigm, we’re going to be forever fighting the real disruption of technology.

Advertising is changing before our eyes, and while it may not go entirely the way that people like Doc Searls would like to see it go, the changes will be radical enough to impact everything that the current model touches. And that’s especially true for those, like us, whose entire business model is based on the assumptions that advertising brings along with it.

(Originally posted in AR&D’s Media 2.0 Intel newsletter)

Comments

  1. The flaw here is the idea that there’s some sort of marketing commmunications steady-state in a marketplace flawed by virtue of the flow going the wrong way (marketers to people). In this view, reversing the flow would work better for all. Problem is, the essence of modern marketing/advertising is not simply to supply people’s wants/needs, it’s to CREATE wants/needs people didn’t know they have. The excess of demand thereby created is where profit margins and brand equity lie (I mean in the financial sense). That’s the basis of the consumer-driven economy (good and bad). Marketers can’t subsist on responding to needs expressed by consumers, and they wouldn’t settle for a system that was based on such a premise.

    Now, what marketers want won’t matter if another premise here is correct… namely, that consumers “hate” advertising, are up in arms about privacy, etc. They “hate” advertising the same way they “love” public TV. Reality is, warts and all, advertising and other modern marketing practices do confer many benefits (one of which, in the case of advertising, has traditionally been the delivery of high-value content at low/no cost).

    Yes, the search advertising paradigm is based on responding to expressed desire, but marketers are starting to recognize that it does not work for them in a vacuum, unsupported by traditional marketing practices, including advertisers. Not to mention that while the communication of desire/intent via the search box may be “pure”, many SEM practices that kick in once the user hits that search button are anything but..

    I’m not trying to argue whether on balance the Doc Searls vision is “better” than what we have now or not, simply suggesting this vision is a little naïve, and in some respects, is surprisingly under-informed given how brilliant and accomplished the guy is (outside of business, clearly). Speaking of under-informed, I read one of the WSJ series pieces yesterday… a mish-mash of real info, mis-info, and paranoid spin. I mean, geodemographic lifestyle segmentation is as old as the hills, for crying out loud. If people are really worried about privacy, they should be a lot more concerned about all their real PII that’s floating around out there offline.

    And having said all of this, I like the idea of VRM. It’s got great potential. Something like that will definitely have to emerge…to augment…not replace, traditional marketing methods. P&G will buy up the IP and make it happen.

  2. Ron

    You’re missing the point. Who cares what marketeers subsist on? What ever gave them to right to a subsistence above anybody else? And who cares if they wouldn’t settle for a system that was based on the premise of shared rewards. Tough. They should stay put in their existing system that rewards greed and not good.

    Your love/hate assertion is a binary argument that’s purely subjective. “Consumers” (soon to be an old-fashioned term) aren’t yet aware of the fact that the advertising industry is making billions from them without their knowledge. What do you expect will happen when these people realise that this is so? Will they decide maybe, to come together and say “if you want what is mine, cough up”? I’m damn sure i’m going to be making that demand. All we need is someone selling some good, not some more crap we don’t really want or need and which costs the earth to produce.

    And your suggestion that the advertising industry delivers high value content is laughable. Seriously — go see a doctor if that’s what you think. Woof!

    The trouble with you ad men, is you can’t see the damage you cause. Do you think it’s fair for you and your type to sell dreams to poor kids in exchange for their money and souls? Really, can that new Lynx spray get me loads of chicks to suck my ****, and will i be the next pop star or football hero? What happens to these innocent kids when the penny drops later in life. You sell people crap — that’s what you guys do. We don’t need your crap anymore — it costs to much and invariably its full of pollution in some way — usually laden with emotional triggers that give false hope to poor people which has a long term impact on their emotional health and wellbeing. But of course you won’t be paying for that treatment on the health service (UK at least) because you’ll have sold enough crap to to enough mugs to retire off-shore, where you won’t pay any tax.

    It’s time the man in the street realised that they are sitting on something very valuable — their own information. And just because you’ve sold out to Proctor and Gamble, doesn’t mean anyone else has to. And you really are a patronising so and so, aren’t you? Doc Searles isn’t like you. He’s been GIVING his IP away for years but you’re too up your own arse to see it. This is a new world — one of sharing and one of saving.

    Loser. You’re SO 20th century.

    @mikeriddell62

  3. Ron Stitt says

    Mike, unlike you, I’m simply outlining reality as it exists, not engaging in sanctimonious moralizing. And pay attention…I said what marketers want doesn’t matter if consumers really desire a different paradigm. I’m patronizing? You’re basically arguing that consumers (o.k., people) are too stupid to know what they REALLY want. Read your own remarks carefully…you obviously have a very low opinion of the “masses” you purport to care so much about.

    I don’t say marketing practices are “good” or “bad” (I realize “idealists” like you think like that…and you accuse me of binary reasoning!). Funny how you combine an overweening sense of moral superiority with a personal style of such vitriol. The P&G thing… that was a JOKE. Hello!

  4. First a small correction. I’ve worked in business all my adult life. I still work in business. For half the eighties and most of the 90s, Hodskins Simone & Searls was one of the top advertising agencies in Silicon Valley. My name was on a building in downtown Palo Alto that whole time. I know advertising. I know marketing. So I’m not sure how my vision is naïve or under-informed. I’ve been steeped in that business for a very long time.

    VRM is nothing more than putting new tools in the hands of customers — tools that let them do for themselves what no seller can do for them, no matter how good that seller’s marketing system might be. The idea for creating those tools began to form for me a long time ago, when I was still in the advertising business. I realized that advertising and marketing at their best still involved guesswork. What would happen if the customer had better powers of self-expression, on their own, without the help of advertisers or marketers? Well, the Net came along and customers got some of that ability to express — through blogging, email, texting and other open standards. They got some more through commercial “social” tools like Twitter and Facebook. But should that be all? Surely we can do better. Surely it’s still early enough. Surely the holy grail here isn’t perfectly personal advertising (as Eric Schmidt of Google has been pushing lately, while Google’s two founders remain silent — a sign of a split, methinks). Shouldn’t it be better relations that go both ways? Shouldn’t it be demand driving supply at least as well as supply guesses about demand — or tries to “drive” it?

    Marketing and advertising won’t go away. But they’ll be a lot better informed. VRM will help with that. If marketers are smart, they’ll help VRM too.

    Speaking of which, check out VRM+CRM 2010, our first workshop bringing VRM and CRM developers together: http://vrmcrm2010.eventbrite.com/ . We’ve already got a pile of sign-ups with no promotion beyond my own blogs and word of mouth. If any of you are around Boston, come by.

    By the way, check out

  5. Doc, stand corrected on the business thing. Apologies. Still say though that our consumer economy is based as much on manufacturing demand as it is on matching supply to demand. Leads to a lot of good things…like material prosperity. But I’m not blind to the downside either.. on a practical level, great disparities in wealth, poor nutrition, dumbed-down entertainment content, etc., and on a spiritual level…you occasionally look around and say “all the stuff we desire and accumulate is…useless, and without meaning… oh wow, check out that new Ferrari!”

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