July 2023
The Funnel is in Full Meltdown
New data continues to show the short-sightedness of funnel thinking. When will planners listen?
Let’s start here:
In late 2009, NBC had a problem: its funnel was broken. Conan O’Brien had recently taken over the Tonight Show, but his ratings weren’t at the heights many insiders had hoped. This performance, which some blamed on his niche comedy style, was at least partially due to the fact that Jay Leno’s new 10 pm show was floundering. A bad 10 pm show gave a bad lead-in to the 11 pm local news, which in turn filtered into a bad lead-in to Conan at 11:35. The local affiliates were up in arms; they needed a fix, and fast, because the funnel to their ad sales business had been broken by NBC’s attempt to keep both late night hosts employed and on the air in some capacity.
The resulting very public breakup of NBC and Conan in early 2010 has been well-documented over the last 13 or so years, none more in-depth than Bill Carter’s The War for Late Night, which was published in 2011 with extensive interviews and insight from nearly all the key players. It goes into the psyche of the participants, gives extensive backstory to the closed-door decision making, and paints a captivating picture of a “war” that had many sides & motivations.
But looking back at the book - and that particular moment for TV - and I can’t help but feel like the bigger picture was being missed by key decision makers, especially 2 factors:
DVR usage, which Nielsen started measuring in 2006, was starting to clearly impact the ratings of most shows, and also when people consumed them. In fact, by July 2009, a little over 20% of viewership for broadcast primetime shows was non-live thanks to DVR.
YouTube and internet video was taking off. January 2009 was the first time the platform passed 100 million US viewers in one month.
Despite the fact that both of these were direct and growing challenges to the traditional TV funnel for ad sales, they were barely a blip in the decision making of NBC during the Conan debacle. DVR gets a few mentions in Carter’s book, but more as a nuisance to Jay Leno’s 10 pm show than anything else (NBC surmised people were DVRing other shows and watching them at 10 pm instead). YouTube gets even less of a mention, positioned as a nascent threat that broadcasters believed they could neutralize by adjusting how and when they share their own content. When Jimmy Kimmel was interviewed by Carter for his book, he did not see the cultural cache possibilities of the internet, and instead thought networks should band together to force people to watch their shows. He proposed that the networks get together and say, “We’re not putting anything online anymore. You want to see it? You better fucking watch it.”
In the end, Conan ended up on TBS, where NBC was satisfied he would be neutralized because of its low awareness and lack of strong lead-ins. While it’s true that Conan’s ratings at TBS were never incredible, what happened instead was emblematic of the future of attention-grabbing: Conan, and new Late Night host Jimmy Fallon, turned the internet into a weapon, proving that virality could be its own kind of carrot for advertisers if served the right way - like in aggressively sponsored online content or product placement that matched the sentiment of the show. The late night TV landscape has never been the same.
Canva, Text to Image: “A picture of Conan O’Brien holding a funnel on a late night TV set.”
A headline…
…found its way into my inbox the other week that brought The War For Late Night back to me: “Gen Z is upending the purchase funnel, according to a new Edelman Trust Barometer report”. The report, part of Edelman’s annual Trust Barometer series, summarizes that “consumers are looking for ongoing engagement after the point of purchase and their need for trust grows with feelings of vulnerability.” Among the key supporting stats, Edelman found that 78% of people agree with the statement "I uncover things that attract me and make me loyal to a brand AFTER my first purchase" and 50% of people that actively research important attributes of the brands they buy say they do most of that research AFTER they’ve made a purchase.
To most, the funnel has always ended at purchase, or included a small caveat for re-engagement and post-purchase love that would help kickstart the funnel anew. But in reality, the way we’ve long taught and looked at the funnel is broken. The fix isn’t just a new lead-in (better content), but also a new way of looking at the cyclical nature of brand love altogether.
Only after decamping to TBS and reflecting on the totality of his ordeal at NBC did Conan start to see how much the future of commerce was a two-way street. "I see a philosophical shift," he said. "The new idea is to try to get a lot of people to see you, yes; but you really try to deepen the connection with those people." He likened some of Team Coco’s new segments as a “dialogue” with the audience, making them “contributors” to his show. He was seeing, for the first time, that buy-in was the beginning of the relationship, not the end of it.
Animation based on “The Collapse of the Journey” from August, 2021
I tried to articulate…
…some of this thinking two years ago when I argued “...that in a lot of cases today, there isn't a "journey" so much as there's one piece of well-placed content that can potentially do it all.” I referenced upcoming launches of live in-feed shopping on TikTok and Instagram as perfect examples of how what once had to be a multi-touch experience with consumers could now be boiled down to seconds. I also referenced what has become a cornerstone problem with strategy & planning today: the fact that many have framework fucked themselves into using hierarchies and charts for the sake of filling them in versus questioning their usefulness against increasing evidence that one funnel does not fit all.
While live in-feed shopping has seen more mixed results in North America than many thought it would, there are plenty of other developments in the last two years that support the POV that the funnel is no longer operational. Many of them can be summed up in what Ted Gioia calls the “Information Crap-pocalypse”, the root of which was also described by James Vincent in the Verge:
“Google is trying to kill the 10 blue links. Twitter is being abandoned to bots and blue ticks. There’s the junkification of Amazon and the enshittification of TikTok. Layoffs are gutting online media. A job posting looking for an “AI editor” expects “output of 200 to 250 articles per week.” ChatGPT is being used to generate whole spam sites. Etsy is flooded with “AI-generated junk.” Chatbots cite one another in a misinformation ouroboros. LinkedIn is using AI to stimulate tired users. Snapchat and Instagram hope bots will talk to you when your friends don’t. Redditors are staging blackouts. Stack Overflow mods are on strike. The Internet Archive is fighting off data scrapers, and “AI is tearing Wikipedia apart.” The old web is dying, and the new web struggles to be born.
The web is always dying, of course; it’s been dying for years, killed by apps that divert traffic from websites or algorithms that reward supposedly shortening attention spans. But in 2023, it’s dying again — and, as the litany above suggests, there’s a new catalyst at play: AI.”
If that litany of issues facing storytellers today in relation to AI wasn’t long enough, let’s throw in the fact that we continue to learn about misplaced, underserved, and junk digital ad placements that have been paid for by marketers over the years in the name of fulfilling the funnel.
The result of all this (and many more examples), is a broken system that is only going to become more fragmented moving forward. Imagining this fragmented future in Today in Tabs a few weeks ago, Mariam Sharia spoke about how her consumption of TV as a child in the USSR created a line of differentiation between her and American children after her family immigrated to the USA, and how that experience is one every child may face in the future thanks to tools like AI:
“What if every five-year-old arrived at elementary school with a cultural identity made up of four years of unique, personalized, AI-generated media? What happens when every teenager’s favorite TV show has disappeared, its tiny share of fans scattered thinly across the globe? I’m afraid that more fragmentation will render us simply unable to understand one another, leaving everyone as alone and sad and insane as little Kindergarten me."
To a large extent, the future Mariam is envisioning is already happening to brands and marketers. Estimates say that up to $318 billion was spent on ads in the US in 2022, but a study we ran at Quick Study found that 30% of Americans couldn’t name a brand relevant in their life today.
That disconnect is unsustainable, especially since it’s cross-generational. According to Global Web Index, only 14% of Gen Z and 9% of Gen X & Baby Boomers feel represented in the advertising they see. When you are focused too much on a process for gaining connection and sales that’s worked in the past, you will inevitably miss the moment when the game changes.
Canva, Text to Image: “A picture of the internet decaying and falling apart”
One takeaway…
…is that a sequential funnel is no longer the answer - it’s about creating a cyclical relationship, Conan’s “dialogue” in action. Mirroring Conan’s discovery about the connection to his fans in the wake of the NBC fiasco, Edelman's global chief brand officer Jackie Cooper told Insider that their research showed that the funnel “can't be linear. It now has to be a lateral relationship. So that's changing how brands need to think about their spend, where they show up, how they show up — far beyond just awareness."
When we launched Quick Study last year, we introduced a new marketing flywheel, one where purchase is just one part of 3 - the other 2 being relevance and trust. Research shows that consumers develop trust with brands through 5 factors - authenticity, consistency, consistency, clarity, and quality. Many of these are harbingers of relevance, things that you can show consumers before your product is even in their hands to evaluate the quality of. If you can create sustained relevance by focusing on authenticity, clarity and consistency, you can build trust, which ultimately leads to sales. And then the more people that use your product, the more relevant you are, continuing the flywheel and creating an ongoing virtuous cycle. This is the type of “funnel” the future will be built on, not a linear system that ignores the realities of content consumption patterns today and where purchase sits in the continuation, and even sometimes beginning, of the cycle.
Our vision of the modern marketing flywheel
Back in 2009…
…NBC was caught using an outdated playbook to make its decisions, but they were far from the only ones. Time and time again in culture we see legacy brands opting to use old frameworks that brought them to a successful place, thereby ignoring the fact that time has passed and so too have their frameworks. And the need for new frameworks isn’t limited to brands, but should be considered for all storytellers. Recently we saw another very public example of the cognitive dissonance that comes from being stuck in the traditional playbook, an instance that Kate Lindsay of Embedded called “the last gasp of old YouTube” because the disgraced YouTuber in question was “operating with an outdated internet playbook and refuses to change.” If you only make decisions based on what you knew before without adjusting to meet the realities of today, you’re doomed to fail.
Canva, Text to Image: “A picture of an art project volcano melting down on a table in a classroom”
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