Archive for the ‘Thoughts’ Category

If you’ve been watching the World Cup, you may well have seen inside FIFA’s VAR (video assistance referee) control centre. Here a team of officials sit watching computer monitors so that they can double-check the on-pitch referee’s decisions in case they have missed something obvious.

You may have also noticed they are wearing full referee’s kit.

Why? You could argue that as they are set in a control centre in Moscow, sometimes 1,000 kilometres away from where the game is happening, there is little need for a dress code. Or, at least, little need for one that stipulates the traditional outfit of a referee.

But here are two reasons why it is better to wear the kit.

First, it puts them in the right frame of mind. Refereeing is a difficult job. You have to be impartial and fair. You have to make decisions that are difficult: did he use his arm to his advantage or was it a genuine accident that the ball struck him there? Is that fair wrestling for the ball or a foul? These are grey areas that often have no obvious correct answer.

In sport psychology, we talk about getting in the right mindset. When you are doing mental imagery/visualisation exercises, for example, the best thing to do is get the athlete to put their kit on and go to the field where they will play. It makes it more real.

If you want to make a VAR feel like they are on the pitch, making real game decisions, which they are, stipulating that they wear their usual refereeing kit is a great place to start.

Second, it gives them legitimacy. Systems like VAR are always going to get criticised for the mistakes they make and ignored for the many times they get things correct. It is easy for fans to look at them as bureaucrats tucked away in a tiny box, thousands of miles away from the action, and vilify them for any decisions they don’t like.

This concern is why they replay the footage that the VAR officials are watching and the superimposed lines showing how they make decisions about whether someone is offside or not.

Similarly, by putting the officials in full kit, it shows the fans that these are real referees doing a legitimate refereeing job. Thus, it makes it easier for fans to accept adverse decisions.

This week, it was announced that Richard Thaler had been awarded the Nobel prize for economics. It is long overdue. Here is why.

Thaler is best known for his 2008 book Nudge: Improving Decisions About Health, Wealth and Happiness which he co-authored with Cass Sunstein. He was a summation of his many years of work on behavioural economics. You can read my review here.

This understates his contribution though: Thaler is considered by many to be the father of behavioural economics.

To understand why that is important, we need to look at what behavioural economics is. Economics, as a subject, has been around for thousands of years. Except that in many ways it really hasn’t. Traditionally, at least in recent tradition, it has focused on building financial models based on people making perfectly rational decisions.

Take the free market, for example. If you put prices up, you decrease demand. It’s nice and simple.

But then Thaler came along and said: “hang on, do people act like rational beings all of the time?” The answer, of course, was no. And a new field of economics was born: behavioural economics. The study of what people actually do.

But what exactly is non-behavioural economics? The more you think about it, the more you realise that we can basically can anything we thought we knew about economics beforehand, because all economics should be behavioural economics. Models that use “econs” rather than “humans” do not work in the real world. Which is where all research should eventually have some kind of relevance.

So, well done to the Nobel prize selection committee for making such an excellent choice. In a perfect world, it would have happened much sooner. But the selection committee, like the rest of us, are humans, not econs.

Why does Lord’s have a Deathly Hallows weather vane on the top?

I bought this at Tesco a few weeks ago. You will notice that it has the words “new recipe” on it. What exactly does this mean?

I mean, it’s cranberry juice. Surely it should be made of the juice from cranberries? Stating that your drink has a new recipe on the side, begs the question “what was in it before and what is in it now?”

I see a lot of online marketers saying “$20,000 for university is a total waste of money. You don’t learn anything. Buy my course for $2,000 instead.” Ignoring the obvious bias they have, it is worth considering why universities still manage to sell their courses and what we can learn from it.

University is a product

When it comes down to it, universities are selling a course. And they are expensive. £9,000 per year in the UK and way more in the US. But university admissions are not going down. Tuition fees are not putting people off. Nearly half of people in the UK will go to university.

On the flip side, you have something like Ramit Sethi’s Zero To Launch programme. It costs over $2,000. I am going to use ZTL as an example, as Sethi is a classic case of what I am talking about, but many other marketers are saying the same things: university is pointless, you need to go to the school of life / hard knocks / whatever.

A common tactic is to compare their info product against a university degree, claiming that their course is more relevant and far cheaper.

But universities stack the value

Where this falls down, though, is that universities are doing something that professional marketers do all of the time: stack the value. They punch so much value into a degree that you would have to be stupid not to buy it.

Universities essentially offer the best info product ever. Here is how. Again, I will compare it to Sethi’s course, but I am not trying to specifically pick on him, lots of marketers are doing the same thing.

The core offer

Your contact time at university depends on your course. Some have more, some have less. I had around 20 hours a week, but I know some history students had 10. Let’s average it out to 15. The academic year is quite short, so let’s say 30 weeks. That is 450 hours of contact time.

That is a lot. This is real in person lecturing and at a good university you are getting it from the leading researchers around the world.

When you do Zero To Launch you get pre-recorded content from Sethi. It’s not interactive and you cannot ask questions. And you do not get 450 hours of it.

But what, there’s more

You also get assigned a personal tutor and get to meet with them for an hour per week. That is 30 hours of consulting per year.

Mike Dillard brags about charging $2,500 per hour for consulting. I’m not sure how much Ramit Sethi charges for his time, but I imagine it’s a lot. In fact, this alone will probably cover the entire value of your tuition fees, even in the US.

Bonus 1: Facilities

You have signed up for an info product and they have made a custom user area to watch the videos in. Great.

My university had two 24-hour computer labs. And access to the White Rose supercomputer grid. And that was just for the computing students. We had labs, including an underground bombproof one for the chemists, lasers, psychology labs, a driving simulator, 3D printers, a selection of theatres for the drama students, etc, etc. Stuff you just cannot get access to elsewhere without a massive amount of money.

Bonus 2: Libraries

Your info product comes with downloadable PDF notes. Cool.

My university has seven libraries, not counting the departmental-run specialist libraries. They have over 2,000,000 items in their collections. And their computer systems get you unlimited free access to thousands of research journals that you would otherwise be paying $30 per article to access. Saving you thousands of pounds right there.

Bonus 3: Community

Your info product comes with a Facebook group. Genuinely useful.

But it doesn’t compare to being dropped into a group of 100-150 peers, all as passionate about the topic as you are. Just turning up to university gets you surrounded by clever people. There is a reason that Google, Facebook and Microsoft all came out of universities: clever people met there and founded companies together. It’s the perfect melting pot for mastermind groups.

Bonus 4: Support

In case you were not already convinced, universities also come with athletics facilities (free or subsidies), a student’s union (discount beer), physical and mental health services, careers advice, and many other student services.

What does it add up to?

Conclusion

The reason that people buy online marketing programmes at $1,500 per time, rather than a $10 eBook, is because these courses stack so much value that they make it worth it.

The reason universities can and do charge ten times more than this is because they stack the value even more: to the point where it simply incomparible to anything else.

If you want to find out what people are interested in, one of the worst ways to do that is to ask them. Why? Because humans respond to incentives and there is very little incentive to tell your interviewer the truth.

We humans are biased by what we think the questioner wants to hear, but what we are willing to admit, or the self-image we want to portray. For example, few people would admit to voting for UKIP or liking Justin Bieber. And we all exercise far more, eat junk food far less, and enjoy a lot more sex than reality would agree with.

Reported vs observed data

This is a major problem in psychology.

However, there is a way around it. We just have to look at times when people are incentivised to tell the truth.

There is a whole book about this for online dating. In Dataclysm: Who We Are (When We Think No One’s Looking), OkCupid founder Christian Rudder points out that although people say they are not racist when it comes to rating people of a different race as equally attractive, our self-reported beliefs come unstuck.

Another example is Google Search. People are searching for the information they want, so they are unlikely to hide it. Google then anoymises this data and makes it available via autocomplete. You start by putting in “President Donald” and Google, having noticed that everyone else is searching for “President Donald Trump”. offers to complete the search term for you.

Which means you can also work backwards. If you put in the first half of a question, Google will give you the most popular options for the rest.

Should I…

Pop culture wins out here. Most people are looking for the famous song by The Clash. Once we get pasted that we move to people struggling with relationships and dating, and finally onto the big questions i life, such as switching careers or hair styles.

Visiting the doctors

If we add “go to the doctor” onto the end of that, people are worrying about two things: colds and mental health. Colds and flu makes sense: it is the most common thing to get, so there are lots of people worrying about it. Anal bleeding, for example, is less ambiguous about a doctor’s visit being required (it is) and not many people get it. Bad flu, on the other hand, occurs a lot.

Mental health is something that comes up a lot, too.

What should I do if…

Here people are worrying about health and dogs. Getting pregnant is the big question, then two entires on dogs and mental health crops up again.

How long until…

This is all about the holidays: people are already counting down the days until Christmas. Of course, if they had a tracker app like I do, they would already know it is 175. No mention of Jesus coming back, which I was surprised about. How long until I get home: I am not sure if this is some kind of Google maps query; I imagine it is as Google offers that functionality.

Is it true that…

This one is just bizarre. Is cats and cucumbers really the most fact-checked question on the internet? Good to see people are doing their research, though.

Films about…

Mental health and dogs both make a re-appearance here. What is even more interesting is if you go into privacy mode and look at the top ten…

Here mental health dominates, taking spots one and three. People are also interested in drugs, dogs, aliens, 9/11, and somewhere down the bottom is love, space and religion.

Films about self…

Taking the search a step further and adding the word “self”, the topic of self harm comes up a lot. People are interested in self-esteem and self-love, but no self-improvement on the list.

Conclusion

People are frequently concerned with their mental health and the health of their dogs. Everything else can go hang. And they’re really not sure whether 9/11 was an inside job or not.

What we can learn from this? Nothing. It’s a couple of data points pulled out in a non-scientific way. But at least now you know that it is only 175 days until Christmas.

I, like everyone else, was shocked and appalled to see the pictures coming out of Manchester after the terrorist attack at Manchester Arena. Not in the hyperbolic sense: there was a literal shock (well, not shock, but shock) and appalling. That someone would do that for a concert aimed at children genuinely takes you aback.

It’s the kind of propaganda you might expect to have spread during the Second World War. Goebbels would have been proud to convince his citizens that the enemy was deliberating bombing children. But here was someone so brainwashed by a political-religious ideology that they were actually doing it. At the M.E.N., a place where so many of us in the north have pleasant memories.

I would like to say I was inspired by the reaction of the community in supporting the victims. But the truth is better: I wasn’t surprised because that is just standard. Of course, people rushed to help, gave people rides, took them into their houses. Who was surprised by this? When did we set the bar so low? Not us.

Remember when supermarkets started doing online deliveries? And it turned out that they just had people going around their own stores picking out items to send to people?

Oh, how we laughed. “What a silly way to do it” we jeered. “Why don’t they have one central warehouse where they can do everything efficiently?”

I don’t think supermarkets did it this way because they thought it was the best way. I think they did it because of path dependency: they already all of these stores and it was the easiest way to do it. However, here we are a decade later, and it turns out that their approach is the best.

In fairness, I’m being overly provocative with my headline. I’m a fan of Ocado. You can read my review of Ocado here. But my guess is that if they want to build on their success in the long-term, they have some fundamental business challenges to overcome.

This is why…

Why is Amazon looking for retail space?

The story starts as many do, with some fascinating insight from Scott Galloway. He said that Amazon would eventually buy a large department store.

Why? Because such a company would have stores in every major city. This is important because it allows Amazon to deliver products quicker. One of their big problems is time: I can drive to the shop and buy something instantly. And customers love instant gratification. Amazon cannot deliver that, which is why they are spending time messing around with drones.

Jeff Bezos has always wanted to find a better way to do this. In Bezos’s biography, The Everything Store, Brad Stone talks about how Bezos wanted to hire college kids to keep a stock of Amazon products in their bedrooms and cycle them round to customers the minute they ordered.

Short of that, Amazon needs a distribution facility in each area to allow them to get products to customers quickly. That is tough when you operate a huge monolithic centre. But way easier when you have loads of local stores.

What does this mean for Ocado?

Ocado has the same problem that Amazon does. They operate out of a giant warehouse down south. This means that you have to pick the orders there and drive them to every corner of the country. Doing this is expensive for Ocado and slow for consumers.

Compare that to the major supermarkets: Sainsbury’s have their warehouse located literally only a few miles from my house. And everybody’s house. And running this warehouse costs them practically nothing because the stores are profitable in themselves.

Therefore, even when you add the cost of an inefficient system in which employees go around the shop picking out items like an in-store customer would, it still produces a business model that works and works well.

What can they do about?

Ocado needs to find other ways to compete. Amazon was successful in competing against existing high street stores. It did this in two ways. 1) it offered cheaper prices and 2) it offered a way bigger selection. Their tagline is, after all, “Earth’s biggest selection”.

Ocado doesn’t do this. Their prices are more expensive. Their selection is good, but not amazing. Take fish, for example. The selection at most supermarkets is rubbish: cod, salmon, seabass, maybe some tuna or another white fish if you are lucky. Morrison’s is a bit better. Ocado better still: their selection is maybe twice as big.

But, as Peter Thiel points out in Zero to One, if you want to do the same thing as everyone else, you can’t be 2x better: you need to be 10x better. Leeds Fish Market is 10x better. I can get maybe 100 different specifies of fish and seafood there. So I go. Just like Amazon offered way more books than my bookstore.

Summary

Traditional supermarkets have a huge advantage over online ones because they have a far better distribution network. This is important because that is all a supermarket essentially is: they buy other people’s food and distribute it to people before it goes off. If the online world wants to compete, it needs to offer an experience that is so much better you cannot possibly not switch. Ocado and Amazon Fresh do not yet do that, in my opinion.

A phrase I hear a lot (because apparently, my friends are the kind of people who have those conversations) are “why would anyone pay for internet pornography when there is so much free stuff available?”

But if nobody is buying online porn anymore, someone should probably tell the industry. Because they seem to be bringing in as much revenue as ever. In fact, adult industry revenues continue to grow.

It would seem, then, that men are still paying for porn. Here is why.

There is too much free porn online

Have you ever bought a book or a course? Probably. It’s just a generic statement that everybody will have done. The question is, why, though. All the information is on the internet. There are trillions of pages out there, a lot of it valuable stuff.

So why would you spend £10 on a book when you can find it free online? Why would someone spend $1,000 on an online training programme when all of the information they need to learn any skill is already there in Google, and YouTube, and Wikipedia, and so on.

It comes down to this: have you tried finding it?

There is so much information online that we were saturated a decade ago. Finding all of the information you need, curating it together and forming it into a structure that teaches you a topic or skill is a nightmare. It’s so bad that we would rather pay an expert to do it for us.

Which is why we’re still buying books. And courses. And porn. Why waste your time searching the internet when you can just pay a company £15 to deliver it to you. People’s time is valuable and we live in the rich west. It’s a fair trade.

You get higher quality

Sure, there is loads of free stuff out there. But how much of it matches the quality of the stuff being put out by Digital Playground or Kink.com?

None of it. The 2005 film “Pirates” had a reported budget of over $1 million. It’s 2008 sequel, “Pirates II: Stagnetti’s Revenge”, spend over $8 million. No two-bit operation cranking out free stuff is matching those production values.

That’s not to say that people don’t indulge in the free samples as well. But for those times when you want to eat gourmet, you have to put your hand in your pocket.

The industry has evolved

Revenue is up overall. However, admittedly, it is down for some of the traditional studios. But this matches media in general.

It used to be that bands made an album, and made all their money from the sale of that album, and toured to make sure that people bought the album.

Then digital piracy arrived, and everyone realised they could get it for free. Or pay Spotify £10 per month, which the arts see very little of. Spotify pays the record labels £7 of that money, but somewhere before reaching the artists it mysteriously goes missing.

So, now bands make very little money off the albums, but a lot of money from selling their £70-per-ticket arena tours. And because they are dependent on ticket sales, they now play all of their classics, rather than that new shit that nobody wants to listen to. The bands are still making money, and we’re getting the songs we want live. Everybody is a winner.

The music industry evolved.

So did the porn industry. It used to be that if you wanted to spend £20, you could buy a VHS of a dirty movie. Now you can spend that £20 to dictate to a Romanian woman exactly what you want her to do on a live webcam.

Sure, you might have to book in advance and pay a little extra if you want her to cover herself in yoghurt. But she will. And it’s a way better experience than watching a pre-determined movie in which the plot is “everyone loses their clothes and has sex for no reason”.

You avoid all of those horrible ads

Have you seen TV advertising? It’s awful. Nothing is relevant. I’m not looking for a new car, or to compare meerkats, or for a new brand of washing powder. In fact, it’s so bad, that the only way it can be made economical is for the TV channel to show us a solid 14 minutes of adverts per hour.

Then Netflix came along and said, “you can pay us £6 a month and make all of that nonsense go away”. And 93 million of us did because £6 a month is nothing and 14 minutes of our lives (per hour!) is loads.

We made a similar trade with the adult industry.

Trawling through free porn sites means enduring a deluge of irritating ads. I have no interest in a penis enlarger pump. I am perfectly happy my existing penis enlarger pump.

You can try and install an ad blocker. But it won’t work. The porn industry were the people who invented online video streaming in an age when it didn’t exist. They know their stuff. They know how to avoid your ad blocker even though nobody else has managed to launch a pop-up in ten years.

Who would endure that when a small amount of money makes it go away?

Conclusion

Men pay for internet pornography because the adult industry has continued to provide enough value to make it worth paying for. Whether it is providing higher quality, more niched, fewer ads or live webcams, they make a product which is good enough to make people pull out their wallets.

This should come as no surprise. How do bottled water companies make money when the stuff literally falls from the sky? Or newspapers continue to profit when you can get all your news from blogs and Twitter? The answer is a product that people think it worth paying for because it is better.

As long as they continue to do that, men will keep paying for it.

P.S. If my wife is reading this, you should note that this article is really about marketing and consumer behaviour, rather than watching porn.

You’re on the committee for a community group and you have a big event coming up. Someone suggests you should do some advertising as it would be a great chance to get some new people in. Someone else suggests “let’s do some Facebook ads”.

It is understandable why this suggestion would be made. Flyers are a massive waste of money. Plus, everyone is doing Facebook ads now. It seems like a great way to go.

It isn’t. Stop right now and make sure you can answer all of these objections before proceeding.

Your copy sucks

The art of writing sales material, known as copywriting, really is an art. It takes years to become good at copywriting. I’ve spent the last three months working on it, including buying expensive courses from some of the best copywriters around and my copy still sucks. Not just a little bit: it’s rubbish. It doesn’t convert.

And whether you are a business selling a product, or a community group selling an event, you need to convert some people into customers, even if that is only showing up to your event. Saying “oh we have this amazing event” is not enough. You need to write compelling stuff. That takes a professional.

Who are you going to target?

Facebook ads work because you can target specific people. But how will that work for your community group? The best marketers spend ages zoning in on their ideal customer, then market to them, then retarget them after they have visited their website.

Nobody has visited your website because you’re a community group, and even if they did, you don’t have a retargeting pixel on there.

So you target “people in my city”. Which is the equivalent of sending a blanket mailshot out via the Royal Mail. Most targetted direct mail gets a 1% response rate. Untargeted mail can only dream of that.

Facebook takes time to work

Facebook is very good at working out who your ads should be shown to. But this takes time. You have to spend money before it works. When I started advertising for the WAM 30-day challenge, we were paying £0.60 per click. Thre weeks later we were paying £0.15 per click. Facebook worked out who my ads should be shown to.

But that only happened after several weeks and several hundred pounds spent on ads. The first £100-200 is basically a fee you pay to Facebook so they can work out who to show the ads to. Then you start seeing results. How big is your budget? Probably less than that, right?

People don’t trust you

People are suspicious of paid advertising. They should be: a company is trying to influence them. You might think that you avoid this being a community group. But you’re wrong. You’re in a worse position.

Why? Because it is even more suspicious. ProCook follow me round the internet with adverts for their latest cookware. They know I have been on their website so they target me on Google and Facebook (and all the websites who use their ads, which is everyone). There are ProCook ads everywhere.

But at least I know what is going on here. ProCook is relentlessly targeting me because they are trying to sell me a pan. That’s the deal.

With a community group, it is a whole different ball game. What are they selling? How are they funding these ads? Is it a cult? What is their business model that allows them to run Facebook ads?

People want to discover community groups organically, either by searching for something they are interested in or because a friend told them about it. Seeing paid advertising makes it look like a religious cult or government-sponsored initiative to shift state-provided services off their books and into the hands of private individuals.

There are better things to spend the money on

Like making your events even more awesome. So that people come back. Most groups do not have a promotion problem. They have a retention problem. You only need one new person to come along each week and you have one hundred members after two years of running. But most groups are five years down the line with 20 members.