a Critique of Advertising Analytics

Ken Segall:

Ace Metrix sells marketing analytics software and competitive comparisons. Their findings generate stories, which at the same time generate PR for Ace. An excellent way to build “the new standard” in analytics.
 But what exactly is the “Ace Score” of which they speak? If you have the stomach, read on.
 Exposing each ad to 500 people, Ace calibrates creative effectiveness by two key measures — Persuasion and Watchability. In their own words:
 “The Persuasion rating is based on the interactivity of six data elements – Desire, Relevance, Likeability, Attention, Information and Change – automatically captured and analyzed for each ad. Watchability measures the engagement that a person has with the ad. Watchability and Persuasion interact to create the Ace Score.”
 This is the kind of language that gives talented people nightmares, because it often gives ammunition to people who aren’t particularly good at judging creative work.
 I get that a lot of companies feel compelled to subject their ads to deep analysis. But — would you like to know how Steve Jobs analyzed an ad? He looked at it and said “I like it” or “I don’t like it.” After it ran, he gauged the reactions to it.
 Ace’s type of analysis is the reason why so many companies, usually the bigger ones, begin to churn out drivel. They get more concerned with ratcheting up their “six data elements” than creating great ads.
 Steve didn’t tolerate that kind of thinking. Apple’s history of great advertising is the validation of his approach.

Hospitals Are Mining Patients’ Credit Card Data to Predict Who Will Get Sick

Shannon Pettypiece and Jordan Robertson:

Imagine getting a call from your doctor if you let your gym membership lapse, make a habit of buying candy bars at the checkout counter, or begin shopping at plus-size clothing stores. For patients of Carolinas HealthCare System, which operates the largest group of medical centers in North and South Carolina, such a day could be sooner than they think. Carolinas HealthCare, which runs more than 900 care centers, including hospitals, nursing homes, doctors’ offices, and surgical centers, has begun plugging consumer data on 2 million people into algorithms designed to identify high-risk patients so that doctors can intervene before they get sick. The company purchases the data from brokers who cull public records, store loyalty program transactions, and credit card purchases.
 Information on consumer spending can provide a more complete picture than the glimpse doctors get during an office visit or through lab results, says Michael Dulin, chief clinical officer for analytics and outcomes research at Carolinas HealthCare. The Charlotte-based hospital chain is placing its data into predictive models that give risk scores to patients. Within two years, Dulin plans to regularly distribute those scores to doctors and nurses who can then reach out to high-risk patients and suggest changes before they fall ill. “What we are looking to find are people before they end up in trouble,” says Dulin, who is a practicing physician.
 For a patient with asthma, the hospital would be able to assess how likely he is to arrive at the emergency room by looking at whether he’s refilled his asthma medication at the pharmacy, has been buying cigarettes at the grocery store, and lives in an area with a high pollen count, Dulin says. The system may also look at the probability of someone having a heart attack by considering factors such as the type of foods she buys and if she has a gym membership. “The idea is to use Big Data and predictive models to think about population health and drill down to the individual levels,” he says.

Related: Making pizza delivery more efficient.

Facebook Could Decide an Election Without Anyone Ever Finding Out

Jonathan Zittrain:

On November 2, 2010, Facebook’s American users were subject to an ambitious experiment in civic-engineering: Could a social network get otherwise-indolent people to cast a ballot in that day’s congressional midterm elections?
 The answer was yes.
 The prod to nudge bystanders to the voting booths was simple. It consisted of a graphic containing a link for looking up polling places, a button to click to announce that you had voted, and the profile photos of up to six Facebook friends who had indicated they’d already done the same. With Facebook’s cooperation, the political scientists who dreamed up the study planted that graphic in the newsfeeds of tens of millions of users. (Other groups of Facebook users were shown a generic get-out-the-vote message or received no voting reminder at all.) Then, in an awesome feat of data-crunching, the researchers cross-referenced their subjects’ names with the day’s actual voting records from precincts across the country to measure how much their voting prompt increased turnout.
 Overall, users notified of their friends’ voting were 0.39 percent more likely to vote than those in the control group, and any resulting decisions to cast a ballot also appeared to ripple to the behavior of close Facebook friends, even if those people hadn’t received the original message. That small increase in turnout rates amounted to a lot of new votes. The researchers concluded that their Facebook graphic directly mobilized 60,000 voters, and, thanks to the ripple effect, ultimately caused an additional 340,000 votes to be cast that day. As they point out, George W. Bush won Florida, and thus the presidency, by 537 votes—fewer than 0.01 percent of the votes cast in that state.

Moaning Moguls

James Surowiecki:

The past few years have been very good to Stephen Schwarzman, the chairman and C.E.O. of the Blackstone Group, the giant private-equity firm. His industry, which relies on borrowed money, has benefitted from low interest rates, and the stock-market boom has given his firm great opportunities to cash out investments. Schwarzman is now worth more than ten billion dollars. You wouldn’t think he’d have much to complain about. But, to hear him tell it, he’s beset by a meddlesome, tax-happy government and a whiny, envious populace. He recently grumbled that the U.S. middle class has taken to “blaming wealthy people” for its problems. Previously, he has said that it might be good to raise income taxes on the poor so they had “skin in the game,” and that proposals to repeal the carried-interest tax loophole—from which he personally benefits—were akin to the German invasion of Poland.

The IPO is dying. Marc Andreessen explains why

Timothy Lee:

This is so powerful in the conventional wisdom right now. I love the Daily Show like everyone else does. But literally [Jon Stewart’s] answer to every issue is Congress should pass a law. [People think you can] solve any problem by passing enough laws.
 I don’t see the world getting less dramatic. I don’t see the world calming down.
 The loop we’re in now is that people are getting upset and disappointed by the stock market. There are no growth stocks, which means there’s no growth. Stock market returns have been weak for 15 years, which is exactly what you’d expect if you took all the growth out. Everyone is upset the stock market isn’t performing. The worse the results get, the more regulation you get. It’s in its own kind of doom loop. Unless something happens to shock the system a lot, our assumption is it gets worse, not better.

Modern Marketing Use Case: This Internet Millionaire Has a New Deal For You

Tim Rogers:

At length, after a bit of business talk that maybe resembled a cousin of an actual breakfast meeting, Rutledge blurted out a question that had been troubling him: “Why did you buy Woot?”
 For the uninitiated, the term “woot” is an expression of joy that sprang from online role-playing games, a portmanteau of “wow” and “loot.” Rutledge had bought the web address Woot.com in 2003 for $6,000, and the next year launched a site that sold stuff in a way no one had ever tried. Woot offered only one item per day, usually a gadget but maybe a wheel of cheese, and priced it so low that it oftentimes sold out in a matter of hours. When the items didn’t sell out, Woot put them in a Bag of Crap, a bundle that users bought blindly. Customer service pretty much began and ended with the suggestion that the customer put any unwanted or defective item on eBay.
 Woot violated nearly every precept of retail. And it was wildly successful. Each weekday just after midnight Central Standard, a new item went up. It was an event. The site attracted a community of geeks who once flooded its discussion forum with 452 comments about a power adapter. At its height, Woot attracted 1 million daily visitors, to whom Rutledge was something of a rock star. By 2008, annual sales had eclipsed $164 million, and Inc. magazine named Woot the fastest-growing private retailer in the country (and the fastest-growing private company in North Texas). At that point, Amazon had already invested in the company. Then it bought the whole thing.
 So there sat Bezos at the breakfast table, faced with a question for which he was apparently unprepared. Many painful seconds passed without an answer. Rutledge let the pause lengthen as long as he could bear it and was just about to tell his host to forget it, when Bezos finally spoke.
 He looked down at his plate. Bezos had ordered a dish called Tom’s Big Breakfast, a preparation of Mediterranean octopus that includes potatoes, bacon, green garlic yogurt, and a poached egg. “You’re the octopus that I’m having for breakfast,” Rutledge remembers Bezos saying. “When I look at the menu, you’re the thing I don’t understand, the thing I’ve never had. I must have the breakfast octopus.”
 Not until Rutledge had returned to Dallas and related the story to his anxious employees—now Amazon’s employees—did he realize just how absurd that explanation sounded. Before it can be eaten, generally, the breakfast octopus must be killed.

Letter to a Friend

My Cup Runneth Over” – Psalm 23:5

“What should I do? What did you do? How do I know? Stay or go?”

Questions arrive from time to time. One after another in short order. Inevitably, I reflect on the gifts of my journey.

How did I get here?

Riding around in my Grandfather’s car (1957 Chevy) mowing lawns lead to working with my dad selling tractors in high school and college, which begat a lifelong mentor relationship which further begat numerous business and personal opportunities.

A flight from Chihuahua to Juarez while a student leads to a kind ride across the border from two corporate types.

A chance meeting at a ski show swerves into an introduction to my future wife.

A sermon, perhaps given ten years ago has long stayed in my mind: “Worry is rust on the saw blade of life”. The words were based on Matthew 6:25-34 which begins:

“Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more than food, and the body more than clothes? 26 Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they? 27 Can any one of you by worrying add a single hour to your life[a]?”

Teachers, professors and mentors that went the extra mile.

A chance conversation at the gym leads to a friend in Istanbul.

My parents taught me to be opportunistic and persistent. Indeed. My cup runs over. So thankful. They also taught me that the Lord giveth and taketh away.

My answer to these questions: trust in God. Take advantage of the many opportunities that arise. Work hard.

Millennials Shunning Malls Speeds Web Shopping Revolution

Matt Townsend:

CJ Chu is a retailer’s nightmare.
 The 24-year-old associate for a private-equity firm does “99 percent” of his shopping online — even toothpaste. He’d rather buy groceries on the Web than walk to the supermarket.
 “Convenience and free time is something I value,” said Chu, who works for Bridge Growth Partners LLC in New York. “Ordering online just makes more sense.”
 Chu is an extreme case. Yet millions of Americans like him are abandoning stores faster than executives predicted, pushing the industry to a precipice. Traditional retailers, for the first time ever in 2014, will generate half their sales growth on the Web, according to Stifel Financial Corp. That means about $18 billion in new revenue generated this year will come from online purchases, an analysis of U.S. Census data shows.
 The stampede online will only accelerate as 80 million U.S. millennials start families, buying homes and filling them with stuff. Mobile shopping is giving e-commerce another boost. Next month, Amazon.com Inc. (AMZN) will start selling a smartphone that will allow shoppers to scan a product in a mall and purchase it from the company’s online store, giving retailers another reason to fear their most potent Web rival.
 It’s widely accepted that traditional chains must mesh physical and online stores into a seamless shopping experience, but “nobody is doing it well,” said Anne Zybowski, vice president for retail insights at Kantar Retail in Boston. “There isn’t any best-in-class because nobody is there yet.”


Understanding Disruption: Insights From The History Of Business

Steve Denning:

“Before I read this book,” writes W. Brian Arthur of the Santa Fe Institute “I thought that the history of technology was – to borrow Churchill’s phrase – merely ‘one damned thing after another’. Not so. Carlota Perez shows us that historically technological revolutions arrive with remarkable regularity, and that economies react to them in predictable phases.”
 Pérez takes a long-term horizon: several hundred years—much longer than either Christensen or Lepore. She draws on many disciplines: history, economics, finance, technology, sociology and management. Ironically, the breadth and depth of the book is one reason why it has been neglected by academics. It’s too bold and wide-ranging for any of them to accept it as “one of theirs”.
 The book is guilty of other academic sins. It is clearly written and succinct—a mere 171 pages. And the succinctness is accompanied by precise details on the vast territory covered—the story of capitalism over the last 250 years.

The open source revolution is coming and it will conquer the 1% – ex CIA spy The man who trained more than 66 countries in open source methods calls for re-invention of intelligence to re-engineer Earth

Nafeez Ahmed:

For Steele, the open source revolution is inevitable, simply because the demise of the system presided over by the 1% cannot be stopped – and because the alternatives to reclaiming the commons are too dismal to contemplate. We have no choice but to step up.
 “My motto, a play on the CIA motto that is disgraced every day, is ‘the truth at any cost lowers all other costs'”, he tells me. “Others wiser than I have pointed out that nature bats last. We are at the end of an era in which lies can be used to steal from the public and the commons. We are at the beginning of an era in which truth in public service can restore us all to a state of grace.”