The Precipitous Decline of Brands
...and the rise of generics because of AI agents and other things. (Issue #173)
Before we get to today's main topic, some miscellaneous goodies and things worth your attention…
Calvin and Hobbes holds up
In a random moment yesterday, I picked up one of the anthologies of this classic newspaper comic and fell into it. It's still wonderful. It's also hard to believe that Bill Watterson only wrote and illustrated it for a decade. It made such a huge impression on me and on my kids that I had convinced myself it was around longer. My kids never had the experience of discovering it in the newspaper: for them it was always collections. It's nice that GoComics.com shares one of the old strips daily.
In The Atlantic, Xochitl Gonzalez...
has a witty and thoughtful article about fitness guru Tracy Anderson and her very, very, very expensive classes. The article is an in-depth study of shallowness and a sensibility that people who know well-heeled people in upscale neighborhoods will recognize. Here's one representative snippet:
Anderson sees politics as a wellness issue. “I cannot stand the hate. I cannot stand the division,” she told me. “That is so unhealthy for us.” Over lunch (a vegan fried-green-tomato salad) she talked about “how our nervous systems as women have been epigenetically so compromised” by living in a “system that is so corrupt and unfair.” Then we had to pause: A package from Goop had been delivered in the mail.
If you smiled or laughed at that last sentence, like I did, then this article is for you.
Dr. Robot will see you now
Wired has a piece about a new Medical AI from Microsoft—a team of interoperable AI agents—that "diagnosed patients 4 times more accurately than human doctors." This is nonsense as the constraints of the test were artificially narrow to enable such claims.
Most worrying is this sentence: "The project also suggests that AI could help lower health care costs, a critical issue, particularly in the US." It's true that American health care costs are astronomical, but if history is any guide adding a team of medical AI agents into the flow of health care will a) decrease costs for insurance companies rather than patients, and b) make it even harder for a patient to talk with a flesh and blood doctor in real life.
Over the weekend, I got trapped in an Xfinity labyrinth of "I can help you connect to an agent, but only after you answer these questions that are irrelevant to your problem." This was head-bangingly frustrating, and that was just with my internet service. Imagine having to do this when you're sick!
Back to Xfinity: can somebody explain why it's easier to find Jimmy Hoffa's left bicuspid than it is to get a human to talk with you in most so-called customer service experiences?
R.I.P. Hardy Cook
Few readers of The Dispatch will recognize his name. However, people who have participated in SHAKSPER: The Global Shakespeare Discussion List will remember Hardy's kind, thoughtful, and generous leadership of that community over decades. He was also a Shakespeare professor at Bowie State University.
Hardy also represented the first of many experiences I had meeting in person somebody with whom I had only corresponded online. It was at a Modern Language Association conference in D.C. many years ago where I was doing what all academics do—poring over the offerings in the book hall. I was zeroing in on a book about Shakespeare (of course) when I bumped into a middle-aged man looking at the same book. We looked at each other's name badges.
"Hardy?" I asked.
"Brad?" he asked.
Then we hugged. Until that moment, I had no idea of Hardy's gender, race, or age, but it didn't matter because we had enjoyed a spirited correspondence. That sort of experience is part of what makes the internet great.
Hardy died on June 24th. I'll miss him, even though I only saw him IRL once.
The Floods in Texas are devastating to witness
Some of the coverage of the mayhem and death created by flash foods has taken climate change into account. Here's a representative snippet from the Sunday New York Times print edition (it didn't make it online):
While it is difficult to ascribe any individual disaster to climate change, colossal bursts or rain like the ones that caused the deadly flooding in Texas are becoming more frequent and intense around the globe as the burning of fossil fuels heats the planet.
This misses an important piece of context: Texas is a national leader when it comes to climate change denial. Will the families of the children and adults killed in the flash floods make the connection between their elected officials' explicit policies and their losses?
On the lighter side...
The final episode of Murderbot Season 1 on AppleTV+ comes Friday, and I am both excited and in preemptive mourning that it will be over for who knows how long.
The Sandman Season 2 on Netflix, in contrast, has been slow. So slow. So very slow. I'm already conflicted about reading or watching things from Neil Gaiman, and the watching cement dry experience so far isn't motivating me to continue, but I probably will.
Superman comes to theaters on Friday! I just hope William, my 20 year old son and superhero buddy, will be in Portland.
The Gabriel Allon series by Daniel Silva is addictive. Peter Horan recommended them. I inhaled the first and bought the next three moments later. Now I just have to be careful about when I start them. Michael Connelly has competition for "stop everything and read" challenges to my self-discipline.
Practical Matters:
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On to our top story...
The Precipitous Decline of Brands
Last Dispatch, I mentioned a wide-ranging conversation about AI with my friend Louis Jones of the Brand Safety Institute. Louis and I spent a chunk of time talking about the rise of AI Agents, how they will impact customer behavior, and the implications of those changes for brands. This issue, I'm going to dig a little deeper into that topic.
If you have never heard about AI Agents, then you might want to take a quick look at this piece.
For those unwilling to click, a short explanation of AI Agents...
In the future people will have teams of AI Agents that make ChatGPT, Siri, Alexa, and their ilk seem like sock puppets. Today's digital assistants provide us with information. Agents will be able to do things in the world.
Today, Fandango tells me where I can see Superman and allows me to buy tickets. Soon, my AI Agents will look at my calendar, talk with the agents of the people I'm seeing the movie with, look at their calendars, choose a showing at a theater convenient to all, choose the seats, buy the tickets, send the tickets to my phone, set up a reminder about when to leave, and have my popcorn ready to pick up when I reach the theater.
This will be a massive change to shopping and purchasing behavior. Here's why...
Most of our decisions are unimportant.
The overwhelming majority of our everyday decisions are trivial—what detergent to use, what socks to wear, which cereal to have for breakfast, which route to take to get to work.
Brands like Tide, Bombas, and Count Chocula exist to make it easier for people to make unimportant decisions. Sometimes we are loyal to a brand because we believe the product is better, higher quality, or because the brand says something to the world about us. Most of the time, though, it's just habit.
The marketing team at Red Bull targets boys aged 15 to 19 as their "entry point consumer" because they believe that by age 20 a young man will have made his energy drink choice for the rest of his life—habit.
Once a brand homesteads a place in your brain, particularly but not only with low-consideration purchases like CPG products, it is unlikely that you'll buy a different brand unless your typical brand is unavailable when you need, for example, toothpaste. Extrinsic events can shift brand habits, but it takes a mighty big stimulus or a provocative advertisement to wedge the challenger brand into your mind. (The slightly crazy way I shifted from Crest to Colgate is an example.)
Unimportant decisions are a cognitive burden.
In his remarkable book The Organized Mind, Daniel J. Levitin observes that "the decision-making network in our brain doesn't prioritize" (page 6). We greet each day with a limited amount of decision-making energy. If we spend that decision-making energy on socks, social media, and shopping on Amazon, then we've squandered it and will thereafter make poor-quality decisions.
People want help preserving their decision-making energy.
In a famous 2008 talk, Clay Shirky distinguished between information overload and "filter failure," arguing that the problem we have navigating evermore information isn't the fault of the information: it's our lack of adequate filters to manage that information
A few paragraphs back, I mentioned "which route to take to get to work" among the trivial decisions we make. Often, I use the GPS in my car to navigate places even when I know where I'm going. Partially, this is because my GPS takes traffic into account, but it's also because I want to think about other things. In Shirky's lingo, I'm using my GPS as a filter.
AI Agents will become our main filters, and this is bad for brands.
We will offload as many of our trivial decisions as we can to our AI Agents.
Unlike human brains, colorful packaging, celebrity spokespeople, jingles, logos, and slogans have no effect on AI Agents.
The hockey-stick rise of generic products
If you're like me, then—when you need something from the pharmacy and see a store brand next to the national brand—you stand in the aisle scrutinizing the back of each box of, say, allergy medicine. Claritin is the national brand of loratadine; the CVS generic reads "Allergy Relief." If the ingredients are the same on each box, then you're likely to buy the generic.
I don't bother doing this with toothpaste or detergent because there are too darned many ingredients for me to make the comparison. I don't have the cognitive energy, but AI does.
I tend to buy Ticonderoga pencils and Sharpie highlighters, but that's just because I'm too lazy to make a comparison. If my AI Agent sees that there's no difference between the national brand and the generic, it will order the generic.
Often, the brand name manufacturer of a product is also the manufacturer of the generic store brand, so there may be no difference between the products. Big brands and retailers alike work hard to keep this a secret. However, if the ingredients are listed, then it's likely that AI Agents will be able to determine this, which is good for the customer but bad for a national brand that will sell less of the more profitable branded versions.
Is there any hope for brands?
Maybe. One reason why the media rights for sports have stratospheric price tags these days, and the reason why Amazon, AppleTV+, YouTube and others are vying for them, is that sports fan tend to watch live. If a sports fan DVRs the big game, then she has to work hard to keep the world from sharing the final score before she gets to watch. (She also can't text with her friends while watching.)
The advertising inventory around sports will become even more valuable and expensive once sports are the last place where a brand can do an end-run around AI Agent filters and try to coax a consumer into considering Colgate instead of Crest, Discover instead of Amex, Pepsi instead of Coke, a Chevy Silverado instead of a Ford F150, and so on.
The stakes for brands are about to get higher.
Thanks for reading. See you next Sunday.
* Image Prompt: "Create an image of the word 'BRANDS' that is melting like the famous Salvador Dali painting 'The Persistence of Memory.'"
The fact that we can only make a certain amount of decisions per day reminds me of "The Big Bang Theory" episode "The Wiggly Finger Catalyst" (Season 5, Episode 4). Here's the AI description: Sheldon decides to use Dungeons & Dragons dice to make his minor, everyday decisions. He does this to free up his mental energy for his theoretical physics work. The episode sees him rolling dice to decide what to eat, whether to go to the bathroom, and even whether or not to wear underwear.
It's actually a pretty funny episode. Not to mention that Sheldon might've been right...?
On an optimistic note, we might see brands invest much more in product value and innovation. When you can no longer milk brands, this may be the only way out.