Splurging Consumers: Are They Cash Crazy?

Bloomburg Businessweek calls it the new abnormal. Americans, they say, are broke and depressed but also buying $3 lattes and waiting in line for iPhones. The compelling Businessweek cover story provides plenty of examples, including a woman who explained how tough the economy was while splurging in Las Vegas.

A few numbers behind the article citing the new abnormal.

• Businessweek cites the success of companies like Apple, Starbucks, Mercedes-Benz, and BMW.
• 17 percent of consumers are spending outside their means; 20 percent struggle with needs and wants.
• 20 percent of Americans have bought something in the last 30 days they wouldn't have 6 months ago.
• 51 percent of Americans have fallen behind on their their annual savings plans, but still splurge shop.

Some of these percentages certainly seem far off from the report that The Futures Company put out last year. That think piece, A Darwinian Gale, said that consumers had reshaped their entire thinking, with an emphasis on responsibility, vigilance, resourcefulness, prioritization, and network orientation. In March, another study from Euro RSCG Worldwide, said there were more prosumers than ever before.

Have consumers gone crazy, trading in the "new" society for schizophrenic shopping?

They aren't crazy. Devin Leonard touches on some of it in the podcast, but doesn't go deep enough in understanding consumers, especially those who are broke or feel stressed by the lackluster economy and low consumer confidence.

It's not impulsive shopping as much as it is backlash against the pressure of isolation, intense savings, and preparation for the worst (which he does say). But even more importantly, most consumers, especially those who had not faced any hardships in previous economic downturns, splurge now and again because they remain unbalanced.

This is one of the reasons most financial planners I know always suggest building entertainment in to a budget, no matter how small that budget might be. Simply put, it's little luxuries (scalable to our financial picture) that help lift our spirits up and keep us moving forward. It may also represent a re-prioritization to a mindset that tip earners tend to have all their lives.

Since tip earners have unfixed incomes, they tend to avoid fixed expenses such as magazine or newspaper subscriptions. They also cut back on other fixed expenses as they can, such as grocery shopping or gas consumption or premium cable. Why? So they feel like they have more control over their daily finances even if that means they purchase something some would consider "luxurious."

The same psychology played out during the Great Depression. Despite being the worst economic collapse in the nation's history, this era also helped launch the major motion picture industry. The same psychology prompted hungry children in Europe during World War II to buy candy instead of soup if they happened to find a few cents. And the same psychology may have even been present during the Renaissance, when theater for the masses become an important part of life.

For a few minutes (if it's a cup of coffee) or a few hours (if it's a movie) or a few weeks (if it's an iPad), consumers can take the edge off a repressive economy and chronic uncertainty. And the need to do so grows exponentially if they didn't balance out their finances prior to the crash, which increases the pressure to splurge rather than spend a smaller amount on themselves every week or every month.

Marketers can empower consumers with fewer fixed costs.

Does this change how consumers spend? Sure. From a big picture perspective, it skews purchases much like the Businessweek article says. However, it tends to be for very different reasons. This behavior isn't a new abnormal. It's very normal. And as long as consumers can limit the pendulum swing between feast and famine, it might even be healthy too.

The question marketers ought to be asking themselves is how do they adjust their message to meet the mood? Some might make the mistake of cutting prices. But others will likely find some lift in removing "fixed" costs and giving consumers more flexibility.

Speaking Simply: Fresh Content Project

I read a quote this weekend that stuck with me. I believe in the concept anyway, but quotes are always fun to find in order to share what you think with someone else's articulation of it. Here's the quote...

“Making the simple complicated is commonplace; making the complicated simple, awesomely simple, that's creativity.” — Charles Mingus

The next five fresh picks are much like that. They provide smart and simple solutions, like why the Old Spice guy might have really worked or why thinking of your blog as a loss leader is a bad idea. They show you why the media isn't trusted all the time, why chasing comments is silly, and why algorithms that include the "number of followers" don't tell the whole story.

Best Fresh Content In Review, Week of July 19

• How to Reproduce the Old Spice Video Phenomena.
I'm not a fan of the Old Spice euphoria nor the Old Spice cynicism, but John Bell did one of the best jobs asking the right questions. Was it successful? What about it made it so? And did it drive sales? But more than that, he warns people away from trying to duplicate the tactics. (Elf Yourself is no fun for hotdog buns beyond a chuckle.) Like most great advertising, it was breaking the mold that captured our attention (even if some ideas were in play before). With exception to not noting that the social media element was part of a larger campaign, including a huge coupon drop, we need more thinking like this.

• Blogs As Loss Leaders.
Chris Brogan debunks some of the myth behind considering a blog your or your company's loss leader. He suggests looking at it differently, as part of the entire value chain. While the value chain may have different parts that cary more financial weight than other parts, they are just as important. If you want an analogy to help this sink in, think of your car having a value chain. The seat might not have anything to do with getting you where you need to go, but leather sure feels better while you're getting there.

• Social Media is the Servant of Strategy, Not the Master.
Adam Singer considers the problem with comment counting, which was all the rage in determining (gasp) influence a few years ago. (If you had more comments to count, you counted more. Whatever.) Singer then goes on to point out something we can never hear enough of — drive outcomes instead. As he mentions, comments don't do much for businesses. And not all comments happen on blogs anymore, anyway. That doesn't mean to discount them. Just keep them in perspective.

• The I-Dumbing of Journalism.
Ike Pigott shares one of the most blatant and silly stories sensationalized by a media outlet. The reason is clear enough. It was a ratings period and the Oklahoma City television station knows that fear for family drives eyeballs. So it spiked up a story on audio files that kids download to make them high and how these sounds are, basically, the new gateway drug. Pigott debunks a small part of the story simply by noting that binaural or "two-tone" sounds are easy enough to come by. Telephone tones, among them.

• My Followers Are Bigger Than Yours: On Twitter, Quality Beats Quantity.
Ian Lurie has been doing an unscientific study by tracking what happens after someone retweets his posts. He noticed that people with a moderate following actually generate more responses from their RTs than people with larger followings. No surprise, he also found spammy people do not generate as much interaction, engagement or link clicks because they have already established a reputation for sharing junk. Ergo, the only place spammy guy has reach or influence is on algorithms.

Want to review more Fresh Content picks? Click on the Fresh Content label or join the Fresh Content Project on Facebook.

Finding Truth: The Death Of Hyperbole?

For several years now, dozens of companies have released scores of research studies that have captured the fancy of mainstream media for headlines. I've mentioned it a few times over the years.

In May, MyType surveyed over 20,000 of its users on Facebook to determine that iPad owners are generally selfish elites and their critics are independent geeks. Never mind that in another part of the study, the independent geeks self-scored themselves higher on being susceptible to greed. And never mind that MyType, a Facebook application developer, created the segments "by selecting only people who matched multiple profile characteristics."

That might be a naughty note in research circles, but it didn't stop a few papers and magazines from jumping at the chance to publish the findings, without the methodology. One exception, one month later, was the Guardian. It took more interest in John Grohol's article that called the MyType research bad science.

Balancing Popular Polls With Real Research.

Things are changing. As more celebrities join social networks, they tend to grab up positions of popularity over the once socially famous (assuming they aren't automated celebrities). As expert authorities increase their participation, quick psychology surveys by software developers lose any feeling of real importance. As agencies play a greater role in developing online content, what once was considered creative loses some of its luster.

It will take more time, but the media will eventually participate in the shift. As publications compete for the same base of subscribers, it might be in their best interest to police themselves against those that grab up nonsense. Specifically, those that benefit from pushing catchy headlines one day, may find themselves making the headlines the next (much like the Guardian did to several by pointing out which ones published the MyType research). Even those that maintain popular blog listings might be turned off, eventually.

The point here might be that this signals a restructuring over who and what can hold people's attention. And the good news is that some patently bad ideas might be vetted. The not-so-good news is that some networks might be more dismissive of those little gems that bubble up from time to time in favor of sticking by bigger brands. We'll see.

In the meantime, expect more research to be unraveled by people who practice science and psychology (and other fields) . While people who are authorities in those areas aren't always right, they're welcome to point out what others might be doing wrong. And that, we can hope, will be worth coverage by the media.

Trapping With Inaccuracy: Plagiarism Days Are Marked

Ever since Bob Conrad, author of The Good, The Bad, and The Spin, shared the Wired story about Las Vegas-based Righthaven, we've been wondering about the future of a few "experts."

According to the article, Righthaven has filed "at least 80 federal lawsuits against website operators and individual bloggers who’ve re-posted articles" originally written by their first client. If the infringements are settled, they are worth between $1,500 and $3,000 apiece. If they go to litigation, they could be worth $150,000 or more.

Trapping plagiarists with inaccuracies.

While reposting complete articles is obvious, reframing ideas are not always so obvious, as Ike Pigott illustrated last March with his post Attribution is the Sincerest Form of Flattery. And again, comparing this story with this story. Are there similarities?

It might be more crystal clear if the screen scrapes were even more blatant. And one way to make that happen might be to borrow a page of out The Trivia Encyclopedia by Fred L. Worth. Worth lost his $300 million lawsuit even after inventors of Trivial Pursuit acknowledged that Worth's books were among their sources*, but recently a Wall Street Journal writer wasn't so lucky.

The Wall Street Journal recently reported on one of its contributors. It seems two "Agenda" columns by Bill Jamieson, executive editor of the Scotsman, sourced information without crediting the source. (Hat tip: Regret The Error). The reason it was obvious was because Jamieson had apparently scraped up errors from those sources.

*Interestingly enough, the only reason Worth lost his lawsuit is because the judge had ruled that facts cannot be copyrighted. However, while I'm not an attorney, I wonder if a better counter argument could have been that embedded errors aren't fact at all.

Avoiding the accidental pickup.

I like to give people the benefit of the doubt. So let's assume most people want to write something remotely original, but also want to use the openness of the Web to color their stories with other ideas, thoughts, and opinions. The easiest way to do that is by following some simple guidelines.

• Some facts don't have to attributed. In the States, we'd all be hard pressed to attribute who first told us that the United States declared independence on July 4, 1776.
• Other facts, however, deserve to be attributed anyway. And since we have the ability to link back to the source, readers might benefit from the source.
• Opinions and original thoughts are always attributed. Sure, there are times when two people stumble upon similar topics, but certain phrasing, analogy, and novelty might reveal a different conclusion.
• Full story screen scrapes, even with link backs, are a very, very bad idea. It neglects the rights of the publisher, which is why more firms like Righthaven are very likely to become the publishing industry's new friend.
• Attribution is the sincerest form of flattery, just as Pigott said. It's in your best interest to credit original thought because those credited are much more likely to promote the content.

For some of us, it all seems pretty basic. For others, it seems much more challenging, but not for long. If firms like Righthaven become a profession that publishers and even bloggers embrace, it seems very likely that a few popular names in social media and communication might come crashing down at $1,500 to $3,000 per infraction (or more).

You see, there has been another trend noticed among communication blogs that started about two years ago. As some became more popular, their propensity to attribute has shrunk. Author Geoff Livingston mentioned it last year. And since I built out my reader to the size he sported then, I've seen more "coincidences" than I care to share.

Telling Fibs: Why BP Photoshop Blunders Are Big News

With Tony Hayworth, CEO of BP, stepping down to be replaced by Robert Dudley in October, many people have the same question. Can Dudley turn BP around, clean up the Gulf, and restore the company's reputation? At the moment, the answer is maybe.

October is a long time away, which may give Dudley a cleaner start than if he took over today. But the real challenge for BP isn't a change in leadership but a change in company culture. As one of the world's largest energy companies, that won't be an easy task.

The smallest fibs, not the largest, can be the most telling.

BP's liberal and enthusiastic use of Photoshop, not once but twice, became one of the biggest stories because the fibs were so terribly small. And that might mean something beyond the Photoshop lessons some very creative folks have left sprinkled around the Web. (It's hard to pick a favorite.)

• The company's code of conduct is being ignored.
• The culture has accepted a standard of deceit.
• The smallest of details don't really matter at all.

Years ago, when I was working on one of my first political campaigns, we discovered that the primary opponent had lied. Not only did he not have a degree in the field stated on his literature, but the college he had attended never offered such a degree.

Upon discovering this, we began a much more rigorous investigation better known as opposition research. Of about twenty points made to convince people that he was the best candidate, about 14 of them were either made up or patently false.

One fib on its own might have been forgiven by the public. But anything more than a dozen fibs was a lofty number. It didn't matter how small some of them seemed to be. Tell enough half truths, spins, and misstatements and any brand or reputation will eventually collapse. There seems to be a mountain of them related to Deepwater Horizon and the Gulf Coast oil spill.

Have you ever read the BP Code of Conduct? It begins as "one of the world’s leading companies, we have a responsibility to set high standards: to be, and be seen to be, a business which is committed to integrity."

How do you feel about that statement today, knowing that the company culture seemed to have embraced a general rule that tiny lies, little breaches of protocol, and miniscule lapses in following safety standards were somehow acceptable. As long as the paperwork looked good and nobody was hurt, did it really matter? It mattered on April 20.

On some things, it's better not to give an inch. The poorly done Photoshop pictures weren't being sent out as cover shots for the annual report. They were being provided as part of a slew of shots meant to convince us that BP was on top of the problem.

Obviously they weren't. The problem is on the inside.

*The above commenter photo can be found on Gizmodo, posted on July 22 by Jeremy "Bobafett."

Interpreting Influence: Intuition Over Infatuation, Part 2

The reason I initially chose the title of this two-part post was to illustrate that we can be infatuated with someone, but that doesn't mean they necessarily have influence over us. I like many people online, but I don't always agree with them. And generally, the people I like, don't always agree with me either.

Our influence over each other is confined to the validity of our ideas at any given moment. And what makes that a stronger relationship, in my opinion, is mutual respect because neither of us is so enamored with each other that we fawn over every word. It's an unspoken, sometimes subconscious, connection. The ties that bind are ideas, not personality, popularity, or any other measure.

This post is part two of a two-part post. If you missed the first one, it's called Interpreting Influence: Intuition Over Infatuation, Part 1. It includes a link to an extensive education study commissioned by The Wallace Foundation. This post is an extension of my own conclusions in applying it to the discussion of online influence.

What Is Influence, Anyway?

1. A power affecting a person, thing, or course of events, especially one that operates without any direct or apparent effort.
2. An individual or group's power to sway or affect based on prestige, wealth, ability, position, or presentation.
3. A person who exerts influence such as friends, family, co-workers, and customers.
4. A power such as the moon and the stars, divine intervention, genetics, or law of nature.

The order of most definitions provides an insight into the meaning of the word, with the most weight being given not to people but to the ideas, actions, and reflections they make. Ideas are powerful, which is why some men with mistaken perceptions or malicious intent have worked diligently to control them.

During one of my presentations earlier this year, this became an important part of the introduction. Every innovation in communication to help messages, thoughts, and ideas spread has led to advents in how to manage, control, manipulate or snuff them out.

However, as influence applies to the concept of collective leadership, the power outlined in the leading definition is derived by a singular individual as much as it is derived from inherent truths that already exist within a public. And even individuals in definition 2 or 3 stand the best chance to succeed when they adhere to that principle.

Six Considerations Of Influence.

1. Ideas. If someone proposes a good idea, performs an action worth following, or reflects the feelings of an audience, then the idea (assuming it reaches the right mass) will be propelled forward. Consider how many ideas you have shared over the last few months and how frequently or infrequently you remember the originator of those ideas.

2. Authority. People in positions of authority have a degree of influence. A boss can set expectations. A legislative leader can pass laws. An expert might be given our attention. However, even people in positions of authority rely on the ideas they propose and the outcomes they produce. Allowing them to influence us is voluntary, even when it doesn't feel that way.

3. Persuasion. Novelty can influence us to look, but only in that it attracts our interest. The fictional Old Spice man didn't influence anyone as much as he attracted attention. It was creative, clever, and funny. Did it compel, convincing men to start using specific scented body washes? Maybe. Persuasion is powerful, but it relies on ideas to remain sustainable. (The ads also had a reward mechanism. They made us laugh.)

4. Proximity. People who are closer to us — friends, neighbors, family — can be influential, even if that influence is unseen. Over time, people tend to adopt the behaviors and beliefs of those they associate with on a regular basis, even if that proximity is not geographical. And yet, individuals don't necessarily set the stage as much as the collective of a community.

5. Popularity. Most social media measures record popularity. And while it is true that popularity can propel a message forward, giving it the reach it needs to impact more people, popularity on its own doesn't hold much influence. Consumers snub reviewers all the time to make movies into blockbusters because the collective ideas of many consumers might outweigh their popularity or authority.

6. Reinforcement. There are positive and negative reinforcements that can influence behavior. I've seen it in labs. It is one of the few actions that can trump ideas, good or bad. In a social network setting, for example, a popular person or someone with authority might influence someone to do something for a reward, whether it be affirmation or a prize (reward). As a negative reinforcement, it might be banning them from a site or the threat of diatribe (fear).

But the question I keep asking is does this type of influence come from the individual or the action itself? When I was in college, teaching mice to press a bar for water, it wasn't difficult to figure out that I did not influence the mouse. The design of the experiment and reinforcement did. (Surely, you would laugh at me for presuming I had influence over the mouse.)

What About Reputation?

Reputation fits in rather nicely. Yesterday, I mentioned that people did not march to Washington D.C. for Martin Luther King, Jr. They marched for civil rights and social equality. However, I am sure there were a few in the crowd that would have marched specifically to see him, no matter what the reason.

It seems to me, for those few, his reputation was based on not much more than the collective ideas and actions he had taken prior to that point. But what made him a great leader, much like many great leaders, is that his greatest ideas didn't make him influential. His influence — the ability to refine and reflect what was already in the American psyche — made him great.

Others, unlike King, rise to greatness only to see their ideas do not produce stated outcomes. They quickly wither. And as they wither, some of them begin to rely on other mechanisms of influence, with fear being the most commonly employed.

What's The Point, Anyway?

I don't have to be right, but what I do hope some people get out of these two posts is that real influence doesn't come from the number of followers, retweets, or any other popular online measurement. Real influence comes from something that connects two people — a shared idea (even if one person has refined it).

And while other factors, like those noted, can be influential or sometimes work in tandem, they also tend to be more fragile on their own. If you want to influence people with positive intent, the best course of action is to pay careful attention to what they already think and then refine and reflect their ideas back to them. Just don't make the mistake of believing that makes "you" an influencer. If you think that, there is a different word. It's called narcissism.