In today's digital world, it is clear now more than ever before that pricing power is rapidly shifting to the consumer. The digital medium has brought transparency to prices and made it easy for anyone with a computer or mobile device to quickly find the lowest price for any product. The typical online purchase now involves the use of either a price comparison engine, a search for online coupons or discounts, a free shipping offer, a daily deal or some other incentive that reduces the price paid.
But this is no longer relegated only to online commerce. Consumers have also become accustomed to using the Internet to root out the best price for any product before they buy in a retail store. And, the rapid emergence of smartphones – which are now being activated at the rate of nearly 1 million per week – has made these pricing tools mobile, giving consumers the ability to use them in brick-and-mortar locations in addition to online. As one retailer recently proclaimed to me "I never thought I'd be competing with Amazon in my own stores!"
This of course spells trouble for any manufacturer or retailer who doesn't have either the low price advantage or some other more compelling value driver that appeals to consumers. As merchants are forced to appeal to these other value drivers, it places a premium on great advertising. It is this new reality that has convinced me we may now be on the verge of a renaissance in advertising, where compelling multimedia creative emerges as the antidote to low prices.
Advertising's role in this new world becomes not just a demand driver but also a counterbalancing force to price as the main determinant of consumer choice. Ad spending trends certainly support this conclusion: TV ad sales rose 9% in the first quarter of this year, while the IAB just reported a 23% growth in online advertising. Tellingly, in 2010, display advertising grew faster than search -- for the first time since the IAB began reporting its data -- driven by a 35% increase in spending on video ads.
These numbers indicate a new-found focus on branding advertising at the expense of direct response or price / promotion communication. And, if the growth in ad dollars spent in branding media is indeed driven by advertisers' efforts to garner higher prices, then it's possible we can also expect to see an increased focus on creative. It's been about twenty years since some ad agencies first concluded that they were able to make more money through media planning and buying than through their efforts at developing great creative. I remember vividly one advertiser telling me sarcastically that it almost looked as if "agencies had outsourced creative." Those days might well be history.
Dion Hughes, the creative director at Persuasion Companies, points out that investing in a better brand experience all 'round is a clear way to differentiate and create value. And by all 'round, Dion isn't just referring to paid-media communications, but "what the brand does, how it talks, what it looks like, where it appears, what it stays away from, etc." Dion also believes that we're undergoing a creative revolution, and not necessarily just in digital, though that 's where it might look like it's happening. As he sees it, the revolution (or maybe it's the frontier) today is in orchestrating a brand's behavior across so many different media channels.
In an age of consumer pricing power, we need to remember that advertising plays a key role in building consumer demand and creating the willingness for consumers to buy a more expensive "premium brand" rather than a lower priced alternative, or a generic, or private label brand. In fact, research conducted by comScore ARS has shown that TV creative is responsible for 52% of the changes over time in a brand's market share, four times greater than the impact of other elements of the media plan.
That said, it's vital that marketers make sure that their creative is doing its intended persuasive job by testing it. I wrote about this in a blog post entitled "Four times zero is still zero", pointing out that even dramatically increased spending behind poor creative will not move the needle. That's the bad news. The good news is that it's been proven time and again that great creative helps build great brands …. and great brands don't have to join pricing's race to the bottom. Today, especially, that 's a vital point for marketers to remember.