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June 05, 2005
Don't blame the metrics
Some eye-opening statistics from the June 2005 Harvard Business Review (subscription req'd) on the effectiveness of 500 various consumer and B2B marketing programs:
* 84% resulted in less market share, not more
* Most customer acquisition efforts did not break even
* Fewer than 10% of new products succeeded
* Most sales promotions were unprofitable
* Advertising ROI was below 4%
* Doubling advertising expenditures for established products increased sales just 1% - 2%
While the article does not tell us explicitly, chances are many of the 500 programs were designed to goose quarterly results. It's the siren's call of immediate customer traffic that steers so many marketers toward one-way advertising programs; as the results show, this usually leads you straight to the rocky shores of poor ROI.
Good benchmarks. Poor results.
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» Is Advertising a Commodity? from Casual Fridays
I participated in a volley of comments over at Church of the Customer earlier this week on the dimnishing returns of traditional advertising. Ben McConnell made this statement:
…advertising isn’t dead; it’s been commoditized. That ... [Read More]
With all due respect, I'm growing weary of the co-creation, customer intimacy jive. Yes, we all dig that customers are not sheep and they cannot simply be cowed into purchases. Great.
However, all this focus on the customer leaves one thing dangling in the wind to my mind. Namely, good creative. I suspect a good part of the reason why marketing is so poor at meeting expectations is because of the quality of the work demonstrated by the overwhelming majority of shops (nee people in general). When I say quality, I mean that synergy that occurs in the minds of great creatives between knowledge of the client, knowledge of the audience, knowledge of aesthetic archetypes and application thereof.
Because let’s face it, customers are just people like marketers. They’re fallible. They often (and this is important) cannot articulate what they want anyway! So the notion that a more transactional style of marketing is some panacea to create consumer tranquility seems like true-religion to my mind.
Many great political minds throughout history have commented that perhaps the most compelling form of governance is an enlightened monarchy. While I don’t completely embrace such musings, I do recognize the antecedent and it is this: integrity of vision. Would you have had Einstein get buy-in from laymen before publishing? Even more germane, would you have had Shakespeare do so? I think the stuff Crispin, Porter & Bogusky is doing is an excellent example of that to which I am alluding: Great storytelling is the fundament of human volition and stories get muddled by too many chefs.
What this blog seems to be proposing is that we saddle this process of engendering and communicating compelling stories with another layer of bureaucracy. How else can the customer become involved in the process but through the intercession of some bureaucratic system?
In case it isn’t clear, I laud any effort to treat people as people and not merely as disarticulated pieces of a dataset. I laud any effort to encourage marketers to tell better stories instead of just beating their collective chests. In that vein, I applaud your efforts, but I am too much of an individualist, and like other creative minds, I have too great an ego to allow my creative vision to be undermined by any caprice, whether it come from wrong-headed clients OR their customers.
Again and again, we're finding out (slowly, but surely) that, as marketers, we must evlove. Or suffer the consequences.
Ben,
Do you have any experience to back up your assertion that a short term focus generated these results? If so I'd love to hear about it.
Our experience demonstrates that good strategy executed via tightly-defined, short term campaigns measured by revenue, profit or market share succeed quite nicely.
Better creative may help, as Malaclypse argues, but the fundamental problem is that advertising has permeated nearly every fiber of our daily existence. There's so much of it, and such a huge infrastructure to support it, that the Crispin, Porter, Bogusky's of the world will always remain the exception.
The advertising virus has mutated so much that we have no choice but to develop a general-purpose immunity. It's why, as Jackie posted awhile back, that a GM spokesman was quoted saying recently that in order to grow, GM just needs to yell louder.
That's the virus talking.
"...the Crispin, Porter, Bogusky's of the world will always remain the exception..."
Let's hear it for the exceptions. You’re not really suggesting that we all lower our aspirations because it appears too difficult to be great are ya?
Yes, advertising is everywhere. That seems to speak to my thesis. When all you get is a few scant moments, how are you going to get attention? Are you suggesting that marketers spend those precious nanoseconds begging the audience to “participate”?
Great stories break through the advertising immunity by merit of the fact that they’re not precisely marketing per se – they’re stories. Why throw up the bullshit filter when all that is being asked of is that you have a laugh; a genuine human moment? To my mind, this is what it really means to “be on the side of consumer.” It means employing the ubiquity of advertising to speak to the real human experience.
Anyway, advertising is nothing new. The promotion of ideas is the primary mechanism for technological evolution (I use technological in the broadest possible sense: political, social, economic, etc.) Churchill demonstrated his understanding of this when he said, “History will be kind to me for I intend to write it.”
Lest I appear too much the contrarian, I do enjoy your blog and read it rather regularly. Thanks for providing the opportunity for thought.
Malaclypse,
The "genuine human moment" results from marketers who understand the "truth" and know how to express it. Steve Jobs is the master of understanding and expressing the "truth".
Mal,
Perhaps the proponents of customer centricity are speaking a bit over the top, but they are yelling into a hurricane of traditional advertising.
I see incredible merits in customer evangelism. I don't see it as a replacement for advertising, but rather a new form of consumer research. A much more powerful form with arms like advertising and feet like PR. A truly creative mind like yours should be empowered by the addition of customer information, customer evangelists, and citizen marketers, not limited by them.
Zealots will say that advertising is dead. Not so, but it is less effective and unconventional marketing is on the rise. You mention the ubiquity of advertising. One person sees "ubiquity" as power, while another sees it as diluted and expensive.
From my vantage point, the customer involvement movement is just taking root since so little of it is practiced compared to the one-way street of advertising. P&G CEO A.G. Lafley would hardly onsider his direct involvement with end-customers in their homes to be a layer of bureaucracy!
Complex customer involvement in product development, marketing, sales and distribution is just beginning to be explored and developed in large-scale forums. To me, undertaking it vs. advertising is not a binary decision; it's part of a holistic marketing theology. If you don't believe in it, that's fine. But I'm not preaching to the atheists :)
To bolster Dustin's point... advertising isn't dead; it's been commoditized. That renders a lot of its value obsolete.
"But I'm not preaching to the atheists."
No one here but us agnostics. :)
I don't dispute the value of trying to truly engage customers directly and as real humans. It seems clear to me that a lot of what makes this customer stuff go is the one-two of the personal computer and the internet. Back in 91 when I was in school, all the libertarian comp sci froods were talking about how this two-year-old technology was going to revolutionize personal publishing. The blog looks like it's the app that has finally realized those visions. I've been recommending blogs to my firm's clients for over two years now.
My jape was over what I sometimes perceive to be a "when all you have is a hammer everything looks like a nail" thing with the customer stuff. I mean, you did say "theology," and this is a church (which reminds me I should watch the language) after all.
Not sure I grok your "advertising is a commodity" tack. I must be missing something. The little I know from my cursory reading of history-in-general supports the notion that art, communication and the art of communication have always been bought and sold. Great artist-communicators seem to make amazing things all the more amazing for having patronage, right? Perhaps you're suggesting that advertising is becoming bland and formulaic. I would only reply that great creative is all the more profound in such environments. To wit (and only briefly): Subservient Chicken? The BMW Films stuff? Jib-Jab?
Oh, and props to Mr. Lafley – he's a mench, no doubt. He's been quite an exponent of the value of great design (among other things). I don't suppose I have to mention that I think well of such opinions.
I offer plaudits to you for being such a good host in both allowing some heresy in your halls and responding thoughtfully and wittily.
er...mensch :P
Actually, I'm not suggesting that advertising is becoming bland and formulaic. I'm suggesting, as does a clear majority of Americans (according to a 2004 Yankelovich survey), that advertising is far too prevalent in society.
To stand out from the crowd, we suggest organizations wean themselves of systemic advertising addiction. Build a plan to rededicate all advertising budgets toward bolstering existing customer relationships, improving product and service quality, and creating collaborative marketing programs with customers.
“To me, undertaking it vs. advertising is not a binary decision; it's part of a holistic marketing theology.”
“Build a plan to rededicate all advertising budgets toward bolstering existing customer relationships, improving product and service quality, and creating collaborative marketing programs with customers.”
Perhaps you can reconcile those two statements? “all advertising budgets” ?
"I'm suggesting, as does a clear majority of Americans (according to a 2004 Yankelovich survey), that advertising is far too prevalent in society."
Interestingly, one Professor Stephen Earl Bennett once remarked in an article:
"Very few Americans do well on tests of political knowledge; beyond recognizing presidential figures, the public is just as hazy about things political as it was five decades ago ... 74 percent did not know the name and party of even one local congressional candidate."
I can’t say I find Argumentum Ad Populum particularly convincing. Everyone wants their local symphony to play the Messiah or Carmina Burana all the time. So should they just fill up their schedules with nothing but those performances?
Anyway, as I've suggested elsewhere, one very probable reason for the perception that advertising is too prevalent is that most of it sucks – it is uninspired and insipid. Why? In some part, I would argue, it is because the storytelling that is the centerpiece of persuasion (and always has been so since time immemorial) is undermined by tendentious techno-lust for the latest marketing methodology.
Actually, I'm not surprised that doubling the advertising investment only increased sales by 1% or 2%. I suspect that most products aren't sold because of advertising - they're sold because of location, because it's repeat business, because of referral. Oh, and let's not forget share of advertising voice. That doesn't mean the ads aren't important, they certainly are, but rather that the customer's treatment at the retail level is a greater predictor of customer response than a short-term spike in the budget.
Hi Ben
the statistic shown is also consistent with my posting here on http://marketingjournal.blogspot.com/2005/07/increase-in-advertising-spent-does-not.html
bryan
In recent conversations with my children about their buying habits a couple of things are very interesting. They are all in their early thirties and they go to the famous world wide web before they buy. In recent weeks the products have been lawn mowers, cars,and travel. Buy the time they make a purchase they know about the product and the company. Where do they purchase the items? On line if they can save a buck, if not they will search for local businesses who stock the product. Entertaining commercials that don't tell about the product will not reach them. Creative, web designer son-in-law considers most televison commercials as stupid. Now there is a challenge for all of us.
