The following interview was conducted by Pete Krainik, CEO of the CMO Club, and was published on the CMO Club website in February, 2010…
Pete – I took the opportunity recently to interview digital industry pioneer Jeff Einstein, co-founder of the first interactive agency way back in 1984, and now a partner with the Brothers Einstein, an extremely contrarian brand strategy boutique. The interview was conducted via email over the past couple of months, then edited down at my end. While many of the emails back and forth between us were notable in and of themselves, what I discovered in my hands after reading the finished product for the first time was nothing less than an alternative digital manifesto that — I believe — stands utterly alone in its devotion to historical perspective and common sense.
In it he describes among other things the myth of media performance, metrics as deck chairs on a sinking ship, letting the audience target us, digital bubbles and collapse as the price of unchecked acceleration, how to fashion wisdom from knowledge, social media as the success of social and the failure of media, the efficacy of bait over ammo, the wisdom of fishing versus hunting, innovation as a process of subtraction and disintermediation, and – remedially – the need to grow up, slow down, let go of failure, and embark on what he calls a process of deliberate simplification.
First, a little background information about Mr. Einstein: Over the years, his strategic marketing and business development initiatives have driven the acquisition of two agencies, the global growth of a third, and a high-tech IPO, and have appeared in virtually every major business venue, including two front-page stories in The Wall Street Journal, and cover stories for Red Herring Magazine, George, PC Magazine, and The New York Times Sunday Magazine.
He has appeared as a featured speaker at more than 200 media and marketing industry tradeshows, seminars and workshops, and as a media industry expert on dozens of radio and TV programs, including The Today Show with Katie Couric, CNN’s 360 with Anderson Cooper, and CNN’s Moneyline with Lou Dobbs.
In more recent years, however, Mr. Einstein has re-emerged as a fierce media critic whose writing takes no prisoners and suffers few fools. He currently asserts that those of us in the marketing and advertising industries have passed through the looking glass and plunged down the rabbit hole, where we now spend most of our time drinking our own Kool Aid and plotting new ways to sell ads that no one wants to see and everyone is equipped to avoid.
So in renewed hopes for a New Year, and in the spirit of positive change we can truly believe in, I present my interview with Jeff Einstein…
Pete – Welcome, Jeff. What evidence can you cite to support your assertion that we’ve passed through the looking glass and plunged down the rabbit hole?
Jeff – We can begin with a litany of online performance indicators, including the prevalence of sub-$1 CPMs, clickthrough rates firmly ensconced at statistical zero, click fraud estimates of anywhere from 25-85% (depending on your choice of networks and industry experts), not to mention the insolvency and failure of thousands of media franchises, many of them brand names with long, distinguished track records. In more sober environments with more sober leadership such massive failure and systemic collapse might give us pause, but as an industry we’ve responded instead by speeding up, doubling down and plunging ourselves even deeper down the rabbit hole in Lewis Carroll’s vision of madness, a world where up is down and down is up. If anything, we’ve accelerated our commitments to the very same insanity that got us here in the first place.
Pete – That’s pretty harsh. Aren’t many of our problems right now simple byproducts of a deep recession?
Jeff – No, absolutely not. While the recession certainly hurts like crazy, our problems don’t result from the recession as much as the recession results from our problems. Performance across all channels has actually been in decline for a couple of decades now, regardless of the economy and in spite of explosive industry growth.
Pete – Then why do you think media performance is so anemic these days?
Jeff – Mostly because media performance is a myth to begin with. We’re chasing a great white whale. Media aren’t supposed to perform. The message should perform, not the media. The onus to perform should weigh on the advertisers and the agencies, not on the media franchises; their only job is to aggregate and somehow entertain or inform an audience, the same now as it was fifty years ago.
Only with the digitally-driven ascent of discrete media agencies as the crown jewels of global media holding companies did we suddenly discover an excuse to divorce the medium from the message and shift the onus of performance from the message to the medium in the process. But in truth, the media simply can’t perform because they were never designed to. And that’s why, despite all the lip service, advertisers and agencies don’t buy performance. They buy ubiquity, the exact opposite. Rather than assume responsibility for their own lack of performance, advertisers and agencies would rather hedge their bets and buy more and more of something that’s worth less and less with each passing day. Big advertisers and big agencies talk performance, but they buy ubiquity because they know the media can’t perform.
Pete – Lots of industry folks are calling for a complete online marketing overhaul, including new metrics, more sophisticated targeting technologies, more research, more data-based marketing, and more social media. What do you think?
Jeff – I think new metrics are just another way to shoot the messenger, another way to rearrange the deck chairs on a sinking ship. Besides, in marketing applications metrics never really describe what works as much as they describe what can be sold. We already know that the continued growth of online ad budgets will rely increasingly on our ability to sell more branding, in no small part because we’ve invested so heavily in ad serving technologies and infrastructure over the past 15 years. The perceived need to sell more branding explains why the new metrics being proposed now all seek to measure the very things the industry arrogantly dismissed as useless and effete back in the mid-1990s, all the intangibles that drove the growth of great branding media like print, radio and TV for decades. We cut off our noses to spite our faces 15 years ago in a foolish and immature effort to distinguish digital media from their analog counterparts, and now the bed we’ve made for ourselves is wrecking everyone’s sleep, our own not least.
Pete – What about behavioral targeting?
Jeff – Anyone with any historical perspective will rightfully conclude that each additional layer of targeting technology increases costs and reduces performance. As a result, each additional layer of targeting technology further burdens publishers and networks alike. The promise of digital scale starts working against them; the more traffic they attract and the more advertising they sell, the faster they go out of business. McLuhan had it right: any medium pushed to extreme will begin to operate in reverse.
Sophisticated targeting technologies don’t work because commercial media are now and always have been on-demand, and in an on-demand media universe it simply makes far less sense to target the audience and far more sense to let the audience target us instead – exactly why search works so much better than display advertising. This much we know with absolute certainty: no one demands more advertising, relevant or otherwise, and everyone is equipped to avoid it. That’s the primary reason why online advertising fails at least 99.9 percent of the time, and why TV and radio executives are having nervous breakdowns.
Pete – Should I assume from your aversion to behavioral targeting that you’re also no fan of data-based marketing?
Jeff – Yes, that’s a pretty safe assumption. Data-based marketing is the end of the road, where we wind up only after we conclude that the message is worth less than the medium, and only after we conclude subsequently that the medium is worth less than the data it generates. Anything that can’t be measured, quantified and reduced to a mathematical algorithm is excluded by definition — which means we can only measure the smallest, least significant things, and only the things that don’t work.
Unfortunately, however, advertising and branding only work because of the very things that most resist measurement and quantification, those intangibles that can’t be reduced to convenient formulae. Quite apart from the fact that no one wants more advertising to begin with, the advertising-as-intermediary model can’t possibly perform in the age of behavioral targeting and data-based marketing because advertising performance is all about the message, and marketing nowadays is all about the media and the data. The good news is that we’ve finally lived up to Oscar Wilde’s brilliant definition of a cynic as someone who knows the price of everything and the value of nothing.
Pete – Do you hold out any hope for social media as a marketing or advertising option?
Jeff – Certainly not as a savior, or even as an antidote for prior stupidity. We need to understand that social media really represent the end state of our trillion-dollar investment in a seamless user interface designed to eliminate friction and move people from one virtual place to another as quickly as possible. As such, social media represent the logical extension of an on-demand universe; it’s where we wind up when we’re constantly en route to me, myself and I. Unfortunately, that same seamless user interface is at complete odds with the basic nature of advertising, which seeks first and foremost to interrupt and intrude on our narcissistic cocoons with someone else’s message. The seamless user interface we’ve built at huge expense simply can’t and won’t tolerate the legacy advertising-as-intermediary model we imported to support it back in the mid-90s, especially not in social media. That’s why advertising and branding will shift over the next several years from their current status as intermediaries to a far more functional and appropriate status as destinations.
The more operative component of social media for marketers and advertisers is social, not media. Consumers who use social media couldn’t care less about its potential value to marketers and advertisers. They see it exclusively as a social tool, not a distribution medium. Those marketers and advertisers who see social media first for what they really are, sophisticated tools to expedite social exchange and sharing, will understand immediately why a $.05 Facebook CPM is way overpriced, and fare far better than those who see social media as just the latest in a long litany of cheap media opportunities. The secret to success with social media, as with all media, is to understand first what they don’t do well. As always, the examination of failure is prerequisite to success. Fortunately, there’s no dearth of failure to examine. Unfortunately, no one’s looking.
Pete – So if everything we do simply compounds the problem and drives us deeper into the rabbit hole, what’s the solution?
Jeff – We need to do three things: First, we need to slow down. Next, we need to let go, and finally, we need to begin a process of deliberate simplification.
Pete – Let go of what?
Jeff – Bless you for jumping the queue, Pete. But let’s talk first about slowing down, because we can’t possibly hope to institute meaningful change unless and until we first turn down the noise between our own ears. We need to clear room in our hearts and minds for a better world before we can hope to create a better world, and we can’t possibly find wisdom in the harsh events of the digital era unless and until we first turn down the volume in our own heads. Failure to do so will only guarantee bigger bubbles and bigger collapses than the three trillion-dollar market crashes we’ve already endured in the past decade alone, not to mention the current collapse of the media and healthcare industries.
Pete – Okay, what wisdom will we find once we slow down and reduce the volume between our ears?
Jeff – We’ll find that the core imperative of all technology is to accelerate itself and everything around it, and that our primary responsibility in relationship to our own technology is to moderate and restrain it at all times, something we’ve utterly failed to do, or even try. We’ll find that we’ve become – in the words of Henry Thoreau – tools of our tools, that we work and live our lives at speeds determined not by our own conscious deliberation and common sense, but by the digital tools at our disposal. The default condition of life in the digital era is perpetual acceleration.
Pete – So what do you suggest?
Jeff – Again, we need to slow down, let go of what doesn’t work and initiate a process of deliberate simplification. We need to institutionalize ways to become more deliberate as an antidote to the toxic effects of the tool-driven acceleration that we know for certain rides shotgun with our digital technology. We need to slow down frequently and long enough to interject historical perspective into our deliberations, otherwise we have no way to fashion wisdom from knowledge, and no way to identify or put common sense back to work.
Pete – Everyone I know wants to speed up and do more in less time.
Jeff – That’s the technology talking, Pete. That’s only what we think we need to do in order to reach our real objective.
Pete – Which is?
Jeff – A far simpler, less cluttered life. Ultimately, what we really want is a rocking chair on a country porch or a hammock on the beach. What we really want is a safe place to let go. Our objectives, however, are very much at odds with our means, and very much at odds with the tool-driven perception that we need to do more in less time. Only in the rabbit hole on the far side of the looking glass can we expect to live simpler, less cluttered lives by speeding up and adding more clutter.
Pete – What are we letting go of?
Jeff – We’re letting go of failure, and the false pride that compels us to hold onto it. We can’t possibly innovate in any meaningful way unless and until we make room for innovation in our own hearts and minds, and the only way to create enough breathing room for new ideas is to slow down long enough to identify and let go of the old ones we know no longer work, despite our vested interests. We don’t find innovation as much as it finds us – but only if and when we remove the barriers. Innovation is a process of subtraction and disintermediation.
Pete – Can you give me a failed idea in the advertising and marketing industries that we should let go of right away?
Jeff – Yup. Advertisers, agencies, content producers and publishers need to let go of the traditional advertising-as-intermediary model, especially online. Again, it offers a product no one wants and everyone is equipped to avoid, and the technological and administrative costs to support it are far too cumbersome and onerous for publishers and content producers to sustain. As I mentioned earlier, the current collapse of the media ecosystem isn’t just a byproduct of a deep recession. Industry bubbles inflate and burst when the aggregate weight and cost of excess intermediation eclipse and crush the value of the product or service being sold – exactly what happened with the dot com, financial and real estate bubbles. And that’s exactly what’s happening right now with the media and healthcare industries. They’re collapsing from the aggregate weight of all the intermediaries who contribute far too little and extract far too much.
Pete – Who would you identify as the primary intermediaries in the media industry?
Jeff – The media agencies, the ad networks, the targeting technology vendors, and the data-marketing vendors. They’re all in the business of adding costs and complexity to the failing advertising-as-intermediary model whose performance can only continue to decline no matter what. In the end, none of what they bring to the table can improve performance of a product no one wants, and their collective weight can only further imperil the livelihoods of those who truly belong at the table, the content producers and the publishers.
Pete – Better technology can’t help?
Jeff – Better technology can help a lot of things, but the advertising-as-intermediary model isn’t one of them. Remember, technology is supposed to simplify our lives. But the twenty-something technologists who took over the marketing and advertising industries straight out of business school in the mid-1990s simply weren’t mature enough to understand that the secret to success with all technologies is deliberate restraint, the wisdom to know when and where not to use them. So they went on a collective bender instead and introduced layer after layer of increasingly complex digital technologies, none of which increased the intrinsic value of the work product, and all of which imposed untenable burdens and costs on the ecosystem.
Pete – That was then. What about now?
Jeff – Now we’re old enough to know better. Now we know what doesn’t work. Now it’s time to put aside childish things and grow up. Now it’s time for us as an industry to slow down, let go of what doesn’t work, and begin the process of deliberate simplification.
Pete – Where do we begin?
Jeff – We begin with a more mature understanding that the ability to defer gratification and exercise restraint is what distinguishes mature behavior from adolescent behavior. So we begin with the re-introduction of restraint. We begin by reaffirming that our primary responsibility as senior executives is to teach, institutionalize and practice restraint and moderation up and down the entire food chain. Job one of all senior executives is to reject the excesses of the past two decades and say no to patently self-destructive and promiscuous behavior, especially when we know it’s powered by several billion microchips.
Pete – Beyond the acts of slowing down and letting go of things that don’t work, what does the process of deliberate simplification look like?
Jeff – Think of yourself and your business on the slick surface of a spinning wheel. In order to stay in business you must remain on the wheel, despite the fact that it accelerates faster and faster with each and every rotation. We know from Albert Einstein’s casual observation of a phonograph record that the outer edge of the wheel spins much faster than the hub, which means the centrifugal force you feel on the outer edge of the spinning wheel is far more intense than the centrifugal force you feel at the center. Think now of the centrifugal force you feel on the spinning wheel as all the day-to-day pressures, inertia and exigencies that conspire in aggregate to steal your resources and sap your strength.
The success and sustainability of your business depends therefore on where you spend your time on the spinning wheel. The closer you are to the outer edge, the greater the centrifugal force that pushes you towards oblivion. The closer you are to the outer edge, the more time and energy you must invest in your battle simply to stay on the wheel. The closer you are to the outer edge, the more time and energy you invest in pure reaction to your environment. I would submit that tens of thousands of businesses and hundreds of thousands of senior executives are living wholly reactive lives perched precariously on the edge at this very moment.
The process of deliberate simplification is one that describes a proactive journey from the insanity and fragmentation of perpetual life on the edge to the sanity and wholeness of life in the center. The process of deliberate simplification — like innovation — is in fact a deliberate process of subtraction and disintermediation, and it’s the only way to emerge from the rabbit hole with our sanity and wallets intact.
Pete – What specifically can we do to begin the journey from the outer edge to the center? For instance, if you were an advertiser, what steps would you take to introduce a process of deliberate simplification online?
Jeff – Over time I’d cease to use third-party websites to advertise my brand message. Instead I’d replace the intermediary ads with more compelling unbranded content teasers designed only to entice and move prospects directly to my branded sites. I’d use bait instead of ammo and go fishing instead of hunting. The content bait I place on third-party websites would always resolve on my websites, surrounded entirely by my brand with my calls to action. I’d no longer ask the publishers to do something they’re clearly not equipped to do, I wouldn’t ask prospects to look at or click on something they clearly don’t want, and I’d always know precisely where and on what terms my brand message is being consumed.
Pete – Doesn’t that put advertisers in the content business?
Jeff – Of course. But lots of advertisers are already in the content business, some quite successfully since the 1930s. Those who can’t afford or aren’t inclined to create their own content can license someone else’s. Content producers and publishers get paid on a pure and simple performance basis for traffic and content they deliver directly to my websites, and we eliminate most if not all the front-end targeting technologies that are currently driving them out of business, putting my brand at risk and wrecking my ROI. The onus for performance shifts back to me where it belongs, and I put my digital agency back to work doing what they should have been doing all along, creating quality destination environments for my brand instead of trying to decide which websites will fail least often. I’d stop paying them to fail.
Pete – So you’d just replace the ads with content teasers?
Jeff – Yes, and put all the branding on my own destination sites. It’s the only cost-efficient and scalable way for me to control my own brand exposure and eliminate risk, and it’s the only way not to drive quality publishers and content producers straight to the poor house in the process. Instead of the current site-targeting insanity that presumes to know which ads my prospects won’t avoid, I can now entice them with something they truly want to consume. Instead of paying for what I know will fail at least 99.9% of the time, I’ll pay only for success, and I won’t be forcing publishers or content producers to foot the bill for my failures anymore.
Pete – Do you think publishers and content producers will play along?
Jeff – Publishers and content producers don’t set policy. Ultimately, only the advertiser — the guy with the cash in hand — sets policy. That aside, publishers and content producers need to slow down, let go, and embark on a process of deliberate simplification also. Publishers need to let go of the performance myth imposed upon them by advertisers and feckless agencies. In fact, they not only need to let go of their traffic, but they need to let go of their content as well.
Pete – How do you mean?
Jeff – Publishers need to send their content and their traffic directly to paying advertiser sites, rather than trying to hold on to both. They simply can’t deliver brand messages in an age when no one wants to see them and everyone is equipped to avoid them, and — as a result — they can’t afford to keep quality content on-site any longer. The advertising-as-intermediary revenue model can no longer support the requisite costs to aggregate and target audiences.
Pete – What do you suggest?
Jeff – I suggest they retain the dot com model to aggregate eyeballs, but function as gatekeepers rather than curators. Publishers should take the same content that attracts advertisers now to their sites, put it directly on a paying advertiser’s website, link to it then get paid for both the traffic and the content on a CPC basis. Much simpler, much more direct, and much less expensive than trying to figure out year after year how to compel visitors to view ads they simply don’t want to see. Publishers get to do exactly what they’ve always done so well: create great content and aggregate audiences. And they get to do it with none of the invasive targeting technologies that can only add costs, erode performance, and piss people off the moment they accidently learn about them.
Pete – So you don’t think the new IAB campaign to educate consumers on the benefits of behavioral targeting will work?
Jeff – Hardly. I think it’s like conducting tours of a sausage factory, but without the tasting room at the end. The IAB is trying to convince folks that what they don’t see behind the ads won’t hurt them, when in fact no one but the IAB and other industry intermediaries wants the ads in the first place. The Mad Hatter would be proud. But again, deliberate simplification is a journey of deliberate subtraction and disintermediation. We need to remove the layers of technology-driven intermediation that currently stand between visitors and brands. We need to remove the intermediaries that drive publishers and content producers out of business. In short, we need to invert the current model: instead of taking the ad and immersing it in the content on the publisher’s site, publishers should immerse both the content and the visitor in the ad directly on the advertiser’s site. It’s the only ad model that plays in scale to the distributed network strength of the medium, the only one that will deliver the branding advertisers want without the risk and waste, and the only one that will protect the interests of publishers and content producers as well.
Pete – Any final calls to action?
Jeff – Just one: anyone who’s slowed down long enough to read this entire interview is likely ready to emerge from the rabbit hole, and should drop me a line…
Pete – Thanks, Jeff.
Jeff – Thank you, Pete, and Happy New Year.