Big Data, Analytics and Programmatic Buying Are No Panacea
Harvard Business Review recently devoted much of their March 2013 print issue, including the cover, to digital advertising and the way big data and analytics are transforming the field. You can read an intro to the piece here, but will have to subscribe to get the full article.
The Promise of Smart Advertising
The article discusses how today’s data-centric marketing is not only able to precisely target ad placements based on demographic, psychographic, behavioral, and a host of other data, but can then also reliably track and attribute subsequent consumer behavior to exactly the advertising that triggered it. This insight is then used to further tune campaigns, optimize media spend, targeting, and placement on an ongoing basis.
Usually, all of this is automated. Media is bought via programmatic platforms and campaigns are optimized in real time based on results achieved, driven by powerful algorithms and without human intervention. According to the HBR article – and countless ad-tech vendors’ marketing claims – this approach promises the equivalent of laser-guided precision ad units that hit the mark each time, at precisely the right place and time for maximum effect and minimal cost. HBR describes this new advertising landscape similar to the precision-guided munitions employed by our military. Perhaps an apt comparison, as they seem to share a common flaw: both require a change in approach and neither seems to work quite as promised in less than ideal settings. Allow me to elaborate.
Measuring is no Substitute for Managing
Digital advertising has always claimed to be more measurable than its traditional, offline brethren. While billboards, print, and broadcast media were forced to rely on crude (and often manipulated) metrics like circulation, Nielsen ratings, GRPs, traffic counts and the like, digital media could always point to its inherently interactive nature. And this claim could be substantiated by “hard” data, including click-through rates and paths, engagement, time-on-site and more.
Proper Ad Targeting, Context, and Placement are Crucial
(Image source: imgur.com)
Even better, when a product was purchased online or a lead generated, this action would commonly be credited to the media that drove the consumer to the conversion point, a process commonly referred to as last-click attribution. It seemed the only blind spot for digital media was the inability to clearly attribute offline purchase decisions to media consumed (and ads viewed) online, where both traditional and digital media appeared to be on equal footing. And, given that consumers were increasingly consuming media online and in digital formats, yet brands were still disproportionately allocating spend to traditional, all that remained was for marketers to shift spend so that online media got its fair share and all would be right. Wrong.
For one, it turns out that not everyone peddling eyeballs online is totally honest and a lot of those clicks and views are not by actual consumers but, instead, automated bots that generate phantom traffic. As a result, much of what brands spend on digital ads is wasted on non-existent views and fraudulent clicks. And it’s not just amateurs getting taken here. Even large, presumably sophisticated advertisers like AT&T, BMW, and McDonalds, running what I assume to be sophisticated (and expensive) campaigns, are falling victim to this and, at times, losing up to 80% of their spend to fraud according to one report.
But, click-fraud and bot-traffic aside, there remain other issues with today’s state of digital advertising and it is still far from the perfect, well-oiled machine portrayed in the HBR. For one, online display ads are notoriously weak in building brand awareness and show weakness even for direct-response advertising. A recent study illustrates this and data shows that consumers are statistically more likely to survive a plane crash than click on a banner ad. Of course, campaigns vary greatly in terms of effectiveness, but you get the gist. Beyond display advertising (banners and such), similar issues surface in paid search, social media, and the latest trend to emerge, so-called “native” advertising.
My Reality Belies Market Claims
At the heart of these issues seem to lay poor segmentation and targeting, along with the crude, heavy-handed execution of many of the campaigns. For all the much-vaunted data that Google and Facebook have on consumer behavior and the supposed sophistication of today’s marketers, I continue to be perplexed by the ads I am (mis-)served on a daily basis. Any parent who has had their teenage daughter borrow their computer for 30 minutes and then paid for this with countless ads for One Direction’s new tour or the spring sale at Forever 21 knows what I’m talking about. These re-targeted ads – which occur when you visit a site but then fail to buy (or even when you DO buy, ‘cause, y’know, you might have missed something, right?) – are becoming increasingly popular with marketers, despite a growing backlash by Internet users.
Marketing Still Requires Marketers
This is not to say that digital advertising isn’t the way forward. Nor that smart, targeted ads guided by data-intensive insight don’t hold great promise, for both are clearly true.
It’s just that, for now, they are not yet delivering on their promise of identifying the right consumers and serving them the most relevant ads at the most appropriate time. Big data, analytics and ad-technology will clearly play a key role in getting us to there. But, technology alone will not do the trick. While it is clearly necessary, it is simply not sufficient on its own. As programmatic buying and RTB (Real-Time Bidding) platforms gain traction and big data becomes an even a bigger deal in guiding marketing (hard to imagine in the current hype-cycle, right?), advertisers, their agencies, and consultants will need to ensure that the human component is given equal consideration. Business processes, marketing departments, campaign design, and media spend all need to be adapted to the new reality. Some even claim that the rise of technology-centric marketing calls for an entirely new member of the C-suite, the Chief Digital Officer or CDO. While this is a debate for another time, this much is clear: investments in hiring, training, and consulting services must accompany those made in systems and technology if they are to be effective. Technology, no matter how refined and sophisticated, is never the panacea promised by vendors. We saw this with ERP systems, EAI/BPM, and a host of other initiatives that all required several years and multiple investment cycles in both IT and human capital, along with structural changes to organizations and processes, to deliver on their promise.
Solid marketing fundamentals, effective strategy, strong creative, and execution still matter, and I fear there’s just no app for that. New techniques and tools will require marketing teams and brands to change their thinking, acquire new skills, and develop effective approaches. Same as it ever was, one might quote one of my favorite 80s bands.
The Marine Corps has a saying that, when things get serious, it doesn’t matter if you’re a cook, a truck driver, clerk or radio operator. When the shit hits the fan, everyone’s a rifleman. As a result, every Marine, regardless of military occupational specialty, is trained in basic rifle marksmanship and required to regularly qualify with their primary weapon, currently the M-16A4 rifle.
The rationale being that, since modern warfare is marked by fluid, often unpredictable battle lines and that even rear echelon support troops may find themselves in armed combat at a moment’s notice, every Marine must be proficient in basic marksmanship. As we have seen in Iraq and Afghanistan, there are no more “front lines” in today’s battlefield.
US Marines with their primary weapon.
Photo courtesy of the USMC.
The Internet – The Primary Weapon for Modern Business
A similar case can be made for a basic understanding of technology, in particular Internet technology, in the context of modern business. Whether you’re an accountant, supply chain manager, banker, salesperson, or marketer, the Internet is an integral part of your job.
Technology is everywhere, and the Web continues to upend and disrupt nearly every aspect of business. Organizations at the forefront of this trend are integrating processes and systems all along the value chain and one is hard-pressed to find roles not dramatically affected by this. GE is now employing social computing to improve their industrial manufacturing processes and is integrating sensors that use TCP/IP and wireless protocols to optimize the efficiency of wind turbines. From procurement to logistics, over sales planning, POS, accounting, billing, payments and customer service, formerly disparate systems are increasingly integrated via networks built on Internet standards. And, in most cases, these systems are being accessed primarily via the Web (or Web-based technologies), often through a multitude of channels, including smart phones and other mobile devices. This not only streamlines business processes, reduces errors and cuts cost, but also increases speed and transparency.
Marketing in the Digital Age
One area that has been affected dramatically by the Internet is marketing. Today’s marketer works in an environment that is fundamentally different in just about every aspect from what he may have encountered as recently as a decade ago. With the rise of digital platforms, marketing has become far more complex, more fluid, and, importantly, more measurable. And yet many of today’s marketers have failed to evolve and often lack the technical skills and fundamental understanding of the Internet needed to most effectively employ the tools at their disposal.
It used to be that IT was a separate department that other functional areas called upon when they needed their PC connected to the printer or a piece of software installed. Accountants, sales people, supply chain managers, and, yes, marketers would go about their daily business blissfully unaware of what made the network run or how exactly their e-mail got to where it needed. Information technology was considered a cost center, not a source of competitive advantage or differentiation. All that has changed and many companies now – from retailers, to publishers, financial services companies, and consulting firms – derive a significant portion of their revenue from online activities. Digital technology is now so pervasive, affecting so many aspects of business in such fundamental ways, that many experts question if it even makes sense anymore to have IT as a separate department. Instead, technical expertise and digital fluency are now such an integral component of just about any business function, that these skills need to permeate each and every part of the org chart.
A Series of Tubes
When the late Alaska Senator Ted Stevens described the Internet as “a series of tubes” back in 2006, he was roundly ridiculed by pundits and members of the digerati. Ironically, he was charged with oversight and regulation of the Internet at the time. But ask a random sample of marketing folks to explain the basic building blocks of the Internet – things like HTTP, TCP/IP, HTML and similar – and you just might find that the late Senator had a better grasp of things back then than many marketers can muster now. And, while many eagerly employ industry buzzwords like Big Data, real-time analytics, business intelligence, cross-media publishing and more, few can describe what they actually mean and even less could write an SQL query or build and launch a simple Website.
Now many of you may interject that there is no need to understand the technical underpinnings of these tools and concepts in order to use them. And, if your job is merely to write content for your Website or place media buys, you may be right. To a point at least. But if your role goes even just a little beyond that – and, let’s face it, most do – you’d be dead wrong. For even those simple tasks require at least a basic understanding of SEO, a grasp of how your content management system works, or how media buys are priced dynamically based on variable CPM rates, how to identify or avoid click-fraud, and a multitude of other factors that affect success.
If you’re in an only slightly more responsible role, you may be called upon to research and identify new marketing automation software, or help assess the cost, time, and effort to integrate your CRM platform with the new e-mail marketing system. Without a basic grasp of how these work, all you have to go on is the information provided by vendors or consultants. How would you know if an estimate is too high or, as often happens, unreasonably low? There are common reasons why most IT projects come in over budget, are completed late or fail altogether and, next to poor planning and project management (and I would argue that both of these are related to technology as well), a lack of technical understanding by key decision makers is often a root cause.
Trust – But Verify
For how can you or your team evaluate a proposal or tool without understanding both the business requirements and the technical criteria needed for it to work, especially when the two are so closely intertwined? If I had a dollar for every time I’ve heard a vendor tell me their system is “basically plug-and-play” and offers all you could ever want or need “out-of-the-box” with only some “minimal configuration”, I’d be a wealthy man. The fact is, IT is complex. And it has to be in order to solve the complex business problems that need to be addressed. Sure, the CRM system your company is considering looked easy and worked flawlessly during the vendor demo, but how much time and effort was put into preparing that slick presentation? And just because your consultant – who, let’s remember, is paid by the hour – says that adapting the system to your processes and integrating it into your environment is “straightforward”, doesn’t make it so.
But bad IT purchase decisions and failed projects are but one symptom of inadequate technical knowledge within many organizations, albeit a very visible one. Much more prevalent – and insidious – are persistent under-performance and missed opportunity, which can often go undetected for years. The effects can be corrosive and will often lead to a vicious circle that feeds on itself and becomes self-reinforcing as more tech-savvy team members become frustrated and seek opportunities with organizations that “get it” and value their expertise.
Survival is Optional
The fact is, technical competence is increasingly important, regardless if you’re a project manager, analyst, or even a sales or account director. The days when a fellow like Tom Smykowski could get by on just “people skills” are over, today’s interconnected business calls for more. Much more. But, worry not, your company will most likely adapt and survive. The question many marketing professionals should ask though is whether they will. Younger, more tech-savvy employees are coming up quick. I was reminded of this just the other day by my 12-yo daughter. Previously, I had learned of her holiday wish-list from a letter to Santa written in crayon. This year’s list, which included a request for an iPad and a new smart phone, came to me via e-mail containing a link to Google Docs. And, just to be sure “Santa” – not always known for his technical prowess – got it right, she had included links to the exact products on retail Websites and photos of the desired items on Pinterest and Instagram.
Online collaboration via Google Docs, integrated with social media and delivered using the Internet. All this by a 12-yo child in seventh grade. I work with senior digital marketing leaders at Fortune-500 companies nearly every day and many of them would not be able to pull this off without help.
Attend any digital marketing conference and you quickly realize who the belle of the ball is these days. Everyone, from agencies, management consultants, publishers, to technology vendors, seems to be obsessed with mobile. Everyone except business, that is. For while mobile currently makes up around 16% of total Internet traffic, and its rapid growth promises to fundamentally change the web, its share of advertising spending and overall investment is significantly lower. This indicates that business may, once again, be late to recognize a major shift.
We see this reflected in the lower advertising CPM for the mobile Internet, which is currently only about 20% of desktop CPM. This is often justified by pointing out that average revenue per user (ARPU) is similarly lower for mobile users. I contend this is the same circular logic that led to the initial under-investment by brick-and-mortar business back in the 90s, when the Internet first became mainstream. This myopia on the part of business allowed many traditional players to become dis-intermediated by the likes of Amazon, eBay and Zappos. Others lost market share to nimbler competitors who adapted more quickly. The current rise of mobile may well do the same.
For let’s face it, mobile Internet users are just like desktop users, only more so. As in more educated, more urban, more influential, younger, and more affluent. So why would CPM and ARPU trail by such significant margin? Well, for one, the mobile Internet experience is currently far different surfing the Web at our desk. Even putting network limitations such as coverage and latency aside – assuming for instance that we are connected via Wi-Fi, as most tablet users are – the difference in user interface and screen size of a phone or tablet demands a different approach.
Business and advertisers alike have been slow to adapt to this new landscape and they most commonly fail due to:
Not Offering a Mobile-Optimized Experience at all
Many businesses, including even large retailers, still do not offer an online experience optimized for mobile users. I have experienced this personally in just the last week when I tried to access a national retailer site using my smart phone.
Failure to Correctly Identify Mobile Users
Even companies that have invested in a mobile site often fail due to poor browser/device detection. Incorrectly identifying mobile users and sending them to the desktop site negates any effort and investment made in developing the mobile-optimized experience.
Not Considering a Connected, Multi-Device World
Business needs to understand that users connect and share information across various devices throughout the day and they need to take this into account and plan for it. If a mobile user posts a link to Facebook using his phone, this link may later be accessed by users on a variety of devices. Hard-coding the posters device choice into the link – as I had happen to me when a friend shared this CNN article earlier today – and then taking me to the mobile site even though I am accessing it on my desktop is simply unacceptable and will lead to frustration and drop-off.
Unsuitable Back-End Systems and Data Structures
Some companies may adapt their front-end UI for mobile users but fail to consider other UX aspects. Back-end systems, data structures and cumbersome check-out processes often need to be adapted for smaller screens. A huge look-up table may work (somewhat) on the desktop, but scrolling through a list of 20-30 options proves cumbersome on a phone.
Failure to Truly Optimize for the Mobile Use Case
Mobile users often have different needs and goals than those behind a desk. For one, they’re mobile (as in away from home), so a store locator driven by ZIP code won’t work if you don’t know where you are. Similarly, mobile users are often more task-oriented and will have little patience for superfluous content or fancy imagery.
Business should recognize that the current difference in CPM and ARPU for mobile users is caused by a poor mobile user experience and ads that are simply not designed appropriately. The sooner digital marketers and eCommerce leaders accept that mobile users are not inherently different from desktop users – but that they do have different needs dictated by their device – the sooner they will adjust and refocus their investment in the mobile Internet to reflect the reality of its rapid growth.
Some readers will find themselves somewhat confused by the title of today’s post. Many others will have recognized instantly the significance of it. Others yet might be intrigued and eager to learn more. Some will quickly leave my blog – I expect abandonment and drop-off to be a bit higher for this entry, but I also expect deeper engagement with those readers who are in the know. Even here knowledge of context makes all the difference.
If you’re still with me then you probably know the significance of the number 42. If you don’t, you’re probably wishing I would just go ahead and explain it. Either way, you’re probably wondering what the hell this has to do with digital marketing or interactive technology.
Well, continuing my musings on metrics and analytics that started with this post over the weekend and, subsequently, with my thoughts on effective analysis this past Wednesday, today’s entry takes a deeper look at the importance of contextual understanding
So, to clear the air and level the playing field, 42 is, as many know, the Answer to the Ultimate Question of Life, The Universe, and Everything, as unveiled in Douglas Adams’ now classic book, The Hitchhikers Guide to the Galaxy.
I chose 42 as the title of today’s post for a number of reasons. First, I like that Adams chose such a simple, yet obscure answer to one of the most profound questions ever asked. It reminds me of many of today’s marketers, who similarly seek simple answers to often immensely complex problems. How else to explain their fixation on things like Klout scores, PageRank, Facebook friends, Twitter followers and similar metrics that, while neat, fail to capture true value? We see this phenomenon offline, in other parts of our lives, as well. Consider FICO scores, BMI numbers and GDP data, which, while providing a valid single data point, cannot possibly encapsulate the complexity of our lives, our creditworthiness, health or wellbeing as a nation.
Second, I like that while Deep Thought returns an answer so seemingly simple, it took 7½ million years to compute and check it, by which time nobody remembers the actual question or understands the significance of the answer. Sound familiar? Marketers, senior executives, board members, “the market”, and countless others are forever looking for a simple metric to capture all aspects of complex issues, so let’s give them what they ask for. Even if we may not really understand the questions, nor grok the answers.
Finally, in a nod to SEO, I figured using the Hitchhikers Guide and 42 as a side topic would boost my blog’s search performance and drive traffic to my site. Sure, it’s poorly targeted and mostly irrelevant traffic, but hey, it’s traffic nonetheless and it’s something that’s measurable.
Exploring What Content Curation Is and Isn’t, What it Can and Cannot Do
In my last entry, I discussed the pivotal role that compelling, current and relevant content plays in SEO performance. And, while being discovered and getting traffic is an important part of online success, it’s only the first step. Actually engaging site visitors once they arrive at your site, getting them to consume the content that brought them there – and ideally more – is an equally important step in the conversion process.
The rook. After the King, arguably the most valuable and versatile piece on the board.
Beyond engagement, getting users to share, link back to and reference your content is a further important hurdle. And lastly, establishing your site as a subject matter authority, a thought leader, and a helpful, valuable resource, is the final step in becoming a regular destination, one that users will bookmark and refer others to.
Content Quality over Quantity
So, while the SEO aspect is impacted at least to some degree by content quantity – though this is quickly changing with the evolution of search engine algorithms, most notably Google’s Panda and Penguin releases – the more downstream aspects of engagement and conversion (however you define this for your site or business), are driven purely by content quality. And this is where many content curation strategies all too often fall down.
The same things that make the creation of compelling original content challenging – the investment of time, effort, talent, and money it requires – also apply to curation, albeit to a lesser degree. And, similar to content creation, the approaches to curation vary greatly. As one might expect, the same is true of the results. We all know sites that use content-mills and armies of loosely-affiliated, poorly paid and minimally vetted freelance writers to churn out volumes of low quality content a mile-wide and an inch (or often less) deep, but how many of us bother to read their blabber, much less forward it or share it online? Poorly “curated” content suffers from many of the same ills.
Simply locating and sharing of content is aggregation, not curation. I have seen brands do this using automated systems with minimal human involvement. And it shows. Effective curation involves locating online content, categorizing it properly, and reviewing it to assess its editorial quality, the salience of the views or insights expressed, and their originality. This simply cannot be automated. Next, a good curator will then add to and improve the curated content piece further, perhaps by explaining how and why it relates to the point of interest, thereby establishing relevance. Finally, a good curator will add their own point of view (or that of the company or brand employing them), which may either be aligned with the original piece, or in opposition to it. Such contrarian curation can be particularly effective in crisis management situations, or where an organization would like to clearly differentiate themselves from others, or distance themselves from certain issues. Doing this well requires experience, editorial skill and original thinking.
Content Curation Increases Efficiency and Reach
If done well, content curation can be an effective force multiplier for brands and sites. For one, even a solid, well-conceived and executed curation program will allow brands to generate relevant content entries more quickly and with less effort than creating them from scratch. Secondly, it allows brands to leverage and tap into emerging trends quickly and properly curated content will be innately aligned with popular keyword trends and thus able to capture long-tail search traffic around them. Curating and linking to outside content may also invite reciprocal back-linking by the original content source. Finally, by curating and linking to content from others, your message may be perceived as more objective, given that the original source is unrelated to the brand doing the curation.
So, returning to our original chess reference in the title of this entry, while original content may be king, it is also expensive, unwieldy and often slow. Curation, similar to the rook on the chessboard, is more nimble and an effective multiplier, but not a substitute. Together, the two approaches make for an effective content strategy.
Why There Are No Shortcuts to Online Success
As Americans, we’re conditioned to expect instant gratification. It seems at every turn we are offered quick and easy solutions to tough problems and are promised rapid results with little or no effort – as long as we’re willing to ante up and pay for the latest gadget or surefire approach.
If you’re as old as I am, you’ve seen a lot of gimmicks, gadgets and just plain nonsense come and go. Remember the Abdominizer? Or the Ab Energizer? Both promised rock-hard six-pack abs with little or no effort. In fact, the latter used “powerful technology” to “send just the right amount of electronic stimulation to your abdominal muscles”, thus toning them without the need for exercise. Get a rock-hard washboard stomach, while watching TV and enjoying a dozen chicken wings…imagine that. Or how about the Hollywood Diet, which promises that you will magically shed pounds in mere days. What could possibly go wrong, especially with a name like that? Turns out plenty, since none of these actually work and quite a few may send you to the emergency room.
Likewise, our penchant for easy solutions and quick fixes extends online as well. Brands want to rank in the top-3 results for a given search terms on Google but all too often don’t understand and appreciate what it takes to get and, perhaps more importantly, stay there. And, of course, they would like to get there fast. Ideally this week, but if not, certainly by the end of the month. And, if at all possible, without making any of the hard changes, like developing a better website, investing in compelling, relevant content or implementing an effective social media strategy. This desire for real results without hard work is the online marketing equivalent the Abdominizer. And, just like its offline cousin, it promises a lot and delivers very little. But, hope springs eternal and, fueled by heady promises from “search experts” who bandy about mysterious terms like black hat SEO, link building and cloaking, there seems to be no shortage of companies willing to spend money on a quick-fix boost to their search ranking.
Now, don’t get me wrong, there are legitimate and effective techniques that make a site more SEO-friendly and thus easier to index, and these should certainly be employed. SEO-friendly URLs, consistent terminology and keywords, proper redirects and an up-to-date sitemap are indispensible and no site should be launched without. And, even some of the more frowned-upon practices may indeed deliver a short-term boost to your ranking. Another option, one I am not fond of but certainly effective, is to employ paid search (AdWords) and simply buy your way to the top of the results page. Of course, paid results are often viewed with skepticism by users, the traffic they generate may differ in terms of quality and conversion, and there is the risk of click-fraud. So, while this approach may circumvent natural PageRank and lift traffic, it does so at an ongoing cost and thus hardly presents a long-term advantage.
At the end of the day – and certainly with the recent Penguin release of Google’s algorithm – there is only one surefire way to improve your PageRank and that is to regularly create compelling, valuable and relevant content that people want to consume, reference, share and link to. Anything short of that is not just short-sighted, but also bad business.
Protecting the environment – or at least purporting or appearing to do so – seems all the rage these days. Recent events, such as BP’s Deepwater Horizon oil spill in the gulf, countless food scares, and reports on natural gas “fracking”, climate change, hypoxic dead-zones and huge fields of plastic floating in our oceans have created a level of awareness and concern not seen in decades among average citizens.
This new-found focus on sustainability has not been lost on business. One is hard pressed to find any organization not currently espousing their commitment to preserving our natural resources and protecting our environment. Nearly every Fortune-500 company has a sustainability department these days and many tout their “green” credentials in slick TV commercials, print ads and glossy sustainability reports.
And then there are the many initiatives undertaken across all levels of government as well as by non-profits and various non-governmental organizations (NGOs), many with global reach and sizable budgets. It seems from the White House down to the smallest city council, everyone has a sustainability plan and touts “going green” as a core part of their agenda. Communities are investing in renewable energy, embracing alternative fuels, fighting food deserts, and supporting local agriculture, with politicians proudly appearing at ribbon cuttings, conferences or grand openings. Provided the press is there as well to capture and cover the moment, of course.
Unfortunately, posturing, proclamations and press releases will not help us meet the environmental challenges we face, which are very real. Instead, we need original thinking, bold leadership, competence, and a commitment to innovation and effective, workable solutions. As far as publicly funded initiatives are concerned, all options must be understood, objectively analyzed and assessed based on effectiveness, not hype. Projects and solution proposals should be evaluated based on their overall impact and long-term cost-benefit ratio, not their PR value. And we must recognize that we will not tackle the problems of today with solutions of the past, or the romantic notion that if we could just return to doing things the way we did in the “good old days”, all would be well.
A growing population and strong economy will increasingly require more, not less, of just about everything. The challenge is to meet these additional needs using the same or, ideally, less resources and inputs. This will in some cases require a fundamental change in mindset and openness to radical innovation and change.
Luckily, we have a proven, effective framework and ecosystem for bringing about innovation and change: the open market place. This is not to say that government and NGOs do not have a role to play, for clearly they do. Both, however, should limit their primary focus to educating the public, fostering popular awareness and engagement, and supporting promising emerging technologies through their normal procurement activities and the inherent power-of-the-purse they wield given their unique ability to make long-term investments with time horizons that would not be feasible in the private sector. In selective – and very rare – cases it may make sense to provide early financial or in-kind support to foster an emerging sector that provides a real and tangible social benefit. The role should be that of a midwife, however, and not a parent or patron. Governments, NGOs and foundations should refrain from providing market-distorting long-term financial support, since this will do more harm than good. Sustainable, lasting change can only come from truly sustainable businesses and these must offer a desirable product and be able to compete in the open marketplace. Businesses that generate profits that can be reinvested in growth and provide an economic incentive for the principals and early-stage investors. This is true regardless of whether the focus is on solar, rainwater capture, natural foods, or urban farming.
The best support that government or anyone else can provide in fostering a viable “green” economy is to provide a truly level playing field free of market distortions while also fostering transparency, awareness and education around the relevant issues and their importance. If these two preconditions are met and the product or service is truly competitive – a necessary precondition for true sustainability – then market forces will take over and bring about lasting change and success. Examples include the Toyota Prius, Patagonia, Whole Foods, TOMS Shoes and, just recently, Annie’s Natural Foods, who had one of the most successful IPOs of this year. Without these preconditions, the effort will be a dependent on handouts indefinitely. In the best case it merely acts as a drag on the economy by mis-allocating scarce resources away from other, worthier ventures. At worst it can cause market distortions that keep other, truly sustainable players from entering the market, cause them to fail, or even discredit the entire sector. And surely no one would have an interest in that, would they?