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The Seven Types of Mobile Social Commerce

The Seven Types of Mobile Social Commerce
originally published in MediaPost's Social Media Insider

Until recently, I used to put mobile social commerce in the same category as Woody Allen's blockbusters and Rick Perry's bad hair days; it's something that couldn't possibly exist. When defining it properly and exploring the possibilities, though, it turns out that mobile social commerce is flourishing.

The concept of social commerce can be taken literally, as in making a purchase directly through a social media property. This can be done, such as renting "The Big Lebowski" and watching it on Facebook. That's happening now, but as a revenue stream, it's insignificant. Far more important is the degree to which content shared through social media is influencing purchasing decisions, which is happening on a massive scale, as illustrated by a stat roundup on Social Commerce Today.

Mobile social commerce operates in the same way. The limitations are even more pronounced, though. For instance, when Burberry offered a sampling program through Facebook, it had to post a disclaimer that the sample couldn't be requested through mobile devices. Similarly, few people are going to read someone's tweet or Google+ post or Tumblr update and follow a link to make an impulse buy right from their iPhone or Droid. Still, social media is profoundly influencing commercial activities through mobile channels.

As I discovered when researching a report on the subject just released by my agency, 360i, most forms of mobile social commerce fit into the seven categories below:

1) Reviews

Consumer testimonials are hardly new, and it's hard to imagine making a remotely significant purchase online or offline without consulting them. Marketers that incorporate reviews into their websites already also tend to do so with their mobile sites and applications. Popular review sites such as Yelp  and TripAdvisor have seen much of their growth come from mobile applications, and startups like SpotOn and Bizzy are adding their own twists.

2) Check-ins

Foursquare is most effective when local businesses can attract nearby shoppers to their stores. As is typical for mobile programs, most of the real impact on sales will happen offline. Foursquare's partnerships with daily deal sites indicate that check-ins alone probably aren't enough of a draw for consumers. We'll see in the coming year how strongly Facebook pushes Places; the degree to which Facebook tries to compete here will indicate how vibrant the check-in field is.

3) Daily Deals

At this point, most daily deal sites aren't particularly social. Even LivingSocial, which has continued to rely on social media to spread the word of its deals, is far more anti-social through its mobile application. It's possible, and even likely, that social dynamics will return as a major driver, but for now it's only worth including here because of the perceived role of social media.

4) Q&A

The promise for local question and answer services is that questions are directed to people who are physically at specific locations, or to people who have visited enough to offer some expertise. Localmind currently offers the best way to ask locals questions, but there's not yet enough scale to guarantee relevant and timely answers in return.

5) Style Feedback

One of my favorite applications, more as an observer than a consumer, is Go Try It On. You take photos of yourself and get feedback on your clothing and accessories. I did a test over the weekend with two different dress shirts, and most of the dozens of votes came in fast enough that I could have used it to determine my outfit that day. Its mobile app is extremely easy to use, as is rival app Fashism. This genre is largely a haven for teen girls and younger female adults, and in time this is the kind of technology that's likely to change how some people shop. Of course, some girls are using it more to flaunt themselves than their apparel.

6) Shopping Feedback

It's possible to use apps like Go Try It On in a store's dressing room, but they're more typically used at home. Other apps are focused solely on soliciting feedback on purchases, such as MyShopanion, which allows users to seek friends' opinions about products whose barcodes they scan.

7) Collecting

Another favorite app, Pinterest, was the subject of a recent column, while Pose is a sort of hybrid of Pinterest and Go Try It On. Find something you love, snap a photo, and add it to your collection. Even though the Pinterest craze started online, it's easy to see how the mobile version should prove to be especially popular over time.

Consider these seven collectively as a starting point. Mobile social commerce is bound to evolve. In time, it will be possible to make purchases directly through social networks' mobile sites and applications. It will be possible to receive better deals if you share them with friends who are in close proximity to certain retail locations. It will be possible to use near field communication (NFC) to share purchasing activity as soon as transactions are completed. All of this will lead to more literal and tangible versions of mobile social commerce, if it turns out that's how consumers want to shop. There's no need to wait, though, given all of the opportunities marketers have to use mobile social media to impact purchasing behavior today.

 

 

 

The Wrong Route To Social Commerce

 Social + Commerce -- like Bacon + Brownies?

The Wrong Route to Social Commerce
originally in MediaPost's Social Media Insider 

Lost in the chaos last week, amidst signs of rapture and fears of a second dot-com bubble, was a positive omen. What once appeared to be one of the four horsemen of social media's apocalypse met an untimely death at the hands of user disinterest. It was a good week.

Regular Social Media Insider readers know there are few social services I won't try. I gave up expectations of privacy a long time ago, an occupational hazard that may ultimately prove disastrous but one I've willingly embraced. Only when Blippy came around did I discover the one social service I felt more comfortable eyeing from a distance. That's why I was relieved when TechCrunch reported that the company's flagship, eponymous offering is being discontinued.

The product Blippy -- as opposed to the company, which is still in business developing offerings that are still under wraps --allowed users to register their credit cards and share purchases with their friends. If you wonder how good an idea this is, take a look at your most recent bank statement. How many purchases were remotely interesting, even to you? How many transactions are bills, ATM withdrawals, errands, fast food, or purchases so boring that your best friend couldn't possibly care about them? I could imagine how even Imelda Marcos would find Filipino subjects unfriending her when, between her latest shoe hauls, she'd inadvertently broadcast her trips to Rite Aid for toilet paper. 

I did sign up for a rival service, Swipely, only because I could connect my iTunes account without adding credit cards. My own purchase history is dull enough, but it reads like "Don Quixote" compared to a friend's complete details of going to Wells Fargo and paying his AT&T bills. What makes it worse is that you don't even see what products people bought; you just see where people spent their money. What does this do for you or your friends?

There is the occasional service that will get people to share their financial information, such as Mint, which manages financial records and makes it easy to track spending, or Credit Sesame, which monitors credit scores. For social purposes alone, the payoff was weak for Blippy and Swipely. That's why Blippy the product is winding down, while Swipely veered in a different direction. TechCrunch astutely noted, "Sharing purchases with friends doesn't solve a problem. Challenge: Try to figure out what problem Blippy solves, or for that matter what Ping solves or what competitor Swipely solved. ('We don't think people want to share their purchases, period," Swipely CEO Angus Davis told me after his service had pivoted. 'I don't know how to be more emphatic than that.')"

What's especially telling is that Blippy and Swipely failed at a time when interest in social commerce has never been stronger. Forrester Research just issued a report, "Will Facebook Ever Drive eCommerce?" I recently chatted with George Eberstadt, the CEO of social commerce platform TurnTo, and he seconded my take that marketer excitement around social commerce has surged the past few months.  My own agency just released a report on social commerce, and there was so much ground to cover that we're turning it into a series that will churn out installments through the summer.

Where Blippy and Swipely went wrong was taking social commerce literally. Sometimes, taking two great concepts works great when you mash them together, like Cat Paint or bacon brownies. With social commerce, though, social media and commerce can't be thrown together willy-nilly. That means you can't slap your e-commerce site on Facebook and expect people to transact with it, and you can't add social sharing to consumers' transaction records and expect people to sign up. There are plenty of other bad ideas here waiting to happen.

Social commerce, however, is a great idea. And it works. According to a thorough research roundup from Social Commerce Today, fans of a brand on Facebook will spend 117% more on that brand than non-fans, 17% of Facebook users say being able to "like" a brand makes them more likely to make a purchase, and consumers are 51% more likely to make a purchase after clicking a '"like" button. Danny Sullivan shared another roundup of stats directly from Facebook, noting that Levi's saw 40 times the referral traffic after adding "like" buttons, American Eagle visitors referred through Facebook spent 57% more than other visitors, and outdoor goods retailer Giantnerd.com saw a 100% increase in revenue from Facebook after adding "like" buttons. These are just about Facebook, which happens to be the 800-pound (or 600-million-user) gorilla, and there's enough evidence spanning the broader social web as well.

The opportunity for marketers is to figure out how they will provide value for consumers through social commerce. Is it giving consumers exclusive or early access to a product? Is it a deal that people will want to share with their friends? Can you make it easier for consumers to share recommendations with their peers, or can consumers receive more relevant recommendations by sharing their social data with you? There are so many triggers that can work.

When they work, you see entities like Facebook and Danny Sullivan telling everyone they know. When they don't work, you see lots of pivoting - the classic change in plans. Marketers pivot too, and those who carelessly slap "social" and "commerce" together will soon discover how they don't always pair well. Combining them in a way that provides value to consumers isn't that original an idea, but it's also an idea that never gets old.

 

 

RFID and NFC presentation from SXSW

Whoa, that title's a mouthful. Interested in radio frequency identification (RFID) or near field communications (NFC)? Have no clue what either are? I hope the talk I'm giving at South by Southwest (SXSW) will be useful for both audiences, and I welcome your feedback. Slides are below, the short link is bit.ly/sxswnfc, and further resources appear at the end.

Thanks to Dan Shust for having me as part of SXSW's Future 15 convergence series. Tweet him the word "gimme" to get his slides on convergence trends - great stuff.

How Near Field Communications (NFC) and Radio Frequency Identification (RFID) Will Change Mobile - SXSW 2011

View more presentations from David Berkowitz

Kneel Before the King of Disinfectant

Originally published in MediaPost's Social Media Insider

My name is David B., and I'm the King of Disinfectant.

That's how I'll need to introduce myself when a 12-step program comes along to help people with their mobile social media obsessions. If I work fast, I can get this listed as a condition in the Diagnostic and Statistical Manual of Mental Disorders (DSM) before the fifth edition comes out in 2013.

I'm proud of a number of titles that I hold: Senior Director of Emerging Media and Innovation, Social Media Insider columnist, blogger, Museum of Modern Art member. How is it that some iPhone application then got me to care about how I rank in the disinfectant category?

Here's how Barcode Hero works: download the app (for the iPhone now, but Android soon), scan products, share your recommendations, and gain virtual awards for doing so. Only by checking the site did I remember you can also compare prices. Yes, the one practical application of Barcode Hero was totally lost on me.

Perhaps it's just as well. ShopSavvy is a great barcode scanner for comparing prices, as is RedLaser. Stickybits, profiled a few months ago, allows conversation around products. Barcode Hero lets you become the duke or king, the same titles used in Yelp (I don't know if Hero has barons, as Yelp does).

What makes Barcode Hero really stand out is the role of recommendations. While you get points for scanning a product, the scoring picks up once you recommend a product, say you own it, or note you're buying it now. For any given category, if you scan two related products that you both own and recommend, you can become a duke. For instance, if I scan the Lysol spray and wipes, and then say I own and recommend them, I can become a duke of disinfectant and Lysol. Becoming a king often takes more work. I was briefly king of cookbooks but had to cede that turf.

I still keep getting sucked back into the game, which is the perfect hook for the kind of person who finds it fun to earn meaningless titles by scanning consumer packaged goods with a mobile application. In the process of earning my royal titles, I'm amassing a library of products I like, and, on occasion, I'm even buying them at the time. If Barcode Hero has access to enough location data, it can even tell if I'm in a store while I'm scanning it, and then which store I'm in.

There's no marketing application right now. I had a brief exchange with co-founder Blake Scholl when I started using the app, and he noted that Barcode Hero will ideally help consumers while they're in stores. He mentioned to TechCrunch that there's still not much scanning happening in stores, but the app is in its infancy, and presumably the price comparisons are just the start of uses for it.

I'd love to see marketing opportunities not just around the product being scanned but around some mix of personas and behavioral targeting. For instance, someone who scans a jar of olives may be snacking, preparing an appetizer or hosting a dinner party. Yet someone who scans a jar of olive and a bottle of vermouth probably is tending bar and has some different needs than the home chef. The possibilities become even more interesting when mixing and matching products from a range of categories such as groceries, consumer electronics, books, and health.

The most fun I had with the app was in a store, as I discovered that this app is the perfect toy to use when your significant other is shopping. I was in no rush to leave Target over the weekend as I was regaining my disinfectant kingship, padding my lead as king of cookies, and earning countless new titles. Sure, I could have done something productive, like continuing reading a book on the Kindle app, but at the time this was more fun.

It's not everyone's idea of fun, I know. Game mechanics work best when there's either an actual game (think FarmVille) or there's a clear benefit to using it (the Foursquare mayorships add a hook to the utility of seeing which friends are nearby). I don't even want everyone using Barcode Hero because then my kingdoms will crumble. If it becomes a great recommendation engine, though, I may gracefully let a few of my titles lapse.

 

Mint's Consumer Electronics Shopping Trends for 2009 Holidays

Mint.com, the personal finance tracking suite that I'm a proud user (and ignorer) of, released a bunch of trends from the holiday shopping season. It's all one (really) long image that I've taken the liberty of embedding. You can find an even larger image here. There will be a press release on this Monday, but I like the pictures better anyway, and they did a nice job with it.

My one recommendation for them: include these on Slideshare one by one too - might be easier to digest frame by frame and it's stjll embeddable, plus easier to share.

The really amazing thing here, to me at least, is how many new products made the wish list for 09. I'm curious if the hype on tablets and 3D tvs lasts long enough to carry over to the end of the year.

 

Searchers Don't Pay Retail: A Review of Coupon Searches and Search Engines

Image by Getty Images via Daylife

Today's Search Insider column, via MediaPost

It's no secret that Google isn't the best search engine for everything. We saw that in recent explorations of live search and bathroom search engines. Another such area is finding coupons.

Google's a great place to find coupon sites, but then you have to sort through the clutter. I tried a search on "kodak coupons," and it's dizzying trying to figure out if and how you can get 20%, 30%, 35%, or 45%  off at KodakGallery.com, as the headlines of search ads indicate. Some sites we'll look at today make searching for coupons much more manageable.

Google Trends shows that the volume of searches for coupons so far this year is twice as high as in early 2008. The AdWords keyword tool reports that the top 10 coupon terms attracted 46.5 million Google searches in March 2009 alone, with "coupons" and "coupon" accounting for 37 million combined (the others, in order, are: coupon code, printable coupons, coupon codes, free coupons, grocery coupons, coupons.com, online coupons, printable coupon).

Analytics firm Compete's blog reported that visitors to top coupon sites are up an average of 170% from March 2008 to March 2009. The blog distinguishes between two categories, "those primarily offering manufacturer coupons (40¢ off Viva paper towels), and those primarily offering retailer-specific coupons (25% off your Target purchase)." It then notes, "Of all searches containing the word ‘coupon,' the share captured by retailer-coupon sites grew by 30% year-over-year in March, while manufacturer-coupon share shrank by 11%."

Compete singles out some of these retailer coupon sites, including RetailMeNot, the fastest growing coupon site among the top five in the category. It's one of my favorite sites, one I go to before completing most of my online purchases. Please don't ask me why (I swear I'm doing alright during this economic crisis), but I recently ordered prints from Snapfish valued at 72 cents and went on RetailMeNot, where I found a code to save 14 cents off my order. It's addictive. And heck, if I'm going to rank all my habits, this is one of the better ones, right behind calling Grandmom.

What's so brilliant about the site is its perfect role at the end of the purchase funnel. When you have a sense of where you're considering buying something from, you can enter the Web site on RetailMeNot, and it will list all of the coupon codes. The coupons are ranked by how many other people used that code successfully, so the most reliable rise to the top while the duds drop out of view. In that sense, it's a massive time-saver as well as a money-saver.

It hardly works for every site. Amazon rarely has any listings unless it's specifically promoting some service. And for some merchants, there's an error that appears that reads, "Sorry for the inconvenience but this merchant has specifically requested to have all user contributed coupons removed from the RetailMeNot system." From my experience, those retailers don't have coupons publicly available anyway, so it's not just RetailMeNot that's singled out.

Other sites are trying similar approaches. One I like is Tjoos, even if I can't always remember how to spell it. It's meant to be a play on "choose," but I can't tell you how many times I misspelled it when entering it into my browser.  According to Compete, Tjoos had about one-tenth of RetailMeNot's traffic in March, while growing three times as fast (off a much smaller base) over the past year.

The one twist Tjoos offers is that it has its own specialists who confirm that coupon codes work. Other coupon users can also contribute whether the coupons worked. As this column was written, Tjoos claimed to have 133,000 online stores, 20,000 verified coupons out of 165,000, and nearly 1,400 exclusive coupons. By comparison, RetailMeNot claims that over the past few years, its users have shared over 100,000 discounts at over 20,000 stores. The numbers aren't as important as whether the sites have current coupons for stores where consumers are shopping, and from the anecdotal tests I tried, they both perform admirably.

You'll find both Tjoos and RetailMeNot in Google when searching for discounts. Once you have a favorite way to seek a discount, though, Google's importance diminishes.

The 10 Most Moving Search Engines

Here's the latest column from MediaPost. Any time you're up for some bhaktsa marku, send me a note.

Dalai Lama by Getty Images via Daylife

Over the weekend, under the gaze of a painting of the Dalai Lama at Tibetan Kitchen, I savored my dessert of bhaktsa marku while thinking of all the search engines that helped get me to that place. And by "that place" I don't mean the Tibetan restaurant, but rather my new Manhattan neighborhood where my wife and I dined out for the first time as residents. Below are ten search engines that helped with the moving process.

1)  LinkedIn: This is the first search engine we used; it's how my wife found our real estate broker. What's funny is that my wife, a lawyer working for New York City Department of Health, thought to use LinkedIn when it hadn't occurred to me.

2) StreetEasy: There are a lot of real estate sites out there, but for New York City, StreetEasy seemed to have the most comprehensive information about apartment listings presented in the most navigable format. The blog Curbed also came in handy when digging up dirt on buildings, especially a few new construction units we considered.

3) Google Maps: It's even better now for New Yorkers with subway directions. Before it launched, I'd often turn to HopStop to figure out how to get to the various listings.

4) Delicious: What was the name of that moving company I used a couple years ago? Where did I buy boxes? I often think of Delicious as my second brain, the more organized one with fewer memory leaks. I posted some real estate-related sites in my public bookmarks, while I hid other links, such as for specific apartment listings.

5) Citimove: I've used this reverse auction site for several consecutive moves. You list what you have to move and get bids for your job, only disclosing your contact information when you're ready. There are some checks for verified reviews to add to its trustworthiness.

6) Amazon: I've been doing a lot of product research for the move, from home office supplies to electronics upgrades. All searches included Amazon, as did a number of the purchases. Their reliability remains strong for delivering what they're supposed to in a reasonable amount of time. They didn't win all my business, though; I completed a couple of the larger transactions elsewhere.

7) CNET Reviews: Every time I searched for an electronics product, I wound up on CNET. It wasn't always intentional; sometimes I'd use a search engine to find product reviews and CNET would rank prominently in the natural results. CNET helped me rethink which flat-screen TV to buy, and it recommended other products like speakers that I had no plans on buying.

8) Google Product Search: Google managed to be Amazon's biggest competitor for my new-home shopping. The thousands of reviews of merchants added enough of a degree of trustworthiness so that it was more feasible to explore alternatives to the Amazon default. I also gravitated toward merchants that accepted Google Checkout, which I used more in the past two months than I ever have just so I didn't have to register with a seller for a one-time small-ticket purchase.

9) Crate and Barrel: The on-site search engine here got enough use that it helped turn our apartment into a satellite showroom.

10) MenuPages: The most important question a New Yorker faces when moving is figuring out where to eat (what's the point of living here if you're more than a few blocks from a good bagel, pizza, or sushi source?). Where I moved, an area affectionately dubbed Curry Hill for its abundance of Indian restaurants, is one of those neighborhoods that suffers from too many options rather than too few, so MenuPages helps narrow the field.

All of these engines competed with one other major source: word of mouth. It was word of mouth that led us to our real estate lawyer and mortgage broker. Word of mouth also won out for specialized purchases such as a folding bicycle. Search engines still won the day overall, though, beating out word-of-mouth recommendations for a real estate broker, moving company, and television.

But everything was interconnected. We found the real estate broker on LinkedIn who introduced us to the lawyer, and the lawyer referred us to the mortgage broker. None of it happened in a vacuum. Right, vacuum... one more thing I need to buy, which I'll have to search for -- unless you have any good recommendations.

You Call That a Bribe?

Today's Search Insider column, originally in MediaPost

Microsoft’s new Live Search Cashback program has been routinely called a bribe by journalists and pundits. Microsoft and others have tried to bribe users before, but calling Cashback a form of “bribery” diminishes the meaning of the word.

Here’s how Cashback works: A consumer searches a Microsoft property like msn.com or live.com for a query such as “shoes.” In this case, three ads appear above the natural search results; the second one says “Buy Women’s Shoes: Save on shoes at Live Search cashback” with the URL Search.Live.com/cashback and a logo for Cashback beside it. The link leads to a page of shoe listings at the Cashback site. Clicking “compare prices” below the first listing brings up a table with store names, the original store price, the Cashback discount, and the new “bottomline price.” For the seven stores here, FootSmart has the highest store price at $91.98, but with its 25% discount leading the pack, it’s listed fifth, as the results are displayed by bottomline price.

If consumers click to go to one of these stores to make a purchase, they first enter an email address to register with Cashback to receive information about the discount. Then they must play the waiting game. First they have to wait to accumulate $5 in Cashback rewards, if they don’t get that much through the first purchase. Then there’s a 60-day period before redeeming it, allowing room for returns  – and it takes 14 more days to actually get the refund. One better hope the government’s tax rebates provide more of an economic stimulus, because this deal’s a lot of work. It can easily take ten clicks from the search through completing the transaction.

The consensus seems to be that Microsoft is bribing consumers to search and shop. Andy Beal’s headline in MarketingPilgrim was, “Microsoft Gives up Earning Your Loyalty; Launches ‘Cashback’ to Bribe You Instead.” Kevin Maney at Portfolio.com writes, “Good Luck with the Bribing, Microsoft.” InformationWeek’s Dave Methvin, who generally praises the product search experience at Cashback, still calls it “bribery” that “inevitably will have to end.”

So, is this really a bribe?

I have a hard time seeing it that way. Checking dictionary.com and other sources, there are two ways to define bribery. The first is usually illegal: offering money or something of value to corrupt someone’s behavior. Microsoft isn’t incentivizing consumers to steal Google’s servers or sell Yahoo stock en masse to drive down its price; Microsoft is incentivizing consumers to shop, albeit with merchants listed on its own shopping site. Do journalists hate Microsoft that much, to insinuate it’s doing something that nefarious? And yes, the question’s rhetorical.

Then there’s the second definition, worded on dictionary.com as “anything given or serving to persuade or induce.” Since you’re reading this column, you probably have some connection to marketing. Guess what marketing is all about? Persuading and inducing.

If Microsoft is guilty of bribery here, then we all are. Look at how Cashback works: Advertisers offer a rebate through Microsoft which Microsoft refunds to the consumers who make a purchase there. How come the press isn’t up in arms over every other rebate deal? Then look at it from the consumer’s perspective. I’m shopping for shoes, I see an ad where maybe I can save money, I choose a retailer I trust with a low price, I click the ad, and three months later I’ve got $5 in my pocket, along with a decent deal on Manolo Blahniks. Is this really any different than other comparison shopping sites, including Yahoo Shopping and Froogle, where consumers decide based on the product price and retailer’s brand?

That’s not to say I’m in love with the program. I doubt it will affect Microsoft’s market share, and Microsoft’s taking a risk. The rebate works as a cost-per-acquisition model for advertisers. Microsoft doesn’t take a cut and passes the advertiser’s rebate to the consumer in full. Microsoft then promotes the program with its precious search ad inventory, where it’s promoting Cashback for high-volume, high-value searches like “shoes” and “digital camera,” so it loses out by knocking other advertisers out of those spots.

Ultimately, with Cashback, Microsoft is offering a comparison shopping service for consumers who are already shopping. This is different from other promotions Microsoft has offered over the years that reek of bribery much worse than Cashback. Consider Micorosft’s “Search and Win” campaign from February 2006, where it offered rewards like electronics, sporting equipment, and gift cards for consumers who happened to perform a search on one of more than 1,200 pre-selected keywords in February (the list grew in subsequent months). Here, the incentive, or perhaps the bribe, was for consumers to do something they weren’t going to do anyway — first, search MSN, and then search for the keyword that would lead to a chance at winning a prize.

The campaign bombed. According to Search Engine Watch, comScore reported Microsoft’s search market share dropped in February, March, and April of 2006; Hitwise and Nielsen//NetRatings also showed MSN declining. The campaign’s domain, msnsearchandwin.com, now redirects to a French blog by Braun promoting its cruZer shaver that, based on the site’s artwork, seems to target gay men. N’est-ce pas?

As for Cashback, consumers will likely find it when they’re already conducting searches on Microsoft’s sites. Microsoft needs those users to convert to gain more leverage with Cashback’s advertisers so they’ll spend more with Microsoft. You could say Microsoft is bribing advertisers.

That’s not a bribe; that’s an incentive. If it is a bribe, then all marketing is bribery. And whatever Microsoft’s doing here, Cashback better work better than Search and Win. Consumers are smart, though. They may just hold out longer — until Microsoft ups the ante again.

Calorie Labeling's Laws of Unintended Consequences

Yesterday I went to lunch at Cosi to check out the results of New York City's new calorie labeling law that requires restaurants with 15 or more locations nationwide to post calories on their menus. The City started sending out violation notices yesterday, and while it's still being contested, fines are due to be sent out starting July 18. See NY1, my favorite local news source, for the news, and this PDF from NYC for full details in the compliance guide.

At Cosi, a restaurant I don't go to much, I suddenly had a new appreciation for the menu. Some of the smoothies there had calorie counts in the quadruple digits; even food guru Marion Nestle was surprised.

I ordered the wasabi roast beef sandwich partially because at 626 calories, it's one of the more moderate menu items. It has 200 fewer calories than the veggie muffaletta sandwich (see the nutrition info online at getcosi.com). I love it. It was such a thrill to be able to see everything out in the open.

I know I'm not the average consumer. I'm fairly well read on nutrition, I have a fairly high metabolism that I take advantage of far more than I should, and - full disclosure - a family member works for the NYC Department of Health, so I know a ton about this issue in particular. But I'm still a consumer, one who eats out a lot (though usually not at chains), one who likes food, and one who still has that reptilian brain for hunger fulfillment, so I don't think I'm totally out there.

When I saw that Cosi menu, I could balance a number of factors in making my decision: how tasty an item looked, how hungry I was, what else I had to or planned to eat today, how much I felt like making the right decision, how much I felt like spoiling myself, and how many calories certain items had relative to the others. The last point's especially salient here: if the items average 800 calories, then ordering an 800 calorie sandwich makes me seem like I'm doing a so-so job at monitoring my intake, but if the items average 1,400 calories, then getting an 800 calorie item makes me feel like I'm a dieting superstar. In the latter scenario, I might then go for a 1,000 calorie item over an 800 calorie item, or I might stop by the ice cream truck (with no calorie labels) on the way back to work (which I almost did - I SO wanted the chocolate dipped vanilla cone).

That's the first unintended consequence: restaurants with abominable menus may encourage consumers to eat worse and think they're dieting.

The second unintended consequence is that consumers who care about nutrition may go to fast food restaurants MORE often. I could go to Eisenberg's Deli and get a BLT with mayo, a fantastic sandwich at one of the best lunch spots in the city, and wash it down with an egg cream, consuming who knows how many calories in the process. OR, I could go to Cosi, get a lower quality sandwich, but at least know what I'm getting myself into. The decision to go to Cosi starts looking better and better.

Putting the two together, this may mean fast food chains don't lose any business over this. They could even increase business. And while sales of their highest calorie items may drop off, sales of items with slightly fewer calories may actually increase. That means these restaurants would be wise to keep the highest calorie items prominently displayed on their menus. Even if sales drop off for those items, their mere presence could encourage a new form of pseudo-health-conscious gluttony, where consumers think they're eating better in the relative sense. Still, the informed glutton is better off than the uninformed glutton, and a small fraction of people changing their eating habits can make this program pay off many times over.

As for my visit to Cosi, I avoided getting a drink, opting for water at my desk. With lunch, they offer a bag of carrots or a bag of chips. I was so good ordering a relatively lower calorie sandwich. Of course I got the chips.

And later that day I went to Eisenberg's to meet someone for coffee, where I drank my egg cream in blissful ignorance.