Volume 67: A day late and a dollar short.
1. Living in a boomtime.
tl;dr: Signs of booming economic growth impossible to ignore.
There have been many predictions about what would happen as vaccinations began rolling out broadly, restrictions started to ease, and people started to feel safer going about their daily lives. And now we know.
Those who predicted a rapid return to growth are being proven spectacularly right. Even as predictions of GDP growth are changing around the margins as case counts spike in certain states, we see a US economy growing at its fastest rate since World War Two. Goldman Sachs predicts that GDP will rise by 8% in 2021 and that excess growth above the average will last until at least 2023 based solely upon the government stimulus that’s been pumped into the US economy over the past 12 months.
Even more astounding is that if you look at things like the 14-month trendline in retail sales (Sorry, behind the Bloomberg paywall), we see not only the massive spike downward in March last year but a much larger spike upward. Today, we’re not just back at pre-pandemic levels of retail spending; we’ve surpassed this to the highest levels of retail spending ever recorded.
Beyond consumers, certain indicators of manufacturing strength are at their highest since the 1970s, and recovery in the labor force is starting to look equally robust, with predictions of just 3% unemployment by year’s end.
Now, as good as all these indicators undoubtedly are, this remains a very uneven recovery, which means that not everyone will be feeling it yet. After all, the pandemic has hit different people very differently indeed. Still, if this kind of economic bounce continues, it looks like we really might be in store for the roaring ’20s.
Not only that, economic growth might just rise enough to justify some of the breathtaking valuations we see in the market.
2. What gets measured gets manipulated.
tl;dr: An update for the oft-used management cliche.
One of the more common cliches’ in business is the statement that “what gets measured gets managed.” On its face, it makes sense. If you can measure something, you can baseline it objectively and see whether the management actions you take have a positive or negative impact. This is why measurement and metrics in business are like the score in sports. They mark your fitness to perform and thus your likelihood to advance and win.
However, what I’ve observed over the years is that “what gets measured gets managed” isn’t particularly accurate. The long-winded reality should really be “what gets easily measured gets manipulated, sometimes falsified, and what’s hard to measure gets ignored.” I’ve yet to meet a business that in some way or another doesn’t manipulate easily measurable metrics to make it look as if they’re winning the game. Why? Well, if your career depends on climbing the rungs of any large corporation, the metrics and measures you’re judged by don’t just indicate whether you’ll progress, but whether you’ll even have a job.
When looked at through this lens, you see the temptation to measure and manipulate can easily become oppositional to good management. Here are three examples from large to small:
Many years ago, I consulted with GE, which at the time was the world’s largest corporation by market capitalization. Its primary strength was its scale and scope - it had discovered flywheel effects long before Amazon popularized the concept - but it didn’t compete that way. Instead, GE fragmented into thousands of mini-businesses that often competed harder against each other than they did the competition. Why? Because former CEO Jack Welch had said, GE would “be number 1 or 2 in any market or get out,” which led the organization to drastically narrow its definition of what a market was to ensure it was always “no 1 or 2” no matter how small or insignificant the market might be. Measure meet manipulated.
The second comes from a friend who used to work in the automotive industry. The measure to be manipulated was sales volume, which meant working diligently at the end of each quarter to ensure cars were “sold” and then just as diligently, but a lot more quietly, to ensure they were “unsold” at the beginning of the next. How else to ensure you remained the volume leader in car sales?
And finally, think about any agency business where you’ve been told to fill in your timesheets only with the hours approved in the budget, irrespective of how long it takes to do the work. This makes the people judged on their ability to manage a budget look great but wreaks havoc on the business's ability to accurately price future work and understand how busy the agency really is. (As a side note, if you’ve ever been asked to do this, you’ve almost certainly found yourself working crazy hours because the people in charge of resourcing are working from manipulated data and think the agency is a lot less busy than it is).
It isn’t just easily measured and manipulated metrics that are the problem. It’s the deliberate ignoring of difficult-to-measure metrics too. Beautifully illustrated by Tim O’Reilly when he talks about the clothesline paradox: As a society, we only measure the energy used by dryers and entirely ignore the washing that gets hung on the line.
The reason this matters is that as marketing has become vastly more technology-driven and embraced an unprecedented level of quantification, it’s also become ground zero for manipulated, downright falsified, and largely ignored measures, which has led to all sorts of unintended consequences, such as the effectiveness of marketing going into a ten-year decline.
This is why performance marketing (easily measured, manipulated, and falsified) often gets budget preference ahead of brand marketing (hard to measure, typically ignored), even when the evidence points to a requirement for both.
It’s why we create bizarre and arbitrary attributions across the customer buying journey through surveillance that gives us a tremendous understanding of correlation and almost zero understanding of causation, excellently illustrated through this story of attributing a % of sales in a physical store to the door you had to open to enter. Or the observation that a large % of digital advertising doesn't have an advertising effect at all but at best acts like wayfinding signage (thus suggesting the cost of things like Google AdWords are vastly greater than they should be based on actual commercial impact).
This neatly brings me to the dominant advertising platforms themselves. Google & THE FACEBOOK now control the vast majority of US digital advertising and a good chunk of total advertising. Both provide powerful black box measurement tools that drive marketing management toward measures that reinforce their platform dominance rather than what’s right for the marketer and have proven extremely difficult to independently audit. Concerningly, both seem to have problems telling the truth, as multiple lawsuits continue to demonstrate.
My final point, inspired by Ben Evans is that no amount of technology, digitalization, and quantification of marketing changes the fact that marketing has and always will have marketing problems to solve. When technology points itself at a market, it moves in, destabilizes it, and then moves on. And when it moves on, it becomes apparent that those things that were being framed as technology problems often were not. In retail, we are left with retail problems. In banking, banking problems. Entertainment, entertainment problems, and so on.
And this is where we are at. For the past ten years, technology has destabilized the market for marketing, showering us with black box insights, surveillance ecosystems, rampant fraud, hucksterism masquerading as intelligence, and a broad swathe of automatically measured, easily manipulated, often falsified, and sometimes downright dangerous metrics combined with the hard to measure things that we completely ignore because they don’t fuel ad-tech or mar-tech monetization.
But, as technology moves on from marketing to bigger and more profitable arenas, I believe marketers will begin rediscovering the fundamentals of marketing again, which will mean less time spent worrying about click metrics and more spent creating customers, delivering on their needs, and creating value for them.
3. There’s a dead mammoth in my logo.
tl;dr: What I can only describe as a “stunning” new logo for an airport.
Mexican airports generally don’t catch my attention except when I’m flying into them, but it was almost impossible this week not to notice the stunning new logo that appears to have been created for the brand new $3.6bn Felipe Ángeles International Airport being built to serve Mexico City and slated for opening next March.
When I say stunning, I should really have said that I was left stunned. Like with my mouth hanging open, stunned, thinking, “there’s no way on earth this can possibly be real,” quickly followed by the thought that this is what a logo would look like if I’d designed it using PowerPoint and clipart at 3 am after a half bottle of whisky and some gin. Yes, folks, it really is that bad.
Not only bad but crammed in among all the other visual clutter, there appears to be a mammoth. Why on earth, you might wonder, is there a mammoth in the logo for a new airport? It would appear that when they were digging the foundations, they discovered they were building atop a mammoth graveyard. So, of course, the first thing you’d think of is memorializing the dead mammoths whose graves you’ve desecrated by putting one in your logo. I mean, naturally.
Anyway, while I really hope this is a joke and that they do something properly next year, there is a part of me that kind of wants them to stick it out. This being so unbearably bad that it’s almost good.