Economics and Ecology

January 12, 2010 in Economics, Essays, Videos

I’m a big fan of the VlogBrothers, two brothers who make daily youtube videos addressed to each other (but also to a wider audience). In today’s video one of the brothers, Hank, attempts to give the other brother – and the rest of the viewers – a quick overview of “Ecosystem Services“. To quote Hank directly:

“Ecology is a fascinating and complicated science. But if you mix it with the fascinating and complicated science of economics, you end up giving value to the things our world does for us.

Those things, in ecological lingo, are “ecosystem services” and you can actually put price tags on them.”

It’s an interesting video and a great introduction to an area of economics that I had never really considered before:

Murdoch’s Paywall

November 23, 2009 in Business, Economics, Essays

There has been a lot debate online recently surrounding Rupert Murdoch’s change of mind about paywalls for his online newspapers. I’ve been reading a huge number of arguments on both sides (including a 40min video interview with Rupert himself) and am sad to say that most of them seem to be missing the point.

Earlier today I read Adrian Weckler’s article ‘The case for a paywall for Irish newspapers’, and decided to write my response in a post here, and to summarize my thoughts on the debate in general.

Paywall or Die?

Ardian makes many of the points that are being made by journalists and newsfolk around the world, that the business model is collapsing and they can’t afford to keep giving it all away for free. He finishes his article with the question:

But if the choice is a continuous decline in circulation figures or a paywall, it’s not really that tough a choice. I mean, ask yourself: what would you do?

The fundamental problem in the paywall debate, but the one too often overlooked, is one of supply and demand. The question the article asks is “Should we decide to command a price, yes or no?”, but economics tells us that the only question one can really ask is “Can we command a price“.

As a simple analogy, imagine one major Irish newspaper put up a paywall, but none of it’s competitors decided to follow suit. This paper obviously wouldn’t do so well, most of the news stories would be available in the other major publications or elsewhere online, it’s own articles wouldn’t be shared, tweeted or linked to as much as other papers and it would also lose the water-cooler effect if much fewer people are reading it.

This is the best analogy I can think of to describe the problems I see with an industry wide paywall – but the problems that afflict that single newspaper would hurt the whole industry, and the competition would be from other online news sources, international papers, bloggers and independent journalists.

The Economics

If you view news as a commodity, it can be fairly undifferentiated. If you take my analogy above, there are some people who would stay and pay for the subscription, but most would not. This is because the news is largely the same to them regardless of the source.

It is also served up at a near zero marginal cost. Think about it, how much does it cost the Sunday Business Post for each additional article read by a new visitor (or even – how much does it cost yourtechstuff.com?). In economics, when the market is competitive, price will always fall to the marginal cost. If you’re in an industry with a marginal cost of close to zero, it will be very, very, very difficult to command a price.

The Business Model

So back to the closing question, paywall or death? As always, (and without wanting to sound like a Carlsberg commercial) there’s a better third option here. This is a business model problem that newspapers have. In print, they have little competition for audience attention, and therefore can sell that attention for a high price to advertisers. Online, this is not the case, and so the price the can command for advertising is much lower. They therefore need a new revenue model, and here’s my suggestion for how they should get started:

Always remember that standard news articles cost nothing to distribute, attract an audience and command no price, so if you’re going to publish them, keep them free. Then figure out how to convert a proportion of the readers of those articles into paying customers.

If you want to charge your readers (or a subset of your readers), start by asking what value you can add to your service to make it worth the price. This is the biggest flaw in Murdoch’s plan – he’s wants to introduce a new price, but without introducing a new clear reason for his customers to buy. Some publications, like the WSJ, already add value by offering in depth insight into content for a specific market. This is one option, but it does leave you open to new competition that could easily offer the same content for free.

Preferably this new revenue model would involve selling new scarcities, such as personalisation, physical products, access to ‘behind the scenes’, or an editors time (e.g. letters to the editor can be read by everyone, but only written by subscribers – or better yet a discussion forum with the editors, accessible only by subscribers).

Here are some quick examples of news organisations leveraging free news articles to sell scarcities (there’s obviously not too many examples though, otherwise the industry wouldn’t be in such a pickle!):

  • Tecdirt’s “crystal ball” membership option – for only $15 per year “with the Techdirt Crystal ball, we give you a chance to see the headlines of some of the posts we’re working on, and some indication of when they might get published. And, once a story is published, you’ll be able to see it up to 60 minutes before anyone else can.”
  • The New York Times’ Gold & Silver online membership plans – The packages carry an annual cost of $150 and $50, respectively, and emphasize behind-the-scenes benefits like newsroom tours, exclusive videos of reporters telling “the story behind the story” and ancient back issues.
  • The Insight Community – a clever way to charge a brand to work with your readers to build or design a new product.

So that’s my input and advice for this debate, and can be summarized in these two lessons that I learned on my first day of Leaving Cert Economics:

  1. In order for a good to command a price, it must be scarce in relation to demand
  2. In a competitive market, price will always fall towards the Marginal Cost of production

Content is the Advertisement

July 15, 2009 in Essays, Marketing

This is an idea I touched on in a previous post called signs. The post was about a nice short film, which centred around a guy and a girl falling for each other through a series of short messages (it’s well worth the watch).

I suggested that this kind of short film could have been a great advertisement for Twitter (a TV ad in the YouTube age). It was very enjoyable to watch, it showed the importance, benefit and joy of communication and how it can be incredibly rich even if constrained to short bursts. This kind advertisement, which creates a branded, emotional connection, is one that companies have been trying to perfect for decades, but unlike most of their previous 30 second efforts, this YouTube short movie was very enjoyable to watch!

Had this work been commissioned by Twitter and uploaded to their YouTube channel (not even necessarily branded as a Twitter short movie), this is what I could call Content as Advertising.

This is different to content as marketing. An example of content as marketing would be a company blog, which offers advice to small business on it’s field of expertise, which generates word of mouth about this company and gives it a great reputation, which in turn generates more sales leads. Content as marketing is something most people reading this blog will be familiar with. Advertising as content is something different. It’s not quite as blunt as product placement, and it’s deeper than just having your own jingle.

Last week I saw (on Christian Hughes’ Digitology blog) one of the best examples of content as advertising that I’ve come across so far. It’s a series of short web episodes, and is incredibly brave for the company behind it (Proctor & Gamble), both in it’s concept and it’s content. It’s the story of a boy who wakes up with “Girl parts…. down there ” and it follows his journey, almost as if he’s a young girl discovering puberty/her body/herself. Now, because the product is Tampax, and I’m a 24 year old lad, I’m not really in a place to comment on the advertisement’s effectiveness, or how relevant it is to their target audience, but I do admire what they’re doing – or at least trying to do.

The first video has close to 40,000 views at the time of posting. Hopefully the story line is compelling enough for them to draw a good audience and connect with a lot of new customers. I also hope to see more companies exploring and trying out this genre as I think it could be beneficial to both advertising and the arts.

Using Downtime to Upskill

March 18, 2009 in Essays, Fuck The Recession

learnFor reasons that I don’t need to explain, many people are finding they have a lot of free time on their hands these days.

If you’re out of work there are many people giving great advice on using social media and the internet to upskill yourself and get back in the game. I think this is great advice, and there are already lots of people doing it well.

If you do decide to upskill, what skills should try learn? For some people the answer could simply be improving a skill you have or persuing something you have always wanted to do but never had the time. If, however, you want to invest your time in a skill that will directly increase your employability (if that’s a word!) then you should check out the Elance blog.

If you don’t know it, elance.com is an online marketplace for professionals. You can use it to hire people for a project or to offer your services online. Each month they publish a list of the most in-demand skills. Here’s the top 10 skills that people were looking for in February. Hopefully it can help you decide what to focus on.

February Rank Skill Name Trend from January
1 Graphic Design 0
2 PHP 0
3 MySQL 0
4 Logo Design 0
5 Article Writing 1
6 HTML -1
7 Web Content 2
8 CSS 0
9 Illustrator -2
10 WordPress 0

 Click here for the top 100.

Signs

March 16, 2009 in Marketing, Videos

I found this video today (via MJ). It’s one of the nicest short films I’ve seen in a long time, and is well worth the 12mins of your time. (click if you can’t view the video below).

One of my first thoughts for the video was “this should be an ad for Twitter”. Is it wrong that my first thought about such a lovely short film was business related? Probably. But I still think it was an important one.

In the marketing world, as the transition is being made from TV ads to online videos, the trend has been to make snappier, shorter, “more viral” videos. While this has worked well in many instances, I don’t think it’s the only way that online video can be best used.

If you have a product as good as Twitter, something that is unique and enriches peoples lives, then I see no reason why you couldn’t use an artistic short film similar to the one above to convey the value your service can bring to people.

There’s a lot of talented filmmakers and film school students out there thirsty for projects to work on (and for budgets!) and it would probably work out much cheaper than a TV campaign. It’s just a thought.

Growth, Reproduction, Generations and The Recession

February 12, 2009 in Economics, Essays, Evolution, Fuck The Recession

I was going to call this post “How Darwin could help us out of this recession” in honour of his 200th Birthday today. Apologies in advance for the length, but I hope it’s worth it.


The last book I finished reading was Richard DawkinsThe Extended Phenotype. It was fantastic. Although it has given my mind enough fodder for several blog posts, I’ll start with the very end of the very last chapter, which I finished the week that the big three car companies in the US went to congress looking for a bailout.

Reproduction vs Growth

What is the difference between reproduction and growth? It may seem obvious at first, but apparently it caused biologists a spot of bother back in the 70s.

When an organism grows, it mostly does this by replicating cells over and over. My hand, for example, grew in size from when I was a child. It did so when cells in my hand multiplied to form more skin, muscle etc. for a bigger hand. All of these cells contain the same DNA (my DNA) because they’re all me! In an evolutionary sense, all of the cells with my DNA – which are all the cells in my body – are working together to make hands and eyes and organs and tissues to get me through life and to reproduction, to pass my genes on.

Reproduction is obviously different. It involves two organisms coming together, to produce a third organism which is an exact copy of neither. Right? Wrong! But then what about a-sexual reproduction? When a bacteria cell divides in two, both are copies of the parent, is this really reproduction or is it just growth like the cells in my hand? And that was the stickler.

So What?

The discussion is fascinating and well worth a read, but not overly important for this post. The crux of the difference is that growth involves dead end replication – if there’s a strange mutation in the cells in my hand and the DNA suddenly begins to code for a new finger to grow, this will affect my hand only. If my hand gets chopped off, my future sons or daughters will not be born hand-less; If I get a tan they’re still be born a pasty Irish white! Reproduction is replication of DNA that will live on, forming a new organism which will potentially reproduce again.

A long time ago in a primordial soup far far away….

The importance lies not in understanding “what” is the difference, but “why?” If you cast your imagination back a few billion years to a primitive earth, where the first single celled organisms were appearing in the primordial sea. It’s obvious why some of them ganged together and found a competitive advantage as a multi-cellular organism. But what’s not obvious is why did reproduction evolve? Here are two examples from the book that best illustrate this point:

Imagine a primitive plant consisting of a flat, pad-like thallus, floating on the surface of the sea, absorbing nutrients through its lower surface and sunlight through its upper surface. Instead of “reproducing” (i.e. sending off single-celled propagules to grow elsewhere), it simply grows at its margins, spreading into an ever larger circular green carpet, like a monstrous lily pad several miles across and still growing. Maybe older parts of the thallus eventually die, so that it consists of an expanding ring rather than a filled circle like a true lily pad. Perhaps also, from time to time, chunks of the thallus split off, like icefloes shearing away from the pack ice, and separate chunks drift to different parts of the ocean.

Now consider a similar kind of plant which differs in one crucial respect. It stops growing when it attains a diameter of 1 foot, and reproduces instead. It manufactures single-celled propagules, either sexually or asexually, and sheds them into the air where they may be carried a long way on the wind. When one of these propagules lands on the water surface it becomes a new thallus, which grows until it is 1 foot wide, then reproduces again. I shall call the two species G (for growth) and R (for reproduction) respectively.

These two outcomes were possible, but the second one (R) is what we recognise as the modern plant. For this to evolve by natural selection it has to have had some advantage over pure growth (G). In what way is reproduction a more successful competitive strategy than pure growth? I’ll let Prof. Dawkins explain it better than I ever could:

…the significance of the difference between growth and reproduction is that reproduction permits a new beginning, a new developmental cycle and a new organism which may be an improvement, in terms of the fundamental organization of complex structure, over its predecessor. Of course it may not be an improvement, in which case its genetic basis will be eliminated by natural selection. But growth without reproduction does not even allow the possibility of radical change at the organ level, either in the direction of improvement or the reverse. It allows only superficial tinkering. You may divert a developing Bentley into a fully grown Rolls Royce, simply by tinkering with the assembly process at the late point where the radiator is added. But if you want to change a Ford into a Rolls Royce you must start at the drawing board, before the car starts “growing” on the assembly line at all. The point about recurrent reproduction life cycles, and hence, by implication, the point about organisms, is that they allow repeated returns to the drawing board during evolutionary time.

On Detroit

I read that for the first time last month, and I think I enjoy it even more every time I read it. Biology is such a powerful teacher. Evolution by natural selection is by far the most powerful scientific theory that I’ve had the fortune to learn. Natural selection has no intelligence behind it – the most successful organism (or gene or evolutionary strategy) will reproduce and live on, lesser alternatives will not. When nature has a way of doing something we should take note, as it’s more than likely the best possible way that it can be done.

So on the occasions that free market economics fails us (as it’s been accustomed to doing of late!) we should look to Biology for guidance. How can we apply the learnings that reproduction is better than growth, that the continuous life cycle beats never ending expansion, that rebirth trumps a resistance to ending?


Once more I’ll quote someone who can say it much better than me. This is an excerpt from a Seth Godin post titled What to do About Detroit:

Not only should Congress encourage/facilitate the organized bankruptcy of the Big Three [car manufacturers], but it should also make it easy for them to be replaced by 500 new car companies.

Or perhaps a thousand.

That’s how many car companies there were 90 years ago.

That’s right, when all the innovation hit the car industry, there were thousands of car companies, with hundreds running at any one time. From Wikipedia:

Throughout this era, development of automotive technology was rapid, due in part to a huge number (hundreds) of small manufacturers all competing to gain the world’s attention. Key developments included electric ignition (by Robert Bosch, 1903), independent suspension, and four-wheel brakes (by the Arrol-Johnston Company of Scotland in 1909).[16] Leaf springs were widely used for suspension, though many other systems were still in use, with angle steel taking over from armored wood as the frame material of choice. Transmissions and throttle controls were widely adopted, allowing a variety of cruising speeds, though vehicles generally still had discrete speed settings rather than the infinitely variable system familiar in cars of later eras.

Between 1907 and 1912, the high-wheel motor buggy (resembling the horse buggy of before 1900) was in its heyday, with over seventy-five makers including Holsman (Chicago), IHC (Chicago), and Sears (which sold via catalog); the high-wheeler would be killed by the Model T.

What we don’t need are giant companies with limited choice, confused priorities, private jets and a bully’s attitude.

I’d spend a billion dollars to make the creation of a car company turnkey. Make it easy to get all the safety and regulatory approvals… as easy to start a car company as it is to start a web company. Use the bankruptcy to wipe out the hated, legacy marketing portion of the industry: the dealers.

We’d end up with a rational number of “car stores” in every city that sold lots of brands. We’d have super cheap cars and super efficient cars and super weird cars. There’d be an orgy of innovation, and from that, a whole new energy and approach would evolve. Betcha.

I know this post has been mostly me patching together the thoughts of two men much smarter than me, but I think there’s value to be gained from linking the two.

I don’t think this is just a lesson to be applied to certain industries, but in fact could be applied to modern economics as a whole. Capitalism is still quite young and questions like “for how long should a company live?” need to be be considered. The demise of a company like Waterford Wedgewood is obviously not good for the company itself, but the existence of a company life cycle is beneficial for the economy as a whole. This life cycle, with the expectation that companies will some day reach the end of the line, is not something that should be fought by our governments with bailouts or protectionism. It should be expected, managed, normalised and encouraged so that a sector, an industry, an economy and a country can be reborn stronger than before.

Finger on the Pulse

January 19, 2009 in Marketing, Technology & Science

I just watched another one of Niall’s great videos in which he shares a great tip on how to increase sales on Twitter. I want to expand on his tip with a few handy pointers on how I use Twitter search to do business and find and interact with customers.

In his video, Niall uses the example of Pat Phelan searching for potential Max Roam customers talking about cheap roaming. This is simple enough to manage as there tends to be about one tweet per day. But what if Pat wants to have a look at all people complaining about their phones? That search has a new tweet every second (and has 5 new results in the time it took me to write that sentence!).

Here’s what I do to keep my ear to the twitter ground more effectively:

Location, Location, Location

A very handy thing you can do with twitter searches is append a location to the end of them. So for me, because all my customers are in Ireland I add “&geocode=53.344104,-6.2674937,100mi” to the end of a search it will show me only the results within 100 miles of that location (which is Dublin, but maybe I should change it to Athlone). Using the same example as above, that search for phones becomes much more managable with about 10 tweets per day.

For an easy way to do this for the coordinates and distance (e.g. within 2km of your shop/business) use the search bar at the top of monitter.com

monitterlocation

Feed Me

Now that you’ve narrowed down your location you can easily manage more keywords that are relevant to your business. This leads to the problem of remembering all these key words and constantly checking them all, which is where RSS steps in. On the right side of the search.twitter.com results you should see a link to the feed.

twitterrss

If you have a feed reader (I use Google reader) you can add this feed and the search results will pop straight into your reader. I have all mine organised in a Twitter folder and check on it a few times per day. There is a slight delay of an hour or two between when a tweet is posted and when it appears in my reader. I use it for work and personal – e.g. I have a “leaving cert” alert set up for zulunotes.com.

googlereader

twittertweetsfolder

Example

One evening a new entry appeared in the feed for the term Leaving Cert:

wdf

(bonus: I’m now even more “hip” with the youth of today after learning that WDF stands for What Da Fuck?)

From the Zulunotes twitter account I offered some help

zulunotestwitter

And I had one happy user in less than 5 mins effort.

omg

Other uses

Of course this isn’t only useful for businesses finding and engaging with customers or prospects; It can be used to find people tweeting about things you’re interested in, or for journalists keeping an ear out for discussion on certain topics or breaking stories.

Cheat Sheet

For a search for a word being mentioned in Ireland:

http://search.twitter.com/search?q=searchterm&geocode=53.344104,-6.2674937,100mi

Or for a two word term (e.g. “Social Media” = social+media)

http://search.twitter.com/search?q=term1+term2&geocode=53.344104,-6.2674937,100mi

Or the link directly to the feed:

http://search.twitter.com/search.atom?q=searchter&geocode=53.344104,-6.2674937,100mi

Recruit When There’s Blood in the Streets

January 4, 2009 in Essays, Fuck The Recession, Investing

Be fearful when others are greedy and greedy when others are fearful.

That’s one of my favourite Warren Buffett quotes. I’ve learned a lot from him (indirectly, of course), not just about investing but about business and life in general. For those of you who don’t know him, he’s the richest man in the world, and has made his money from finding and investing in great companies.
I subscribe to the Motley Fool and read many of their great articles. They’re champions of the Buffett style of investing. It’s not all “buy buy buy, sell sell sell!” Charlie Sheen style trading. It’s about owning great companies, with great business models, that care about their customers. It’s about being in it for the long run and the big win, not the quick buck. As Mr. Buffet himself remarked about his company Berkshire Hathaway “Our favourite holding period is forever. “
One recent Motley Fool article that I liked was called Learn From Buffet’s Patience – in reference to his billion dollar investments in Goldman Sachs and General Electric and his Op-ed piece in the NY Times saying that he was personally buying American stocks & shares last October (read: as the world Economy headed into a depression). An excerpt from the Fool article:
On the other hand, this is Warren Buffett, and he’s made these sorts of predictions before. The years 1973 and 1974 were two very bad ones for the market. Over those two years, the S&P 500 plunged by 42%. It was then, on Nov. 1, 1974, at the height of the pessimism, that Buffett made his first well-publicized bullish market call : “Now is the time to invest and get rich.” 
Buffett himself was buying shares of The Washington Post. He paid just $11 million for an investment worth nearly $1.4 billion at the end of 2007 — a 127-bagger! Of all the stocks listed, Washington Post is the biggest gainer — by a factor of 12. While relatively small in dollar terms, it’ll certainly go down as one of Buffett’s greatest investments. 
But do you know what happened to the stock right after Buffett began buying shares in 1973? Shares plunged 20% and stayed there, not for a few months, but for three years. It was 1976 before Buffett was in the black, and it was 1981 before WaPo traded at Buffett’s estimate of its 1973 intrinsic value.

Think about that: What ultimately became one of Buffett’s greatest investments began with three years of double-digit losses and mind-numbing stagnation. Patience pays, Fools.

It encapsulates the two of my favourite meme’s I’ve learned from him: Bucking the trend, and ‘being in it for the long run’ are two vital ingredients for success.
And this doesn’t just hold true for investing. When I look, I see it in all the great advice I get about business, about how marketing is about building relationships with customers, how successful business appreciate the life time value of a customer, how the best executives think past the next bonus check or year-end KPI.
Where I see this as very applicable right now is in recruitment. In an environment when every day there’s a new headline about head-count reductions and redundancies left, right and centre, who has the courage to zig when everyone else zags? If you’re in HR, or in the position to hire staff, are you brave enough?

Uncertainty is the friend of the buyer of long-term values.
I’m 24. I was out for drinks with friends over christmas and we got to talking about job hunting. 1 has a PHD, 2 have masters in marketing, 2 have degrees, none can get jobs. Think about it, there is a pool of young, enthusiastic, well educated people yearning for a job in your company. The labour market is saturated with talent. Uncertainty has crippled the jobs market, and “long-term values” (people) abound, are you a buyer?
The company that seizes on this opportunity will be the one that emerges from this recession stronger (in leaps and bounds) than when it entered. People are the core of your business, that’s true of every business. So are you bucking the trend, are you willing to take advantage of opportunity to lay the foundations for you success over the next 10, 20 years? Are you ready to forsake the quick win of saving small costs and go for the big win? 
Are you ready to be greedy when others are fearful?
If not, why not?

Wants, Needs and the Spectrum of Desire

December 4, 2008 in Economics, Essays, Evolution, Marketing

I enjoy reading Seth Godin’s blog. He often has really clever insights and ideas about marketing and business, and his books are very good too.

Recently he wrote a post entitled Hungry. An excerpt:

By any traditional definition of the word, she wasn’t actually hungry. She didn’t need more fuel to power her through an afternoon of sitting around. No, she was bored. Or yearning for a feeling of fullness. Or eager for the fun of making something or the break in the routine that comes from eating it. Most likely, she wanted the psychic satisfaction that she associates with eating well-marketed snacks.

It got me thinking about the distinction we draw between needs and wants. From a practical point of view I can see the difference. We all know the definition of the two: Food, shelter and water are items that we cannot live without, they are necessities, they are needs; wants are anything above and beyond this.

But from a biological point of view, I wonder do our bodies draw as clear a line in the sand? Evolution teaches us that organisms that felt the strongest compulsion to survive and replicate would be the fittest. Survival of the fittest ensures that after many generations the only organisms that are left will have strong compulsion to do/get/eat/drink/find that which helps them survive.

Plants don’t have brains. They can’t decide or know what they want or need. They have instead evolved tropisms which ensure that each plant “desires” or “wants” those things that make it survive, but in a very mechanical way. Geotropism involves anti-growth hormones in the stem, which are pulled to the bottom of the cell by gravity, ensuring the plant grows upwards. Phototropisms are chemical reactions to sunlight, spurring the plant to grow towards the sun. Were we to personify plants, could we describe these physiological reactions as needs or wants?

Evolution has resulted in similar mechanisms in us animals. To be a successful animal, our ancestors would have had to 1) survive to reproduction age and 2) reproduce!

For the part 2) we all understand sexual desire, and how important it is in the survival of a species and the passing on of genes. We also understand that there’s a spectrum of desire involved here. There are ranges of emotion we can feel: Having a crush, a fantasy, a sexual encounter or falling in love. Do we need a relationship but want sex? (Or vice versa!?)

And then when we look at part 1) – surviving – I don’t think our bodies have evolved to distinguish a clear cut distinction between a need or a want. Biologically speaking, our reactions are based on a spectrum of desire.

The reaction process (e.g. a plant growing, a dog eating, a human wanting) has been fine-tuned by evolution, so that the intensity of the desire is matched by it’s benefit. Think of it as an algorithm of sorts. This is why we feel thirst as a more intense desire than a hunger for chocolate, or sexual desire more intense than the desire for friendship. I think of it like a mental tropism – the stronger the sunlight the more a plant grows towards it – the greater the benefit to my survival, the more I subconsciously desire it.

The way we use language always gives us a good insight into the working of the mind. The fact that we use terms like “she had a thirst for knowledge” or “he had a hunger for results” are great examples of how our mind processes this spectrum of desire. Even though hunger and thirst are supposed to be for food and water, our mind can instinctively understand what is being said. This simple sentence construct is further support for the theory that our mind treats desire as a spectrum. There is no cognitive leap that the mind has to make between understanding hunger for a need (food) and hunger for a want (results).

Which brings me back to Seth’s post.

People don’t need Twitter or an SUV or a purse from Coach. We don’t need much of anything, actually, but we want a lot. Truly successful industries align their ‘wants’ with basic needs (like hunger) and consumers (that’s us) cooperate all day long.
….
yet most of them aren’t needs at all. That’s because the industries that market these items have done a brilliant job of persuading us that they are needs after all.

A lot of people make the claim that Seth is alluding to here, that marketers make needs out of wants. That they exploit basic needs such as hunger and thirst, and build new wants around them.

I wouldn’t give marketers that much credit! Something like that sounds difficult to do, and yet millions of products are successfully marketed, and not all these marketers can be way above average ability, right?

The reason this is so do-able, I suggest, and the reason that there are thousands of new products each week which attract customers’ desire, is because us consumers don’t mentally divide every purchase into a need or a want. We operate based on our spectrum of desire. And just as it’s possible for me to tell you that “Jane had a thirst for knowledge” without you having to make a cognitive leap to understand it, so too is it possible for a marketer to position a product so that you subconsciously desire it almost as much as something else you consciously define as a need.

As a marketer I don’t try to create new needs, or trick people into needing something that they barely even want. That sounds complicated, elaborate and quite frankly not something I have a desire to do. As a marketer I try understand what people desire and I try create products and services to satisfy those desires. Advertising shouldn’t be used as smokescreen or a ruse to con people into thinking my product will meet a desire that it won’t, or a need that they don’t have. Advertising should be a display, a way to demonstrate how it can satisfy their desires. Branding can be used to help my product meet multiple desires, and move it up along the spectrum. Sure, Nike fill their customer’s desire to be clothed, but also to feel cool, to feel athletic, to express something about themselves etc.

Are these needs? Or wants? Or wants in needs clothing? I don’t know, but they’re definitely desires and meeting them as best they can should be every marketers goal.