Today the United States Supreme Court will hear oral arguments in the case of King v. Burwell, the outcome of which could, according to some analysts, result in the end of Federal subsidies for recipients of health insurance under Obamacare, which in turn may cause the legislative foundation of the system to collapse. Regardless of where you fall on the political spectrum, that millions of people—around 9 million, according to government estimates—may suddenly find themselves unable to afford health insurance should give you pause.
If you find the tortuous legal arguments for and against Obamacare brain-rattling, you’re not alone. The best summation I've found of what’s at stake in the case comes courtesy of Emily Bazelon in today’s New York Times. Money quote:
If the plaintiffs prevail, the federal government will not be able to provide subsidies to anyone buying health insurance through a federally-run exchange. Many of those nine million people would presumably pull out of the exchanges, driving up the prices for whomever is left, and the exchanges could collapse. That’s what is concretely at stake in this case.
The crux of the case rests on whether the court decides that the IRS is allowed to grant health insurance subsidies through the Federal exchanges, which are currently insuring citizens in those 34 states that opted out of setting up state-run exchanges, or only in states that are already operating their own exchanges. The justices’ interpretation of the wording in the Affordable Care Act is key; if they interpret the language literally, then they may rule that the Federal exchanges are disallowed under the law as written; if they interpret the language broadly, then the court will effectively endorse the IRS interpretation of the law.
Whether your reaction is "OMG!" or “Good riddance,” you should care about the outcome. How will the court decide? Reading SCOTUS tea leaves is generally as easy as predicting the phases of the moon, particularly since the Court has become a political battleground, with the Antonin Scalia-led wing typically squaring off against the wing led by progressive hero Ruth Bader Ginsberg. Reporting on today’s oral arguments, Slate’s Mark Joseph Stern argues that Justice Anthony Kennedy, so often the swing vote in the Court’s liberal-versus-conservative seesaw, once again finds himself the fulcrum:
“If the Supreme Court struck down the federally facilitated exchanges, Kennedy mused, that would put extreme pressure on the states to set up their own, raising a ‘serious constitutional problem. In order to avoid such a problem, Kennedy seemed to suggest, the court should side with the government and permit the federally facilitated exchanges to continue. Alternatively, Kennedy implied that even if Congress did intend to force states to set up their own exchanges, the court should strike down that provision to protect the federally facilitated exchanges. Finally, Kennedy mused that Congress could not have intended to coerce state legislators to set up their own exchanges, knowing such coercion would be unconstitutional.
Other analysts, meanwhile, think Kennedy is more likely to vote against the ACA, which leaves Chief Justice John Roberts as the swing vote. Will the Chief Justice save Obamacare's bacon once again? Only Roberts's conscience knows for sure. Meanwhile, conservatives who hope for a plaintiff outcome may find themselves in “Careful what you wish for” territory. As the Atlantic’s Olga Khazan points out, should the plaintiffs prevail, those 9 million people who will suddenly find themselves without health insurance may blame those Republican governors who refused to set up state-run exchanges:
“Most people who will be affected by this case do not realize they will be. According to a January poll by the Kaiser Family Foundation, 56 percent of Americans say they have heard 'nothing at all' about King v. Burwell. In fact, most people do not know what kind of exchange their state uses, which suggests that these people might be blindsided by the ruling.”
Polls repeatedly show that, even as a majority of citizens disapprove of Obamacare in toto, individual provisions of the law enjoy broad popularity. Political fallout from a government defeat in the SCOTUS ruling may, in fact, find GOP representatives in red states scrambling to pass legislation to save Obamacare for those millions of voters affected by a plaintiff’s ruling—thereby ensuring that Obama’s signature legislative achievement remains the law of the land. This, friends, is the definition of irony.
The Court is set to issue a ruling on the case in June. Stay tuned.
Last week, the Federal Communications Commission voted along party lines to regulate the Internet as a public utility, upholding the principle of "Net Neutrality” and thereby ensuring that the internet won’t become a sleek autobahn for well-heeled content providers and a goat path for everyone else. How you feel about this ruling falls generally along three possible responses.
The optimist’s view: The FCC’s ruling represents a victory for grassroots activists who demanded free and unfettered access to the internet. It was a rare, welcome victory for the “little guy” over broadband providers such as AT&T, Comcast, and Verizon, who wanted to turn the internet into a pay-for-play cash machine. This quote from Even Greer, campaign director for the activist group Fight the Future, in a recent New York Times article sums up the optimist's view:
“This [ruling] shows that the Internet has changed the rules of what can be accomplished in Washington.”
The pessimists view: The FCC’s ruling was the result of corporate pressure applied by such behemoths as Amazon, Facebook, Google, and Microsoft, the interests of which just happened to align with those of the little guys. If Net Neutrality didn’t stand to directly impact the bottom lines of these large corporations, they wouldn’t have thrown their lobbying muscle behind it, and the principle might have been as dead as fried chicken. This view is perhaps best summed up by Gawker’s Alex Pareene:
“We have net neutrality for the same reason that copyright terms will be extended indefinitely forever and the Defense Department will keep being forced to buy incredibly expensive planes that don't actually work: Because a large industry had a strong opinion on the subject.”
The libertarian view: The internet isn't broken, and the FCC’s ruling represents unconscionable government meddling in free enterprise that will stifle innovation and harm consumers. This statement from Jim Cicconi, AT&T’s Senior Executive Vice President-External and Legislative Affairs, sums up the libertarian view:
“We will hope that other voices of reason will emerge, voices who recognize that animosity, exaggeration, demonization and fear-mongering are not a basis on which to make wise national policies.”
Rule of thumb: Whenever one side of a debate accuses the other side of “demonization and fear-mongering,” you may rest assured that the accusers are fully aware that their position is untenable. That the libertarian view is suspect should be obvious. Given that the vast majority of American consumers have only a single choice of broadband providers, and that the United States has fallen behind other developed countries in both broadband speed and affordability, lack of regulation has demonstrably not resulted in more innovation and choice for consumers. If anything, the ruling will force broadband providers to actually compete for consumers on features and price, rather than extort content providers for access to the fast lane.
But whither the broadband companies? Will Title II enforcement, a rule that was designed to regulate Ma Bell back in horse-and-buggy times, really stifle innovation and turn the internet into the connected equivalent of an IRS audit? Typical of the naysayers is this May 2014 piece by Anna-Maria Kovacs, which argues that, because the smart phone killed home phone service, which is regulated, so too will regulation kill the internet. Money quote:
“Consumers are fleeing [home phone service] in droves. In 1996, when they had no other choice, 94 percent of American households relied on [the home phone] as their sole means of telecommunications. Today, fewer than 5 percent do so. That is not surprising. There are things regulators do well, but innovation is not one of them…regulations that were designed for a rotary phone connected to a 64 kilobit switched-access line would be disastrous.”
But no one is expecting the FCC to enforce Title II down the line—FCC chairman Tom Wheeler is already on record as stating that the commission won’t regulate prices, for example. Kovacs argues that deregulation has spurred broadband investment, and that US consumers thus enjoy superior connectivity to, say, those unrepentant socialists in Europe. It may be true that the US has invested more heavily in broadband, but that investment hasn’t resulted in lower prices or faster speeds for consumers; quite the opposite. As this New York Times piece points out:
“Downloading a high-definition movie takes about seven seconds in Seoul, Hong Kong, Tokyo, Zurich, Bucharest and Paris, and people pay as little as $30 a month for that connection. In Los Angeles, New York and Washington, downloading the same movie takes 1.4 minutes for people with the fastest Internet available, and they pay $300 a month for the privilege...”
What deregulation has spurred is high prices, lack of choice, and rampant consolidation. Does Kovacs or any other broadband apologist really believe that the proposed merger between Comcast and Time Warner, for example, will result in anything other than higher prices and poorer service? Absent regulation, Comcast is already arguably the most hated corporation in the country. Will overturning the FCC’s ruling suddenly turn them into Apple?
So am I an optimist on net neutrality, or a pessimist? The truth certainly lies in the middle. No one believes that, in supporting the FCC's ruling, Amazon, Facebook, and Google have anything but their own selfish interests in mind. Did the lobbying efforts of these giant corporations turn the tide for Net Neutrality? Of course. In other news, the sun rose today. But we can’t simply dismiss the impact of those four million people who petitioned the FCC in favor of neutrality. President Obama heard them, at least, which is why he voiced support for the principle prior to the vote.
No one will ever accuse Amazon, Google, and Facebook of altruism. It’s helpful to remember, however, that even these gargantuan corporations were once themselves scrappy upstarts that prospered precisely because they enjoyed unfettered access to the interwebs. By enshrining Net Neutrality as the law of the land, the FCC is ensuring that the next Google enjoys the same advantages as the current one.
Still, Net Neutrality advocates can hardly rest on their laurels. The FCC has yet to propose remedies for the broadband industry; toothless enforcement is still possible. Republican legislators are already crafting legislation designed to block the ruling. And the issue will soon fall to the courts, as broadband providers sue the government to prevent enforcement of the ruling. It therefore remains vitally important that those millions of voices continue to be heard on this issue. The internet is a public trust, as crucial to commerce in this century as the interstate highway system was to commerce in the last one. In this instance, I’ll stand with the optimists.
I was pleased and gratified to read the responses to my previous post on McDonald's recent "Signs" ad (if you missed the original article, you can find it here). The comments were varied and interesting enough that I thought it might be fruitful to parse a few of them in a follow up post.
Reader responses on the merits of the McDonald's ad leaned toward the "agreed with me" response, with many readers agreeing that the ad seemed inconsistent with their daily experiences with the brand. This reader, for example:
"I believe it was Marshall Mcluhan, in his book "The Image Makers" who wrote, "The medium IS the message." The medium, in the case of McDonalds, is much more than any electronic outlets which purvey their message. It is the person behind the counter who takes your order. It's the building and grounds you walk into, or drive through to get your order. It is, in short, all of the people and things which touch you in the course of your doing business with them."
"So many companies forget that culture and brand are intertwined. Ultimately the customer experience dictates how they think about you and with social media channels (unlike in the past) how a customer thinks about you is easily shared and magnified."
This reader thinks I may have coined a phrase:
"Some people believe in their stories, however, they fail to align their behavior with their stories. I guess we have a new term for that type of story - a McStory."
A reader highlights the importance of trust as an essential story element:
"[The McDonald's ad] is a prime example of trying to piggyback storytelling onto a shaky trust platform. Storytelling and content precede trust and contribute to it, but they do not create it by itself. If trust isn't rock solid, stories will undermine it better and quicker than anything else can...Rather than this story, McDonald's would be better served spending its money on addressing the fundamental reasons why people are turning away. Then, way down the track, they can have the luxury of telling stories."
While this reader, a software User Interface programmer, makes a compelling connection between brand stories and UI design:
"I was recently thinking something similar about user interfaces. You can't fix a flawed UI by grafting on another set of pretty pixels, not if the flaws come from not understanding customer needs in the first place. User interfaces today are in many (most!) ways an extension of marketing. We build these huge apps with so many features, and then graft on a navigation scheme that reveals the features in all their snarled, hierarchical glory to make the sales pitch easier. It's UI as slide deck...The culture of "build a feature and they will come" is entrenched."
A few readers wrote in to take McDonald's to task:
"McDonald's...business model does not allow for quality food. Being a publicly traded purveyor of fast food, there is nothing they can do to improve the quality or sourcing of their food.[The company] has forever lost customers who watch what they eat. There is too much information out there."
Other readers, however, commented to defend the company:
"The 'Signs' story shows me how McDonald's views themselves. It's a great company with a great, customer sensitive product line. It was very successful."
While one reader pointed out that the ad was just one piece of the company's rebranding effort:
"While I agree with the importance of holding a consistent line between the reality and the story, this is just one ad of a huge campaign to try and re-build the damaged brand. The company has made it clear that there will be initiatives to transform the fundamentals of the business. This is ad is just the start, so I believe it's unfair to judge the brand on the basis of just this. Let's check back in six months and see what progress McDonald's has made."
One reader accused critics of the ad of taking easy shots:
"I think there are certain companies (Wal-Mart would be another) that are trendy to slap. This article starts by throwing stones: 'more than just purveyors of empty calories.' even the comments attached to this story show that people are not fans of the company, but continue to use it (my kids love the Happy Meals). Maybe this campaign failed because it wasn't very good, maybe it failed because people didn't buy in, but in reality I can make an argument that McDonald's is a sturdy member of [these] communities and offers a product people have enjoyed for decades...not sure why that is a negative-- even if they are not hitting the heights they have in the past."
And finally, a few readers pointed out the obvious point that I missed in the original article:
"This [ad] created questions. But in the end, we watched and are talking about it."
A few readers also challenged me to name examples of companies who are successfully telling brand stories sincerely, consistently, and with resonance. Look for exploration of that topic in a subsequent post. And as always, thanks for reading.
Please enjoy these colorful sea creatures (h/t Kottke):
Have a comment? Email me!
As if we needed any more proof that consumers are concerned about privacy only so long as it doesn't cost them money or time to protect it: The Wall Street Journal reports that AT&T, which tracks users' browsing history through its fiber-optic internet service, allows consumers to opt out of browser tracking by paying an extra $29 a month. Sounds like a deal, right? Not according to the Atlantic's Greg Ferenstein, who reports that few AT&T customers pay for the service. Ferenstein quotes a TechCrunch report to argue that privacy is essentially a 20th Century invention:
Privacy was not an issue in hunter-gather societies, because it wasn't even a possibility. “Privacy is something which has emerged out of the urban boom coming from the industrial revolution,” explained Google’s Chief Internet Evangelist Vint Cerf at a Federal Trade Commission event in 2013. "Privacy may actually be an anomaly."
Consumers' apparent disregard for the sanctity of their personal information shouldn't surprise; to paraphrase John Oliver, Apple could insert the entire text of Mein Kampf into iTunes' Terms & Conditions and everyone would still click "Accept." Does our ancient-yet-modern disregard for privacy mean that marketers can just track whatever they want, and sell the data to whomever they want, and skip along merrily down the road? Quoted in eWEEK, technology analyst Ken Hyers cautions that consumers may soon wake up:
"I believe that the balance between information collected and consumers' benefit from this collection, over the last couple of years, has shifted dramatically in online companies favor," said Hyers. "And I believe that there is a danger that the consumer will begin to benefit less from this ongoing shift." We've reached a point, Hyers believes, where "regulations governing how this information is collected and used, including explicit and easy-to-understand information about exactly what is collected, are necessary."
How can marketers continue to collect information while acting responsibly? Best practice in online data management calls for transparency in the value exchange: Make explicit what data you're collecting, and make explicit how the consumer will benefit by giving up said data. Everybody's happy!
As for me, I'm an open book. I'll tell you anything--as long as there's something in it for me.
Have a comment? Hit me up.
One of the things I like to do with my free time is to read dense, 2,900-word opinion pieces by McKinsey consultants-- I read them so you don't have to. A particular February 2015 piece by Jonanthan Gordon and Jesko Perrey resonated with me because of its emphasis on the necessity of storytelling in marketing. At Phabulousity , we're big believers in the power of storytelling. I'd argue, in fact, that all of your marketing communications, through every channel and touch point, must tell a sincere, consistent, and resonant story. Fall short on any one of these essential elements, and consumers will dismiss your efforts-- and maybe even take their business elsewhere.
The McKinsey article is predicated on the dawn of a new "golden age of marketing"-- a familiar premise, considering that marketers have been predicting a new "golden age of marketing" since at least the Pleistocene epoch. Amidst the usual nods to big data, the digital economy, and organizational change is a plea to marketers to embrace storytelling. Money quote:
Creativity is important in storytelling, obviously. But creativity is also cheap-- every successful marketing agency can provide it. What's in short supply in marketing today are the elements of sincerity, consistency, and resonance. To tell a believable story, you must balance these elements so the story rises organically from the customer experience, rather than allow an agency to graft on a story at odds with what your customers know to be true.
For an example of a story that doesn't pass the sniff test with consumers, consider McDonald's "Signs" commercial that debuted during this year's Golden Globe awards in the US. In case you missed it, here it is:
Even as marketing reaches new heights with technology-enabled measurement, the importance of the story hasn’t diminished. But ways to tell it are morphing continually as the stuff of storytelling encompasses richer digital interactions, and mobile devices become more powerful communications tools. In this world, creativity is in greater demand than ever.
Many commentators found the ad heartwarming and effective:
While many others found it galling or worse:
On the surface, the ad was well-crafted, telling a clear and compelling story: At McDonald's, we care. We're more than just purveyors of empty calories; we're a part of your community, too. To many viewers, however, something seemed off. The element of the ad that most divided the commentators was, in a word, its sincerity.
No one was claiming that the ad was dishonest, or that the signs were photoshopped or otherwise created specifically for the ad. McDonald's even set up a Tumblr to tell the stories behind some of the individual signs. What the naysayers doubted was the ad's sincerity-- they simply didn't believe that McDonald's cared as much as the ad implied. When the ad aired it set off a tweet-storm, with commentators assailing the company for everything from its wage practices, to the quality of its food, to its exploitation of such national tragedies as 9/11 and the Boston Marathon bombing. Despite public opinion being evenly divided, McDonald's couldn't shake the perception that a company rife with falling sales and a poor public image had stumbled once again.
My take: The "Signs" add failed not on sincerity, but rather on the elements of consistency and resonance. The ad was sincere; the signs were real, after all, and most McDonald's restaurants are franchises, with owners who care very much about the communities in which they operate. But the ad did highlight the inconsistency of this message, as consumers seldom experience this level of caring in their daily interactions with the brand. And the ad failed to resonate with these same consumers-- particularly Millennial consumers who prefer quick-fresh options such as Chipotle to McDonald's fast-and-greasy fare-- who sensed that the "we care" story was grafted onto the brand rather than rising organically from the way it conducts business.
For a marketing story to pass muster with consumers, the story must succeed on these three fundamental elements:
New media also dictate that marketers relinquish control of the story as digital interactions with customers become more frequent. Customers want to interact with stories and modify them on social media. Following the kinds of story rules that once made board members and CEOs comfortable is no longer feasible. Social-media programs are consuming a larger share of many marketing budgets. A number of major consumer companies are using interaction centers to monitor and participate in social-media conversations as they develop, sometimes including the promotion of discussions on corporate social-media channels.
This quote is on the money. To craft sincere, consistent brand stories that resonate with your customers, start by listening to them. What do they love about your brand? What are the most successful elements of your customer experience? What must you do to improve the experience? Be certain to fix any outstanding issues, and then tell a story that can withstand the toughest barbs from the Twitter-verse. Are we on the cusp of a "golden age of marketing?" Who knows? There's no reason, however, why you can't jump-start your own golden age of sincere, consistent, and resonant storytelling.
IT security pros and tech geeks are apoplectic over the news that laptop manufacturer Lenovo purposefully installed malware on its laptops to serve advertising to its unsuspecting users. The program, called SuperFish, contains a security flaw that could allow any knowledgeable and ne'er-do-well hacker to steal passwords, bank credentials, and other valuable information from your laptop while you're scrolling through Facebook posts at Starbucks via their free wi-fi.
As if that wasn't bad enough, the program also monitors your online activity, uploads your personal information to its servers, and injects intrusive advertising on web sites you visit. Many cyber-security experts consider the Lenovo-SuperFish trojan horse to be the most egregious violation of consumer trust since the 2005 Sony DRM scandal. Says cyber-security expert Marc Rogers:
This is unbelievably ignorant and reckless of [Lenovo]. Its quite possibly the single worst thing I have seen a manufacturer do to its customer base. At this point I would consider every single one of these affected laptops to be potentially compromised and would reinstall them from scratch.
Slate's David Auerbach, meanwhile, is flabbergasted that Lenovo risked its reputation for so little apparent reward:
Whatever commissions Lenovo might have received from Superfish must have been paltry… Lenovo sold its soul to the devil and forgot to get much of anything in return. Homer Simpson would’ve made a better Faustian bargain.
Security experts are also less than thrilled with Lenovo's official response to the backlash; the company has defaulted to corporate PR speak, claiming that it innocently pre-installed the software in order to "enhance the user experience." Word to the wise: whenever a company claims it has taken an action in order to "enhance" your "experience," you may safely assume that this action benefits the company and not you.
Recently in Birmingham, England I attended a presentation on cyber-security by a pair of (seemingly) 12-year old hackers who put the fear of God into me over my personal data security. My two takeaways: One, never access any banking, e-commerce, or any other sites that require password entry while connected to an open wi-fi network; and two, whatever your routine for choosing and remembering passwords for your sensitive web sites, you may be assured that it's not good enough. The hackers recommended choosing a password manager tool to secure access to sensitive data. Lifehacker recently posted their list of the five best password managers. Stay safe out there.
This week's Friday Find comes courtesy of Brooklyn-based indie trio The Lone Below. I love everything about this track; it's as if Levon Helm and Van Morrison met in a Memphis bar in 1992 and wrote this song in a back room with nothing but a couple of guitars and a cocktail napkin to scribble down the lyrics. If I could step into a music lab and assemble my version of a perfect band, it would sound very much like these guys. You can learn more about them here. Enjoy!
Rick Ferguson is the author of The Chronicles of Elberon fantasy trilogy. Rick is also a globally recognized marketing expert with appearances in the New York Times, Wall Street Journal, Advertising Age, Fast Company, the Globe & Mail Canada, the Guardian UK, the Financial Times India, MSNBC, and the Fox Business Channel. He has delivered keynote speeches on marketing principles and best practices on six continents. He is also master of time, space, and dimension.