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Trying to hitchhike to get to your destination.

This is the fourth in a series of blog entries about the concept of blockchain.
Blockchain is a decentralised database that keeps track of all transactions between participants in the system.
Blockchains are intended to help sellers and buyers, for instance:

1. Counterfeits can be prevented from entering a company’s supply chain, and
2. Consumer scams can be stopped before they begin.

♥ READ about blockchain in German and on the Vault Security Systems blog

Blockchain possibilities

Nakamoto (pseudonym) stated that the objective of a blockchain was to provide users with:

an electronic payment system based on cryptographic proof instead of trust.

Interesting read: Nakamoto, S. (2008). Bitcoin, a peer-to-peer electronic cash system. Retrieved March 5, 2019 from https://bitcoin.org/bitcoin.pdf

The scope of use for such peer-to-peer crypto-currency platforms has grown considerably. Since the beginning, most blockchains have included five elements:

1. Anonymity of the blockchain’s users. This is accomplished by use of a public / private key pair. Each user of the blockchain is identified by the public key. Authentication is then completed by signing with the private key. This is neither a new procedure nor invented by blockchain.

2. Distributed but centralised ledger. Several transactions are stored together in what is called a block. Each block contains a part of the digital signature or hash of the following transaction.
The network of nodes (i.e. many computers) guarantee a unique order of transactions – for example, how they happened according to the timestamp, and validate the block of transactions.
The ledger contains all blocks of transactions. Once it is published on the network, it is immutable.

3. Consensus algorithm for mining (i.e. process of adding transaction records). This is a way to ensure all the copies of the ledger are the same. Each transaction must be approved by members of the community. Transactions are accepted when consensus between validating nodes has been reached.
This is expensive because it requires a lot of data storage and energy to maintain the system.

4. Single purpose focused. For instance, Bitcoin performs a single purpose only, i.e. to sell and trade its tokens. Such blockchains do not contain programming features to allow solving computational problems. The latter enables the blockchain to be used in a multi-purpose setting.

5. Trading of tokens. Tokens are used, for instance, to pay people who run mining operations that require much energy (see point 3). Investors or speculators buy and sell tokens to benefit from market up- or down-swings.
Transactions involving these tokens are stored on the ledger.

The above describes a blockchain such as the one used by Bitcoin to allow the trading of tokens. Its purpose is to maintain a ledger that accounts for who owns how many tokens. Moreover,

    1. owners of these coins remain anonymous,
    2. transactions cannot be reversed once they haven been executed, and
    3. if one loses one’s private cryptographic key, the tokens cannot be recovered – i.e. they are ‘lost’.

Interesting read: Apple co-founder Steve Wozniak discovered that point 2 applies when he had $70,000 in Bitcoin stolen after falling for a simple, yet perfect, scam.

Lots of experts do not like such single purpose platforms, especially if they focus on trading tokens only. For instance, Bruce Scheiner wrote in February 2019:

“Honestly, cryptocurrencies are useless. They’re only used by speculators looking for quick riches, people who don’t like government backed currencies, and criminals who want a black-market way to exchange money.”

Blockchain - a single one will not do.

Blockchain – a single one will not do.

What now?

The above illustrates that single-purpose blockchains may not be that useful to businesses to protect their supply chain or provide additional data services to their clients. To illustrate, in the enterprise or global trade context, programming features need to be offered in order to process various computational problems in the blockchain.

watch the WEF Davos interview on bloxlive.tv here

Another reason why single purpose blockchains are not useful for companies is that if clients have an issue, nobody is there to mediate the dispute. In most business applications, it seems most feasible to implement a combination of features of a consortium / private-type blockchain to better protect and manage data, as well as goods and services being traded.

Table 2 – Checklist: Deployment Models for a Blockchain
Type Access Key Characteristics Typical Use Cases
Public Unrestricted Distributed (multiple copies, immutable), consensus algorithm and currency (i.e. token) Cryptocurrencies,   general purpose
Consortium Restricted to consortium members (public may have read-only access) Immutable and distributed Consortium-specific cases, such as trade between members
Private Restricted to single entity, read-only access can be public / unrestricted Internal audit, database management, supply chain within corporation and its subsidiaries

Note. Adapted and expanded upon from Uhlmann, Sacha (2017). Reducing counterfeit products with blockchains. Master Thesis, Univ. of Zurich. Accessed 2019-01 at https://www.merlin.uzh.ch/contributionDocument/download/10024

Case 1

To illustrate, a replacement part is shipped from the original manufacturer. Each time the part enters the warehouse of the next party in the distribution chain, this is added to the block of transactions (e.g., wholesaler, importer). The final transaction occurs when the mechanic replaces the defective part in the car with the new, genuine one. Once this final transaction is stored on the block, the block is completed and digitally signed. The block is now ‘closed’.

With this block of transactions, the car owner now has proof that the defective part was replaced with a genuine one – not a fake. On this blockchain, both parts are being tracked, as well as work provided by the car dealer and the repair shop. Reselling and other car servicing data will also be stored on the blockchain.

In short, a single purpose blockchain will not be the best strategy. Only a multi-functional one will permit all these different types of transactions to be stored safely on the blockchain.

Interesting read:  Tabora, Vince (2018-08-04). A blockchain is a database, unfortunately a database is not a blockchain explains differences nicely.

Remind me when I have to take my car in for service. Original parts only...

Remind me when I have to take my car in for service. Original parts only…

What is your opinion?

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Distributed ledger technologies are collectively known as blockchain. Blockchain is a decentralised database that keeps track of all transactions between participants in the system. Several transactions are stored together in what is called a block. These are connected to other blocks in chronological order according to their time stamp.

Any corruption of the chain of transactions after consensus was reached will quickly be discovered, because the corruption of this chain of transactions is visible. This also makes a blockchain very safe against fraudulent activity.

While they offer great opportunities, we have to separate the wheat from the chaff when it comes to blockchain hype. We hope this blog entry helps you in that process.

What do you think?

  • Do you have experience with crypto tokens?
  • Is your company trying to use blockchain technology to make its processes faster, more efficient or transparent for its customers or suppliers?
  • What questions do you have about blockchain?
  • What do you like or dislike about blockchain?

Please share this entry on social media using this link: https://blog.drkpi.com/?p=4904

Leave a comment and share your thoughts.

The author declares that some of the companies mentioned herein are clients of CyTRAP Labs or subscribers of DrKPI® services.

Fake bags being sold at the beach promenade in Barcelona.

This is the third in a series of blog entries about the concept of blockchain. For most of us, the problem is all too familiar: a fire sweeps through someone’s home, reducing their treasures to ashes.

The worst is when that person finds out that, not only have the much-loved treasures (whatever they may be) gone up in flames, so have their documents of ownership, tucked away in a drawer in the same home. Proving their ownership rights to the insurer now becomes considerably harder.

But the same can happen when somebody robs you. As Arman Sarhaddar, CEO of Vault Security Systems AG (with its iVAULT brand of products) explains:

These days, in some places not even your locked and supposedly guarded storage space may be safe. That happened to me – when I returned, my valuables and personal items were gone.

The above example is one case where blockchain can help the consumer, and even the insurer. Many more applications are also feasible. We explain some of the technical issues below.

1. What are we trying to accomplish?

The blockchain can help answer the important questions listed in Table 1 below.

Table 1 – Checklist: What challenges do we solve with the blockchain?
What are we trying to do? What value do we want to capture? For whom is this of use?
Record the transaction Information and knowledge about what changed hands Clients
Track the transaction Attribution and who is responsible Suppliers
Verify the transaction Access to records or permission to view them Manufacturers of goods
Aggregate transaction Ownership Creditors or investors
Reputation and trust Public agencies
Contracts Employees
Transaction ledger

Table. Adapted and expanded upon from Felin, Teppo and Lakhani, Karim (Fall 2018). What problems will you solve with blockchain. MIT Sloan Management Review, p. 36. Retrieved 2018-10-20 from http://sloanreview.mit.edu/x/6015. See also https://blog.drkpi.com/show-me-the-facts-1/

A blockchain attempts to maintain a permanent, trusted database, which the owner, and trusted advisors and manufacturers have access to only with a secure key. In turn, history and proof of purchase, the provenance of works in a collection and all related legal and insurance documents can be held on a blockchain.

However, before you decide to use a blockchain, it helps to address the questions outlined below:

  • Do multiple parties share data?
  • Do multiple parties update data?
  • Is there a requirement for verification?
  • Can intermediaries be removed and reduce cost and complexity?

If you answered yes to three of the above questions, then you have the potential to apply blockchain.

Blockchain technology - What kind of blockchain is best for me?

Blockchain technology – What kind of blockchain is best for me?

2. Privacy

The traditional blockchain paradigm is complete transparency. Business applications, however, need to meet certain privacy criteria.

Not all transactions should be visible to everyone. The reasons for this may range from concerns of commercial confidentiality, to legal requirements.

Regulations, such as Europe’s General Data Protection Regulation (GDPR) simply make it impossible for companies to make all data accessible. Instead, some information, such as a patients ID number, must be protected.

Thus, any enterprise blockchain platform should provide an extensive set of privacy features. Only then, can GDPR compliance be assured (see this resource page from MC Lago – checklists and forms that help)

3. Security

Another requirement, closely related to privacy, is security. Businesses usually need to prevent data theft at all costs. They also need to ensure all actors are clearly identified. Again, this necessity might be imposed by the business case or by regulations.

Thus, enterprise blockchains need to implement authentication features and control who can participate in the network.

Security, Safety, Privacy, and Data Protection: Vaultsecurity.ch to the rescue.

Security, Safety, Privacy, and Data Protection: Vaultsecurity.ch to the rescue.

4. Transaction throughput

As Table 2 below illustrates, public blockchains may have advantages, but transaction throughput and energy consumption levels may not be to everyone’s liking.

Enterprise applications are usually transaction-intense and need to be scaled in terms of transaction throughput.

At the other extreme, public blockchains need to be scaled in terms of the number of nodes that can participate in the consensus protocol.

In most enterprise applications the number of validator nodes can be relatively small: for example, one representative per company participating in the consortium. Thus, transaction throughput can be prioritised.

Hence, enterprise applications may not be public. Instead a combination of features of a consortium / private-type blockchain may be used.

Table 2 – Checklist: Deployment Models for a Blockchain
Access Key Characteristics Typical Use Cases
Public Unrestricted Immutable and distributed Cryptocurrencies,   general purpose
Consortium Restricted to consortium members (public may have read-only access) Immutable and distributed Consortium-specific cases, such as trade between members
Private Restricted to single entity, read-only access can be public / unrestricted Internal audit, database management, supply chain within corporation and its subsidiaries

Note. Adapted and expanded upon from Uhlmann, Sacha (2017). Reducing counterfeit products with blockchains. Master Thesis, Univ. of Zurich. Accessed 2019-01 at https://www.merlin.uzh.ch/contributionDocument/download/10024

By the way, the video below shows in a straightforward way how the blockchain principle can work for you and that its foundations – asymmetric cryptography and distributed systems – have been known for decades by computing science researchers.

Also check out iVAULT on bloxlive.tv – Interview at #WEF2019

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5. What is your opinion?

Distributed ledger technologies are collectively known as blockchain. While they offer great opportunities, we have to separate the wheat from the chaff when it comes to hype. We hope this blog entry helps you in that process.

What interests us, however, is what you think:

  • Do you have experience with crypto tokens?
  • Is your company trying to use blockchain technology to make its processes faster, more efficient or transparent for its customers or suppliers?
  • What questions do you have about blockchain?
  • What do you like or dislike about blockchains?

Please share this entry on social media using this link: https://blog.drkpi.com/?p=1990

Danyele Boland Co-founder of Vault Security Systems AG

In December, we gave you insights into the #iVAULT blockchain, the new brand by Vault Security Systems AG, and the DrKPI production of the first three videos for iVAULT.

Now, we are happy to provide you with an update, available on YouTube, which is an additional clip to introduce you to Danyele Boland. She is the co-founder of Vault Security Systems AG (VSSAG) and as passionate about her business as the rest of the team.

If you need to know more about iVault or the minds behind this idea, read more here:

To stay tuned and get the latest updates on Vault, sign up for our newsletter here. Or subscribe to the iVAULT Newsletter here.

Danyele Boland: “Why I am involved”

iVAULT is a global network for users to register assets, such as lost or stolen property, to search for and identify them on a blockchain. These items can be anything of value to the individual user of the iVAULT blockchain. Companies and businesses, on the other hand, can protect their supply chain against counterfeits and contraband.

Working with Danyele was a special treat. She is a charismatic and intelligent speaker, and it did not take us long to get some great shots, even though she had just arrived from the US.

With years of experience in international sales, human resource management, logistics, and much more, she is an irreplaceable part of the VSSAG team.

In her video, Danyele recalls when Arman Sarhaddar told her about his storage unit getting robbed. He lost some of his most valued belongings. This is how they got the idea to create a platform to secure physical assets such as luxury watches, pieces of art or jewellery, or anything else that is of some value to its owner.

Gain more insights on her perspective and what she tells us about blockchain technology here:

https://youtu.be/LeMDFZ7zD98

What’s your opinion?

iVAULT is the first global network to use blockchain technology for registering and identifying assets (such as lost items or stolen goods). It lets users register their items on the blockchain, search for, and identify them.

So, what do you think?

  • Have you ever used a blockchain?
  • Do you want to try iVAULT, or do you still have some concerns?
  • Have you ever had a problem iVAULT would have immediately solved? You lost something of great value or bought a fake product? It must have been very upsetting. Tell us about it, we’d like to hear your story.

Join in the discussion and leave a comment. We will respond soon.

The author declares that some of the companies mentioned herein are clients of CyTRAP Labs or subscribers of DrKPI® services.
Arman Sarhaddar and Urs E. Gattiker preparing for the iVault video shooting in Zurich

Three new DrKPI videos are out now on YouTube.
Counterfeiting and theft are a global problem that is growing. Billions of dollars of damage are recorded every year.
Here, we explain how you can protect yourself against both counterfeiting and theft using iVAULT.

“Protect what’s yours.” That is exactly what you will be able to do with iVAULT. This new brand was created by Vault Security Systems AG.

This blog entry is about the three videos we created with Arman Sarhaddar, Urs E. Gattiker, and Lothar Rentschler, all engaged in their work for #iVAULT.

If you prefer to read their statements, you can find each of them here:

  1. Urs E. Gattiker, COO: What is a blockchain and what does iVAULT do with this technology?
  2. Arman Sarhaddar, CEO and founder: Why I created iVAULT
  3. Lothar Rentschler, CMO: Initial thoughts on marketing

Read this blog entry in German here.

To stay tuned and get the latest updates on Vault, sign up for our newsletter here.

1. What makes iVAULT special?

Urs E. Gattiker, Chief Operating Officer of Vault Security Systems AG, talks a little bit about the basics:

  1. What is a blockchain?
  2. 4 challenges iVAULT helps clients with.
  3. How does iVAULT ensure that no fakes enter their supply chain?

Remember when your club or association kept a petty cash book or ledger on paper? Each record was entered by hand, and then we started doing it all with accounting software, possibly customised for use in associations.

To be sure things were done properly, we probably had two club members act as auditors. They checked the books, including petty cash, and reported back to the other members at the annual meeting.

This is much easier with iVAULT. All club members or a selected group (e.g., board, advisory board, and elected auditors) can have a copy of the books in digital, encrypted form. This distributed system records each booking, which is then entered permanently onto the books once the majority agrees. Entering it onto the blockchain also means it can no longer be altered, unless others agree to the alterations.

With iVAULT, the new platform, we can keep our association’s books via the blockchain. Additionally, an individual may register their assets in the data bank. It can be seen and checked by everyone on thousands of computers, and the data cannot be manipulated. This means that if you want to buy a product secondhand, you can be sure that the person selling it to you is the true owner. Most important, if purchasing a used luxury car, jewellery, or expensive technical equipment, you know that what you think you’re buying is what you’ll get.

No fakes, only the original with genuine parts.

iVAULT offers four advantages:

  • Authenticity: Consumers can be sure that they’re not buying stolen or fake products.
  • Compliance: Streamlining your governance processes.
  • Information Security: iVAULT helps better protect consumer data while strengthening privacy.
  • Costs: Reducing costs, while speeding up transactions in the supply chain.

Urs explains this in a video, with an example:

If we want to buy a luxury car secondhand, we want to be sure that all data about the car are true.
This challenge iVAULT addresses by providing you with 100% assurance of that, because data, once entered onto the blockchain, can no longer be altered or even falsified.
You can trust that what you buy is what you get. As well, the company can assure its customers that they get the original product. In turn, this helps protect the company’s reputation.

We can check the information on every computer:

  • Which garage did the warranty work,
  • was the car in a major accident, and
  • more factors that affect its value and dependability (e.g., mileage and major repairs).

That is why we can protect what’s ours with iVAULT. But how did this idea originate?

2. Why I created iVAULT

Arman Sarhaddar, Chief Executive Officer und founder of Vault Security Systems AG, tells his own personal story in the video below.

It is what inspired him, along with his team, to create iVAULT.

With his personal belongings in a storage facility, he would have gladly used iVAULT, had it existed. When he was robbed seven years ago, having iVAULT available would have given him a real chance to recover his stolen treasures, and things he loved.

Watch the video of this very personal story below.

Arman lost all the things he gave to a storage facility, like a wooden sculpture and his complete music production studio.

With iVAULT, everyone can register, search for, and identify assets, such as lost or stolen items. Consumers can look up the information given by a seller about a watch, a painting, a car – almost anything – to check if the seller is the true owner and has the right to sell it.

For companies, the benefit can be even greater. For example, when fake medication is sold online, it damages the business’ image, and hurts patients. iVAULT makes it possible to identify counterfeits, both medication, and medical technology.

3. Initial thoughts on marketing

Lothar Rentschler, Chief Marketing Officer, explains that customer happiness, as well as service, is essential to iVAULT’s vision and mission.

iVAULT is about providing a new level of security and comfort for consumers and businesses alike. It is an outstanding solution for counterfeiting and theft. iVAULT helps to protect your goods, and that is why everyone on the team is certain of the market potential of the new brand.

Last but not least, if you want to read more about the shooting take an exclusive look at us behind the scenes.

4. What’s your opinion?

iVAULT is the first global network to use blockchain technology for registering and identifying assets (such as lost items or stolen goods). It lets users register their items on the blockchain, search for them, and identify them.

  • Have you ever used a blockchain?
  • Do you want to try iVAULT, or do you still have concerns?
  • Have you experienced something like Arman Sarhaddar did? Did you lose something of great value or buy a fake product? It must have been very upsetting. Tell us about it, we would to hear your story.

Leave a comment and share your thoughts.

The author declares that some of the companies mentioned herein are clients of CyTRAP Labs or subscribers of DrKPI® services.

VW BP Daimler Toyota Mitsubishi Why do companies risk their reputation?

Please read Updates about Mitsubishi, Opel, GM, VW in the comments below.

Summary: VW intends to repurchase 480,000 vehicles in the US. Estimates put the final bill in excess of €45 billion. But how much damage will this cause to their:

– brand
– image (e.g., the image of the VW or Audi brands), AND
– reputation (e.g., reputation of the brand or company)?

Volkswagen has an interesting portfolio consisting of luxury brands as well as truck and low-cost car brands, as shown below.

[su_custom_gallery source=”media: 3719″ limit=”7″ link=”image” target=”blank” width=”780px” height=”449px” Title=”Volkswagen brands read like a who’s who – how much will the emission scandal damage the value of their brands?” alt=”Volkswagen brands read like a who’s who – how much will the emission scandal damage the value of their brands?”]

1. Defining the terms

In daily life we may talk about brand, image and reputation interchangeably, without drawing a line between them.

But we cannot truly appreciate the value of something, if we do not unterstand what it is we are examining. And Jeff Bezos may have thought he was talking about brand, when he was actually talking about the reputation of the Amazon brand with its clients:

Your brand reputation is what people say about you after you have left the room.

We need to define brand, brand image and brand reputation. Only then can we be sure that we share the same vocabulary, which is the basis for understanding each other.

You need a great product. Your image of offering great design or R & D does not hurt the company either (for example, Apple). Crowned with a reputation for offering great client services (e.g., your neighbourhood grocer), you should do well in the market place.

[su_box title=”Table 1. Defining brand” box_color=”#86bac5″ title_color=”#ffffff”]
The word brand originated with the practice of putting a hot stamp on the bodies of young livestock to indicate ownership (i.e. branding calves). In the corporate world, a company’s logo or the lettering used for write its name may similarly serve as a stamp. It brands the firm.

The cattle brand helps one separate stock from Ranch A and Ranch B. In turn, the company’s brand or its logo help us recognize the product on the shelf.

The brand symbolizes what we stand for in the minds of people that we are trying to reach, influence and move to action (see Deborah Maue, 2015).

Brand is what the corporation tells the public or its investors, the news it shares about itself or the product, and most importantly, what it wants and aspires to be.

This gives the brand manager some control over the brand.

A brand helps reduce uncertainty for a client. The customer knows what they get, such as a hotel chain’s rooms offering the same features (make-up mirror, good hair dryer) as standard around the globe.

[/su_box]

But these days, mistakes can damage a brand’s image and consumer trust in the brand may evaporate as well.

For instance, in a 2016-04-20 media briefing Mitsubishi Motors president Tetsuro Aikawa tried to take responsibility for the manipulated fuel-economy test data. It affects 4 mini-car models sold in Japan, about 625,000 vehicles since 2013.

In just three trading days, the fuel-economy scandal has destroyed 42 percent of Mitsubishi Motors’ market value.

[su_custom_gallery source=”media: 3711″ limit=”7″ link=”image” target=”blank” width=”780px” height=”339px” Title=”With the increasing complexity of the marketplace, CONSUMERS focus on select dimensions of products such as price, not quality.” alt=”With the increasing complexity of the marketplace, CONSUMERS focus on select dimensions of products such as price, not quality.”]

As the above research illustrates, with increasing market complexity, consumers may fall back on such factors as price, instead of focusing on quality.

Hence, as BP’s Deepwater Horizon disaster suggests, Mitsubishi Motors can hope that people will forget that the company abused customer trust by falsifying fuel economy test data.

If that happens, customers may no longer focus on this disaster. Instead price or options offered with its cars may be most important in the decision-process to buy or not to buy a Mitsubishi Product.

[su_box title=”Table 2. Defining brand image” box_color=”#86bac5″ title_color=”#ffffff”]

A brand’s image tells us the qualities of the company or its products. Image is based on how much effort a company spends on getting its message across and its target audience to believe it (e.g., just do it – Nike).

Advertising is about image.

For instance, green advertising helped BP recover from the Deepwater Horizon oil spill. This means the visual, the look, the controlled viewpoint about an issue the company cares about, such as the environment, makes up the corporate or brand image.

As the video clip below shows, with the help of TV spots Volkswagen was trying to portray itself as producing cars running on “clean” diesel engines. Until September 2015 when the fuel emission scandal began, consumers believed this story.

[/su_box]
Advertising can be used to improve a corporate image or try to portray a greener image than one might otherwise have in the public’s eyes.

Watch this humorous VW commercial aired in the US.

[su_box title=”Defining brand or corporate reputation: An experience-centric concept.” box_color=”#86bac5″ title_color=”#ffffff”]

Attitude denotes the subjective, emotional, and cognitive based mindset (see Schwaiger, 2004, p. 49), which implies splitting the construct of reputation into affective and cognitive components.

The cognitive component of the construct can be described as the rational outcomes of high reputation. Examples include high performance, global reach and one’s perception of the company (e.g., great employer, wonderful customer service).

The affective component of reputation is the emotions that respondents have towards a company. Thus, people talk about these things with friends (word-of-mouth). Media coverage can also influence how we feel toward a company.

Reputation is hard-earned and generally long-standing. Nevertheless, it can be harmed by a new product that is shabbily put together or a big product recall as Toyota experienced with Prius in 2010 in the US and elsewhere.

Reputation is temporal, meaning for example that bad customer service will result in bad customer testimonials on webpages or blogs (what is called earned and social media).

Reputation is primarily based on my experience (i.e. cognitive) and what my friends say (affective). Hence, a bad experience may get me to write a bad product review or a post on Facebook. Good and bad press about a brand is also shared with one’s friends…

[/su_box]

Interesting: Fiske, Rosanna (2011-01-26). Image vs. Reputation: Which Reigns Supreme? Advertising Week, retrieved April 24, 2016 from http://www.adweek.com/news/advertising-branding/image-vs-reputation-which-reigns-supreme-125527?page=2

General Motors learned the temporal nature of reputation in 2014, after managing to deflect most of the blame for a 30 million vehicle recall on the habits of the old guard of the company, prior to a massive government bail-out. Never mind that GM knew all along about the ignition switch issue that caused up to 169 preventable deaths.

On February 1, 2010, Apple co-founder Steve Wozniak claimed that he had experienced a ‘software-related acceleration problem’ with his Prius, that causes the car to go wild under certain conditions when cruise control is engaged.

This and his comment that, “This is software. It’s not a bad accelerator pedal. It’s very scary, but luckily for me I can hit the brakes,” spread like wildfire via newswire, Twitter and others.

In early 2010 I wrote:

“We all remember when Audi (Volkswagen) faced unintended acceleration problems with its 5000 model in the US in the mid-1980s. Its initial response was to run advertisements of its top executives talking about its vehicles’ mechanics.

Audi was vindicated eventually but its effort to regain customers’ trust flopped amid perceptions that it built bad cars and was not taking the problem seriously. It took Audi 10 years to recover from this public relations debacle…”

Of course, one can only hope that #dieselgate will not hurt Volkswagen and its brands for another 10 years. But the share price drop as well as the compensations to be paid to US car owners whose models are affected suggest that it will be worse (see chart below for more information).

[su_custom_gallery source=”media: 3710″ limit=”7″ link=”image” target=”blank” width=”780px” height=”456px” Title=”-15.4 percent yer-on-year fall in VW brand car sales in the US, 1 in 20 German jobs depends on the sector.” alt=”-15.4 percent yer-on-year fall in VW brand car sales in the US, 1 in 20 German jobs depends on the sector.”]

2. Bottom line

Arguing which has greater influence — image or reputation — is likely a moot point.

Nevertheless, the two are linked, as the BP Deepwater Horizon oil spill suggests. At the time, many Americans called for BP boycotts and sales took a hit despite the fact that BP was still selling the same fuel it was selling before the crisis.

In essence, BP’s negative reputation caused consumers to perceive BP’s brand differently.

Reputation, then, is best used as a way for companies to differentiate themselves from other organizations with the same brand.

It takes plenty of money and effort to build a great image. But one mistake can cost a company dearly. For instance, Nike and TAG Heuer ditched Maria Sharapova, the world’s highest paid female athlete, after she revealed she had failed a drugs test at the Australian Open in January 2016. Both brands felt it was too risky to continue sponsorship.

Although the two brands avoided a fall out from Maria Sharapova’s problems, the athlete’s marketability as an image ambassador was severely damaged.

Two intangibles VW and Mitsubishi Motors and competitors have to face.

  1. The effect on sales over the next couple of years, AND
  2. The effect of tighter regulations on future margins of car manufacturers.

How do VW car owners feel about the option of being offered a buy back or going for the fix and getting paid for it? We do not know if they will prefer getting $5,000 on top of the $1,000 they already have, or returning their car at market value. However, how owners perceive these options (positive or negative) and how VW handles European regulators and customers will affect its reputation.

As far as Volkswagen’s image is concerned? The damage may pass. However, regulator fines, compensating customers and losing sales will continue affecting the firm’s bottom line for a while yet.

Nevertheless, both VW and Mitsubishi have not had their last chance to hurt their reputation. How they handle their respective scandals from here, and whether they reform their corporate culture, will matter. Moreover, the possibility, not yet addressed, of the scale of lawsuits from aggrieved U.S. dealers and individual U.S. states for VW’s possible fraudulent advertising should worry shareholders.

What VW’s #dieselgate and Mitsubishi Motors’ falsified test results says about these companies’ internal procedures and ethics is another chapter in this saga.

3. Have your say – join the conversation

Source: Brand image and reputation: VW pays dearly for #Dieselgate

What is your opinion?

  • What do you advise a company to do when a public relations disaster is in the making?
  • Will people forget Volkswagen #dieselgate as they did the BP Horizon Deepwater disaster?
  • Did UK and French regulators do the right thing, waiting until US regulators set the stage (e.g., how much compensation per car, fines, etc.)?

The author declares that he had no conflict of interest with respect to the content, authorship or publication of this blog entry (i.e. I neither own any of these brands’ products nor are they our clients).

Check the original research first, before you re-tweet the URL

Summary: 4 tips for using storytelling to create great fact-based content.
Martha Lane Fox (founder of lastminute.com) is right in suggesting instinct should be ditched.

Recently I came across a LinkedIn Update from my colleague Karen Dietz that made it clear that if I started my blog post with a story, I would get:

  1. 300 percent more visitors, And
  2. 68.5 percent more reader engagement beyond the first mobile phone screen.

Who would not want to achieve such results? I was intrigued.

Then my colleague Sandra turned around and said:

“Urs, show me the numbers.”

I answered:

“Sure Sandra, no problem. I just need to dig for them first.”

So I shared my insights with Sandra, but also thought that my experience hunting for these numbers is definitely worth sharing with you!

Learn about 4 things great bloggers do better.

This post is part of our series on business analytics and big data.

[su_custom_gallery source=”media: 3581″ limit=”7″ link=”image” target=”blank” width=”780px” height=”309px” Title=”Karen Dietz Update on LinkedIn: Is this maybe too good to be true?” alt=”Karen Dietz Update on LinkedIn: Is this maybe too good to be true?”]

Permanent Link to the above Status Update from Karen, found on my LinkedIn Update list 2016-03-27.

1. Storytelling is what it takes

So I clicked on the LinkedIn post that got me to Karen’s scoop.it page with the story (2016-03-28). There I clicked a link again. This brought me to 5 Storytelling Methods to Captivate Your Audience (2016-02-28), published in the Search Engine Journal.

Here the author outlines that somebody else did an A/B test. One of the blog entries had a story at the beginning and the other started with the topic of the blog entry right away. Sure enough, the former supposedly got 300 percent more readers than the one without a story at the beginning.

The Search Engine Journal’s entry referred me to a Buffer blog entry by Alex Thompson entitled, The power of storytelling: How we got 300% more people to read our content, from 2014-04-22. Here, he supposedly unravels the mystery by going into detail as far as this case study is concerned.

After some digging, I learned that the A/B test was really sending two types of emails containing the blog entry. One began with a story and the other dove right in.

Okay, is testing whether a blog entry attracts readers versus what works better in an emailed newsletter the same? Personally, I think those are two vastly different things.

Plus, Alex never gets around to telling us exactly how many people participated in the A/B test and how the sample was selected (e.g., clients, webpage visitors, combination thereof, etc.).

But the example below does not suggest this kind of storytelling works, does it?

[su_custom_gallery source=”media: 3675″ limit=”7″ link=”image” target=”blank” width=”780px” height=”563px” Title=”Nemu Chu at Kissmetrics Blog – telling me a crazy story in 173 words before you get to the beef I want to read is not effective use of the story metaphor ” alt=”Nemu Chu at Kissmetrics Blog – telling me a crazy story in 173 words before you get to the beef I want to read is not effective use of the story metaphor”]

2. Gut feelings are out, science is in

The fact is that science tells us that a person decides whether or not to read your story within the first five to ten seconds. If just your title is 12 words long, you have five seconds left to get the person’s attention – at most.

Using a story about driving a Porsche blindfolded is cute… but will it get your target audience’s attention? Of course, we are all smart and at least one of us will point out:

What is the target audience? Are these geeks doing social media monitoring, managers or housemen/housewives?

This is an important question. Research with over 400,000 page visitors to some of the biggest websites in the US provides the answer. It points out regardless of your target audience, they want a headline that is relevant to them. As well, if the first three lines of text fail to convey anything important, 60 percent will already be gone by line four.

Hence, striving for high quality content means short introductory stories at the beginning might work very well. Long-winded intros are less likely to encourage your reader to go beyond the second mobile screen.

3. Facebook or Twitter: Check before sharing

Getting 300 percent more readers thanks to starting a blog entry with a story is a wonderful result. But I hope you do not mind me asking:

– What type of story are we talking about (e.g., length, relevance, etc.)?
– What type of story will work with my audience?

I was unable to get an answer to these questions in those blog entries as mentioned above.

So I took the trouble to dig a bit deeper in the subject matter. For instance, in the Search Engine Journal’s entry the author had used a model from a study on mice (see below).

[su_custom_gallery source=”media: 3598″ limit=”7″ link=”image” target=”blank” width=”781px” height=”472px” Title=”Nice graphic – that is the proposed model, but what about the one confirmed by Lisrel analysis? That looks a bit different!” alt=”Nice graphic – that is the proposed model, but what about the one confirmed by Lisrel analysis? That looks a bit different!”]

I then found the original paper from which the above graphic was taken. Read it here (sign up free to view and download the paper): The Customer loyalty to content-based Web sites: The case of an online health-care service. Journal of Services Marketing, Vol 18(3):175-186, May 2004

The paper yielded some interesting new facts that we should ponder.

For instance, on page 179 of the paper, the reader is told that the study is based on 421 usable responses on a health site. Where the site is located and in which language content is written is not clear.

We are also told that the online survey was responded to by 6 percent of those that were asked to fill it out while visiting the website. Moreover, 93 percent of these respondents are women (see page 180).

Just looking at this information tells us that the study does not allow us to generalise from its findings due to sample selection and so forth.

Also, “Need fulfillment” is set to equal content quality by the Search Engine Journal’s author Razvan Gavrilas. However, as the study clarifies, need fulfillment was measured using four items. We are not given their exact wording except one: Net Clinic meets my personal needs (page 179). For all I know, this could mean finding the doctor’s address I am looking for. That does not measure content quality, does it?

Put differently, the study does not address quality content. Hence, the Search Engine Journal’s author simply misconstrued the study’s findings, then wrote a great story about it. But storytelling based on misinterpreting research findings does not help us gain and maintain our readers’ trust.

4. Checklist

This story perfectly illustrates that one best check one’s sources carefully. Unless you prefer to have metaphorical egg on your face as a blogger?

Here are four science-based tips that will help you use storytelling effectively while building trust and reputation for your publication.

[su_box title=”The no bullshit guide to better blogging” box_color=”#86bac5″ title_color=”#ffffff”]
1. Mobile readers want you to get to the point – fast.
First, tell me why you think I should read this, and what I will get out of it (20 words max).

Second, don’t give me a 170-word story about the blindfolded Porsche driver. Start your blog entry with a great story but keep it to about 30 to 50 words maximum.

By the time they hit 60 to 100 words (including the headline), readers want to be convinced that reading onward is worth their time.

2. Remember your favourite librarian’s advice.
I remember a librarian telling students in her workshop for new library users: “When doing your semester paper, do not cite an article you found in some paper’s reference list before checking the original. It could be that the author misquoted it or misinterpreted the original paper’s findings.”

Of course, for some of us the clincher was that she stated: “If your professor knows the author or has read the original study, they will know if you misquoted or misinterpreted something. That could not only be embarrassing, but as importantly, lower your grade.”

Just checking a URL in a LInkedIn news update leading to a blog will not do. Go to the original study the blogger refers to and make sure they got it right.

3. Great science is a start.
As a blogger, check your sources. Does the article or white paper from Adobe represent science or a poorly-veiled sales pitch, though nicely packaged?

A first danger sign is a report that contains superfluous content or lacks a method section. Another sign could be that a lot of color and ink has been wasted to make things look pretty, but the report lacks any depth or detail.

4. Instinct and gut feelings have no place here.
Some examples:

10 Qualities of People With High Emotional Intelligence
These Are the 30 Most Motivational Books Ever Written
9 Affirmations the Most Successful People Repeat Each and Every Day
The Top 8 Skills Wealthy People Have Mastered

The headlines above are great link bait. And yes, unless our headline stirs the reader’s interest, they will never read anything beyond it.

Nevertheless, claiming something or suggesting a checklist based on your opinion will not do. Martha Lane Fox is right, ditch your instinct and opinions, but back your choices up with data and facts.

Of course, some master the art of an attention grabbing headline and then really deliver the bacon in their blog entries, such as: WordStream: 5 Lazy Tips to Cut Your PPC Budget in Half

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5.  Bottom line

CLICK - Starting with best science is a good start, but it must also lead to a better life.Asked what advice she wished she had received at 25, Martha Lane Fox, co-founder of Lastminute.com led with hiring. Instinct should be ditched, she told the BBC, in favour of a slower-burn audition of candidates (as mentioned by Emma De Vita 2016-03-28, FT p. 8).

Believing a person’s CV or LinkedIn Update (with a link to an article) is fine. Better yet is to go and check the original article, including research, to see if the claims made can be trusted.

In the case of hiring, encourage many staff to talk to the person. If possible, ask the candidate to spend a day or two at your office.

Headlines such as “6 things successful people do every morning” are great teasers. Inc. Wire is a master at this. However, besides some opinions from the authors of such entries, science does not play any role.

Instead, reading tea leaves or misinterpreting research if some is used is most likely the case. In turn, the suggestions should be taken with a grain of salt.

Would you rather trust a therapy to save your life based on somebody’s opinion or the best science and tests?
Are you willing to invest your hard earned cash in something somebody just believes in?
Would you not sleep better tonight if the numbers tell the story?

Let us focus more on observation of behaviour, instead of claims or accounts of people’s behaviour (e.g., as stipulated by authors of a blog or magazine article).

6. Have your say – join the conversation

I have decided to follow Sandra’s advice: “Urs, show me the numbers!”

  • What do you advise corporate bloggers to do to write high quality content?
  • Do you like reading a made-up kind of story at the beginning of a corporate blog entry?
  • Do you prefer the author cutting to the chase straight away in a blog entry?
  • Does any news you get from corporate blogs affect your decision-making at work?

The author declares that he had no conflict of interest with respect to the content, authorship or publication of this blog entry.

Final thoughts

The sad fact is that in a world where BuzzFeed, Gawker, Vice, Vox and others increasingly chase advertising dollars, fewer and fewer resources are left over to check original sources. Instead, storytelling or headlines use click bait, sensationalism and so forth to get the clicks needed to gain the most pageviews.

The only option we have is to not waste our time on such content. If many of us stop, it will result in fewer clicks and advertising dollars for such sites. I have therefore decided to no longer visit Inc. Wire’s content. Nor do I care about Gawker or BuzzFeed. But I will not hold my breath that things will improve soon… Of course, quality content is not free – somebody pays. In the case of this blog, it’s my company :-)

, , Drinking Red Bull boosts job performance
Math-myopia and Prince Harry: do these numbers from Red Bull about performance enhancements make sense?

Will drinking Red Bull and smoking cigars boost our productivity at work?
Will sleep deprivation increase the number of mistakes we make?

This post addresses these questions, as well as how math-myopia affects love for metrics and statistics about sports, dieting, work injuries and so forth.

This blog entry is part of our series on business analytics and big data

If you read German, check out our series on political campaigning and the usefulness of polling (US presidential election).

[su_box title=”Table 1: Keep the numeracy problem in mind” box_color=”#86bac5″ title_color=”#ffffff” radius=”5″ width=”px 700″ ]

1.1 Making a good guess: Avoid base rate neglect

When we combine two pieces of information, we tend to ignore one of them completely. This phenomenon is called “base rate neglect”. For example, the base rate tells us how many people are affected by bowel cancer (6 out of 100), or how many have a fatal injury at work (i.e. 142 deaths per year in the UK – a rate of 0.46 deaths per 100,000 workers).

Knowing the base rate helps put things in perspective.

1.2 Our culture makes it acceptable to say, “I do not do numbers.”

Imagine a study that presents a test that is 75 percent accurate. In 25 percent of the cases where the test predicts a self-reported injury at work will happen, it does not. This is called a false positive.

What is the chance that the person has a work-related accident? Intuitively we might say that in 75 percent of cases a fatal accident will occur. However, the correct answer is, ‘we do not know’ – unless we have the base rate.

To illustrate, if we test 100 people and 4 come out positive, 3 were rightfully identified to likely have a work-related accident and 1 was wrongfully identified. But wait! Of the 96 others, 24 (= 25 percent) will have a false positive. This means we predict a non-fatal work injury, but they will not have one.

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Unfortunately, in a culture where Prince Harry can publicly state that he may not have the math skills to be an air ambulance helicopter pilot, he is likely to ignore the base rate…

The base rate is a good way to start if we want to forecast something or put test results in perspective (see Tables 2 and 3 below).

Below we illustrate this a bit more with an example based on a May 2015 Financial Times article, which nicely illustrates how things can be misconstrued by journalists.

To reduce this risk, we must go to the trouble and check the numbers.

Financial Times gets the ball rolling

[su_custom_gallery source=”media: 1986″ limit=”7″ link=”image” target=”blank” width=”531px” height=”130px”]

Great headline. Unfortunately, the FT journalist fails to refer us readers to the original study from which she got these numbers.

I left a comment, asking author and Employment Correspondent Sarah O’Connor for help.

[su_custom_gallery source=”media: 1984″ limit=”7″ link=”image” target=”blank” width=”441px” height=”234px”]

My comment (see above image) did not get published, nor did I get an answer from the journalist regarding my query.

So as a paying subscriber, should I trust these claims? Might it be wiser to go and check?

You guessed, I continued digging myself. An interesting journey that took me 28 minutes…

The Daily Mail

I found an article from the Daily Mail (see image below).

But it referred to an earlier article by Mail staff referring to a study by Uppsala University (Sweden) researchers.

References? None whatsoever!
[su_custom_gallery source=”media: 1987″ limit=”7″ link=”image” target=”blank” width=”492px” height=”368px”]

So where did the Financial Times’ (FT) journalist find the information if not from the Daily Mail?

Huffington Post links to FT

The Huffington Post managed a link to the FT article from which it had copied. In other words, to avoid copyright infringement the journalist had done a fast re-write. The content was the same as in the FT article using different wording.

[su_custom_gallery source=”media: 1988″ limit=”7″ link=”image” target=”blank” width=”471px” height=”337px”]

So the Huffington Post failed to add substance to what was posted in the FT. What now?

Vitality Health Life – study cannot be found

You might suggest as a good next step to go and check whether the sponsor of a study might offer the full report. That is what we did.

Unfortunately, the sponsor’s website did not make it easy – it failed basic usability requirements. After some digging we found something, but it did not link to the original or complete report either.

You got that right, the sponsor did not provide the full report. Just a bit of information and nothing more. Real bummer.

[su_custom_gallery source=”media: 1985″ limit=”7″ link=”image” target=”blank” width=”490px” height=”349px”]

Do another organic search

Maybe a search with different keywords could help? Read on and find out. Incidentally, why not subscribe to this blog’s newsletter right now?

[su_box title=”Table 2: 6 things we must do to make sure the numbers add up” box_color=”#86bac5″ title_color=”#ffffff” radius=”5″ width=”px 700″ ]

2.1 Go search for the original (see organic search data in image below)

This got me the link to the Rand Corporation. Here something was written up about the study. But once you have the original study, read it carefully, including the method section.

2.2 Read the method and result section carefully

To illustrate, I recently read:

Murray, Sarah (2016-02-26). Frustrated US workers go it alone. Freelancing. Work is becoming more flexible but less secure. Financial Times, FT Executive Appointments. Employment Global Best Practice. Retrieved, Feb. 27, 1026 from http://www.ft.com/intl/cms/s/0/6030a0dc-d0b2-11e5-92a1-c5e23ef99c77.html

I went to the original study, Freelancing, and found another study where the authors do not provide a methodology section.

After reading such a study, make sure the following four questions are answered and if not, don’t make decisions based on such work:

2.2.a — How was the sample selected? No information given in the report!
2.2.b –What kind of survey was used? No information given!
2.2.c — Were participants interviewed using an online survey? No information!
2.2.d — Was a combination of landline and cellphone random digit dialing samples used to get responses through interviews? No information!

If the report does not provide information regarding questions 2.2.a to 2.2.d, should I trust it?

Put differently, as a shareholder or tax assessor, would you trust the company’s financial statements if answers to such auditor questions were missing?

Certainly not, so why should you trust such numbers for an opinion poll? I rest my case!

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[su_custom_gallery source=”media: 1999″ limit=”7″ link=”image” target=”blank” width=”413px” height=”498px”]

Rand Corporation

A short description is offered and at the bottom a link to the report. Another page opens with another description about the study. Eureka – I can finally download the report.

[su_custom_gallery source=”media: 1989″ limit=”7″ link=”image” target=”blank” width=”489px” height=”268px”]

The report itself is very interesting. On page 11 it introduces the reader to the concept of abseenteeism and presenteeism.

– Absenteeism refers to the measure of days absent from work
– Presenteeism refers to the measure of reduced productivity while at work (e.g., due to headache, flu, etc.).

On page 12, it goes on to say, “The instrument consists of six questions with a recall time frame of seven days. The questions ask whether the respondent is employed; the number of hours missed from work; the number of hours actually worked; and the degree to which the respondent feels that a health problem has affected productivity while at work and affected their ability to do daily activities other than work. WPAI-GH outcomes are expressed as impairment percentages, where higher percentages indicate greater impairment and lower productivity. We use the following three work-related impairment percentages calculated on the basis of the WPAI-GH scale

– Per cent work time missed due to ill-health (absenteeism),
– Per cent impairment while working due to ill-health (presenteeism),
– Per cent overall work impairment due to ill-health (absenteeism and presenteeism).”

Hafner, Marco; van Stolk, Christian; Saunders, Catherine, L; Krapels, Jochim; Baruch, Ben (May 22, 2015). Health, wellbeing and productivity in the workplace. A Britain’s Healthiest Company summary report. Retrieved, May 31, 2015 from http://www.rand.org/content/dam/rand/pubs/research_reports/RR1000/RR1084/RAND_RR1084.pdf

What is the problem with the Rand study?

The survey depends on how well subjects recollect facts from last week. But do seven days in a person’s year accurately reflect the status of their health? Additionally, does it make a difference if we collected these data in July, October, December or February of the year we studied?

Finally, large companies are over-represented in this sample. Moreover, companies with under 50 employees – over 70 percent of British firms – could not participate.

So is this a great study? It is very interesting, but the journalists’ interpretation of these data far exceeds what the authors infer from their own data.

By the way, there is research that is far better suited than the above to learning how sleep deprivation can affect job performance or studying math.

[su_custom_gallery source=”media: 1993″ limit=”7″ link=”image” target=”blank” width=”445px” height=”179px”]

Lack of sleep increases risk of failure in school

Uppsala University to the rescue

Olga E. Titova, et al., (2014) Associations of self-reported sleep disturbance and duration with academic failure in community-dwelling Swedish adolescents. Sleep Medicine doi: 10.1016/j.sleep.2014.09.004 Retrieved May 31, 2015 from http://www.researchgate.net/…… (click on citation to get study link since it is too long to post here).

The study included 20,000 adolescents aged 12 to 19. This longitudinal study was conducted from 2005 to 2011. About 30 percent of participants reported regular sleep problems.

The study found that if you have less than seven hours of sleep, data indicate an increased risk of failure in school.

The group also found in a previous study that going without a night of sleep increased toxic substances in the brain. Possible increased risk of Alzheimer’s, Parkinson’s and multiple sclerosis was reported. Other prior research shows how the brain uses sleep to cleanse itself.

Interesting Reading

2015-07-20 – One night of sleep loss can alter clock genes in your tissues
2015-07-13 – Sleep loss makes memories less accessible in stressful situations
Three studies show that teens should decrease screen time before going to bed

Bottom line: Show me the data…

[su_box title=”Table 3: Does the story meet 2 critical benchmarks?” box_color=”#86bac5″ title_color=”#ffffff” radius=”5″ width=”px 700″ ]

1. Does the article provide the reader with a link to the original study discussed?

Every journalist does some research before writing their story. If the original material is available online, why not reference it? Saves your reader time and gives them a chance to read up on this interesting topic.

Hence, the printed article should provide a link to the original source(s). At the very least, it should refer to the online version of the article where links to the original sources are provided.

2. Does the study report provide the reader with a method section?

Explain succinctly how you did the study, such as:

“The analysis in this report is based on telephone interviews conducted February 18-21, 2016 among a national sample of 1,002 adults, 18 years of age or older, living in the continental United States (501 respondents were interviewed on a landline telephone, and 501 were interviewed on a cellphone, including 312 who had no landline telephone)….

A combination of landline and cellphone random digit dialing samples were used… Interviews were conducted in English and Spanish. Respondents in the landline sample were selected by randomly asking for the youngest adult male or female currently at home. Interviews in the cell sample were conducted with the person who answered the phone, if that person was an adult 18 years of age or older.”

Great read: PEW – information about our survey methodology

For those like Prince Harry, who claims, “I can’t do maths,” the above paragraph can be a lifesaver.

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If you read an article like the one for this post, better check the number to see if the headline by the journalist can be justified from the study’s results. Very likely it cannot, so putting decreasing amounts into content seems to only viable strategy left.

And to answer our question in the title: No study shows drinking #RedBull boosts job performance.

However, it does increase your daily sugar intake significantly, which is probably not a good thing.

Join the conversation

  1. Do you have an example of how mathematics phobia is affecting basic mastery of mathematics skills?
  2. Do you have a good example of a sponsored study that addresses some of the issues outlined here?
  3. How do you make good guesses about things that affect your decision-making (i.e. invest my money here or there…)?

Of course, I will answer you in the comments. Guaranteed.

Can we trust these numbers?

Interesting reads point out that trust is learned more than inherited. Trust is socially received and transmitted.

The truth about trust
Van Lange, P. A. M. (2015). Generalized trust: Four lessons from genetics and culture. Current Directions in Psychological Science, 24, 71–76.

Download PDF file: How to save advertising dollars on Facebook and YouTube.
2015-09-28 Update thanks to Rubén Cuevas,

Fake views of ads by "bots" cost advertisers more than $6.3 billion US globally during 2015.

Data show, video fraud-detection on DailyMotion, vimeo, YouTube and others fails to filter out invalid traffic properly.
 
Here I distill our knowledge into 3 takeaways.

Check out what Sir Martin Sorrell WPP has to say about the matter.
According to Media Rating Council (MRC) and IAB (Interactive Advertising Bureau) standards, a viewable impression of a digital ad occurs when 50 percent of an ad’s pixels are on screen for one second.

In December 2014 Google published data regarding display ads in browsers (desktop and mobile). The study revealed that 56 percent of the display ads it served on its own and others’ sites never appeared within view on someone’s screen.

Nobody really knows for sure how Google or any other video platform or ad server come up with these numbers. For instance, Google provides explanations of what one should look for in these numbers it serves advertisers about their ads. How it collects them is, however, not explained.

1. What is the challenge?

The US Association of National Advertisers (ANA) released a report in December 2014, which estimated that

  • 23 percent of video ads, and
  • 11 percent of display ads

are viewed by “bots”. These are computer programs that mimic the behaviour of an Internet user.

The ANA estimated that this would cost advertisers about $6.3 billion US globally in 2015. This is a concern for two reasons.

1. Adertisers are spending ever larger amounts of money across both display and video advertising (see graphic below), and

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2. Spending for video ads is estimated to grow 21.9 percent compound annually from 2015 to 2020 (US data) (see also online video celebrities – chart below).

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2. Google and Facebook want a larger slice

Google and its YouTube platform want to garner the largest share possible of this growth in video advertising. Nonetheless, the competition will surely want to prevent this.

In April 2015, Facebook boasted it had over 4 billion video views each day. This number continues to grow.

For now, YouTube data suggest many more videos are viewed daily on its video platform than on Facebook.

For Google, display and video ads create tons of cash for the company, but things are changing. For instance, the rate for pay-per-click ads has been dropping (view chart as shown below). Google explains this was lower rates on YouTube than its other platforms.

[su_custom_gallery source=”media: 2334″ limit=”7″ link=”image” target=”blank” width=”530px” height=”288px”]

Join the 3,000+ organizations using the DrKPI Blog Benchmark to double reader comments in a few months while increasing social shares by 50 percent - register now!

Some suggest that in the US, millenials spend nearly 60 percent of their time watching movies on either a smartphone, tablet or desktop/laptop.

To keep advertisers pouring more money into video ads, however, Google and Facebook have to up their game. Accordingly, both must provide strong evidence that their fraud detection systems work. Until fraud detection works, three things must be addressed as outlined below.

3. Focus on not getting charged for invalid video views

Each video platform wants to charge advertisers for video ads according to whatever the market will bear. In turn, advertisers want to keep costs for ads down, but this is becoming a challenge.

Apparently, some companies offer tens of thousands of YouTube views for as little as $5 US. Such data could in part help explain why 23 percent of video ads are viewed by fake consumers.

Of course, no advertiser wants to pay for these “views”.

How does one avoid paying for fraudulent views?

That is difficult to say, because…

Filtering invalid traffic before advertisers are ever charged is not getting easier.

Recent research sheds light on this important issue. Researchers uploaded two videos to each of five video platforms (YouTube, DailyMotion, Myvideo.de, TV UOL and Vimeo).

They bought ads on these platforms, which targeted the videos they had previously uploaded. Then, they directed their “bots” to these videos.

What are bots?

[su_box title=”EXPLANATION: What are bots?” box_color=”#86bac5″ title_color=”#ffffff”]

Bots are used by DrKPI, Google and Qwant Search to crawl the web.

They are little programs that allow DrKPI  to collect data about blog entries (e.g., text, data of blog entry, etc.).

Google uses bots to index webpages. Bots can also be computer programs that mimic the behaviour of internet users viewing, e.g., a video ad.

About 60% of internet traffic is due to bots.[/su_box]

Each platform’s two videos were visited by the bots about 150 times. The researchers explain in their paper that the bots used were far from sophisticated tools as cyber criminals might use. Nevertheless, the results are worrisome for advertisers.

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If detection mechanisms work properly, marketers do not have to pay for ads on YouTube viewed by robots.

Data show that YouTube seems to have the best fraud-detection mechanism of the five platforms tested. It was followed by DailyMotion.

YouTube’s fraud detection tool identified 25 of the 150 bot visits to a video as real users viewing the video.

This means in 16.67 percent of cases, YouTube wrongfully identified a bot or robot to be a human watching a video.

♥ Curious? Join 1,500+ other subscribers to this blog’s newsletter and read on!

What is most unsettling, however, is that Google charged the researchers for 90 of the registered fake views. This is a 60.67 percent error rate!

So what is the bigger problem:

1. That YouTube wrongfully identified 25 robot “views” to be humans out of 150 times the video ads were “seen” = 16.67 percent error rate, or

2. Google AdWords, instead of charging for the 16.67 percent of views wrongly identified as humans by YouTube, deciding to charge for 90 views done by robots =  a 60.67 percent error or false positive rate?

How could YouTube’s false positive-rate be so inflated? The process of counting views (i.e. public view counter and number of counted and monetized views) is opaque on YouTube.

Thanks to Rubén Cuevas for pointing out: “YouTube has two different mechanisms in place to discount views for the:

public view counter, and also the
monetised view counter”

Important is here to understand as Rubén pointed out to me, the public view counter seems to be more strict in the detection of fake views.

This is to say YouTube increases the count, and therefore, charges the advertiser for even more fake views than the public view counter would suggest.

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Read the research findings in detail:

Marciel, Miriam; Cuevas, Ruben; Banchs, Albert; Gonzales, Roberto; Traverso, Stefano; Ahmed, Mohamed and Azcorra, Arturo (July 2015). Understanding the detection of fake view fraud in Video Content Portals. Retrieved September 23, 2015 from http://arxiv.org/abs/1507.08874

Check out the FT article for non geeks, including comments by the researchers left here:

Cookson, Robert (September 23, 2015). Google charges marketers for ads on YouTube even when viewed by robots. Financial Times, p. 1. Retrieved, September 23, 2015 from http://www.ft.com/intl/cms/s/0/53ac3fd0-604e-11e5-a28b-50226830d644.html

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1. Better process transparency for fraud detection
Having over 15 percent of bot views identified as “real” is a high error rate. While this is bad, YouTube is better than the rest.

YouTube seems to use a sufficiently discriminative fake view detection mechanism, but this applies only to the public view counter.

For the monetized view counter (i.e. those for which advertisers get billed), YouTube seems to ignore this mechanism for discounting fake views (see section 3 above – verifiability).

This is, of course, unacceptable for advertisers. Moreover, it makes the process of how YouTube detects these deceptors totally intransparent for advertisers.

Bottom line: With the help of third party verification, this challenge should be resolved quickly.

2. Improve measurement and use a set of standardized metrics
Even with third parties verifying numbers for advertisers, if our KPIs (key performance indicators) are not comparable we are stuck. For instance, Facebook defines a “view” as someone watching a video for three seconds or more. Others like YouTube talk about around 30 seconds before counting.

These different standards make it difficult for advertisers to get a clear feel and comparable numbers across platforms. Thus, even focusing on numbers, as Google suggests, is of limited value.

Bottom line: Define and agree upon the metrics used by the advertising industry. Make them comparable across social networks and video platforms.

3. Establish third party collecting, verifying and auditing of numbers
Facebook has followed the practice of self-reporting on viewability of ads, pages, reader engagement, and so forth. But as Volskwagen’s #dieselgate shows, self-reporting is always vulnerable to misuse, sloppiness and abuse of the system.

Bottom line: We need third party collecting and verification of numbers. Such efforts must in part focus on minimising charges for advertisers when ads are viewed by robots.

Eliminating fraud in online advertising is key

You are supposed to count the actual number of measured views of a video ad. Ergo, filter out invalid traffic from bots.

In December 2014, the ANA/White Ops study identified 23 percent of video ad impressions as bot fraud. Combine that number with the results from data reported here, and this means:

Google AdWords takes at least 60.67 percent of the 23 percent bot fraud views on YouTube and charges advertisers for them.

Thus, it follows that advertisers pay for at least 14 percent of video ads not viewed by humans!

The lack of transparency, standardized metrics and a regular audit of how video platforms handle fake ad views costs advertisers dearly.

Accurate metrics matter. For the first time ever worldwide mobile advertising will overtake print in 2016 ($71 billion US versus print shrinking to $68 billon US).

As well, social media advertising will top $25 billion US this year. Facebook is expected to take the biggest slice, more than $16 billion US. Instagram will account for “just” $600 million US.

Advertisers are justifiably wary and suspicious. Based on the above predictions, we better make sure that we pay only for those imprints, views, etc., that were executed by humans and not robots. Will #GoogleAW2015 tell us more about how YouTube plans to address this issue? Not really.

Download the checklist as a PDF (320KB file).

Interesting read

a) More content about advertising and viral content
b) Google: hidden ad costs
c) IAB’s efforts to establish a more trustworthy supply chain
d) YouTube frozen views
e) YouTube search for counted views – zero information provided
f) Facebook partners with Moat to verify video ad metrics
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What is your opinion?

Now that you have read “Epic fail: Video view fraud detection“, I would like to ask you a question or two.

– As an advertiser, how do you deal with this issue? Please share!
– What type of video advertising works best for your business?
– What do you know about Facebook’s handling of this challenge?

More about advertising fraud

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Summary: How can David Cameron trust ex-HSBC boss Stephen Green enough to appoint him trade minister?
Why should I trust your recommendation and read this book?

The above are all situations in which we as consumers, co-workers, citizens or purchasing officers have to decide, can I trust this information?
Discover four tips right here, plus see our handy checklist – with slides!
How do you do it? Leave a comment, I am curious to know.

Can I trust you?

Every day we tweet and share information, but how much can we trust these things?

Can you trust Dominique Strauss-Kahn? The French former politician and International Monetary Fund (IMF) chief recently gave evidence at his trial on pimping charges, which threatens to expose his double life. Stating that he rarely attended sex parties because he was “saving the world” and had “other things to do”, he probably knows what it means to lose one’s reputation and wife’s trust and respect.

Dominique-Strauss-Kahn-faces-pimping-charges-in-Lille-court

Once tipped to be the next president of France, Strauss-Kahn does not deny having had group sex. But he refutes the charges of “aggravated pimping”, described as aiding and abetting prostitution. He denies knowing that women at the orgies were prostitutes, which is punishable by up to ten years in prison.

Similarly, the UK government was in possession of detailed evidence about wrongdoing at HSBC’s Swiss bank. That did not stop David Cameron from appointing former HSBC boss Lord Green as trade minister. But Swissleaks and other HSBC leaks haunt the ordained Church of England minister. The alleged money laundering activities happened during his watch (see below).

You are what you tweet

Remember last time you saw a tweet or got a newsletter in your inbox? You shared it on Twitter and Facebook, but did you first ask yourself, “Can I trust the information that I just passed on?” Was the study well done or based on a convenience sample (i.e. we asked our friends and know what people want based on that)?

Remember the last time you saw a blog entry like this:

Top 10 social media agencies in the world

So, the world consists only of the UK and US? I don’t think so!

11 power tips to increase your Facebook engagement

More like power trips, not tips!

These things are often based on people’s personal experience and opinions, but people still eat this stuff up and share it like candy.

Just reflect a moment, would you trust your banker to invest your pension savings based on personal beliefs? I prefer facts. I surely hope that our pension’s fund managers analyze data more carefully than just following such blog entries’ advice.

Remember, if it sounds too good to be true, it probably is.

How to check trust levels for a blogger => DrKPI Trust Index

Garbage in, garbage out? Nope!

Corporate blogs are often simply about the product. In other words, they all just push products, some openly, and others in more subtle ways. The SAS blogs do better than most, that is for sure. For instance, whenever possible the authors refer to other material that is beyond reproach.

Erwan Granger blogged about cloud computing (see below). Smartly, he refers to the definitions of cloud computing as put forward by NIST (Peter Mell and Timothy Grance), a well-respected agency.

SAS-writes-about-cloud-computing-uses-NIST-definition

While the above blog entry tries to push product, it still provides content that is valuable, helping the reader better understand what cloud computing is. By linking to other material it provides me with useful links where I can learn more, thus saving me time. Well done! If you have to push product, this is a good way of doing it (please note, we do not do business with SAS, directly or indirectly).

PS. How independent these SAS users are we do not know. But some do a very nice job blogging !

Curious? Join 1500 other subscribers to this blog’s newsletter and read on!
Join the 3,000+ organizations using the DrKPI Blog Benchmark to double reader comments in a few months while increasing social shares by 50 percent – CHECK US OUT NOW!

Bottom line

There are four things to abide by before you trust your banker, corporate blogger, client or dentist:

1. Take five minutes to check the facts. Before you believe your banker or a tweet you saw, do a check. Is the eMarketer study or Jeff Bullas’ tip based on sound facts and research, or just the author’s gut feelings?

Is the research or opinion good enough to bet your money on? Probably not, unless it is personal investment advice from the Sage of Omaha, Warren Buffet, or maybe well-done survey research from PEW.

eMarketer-cites-study-with-invalid-data-trust-lost-in-their-material

2. How did you come to trust this person? Think about your family physician: they are a non-nonsense person you trust based on their experience. They check a few things to avoid making a hasty, and possibly wrong, diagnosis.

Online content from a corporate blogger is similar. Have you followed them and read their material for some time; is their material trustworthy? Just like building trust, writing great blog content is time consuming and requires more than writing what you believe – show me the numbers.

3. Will your behaviour decrease the other person’s trust in you? Last week you agreed to have dinner with a business partner this Tuesday. Now you have to cancel.

It goes without saying that appointments should be kept whenever possible, but if you must cancel, do it personally and start with an apology. Make sure the other person does not feel offended or let down. Finally, agree on another time and place right then.

Stephen-Green-ex-HSBC-Boss-do-not-preach-just-live-ethically

4. Lead by example and don’t preach, just do it right. Lord Green, the ex-HSBC boss published a book in 2009 (see above image) that preached at leaders to not only behave legally but ethically, going beyond “what you can get away with”.

In 2005, Green became chair of the supervisory company of HSBC’s Geneva unit, HSBC Private Banking Holdings (Suisse) SA. In this capacity, he was responsible for compliance and oversight when the alleged money laundering activity took place at HSBC’s Geneva branch.

The trust people put in you, the reputation you had and how good you made people feel is what you will be remembered by.

Looking at the above suggestions, before you re-tweet something next time, check it first. For instance, can you trust the study’s data? Otherwise follow Harper Lee’s 2007 advice, “Well, it’s better to be silent than to be a fool.

Sounds like a good motto for corporate bloggers: Check and re-check the facts, otherwise do not publish. Especially if somebody wants to quote you, make sure you read the book first before making a fool of yourself.

More Information
Download PDF file with additional graphics and 20 slides (317 kb) – Can I trust my banker, blogger and this book review?

Check out the SLIDES here, they’re definitely worth your time!

[slideshare id=44382283&doc=check-1st-or-loose-reputation-and-trust-150207080226-conversion-gate02]

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You can view more presentation slides from DrKPI here.

What is your opinion?

CLICK - Facebook Likes tell a lot about you, such as if you drink beer, have sex regularly and are happy.

Facebook engaged in a large study to see if users’ emotional states could be affected by their news feed content.
Consent of Human Subjects: Subjects not asked for permission first.
Findings: Extremely small effects.
Research methodology: Poor algorithms used, questionable findings.

Key finding: A reduction in negative content in a person’s newsfeed on Facebook increased positive content in users’ posting behavior by about 1/15 of one percent!

We address 3 questions

1. Why did some of the checks and balances possibly fail?
2. Should we worry about the study’s findings?
3. What benefits do Facebook users get out of this study?

Non-techie description of study: News feed: ‘Emotional contagion’ sweeps Facebook

1. Some checks and balances failed

Following the spirit as well as the letter of the law is the key to successful compliance. In turn, any governance depends upon the participants doing their job thoroughly and carefully.

In this case, the academics thought this was an important subject that could be nicely studied with Facebook users. They may not have considered how much it might upset users and the media.

Cornell University has a its procedure in place for getting approval for research with human subjects. As the image below illustrates, the researcher is expected to reflect on the project and if in doubt, ask for help.

CLICK - Why does the media not get the facts right about the Facebook study? #BigData

The university points out that it did not review the study. Specifically, it did not check whether it met university guidelines for doing research with human subjects. The reasons given were that its staff:

Curious? Join 1500 other subscribers to this blog’s newsletter and read on! Pls. use an e-mail that works after you change jobs! Continue reading “Facebook mood study: Playing with your mind” »