Hey, Google: Put Some of Those Ad Dollars Back Into Advertising

Company Rakes in Millions of in Ad Revenue but Own Ad Spending Is Rather Small

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In the spring of 1972, Jack Trout and I wrote a series of articles for Advertising Age titled "The Positioning Era Cometh."

And it sure came. By December of that year, The Wall Street Journal ran a front-page story on positioning (not totally favorable). But it turned out to be a "keystone" story that sparked hundreds of articles in local newspapers and magazines.

As a result of the publicity, our advertising agency (Ries Cappiello Colwell) began to attract a different kind of client. As one prospective client said, "We don't want to hire you to do our advertising; we have an agency for that. We want to hire you to do our positioning strategy."

So we wound up with two businesses: 1) advertising and 2) marketing consulting.

Fifteen years later, I was giving a speech to a group of marketing people on the folly of line extension. When you expand your brand, you undermine its position in mind.

In the question-and-answer session that followed, one marketing manager stood up and asked me a question I still remember today.

"Why don't you take your own advice?"

I was blown away by the question and its obvious implication. The line-extension folly also existed inside our own organization.

As soon as we could, we shut down our New York City advertising agency and moved our marketing consulting business to Greenwich, Connecticut, a location we thought would be more consistent with our new "consulting" position.

It turned out to be the best move we ever made. I only wish we had made the move a decade earlier. And I wish I could remember the name of the person who asked me that question 27 years ago.

"Why don't you take your own advice" can be a powerful wakeup call for marketers in many companies.

Light bulbs and healthier living

Years ago, I was consulting with someone in General Electric's lighting department. The problem was trying to convince companies to replace all their fluorescent light bulbs after a certain percentage had failed.

The overall cost, including labor, of "wholesale" replacement would be less than the cost of "retail" replacement. That is, individually replacing each bulb when it failed.

Why don't you take a typical General Electric manufacturing plant, I suggested, and use it as a case history to demonstrate the savings that could be had.

You know the end of that story. Oh, the GE marketing manager said, our company plants don't do that.

Anyone visiting a medical doctor for an annual physical knows what advice and counsel he or she is going to receive. Eat healthier and exercise more.

But how come a recent study by Kevin Kenward of the American Medical Association found that medical doctors in the United States live eight years less than the average person? And that's despite a higher socio-economic status and all the benefits that go along with it.

The power of advertising

Advertising can be powerful.

Except perhaps for yourself.

Every year, many advertising executives are happy to be invited to Cannes to talk about the powerful advertising they have created for others. And neglect to mention why they are not creating powerful advertising for their own agencies.

Dozens of magazines are currently bemoaning the lack of advertising in their own publications, but would never think of running advertising for themselves.

Hundreds of consultants are happy to tell their clients in great detail what their marketing strategies ought to be. And neglect to create a strategy for their own marketing companies.

Advertising can make you rich.

Beyond your wildest dreams.

What company took in $59.1 billion worth of advertising revenue last year? The same company that is worth $371 billion on the stock market. Next to Apple, the second most-valuable company in America.

That company is Google.

Google is a global company, so that $59.1 billion wasn't all generated in America. But $25.2 billion was. Think about that for a minute. That's more domestic advertising revenue than radio racked up last year ($17.4 billion.) And more than magazines ($17.7 billion.) And more than newspapers ($21.1 billion.) Google alone accounts for 14% of all measured media spending.

Google's domestic advertising revenue ($25.2 billion) was greater than the combined advertising revenues of CBS Corp. and NBC Universal Media ($23.5 billion.) Also greater than the total revenues of Facebook, Yahoo, AOL and Twitter ($21.0 billion.)

Globally, Google's advertising revenue ($59.1 billion) was greater than the combined revenues of the Big Four advertising conglomerates: WPP, Omnicom, Publicis and Interpublic ($49.8 billion.)

Never in the history of advertising has one company played such a dominant role in the advertising industry. And that domination is likely continue well into the future. Last year, Google increased its revenues by 10 percent.

Protecting a dominate position

If I were running Google, I would be spending a small fortune protecting my advertising revenue stream. And how do you protect a market position? The best way is with advertising.

With its dominant advertising position, you might think Google would also be a big advertiser. But it's not. Google seems to be more interested in putting its money into smartphones and virtual-reality glasses.

In 2013, according to Ad Age DataCenter, Google spent $568 million on measured advertising media. That made Google the 44th largest advertiser in America, outspent by such companies as Merck ($603 million), Kellogg ($642 million), Hershey ($668 million), and Kraft ($716 million.)

Hey, Google! Is advertising a good investment or not? If it is, why isn't your company one of America's largest advertisers, right up there with Procter & Gamble? ($3.5 billion in 2013 measured media.)

Actions speak louder than words.

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