I have recently, to mark the 5th anniversary of the Advertising Law Association, given a presentation on the significance of the Zero Moment of Truth for advertising law. The pressing question facing us is whether consumers still need protection in the current media landscape, or whether we are indeed guilty of over or underestimating consumers. A brief overview follows below.
Advertising law is rooted in the desire to protect consumers against powerful organisations that use advertising to convey an overly positive view of their products. What is – and perhaps more important, what is not – permitted in terms of communication by companies to consumers? May, for example, a manufacturer call its pillows semidown, while the actual down content is just 20%? Is that misleading? And where indeed can one find the applicable rules? It is allowed, it is not misleading, and the rules can be found in a Decree under the Commodities Act! There, it is stated that ‘semidown’ means that a pillow, for example, should contain 15%-65% down. While many rules of this nature seek to address the unequal relationship between companies and individuals, rapidly advancing consumer influence is creating a more equal balance of power.
That raises the question whether organisations in the current media landscape can still get away with misleading claims and false promises. Fact is that consumers have become ever better at taking care of themselves. So is protection still required?
Zero Moment of Truth
By using the Zero Moment of Truth (ZMOT) we can also reverse the perspective. It is no longer consumers that require protection, indeed it is now the companies that have to adapt to consumer demands. In that context, the visionary Rishadt Tobaccowala says: “… Today you are not behind your competition. You are not behind technology. You are behind your consumer.”
Learning to become social again
To retain their relationship with consumers, companies must again learn to become social. In a time in which the balance of power between company and consumer is changing, companies must again earn their position in the (online) community. Looking back at the social communities that predate the industrial revolution, we see that individuals and businesses were dependent on one another. Businesses were embedded in and dependent on the community. In these social communities, characterised by unwritten rules, human conversation determined the reputation of businesses.
Driven by new technology, old norms and values from the preindustrial age are again determining community relations. The era in which brands could control and influence the public debate through the media has largely come to an end. Social media serve as a social filter, continuously correcting companies on untruths, poor products or failing service. Serious cracks are appearing in the classic marketing model. Where, in the past, it was possible over time to carefully construct a brand and its image, brands are currently acquiring more and more of a social dimension. Indeed, brands are once again becoming the sum of human conversation. Marty Neumeier explains it as follows: “… A brand is the consumers feeling about your product, your services or your organization.”
Backed by the social media, consumers are reclaiming the power that public conversation has over brands. The sum of opinions and conversations plays a significant role in determining the reputation and brand value of organisations. Managing this reputation is a key pillar in the contemporary social community. Anti-social behaviour is not tolerated.
In order to earn a good position within the social community, it is necessary for companies to take a close look at the key pillars of preindustrial societies. Not only is reputation management a key pillar, so too is having the correct relations.
Relations and social capital
Your position in the community is often determined on the basis of your social capital; the value that an organisation can add to the greater whole on the basis of relations. Relations therefore have value and are thus assessed on the basis of the ‘social currency’ that they generate. Social currency is a form of information that is passed on from relation to relation. The sooner you gain access to, for example, important information, the higher your social currency, which thus forms an important lubricant within a network society that is based entirely on relations. Providing social currency within the dynamic environment is the best way for companies to build and maintain relations.
Company self-interest is slowly receding into the background; consumers are regaining centre stage. The exchange and creation of value must be divided ever more equally. The business model and the concept of shareholders value run somewhat perpendicular to the dynamics of social media; the maximise profits at any cost approach is far from social and fast losing validity. Consumers increasingly demand value or indeed propose alternatives. When organised, consumers have sufficient power to take the competition to companies or entire sectors. Just look at the music industry that was seriously shaken by Napster or messenger service Whatsapp, which is a source of embarrassment for the telecom sector.
The emergence of the so-called peer-2-peer economy proves that the classic business model is not sacred. There are, after all, sufficient alternatives whereby services can be directly exchanged between consumers without requiring any intervention by companies. The best-known example is AirBnB, whereby supply and demand in accommodation is directly exchanged between consumers. Less well-known are initiatives to develop an open source car, or crowdfunding initiatives that often form the starting point of various fantastic developments. Also consider the financial solutions that are gaining an ever firmer foothold. In a time in which people are losing faith in banks, initiatives of this type could really take off.
Reflecting on old communities and the accompanying dynamics, the current media landscape throws a new light on McLuhan’s global village. If companies wish to earn their place in the network society, they will have to adopt a social approach and take the dynamics of the community into account.
The question whether consumers still require protection from companies is now open to debate. Companies no longer have a monopoly of public conversation or large-scale value production. Any company that fails to place consumers central or involve them in the value chain will automatically find itself at a disadvantage in the current landscape. The idea that consumers must be protected comes forth from the unequal balance of power between consumers and companies, a balance which is gradually being redressed. While consumer protection must, of course, remain a priority, let us not lose sight of the fact that contemporary consumers are well able to take care of themselves. How long will it take before the roles are reversed and companies require protection from consumers?