18 June 2017

Economic Thinking in the War on Waste


ABC's War on Waste is a fantastic series that explores how we're fucking up the environment. Once you get over your guilt, it prompts a lot of conversation on how we need to change to reduce our impact.

It's even more interesting through the lens of behavioural economics.

One of the show's major focuses is food wastage. Annually we throw away $8 billion of food, having produced enough to feed 60 million people (nearly two and half times our population). And it's a huge problem, not just in wasted resources for production but in disposal. When food rots in landfill with other organic matter it releases a greenhouse gas 25 times more potent than the carbon dioxide from car exhaust.

It's not just household behaviour to blame, in many cases food becomes waste before it leaves the farm. War on Waste hones in on bananas, our number one selling supermarket product with five million purchased daily. That's a lot of bananas.

The banana grower highlighted in the show, the third largest in Australia, produces 1.4 million boxes a year. In some cases up to 40% can be put straight into landfill. Again, that's a lot of bananas.

Why? It's not because they're bad.

Our supermarkets have strict cosmetic standards on what is acceptable. Bananas can't be too long or too short. They can't be too fat or too thin. Too marked or too ugly. Craig Reucassel, the host of the show, gets particularly frustrated that one of type of straight banana can be thrown away because it's too bent, while another bent breed can be too straight. That's really fucking bananas.

These, he points out, are arbitrary rules defined by the supermarkets.

The supermarkets blame consumers (of course!). And while they make token efforts through initiatives such as Woolworth's Odd Bunch - they state it's consumer demand that drives decisions on what makes a banana too straight or too bent.

Thankfully, a generation of slacktivists responded (I'm not actually that skeptical, it's a really good thing people give a shit). 136,000 supporters signed a petition announcing we don't care what size and shape our fresh food is. And those poor Community Managers running the Facebook pages for Woolworths and Coles have been flooded with messages.



But I don't believe it's that simple. Or that people realise the potential consequences of their actions. Inspired by years of the Freakonomics podcast, I started thinking how this could actually play out.

Sometimes we appear to be doing more good than we actually are. And in some cases we make it worse (see the Cobra Effect).

Take the recent changes for first home buyers here in Australia. In an attempt to increase home affordability, the government has added incentives for people to buy their first property. But when you increase the market's buying power, demand goes up. And homes will be more expensive, not less.

Humans are also really good at exploiting systems, which is why you'll often see properties sold for $600,001 - $1 over the threshold for stamp duty savings.

This is why we need economist-thinking on what happens if Coles and Woolies relax their cosmetic standards. I'm by no means educated enough to think this out a loud, but sometimes that's what blogs are good for.

If we relax our cosmetic standards for fruit, more bananas become available. Less bananas leave the farm for landfill and instead end up on supermarket shelves.

But demand won't increase overnight. Australian's aren't suddenly going to start eating 40% more bananas.

Allowing more bananas through the system will make farmers more efficient, but the supermarkets don't have a need for the surplus bananas.

With 60% of the land and resources now supplying 100% of Australia's banana needs, it opens opportunities for farmers to diversify the remaining 40% into alternative production. Even if the land can be used for something else, it requires capital and knowledge. Not to mention the inefficiencies in managing two different products. I'm no farmer, but I imagine it's not simple to turn a banana plantation into an apple orchard.

Instead, farmers will lose jobs (and likely farms). If the supermarkets only need six farms to supply them instead of ten, four go out of business. It's cheaper to deal with fewer suppliers.

That's a tough outcome for a country who's been hearing about the struggling farmers for the past decade. But that's the free market and while we'll ultimately be better off, there's hardship to be had in the process.

There is another factor: price. You learn in the first week of Economics 101 that an increase in supply lowers price. And there is some evidence to suggest bananas are quite elastic, meaning price movement impacts sales. 2006's Cyclone Larry saw almost 90% of Australia's banana supply wiped out, with prices up 500% leading consumers to seek fruit alternatives. But can a 40% demand gap be utilised by dropping the price a dollar per kilo? How many bananas can we eat?

If it happened, it would be a great outcome - particularly if Aussies were to consume in favour of cheaper junk foods. Health, unfortunately, is not really the concern of supermarkets.

The one place there is actually a supply shortage is feeding those in need. But based on the same episode of War on Waste the issue here is not in food donation - it's logistics and storage which are most problematic (and expensive).

Ultimately if you remove what is essentially a tariff for something to become more efficient, it will be better for the market long term. But it means farmers might lose jobs.

Of course, it's not really that straight forward. And I'm not nearly clever enough to talk about it as much I have - but I do wonder if 136,000 people who signed the petition thought about its impact.

05 April 2017

Content Marketing is Boring




The most effective content marketing strategies are also the most mundane. Often too in execution.

Our approach to content nurtures leads through a conversion funnel based on their behaviour. Dry! And this might be executed through assets like articles that teach someone how to use the product. Yawn!

It works, but wow it's boring compared to a big idea. Especially in an advertising agency.

Content marketing also suffers through a lack of industry visibility. A consumer isn't exposed to content unless their behaviour indicates they are a potential lead. Most of the content engine sits beneath the water line. A bit like Facebook where the good stuff happens in dark posts, not on the wall for all audiences to see.

There's little wastage as a result but it means marketers often don't see it out and about either.

It also doesn't usually have a million views. Unlike, say, the viral marketing fad where everything you saw was popular (hint: you only saw it because it was popular), content marketing isn't a numbers game. We create things for very niche audiences, sometimes designed not to be seen by many. Through targeting it reaches few, but conversion is amazeballs.

Because content marketing is boring, hidden and not trending - it's not sexy enough for trade press. Instead it ends up in long case studies full of tech stack jargon and media acronyms. More yawns!

Unfortunately all of this makes it harder to sell. Even though it's more effective than viral marketing. So if you're doing content work that works, tell the industry about it. And if you have something that's not boring please share so I can stop putting people to sleep trying to fight the good fight.

12 March 2017

Experience Trumps Perception



Uber had a rough month in the media. A former female engineer exposed their culture of sexual harassment and Newsweek best highlights a dozen other problems with the company.

Rationally, knowledge of these might be enough to impact one's use of the app. Much of their behaviour is really not cool.

But I continue to ride with them. I can't really justify it, but Uber retains a high enough level of motivation and ease - the two factors you need to impact in behaviour change.

That is, until this week. An Uber trip that was fine until I got out of the car, when the ride wasn't terminated by the driver. I realised five minutes later, took a screen shot and cancelled the trip (automatically paying the full fare as it was at the time I cancelled).

A disappointing experience, but one that could be easily corrected when I sent Uber the screenshot.

Sadly, more than a week and eight emails later, as well as several attempts on social media - I still have not been refunded that portion of the trip.

Here's how a driver's mistake becomes an incompetent company cheating a customer.

An infuriating loop of scripted responses quickly shows how poor their system is. Particularly when none address my actual problem, and are always condescendingly signed off with how much they appreciate the time I've taken.

When I finally get through to a human, I'm told "the fare you were charged is within our estimate for the trip [...] as a result, the fare was not adjusted". Their algorithm supersedes the fact a driver cost me a few dollars. When I question this, the loop of automated incompetence begins again.

It was not their sexist culture or deceptive arrogance that stopped me using Uber, but an awful customer experience. Over only a few dollars they lose a loyal customer.

While it's fun to invest in activities that generates media buzz (like Uber bringing puppies to workplaces) you can't overlook the importance of customer experience, which always trumps perception.

Anyone got a Lyft promo code? (Who interestingly are also using media stunts wrapped in activism to drive growth, although only after another blunder by Uber of course.)

02 March 2017

I Couldn't Edit A Single Word on Wikipedia

I had a great idea.

Based on an old blog post, I intended to remove all unnecessary uses of the word "that" from Wikipedia.

I created an account called removesthat and got started. Using the random page feature I spent an hour finding dozens of inappropriate uses of "that" and deleted them.

He was dismayed to discover that his granddaughter did not know what coal was.

became:

He was dismayed to discover his granddaughter did not know what coal was.

It makes the writing more concise and saves five bytes of bandwidth on every page load.

Once I'd done a few thousand I was going to write up the stunt and see if it could get some traction in PR. It was going to be a fun side project to kick off the year.

But less than an hour after my first edits, they were reverted:


I attempted to point out Mean as custard's arbitrary decision making and the irony of indiscriminately reverting all changes, but ultimately I ended up dealing with a troll. And you shouldn't feed trolls. (Interestingly the Washington Post has covered this user before!)

I guess not every idea is a good one. All I got out of it was this crappy blog post!

04 February 2017

Junk Mail Please


I do not like junk mail.

Which is why I have a No Junk Mail sticker on my letterbox. It's meant to stop catalogues and flyers, although is frequently ignored by businesses big and small. Last year I got six from one pizza shop who each time assured me it wouldn't happen again. They always blame the distributors.

It's difficult to find research on how many Australian households have these stickers, so I conducted my own with a sample of 500 properties. (Happy to admit this was not random, but based on the first 500 mailboxes I came across in the northern suburbs of Melbourne.)

30.4% had No Junk Mail signs.

I wondered, what would be the impact if the junk mail system was opt-in, instead of opt-out? As behavioural economist Dan Ariely tells us, the default option in a system has a significant impact on how we make decisions.

We see this most dramatically in organ donation around the world, where countries similar in culture, religion etc. have very different outcomes. The critical factor is opt-in versus opt-out.

The difference between opt-in and opt-out of organ donation.

Applying this thinking, I conducted an experiment by printing 150 No Junk Mail stickers and placing them on letterboxes around the neighbourhood.

A month later I measured how many had been removed and how many remained. 61.3% of the No Junk Mail stickers were still on the letterboxes.

Imagine our junk mail system was opt-in instead of opt-out, where people would put a Junk Mail Please sticker on their letterbox if they wanted to receive catalogues. We'd shift from 30.4% of households not receiving junk mail to 73.6%.

The difference between No Junk Mail and Junk Mail Please systems.
And this doesn't account for how much harder it would be to source a Junk Mail Please sticker than taking off one of my homemade ones. Nor does it account for the social norming which would shift perceptions once it had a majority.

The industry would more than halve over night. And so too would the landfill.

Of course, the marketer in me knows the channel is an effective one. Retailers invest in catalogues because they work. I have a client whose most successful marketing activity to date was a fridge magnet drop.

Doesn't mean I wouldn't mind seeing the end of junk mail though!

15 January 2017

Brands, Please Stop Hijacking Memes

Kittens (or memes) aren't a social media strategy. 

Our Global Chief Strategy Officer says "Everything communicates."

Not just your communications. Your product, your customer service, your price point. The perception of a brand is informed through experience, not just ads.

Your social media strategy communicates too. Obviously the content itself, but so too does the way you approach the channel, where you invest your time and money. Everything communicates.

And these days social isn't a single line item on the bottom of a media plan. Bigger budgets every year support the channel which is long over due - too many brands over invest in production relative to distribution.

As the channel matures, so too must our approach. Unfortunately brands still think the answer is memes - attempts to 'hijack the conversion' with reactive content. Now, armed with a media budget, they have reach.

In two days I've seen half a dozen attempts by local brands to jump on the salt bae and jacketgate memes (don't worry, I had to look them up as well). And there's more every day.

Please, stop doing it. Far more often than not:
  1. It's too niche or early for people to have context (so much wastage)
  2. It's off brand (and it's not distinctive if everyone is doing it)
  3. It's off strategy (if you even have one)
  4. You don't own the image/video rights or talent usage (ask your legal team)
  5. It's lame (especially when you PR it in trade press)
No doubt it's more engaging than the shitty content you put out every other day. But if you wanted to be popular, you'd just post photos of kittens.

Just because it's getting lots of likes doesn't mean it's working.

09 January 2017

Shipping Faster

Your lizard brain slows ideas.



It's nearly a decade old, but as relevant as ever: Always. Be. Shipping.

I'm very slow at shipping ideas. From big side projects to short blog posts (like this one). They often float around in head for weeks, then longer as notes on my phone. Only much later do they turn into something. Sometimes.

Seth Godin says it's our lizard brain. It slows down ideas and kills them through inertia. I also find it stops new bulbs from lighting up - there's only so many ideas I can keep in my head at once. If I don't get them out fast enough new ones don't come.

But it's never been easier to quickly get from light bulb moment to shipped product. It takes almost no time or effort or cost to gauge demand or build a prototype. Technology let's you make things (or break things) fast. Or bash out a hundred words.

There's probably something to be said for letting ideas sit to evolve. They "stew". But I find it doesn't happen without action - researching, brainstorming, writing. Especially when Mario Run doesn't let you get bored enough to stew them over. (That's why you have your best ideas in the shower.)

I love pushing things out into the world. Even pressing the Publish button on a post. Not just because people engage with your idea, but shipping one creates space for the next to exist.

If you don't, your current small ideas (or bad ones) might be blocking that next big one.

I'm not very good at it. 73% of my blog posts last year were published in the last week of the month. I don't have a schedule or volume target - I post whenever I have something worth sharing. Yet my lizard brain apparently likes an artificial monthly deadline. Rarely do I post more frequently, unintentionally holding out on a post idea to 'tick' off that month. And while my brain is holding ideas, it's not generating new ones.

I'm not really one for New Year's resolutions, but this year I want to move faster with ideas. Get them out into the world sooner (and not just one at the end of each month). Starting with this post, based on a conversation I had with a colleague only three days ago. Normally it would take me a fortnight.

And I've got another post to write tomorrow.

Freeing up the mind keeps it hungry.
The views expressed herein are my own and do not necessarily reflect those of my employer. Also ponies are evil.
Pigs Don't Fly © Copyright Zac Martin