Read an Excerpt
Read This FirstThe Executive's Guide to New Media- from Blogs to Social Networks
By Ron Ploof
iUniverse, Inc.Copyright © 2009 Ron Ploof
All right reserved.
Chapter OneThe Economics of Influence
Freedom of the press is limited to those who own one. -A.J. Liebling (1904-1963)
I begin many of my speaking engagements by presenting the illustration in Figure 1-1 and asking if anyone recognizes it. Do you? More often than not, an American in the audience identifies it as "The Boston Massacre," correctly referring to an incident that occurred on March 5, 1770. But there is much more to the story than meets the eye.
The word "massacre" conjures images of defenseless citizens being cut down by ruthless aggressors and careful examination of the print reveals details consistent with that conclusion. Seven British soldiers are firing expertly leveled muskets toward a group of innocent colonists. Behind these soldiers stands their maniacal-looking commanding officer, sword raised as if giving them the order to fire. Faneuil Hall has been renamed "Butcher's Hall," and, to really pull at the heartstrings, a cute puppy looks on in disbelief.
The problem is that virtually none of it is true. A criminal trial of the soldiers determined that the incident was one of self-defense instead of a massacre.
Why would one of the most recognizable illustrations from the American War forIndependence-one contained in the majority of American history books-be inaccurate? Why, 250 years later, would it still be recognized as a massacre instead of an act of self-defense? Simple. Because self-defense didn't serve the purposes of those, such as Samuel Adams, who sought independence from the Crown.
Adams understood that those who controlled the flow of information to the masses could exert influence over them. With access to the city's largest printing presses, he exploited this power to successfully stoke the fires of a revolution. He, and others sympathetic to the cause, commissioned Paul Revere to create a poster to commemorate the event. Entitled "The Bloody Massacre," the illustration met the cause's requirements-its content can be more accurately described as inflammatory propaganda than historical fact. However, its influence didn't stop with eighteenth-century Americans. Two-hundred-fifty years later, an argument can be made that this print is the most effective public relations campaign in American history. And it all happened because of the printing press. It all happened because of the Economics of Influence.
The Economics of Influence
When Johannes Gutenberg introduced the printing press to the West in the mid-1400s, he set into motion a means for future businesses to create and distribute ideas through the use of ink and paper. When Thomas Edison recorded sound onto a vinyl cylinder, he set into motion a means for businesses to create and distribute recorded sound. When Guglielmo Marconi transmitted his voice wirelessly through the use of electromagnetic waves, he set into motion a means for businesses to create and distribute radio and television signals.
These three innovations share a common feature: the costs associated with operation limit ownership to a handful of people with sufficient financial resources to do so. When it came to the creation and distribution of content, the world was separated into two publishing categories: the haves and the have-nots. This division transcended the monetary power of traditional socioeconomic classes-those with the capacity to create and distribute information also maintained a powerful influence over the hearts and minds of the vast majority that didn't. This power affected two groups, society and business, yet each reacted in opposite ways.
First, governments around the world were leery about the concentration of such influence into a minority of hands, and therefore passed laws restricting it. In Communist and dictatorial countries, governments often seized control of the media, using its influence to spoon-feed the populace with carefully crafted, state-sponsored messages. On the other hand, in countries supporting free speech, a more moderate approach prevailed as governments attempted to limit influence through licensing.
In the United States, Congress passed the Communications Act of 1934. The law has not only held up for seven decades-it's been updated numerous times, including 1996, 2005, and 2006. Rather than attempting to control the content, which would violate freedom-of-speech laws, the federal government licensed the electromagnetic spectrum, placing certain restrictions on media ownership. For example, by setting limits on the number of newspapers, radio stations, and television stations that any single publisher may own in any given market, the government could limit a publisher's influence within that given market.
Unlike the government, the business world didn't see this concentration of influence as a problem. Rather, businesses saw it as an opportunity to deliver their messages to large numbers of potential customers. Therefore, while governments sought to limit the influence of publishers, businesses sought to harness their influence.
By focusing on the markets that their messages could reach through the media, businesses created marketing, a corporate branch dedicated to delivering product and service messages to potential customers. Marketers approached publishers seeking to insert their messages into publications. Publishers countered the request with a proposition. If businesses were willing to pay for that access, publishers would be more than happy to sell column inches or broadcast minutes to do so. Subsequently, the advertising industry and Madison Avenue were born.
However, a critical element was missing from the relationship. Publishers needed more than advertisements to increase their audiences, which demanded compelling content and news. Simultaneously, businesses sought alternative ways to reduce the cost of delivering their messages. Publishing's need for content combined with business' need for cheaper access, culminated in the creation of another new profession called public relations. Businesses hired employees skilled in the art of influencing, and gave them the job of convincing publishers to talk about their companies for free. Over time, they perfected the press release-a document designed to assist journalists looking for "newsworthy" stories.
Thus began the love/hate relationship between publishers and businesses. On one hand, businesses preferred to have their stories covered by publishers for free. On the other hand, media companies needed newsworthy stories, but also needed to sell advertising space in order to defray costs. As a result, a game of cat and mouse ensued between journalists and PR professionals.
Publishers and Consumers Go Deaf
As the economy grew exponentially, so did the number of public relations professionals, and it didn't take long for their numbers to vastly outnumber those of the publishers. Press releases deluged fax machines and e-mail accounts, totally overwhelming publishers, who in a failed attempt to extract news-needles from press release-haystacks, found themselves overwhelmed by the sheer volume of information thrown at them.
What did marketers and PR people do to help their publishing brethren? Did they try to invent more efficient ways of getting the publishers' attention? Did they try to work with the publishers, helping them sift though the vast piles of self-described news? Nope. Faced with a deaf recipient, businesses did the only thing that they could conceive of doing-they grabbed their megaphones and cranked up the volume. The reaction was circular and comical. The more noise businesses made-the more deaf the publishers became. While marketing and PR people invested in louder megaphones, publishers simply got better at tuning them out.
Benjamin Franklin, ironically a very successful publisher himself, once said, "The definition of insanity is doing the same thing over and over and expecting different results." His two-century-old statement couldn't be truer today as corporate megaphones blare unceasingly.
While publishers were dealing with the constant bombardment of press releases, Joe Sixpack found himself of the target of marketing megaphones. Marketers used interruption techniques to distinguish their companies from the sea of sameness-their messages blared from radios while consumers brushed their teeth. They enticed consumer's eyes with newspaper ads while they drank their coffee. Drive times were filled with more jingles than Top 40 songs. Under the guise of "opting-in," marketers filled work and e-mail boxes with spam, hit them one more time on their drive home, and completed their messaging as consumers dozed off in front of their television sets. No place was safe from the assault. Over the years, marketers have placed their messages on bathroom stalls, movie theater screens, baseball hats, T-shirts, and Internet search results. Consumers have no safe place to cast their gaze or lend their ears without encountering advertising messages.
Economics of Advertising
Publishers and consumers weren't the only folks who were unhappy with the unintended consequences of communications. Business executives struggled with the effectiveness of their advertising investments. For years, marketers have convinced C-level management that a tiny percentage of a large number is a good thing. A 1 percent rate of return, something that would be laughed at in the financial industries, is applauded in marketing circles.
The reality is that advertising, by its very nature, is inefficient. Advertising is a probabilistic business solution, with no guarantee that anyone will ever read, hear, or watch the content that your company has produced. However, by combining the law of large numbers with delivering a corporate message and by placing that advertisement in front of a million people, the odds are that someone will actually read, look at, or listen to it.
The fundamental principles of the Economics of Influence state that the goal of any broadcast medium is to harness the power of large numbers and probability to make it worthwhile for a business to fund advertising budgets. The more attention that the medium delivers, the more likely it is that your company will reach a potential customer. In addition, the odds of reaching customers are getting smaller by the day. Marketing's relentless pursuit of potential customers has backfired with an unintended consequence. Consider the fact that customers are arming themselves with tools such as TiVo and digital video recorders (DVRs) (now leased or purchased from the very same cable companies that continue to sell advertising minutes based upon viewer demographics) to escape advertising and the situation starts to resemble a warped episode of Spy vs. Spy.
Access as a Scarce Resource
In a nutshell, the economics of influence has created a situation where:
Media companies pay lots of money for their respective content and distribution methods. Print companies pay for paper, postage, and gasoline. Music publishers pay for manufacturing, packaging, and shelf space. Radio and television stations pay for licenses, transmitters, satellites, and broadcasting towers.
Governments on the left and the right seek to restrict unapproved influence. Some regulate the broadcast frequencies. Others offer guidelines for what's acceptable to publish and what's not. Lastly, the more controlling governments allow only their own state-sponsored content.
Advertising resembles a squirrel climbing a greased pole. With enough time and effort, he'll eventually get to where he wants to go, but it'll take more time and effort than he planned.
Businesses want access to vast audiences for minimal cost. If only there was a way to be more efficient in targeting the messages as opposed to the traditional spray-and-pray methodology.
Businesses bombard the press with often-worthless releases every day and the press can't keep up. As a result, companies are frustrated that their "news" isn't getting covered and the press is frustrated that their e-mail inboxes are packed with volumes of drivel.
Finally, businesses and content providers inundate customers with messages-from the minute they wake to the sound of the clock radio to the moment they fall asleep with the TV on. Weary consumers are embracing TiVo and DVRs, where they can use their opposable thumbs to fast-forward through Viagra commercials.
All of these behaviors were driven by the fact that the power of influence was held tightly within the hands of a select few. Access to vast audiences was considered a scarce resource to be divided among the few who could afford a seat at the table. However, a funny thing happened on the way to the office between 2000 and 2005. A new set of technologies began emerging that transformed a scarce resource into an abundant one. Armed with these new technologies, a new breed of content creators emerged to challenge those who controlled the influence.
The Perfect Storm
In 1995, the World Wide Web became a prevalent part of mainstream business. Web sites from every conceivable industry sprung up as businesses experimented with a new way to publish their marketing materials. Newspapers put their content online, and tech-savvy individuals began creating their own personal Web pages.
Between 1995 and 1999, this trend continued, as people got more and more familiar with HTML (Hypertext Markup Language), the language of the Web. Internet Service Providers (ISPs) reacted to growing demands from these new publishers by creating more robust services. Competition forced lower rates, further fueling the number of companies and individuals that published their content online. Although this love affair with online publishing grew, three bottlenecks remained to restrict the free flow of information between online publisher and online content consumer.
1. Hand-coding HTML pages was way too geeky for the average user.
2. There was no way to syndicate online content.
3. The more successful an online publisher became and the more hits. the site received, the more it had to pay for bandwidth.
The first bottleneck was eliminated in October 1999 by a company called Pyra, which released a new "Web log" service. Through the company's innovation, anyone with access to a Web browser could publish their thoughts online for free. Better yet, publishing suddenly didn't require a degree in computer science. Pyra's publishing platform-"Blogger"- lowered the barrier-to-entry for online publishers who needed no money and a minimal amount of technical savvy to display their craft. Anyone with the ability to type and press an upload button could become an online publisher. Blogger solved the first of the three bottlenecks, but these new publishers still didn't have a way to automatically distribute their content to their audience.
Newspapers are delivered to your door, magazines come in the mail, and radio programs come through the air. However, if I wanted to read my favorite blog, I had to manually point my browser to the Web site to check for new material. In the fall of 2002, a new technology arrived that allowed online publishers to syndicate their content to readers. Really Simple Syndication (RSS is covered in more detail in Chapter 2) is a result of Web-syndication research that goes as far back as 1995 to Apple Computer's Advanced Technology Group. The technology didn't hit mainstream adoption until Dave Winer released a specification for RSS 2.0 in September 2002, which was subsequently used for the first time by the New York Times two months later. RSS provided publishers a way to deliver their content to online customers automatically. Although the technology required some geekiness on both ends of the channel-publishers needed to know how to create RSS feeds and consumers needed to know how to receive them-it was validated through the New York Times' adoption, which in turn fueled its popularity. Finally, with the ability to syndicate their content around the world, online publishers had almost achieved the Holy Grail of publishing-the ability to cost-effectively deliver their content to self-selecting audiences. (Continues...)
Excerpted from Read This First by Ron Ploof Copyright © 2009 by Ron Ploof. Excerpted by permission.
All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
Excerpts are provided by Dial-A-Book Inc. solely for the personal use of visitors to this web site.