Are you suffering from the endowment effect? (Marcom Pro)


Stop sniggering at the back there.

The title of this week’s Marcom Pro Round-Up has nothing to do with Viagra-related spam e-mails.

The endowment effect was an expression coined by American economist Richard Thaler to describe our tendency to set a higher selling price on what we own (are endowed with) than what we would pay for the identical item if we did not own it. In Peter Bernstein’s excellent book Against the Gods: The Remarkable Story Risk, there are numerous insightful examples of this effect in action (not to mention a host of other intriguing principles such as Prospect Theory and backwardation).

As Bernstein points out, the endowment effect arising from the nationality of the issuing company is a powerful influence on share valuations. Even though international diversification of investment portfolios has increased in recent years, Americans still hold mostly shares of American companies and Japanese investors hold mostly shares of Japanese companies, And yet, the US stock market is equal to only 35pc and the Japanese to only 30pc of the world market.

In a similar way, is marketing suffering from its own endowment effect? Are we still so heavily invested in the sunk costs of our traditional skills and tactics that we are failing to match our marketing investment with the reality of the world today?

According to Mary Meeker, the answer is yes.

If you look at only slide presentation online today, make it this one.

And in particular, look at slide 25. Look at the disparity between print media consumption and marketing spend. Proof positive of marketing’s endowment effect?

(This post first appeared here).

The decline of e-mail and the invitation avalanche


(Apologies: I’ve been testing out Storify – and this should have autoposted originally – but didn’t. So here’s what you should have seen in the first place).

09/02/2011 Comscore and social media expert Jay Baer both point to the decline in e-mail usage, consumption and influence.

According to Comscore, Web e-mail usage has declined 59% among 12 – 17 year olds.

ComScore Says You Don’t Got Mail: Web Email Usage Declines, 59% Among Teens!
techcrunch.com

In introducing his messaging platform last November Facebook CEO Mark Zuckerberg said one of the primary motivations behind product strategy was that teenagers have given up on email, “High school kids don’t use email, they use SMS a lot. People want lighter weight things like SMS and IM to message each other.” A comScore study on 2010 digital trends reinforces Zuckerberg’s claim. It’s inevitable: As innovative social messaging platforms like Facebook and Twitter continue to dominate our online time, email begins its steady decline. Total web email usage was down 8% in the past year (YOY), with a whopping 59% decline in use among people between the ages of 12-17. Cue Matt Drudge -style alarm.
Meanwhile Jay Baer refers to: “Part 8 of the Subscribers, Fans, and Followers research series, “The Social Break-Up” which includes data that frankly shocked me”

41% of Twitter users have followed a brand, and subsequently unfollowed

71% of Facebook members have become more selective about “liking” companies

77% of email users have become more cautious about giving companies their email address – just in the past year

Continues Baer: “We are smothering our very best customers with an invitation avalanche, asking them to hang out with us in every digital clubhouse we can devise. And the reality is, they just aren’t that into us.

They are cheating on us behind our backs, committing attention infidelity right under our noses.

When no longer interested, 25% of consumers just delete, ignore, or filter emails (undetectable by marketers)

When no longer interested, 57% of consumers just ignore or remove companies’ Facebook post from their News Feed (undetectable by marketers)

47% of consumers who have created a Twitter account are no longer active on Twitter, creating ghost town accounts (undetectable by marketers)

We must focus on measuring passion in social media, not aggregation. The fact that you have 50,000 followers means very little in terms of how many people will see (much less respond) to any specific Tweet.

Consumers are already growing tired of speed dating brands, and will be playing increasingly hard to get.”

 

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