The Bankwatch

Tracking the consumer evolution of financial services

Posts Tagged ‘Umair Haque

The coming media crisis and parallels with the financial crisis


A general thread that has been building for me for some years now is highlighted in a few things I have seen recently. The thread is my hatred of advertising and in particular online advertising. For me it lies in the same category as junk (paper) mail except worse. I can simply throw paper junk mail out as one package, so it is not intrusive. Online advertising is horribly intrusive because it is pervasive. I use lots of things to ensure my online experience is minimally interrupted by ads

In 2004 people were asking about blog business models. Now it is social network business models. I have suggested other ways to deal with business models, but the mob continues to aim directly at advertising as the answer. It will pollute the web, and result in the opposite result than what is desired. It will not bring sustainability for them using advertising.

So what happened this week.

  • twitter volumes are already dropping. Pick any topical topic and search it on twitter – result 80% of the tweets are re-tweets of the topic. Its a gigantic echo chamber. In fact the next question – how many of those re-tweets were someone with a vested interest, a professional marketer, or a PR company? The theoretical value of wisdom of crowds does not allow for gaming the system. The black swan of twitter search.
  • the volume of requests to me at this blog for linkbacks, blogroll links and outright requests for ads is increasing significantly. That will never happen btw. However it is indicative of the desire for ‘social media’ results
  • A good friend who despite my recommendations still uses hotmail (now windows live). This persons entire contact list and archive of emails were deleted and it turns out this person not alone. Some kind of scripting virus inside hotmail launched by making the wrong click and signing up for something let the virus in. The clue was emails to all the contacts notifying my friend was happy with some TV or the like. Needless to say my friend is now using gmail exclusively but its a bitter lesson.
  • techcrunch reported on the real evil of ad networks online and the significant money being made. Its a long post, but the key is that no-one is generating any real value here. Individuals are getting rich and that is all.

So what is the point of these seemingly unrelated observations especially as I am a devout proponent of the value of internet. What I am against is traditional interruption advertising coming online. It pollutes the medium and hinders the genuine creation of new and valid business models.

Today I read Umairs post at Harvard and that solidified it all for me (Umair does that). He points to the coming online crisis that is the online version of the subprime crisis. Readers of this blog get the sub prime crisis. The coming online crisis is one of trust, and realisation that online activities require security and protection yet something more which is still to be invented – control. It will be a crisis and it will be a broad based internet crisis of confidence. The result will be serious and cause serious grief for banks and others who have come to rely on online for servicing.

The parallels with the financial crisis are interesting. The financial system was getting better and better at recycling money and the convoluted networks that were built lost sight of the origin of the credit instrument, and the underlying risk. Causes were lack of transparency, shadow markets, rapid expansion, and mis-allocation of risk amongst others. In the case of the online advertising market, there are similar attributes. Transparency is non-existent in most cases, because there is no way to know who is behind those ads. Shadow markets and rapid expansion – ditto. Mis-allocation is interesting. I avoid online ads because they are interruptive. At a deeper level, they are mis-allocation of resources away from user experience and towards the requirements of a stupid ad server that is busily collecting data on you. The value is highly one-sided – worse the server is gather data that may or may not be of any value. Internet is simply clicks – do clicks imply desire, need and future purchase patterns?

Relevance to Bankwatch:
Smart banks and others will look at the embedded value in the customer base they have and define models that add value to those people, not spam them. What is known about your customer base, and what do your customers actually want. Traditional advertising models assumes customer needs – internet models will (I believe) enjoin the customer to participate in the definition of what they need and in return protect them (the customer) from spam advertising. One example is the promise of VRM. But it is only one – others will be developed, and will be supported by powerful authentication tools.

Innovation is another loser in this coming crisis, or as Umair notes unnovation. In advertising land, innovation is all about finding ways to get inside peoples click patterns and drive ad revenue. There is not value created for the majority of consumers (90% + who do not click), nor for merchants who actually desire long term client loyalty.

This has turned out to be a negative post, but really it is intended to provoke thinking beyond online advertising and ad servers. Which innovations will align customer advocates and merchants in a genuine and trusted manner?

Written by Colin Henderson

November 12, 2009 at 21:57

Ken Lewis – where are you getting your political advice?


Building on a post the other day about BofA, you might think its time to single out Ken Lewis here and his apparent inability to read the obvious.  [hat tip Paul].

It has been two weeks since those incredibly painful hearings with the House Finance Committee where no-one could doubt that corporate jets are the political hot potato of the day, right behind bonuses being paid by government bailout money.

Well this piece adds visuals with the rented bling-mobile after a ride on one of the most expensive corporate jets in existence.  Add the almost $4bn in bonuses referred to at the end of this video which represents almost 25% of the bailout, and you have a serious lack of political awareness going on from the top at Bank of America.

Relevance to Bankwatch:

Well I have a different take. Umair speaks of the need for a new corporate DNA.  Here and recently with a manifesto.

Umair is really trying amongst several other things, to address the traditional corporate and customer positioning and associated information control approaches that have existed.  They all fail in internet land.

  • The notion that you know more than the market is flawed.
  • The notion that by not saying anything means that it is not known is flawed.
  • The notion that you can answer criticism with rationalisations to prove you were right is flawed.

Bank of America have not adopted a new DNA at all it appears so their actions depicted in the video are precisely what is expected of an old DNA bank.

In fairness Lewis lives in Charlotte, and I don’t know how he gets his advice.  Who is responsible for monitoring the political sphere and advising him?  As ABC points out its only $444 to fly from Charlotte to NY.  Would that be so hard during these times?  Is he getting the right advice and not listening?  Time will tell.

I refer to my post last week comparing the fate of the telcoms in the dot com crash to the banks.  It refers to the outcomes for the telcoms, and one outcome was that none of the senior executives of the telcoms survived.  BofA are not doing a good job of refuting that lesson.

incidentally, i don’t see Wells Fargo falling into this trap anymore.  Geez we have Obama running around in a 50 car convoy when he hit Canada last week for a 3 hour visit, and he is still able to carry off that he has a believable message for the times and appear contrite.  BofA …  its just not that hard.

Bank of America is a great bank but these are not the best of times.

Written by Colin Henderson

March 1, 2009 at 23:36

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