Reeves looked the chairman square in the eye and replied, "So I can keep you from changing them."
That not-at-all apocryphal story, recounted to me by True North Communications Chairman-CEO David Bell, who was told the story by Reeves' wife, Betty, at his posthumous induction into the Advertising Hall of Fame, demonstrates a couple of things sorely lacking in today's ad world:
1) The head guy was very much involved in and knowledgeable about his company's advertising.
2) Agency heads had the fortitude to stand up for what they believed was great advertising (and, not incidentally, to protect their agency's bottom line).
3) The top guy at the client listened to, and had respect for, the top guy at the agency. Bates, as you might have surmised, didn't change the Wonder bread advertising -- and continued to pocket the 15% commission.
I asked David if that scenario could happen today.
"The first part, about not wanting to pay, happens every day and at multiple levels," he told me. "The second part, about the CEO's deep involvement in the advertising process, happens only rarely. And that's the challenge that our industry faces in the millennium -- being at the top of the CEO's radar screen."
My contention is that CEO interest and involvement is crucial to effective advertising, and because of waning interest at the top -- and a deteriorating agency-client relationship up and down the line -- advertising effectiveness hasn't made much progress in the time since Rosser Reeves had that little chat with his client -- and maybe has even regressed.
When John Wanamaker, the Philadelphia merchant, made his oft-quoted statement at the turn of the last century ("I know half of my advertising is wasted, I just don't know which half"), at least he as the head man of his store was involved in and concerned about his budget. And he also lived in simpler times, when there were fewer media options, less competition and more homogeneous consumers.
Jim Spaeth, president of the Advertising Research Foundation, believes the industry has made progress in the theory of understanding how to evaluate advertising, but marketers haven't been nearly as successful in putting the theory into practice to produce advertising that works, and works consistently.
"The best companies understand the payback of all of their marketing factors and combine them for maximum brand profitability," Jim told me. "They know the sales impact of each campaign and, sometimes, each individual ad. If old John Wanamaker were alive today, he could die in peace."
But Jim was quick to say that only "a few of the best companies in consumer packaged goods have mastered this new science," and even they haven't figured out how to measure brand equity.
"We still can't measure the impact of advertising on the long-term growth of profitable brands," he said, and more important, "we haven't yet migrated this technology much beyond the consumer packaged goods world."
Jim also is of the opinion that advertisers haven't made progress in learning how to create effective advertising. "All the major studies suggest that most advertising is mediocre with marginal financial returns. But the dollars behind that rare campaign that breaks through can be the single most profitable investment a brand can make," he said.
"We have only learned to evaluate advertising, not create it. One would hope that such an evaluation process would make us all much
smarter over time, but given the turnover in this business, anything that happens over time may be irrelevant."
There's ample evidence to show the advertising business hasn't learned much about advertising productivity. Philip Morris Cos., which brought us the Marlboro Man, the most effective advertising icon of the 20th century, lavished several hundred million dollars on a totally ineffective and stupid campaign for Miller Lite.
And General Motors Corp. spent billions of dollars in a failing effort to boost its share of market; the giant auto company now is spending $250,000 with the Magazine Publishers Association to determine how magazine ads are perceived.
What's most discouraging is how little ad professionals seem to know about the advertising process. After the Miller Lite debacle, the head of Miller Brewing told The New York Times: "We learned one lesson from the aborted campaign. If you're advertising a product, you ought to give the consumer a reason to choose the product."
That was a mighty expensive -- and elemental -- lesson.
Other basic things that advertisers would like to know is whether TV commercials have the same effect in any program environment.
Proponents of TV optimizers believe that one ratings point is the same as another, but does a TV commercial running on NBC-TV's "Friends" have the same impact as the same spot running on ABC-TV's "Spin City"?
EFFECT ON STOCK PRICES
And does an advertiser's general advertising have an effect on its stock price? After all, the same consumers who buy Coca-Cola also buy Coca-Cola Co. stock in mutual funds and 401 (k) plans, so consumer ads might well have a residual effect heretofore unacknowledged.
There are lots of other questions and too few answers. You get an idea of what the industry doesn't know from looking over manuscripts delivered at a recent ARF workshop.
Marketers spend millions of dollars on advertising, said Lynn Gillis of Market Facts, "because the returns on advertising investments go beyond sales increases." So far, so good. But Gillis added: "The trouble is, it's hard to quantify those returns."
The industry "must move from an emphasis on understanding the message sender (i.e. the brand) to understanding the message receiver (i.e. the consumer). After all, brands don't make choices, people do."
Maybe all these unanswered questions cause top management to concentrate on more quantitative matters, but when the CEO gives up authority over the advertising, marketing directors will rush to fill the vacuum. It takes too long to change the packaging or distribution channels or to tinker with pricing, so the quickest way to make their mark is to put the account in review. That's one reason why there aren't many long-lasting campaigns anymore, such as the Wonder bread ads of a bygone era.
The marketing manager doesn't have to take the heat because he is off to the next job, and the agency review looks good on the resume.
There's also a deep suspicion of ad agencies on the part of marketing professionals fostered by the agency buyouts of the 1980s. When the Saatchi brothers bought Rosser Reeves' agency, Ted Bates Worldwide, Bob Jacoby, the agency's chairman at the time, walked away with over $100 million, clients felt agency heads were getting rich on their billings.
WHY THE HARD LINE
Bob Goldstein, the late VP-advertising at Procter & Gamble Co., wrote me after the Bates deal: "Perhaps you now understand why we took a hard line [on conflicts]. It wasn't and isn't who calls the tune -- it was all about looking ahead to the shape of the world that might come."
Bob, who drowned in a tragic rafting accident in 1987, was prophetic. The Saatchis' buying spree caused a major rupture in the client-agency relationship that hasn't entirely healed today.
What's happened since is that the 15% commission has gone the way of the dodo bird, and agencies have gotten themselves into fierce price wars over accounts, hoping to sell clients a bundle of other services once their foot is in the door.
The worry, of course, is that with price becoming the differentiating factor, agencies are in danger of becoming interchangeable commodities, ready and even eager to share business by becoming the lowest bidder.
Enter the management consultants, ad agencies' newest competitors. Partly because they're not afraid to charge an arm and a leg for their services, the consultants have the ear of the top management by promising strategic marketing counsel -- the kind of advice the agencies used to give free of charge as part of their advertising work.
ROCK AND A HARD PLACE
So agencies are between a rock and a hard place. They're cutting their fees, which lowers their margins, which makes it harder to afford to hire the MBAs that would make them more competitive with the consultants. And getting into price wars with other agencies helps perpetuate the idea that agencies are commodity suppliers.
At the same time, because consultants require clients to pay through the nose for their words of wisdom, and because they've become powerful brand names in their own right -- and thus a safe haven in case things go wrong -- agencies are being hopelessly outmarketed and outmaneuvered.
So with the client-agency relationship in tatters, with the CEO reluctant to get involved, with the marketing director looking for the next opportunity, is it any wonder that the creative people have taken over the asylum and we're all being held captive?
I have a feeling agency guys sometimes try to foist the most outrageous ads they can come up with on their clients to see how far they can go. And the clients let them get away with it because they figure the ads will at least be talked about -- equating a marketplace buzz to sales.
But too often the agency's creative team doesn't even try to give consumers a reason to buy the product. The argument is that today's younger people (older people don't count) are cynical about advertising (and maybe everything else), so you can't seem to be selling them anything. To reach younger consumers -- so the argument goes -- you've got to wink your eye at them and let them know you share their cynicism and you're not going to insult them with a real ad that has the presumption to sell what is being advertised. So you'll make fun of advertising and share the joke with them and congratulate each other on how hip you both are.
HAVE THE RULES CHANGED?
It shows you how little we know about how advertising works when I have to pose the questions: Have the rules changed? Does advertising no longer have to sell?
Allen Rosenshine, chairman-CEO of BBDO Worldwide, thinks that much of today's advertising is "all too often incomprehensibly absurd, delivering no discernible message in relation to any strategic intent."
I'm afraid we're ending up where we started on the proposition of advertising effectiveness (or the lack thereof). Consultant Herb Zeltner says Wanamaker's enigma still holds.
In fact, thoughtful practitioners aren't even sure the split is 50/50 anymore, Herb says: "With the exception of carefully tracked direct response efforts, more than ever we're uncertain where true effectiveness comes from in an increasingly factioned, multifaceted marketplace."
Herb thinks we've made some progress over the second half of this century on zeroing in on advertising effectiveness, but he still feels "we have miles to go" before any real cause for celebration. And much of the "strenuous effort" is "transparently self-servicing or wheel-spinning."
With miles to go, marketers are taking an awful lot on faith. It is one of the anomalies of our time that advertising has become the great energizer of our economy without anybody being really sure how to measure the results.