Every day companies are spending gobs of money to earn and keep your attention. Advertisers are collecting heaps of information about you in the hopes of presenting you with more targeted advertisements: advertisements on which you’ll want to click. Yet despite all of this information, advertising still pretty much sucks. It doesn’t have to be this way.
While marketers and advertising agencies strive to command your decisions in the “attention economy“, long-time open source advocate Doc Searls puts forward a better idea in his new book, The Intention Economy. Rather than continue to allow vendors to blindly guess as to what we want, we should all be moving toward a new market equilibrium in which we consciously and directly signal our intentions to the market. Companies that respond to our intentions will reap larger profit, waste less money on dubious advertising initiatives, and enjoy real customer loyalty.
In the era of Big Data and hyperscale web services, the consumer is often an afterthought. We’re subjected to exploitative, one-sided one-size-fits-all contracts (contracts of adhesion) for the privilege of using various sites and services. Customer Relationship Management solutions treat all customers essentially the same: as the target of aggressive sales tactics with little to no regard of the customer of an individual. Long-term customer satisfaction is hardly ever discussed.
Consider the issue of customer loyalty. Chances are that, like me, you have one or more loyalty cards for various stores you frequent. These loyalty cards give you some nominal reward, right? Are those really rewards for your patronage, or are they subtle bribes to keep you coming back? Searls explores this concept in detail in The Intention Economy.
Obviously, it’s fair to assume that the programs work pretty well or are at least rationalized well enough to continue justifying them. But so far, I’ve seen no research on the customer side that starts from the premise that maybe we don’t need these programs at all — or that it makes sense to base our understanding of loyalty on what customers actually feel.
Another substantial topic of the book is just how incorrect most of the information collected about us actually is. And still this factually wrong data is used to select which advertisements are presented to you, in the hope that you’ll click through. Aside from how intrusive advertising is, is it any surprise that click-through rates are so low when the data used to target ads to viewers is so wildly off-base?
Searls also advocates strongly for Vendor Relationship Management (VRM) solutions to give to consumers the same kind of tracking and information collection about vendors that the vendors use against us. The point of VRM is not adversarial, according to Searls. Instead, it restores balance to the overall market and seeks to actively reward those companies that pay attention to individual intentions. There’s already a lot of work going on to create VRM tools. You can follow along or — better still — get involved at project-vrm.org
Rather than Big Data, Searls posits the notion of “small data” and “fourth parties”:
We need ways of gathering, organizing, and controlling the data that we generate and that others suck in from our digital crumb trails. We also need new understandings about how personal data might be used. None of this is easy, yet it must be done. Fortunately, it’s still early.
Fourth parties would be trusted repositories that act as brokers on our behalf for our personal data. There are examples of fourth parties today — banks, buyer’s agent realtors, travel agents — but Searls’ vision of fourth parties expands to include those offering “personal data store” services. We would tell our fourth party which of our data is available for public consumption, and what terms and conditions might apply to non-public data. Companies with which we do business would obtain our data from our fourth party only if they agreed to the terms and conditions we had established. There’s little preventing this from happening today — read/write APIs and the global Internet are pretty much all the plumbing we need. It’s a culture and business shift on which we’re waiting.
I asked Searls about fourth parties, observing that those providing “personal data store” services seemed like prime candidates for attack. His reply is insightful:
I’ve been working with VRM developers for nearly six years, and in that time the subject of threats has hardly ever come up. I think that’s because VRM is for individuals. It’s here to fill in a market hole — the need for individual empowerment through new tools and services that serve demand, rather than supply. So we identify with ourselves, and most of us are — as individuals — not out to do harm in the world. Likewise, fourth parties also work for you and me. So, for example, insurance companies, brokers, travel agents, lawyers, banks and buyers agents in real estate are all fourth parties already. Are they subject to attack? Sure, but that doesn’t define them.
I suppose personal data stores, vaults, lockers and personal clouds (all different names for roughly the same thing) could be attacked if they hold stores of personal data in some unprotected way. But personal data isn’t gold, and personal data stores aren’t Fort Knox. As of today, the only actors in the marketplace that seem to want all the personal data they can grab — often in sneaky ways — are advertising companies, and they are currently using an abundance of that data to get sub-1% click-through rates on ads.
Most VRM work proceeds from faith that actual intentions of customers are worth far more than any amount of guesswork by sellers. Put simply, fourth parties will help us buy. They will help move more money, and frame better relationships, than sellers alone make possible, no matter how good their CRM systems or loyalty programs might be. For that reason it makes much more sense to care about opportunities than threats. The market is bigger.
I also asked how the intention economy would react to bad actors (on either side of a transaction), and about the likelihood of malicious fourth parties: someone sneakily providing some kind of personal data store only to misuse the data collected.
Worrying about bad actors with VRM today is like worrying about bad actors with PCs in 1984 or about bad actors with email and the Web in 1995. We got plenty of bad actors in both cases, but what mattered far more were the good actors and the good new things they brought to market.
Bad actors are always around. I remember Reed Hastings telling me, many years ago, about the trouble PayPal had with bad actors shortly after the company started doing business. A “sneaky or malicious fourth party” would have to represent sneaky or malicious people. I don’t know anybody developing intentionally for that market, so I can’t say. Also, fourth party services, such as insurance providers, financial advisors, and banks, could act in a fiduciary role for their clients, thus having a legal responsibility for protecting customer information. Fourth party services, in all their shapes and flavors, will provide a huge new category of business opportunities.
On the whole, I’m actually very excited about the possibilities implied by the intention economy, but this reply really worries me. Yes, we didn’t worry about spam or malware when the core Internet protocols were forming. But we’ve learned an awful lot since then, and it seems to me a glaring omission that reasonable safeguards not be considered at the beginnings of any new Internet construction project.
Finally, I wanted to know if Searls had any gut feeling about which current big companies might be the first early adopters of the intention economy.
When I put this question out to the ProjectVRM list, I got many answers. My favorite comes from one start-up CEO, who says, “None. VRM unbundles the incumbent.” That’s well-aligned with the VRM development spirit, which looks to create the means by which many new companies will come to market, rather than to bet on which old company will “win.”
But you asked, so here are some of the other answers:
- An already trusted or neutral brand
- Not currently massively invested in customer data assets and call-centre style CRM.
- Not currently making lots of money from selling customer data out the back door.
- Not the dominant or #1 player in in their sector/ category (i.e. more to gain/ less to lose than from bold moves).
- A surviving #1 in a threatened category. (e.g. BestBuy)
- Already kitted out with API’s, and accustomed to living in that world. (See ProgrammableWeb.com for examples.)
- In an industry with few good options in its current model. (For example, newspapers and publishers — the Guardian is a good example, with its mix of high ethical aspirations, tech capability, commitment to open platforms and data, and the need to evolve its business model. Pearson Group, publisher of Financial Times and many educational titles, is another.).
- With a product and services portfolio already digital or intangible (e.g. some online movies, financial services), but not in a regulated or sensitive market area (e.g. banking, telco, health). Companies here will be fast followers, but not leaders.
- Profitable enough to throw some money at R & D, Innovation and prototyping without worrying too much about it. (e.g. IBM, which is already pushing Big Data and analytics, so why not Small Data as well.)
- In an industry that benefits from The Quantified Self movement.
- CRM companies looking to embrace customer-side capabilities. (We’ve been talking to SugarCRM, SAP, Microsoft Dynamics, Salesforce and others.)
- Big corporate consulting companies (e.g. Accenture, Bain)
- A category where purchase decisions have benign consequences and therefore a low trust hurdle to overcome — and where interest in new discovery is high, for example with entertainment (e.g. Amazon).
- Companies that seem to already love customers — or should (e.g. Apple, Zappos, Dell, HP)
For contributing to the above I’d like to thank Iain Henderson, William Heath, Katherine Warman Kern, Devon Loffreto, Brian Behlendorf, Cameron Lewis, Carlton Jefferis and William Heath.
The book is easy to read, written in Searls’ first-person voice. He explains in the opening that he’s used to writing online and furnishing lots of links. While he can’t directly link from the content of the book, each chapter contains numerous footnotes with additional information and URLs to further reading. Searls uses plenty of personal anecdotes and examples, and quotes an astonishing number of conversations he’s had with people through the years.
I’m not an economist, so I was marginally worried that the book would be heavy on economic theory. There is some, as well as historical analysis of the evolution of markets and their effects, but all of this is done in a very accessible way. Searls does a great job presenting complex (and often crushingly boring) economic theory in ways that make sense to casual readers.
I purposefully read the book slowly, to allow the concepts to penetrate my thoughts. It didn’t take long for me to start looking much more critically at all the business transactions in which I participate every day and wonder how VRM and the intention economy might change them.
The Intention Economy represents the fruition of several years of lively discussion on this subject. The book is far from definitive, though: the groundwork for the intention economy is only just now being laid, and it’ll be a long time before it becomes an everyday reality.