It’s no coincidence that the rise of the American chain restaurant coincides pretty neatly with the automobile’s shift from an aristocratic toy to a mass means of transportation. As society grew more mobile, a novel problem arose: As you found yourself routinely passing through areas you didn’t know intimately, how could you know where to grab a decent bite? Standardized franchise restaurants—by adapting the assembly line methods of Henry Ford, appropriately enough—provided the answer. What they might lack in quality, they made up for in consistency: Anywhere the internal combustion engine might take you, you could Look for the Golden Arches (or some other easily recognizable logo) and know exactly what you were going to find. The chain was unlikely to be the best casual dining in town, but you at least knew you weren’t going to be surprised with something epically awful. That was a particular risk for roadside restaurants catering primarily to travelers rather than locals: If you don’t expect to do much repeat business, there’s not much percentage in spending time and effort raising the quality of your food much above the level of “palatable.” The national chain, by contrast, had an incentive to ensure that local managers didn’t injure the reputation of the overall brand. A customer might not ever set foot in a particular McDonalds a second time, but a chain has to be concerned with whether her experience makes it likely she’ll visit any McDonalds again.
Now, Brad Plumer reports, there’s research suggesting that online review sites like Yelp are cutting into chains’ bottom line by providing an alternative solution to the information problem. The combination of peer-produced online reviews (which cover local diners along with the big-city restaurants) and mobile, location-aware Internet devices has made it incredibly easy to figure out where you can find the nearest restaurants with good reputations, wherever you might be. Under conditions of uncertainty, the chain represents a rational maximin strategy. As ubiquitous connectivity and peer-production of information reduce that uncertainty, the chain becomes an unnecessary hedge.
Yet it’s not just chain restaurants that have thrived by using standardization and branding to solve a consumer information problem: Branding and marketing generally often serve much the same function. Frequently, generic or store-branded products (soda, cereal, ibuprofen) are literally chemically identical to the more recognizable name-brand product, and only cheaper because they haven’t been saddled with the overhead of a costly marketing campaign designed to signal quality. (Think of the traditional argument for the evolution of peacock feathers: To survive while paying the high overhead cost of such a gaudy display signals genetic fitness.)
Imagine, then, what effect it might have if, five or ten years hence, augmented reality using sophisticated image recognition were as ubiquitous as Internet-enabled phones are becoming in the developed world. Imagine that, for nearly any product consumers encountered, some kind of aggregate rating—based on whatever criteria the individual has determined are most important—would simply appear, with minimal effort. Simply looking at an aisle of products—or even passing shops on the street—I might effortlessly learn which were deemed most satisfactory by people with tastes similar to mine. My incentive to take the time to rank products would be provided by my desire to give the system a basis for determining which other user’s rankings were most likely to be relevant for me. (Think here of Netflix recommendations or other type of social filtering, where contributing ratings enables the system to make better predictions about what I am likely to enjoy.)
With such information more directly available, marketing would become far less relevant to the buyer—and a far less worthwhile investment for the producer. Products, of course, would still need to be distinguished in some way, but a seller with a superior product would be far better able to compete without investing in a costly national marketing campaign. Advertising might be initially important in raising awareness about a new product and building an initial pool of reviews, but its salience would rapidly diminish.
That’s one way things might go, at least. The picture is a bit complicated because today we often “consume” the brand, and not just the product itself. That is a company like Nike might invest a great deal in slick marketing partly in order to create a series of public associations with their logo, so that part of what I’m buying when I purchase their sneakers is what (I hope) the Swoosh signals about the sort of person I am—or how I see myself, at any rate. But this seems like a major consideration in a relatively limited number of product areas, such as clothing (precisely because it’s displayed on the person). If that’s right, the “Yelp Effect” in world where augmented reality technology has been widely adopted could dramatically diminish the broader cultural prominence of corporate logos and brands.