Ged Carroll

Category: economics | 經濟學 | 경제학 | 経済

Economics or the dismal science was something I felt that I needed to include as it provides the context for business and consumption.

Prior to the 20th century, economics was the pursuit of gentleman scholars. The foundation of it is considered to be Adam Smith when he published is work An Inquiry into the Nature and Causes of the Wealth of Nations. Smith outlined one of the core tenets of classical economics: each individual is driven by self-interest and can exert only a negligible influence on prices. And it was the start of assumptions that economists model around that don’t mirror real life all the time.

What really is a rational decision maker? Do consumers always make rational decisions? Do they make decisions that maximise their economic benefit?

The problem is that they might do actions that are rational to them:

  • Reducing choice when they are overwhelmed
  • Looking for a little luxury to comfort them over time. Which was the sales of Cadbury chocolate and Revlon lipstick were known to rise in a recession
  • Luxury goods in general make little sense from a ration decision point of view until you realise the value of what they signal
  • Having a smartphone yet buying watches. Japanese consumers were known to still buy watches to show that they care about the time to employers when they could easily check their smartphone screen

All of which makes the subject area of high interest to me as a marketer. It also explains the amount of focus now being done by economists on the behavioural aspect of things.

  • Innovation stuckness + more 2018 trends

    There are a number of people who have done great trends / predictions for 2018. I thought that I would focus on what I would like to see across three trends: innovation stuckness, lean web design, machine learning ethical considerations, buffer bloat and redefining what a technology start-up is.

    Smartphones are stuck in a period of innovation stuckness. It is becoming increasingly difficult to justify upgrades to your handset. This has had knock-on effects to mobile networks. In markets where subsidised handsets are the norm like the UK we’re seeing that SIM-only contracts are becoming the norm.

    Apple is trying to innovate its way out of this problem with its work on augmented reality interaction. Consumer media consumption will take a good while to catch up.

    Smartphone cameras are as good as consumers need (at the moment). Displays are now good enough that improvements look indistinguishable. They are also large enough for you to watch Amazon Prime or Netflix during a commute. Mobile wallets are merely a back-up in case one leaves your wallet at home.

    Whilst the app names have changed, much of the smartphone usage now is for the same things I used a Nokia or Palm smartphone ten years ago:

    • Alarm clock
    • Web surfing
    • Entertainment
    • Media playback
    • Communications

    I hope that we start to see smartphones going back to the future and looking at different form factors. My iPhone would be much more useful as a productive device if it was available in a similar form factor to the old Nokia communicator. Different form factors of devices for different users. Gamers would benefit from better controls a la the Nokia nGage.

    Interfaces can make better use of haptic feedback, and be designed to take advantage of more hardware-optimised devices.

    Innovation isn’t only the responsibility of app developers and phone makers. What about a modern 4G version of ‘Enhanced Full Rate’ on GSM (GSM-EFR) ‘hi-fi voice calls’. UK operator One2One launched GSM-EFR on 2G networks in the late 1990s as part of their Precept tariffs, but I haven’t seen any other carrier try to do a similar thing since. Why not? I suspect part of the problem is that ‘innovation’ in your average mobile network provider now is testing vendor products in a lab to ensure they work properly on their network.

    The web has developed a digital equivalent of clogged arteries. Part of this is down to buffer bloat and a lack of lean web design approach. Unfortunately the mobile web has not brought a clean slate approach but hacked together adaptations. A bigger issue is the layers of advertising technology trackers, analytics and assorted chunks of Javascript. Ad tech hammers page load time and responsiveness.

    Share of time spent viewing video content in selected countries using ad blockers

    We’ve seen Apple and Mozilla try to redesign their browser technology to slow down or stimmy ad technology. Consumers are adopting ad blockers to try and improve their own web experience.

    There needs to be a collective reset button. I am not sure if we see a resurgence of the paid web or a kinder lighter footprint in advertising technology. Otherwise we have an unending conflict between the media industry and the rest of us.

    The debate around machine learning in 2017 highlighted a Black Mirroresque dystopia awaiting us. The good news is that we tend to overestimate technology’s impact in the short term. In the long term the impact tends to meet our expectations all be in a more banal way.

    Part of the current problem around machine learning is that Silicon Valley seems to only consider technology rather than the consequences of potential use cases. This needs to change, unfortunately the people in charge of technology companies are the least capable people to achieve it. We need a kinder more holistic roadmap. Legislation and regulation will be far too late to the party. We won’t be able to stop technological progress, but we can influence the way its used.

    Lying in bed ill over the Christmas period, I read that crypto currency mining currently required as much energy as Bahrain. By the end of 2018, it will require as much energy as Italy. That is insane.

    Apart from speculation and buying products on the dark web what is the killer app for crypto currencies? Why is worth the energy overhead? Steve Jobs focused on computing power per watt as part of his vision for laptops and moving the Mac range to Intel. Part of the move to the cloud was about making computing more efficient for businesses and providing computing power over the network for consumers on ‘low power’ mobile devices. Yet almost a decade and a half later, the hottest thing in technology is a grossly energy inefficient process.

    We are starting to see regulators in Korea and China step in to regulate the market and energy supply to miners, but western economies need to look at this. And I haven’t even got on to the ICO (intial coin offering) as Ponzi scheme…

    If you substitute the words ‘fax machine’ or ‘call centre’ for app would Uber, Deliveroo etc be considered as technology companies? I suspect that the answer is no.  A company may use a lot of technology – it happens a lot these days. But that doesn’t make Capita, Mastercard or Goldman Sachs a technology company, lets  apply a bit of critical thinking. I wouldn’t mind, but this same mistake was made in the late 1990s during the dot com boom.

    Many companies including Enron were ‘repackaged’ by management, venture capitalists, investment banks and consultancies (cough, cough McKinsey) as asset-light technology driven businesses aka ‘an internet company’. It didn’t work out well last time. It won’t this time either.

    More information
    Enhanced full rate (GSM) – Wikipedia
    Bitcoin Energy Consumption Index | Digiconomist
    Setback for Uber as European court advised to treat it as transport firm | Reuters
    Other trends reports
    Fjord: 2018 Fjord Trends
    iProspect: Future Focus 2018: The New Machine Rules
    Isobar: Augmented Humanity: Isobar Trends Report 2018
    J. Walter Thompson Innovation Group: The Future 100
    Ogilvy & Mather: Key Digital Trends for 2018 – Whatley and Manson are doing webinar presentations this week if you want to catch them
    Campaign Asia did a nice precise of them all
    Past prediction stuff that I’ve done
    2016: crystal ball gazing, how did I do? | renaissance chambara
    2016: just where is it all going? | renaissance chambara
    2015: crystal ball gazing, how did I do? | renaissance chambara
    2015: just where is it all going? | renaissance chambara
    2014: crystal ball gazing, how did I do? | renaissance chambara
    2014: just where is it all going? | renaissance chambara 
    Crystal ball-gazing: 2013 how did I do? | renaissance chambara
    2013: just where is it all going? | renaissance chambara
    Crystal ball-gazing: 2012 how did I do? | renaissance chambara
    2012: just where is digital going? | renaissance chambara
    Things I’d like to see in 2012 | renaissance chambara
    Crystal ball-gazing: 2011 how did I do?
    2010: How did I do? | renaissance chambara
    2010: just where is digital going? | renaissance chambara
    Predictions for 2009 | renaissance chambara

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  • China marketing agency landscape

    China marketing agency changes

    Chinese poster

    Over the past two decades the China marketing agency landscape had got used to go-go growth, just by showing up. The Xi-era of China has seen the end of the go-go years in economic growth in China.  This economic maturation was one of the factors picked up on Arun Sudhaman’s analysis of Chinese marketing agency landscape changes, with a particular focus on PR services.

    Arun also noted dirvergence in fortune of domestic and multi-national firms.

    Here are some of my thoughts on China marketing agency landscape changes.

    Digital disruption affecting China marketing agency landscape

    Multi-national PR agencies often led with corporate communications and public affairs expertise. This meant that their businesses were led by leaders who paid lip-service to digital at best. My experience trying to sell digital internally was one of the most painful processes that I have ever done. It was one of almost insurmountable cultural differences: not Irish-Chinese, but analogue-digital.

    To be fair many corporate and public affairs specialists in London are still trying to get to grip with what digital means. They know it’s important, but they don’t have a clue how it all comes together.

    That mean’t that they didn’t really get social media beyond being a publishing platform. Chinese KOL (key opinion leader) work whilst effective, is paid media. PR agencies generally don’t have the depth of tools and analytics to provide comprehensive planning and execution for KOL projects. It is hard to get management teams to invest adequately in tools and talent.

    Change in legal and regulatory environment

    Premier Xi has changed the landscape for public affairs practitioners. The government is less flexible, it feels that it no longer needs to be. China is on the ascendence in the face of western existential crises and America in rapid retreat from the world stage. Hence, new laws that discriminate against foreign technology companies as part of its wider approach to cyber sovereignty.  Public affairs still has a place in terms of research to provide understanding, but their foreign multinationals won’t like what the results will likely tell them.

    Digital media landscape

    Digital has hit the industry hard. It moved at an accelerated pace compared to other industries. Unlike the west were television isn’t in decline but has stopped growing, Chinese TV isn’t undergoing the golden age that we are seeing in the west. The government has made it less entertaining – which has only helped the acceleration of digital marketing channels in China. Government control of television content has meant less reality shows or remakes of Korean drama stories and more content extolling Chinese Communist Party values. Worthy content, but not particularly engaging.

    May online marketing

    Disintermediation and displacement

    In China, the major digital platform companies try and go direct to clients for social media advertising cutting out the media buying agencies. This gives media and digital agencies extra incentive to go and grab the paid engagements of key opinion leaders. These are often performance-related deals with directly attributable online sales or online-to-offline voucher redemption. Digital and media agencies are better equipped to handle influencer relations than their public relations peers. It is less about influence and more about performance.

    Changes in the client boardroom

    Multinational PR agencies also have problems with their established client base of international brands. Under Premier Xi we have seen a more confident China. This confidence is manifested in Chinese board rooms. The way strategy and goal-setting works in Chinese companies illuminates this difference:

    • Big board meeting where outrageous unrealistic targets are set by the Chairman
    • Planning department turns the ridiculous goals into plans
    • Management goes to arrange funding

    The business then goes to staff up and do whatever is needed. They will build massive conglomerates – what is known as building the eco-system – something that is frowned up in the West as being bad for shareholder value

    Chinese entrepreneurs care about market share more than profitability. And sometimes they fail spectacularly like LeEco or Evergrande, collapsing under the weight of their own debt.

    A lot of it reads like bubble-era corporate Japan. While it seems insane to outsiders, corporate China is much more closely knitted into the government than the keiretsus ever were. Corporate China may go pop in the future, but it won’t happen at the moment.

    Multinational clients struggling

    By comparison, multinationals are worried about activist shareholders and meeting their quarterly numbers can’t be as aggressive in comparison to their Chinese peers. This type of aggressive pursuit of growth would also be an anathema to the likes of WPP, Omnicom, Publicis and IPG who suffer from a similar risk of activist shareholder shenanigans as their multinational clients.

    Which is why Chinese brands have been blowing up across sectors. 91 percent of smartphones now sold in China are from domestic brands. Apple has somewhere around 7 per cent share. Foreign FMCG brands are being slaughtered, even Amazon has only a few percentage points of market share.

    Quite simply, multinational PR firms have generally bet on the wrong horse. China is the one market were American scale and capital actually diminishes in impact over time as the Chinese domestic market picks up. Multinationals in strategic business areas were always going to lose over time.

    Knowledge and business transfer

    Where Chinese brands have wanted to expand globally, they have taken on foreign PR agencies. Part of this process was knowledge transfer. If one looked at an organisation like Huawei, you can see how they have learned and built internal capability with Chinese characteristics in their corporate communications function over time. It would be a similar process in other companies.

    Even foreign luxury brands have struggled to be as agile as their Chinese customers. Between the crackdown on corruption and the rapid development of experienced luxury consumption – the only constant in the luxury market has been change. It is only a matter of time before China has its own answer to Michael Kors or Christian Dior. Western luxury brand problems will affect the agencies that work with them with massive fluctuation in marketing budgets.

    A second transfer of capability from foreign to domestic is the move of multinational agency talent into local agencies. You combine that Chinese entrepreneurship and foreign agencies look vulnerable. Clauses that have kept western agency staff in check from plundering clients and talent don’t hold up as well in China.

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  • Great Scud Hunt + other news

    Great Scud Hunt

    What the Great Scud Hunt Says About War With North Korea | War Is Boring – pretty grime reading. The Great Scud Hunt was a key aspect of the Gulf War. The Great Scud Hunt pitted allied special forces units against the Iraqi army which had scattered its Scud launchers across the desert. The Great Scud Hunt was important to stop Israel coming into the war and fracturing the alliance against Iraq. it was also to prevent scud missile attacks on Saudi oil infrastructure and cities. Despite the terrain being reasonably flat and barren, the allies weren’t as successful the Great Scud Hunt as they would have liked. By comparison North Korea is mountainous and covered in vegetation making the job orders of magnitude harder. North Korean missiles could target the US, Japan and the whole of South Korea. 

    DD-ST-92-07789
    A relic of the Great Scud Hunt – a missile being examined after having been shot down in the desert by a Patriot missile

    Economics

    3D printing a threat to global trade | ING – Research report with hyperbole

    Legal

    INMA: Pros, cons of EU’s General Data Protection Regulation for publishers  – GDPR could lead to a reduction in programmatic ad spend because advertisers will struggle to measure whether their ads lead to purchases, according to Eric Berry, CEO of TripleLift. There’s uncertainty about how the law will be enforced, but if users have to give consent to individual publishers, demand-side platforms, and attribution vendors, the attribution companies won’t have enough data to make accurate measurements

    Luxury

    Supreme Said Close to Deal with Carlyle | Business Of Fashion – was the Louis Vuitton deal just rolling out the carpet for private equity interest?

    Media

    My new chapter: joining Google to better explain search & help bridge the gap – Danny Sullivan is a great person to fill the hole left by Matt Cutts and more. Sullivan’s status as the godfather of search marketing gives him the kind of authority and audience few others have

    Online

    A Farewell to AIM: AOL Instant Messenger Shutting Down in December – ExtremeTech – wow. The ironic thing is that messenger services could (and should) have been the WhatsApp and Facebook Messenger of today

    Retailing

    How supermarkets choose where to open … and where to close | Cities | The Guardian – even retailers don’t like chavvy areas

    Security

    The Uber app can secretly spy on iPhone screens – BGR – mother fucker…

    Screwdriving. Locating and exploiting smart adult toys | Pen Test Partners – one more security issue to worry about

    Guess what Chinese travellers are bringing back home? VPNs, lots of them | South China Morning Post – exaggerates the volume of desire for unfettered access – outside the intelligentsia, most won’t care

    Yahoo says all of its 3bn accounts were affected by 2013 hacking | Technology | The Guardian – how is this only coming out now?

    Technology

    Why isn’t Apple Pay taking off? | The Drum – and other NFC payment technologies for that matter

    Survey: Facebook (FB) is the big tech company that people trust least — Quartz – its only 1,600 Quartz readers

    High Sierra’s Disk Utility does not recognize unformatted disks | Tinyapps – a lot of a fuck up there Apple, although its now fixed by a security update. Related – Think twice before encrypting your HFS+ volumes on High Sierra | Carbon Copy Cloner – big issue

  • Grenadier car project + other news

    Grenadier

    Ineos Projekt Grenadier: an old-school 4×4 off-roader for 2020 by CAR Magazine – interesting that they think there is a gap here. Chemical conglomerate Ineos, have the money to pull the Grenadier off.

    Grenadier market?

    The larger question is around whether there is a market for the Grenadier? While we think of Land Cruisers as luxury vehicles, you can still get a barebones one in markets like Australia, the Middle East and Africa. Mercedes still does a bare bones G-Wagen.

    Grenadier costs

    A mass production assembly line for the Grenadier including tooling would cost about £100 million or so, based on previous refits I have seen done at the Vauxhall car plant in Ellesmere Port.

    That wouldn’t include an engine foundry. I would expect Grenadier to raid the parts bins of other manufacturers for things like engines. They will buy off the shelf transmissions from the likes of ZF or Magna PT, if they can’t raid a parts bin. The problem with raiding parts bins is that you are using products that are designed to be digitally integrated together now. Would companies like VDO be able to provide you with analogue instruments? Most modern cars aren’t unreliable because of cabin electronics, the problems are usually the underlying mechanics and control systems. Those electronics are put there to get the vehicles to ‘limbo’ under the tightening environmental standards and Grenadier will be no exception.

    Overall development of the Grenadier may cost multiples of the price of the production line, including type approval across markets.

    Business

    Publicis and WPP are takeover targets and Accenture ‘looks a credible buyer’, bank says – interesting hypothesis

    T-Mobile and Sprint are in active talks about a merger | CNBC – Son-san and Legere could be an interesting and complementary mix

    Consumer behaviour

    Under The Surface: The Why of Chinese Consumer Behaviour | Holmes Report  – with a billion people and a fast-growing economy, those feelings of uncertainty are even more profound and widespread.   The true meaning of technology for Chinese users? The ability to feel in control in an era of anxiety.

    Douglas Todd: Men do well in science and tech, but lag elsewhere | Montreal Gazette – the real reason more males complete STEM degrees, says Tabarrok, of George Mason University, is that, to put it too bluntly, “the only men who are good enough to get into university are men who are good at STEM. Women are good enough to go into non-STEM and STEM fields.”

    The findings of Card, of the University of California, Berkeley, and Payne, of McMaster University, are consistent with wider concerns about the under-representation of men in higher education and in many sectors of the labour market, says Tabarrok.

    “If we accept the results (of Card and Payne), the gender-industry gap is focused on the wrong thing. The real gender gap is that men are having trouble competing everywhere except in STEM,” says Tabarrok – the big question is the why? It also makes one wonder if the narrative of privilege has gone into reverse for some reason?

    Economics

    Sustainable development: China’s path out of poverty can never be repeated at scale by a country again — Quartz – interesting read. It puts the internet into perspective, shipping containers had more impact in China’s economic rise

    Ethics

    Idle Words | Anatomy of a moral panic – worthwhile reading as it illustrates the current poor state of news reporting

    Ideas

    Blade Runner 2049_: Inside the Dark Future of a Sequel 35 Years in the Making | WIRED – “Blade Runner changed the way the world looks and how we look at the world,” William Gibson says. It was one of the things which inspired me to move to Hong Kong

    Innovation

    Really interesting hologram imagery created using the persistence of vision effect

    Here’s another example of it from a Chinese company in Shenzhen thanks to Naomi Wu for the video. According to Naomi this is a Rainbo device.

    Media

    ​Facebook: news a pagamento entro il 2017, anche in Italia – Rai News – Facebook to trial paywalled content

    China’s Booming Live Streaming Market Has Reached Its Zenith – Huajiao. Long answer: emoji-like “gifts” from the viewers that can later be cashed in for money. Chinese viewers are less enamored by mindlessly goofy check out my six pack vids (*cough* Logan Paul), and more interested in watching the mundanities of their favorite influencer’s everyday life — i.e. singing in the shower, driving, and… slurping soup? – There is a clear line between this and things like Korean ‘eating’ videos.

    Influencer Marketing Effectiveness is Limited by Management! | PARKLU – not only China!

    Uber Sues Mobile Agency Alleging Ad Fraud – WSJ – interesting implications around tracking showing weakness in Uber’s much vaunted data expertise?

    Should Social Go Local? | The Daily | L2 – some nice assets

    Online

    Twitter to test longer tweets – but only for European languages – Mumbrella Asia – to be honest it makes sense for languages like German and Finnish

    The New York Times on Facebook

    The First Web Apps: 5 Apps That Shaped the Internet as We Know It | Zapier blog – great lunch time read

    Security

    DuckDuckGo: The Solopreneur That Is Beating Google at Its Game – The Four-Week MBA

    Signal Has a Fix for Apps’ Contact-Leaking Problem | WIRED – I so hope they sort it

    Distrustful U.S. allies force spy agency to back down in encryption fight  – academic and industry experts from countries including Germany, Japan and Israel worried that the U.S. electronic spy agency was pushing the new techniques not because they were good encryption tools, but because it knew how to break them.

    The NSA has had to drop all but the most powerful versions of the techniques – those least likely to be vulnerable to possible hacks by the NSA

    Technology

    Unilever finds startups can replace some agency tasks – Digiday – marketing automation gone mad

  • Google Facebook Amazon and Apple + more

    Lost Context: How Did We End Up Here? – NewCo Shift – how did Google  Facebook  Amazon and Apple get to a position similar to that of the gilded age giants?  What can be done to regulate Google Facebook Amazon and Apple?

    Online

    Facebook (FB) on Russian ads: Our platform doesn’t influence people; people influence people — Quartz – what’s the point of advertising then?

    Security

    Troy Hunt: Face ID, Touch ID, No ID, PINs and Pragmatic Security – most people are crap at information security. Reducing the friction of signing up and using authentication raises the overall security level of consumers

    WeChat confirms that it makes all private user data available to the Chinese government – Moneycontrol.com – not terribly surprising – this is China’s answer to PRISM. Your communications are unencrypted on WeChat so commercially confidential information is at risk from hackers and your local government regardless of whether Tencent hands your data over to the Chinese government

    Really interesting design experiment from Chinese university students. It is interesting that they use the ‘goldfish’ as the avatar of the AI. It also asks questions about how we relate to pets and whether augmentation like this would work.

    Very interesting student project from Shanghai Jiaotong University, has your pet fish serve as an avatar/front end for a smart device pic.twitter.com/tHDODQHArM

    — Naomi Wu (@RealSexyCyborg) September 22, 2017

    Software

    Business Standard-Bitcoin’s wild ride shows the truth: It is probably worth zero – likely worth nothing

    And I think dealing with the foibles of macOS 11 (developer beta) was a hassle

    Technology

    UK chip designer Imagination bought by Chinese firm – BBC News – but what about the need for a customer base? The MIPS architecture stuff is interesting and probably a bit of a concern for automotive etc

    AI Turns UI Designs Into Code – NVIDIA Developer News Center – interesting project where machine learning takes design mock-ups and turns them into working web apps with code

    Wireless

    Smartphones are dead. Long live smartphones! · Forrester – emphasis away from only ads to also think about experiences – big challenge is the zero growth in aggregate app usage

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