(The Perception of) H1N1 is Out of Control

Key points:

1. H1N1 diagnosis techniques might be (and I repeat—might be) leading to exaggerated statistics regarding the prevalence and spread of the flu strain.

2. These factors combine with others to create a ripe environment for positive feedback loops that take us from healthy skepticism to acidic lunacy.

3. We need our rhetorician in chief now more than ever to ask everyone to take a deep breath, calm down, and get out of the way for those of us who need the vaccine first.

It was almost MEA weekend.

The kids were looking forward to the four-day weekend. That is, until they were sent home with a fever. Uh-oh.

We called the HealthPartners nurse advice line. And they gave us the diagnosis: H1N1. Swine flu. We could expect five-to-seven days of fever, aches, pains, and upper-respiratory distress. If things got worse (in some terrifyingly specific ways), we were to get the ER at Children’s Hospital—immediately.

But luckily, it didn’t work out that way. After about 24 hours, the fever subsided. In fact, it never got too high in the first place. One boy was back in school on Monday, and the other went back on Tuesday.

That seemed odd. That didn’t seem like the “flu”—even a new strain. And as I come to find out from HealthPartners, I am likely correct. They probably had a bad cold. Nothing more.

This got me thinking about methodology, statistics, positive feedback loops, and ensuing media hype.

Let’s start with methodology. Of course, that’s just a fancy way of saying, “How do we count the number of cases of H1N1?” Are the Centers for Disease Control and Prevention (CDC) and the National Institutes of Health (NIH) counting reports from clinics like my local HealthPartners? If so, how many unverified diagnoses are really other illnesses masquerading as the flu? In a recent Minnesota Public Radio interview, an NIH official said it’s tough to tell without a formal lab test (the “quick test” at your doctor’s office is not sensitive enough to tell flus apart). In that case, the CDC will need to extrapolate from confirmed cases to the entire universe of cases—in a chaotic disease environment like a normal autumn, those estimates can be off by an order of magnitude.

So if that’s the basis for the data, what are we to make of the statistics? A recent study claimed more than 65 percent of the U.S. population would be exposed to H1N1 before it’s all over. Another study claimed 95 percent of the flu circulating right now is H1N1. Huh. Based on the “boots on the ground” data collection so far (telephone diagnoses, student health workers combing the dorms at the University of Minnesota, etc.), I’m not so sure. I am not saying I don’t believe them—I’ve just got some healthy skepticism.

Unfortunately, “healthy skepticism” is not where it stops for some people.

This is where you get positive feedback loops. A lack of facts, oddly fantastical statistics, and a slow-growing vaccine combine to create a ripe environment for fish tales of all types. Let’s look at one such spinning loop:

Loop 1: The vaccine was rushed; luckily it is close genetically to seasonal flu.
Loop 2: The vaccine was rushed too fast. It is not safe.
Loop 3: All vaccines are unsafe (this claim feeding on real, but statistically minute, evidence that vaccines cause serious—and sometimes fatal—reactions in a tiny fraction of people).
Loop 4: The government and “big pharma” are asking us to do something that could hurt us.
Loop 5: This must be about campaign contributions.
Loop 6: There is a conspiracy theory afoot. The government must have had a role in actually creating the virus.
Loop 7: Now they are holding up the vaccine to see how it spreads for their nefarious experiments.
Loop 8: This is a way to get revenge on those people who “don’t believe in” vaccines—the government wants to control our lives.
Loop 9: We can’t let them! We must resist! We can’t take this vaccine! H1N1 is a total myth—a lie fabricated to deny us our liberty.

(Don’t believe me on this one? Search YouTube for yourself. Spooky stuff.)

Here’s the rub: Each loop in the sequence contains a bit of logic; it takes a small leap to make it from one loop to the next. They build on each other. They create media attention that feeds on itself. It creates an environment in which sheer lunacy can derive from tiny logical infractions at each stage.

All of these “voices” demand media attention, attention which has more than quadrupled since a small peak back in May of this year. A classic hype environment.

If this is a “dry run” on what a true killer pandemic might look like, we’re not doing well. The problem is simple: In the absence of a central source of reliable information, and a clear voice, we get crashing phone lines at Park Nicollet clinic, wing nuts on the radio (and in even in Congress), and a growing distrust of any authority figure that will lead to an even more difficult communication environment next time around.

Yikes.

Those in the medical communication field, who should have control over the messaging around H1N1, have completely ceded that role to a cornucopia of voices—some legitimate, some clinically insane, and no easy way for the average person to tell the difference.

We need some adult supervision. Right now.

Mr. President, if there is ever a need for your rhetorical power, now is the time.

I might even humbly suggest a script:

My fellow Americans. I understand many of you are concerned about the rapid spread of the H1N1, or “swine flu.” You’re wondering if your family is safe. You’re wondering what you can do to protect them. And your wondering how the government and the health care system are working to solve the problem.

Here is what you need to know. H1N1 is spreading fast, but it is not unlike seasonal flu. It may affect people differently than the flu we are used to every year, but it’s not really any more—or less—serious. That means if you are an expecting mother or you have young children with asthma or you have underlying health conditions or you are a first-responder health-care worker, your doctor will likely recommend that you get the H1N1 vaccine.

And that vaccine is coming as fast as it can. I know it is slower than we thought it would come. Manufacturing is proceeding as fast as it can, but we are behind where we hoped to be at this time. I know that’s led to a lot of concern. Be assured we are working to distribute the vaccine that we do have in a coordinated way, so that the people who need the vaccine can get it first. That means if you are an otherwise healthy adult, you will be expected to wait your turn. That includes me.

Now, I understand there are a lot of rumors circulating. A lot of misinformation. I am here to tell you that misinformation is more dangerous than the flu itself. It is OK to be a little worried. It’s smart to take precautions—like washing your hands, avoiding contact with sick people, and staying home if you get sick. If that sounds familiar, it should be. It’s the same advice you get every year to fend off seasonal flu.

But it is not OK to misrepresent information, stoke rumors, and spread fear just to get a few more Twitter followers. We have the right to speak our minds but also the responsibility to speak the truth. We owe it to each other, to our communities, and to our children.

Over the coming days and weeks, you can rely on flu.gov as well as your local doctor to be the authoritative sources of information about H1N1. We’ll post information and updates. We’ll do our best to get you in touch with your local communities who are working around the clock to distribute vaccine to everyone who needs it first. It’s our job to get you the information you need to make an informed decision for your family. No one will force you to get a vaccine if that’s your choice.

It’s no fun to get sick. I get that. But together—with a coordinated effort between federal, state, and local government, health care providers, vaccine manufacturers, your local doctors and clinics, schools and churches, and you and your families—we will come out of this just fine. We all play a role. We all have to be smart. We all need to work together.

Thank you, and may God bless the United States of America.

Almost anything would be better than the status quo.

Related links

Flu.gov
Or trust YouTube. (Good luck with that)

Men Like Pampering, Too

Key points:

1. The market for men’s salon products and services is small compared with its female counterpart—but growing at better than 10 percent per year.

2. A dissipating stigma among men towards “pampering,” health concerns, and stressful lives seem to be leading the way.

3. The “3–S formula”—speed, sports, and sex—seems to give us a quick heuristic device to analyze men’s salon product marketing.

My son got his first massage.

He’s nine.

And he liked it.

Before you call child protective services, know that he received his services at the Maple Grove Sport Clips as a part of their “MVP” package after his hair cut.

Here’s how it went down:

When he arrived, the stylist pulled his notes from the computer from the last haircut so she wouldn’t have to bug him—and me—about how he wanted his hair cut this time around. After the cut, he got the tea tree shampoo and hot towel treatment in the back. Back in the chair, he caught the last piece of a football game while he enjoyed a massage from the stylist. (She used one of those hand-held jobbers.)

Needless to say, this was quite a far cry from the spinning pole barber shops I remember when I was a kid. It’s also markedly different from a man-intimidating female-oriented salon. This was a different animal entirely.

The lobby sported a 42–inch LCD TV. Each stylist station had a television as well—all with your choice of sports station. This was a guy’s kind of place. I felt strangely comfortable. So I decided to do some informal research.

I was curious: the MVP costs more than the cut ($5 more, I think, or about a 30 percent premium).

In fancy talk, I wanted to see how steep the demand curve is for the special treatment. In regular speak, does the higher price discourage the purchase of purely unnecessary pampering?

Men are cheap when it comes to body care. We all know that.

Or do we?

Here was my question: If 10 men (or boys) walked in, how many would opt for the full- service MVP versus the regular (30 percent cheaper) plain-Jane haircut?

The average of the responses of four stylists: 8.2 out of 10.

Eighty-two percent!

Clearly, the boys were not spending their own money, but the men were.

Could this point to a bigger trend?

Yes, indeed.

The early part of the decade saw the market for men’s skin care products jump 42 percent between 2000 and 2005. The overall market growth was half that, at about 23 percent. When you tease out the numbers, you realize quickly what retailers realize—the men’s market is the growth engine, the women’s market is (largely) stable.

The “spa” market is growing even faster, especially in the later half of the decade (and even amid the recession). It should be noted that the men’s market had a lot more room to grow—the market was basically a clean slate—but can you imagine any other industry where you can double your potential client base in one fell swoop? Unlikely.

So, my youngest son is not alone. What’s driving the trend?

A few key factors. First, we are seeing a transformation in the way men view “body care.” What used to be the sole domain of homosexual men (or, later “metrosexual” men), has begun to drift into the mainstream. Good grooming and hygiene habits are losing some of their stigma as “female-only” discussions.

Second, the Baby Boomer generation seems to view grooming differently than their parents. It’s not just different views on money but rather a different view on health, generally. Successful marketers of men’s products to this generation have transformed “scents and pampering” messaging (staples of the women’s beauty product industry) into “health and fitness” appeals—clearly more in line with a generation of men deeply concerned about vitality well into middle age and beyond.

Finally, for all male age groups, the concept of “relaxation” comes into play. Busy lives (or the perception of busy lives) and accompanying stressors have left the door open for products and services that offer a few minutes of stress release. Not so different than a “feminine” appeal, you say? I think you’re right, but it’s all in the packaging.

That leads directly to the final point. What can my nine-year-old’s experience teach us about how to market these products and services to men?

I call it the “3–S formula”: speed, sports, and sex. It works at all age levels of men, albeit in different ways.

Let’s take my son’s experience. First, it was fast (speed); it happened while he was getting his haircut, so no “extra trip” required. Second, from what was on the tube to the name of the massage itself (the MVP), it was all about sports. That made it seem cool—like something Joe Mauer would do. Third, the stylist used a tea tree oil shampoo with a distinct “mint” smell that permeates the area while he gets the massage treatment. He said it “smelled good”; he has learned from “iCarly” (and other pre-teen television shows) that smelling good is attractive, and not smelling good gets you shunned. He’s learning early.

You could do the same analysis on Axe body sprays for teens.

You could do the same analysis on Every Man Jack skin care products for men over 30.

You get the idea.

Obviously, I don’t often hear men discuss their latest spa treatment with their peers, nor do I expect to see that changing in the near term. But I think you could do worse for yourself than opening a men’s spa right now. Market it correctly, and you might be surprised.

Related links:

SkinInc.com article
Sport Clips

FINRA is Protecting You (and its Turf)

Key points:

1. The recent financial meltdown can be interpreted as a regulatory failure; a cornucopia of government and private agencies meant no one was in charge.

2. FINRA (the industry’s self-policing arm) understands that if it does not, a. get better and b. get better at telling people they are getting better, they are likely to be regulated out of existence.

3. The latest communication campaign takes a page from the Consumer Reports playbook and has a good chance of success.

Who’s the most important investor on Wall Street?

Before we get to that, let’s retell the story of Ian Thierman. He’s a 90-year-old California man who, by all accounts, has led a pretty disciplined life. He survived the Great Depression, so he knows a thing or two about saving. He survived World War II, so he understands how to sacrifice. And he survived Y2K, so he knows how not to get caught up in hype.

But all that experience wasn’t enough to protect Mr. Thierman from one of the best con artists in the business: none other than Bernie Madoff. After losing his life savings and being forced to abandon retirement, you’d think Mr. Thierman would be bitter. As perhaps a lesson to us all, he says he’ll make it through this, too. (And we smart Minnesotans need not look too far for our own mini-Madoff. Sleazery is not just a dished served on Wall Street.)

That said, Mr. Thierman is asking some tough questions.

Most pointedly, who is watching the proverbial hen house?

As it turns out, a variety of foxes have been put in charge.

The Securities and Exchange Commission plays a role. So does the New York Stock Exchange. The Federal Trade Commission and the Consumer Protection Agency have their paws in it, too. Throw in the Better Business Bureau and the Federal Reserve, and it’s little wonder we didn’t catch Bernie, Tom, or Denny until it was too late.

When everyone is in charge, no one is.

I am no political junkie, but even I can tell there is an inevitable push to centralize consumer financial protection. Sure, the industry will grumble, but it’s their own fault for ineffective self-regulation.

Ahead of any move by Congress, the Financial Industry Regulatory Authority (FINRA) is working hard to answer my initial question. So who is the most important investor on Wall Street? FINRA says it’s you.

And lest you think FINRA is some sort of government agency, it just sounds that way. FINRA is the successor of the National Association of Securities Dealers and an industry-spawned regulatory group. Their communication objective is quite simple: If they can convince you to trust them enough to protect your interests, the political will to impose regulation will falter. Because if the government gets into the act, FINRA’s influence—and even its legitimacy—comes into question.

Solution: the FINRA Protects campaign.

FINRA believes that the best way to protect the financial consumer is education. It is not to prevent the consumer from making every conceivable financial mistake, but making sure the consumer understands the risks, and brokers do not mislead their clients.

This latest round of communication materials goes a long way to distance itself from a broker-focused, voluntary, quasi-governmental agency and transform itself into a protector-of-the-little-guy watchdog consumer agency in the mold of Consumers Union, the publisher of Consumer Reports.

In their case, I think the strategy is working.

A few reasons: First, if you weren’t really diligent, you’d think FINRA was a government agency. The communication materials don’t really dispel that perception, although they certainly do not claim to be part of the government. Ask the average person who sees the campaign, “Is the financial investing process regulated?” and they’d likely answer “Yes.” And they would be forgiven for thinking Uncle Sam was behind it.

Second, FINRA has been working hard at licensing, testing, and publishing—all with the end goal of building transparency, much like the folks at Consumer’s Union do with automobiles, flat-screen televisions, and toaster ovens. Case in point: documenting—in detail—of nearly $1 billion in bilked money that has been returned to investors.

Finally, the industry has an incentive to see FINRA win. Government regulation is a politically messy and sometimes counterproductive process. Better to have the experts write the rules, they say.

It’s hard to argue with the overall messaging in the FINRA campaign, or the bevy of tools and resources they make available. It’s also easy to say the industry has a painful credibility gap.

Be that as it may, whatever it takes to keep the foxes out of the hen house seems like a step in the right direction to me.

Related links:

“FINRA Protects” Web site
Bernard Madoff Victims Web site
Consumer Reports summary of regulatory reform initiatives

Pfizer Fine: $2.3 Billion. Result: Who Cares?

Key points:

1. The U.S. Justice Department fined Pfizer $2.3 billion for illegal marketing practices: taking doctors on golf trips, paying for massages, and the like to encourage off-label prescriptions of popular drugs.

2. With such a hefty penalty, conventional wisdom would say Pfizer’s market perception should suffer. By objective measures, that is not happening.

3. Pfizer has insulated its corporate brand by positioning its blockbuster drugs as the stars and not marketing itself. That seems to be working—for now.

Remember the dad in My Big Fat Greek Wedding?

used Windex for everything. He went so far as to carry around a bottle at all times, spraying things (and people) at comically inopportune times. Clearly, neither the FDA nor our friends at S.C. Johnson and Company in Racine, Wisconsin, endorse Windex for the treatment of cold, flu, arthritis, and acne. The depiction was so ridiculous that most (reasonable consumers) wouldn’t take it seriously.

Now, let’s change the scenario.

Imagine you are recovering from a surgical procedure. Let’s pick appendix removal, but it could be anything. Clearly, you’re in pain, and your attending physician prescribes a medication—in this case, Bextra. She tells you to take the prescribed dosage as needed and come back in three weeks.

Let me ask you something: In that scenario, do you look up the drug name in the formulary? Did you learn your doctor just prescribed well beyond the recommended dosage? Did you also learn that Bextra was not approved to treat post operative pain? That is was really an arthritis drug? And a Cox-2 inhibitor? The same Cox-2 inhibitor class of drugs you’ve heard about?

But your doctor knows best, right?

Did you also know your doctor goes out to lunch each week with the Pfizer rep?

Do you still think your doctor has your best interests at heart?

The Justice Department didn’t think so.

About six weeks ago, federal prosecutors leveled the largest-ever penalty for the illegal promotion of several Pfizer drugs (Viagra, Zoloft, Lipitor, and Bextra, among others). The statement went on to say Pfizer was the classic “repeat offender,” and this is the fourth such settlement in as little as 10 years for a grand total of over $13.3 billion in penalties.

Details notwithstanding—Bextra was voluntarily pulled from the market in 2005, and the specific charges relating to this drug were leveled against subsidiaries Pharmacia and Upjohn—there is little question this the practice of “off-label” promotion is (at best) “dirty marketing.”

But the real question remains: Does it really hurt Pfizer? Put another way, is the penalty sufficient to change corporate behavior? Is even a record-breaking penalty fair?

There are a number of different ways we can approach this question. Let’s start with the Pfizer balance sheet.

As of the end of second quarter 2009, Pfizer had $2.244 billion in cash on the books. That seems oddly reminiscent of the $2.3 billion fine, and it may have been used by the Justice Department to calculate the penalty.

This fine wipes out all the company’s strictly liquid assets. Seems fair. However, although $2.3 billion is no chump change, Pfizer doesn’t keep most of its money stuffed in the proverbial mattress. Short-term assets topped $71.5 billion for the same period. Now, the fine is just more than 3 percent. Hmm, perhaps not so fair. All assets: $139.3 billion. Fine: 1.65 percent.

OK, so maybe comparing the fine as a percentage of assets doesn’t quite do it justice. How about comparing it against what Pfizer earns. That could be better. Pfizer dropped $8.1 billion to the bottom line in the second quarter. That puts the fine at about 28 percent of net income. Not immaterial. If I were a shareholder—especially a big institutional investor—I might be perturbed.

Cash aside, what Pfizer should be most concerned about is the fine’s effect on intangibles: its market perception. Market capitalization is driven by shares outstanding multiplied by the share price at any given time. And if the market were concerned about Pfizer’s actions (and its ability in the future to market its next blockbuster), it surely would be reflected in the share price.

Well. Let’s see what happened. In the six weeks since the story broke, Pfizer’s stock rose about 3 percent. In fact, their stock matches similar jumps in the stock for industry competitors Merck and GlaxoSmithKline.

Huh. So investors didn’t really care. They likely see the fine as hefty but not unusual given the company’s track record—more or less a cost of doing business.

But that’s not helping answer our question, is it?

One could make the argument that actions like this could eventually cascade on Pfizer, causing some sort of “tipping point” that plunges the company into the drink. They would point to the double-edged sword of prescription drug consumer marketing, and the fickle tastes of the mass market. If people stop trusting Pfizer drugs, they might stop asking their doctor for them.

But I don’t buy it. I think all is likely to be forgotten once the next big thing comes around.

And what’s more, Pfizer has perfectly executed a classic brand insulation strategy. Instead of branding drugs as the “Pfizer Viagra” or “Pfizer Lipitor,” it’s just “Viagra” and “Lipitor.” As long as the general public doesn’t link the two (and studies show they don’t), Pfizer is in the clear. Investors will understand the link. So will doctors. But the rest of us largely won’t. That, I think, is the key reason Pfizer is likely to come out of this reasonably clean.

Of course, who knows what will happen in the new era of consumer-generated media. This lack of transparency (and “ownership” if you will) may catch up with the company faster than they think. It just hasn’t just yet.

In the meantime, I know I’ll be reading more labels and asking more questions.

Perhaps, unfortunately, I won’t place so much trust in my doctor’s intentions.

I am not sure that’s a good thing.

Like it or not, welcome to consumer-driven health care. Bring your helmet.

Related links

Associated Press Article

Porsche Goes to the Gorilla!

Key points:

1. Most “special financing offer” auto advertising is so bland, you hardly notice. Not this time.

2. Porsche is under tremendous sales pressure, volume down some 27 percent, and special offers seem to be helping the cause.

3. However, price discounts undermine the value proposition of any brand—but especially lux brands like Porsche. Say hello to deteriorating margins.

Three words undeniably mean”sale” at your local car dealer.

Giant. Inflatable. Gorilla.

It conjures images of smarmy guys in plaid suits and plastic smiles. Add in stale popcorn and balloons for the kids, and you’ve got the makings of a busy Saturday afternoon.

When you arrive, you can count on a bevy of smart-sounding deals: X percnet financing (where “X” equals some number less than 1 percent), cash-back deals, and bring-back deals. You can expect to learn what “taking delivery from dealer stock” means. You’ll start to wish you listened more carefully to the super-fast-disclaimer-talk the last time you saw the television ad.

It’s also pretty easy to guess what car nameplates you’ll see on the lot: Chevy, Ford, Dodge, Chrysler, Jeep, Buick, Kia, Hyundai. You might see the occasional Honda or Toyota, but don’t get your hopes up.

It is so common—and so predictable—that it becomes background noise. In the advertising biz, this type of promotion is akin to wiping your backside with your ad budget—no one is listening anymore.

But here’s where it gets interesting.

My wife and I were enjoying a quiet night at home when we caught this little advertising gem:

From who? A 1.9 percent financing deal? For what? A Porsche!

You’ve got to be kidding.

You see, when I grew up, if you had to ask how much the new Porsche cost, you couldn’t afford it. But clearly times have changed for our fancy pants German friends. They must feel like they’ve got to bust out the “monster sale” gorilla in order to get us to pile the kids in the station wagon and head down to our local Porsche dealer.

Just take a step back, however, and you understand the temptation.

We’ve all heard about “grim economic conditions,” and Porsche (counter to some not-so-sage prognostication a year ago) is not immune. Revenues are off 14 percent globally from a year ago for Porsche. Worse yet, sales skidded more than 27 percent during that same time. (Translation: Entry-level buyers aren’t snapping up the lower-margin Boxsters, but 911 sales are still OK).

In dollar terms, that’s a $4 billion loss on global volume of 34,000 units. Yikes.

The sales incentives do however seem to be stemming the tide: Q1 results are up 15 percent from a year ago. But it’s temporary. Our friends at General Motors rode this pony for years—right over a cliff.

In 1994, the average GM vehicle left the lot only after a $900 sales incentive. By 2004, that number climbed to $4,000. In other words, GM trained its customers to buy only when they saw the gorilla. Now I’m not saying Porsche is the next GM, but they had better be careful; former “high-end” retailer Macy’s is in a sales-incentive pickle and may never get out. Lux brands are not immune from the just-put-it-on-sale drug.

Of course, the Porsche group is a bit insulated due to its affiliation with Volkswagon and Audi, but the sports car moniker has struggled in recent years with its image. What used to be a pure sports car has become a crossover SUV (the Cayenne) and now a four-door sedan (the Panamera).

The real question is not the 1.9 percent financing sales incentive itself. The need for sales incentives is a symptom of a broader problem. The real problem is the degeneration of the Porsche brand. Without a clear differentiator between a Porsche and say, a Lexus, BMW, or Mercedes, the company forces itself to compete on others’ terms. Not smart.

Porsche would be well advised to focus on what it is good at: Rockstar-quality sports cars. Let Audi handle the luxury sedan and crossover market. Let VW speak to the people.

Because when everyone can get any kind of Porsche they want, why would you want it?

Special Note:

The Federal Trade Commission recently passed an advisory stating that bloggers must disclose their financial ties to organizations they write about. Well, I’ve never received so much as a free pencil from any subject in any post over the last (nearly) four years. I don’t intend to start now. However, I would be happy to reconsider my position if Porsche would see clear to providing a complementary vehicle for an “extended test drive.” I am partial to the Boxster S, but really, any vehicle would do. Please? C’mon guys? Call me!

Related links:

Autoblog Article

Forbes Article

Official Porsche Offer Site