Web appliancification: Why new cars have old GPS

To understand the future of the web, look at the dashboard of this 2010 Toyota 4Runner. It's sweet. Studly. And it has an old, outmoded GPS system.

For years the 4Runner has been one of Consumer Reports' top-rated SUVs, so when Toyota redesigned it recently manly men were intrigued. It has strong lines, influenced by the blocky FJ Cruiser, and some clever improvements such as an overhead console allowing quick tweaks to 4-wheel-drive traction.

The new electrical network

And this is the challenge of the modern Internet. The 4Runner has an old GPS model with a flat 2-D map that shows your pinpoint crawling across it. No 3-D images of the roads looming ahead such as you'll find in modern $100 units from TomTom or free from Google on a Droid cell phone. This little design problem is endemic across all auto brands, even among the upscale BMWs and Jaguars, because automakers fill their production pipelines years in advance of a car getting to market. When this car was actually sketched back in say 2006, the GPS system was state of the art. Now, in 2010, we have a brand new SUV with technology years behind the curve.

We call this web appliancification -- or the constant improvements in devices that plug into global information systems. The Internet was once a vast wilderness that could only be accessed with a specialized device called a "web browser," but now it's turning into an information electrical grid, where you can plug in any device and it will work in a device-specific way. Josh Bernoff over at Ad Age calls it the "Splinternet" and suggests that after a golden age of 15 years in which we all used one window to get online, we're now approaching an era with splinters of connectivity working on gadgets that have incompatible formats. This is true both from a hardware perspective -- cell phones, smart phones, tablets, laptops, netbooks, GPS units, and web-based appliances -- and in content ecosystems.

The ecosystem battle is most interesting because this is where the big money lies -- including the billions of dollars in advertising spent each year chasing ecosystem audiences. The Apple iPad doesn't play Flash video formats, because Steve Jobs wants you to buy video through his iTunes store -- an ecosystem for music and now books and film. The Kindle is tied into Amazon's competing ecosystem. Hulu wants to own TV viewers, Twitter your future connections, Facebook your past friends, Netflix your film entertainment, Google your commercial searches, Microsoft your work tools, Rupert Murdoch your paid news. In essence, the 1990s "portal" strategy in which content producers fought to find ways to lock in their customers is back, alive and well.

This pressure of micronetworks vying to control your online life has created a new brand rush of content positioning. Why has Google launched a cell phone? Because it wants to lock in audiences in the emerging mobile channel. Consumers have only so many modes -- entertainment, news, work, friends. There can only be a few leaders for each modality. The challenge for marketers is as devices continue to shift, our connections to these new online portals mutate quickly too. It's very hard to maintain market leadership in an information ecosystem when the gadgets that hold the keys keep transforming. The risk for your business is no matter how solid your product, like Toyota, your information appeal to consumers may get left on the road behind.

Google, sex, Utah and chocolate. We're not making this up.

If you haven't toyed with Google Insights for Search yet, get going. It's Google Trends on steroids, allowing you to glean from global search information which regional markets are most interested in your products at which times of the year. There were more than 137 billion searches on the five major U.S. search engines in 2008, making Google a tremendous free database of market interest in products.

Take lingerie. Did you know that the highest concentration of interest in diaphanous negligees is in Utah? Or that the most frequently searched terms revolve around "plus" sizes? A savvy marketer, thinking of how to attract this larger friskier audience, might dream up a chocolate promotion. Google Insights then reveals the highest search volume for chocolate is in the month of December.

And voilà! You target a Christmas holiday promotion for nightgowns in Utah that, rather than 50% off price, offers a free gift of chocolate to every online buyer. And instead of Victoria's Secret super-thin models, you load your web site with images of real women in larger sizes.

Google Insights is worth playing with for your business. Godiva, call us.

Why Apple hates Flash and the Droid has a search key

Apple and Google have something in common: They are both furiously trying to protect their content ecosystems. Apple launched the iPad yesterday with no Flash support -- meaning the majority of video on the web won't work on the tablet device, including clips from Hulu.com. (Word is the New York Times demo had a frozen pane for video in the iPad launch presentation, not a pretty sight.) This is not a design oversight; Apple obviously wants you to watch video by downloading it (and paying for it) from iTunes. Apple is telling Adobe, which controls Flash and thus the majority of online video, it's game on.

Google, as the above ad demonstrates, takes another tact. Mobile phones are filled with handy apps that allow you to get online with a single tap -- and oh yes, by the way, pass Google. Who needs to search on mobile with a search engine when a restaurant, news, sports or map icon gets you to web-based information instantly? If anything, the emergence of new tablet devices could make app onramps to the Internet even more popular. So Google has invested in a phone OS and hardware design which notably has a hot key that launches a Google search browser. Then, to educate the public, Google is running full-page ads in Wired magazine trying to convince you that searching via Google on a cell phone is just as important as doing so on a PC screen.

Apple wants you to buy its videos. Google wants you to use its search engine. And you're learning entirely new devices -- smart phones and tablets and soon other task-specific Internet-wired gadgets -- that may lead you in entirely new directions. It's fun to see the current big players in technology so worried as consumers shift their media habits once again. Wonder if old habits will stick.

The hive mind of Apple desire

You, dear reader, are an ant that is part of a much larger colony -- a hive mind, or what artificial intelligence designers call a "swarm intelligence." This is what happens when you see flocks of birds, each acting alone according to simple rules (fly fast, don't bump into each other) swarm instantly in new directions. We observe group awareness in insects and in schools of fish. You might think that evolved humans are above such collective behaviors, but an observer of the financial markets or a passenger aboard a plane flying into JFK can see groups of humans moving masses of resources to terraform our planet. Really, people: We're only 4 billion years into the 10 billion-year life cycle of the Earth's sun, so if you think humans are the apex of evolution, you're wrong by about 60 percent. As animals do, so do we.

So if we assume hominids act in groups like all other animals, and that all large groups of creatures make intelligent collective decisions to protect their species, and thus our society has a collective consciousness, what can we make of the fanfare of speculation about the Apple Tablet? Why, that 2010 humans are making a prediction that a new device will fill several gaps in our societal infrastructure: Our ability to consume content, move ourselves, broadcast to others, and salvage the struggling publishing and advertising industries. The Apple hyperbole newsgroup is judging as a whole that our peripatetic culture is about to receive a missing tool, a device that connects the world more easily.

This is more than thinking Apple will make a good product -- what marketing scholars Raquel Castaño, Mita Sujan, Manish Kacker, and Harish Sujan have called a cost-benefit consumption analysis. Hive minds act as prediction markets, making decisions not on what they think will happen, or what they believe others think will happen, but what they think others think still others think will happen. Society, like a savvy investor, is three steps removed from logic, trying to game the future that will play out among all the other players. We're like single spectators in a bar guessing who will hook up with whom to better our own odds. Society is judging the tablet as something that others think everyone will find useful.

And what is that? A future world in which panes of glass make true communication -- sight, sound, video, text -- portable at last. When tomorrow's Apple Tablet is remembered a decade from now as the first real effort at portable screens -- in 2020, when such panes cost $20 and are in every schoolchild's backpack -- we may look back and laugh. But it portends a future when the Internet has come unbound and unwired, where two-way video is everywhere, where information is finally at every fingertip, when you can cast your own face to your social network anywhere. Don't trust us. The hive mind of hyperbole says it must be true.

Image: Toastforbrekkie

Apple Tablet Saves the World (a video tour)

From our recent guest riff on AdVerve. Thanks to Angela Natividad and Bill Green for inspiration. We added pics, because who doesn't want to look at the future world from Apple?

Why Foursquare clowns around

From our guest post at Jim Mitchem's Obsessed with Conformity:

A curious trend in social media is how most of its tools start out as perceived toys, worthy of laughter, and then gradually migrate to the mainstream. When Facebook and Twitter launched, early adopters in the business world were often kidded by colleagues. "That's great," an old friend emailed me in 2008 upon hearing I was on Facebook, "now you can stay in touch with teenage girls." Yet soon Twitter is tied in to CNN feeds and chief marketing officers are networking with their ad agencies inside Facebook. In 2010, if you are not using these tools you risk looking stupid.

So here we go again, with geolocation-social media tools. Relatively new services such as Foursquare and Gowalla update your friends when you reach certain physical spots -- in essence, broadcasting your location on a map into your online network. Like early social networks, the premise makes sense yet combines a whiff of immaturity that gives grownups pause. Sure, in a busy world it could be useful to get pinged by a colleague when she reaches a certain point. But the services include stupid-sounding updates. "Hein V. in Amsterdam, The Netherlands, became mayor of Vespuccimarket." "Patrick unlocked the 'Adventurer' badge." The only mature response is: "WTF?" And this month, in the latest goofy Foursquare update, Jan. 28, 2010 has been decreed "International Day of the Toilet," wherein you can let your friends know exactly when you hit the can.

Gaming psychology

But pause. Reflect. Before you deride such silliness, realize the two real undercurrents. First, early creators of new technology must always push the boundaries of maturity, because none of us really needs anything new -- so first forays often come off as gimmicks. (Remember the first camera on your cell phone, and the jokes about who needed to take a picture of their ear? Now most people love them and real camera makers are watching their business slip away.) And second, in a world where everyone is now leaping into social media, creators of new social media networks must create game-like mechanics to try to boost adoption and break through the clutter. Gaming psychology is extremely powerful; the "follower" counts on Twitter have become high score rewards that help boost loyal usage. So it's no mistake that Foursquare updates users' networks of colleagues with the strange-sounding whimsy of "mayors" and "badges": It's a way to get attention, to wake you up, perhaps to get you to try the damn thing.

As such geolocation technology becomes prevalent, we expect the maturity levels to rise and the gimmickry to settle down. Soon, you'll be updating everyone about your whereabouts, too. Just be careful when you're in the can.

Image: Drop Nineteens

Cheerios: A cauldron full of seething excitations

To understand Americans' hunger for self-pleasure, simply read this box.

Cheerios has launched a new chocolate cereal that must compete with hundreds of alternatives in the aisle. In the U.S., Cheerios is a favorite of moms who want a wholesome, feel-good breakfast for kids. Yet General Mills knows that the real consumers -- children -- love a sweet treat in the morning. So here comes its new product with 9 grams of sweetness per approximately 25.5-gram serving, more than one-third pure sugar. When Sigmund Freud wrote of humanity's lustful, chaotic "cauldron full of seething excitations," he could have meant this.

So how can Chocolate Cheerios break through? By appealing to both Freud's Id (lust) and Ego (restraint) at the same time. Chocolate Cheerios is "made with real cocoa" (natural ingredients), it "may reduce the risk of heart disease" (what mom doesn't worry about her family's health?), and of course comes with a "whole grain guarantee" (this is not just real natural food, but General Mills is so certain this is real, it guarantees it). Even the colors of the cereal itself are half white and half cocoa, visually meeting Id and Ego halfway.

Cheerios, you've hit our logic-restrained desires perfectly. How sweet it is.

Adidas whacks Nike with a lightsaber

"What the hell?" you think, watching TIE fighters zoom over Snoop Dogg and David Beckham with an urban backbeat. And then it clicks: Adidas is moving in on Nike one sports demo at a time. In January 2006 it bought Reebok, bringing total athletic shoe sales to No. 2 in the world. In April the same year it won an 11-year deal to be the official sponsor of the National Basketball Association. Adidas is all over Major League Soccer, in 2007 it announced a move into lacrosse, and it recently began stuffing computer chips and kangaroo leather into its highest-end shoes seeking halo differentiation. It now has little kids covered with a Disney tie-in. So, how to get more attention?

Star Wars! Um ... Star Wars? Adidas' new Darth Vadar mask seems curious, since the last Star Wars film was released in May 2005, until you realize it's a smart tactic for infusing Adidas' brand with a meme we all love. What better brand to jack up Adidas adrenaline than a big-bold outer space dream filled with fight scenes? And since nothing happens with Star Wars without George Lucas's approval, it also makes you wonder ... is more to come from the franchise, perhaps the 3-D film versions Lucas hinted about back in 2005? Is Adidas an early blip on the Luke Skywalker master marketing calendar?

Adidas' current marketing slogan is "Impossible is Nothing." That's not as catchy as Nike's old "Just Do It," but as far as catching Nike, Adidas has $15.2 billion in sales vs. Nike's $19.1 billion. Maybe nothing is impossible.

Via @chicalibre and AdRants.

News, now

Is social media no longer a toy? Christian Borges, VP at Deep Focus and a first-generation Haitian-American, feared for his loved ones' lives in Haiti this week. He wrote in Ad Age:

"I needed to know what was happening -- the not knowing was maddening. Twitter and Tweet-deck of course have played the dominant role in keeping me informed with 'real-time' updates and links to deeper pieces of information. Tweets from all the major news organizations and journalists from @breakingnews, @latimes, and @CNN to @GregMitch; tweets and re-tweets from @Wyclef started to populate my Twitter feed encouraging the masses to text 'yele' to 501501 and donate $5 for relief; others started to Tweet similar text initiatives as well. I also saw Tweets with links to a Flickr Haiti Earthquake group with photos that captured the devastation, as well as Twitter lists such as @NPRNews/Haiti-Earthquake and YouTube videos of Wyclef and Haitian author Edwidge Danticante on CNN Live with Anderson Cooper from the night before..."

It's only one case study, but shows how new tools are catching up to our human need for immediacy.

Image: John McNab

The self-correcting social network

Their SEO boys are not going to like this.

If you missed the Final Footwear debate this week, the shoe company apparently hired SEO experts who in turn apparently began filling blogs with spammy comments -- "great blog post!" -- with links back to FinalFootwear.com. Our blog got hit several times. (Such link building is a dirty search engine optimization tactic to try to trick Google into thinking a web site is more relevant, since many links now point back to the site, Google rates sites in part by how many links point to them, and thus Google in turn might elevate that company's web site in search results.) We say apparently, because it is possible real people named Nike and Timberland decided to comment on blogs and link randomly back to a shoe web site. So we gave Final Footwear's SEO plotters a little spanking.

The most interesting thing about the issue is now if anyone searches Google for "FinalFootwear" as one word, our questions about whether it is a link-spammer are now the second and fourth search results. As we wrote over at Kelly Craft's blog:

"It shows how all brands, and all of us, must tread fairly online, since human networks are now self-correcting. When people cross lines of perceived fairness, the group communities react. It’s almost a new form of social justice — groups of humans know when something is wrong, and now social media helps them react very clearly with a response."

Final Footwear, we're still willing to discuss this in person. Feel free to give us a call.

When walls come down

The Haiti earthquake made us wonder: Why do we distance ourselves from others?

There are 6,796,500,000 people on this planet; most can't see beyond self-imposed communities of politics/nationstates/racial attitudes/sports team combatants ... and yet a visitor from another world would think we all look alike. Yes, humans have a few variations in hair and skin color, but outside looking in our race is far more homogeneous than butterflies, cats or dogs. A space alien, flying by on vacation, could only wonder why Homo sapiens, so similar in appearance, fusses and fights given the need for group survival.



Imagine being that alien, trying to puzzle it out. What is going on to make those little hominids below argue so much? Religion? Most humans believe in one god. Territory? An artificial construct, with no nationality lines visible from the sky above. Money? An illusory fiction used to trade goods, most of which start on one side of the world and end up on the other. Very strange, the visitor would think, observing humans who each day wear 10 bits of clothing manufactured from China to India, that we dislike or distrust anyone with a slight alteration in their spoken language. The most comical finding of all would be that when humans do go to war with each other, we often fight the cultures closest to us in similarity -- the U.S. North vs. the South, the English vs. the Irish, Croatia vs. Serbia, or perhaps soon FoxNews vs. MSNBC.




Psychologists suggest our bias to liking our own kin while fearing others slightly different is related to genetics. "If a set of genes predisposes an individual toward assisting a closely related other, there is a high probability that these same genes also exist in the bodies of the recipients by virtue of common descent," wrote Justin Park, Mark Schaller, and Mark Van Vugt in the Review of General Psychology. That is, your body is filled with the instincts of your forebears -- to protect kin at the cost of others -- because those selfish survival genes were the ones most likely to survive. At the same time, we often dislike people quite similar to us, like the Hatfield and McCoy feud, perhaps due to the instinct shared across species not to have sex with close cousins which can cause genetic aberrations. Thus we distrust those from distant lands but really wage war on neighbors slightly different in culture.




Still, when real disaster strikes, for a moment the artificial walls between human cultures come down. It's painful to see people trapped and suffering. Perhaps an altruistic instinct for group survival deeper than a selfish urge to fight lies within us all. Find out yourself: The New York Times lists options for donating to Haiti here.




Ongoing updates to the 2010 Haiti earthquake at Wikipedia here. Images: United Nations photostream on Flickr.

Google's cell phone move No. 348: Local QR codes

Like a lover who realizes his heart's affection may be moving on, Google is eyeing the handsome new competitive world of mobile fearfully. Such tiny screens. So little room for Google ads. So apparently Google has yet another mobile beta program, this one letting you snap photos of retail locations to pull up information on your smart phone using those strange pixelated bar codes that first showed up in Japan. The deal is you see a QR code that looks like a Jackson Pollock painting, you take a picture and a message, link or video lands on your cell phone. It's like a bookmark for mobile.

Phones that squeeze search out

You could write this off as a gimmick, or just another Google trial balloon (remember customizable search results?), yet ...

... Google is worried. Consumers in the U.S. are migrating rapidly away from big laptops to smaller cell and tablet screens (yes, soon), and developing nations that hold the future of our global economy such as India and China are making mobile so big their consumers may soon forget what stodgy old desktops are. The trouble for Google is its current revenue lifeblood, Adwords, works brilliantly on big screens but not so well on tiny mobile glasspads where they cannot cram nine "sponsored links" next to every search result. That's right: Google faces a visual inventory problem. It's the same reason Google pushed hard to launch a mobile operating system, and why it soon may even sell mobile phones. Google wants in on the mobile space, cause it's the future of consumer attention, and that's the future of advertising. If it fits.

Pixelated popularity?

Google being Google, they've cleverly found an auction-type system to help their QR codes work. Businesses that have the most photos snapped of their codes will have future special decals shipped to them (there is no way to buy them) designating them as most popular joints. So businesses have an incentive to push QR codes in your face, so you'll snap, so they win, so Google's service encroaches on your cell phone. Dearest coffee shop, we had a hard enough time understanding your menu already.

Via Brandflakes and @webmetricsguru.

Seeding nature in cities with geospatial analysis

When New York City first dreamed of a great Central Park in 1844, it began a 29-year massive landscaping process over 700 acres that required the demolition of entire villages. Cities today don't have the luxury of three-decade timelines and vast spaces to move earth, and yet with urban manufacturing fading and populations rising, the need to give citizens healthy outdoor areas to breathe, exercise and congregate is more important than ever.

Local Code : Real Estates is a proposal to use geospatial analysis (sophisticated mapping) to pinpoint tiny sections of urbanity in New York, LA, Chicago and DC that have fallen into disarray -- and then consider how to build networks of green spaces at the street level. Here's what Revere Street in San Francisco would look like before and after renovation:



It's an intriguing dream: hundreds of small, soccer-field- or street-sized parks giving residents local opportunities to experience nature. The designs would breathe life into the blighted areas of major cities which often have higher incidence of pollution, bad air quality and poor health. And because of the hyperlocal structure, each area of residents could weigh in with the balance of trees, grass, cobblestones, benches or sports facilities they'd want most. Rather than one vast park acting as a city's heart, you'd have thousands of green pathways acting as arteries.

WPA2 : Local Code / Real Estates from Nicholas de Monchaux on Vimeo.

Via Emmanual Vivier.

FinalFootwear.com: Anatomy of a link-spammer

This is FinalFootwear.com. Surely a reputable company, and we're certain it had no intention of hiring an SEO consultant to build fake links in blogs such as our own pointing back to its site, trying to trick Google into elevating its position in Google search results. Any such occurrence must be a coincidence. Really. I mean, geez, lying in print is almost criminal, and who would do that?

Now, this below is a link spammer, commenting on our blog, with a link embedded in the "Nike" name going back to FinalFootwear.com:


Nice tone, appealing to our ego. You know, the type of comment we might leave there forever, with a link ... pointing to FinalFootwear. And so is this:


We're sure it's an honest mistake, FinalFootwear, and these comments are totally unaffiliated with you. After all, if word got out you were trying to mislead people to find your site, people wouldn't want to shop at FinalFootwear, would they? Instead, they'd think you were a bottom feeder in the marketing universe polluting the Internet with lies, and word might get around that it's risky to shop at such a disreputable company. That would be too bad, wouldn't it?

And just to show we don't think you'd do such a dishonest thing, we've even included a link to your site in our lede. So you'd notice. And let's be clear with your lawyers, we ABSOLUTELY are casting no judgment or making any claim that you would conduct misleading behavior in web links to get people to your site. Really. We're NOT saying that at all. We're just happy that people named Nike and Timberland happen to like our blog, and they're welcome to link back to your shoe site whenever they want. Cheers.

Syfy wins the great rebranding debate

When Sci Fi rebranded to Syfy in mid-2009 with more diverse drama content for women, fans were aghast. But the cable network is having the last laugh with ratings for women 25-54 up, new ad dollars flowing in from Hershey's and BMW, and a leap over Lifetime in the coveted prime time slot. We've been debating ad guru Bill Green for a while over why we liked the rebranding, and responded to his it's-still-wrong post today with this:

Bill, I called this back in March 2009. I think what you missed is cable TV networks don't exist to serve content to audiences; they exist to serve *audiences* to advertisers. Syfy had to find a new audience because the old one was leaving cable TV.

You raise a good point that cable nets risk diluting their value if they broaden content too far. But think about the audience. Science fiction fans skew young and male, the earliest adopters of technology -- and a wave of eyeballs leaving traditional cable TV. You seem to be a sci-fi fan. Do you spend hours in front of cable, Bill, or a computer? Young men also often have less income (since wealth is a function of age) and are focused on a limited product set (gizmos, cars, razors). Women of all stripes, on the other hand, account for 80% of discretionary spending, buy everything for the household, and are a sweet audience to serve to advertisers. Older women are more likely to have higher incomes, another draw for marketers.

I wouldn't blame Syfy for leaving its fans. I'd fess up, and blame Sci Fi's original fans for leaving it. TLC did the same thing a few years back (um, remember "The Learning Channel" human anatomy shows? All gone now.). If you ran a cable net and saw forecasts of your audience going out the door, the smartest thing to do is go find another audience. Syfy, very well played.

Pandoracars and tigers and bears, oh my

Want a signal that the broadcasting world may soon face the troubles newspapers do today? (Um, that's losing audiences and advertisers.) The Wall Street Journal reports:

"Pandora Inc. has struck a deal with electronics maker Pioneer Corp. that promises to make it easier for drivers to listen to its personalized radio service in cars—bringing Internet radio one step closer to snagging a built-in spot on dashboards. The development represents a direct challenge to broadcasters of satellite and traditional radio, who have long dreaded the arrival of Internet radio in cars."

Apparently it works like this: If you have an iPhone that receives the free Pandora music streaming service, a $1,200 auto navigation gizmo will detect the settings and pipe the music into your car. That's a lot of dough for "free" music, but expect the prices to fall (GPS systems once cost hundreds of dollars and now are $99 from dedicated device-makers or free from Google). What happens to the world of advertising-backed radio when you can stream any songs via an interweb for free? Um. Trouble.

Image: Valentina Photography. WSJ story behind the Murdoch paywall here.

Why commuters will love Apple's tiny videos

When we suggested in a BusinessWeek column that Apple's emerging tablet device could encourage commuters to begin working from home, UK Guardian tech editor Charles Arthur pushed back. "No, I'm not really seeing how the iTablet makes telecommutes happen more than a laptop and a second monitor, but anyway..." he wrote. Perhaps. But it's worth reviewing that idea, since what most people miss is we have just entered the uncharted waters of a new two-way video age.

It's 2010. Can you guess what device you're missing?

Quick, grab your gadget and make a video call. What? You can't do that from the subway stop or corner deli? A bit curious, isn't it, that in this modern age you don't have a video transmission device (unless you like walking around with a laptop flipped open near a WiFi hot spot).

That will change this year. Video has been with us for more than a century in some form or another, but it's only been two years since two-way video began appearing on most laptops -- and just four months since Apple stuck a video camera on iPods as small as sticks of gum. Society still has no cheap, simple, small, portable device that you can carry easily that captures and shares video via wireless (well, at least in the U.S.; in parts of Europe they can video-dial Jesus). The iTablet may be that device, since analysts predict it will hold a webcam; if not, another gadget will be. As sure as you can say telephones-never-really-needed-cameras, you better believe the version creep of manufacturers trying to outsell each other will soon put tiny webcams and video screens in most handheld portable electronics.

It's 2010. Do you still hate your commute?

As technology rushes to enable you to video-conference loved ones in Hawaii from any location, society also has a sore point that no market tool has adequately addressed: Your daily commute. In the United States, a land with 3.9 million miles of highways, 9 in 10 U.S. workers get to their employment via car, and they spend a collective 3.7 billion hours each year stuck in traffic. One of the fastest trends in the U.S. is workers leaving prior to 6 a.m. to beat the morning rush; in 2007 McDonald's announced it would open 75% of its U.S. restaurants at 5 a.m. to help those bleary-eyed souls make it there with coffee.

The psychology of why people feel they must work together probably goes back to ancient clans instinctively huddling for shelter, or the fact most communication is nonverbal ... but what if you could really see other people easily on screens, from anywhere, at any time? What if your visual community was anyone you can reach with a click?

Cheap, two-way portable video is finally coming. Travel is expensive, wastes time and stresses both individuals and the society that bears its energy, infrastructure and pollution costs. Hey. You connect the dots.

Image: Christian Spinelli

Why confusing products have high prices

The takeaway: Pricing is information. When information is missing, the price of something may be unfairly high. When information becomes prolific, prices fall, making margins unfairly thin. The only business defenses in our world of increasing information are either to quicken the pace of innovation (to move into areas where pricing information is unknown), or seek to cloud information to protect pricing.

So we cracked the cover to The Road to Serfdom by F. A. Hayek (bear with us, folks) and were reminded of the basic economic concept that pricing is a form of information transfer. Markets, you see, do more than move goods and services around to pay people money; they are actually collective hive minds of intelligence, transferring data on the relative value of things.

Which brings to mind the painful choice of extended warranties. You know, if you bought any big electronics for Christmas, the dissonance of being pitched a warranty by a slick salesperson. Part of you thinks you don't need it; another part worries, well, a neighbor's kid could throw a chair through that flat-panel TV, so maybe, yes?

Margins as friction

Economist Jodi Beggs explains it all with this quote from Richard Thaler and Cass Sunstein:

"The extended warranty is a product that simply should not exist. If humans realized that they were paying twenty dollars for two dollars’ worth of insurance, they would not buy the insurance. But if they do not realize this, markets cannot and will not unravel the situation. Competition will not drive the price down, in part because it takes the salesperson a while to persuade someone to pay twenty dollars for two dollars’ worth of insurance, and in part because it is difficult for third parties to enter this market efficiently."

Shouldn't exist? Well, yes. Most markets have enough competition that a $2 product priced for $20 won't stay alive for long; but a few don't. In the case of warranties, strange services offered only after you've purchased something else in the dark of an electronics store with little competitive information to guide you, the absence of knowledge allows margins to float to the sky. In this case, the friction that blocks comparative value data from competitors creates a sticking point of artificially high margins for the one company pitching the warranty.

The doctor's bill will not see you now

We don't mean to disparage the warranty industry; rather, simply to warn that price gouging of any kind always comes home to roost. Thaler calls this the point when consumers enter a "rip-off" stage of awareness. Healthcare is another vivid example. One could easily suggest the current debate over health reform is the angry reaction of a populous (or at least the liberal side of it) that has awoken to find skyrocketing medical costs are gouging society. Healthcare is really just one example of a broken competitive market; consumers don't pay the bills, insurance companies do, and the individual who receives care has no idea what the procedure, tests and physicians are actually charging. No information, no price competition, no check on rising costs.

The problem for organizations who sell such uncompetitive wares is the Internet, and more recently social media, provides new layers of information that push down on uncompetitive pricing. Your 2,000 peers on Twitter become a virtual Consumer Reports of reviews, warning you when services aren't what they seem. This pressure on margins has been around for a decade, and Chris Anderson has noted it most famously recently in his book Free. (We think Anderson followed the trend line too far; not everything will be priced at zero just as real estate prices in any bubble never reach infinity.)

Really, this push-and-pull is the entire competitive market at work. Companies of all stripes try to disguise their margins in order to raise them. Seeking profits is healthy, because the motive leads to growth and innovation. Yet those goods that are priced too high due to an absence of information will be forced to slide back to reality. As our new tools make value data more transparent, margins will be harder to come by. Competitors will have to respond by either increasing the pace of innovation, or finding new ways to cloud their value. Good luck, and watch out for that guy looking at televisions in Aisle 9 with a cell phone.

Image: Brooks Elliott

Decoding happiness

Much of marketing is focused on giving consumers crystal-clear messages. But what if people want to struggle a bit to digest the offer?

Some of our most compelling hobbies require decoding. The list is long: Crossword puzzles, playing the guitar, practicing soccer, learning a language, falling in love, running a race, advancing in a career, losing a parent, making love. The most joyous or memorable events of our lives require us to struggle a bit to understand what is going on, and we rarely "get it" on the first go. Twitter and Facebook, the hottest fads in the communication world, don't come with instructions and often befuddle new users for weeks. If you're good at your job, it likely took you a decade to get there. Learning to understand what is really happening is often part of the appeal, an instinct perhaps born from ancestors hunting or seeking mates in foreign clans in the field over the mountain.

Mouthing yes, eyeing no

NPR recently interviewed FBI agent Joe Navarro, a sleuth who specializes in decoding human body language to see what people really mean. Navarro suggests that humans, over millennia, became experts in shading the truth, and so we all must judge each other by watching the subtle signals of facial tics or body movement. A person who responds to you while raising one shoulder signals she is not sure of her answer; ask a friend to help you move furniture, and if he pinches his fingers over his eyes, his mouth may say yes but his hands are saying no. Physicians have been trained to learn that a patient, when asked about an ailment, should be watched for touching their neck; a little self-rub means they are hiding part of the truth.

We need to add up clues to understand our world because information flows toward us in fragmented bits, and the peers we would trust most often mask their motives because, well, surviving life is complex. Knowing that everyone shields the truth, we've all learned to decode. It's instinctive, required, and sometimes fun. So in the chess game of communications, perhaps it's worth a thought to give your audience a few layers to decipher, and let them expound upon your own hidden message.

Bonus stay or scholarship, just ahead

Who does this in marketing? Airlines and hotels with points programs that lead you to higher rewards. Multilevel marketing programs that engage salespeople by revealing layers. Catalog marketers who tailor offers over time based on what you've ordered in the past. Teachers, who provide tangled hierarchies of degrees to the students who unlock the most clues. Your boss, who hints at new power if you just keep hitting the goal.

Could any business do this for its customers? It's not completely direct, but you may snare more understanding from your audience if they remain curious about the happiness you can provide.