WASTE NOT, GROW NOT

What follows is authored by Bob Hoffman. It bears repeating here over and over again. Bob is author of the popular “Ad Contrarian” blog, named one of the world's most influential marketing and advertising blogs by Business Insider.  His recent book, "Marketers Are From Mars, Consumers Are From New Jersey" is a must read (buy it at Amazon). 

There's a restaurant in my neighborhood that's very popular.

You can go there any evening about 7 pm and I can predict with absolute certainty that every table will be occupied and there will be 80 people there. But I can never predict which 80 people it will be.

It's the same with toasters. I can tell you with absolutely certainty that tomorrow there will be 1,500 toasters sold in the United States. But I have no idea who will buy them.

Also tomorrow there will be about 500,000 t-shirts sold (I'm making these numbers up.) But who's going to buy them? No idea.

Marketers used to deal with these uncertainties in a reasonable but wasteful way. We would use experience and knowledge of the market to anticipate the type of person who would be most likely to eat at a restaurant, purchase a toaster, or buy a t-shirt. Then we would direct advertising at these types of people.

Because we used mass media, this media strategy had the disadvantage of being wasteful. Most people we reached would not be in the market for, say, a toaster.

But it also had three advantages: First, we would reach just about everyone who we thought would be looking for a toaster. Second, we reached an awful lot of people who we did not think were interested in a toaster, but were. And third, it reached just about everyone who would someday buy a toaster.

Advertising has changed. Now we believe we can predict exactly who will be buying a toaster tomorrow. We believe we can identify not just the most likely group of people, but the actual individuals.

All we have to do is follow them around the web and find out where they've been, collect the  data and soon we'll know when they're ready for a toaster.

The idea is to make individual targeting so precise that it replaces demographic likelihoods as the basis for media strategy.

So far this has been a spectacular failure. Each of us is currently inundated with dozens, if not hundreds, of online messages a day -- banner ads, emails, social messages, etc -- that are assumed by  marketers to be particularly relevant to us and reflective of our individual purchasing needs and behaviors. We pay almost no attention to any of them. They are essentially invisible.

The math tells the story. A generous number for display advertising is that it generates 8 clicks in 10,000 exposures. A generous number for Twitter interactions is 4 engagements in 10,000. It's hard to get much closer to zero.

We are thinking like direct marketers, not brand marketers. We are ineffectually using "precision targeting" to try to engage the perfect individual, and by eschewing mass media we are harming our brand in three ways.

1. We are not reaching those within our target segment who are not active on line or whose data we haven't mined.

2. We are not reaching the unexpected toaster buyers, of whom there are legions. 

3. We are not building a brand. Mass media advertising may be "wasteful" by the nearsighted standards of digital and direct marketers. However, some very wise people have pointed out that the nature of what we call "waste" may, in fact, be the very stuff that brands are built on.

Think about it this way. In 2002, Apple spent tens of millions of dollars in mass media to advertise the iPod. There were hundreds of millions of people who were exposed to iPod advertising who had absolutely no interest in an iPod. After 14 months, advertising had reached hundreds of millions of people, but Apple had sold 600,000 iPods.

Many marketers would call the enormous amount of money that Apple spent promoting the iPod to the uninterested "waste." But was it?

Today hundreds of millions of people who had no interest in an iPod own iPhones. Isn't it more than likely that the iPod advertising of 2002 had significant impact on the iPhone buyers of 2007 and beyond?

• Didn't it make the Apple brand more appealing?

• Didn't it raise interest in mobile devices, particularly Apple mobile devices?

• Didn't it set the stage for the phenomenal success of Apple in the mobile device category, that made Apple the most successful company on Earth?

Or think about it this way. Why have almost all the brands in your supermarket been built with "wasteful" mass media advertising and none with the "precision targeting" of online advertising?

Understanding business is understanding that markets don't move in straight lines, people don't think in straight lines, advertising doesn't work in straight lines.

If you're a brand marketer and you want to grow, you have two choices. Be wasteful or be invisible.

FROM A SECURITY PERSPECTIVE, IF YOU'RE CONNECTED, YOU'RE SCREWED

John Brennan, director of the notoriously secretive US Central Intelligence

Agency (CIA) has said that no one is safe from hackers only a few months after his personal email account was breached and the contents leaked online.

"The cyber environment can pose a very, very serious and significant attack vector for our adversaries if they want to take down our infrastructure, if they want to create havoc in transportation systems, if they want to do great damage to our financial networks," he said.

When asked whether other nations have the capability to 'turn off the lights' of the US he said: "I think fortunately right now those who may have the capability do not have the intent. Those who may have the intent right now I believe do not have the capability.

CLOUDY WITH A CHANCE OF HACKING

What do Apple, Amazon and Microsoft have in common? 

The answer: All three technology giants, considered the gold standard among cloud computing providers, have suffered the ignominy of being breached by hackers.

Apple’s “celebgate” incident exposed personal photos of its celebrity iCloud users and made unwelcome news headlines last year. 

UK technology provider Code Spaces was forced out of business last year after hackers tried to blackmail it and subsequently deleted crucial data from its Amazon Web Services-hosted cloud storage. 

In 2013, an expired SSL certificate in Microsoft’s Azure cloud service gave hackers the chance to bring down the Xbox Live and a raft of other cloud-hosted services.

Cloud security risks are rising, with attacks growing at 45% year-on-year globally, according to cloud security firm Alert Logic. In the next five years, $2 billion will be spent by enterprises to shore up their cloud defenses, according to Forrester Research. 

First time cloud users can be most at risk, simply because of unfamiliarity with the new environment and the added burden of having to grapple with a new way of managing users, data and security.

Credit:Rajesh Maurya, Fortinet / Financial Express

HONEY, WHO'S WATCHING THE KIDS?

Security flaws have been discovered in smart toys and kids' watches

 Rapid7 researchers have unearthed serious flaws in two Internet of Things devices:

• The Fisher-Price Smart Toy, a "stuffed animal" type of toy that can interact with children and can be monitored via a mobile app and WiFi connectivity, and
• The HereO, a smart GPS toy watch that allows parents to track their children's physical location.

In the first instance, API calls from the toy were not appropriately verified, so an attacker could have sent unauthorized requests and extract information such as customer details, children's profiles, and more.

"Most clearly, the ability for an unauthorized person to gain even basic details about a child (e.g. their name, date of birth, gender, spoken language) is something most parents would be concerned about.

While names and birthdays are nominally non-secret pieces of data, these could be combined later with a more complete profile of the child in order to facilitate social engineering or other malicious campaigns against either the child or the child's caregivers."

In the second instance, the flaw allowed attackers to gain access to the family's group by adding an account to it, which would allow them to access the family member's location, location history, etc.

Rapid7 has been working with the companies to correct the problems.

This further highlights nascence of the Internet of Things with regard to information security. While many clever & useful ideas are constantly being innovated for market segments that may have never even existed before, this agility into consumers's hands must be weighed against the potential risks of the technology's use,

Consumer brands must pay greater attention to application security when building smart devices. When a toy becomes connected to the Internet, a child is exposed to a potentially hostile environment. Regulations have not yet caught-up with the need for good application security.

Excerpt from Help Net Security, authored by Zeijka Zora