19 October 2009

The post-crisis consumer: John Gerzema on TED.com

John Gerzema says there's an upside to the recent financial crisis -- the opportunity for positive change. He identifies four major cultural shifts driving new consumer behavior and shows how businesses are evolving to connect with thoughtful spending.(Recorded at TEDxKC, August 2009, Kansas City, Missouri. Duration: 16:34)

Twitter URL: http://on.ted.com/4A

Watch John Gerzema's talk on TED.com, where you can download this TEDTalk, rate it, comment on it and find other talks and performances from our archive of 500+ TEDTalks.

Posted by Shanna Carpenter | Permalink

Permalink | Comments () | TrackBack (0)

15 October 2009

Q&A with Rory Sutherland: An advertarian's take on the world

The TED Blog caught up with ad man Rory Sutherland the evening before we posted his TEDTalk. Drawing on the work of behavioral economists, Nobel Prize winners and others, he talked at length about his personal philosophy of Advertarianism, about President Obama and the healthcare debate, and even threw in some analysis on the future of media use and advertising. Not bad, considering it was well past bedtime in the UK.

You call yourself an "Advertarian." Would you like to explain what that means?

Now, there’s a thought experiment that behavioral economists perform, one in which a man invents a brilliant new way for scanning X-rays -- so you can do cancer scans and X-rays at one tenth of the previous cost and at twice the speed -- and everybody heralds him as a hero. Then, it’s revealed that there isn’t any clever technology. All he does is scan the X-rays and then email them off to the Philippines, where highly trained, low-cost employees do the actual scanning of the X-rays manually, just as before, only at one tenth of the salary. And the argument that’s used by economists is that people are absolutely scandalized by this, everyone thinks is this absolutely outrageous, and "What a terrible man!" Yet, bizarrely, the effects are identical. The effect of offshoring to a low-wage economy is the same as a technological innovation. Indistinguishable. You might even argue that the second course is better, at least if you’re a Filipino in need of a reasonably well-paid job. But, interestingly, we judge them morally on a very different level. We’re very subjective about that, and the means and the intentionality make a big difference.

And I have a parallel example, where I say, “Imagine there’s a device that costs about 50p per household, per year, and if you install it in your house, it decreases the chance of a house fire by 30 percent.” And everybody goes, “That’s an absolutely brilliant idea. I want to buy one of those. And, actually, I think the government should pay for it and they should issue one to all households.” But, it’s not technically a device: it’s actually a TV commercial. To run the ad costs about 50p per household, per year, and it actually decreases the likelihood of household fires by 30 percent. There is a TV commercial that’s had precisely that effect. And then people go, “No, that’s not quite the same.” And the question you have to ask is, “Why is it not the same?” In other words, why do we regard solutions that involve, to a small extent, tampering with our heads or just supplying information or supplying persuasion ... why do we regard those solutions as lesser value than those that involve technology, for example?

It’s not that marketing-driven or advertising-led solutions can solve everything. That’s absolutely not true. What seems strange to me, though, is that people don’t at least try them first. Instead, governments try to solve their problems by compulsion. My view is that we should try and solve the problem by persuasion, and if that fails we can try compulsion or harder-level nudging. For this reason, I think the book Nudge is one of the most important books of the last five to ten years.

One of the small successes of my TEDTalk is that it’s now Conservative Party policy to spend no more money on speed cameras, but to spend the money on those vehicle-activated signs instead. So, I’ve had a small amount of advertarian success, with at least the prospective next government here in Britain. I’m purely philosophical about this. I’m not an advertarian in the sense that I believe that all problems can be solved this way. But, I think it’s best just to try.

Technology makes for easier persuasion and nudging -- what B.J. Fogg at Stanford calls persuasive technology -- and makes it far more potent. So, the British government’s Central Office of Information, they’ve said, “Look we’ve tried advertising with seatbelts for years. It didn’t really work. And so, we made it illegal not to wear a seatbelt and everybody wore one.” It’s interesting, of course, that at the time when we made it compulsory to wear seatbelts, there wasn’t the technology cheaply available to make a car go “bing” for 60 seconds, or even indefinitely, if you didn’t put your seatbelt on. Now, I would argue that making it a legal requirement that all new cars go “bing” for 90 seconds if you don’t put your seatbelt on when you drive off is a nudge, but it’s not really an infringement of liberties.

Senior people in government spend years getting their hands on very large budgets with which they want to do very big things, and quite often there’s a disproportionality, as the things that make an enormous difference are actually quite trivial. For example, Terminal 5 at Heathrow is magnificent. As a piece of architecture, it’s fabulous. But, the signage is dreadful. It’s a Kafka-esque nightmare of really appalling directions and confusion.

All large organizations need a Director of Trivia or a Director of Detail -- a very senior person with a large budget and great powers, but whose job is actually to take care of little irritants. Most board directors and government ministers, their sense of self-aggrandizement is too great for them to actually get involved here. You haven’t spent all those years becoming a government minister to improve form design, yet what Nudge would say is that if you want people to follow your policy, designing really attractive forms and interfaces is probably a better way of achieving your end than spending loads of time legislating or creating expensive incentives. The world needs people going around and sorting out little interface issues. If pelican crossings (crosswalks) had “Cancel” buttons, they would be more efficient. The thing is, you press the button and then realize there’s a gap in the traffic, you jaywalk across, and then all the cars have to stop for no one to cross the street. All you need there is a simple “Cancel” button so that if you decide to make a run for it you don’t stop all the traffic. And there are hundreds more little problems like these that are unnecessary irritants in our daily lives.

The Advertarian philosophy doesn’t solve all this; it’s just a little thing I made up. But, I do think that you should always try to solve a problem first through voluntary means or persuasive means before resorting to heavy-handed compulsion.

When you bring up advertising and government, the first thing that comes to mind is President Obama’s campaign last year. What did you think of his campaigning style, as well as what he’s doing in government right now? Is there anything you think he should be doing differently?

It’s very interesting. I think he ran a brilliant campaign using both social media and mass media. It’s actually a much more conventional advertising campaign than a lot of people have said. There was an enormous amount of money spent on advertising. And, it was interesting that to some extent he portrayed himself as the underdog, even though he was better funded than anyone. He played that off very cleverly. Because he wasn’t a long-time politician, he could play this game of “little old me” when actually, he had bucketloads of money to campaign with.

What’s peculiar in this case is that he’s failed to take the American people with him on health reform in the way that he undoubtedly co-opted them and created a popular movement around his election campaign. It must be remembered that, in the United States, there are immensely powerful lobby groups who weren’t in action against his election in the same way.

But, Obama did have the amazing effect of getting the British to rise up in defense of the National Health Service. The British are mostly critical of the health service and spend a lot of time complaining about it, but when various things came out in the United States more or less suggesting that we have committee meetings to decide whether you die or not, people found that such a ridiculous misrepresentation of the situation that they leapt to the defense of the system.

Now, just bear in mind that by European standards I’m quite right wing. Not by American standards, but by European standards I’m thought to be quite libertarian and quite keen on free-market solutions. But, there is a simple fact that, strangely, you can’t point out to Americans, which is that when you go to Canada, it’s not like everybody’s dying. They pay vastly less for prescription drugs, because they’re purchased centrally.

Incidentally, what no one actually says is that the United States spends an insane amount of money on health. A brutally statistical discovery, as found by the statistician Robin Hanson, claims that, above a certain level of expenditure, there is no correlation between money spent on healthcare and longevity. So, actually, when you spend above a certain amount per person on health, longevity doesn’t actually improve. And, Hanson’s theory is that excessive intervention by medicine outweighs the benefits of overfunding.

Most people think that the more you spend on healthcare, the better your healthcare is, but it’s not true. Now, it’s not that every heart surgeon is going, “Oh yes, a couple more of these heart operations and I’ll be able to pay for a yacht.” Rather, if you’ve spent 40 years practicing heart surgery and becoming a brilliant heart surgeon, you are unusually biased towards seeing solutions in heart surgery, just as legislators are overly biased to seeing solutions in legislation and people who are engineers are overly biased to seeing the solutions to the world’s ills lying in engineering. And so, overmedication and excessive intervention by doctors in the United States is probably a downside of how much money is poured into healthcare. The bias to intervention is always there in a case where you can either do nothing or do something. People always prefer something. The doctor’s recommendation of “Actually, I’d just leave it. It’ll probably go away,” is never one with which people are comfortable.

However, the inordinate amount of money spent on healthcare in the United States has enormous spillover benefit for other countries. The research and pharmaceutical development that’s funded by the large percentage of GDP devoted to US healthcare ultimately benefits the rest of the world enormously. So, in some ways, as a Brit, I would be quite keen for the United States to carry on with its current barking level of health expenditure.

The fundamental problem that Obama has in this -- and the British also had this for the previous 100 years -- is that when you’re top dog nation, you don’t think that anything could be better anywhere else. I mean, if France had come to us and said, “Actually, you ought to drink wine and not beer,” we would never have accepted that. The very idea comes across as unpatriotic. I’ve met Americans who themselves are quite chippy about the United States, but if you ever go and actually say, “I think your restrictions on drinking out-of-doors are a bit silly,” they get quite jumpy about it. In truth, there are 50 million Italians who sit outside drinking wine, in the open air, and their incidence of alcoholism is probably lower than the US.

I think Paul Romer has the answer, in truth. I thought Paul Romer’s speech at TED was actually magnificent. The idea of charter cities: absolutely fascinating. To change something at a national level is impossible. What you need to do is create cities that operate on new models and new institutions, and trial the new thing at that scale and then, effectively, let it spread outwards. That’s an interesting question, whether you should try it state by state in some form.

Is your advice to Obama that he should sit and have a talk with Paul Romer?

Yes, exactly that. I think so.

It’s a fundamental question about making change happen. In truth, much as people in central government love to issue strategy because it’s what they’re there for, a lot of important change happens from the bottom up. Where Britain’s conservatives have been quite good is in looking round the world for good ideas, in the sense that there are some very good Swedish ideas on education involving starting your own school that they’re currently looking at.

READ MORE: Rory Sutherland explains 360 degree branding, why the distance the technology can put between us is actually useful and talks Mad Men

Posted by Shanna Carpenter | Permalink

Permalink | Comments () | TrackBack (0)

14 October 2009

Life lessons from an ad man: Rory Sutherland on TED.com

Advertising adds value to a product by changing our perception, rather than the product itself. Rory Sutherland makes the daring assertion that a change in perceived value can be just as satisfying as what we consider “real” value -- and his conclusion has interesting consequences for how we look at life. (Recorded at TEDGlobal, July 2009, Oxford, UK. Duration: 16:39)

Twitter URL: http://on.ted.com/40

Watch Rory Sutherland's talk on TED.com, where you can download this TEDTalk, rate it, comment on it and find other talks and performances from our archive of 500+ TEDTalks.

Get TED delivered:
Subscribe to the TEDTalks video podcast via RSS >>
Subscribe to the iTunes video podcast
Subscribe to the iTunes audio podcast
Get updates via Twitter >>
Join our Facebook fan page >>

Subscribe to the TED Blog >>

Posted by Shanna Carpenter | Permalink

Permalink | Comments () | TrackBack (0)

04 November 2008

Watch Rives' ad for European TV

Rives writes in to tells us: "A few months ago a researcher at a French ad company was scouring the web, looking for 'real people' who could be featured in a European ad campaign ... He comes across my 'If I Controlled the Internet' poem on TEDTalks and figures: This is the guy."

See the results:

Posted by Emily McManus | Permalink

Permalink | Comments () | TrackBack (0)