Outside In Banking

Warning: This post is long (and probably long-winded).  If you belong the statistical majority who don’t read on the web, here’s the conclusion—advertising is neither dead nor dying.  If you want to know why, read on.

In this—the final post of a series—I’m going to wrap things up.  Here’s the argument I’ve been attempting to refute:

• Premise: Consumers don’t believe advertising anymore.
• Inference: Consumers are in control now.
• Conclusion: Advertising is dead.

So far, I’ve submitted that:

• Belief is not a necessary condition for advertising effectiveness, and therefore the premise is irrelevant.
• Consumers have always been able to vote with their feet. While they do have more voice today, and while they may feel empowered by this, they don’t have any more real control than they’ve always had.

Here are a few thought I’ve had since posting parts I and II:

Premise:

• Consumers haven’t believed or trusted advertising for decades—a fact that hasn’t prevented it from working for decades.
• Belief and trust are primarily evidence-based—if the sun has risen every day, you believe and trust that it will rise tomorrow—but decisions, as neuroscience has revealed, are primarily emotion-based.

Inference:

• If consumers were in control, we’d see more evidence—better service, less overcharging, an increase in consumer-friendly policies, etc.
• It’s not clear that most consumers want control (and the attendant responsibility), so even if they were given the way, would they have the will?

Before moving on to the conclusion, I want to consider some other common arguments for the advertising is dead theory.

1. Consumer media habits have changed.
   Advertising has not changed.
   Advertising is dead.
2. Businesses require accountability today.
   Advertising isn’t accountable.
   Advertising is dead.
3. People hate advertising.
   People are tuning advertising out.
   Advertising is dead.

Advertising and Media Habits

Media habits are indeed changing, but advertising is changing, too.

In fact, from its inception, advertising has been in continuous evolution.

• Over the years, it has adapted to radio, TV, cable, online, mobile, and thousands of so-called alternative media—gas station pumps, eggs, graffiti , t-shirts, stairways, interactive billboards, and the human body, to name a few.
• It has taken on price/product, problem/solution, image, lifestyle, and behavior as messaging platforms.
• Its focus has evolved through local, national, international, targeted, segmented, behavioral, and personal.

So media habits have changed.  They’ve changed before; they’ll change again.  As the Ad Contrarian so eloquently put it:

“Advertising doesn’t really care what media live and what media die. It will use what’s available.”

Related to changing media habits is the fracturing or splintering of media. With more choices available to consumers, no one medium gets the audience that TV, Newspapers, or Magazines once commanded.

Advertising is changing in this regard, too. It’s become, more targeted, less wasteful, and better at integrating various media. Fracturing might be a network or newspaper killer, but it’s certainly not an advertising killer.

Advertising and Accountability

Are businesses really demanding advertising accountability?

I’ve been hearing this cry for more accountability since the commercializing of the web, yet less than 20% of marketers currently measure ROI with any consistently or strategic planning.

I’d say, for most marketers, accountability falls in the “someday” column.  According to McKinsey, most companies still base their advertising budgets on the previous year’s  budget.  This jibes with my own experience.  Every year, come September, marketing managers increase their spending so that their budgets won’t be cut the following year.  This was true 20 years ago and it’s true today.

Of course, every company should demand accountability—it’s important to be efficient as well as effective.  That’s just good budget stewardship.  Unfortunately, it’s not the reality.

The reality is that accountability does not equal—nor does it necessarily lead to—profitability, which is something shareholders demand.  I’ve been doing this for nearly 30 years, and I’ve never met a CEO who obsessed over advertising ROI (although very single one obsessed over perception).

When it comes to accountability, I’m afraid there’s a lot more heat than light out there.

But is advertising accountable?

Yes and no.

What’s the ROI on a CFO? A new corporate headquarters? A mission statement? Casual Fridays? Public relations? Diversity? Training?

All of these have can have a positive effect on a business, and you can often correlate them with a rise in productivity, revenue, or profit.  But can you calculate a precise ROI?

I submit that advertising is more accountable than any of these.

There’s a spectrum, of course. Direct mail is highly accountable. Ads including special phone numbers or URLs are accountable, too.  As are retail sale ads, coupon ads, and search advertising.

Good-will advertising, not so much.

Most criticism, however, is directed at what is known as awareness advertising.

First off, the term is a misnomer. Very little advertising is devoted to awareness only.  What critics actually rail about should be called something like meaning advertising.  Because that’s what it does—it puts meaning into the products and services being advertised.  Most people spend most of their money on meaning. It is with this meaning that they construct their identities. Like it or not, the things we buy tell us—and others—who we are. The difference between Nike and New Balance is meaning. The difference between Black & Decker and Craftsman is meaning.  Shopping carts in a checkout line are baskets loaded with meaning.

The reason you follow through on the recommendations of people you know is not that you trust them, but that you share meanings with them.

So what about the ROI of meaning, then?  Does it matter?  I don’t think it matters to Muhtar Kent.  He’s just glad Coke has meaning.  And he’ll do everything in his power to keep it, because that meaning is worth nearly $68 billion to Coca-Cola—two thirds of its market cap.  And that’s the accountability Mr. Kent cares most about.

Unlike advertising accountability, meaning generates profit.

So, while much of advertising is accountable in the traditional sense, current methods simply aren’t up to the task of measuring meaning.

On the other hand, using a marketing tactic because you can measure it is like looking for your lost keys where the best light is, regardless of where you lost them.

Advertising and Tuning Out

“People read what interests them. Sometimes it’s an ad.”
— Howard Luck Gossage

This is, and always has been, the case.  Nobody likes advertising, except when they do.

Think small. Where’s the beef? Just do it. Got milk? Think different. Mikey likes it.

Most people really don’t hate advertising.  They hate advertising that insults their intelligence, screams at them, bores them, tells unfunny or offensive jokes, wastes their time, or intentionally misleads them.  In other words, they hate bad advertising.

Good advertising, on the other hand provides value.  It’s likable, memetic, and game-changing,  Check out the movie Art & Copy if you get a chance, for an insight into how good advertising works.

Unfortunately, the bad usually outweighs the good.  Which is why most people say they hate advertising (most people also bristle at the suggestion that advertising influences them, but that’s another story).

According to Forrester, however, consumer attitudes toward advertising are actually improving.  Still negative, mind you, but improving.

A few statistics:

99% – Households in the US that own at least one television set

66% – US homes have three or more TV sets.

66% – US households that watch television during dinner

7 – Number hours the television is on per day in an average American  household

250 billion – Number of hours Americans watch television per year

72% – Adults who say that at least some of the ads they see on a typical day engage their attention

53% – Increase in those who say the commercials are the most important part of the Super Bowl (2005-2009)

50% – Internet users who report that TV captures their interest most effectively

51% – DVR users who say they always notice commercials while fast-forwarding

54% – DVR users who say they have rewound or paused television commercials to better understand the advertised product

I could go on and on.  Almost everyone uses statistics that support their claim, and ignore those that don’t.  Those who trumpet studies that “prove” DVR-enabled commercial skipping is approaching universality are no exception.

Try watching TV for an evening, poised to fast-forward through every single commercial break.  I’ve done it, and I didn’t find it liberating.  It was exhausting.

So…do people hate advertising?  Some of them, some of the time.  Are people tuning advertising out?  Some of them, some of the time.  None of this is new.  And, examined closely, none of it indicates of the death of advertising.

Summary

• Belief is not a necessary condition for advertising effectiveness, so it doesn’t matter whether consumers believe advertising or not.
• While consumers do have more voice today (and may feel empowered by this), they don’t have any more control than they’ve always had.
• Media habits have changed, but it’s not the first time and it won’t be the last.
• Advertising has changed as well.  In fact, it has been constantly evolving along with culture and technology, and it will continue to do so.
• When it comes to businesses demanding accountability from advertising, there’s a lot more talk than action.
• Much of advertising really is accountable in the traditional sense. The primary benefits of other advertising are intangible, but irreplaceable.
• Some people hate advertising some of the time.  Some people tune out advertising some of the time. Same as it ever was.

Conclusion

Advertising is neither dead nor dying.  As long as there are products and services to sell, there will be advertising in one form or another.