The relationship of consumers to technology has shifted in fundamental ways, according to Ted Cohen, managing partner of Tag Strategic.  Thanks to a variety of new technologies, the “physics of the media world” are changing—from a world in which attention was abundant and content was scarce to a world in which content is superabundant and attention is scarce.  With so many competing options, the individual’s attention is now the most valuable commodity.

     In the past, new technologies evoked a sense of wonderment—a sense of “Wow!” from consumers about what technology could do.  Eventually that response faded, and consumers began to feel empowered by what technology allowed them to do.  Today we have reached a new stage in which the main feeling among consumers is one of entitlement.  Consumers now say, “I want choices, I want them now, and don’t try to tell me how to get what I want.”

     This shift has been brought about through an array of technologies that expand choice by acting as time shifters (e.g., digital video recorders such as TiVo), place shifters (such as Slingbox, a device that links a home television through the Internet to a personal computer that can be located anywhere), connectors (e.g., Skype, which provides free voice connections globally over the Internet), filters and recommenders (e.g., Google, Technorati, and Digg), and a plethora of hardware devices for accessing and viewing content (e.g., personal computers, televisions, personal digital assistants [PDAs], mobile phones, MP3 players, DVD players, and video game players).

     In this world of ever-expanding choices, “quality” of content is no longer the critical factor in determining success.  What matters most now is relevance.  What users choose to spend time watching, listening to, or reading is not necessarily what is “best” or what is most heavily marketed to them; it is what appeals most to them.  A good example is Google’s "Top 100 Videos." This listing of popular video clips online consists mostly of anonymous or amateur material that is funny or offbeat but rarely reflects high production values.
 
     What marketers in this new world need to know is how people find out about what is available and how they make choices about what they find appealing. Lynda Resnick of Roll International noted that “the whole paradigm of marketing has changed” as a result of the new media environment. For example, Resnick’s company now allocates a “huge part” of its advertising budget to purchasing keywords on search engines such as Google (see "Google’s Ad-Words", From Mass to Personal, From Push to Pull Section).  According to Resnick, most ad agencies have yet to recognize and embrace the new media.  She believes, however, that a good marketer should be able to market a product effectively in this new media environment for one-tenth the budget that such marketing required previously.  Jordan Greenhall, CEO of DivX, noted that his company was able to grow to reach an audience of 180 million users on a marketing budget of zero by using the Internet’s viral marketing capabilities.

The Paradox of Choice

     Former U.S. Secretary of State Madeleine Albright recalled her experience in escorting a group of Czech citizens around the United States after that country’s “velvet revolution.”  One of their stops was a typical U.S. supermarket.  Albright’s Czech visitors initially were amazed by the proliferation of choices available to U.S. consumers, including 25 different types of mustard.  After a while, however, they began to ask, “Why does anyone need 25 different kinds of mustard?”  The Internet seems to provide the opportunity to have thousands of different choices for a single product category. How users are responding to this new abundance of choice is another facet of the evolution of the Internet.

     In his book The Long Tail, Chris Anderson argues that the expansion of choice made possible by the Internet has brought about a significant and unexpected shift in consumer buying behavior. The distribution economics of traditional physical media such as movies, records, CDs, and books have driven those businesses to be dominated by big hits and made it increasingly difficult for works that attract a smaller audience to survive. (This dichotomy was summed up by bestselling author James Michener, who was asked by an aspiring writer if it is possible to make a living through writing. Michener replied that “you can make a killing as a writer, but you can’t make a living.”)  In the digital world, however, things are different. The cost of maintaining inventory is far lower than in the physical world, and the reach of the Internet is so great that even obscure works can find an audience.  The result is that an online store that sells CDs, movies, or books can generate substantial sales from virtually its entire catalog—the “misses” as well as the “hits.” 

     How do consumers find the content they want, however, in a world of virtually unlimited choice?  Too much choice can be paralyzing.  In fact, there is evidence that when people are presented with more than a handful of choices, they tend to lose interest.²¹  Few people, if any, are interested in browsing through a store with 100,000 choices. 

     The challenge is to cut through the clutter of irrelevant choices and provide access to the particular alternatives that are of interest to a particular consumer.  Good search tools are part of the answer. Another element is traditional mass media advertising, which continues to play a role in creating awareness of products, which then motivates consumers to seek more information online. Chris Sacca, head of special initiatives for Google, noted that whereas the television and the personal computer have been in separate rooms in most U.S. households, that has begun to change in the past few years.  With the spread of WiFi networks and the increasing popularity of laptops, televisions and personal computers have moved into the same space, and users often are using both together.  We now live in a world in which multitasking is the norm, especially for younger people, who operate in what Peter Hirshberg described as a state of “continuous partial attention.”

     Google has been able to document the interaction of the new and old media in its search statistics: It has found a strong relationship between specific televised ads and a spike in searches on the topic of the ad.  The relationship between online and offline behavior operates in both directions, however.  An analysis of Google search topics found that there was a high degree of correlation between the popularity of searches on the titles of theatrical movies before their release and the success of those films at the box office.  The research showed that the number of searches on a movie title during the week before the film’s release was 86 percent accurate in predicting ticket sales on its opening weekend.  The number of searches six weeks before the film’s opening was 82 percent accurate in predicting its performance at the box office.  The analysis found a similar correlation for new music releases. 

     Deven Parekh, managing director of Insight Partner Ventures, described another approach to aggregating demand for niche products.  Netshops is a collection of online specialty shops, each of which provides access to an extensive selection of products within a single, narrowly defined category such as dartboards, barstools, water fountains, or rocking chairs. Each shop has its own identity, but all of the shops share a common “back end” with other shops for order processing and fulfillment.

     The most influential source of information about products and services, however, comes, as always, from word of mouth: recommendations from trusted sources—friends, family members, or acknowledged experts.  Online communities made up of people with common interests are powerful concentrators of this kind of information. Individual travelers who are willing to share their personal experiences with airlines, hotels, and so forth are likely to be more trusted and have greater influence than professional travel agents. Research has shown that people today are less likely to trust institutions and more likely to trust “people like me.”²²

Building Trust

     How does one decide who is trustworthy in the online world? The key, according to John Clippinger, senior fellow at the Berkman Center for Internet and Society at Harvard Law School, is to develop “reputation systems” that can be used to establish trust.  According to an analysis by researchers at the University of Michigan School of Information, such systems are vital in an Internet environment in which strangers want to do business with each other:

When you interact with someone over time, the history of past interactions informs you about the other party's abilities and disposition. You learn when you can count on that party, [and] the expectation of reciprocity or retaliation in future interaction creates an incentive for good behavior. Robert Axelrod refers to this as the “shadow of the future,” an expectation that people will consider each other’s past in future interactions. That shadow constrains behavior in the present.

Between strangers, on the other hand, trust is much harder to build, and understandably so. Strangers do not have known past histories or the prospect of future interactions, and they are not subject to a network of informed individuals who will punish bad and reward good behavior toward any of them. In some sense, a stranger’s good name is not at stake. Given these factors, the temptation to “hit and run” outweighs the incentive to cooperate, since the future casts no shadow…. Reputation systems seek to restore the shadow of the future to each transaction by creating an expectation that other people will look back upon it.²³

     One important element of eBay’s success has been its feedback system, which uses input from users who have done business with buyers and sellers to rate them on their reliability. Buyers and sellers know that they will be rated on every transaction and recognize the importance of maintaining a positive reputation. Hence, sellers are motivated to describe accurately the items they are selling and send them promptly to purchasers, and buyers are motivated to pay punctually for items they purchase. The key to the power of the system is the element of reciprocity. 

     Zoë Baird, president of the John and Mary R. Markle Foundation, pointed out that one way trust traditionally has been created in the marketplace has been though laws that establish a clear framework for commerce.  As new tools for building trust online are being developed, however, there may be less need for legal protections.   Another area where legal action has been regarded as necessary is in protecting individuals against the excessive power of monopolies.  This protection has been important, for example, in telecommunications and broadcasting—industries in which relatively few, very large players have dominated.  Is concern about monopoly power still relevant given the proliferation of communication channels online and the ability of individuals to express themselves on an equal footing with traditional media?  Clay T. Whitehead, distinguished visiting professor of communication policy at George Mason University, expanded on this point by noting that he had spent many years working to break down monopoly structures in telecommunications and the media, but now much of this structure appears to have been “blown away” by competition in infrastructure and the new media.  There may be less need now for government regulation, particularly content regulation, than in the past. Net-based trust systems may be more effective protectors of the public interest than traditional government regulators.  As Federal Communications Commission (FCC) Commissioner Robert McDowell asked, do questions of media ownership still matter, or are we trying to put a ball and chain on a dinosaur? 

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