Mental Model : Second Order Thinking
We often think about the immediate consequences of our decisions and actions, whether they will be beneficial, harmful, or neutral in their impact. Taking this a step further is where the real insight lies : Second order thinking.
First Order thinking : anticipating the immediate consequences of our actions or decisions.
Second Order thinking : anticipating the consequences of those consequences.
While there may be a few ways of approaching this, I consider Second Order thinking slightly different from the observation and foresight of unintended consequences; such that Second Order thinking requires us to be more intentional in our observation, deeply committed to intellectual honesty, acknowledging our own biases, taking into consideration the consequences of consequences as a key factor in the cost-benefit analysis of making a decision or taking an action, and a more meticulous and thoughtful preparation for (and sometimes acceptance of) the negative or unknown consequences that may follow.
Storytime.
The Cobra Effect 🐍
During the colonial rule of the British in the Subcontinent (Pakistan and India), the British government wanted to tackle the growing problem of venomous cobra snakes in the city. They came up with a plan to offer a bounty for dead cobras brought to their offices. This strategy led to many dead cobras being claimed for rewards, and a noticeable decrease in the number of cobras around the city. Nice.
But (you knew this was coming), soon after : there was a steep and continued rise in the number of dead cobras being presented for rewards. Suspicious.
Turns out, a group of enterprising people started breeding cobras to cash in on the opportunity. The government realized their strategy had created this unintended consequence, and stopped the program. The breeders, now left with all these unsellable cobras, simply released them into the city — making the initial cobra problem way worse. Yikes.
While it’s unclear whether this is a real or fabricated story (something we can all relate to given the chaotic news cycles of today), it does illustrate the importance of second order thinking.
Next up : A real life example.
Attention in Advertising & Democratization of Content
The digital marketing ecosystem has come together to figure out the right metrics and signals to measure “attention” across online ads. This is an important discussion — not just because the global digital ad spend is projected to reach $679B in 2023 (!!) — but also because the implications of advertising are far reaching.
The economic structure of monetizing content through ads has helped sustain the ecosystem of storytelling and journalism. It has helped keep the internet free and democratized access to content and opportunity for anyone, anywhere with internet access. It has opened the doors for diversity of thought, content creation, and knowledge sharing — and has connected the world in some really beautiful ways! These are some positive consequences.
The digital ad ecosystem has also missed the mark in some significant ways. To start, let’s use first principles to deconstruct to the basics here :
- Publishers create content to inform, educate, and inspire their audiences.
- Audiences visit publisher sites, pages, channels etc to consume content.
- Advertisers run ads across publisher content to capture the attention of and connect with audiences visiting those sites.
Problem : Advertisers found themselves spending $$ on digital ads that were never even seen on the screen by a human.
First order thinking (a linear solution) : Create a standard that requires a creative ad to meet a set of criteria (ex : must be 50% on screen for at least 1-sec) in order to count as a “viewable ad” — aka an ad worth paying a publisher for.
Great! This means publishers will create higher quality content and better ad viewing experiences for consumers across their sites and apps in order to get paid more, and ad dollars are spent more efficiently so ad creatives will get better over time, and the internet just keeps getting better, right? ..Right?
Second Order Thinking : The consequences of consequences of consequences
While well-intended, this strategy missed the mark on considering the complexity of behavioral economics (think : incentives), removed the consumer from the center of the solution (think : quality and experience of content and creatives), and predictably led to some negative unintended consequences.
The strategy to enforce a “viewability” standard did create a good baseline to ensure an ad had the opportunity to be noticed by the intended audience, and it also did create some ad spend efficiency in terms of ads in view on a screen. Not an exhaustive list, but here are two important layers of consequences that followed :
- The rise of MFA sites
- Trust deficit and brand equity
The rise of MFA
Gaming the system. Similar to breeding cobras for bounty, MFA (Made for Advertising) sites are designed to have just enough contextually relevant content to bring a user to the site, but is essentially cluttered with ads that meet the threshold to get paid : 50% of the ad is on screen for 1-sec. Why would the audience visit an unknown site in the first place? MFA traffic mostly comes from clickbait links and redirects from other sites, and MFA sites don’t really need the audience on the page for longer than that 1-sec anyway to get paid. How big is this problem? $13B big.
In other words, that’s $13B of revenue lost for publishers doing the important work of reporting, investigating, and keeping society informed. Revenue that could have been used to innovate platforms and keep audiences engaged as content consumption behaviors shifted. With hard-working publishers fighting for revenue, we began to see a poor quality experience of content consumption online. Think : getting to the content meant x-ing out of 2–10 ads, then dealing with page load latency, pop-ups and random ads’ audio coming from some hidden part of the page, ad clutter distracting from the content we’re there for, and an overall feeling of frustration. With the pressure on, it also wasn’t uncommon to see some publishers misrepresent, embellish, and compromise the overall accuracy of facts in pursuit of ad dollars.
It doesn’t stop at MFAs. Cue : The Social Dilemma.
This is dangerous, and brings us to the consequence of this consequence.
Trust deficit and brand equity
Release the cobras : Trust erosion. Overall, this has led to a trust deficit of what consumers read online. This is illustrated by consumers shifting their content consumption preference to other platforms like Reddit, TikTok, X (previously Twitter), podcasts, substacks, and other independent sources in search for authenticity, accuracy, truth, and a better content experience. The erosion of trust creates gaps that allow for newcomers — not necessarily a bad thing for consumers and advertisers, but not too great for a traditional publisher’s business. This also brings forth the risk of breeding grounds for misinformation or accidental misinformation going unchecked, as the newcomers figure out how to form and enforce fact-checking guidelines and standards of their own. While this has been a concern for centuries, the speed and scale at which information can be shared online can lead to faster reactions and decisions based on that information. On the flip side, that speed and scale can also be used to quickly refute and debunk that information.
The trust deficit in the overall ecosystem results in collateral damage to the brand equity of established premium publishers. A step further, this adversely impacts the Halo effect of creating positive relationships with ads running on those publisher sites.
Ultimately, advertisers aren’t able to effectively reach their audiences, publishers lose revenue potential which hurts journalism and storytelling, and consumers and society overall loses out on quality content and information.
We all have a stake in this problem. This is about advertising, and this is not about advertising.
Now what?
I’m an optimist by default. So despite this observation of the consequences outlined above sounding like doom & gloom, it simply means there are opportunities to learn, course correct, and fine-tune the implementation of our mental models for decision making moving forward.
Experts within the ad industry are coming together to reevaluate how they measure attention, all while keeping the intricacies and multifaceted nature of human behavior in mind. Academics and scientists are contributing their perspectives and cognitive frameworks to the ecosystem. Forward-thinking players are exploring the evolution of existing, and development of new, content consumption platforms and channels. Organizations like Center for Humane Technology are bringing humanity and collective well-being back to the center of the shared information environment. Innovative solutions using AI (such as Community Notes on X, Ad Fontes Media, others) are tackling issues of misinformation and bias in news reporting to work towards a more ethically sound media environment.
Media is powerful. It can be used to mobilize people around a cause that moves humanity forward, or one that creates divisions to tear us apart. It can create platforms that encourage debate and civil discourse, or platforms that encourage hysteria and reveal the ugly parts of human nature.
It is a responsibility to have meaningful conversations around factors that impact how information is distributed, shared, and consumed. Advertising and the ad tech ecosystem is a very significant part of this. It is critical to use Second Order thinking for our decision making, and spend time understanding how each player in the ecosystem is incentivized towards a collective mission of a better internet.
Fail Forward
In essence, Second Order thinking consists of zooming out to the big picture, analyzing the possible consequences, disentangling the signal from the noise, and using mental models to find the best path forward.
It’s important to note that it’s impossible to predict all potential consequences. You don’t want to get trapped in analysis paralysis or permit fear of failure to immobilize you from taking action.
The objective is to make well-informed and thoughtful decisions. If we fall short and encounter failures, let’s make a commitment to fail fast and, most importantly, fail forward.
