SERGIO ZYMAN, THE OUTSPOKEN FORMER COCA-COLA MARKETING GURU, HAS NEWS THAT SOME ON MADISON AVE. WON'T WANT TO HEAR: TRADITIONAL MARKETING IS DEAD

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Most executives don't take kindly to nicknames that play up the abrasiveness of their management styles. Sergio Zyman wears his (the Aya-Cola) like a badge of honor. And that says a lot about the man who once ruled Coca-Cola's marketing universe with an iron fist.

Of course, colorful personalities sell books. And these days, Mr. Zyman is not only serving as a consultant to major marketers, but is carefully crafting, packaging and presenting the brand called Sergio.

His new HarperBusiness book, "The End of Marketing As We Know It," boldly declares traditional marketing "not dying, but dead." It also calls in no-nonsense terms for the marketing process to be demystified. The book is sure to tick off many agencies -- Mr. Zyman says they need to worry less about strategy and more about creating ads -- and any marketing executive content with the status quo.

Mr. Zyman currently runs the Z Group consultancy -- with plans to branch into public relations, sports marketing and other disciplines (but not advertising). He met with Advertising Age Editor Scott Donaton at the Four Season Hotel in New York earlier this month.

AA: You constantly reinforce the seemingly simple message that marketing is supposed to sell stuff. Do you think there's too much advertising that is creative for the sake of being creative?

Mr. Zyman: Interesting how quickly you made the transition from marketing to advertising as if it's the same. But absolutely. People come up with the idea of a commercial without even writing a brief. I remember when stars were the thing to have in advertising. You'd get a phone call and someone would say, 'We can get Bruce Springsteen.' And you'd go, what are we going to do with him? It was always a chase for the film. I think half of the advertising that is put together today has no linkage to a strategy to sell more stuff.

AA: How did we get there?

Mr. Zyman: First of all, advertising in general is overrated as part of the marketing mix. And any time a person gets promoted to president or CEO, they automatically get a master's degree in marketing and start meddling in the stuff. Advertising tends to be used a lot by companies as sales motivators for distributors or wholesalers. It's used to entertain securities analysts. Advertising is supposed to be a small part of the marketing mix, it's supposed to communicate the benefits and differences of a brand. Full stop. That's it. But it's taken so many iterations over the years that in many cases it's ineffective.

AA: How do you define marketing?

Mr. Zyman: Marketing is a discipline, a science that positions your product in front of target consumers in relative terms to your competition. It has to present and explain and package and incite and insist the consumer buy more of your stuff instead of the other person's. Marketing has to drive the product development. It has to go from here's what I can sell, go make it, instead of the other way around. It has to figure out how the product is packaged. Pricing is critical. And then, of course, communications, both paid media and free media. How do you paint the trucks that carry your product around? What kind of point-of-sale materials do you have? Where do you place the product inside of stores?

It's too important to be left to the marketing guys alone. Everybody is in the marketing business.

AA: Do most CEOs get that?

Mr Zyman: No. They don't believe in marketing, because if they did they wouldn't cut it when volume gets soft. You see one quarter where volume is soft and the reason it's soft is because the market conditions changed, and your marketing plan was bad. But then you go to the next quarter and you cut the marketing again. It's like you're saying, 'I just shot myself in the foot, let me reload and shoot myself in the foot again.' It makes no sense. They don't believe in it and they don't understand it, either.

AA: They view marketing as an expense rather than an investment.

Mr. Zyman: That's also because all of the marketing and advertising people have made it into a black box. They say, 'You don't understand it, let me explain it to you. I'm the only guy who knows how to do this.' By doing that, they're actually creating a huge problem.

AA: So marketing executives perpetuate the mystery around marketing. Do agencies share that blame, too?

Mr. Zyman: It's the agencies for sure. But I think there are marketing executives who are disengaged from the business and are infatuated with the trinkets, whether it's going to the agency to drink latte or going to a shoot in L.A. They continue to peddle the thought that it's art. It's not art.

AA: You say in the book traditional marketing is "as dead as Elvis." Is that an overstatement?

Mr. Zyman: The traditional understanding of marketing [is dead]. What is it today? The understanding is that marketing is commercials, or in other parts of the world it's sponsorship. That view is dead. The information revolution is making us so much more aware, so much more exposed to more stuff every single day and we are in this consumer democracy that gives us the opportunity to choose. And we sit there looking at this stuff without really knowing how to choose.

AA: Ad agencies won't love this book. Among other things, you advocate changing agencies in months instead of years if your marketing isn't working. Isn't that short-sighted?

Mr. Zyman: I want to stay with an agency for the rest of my life if the agency is willing to change and do things that need to be done. Agencies need to reinvent themselves to be relevant. Shelly [Lazarus] at Ogilvy is doing that, and [Dan] Wieden and Cliff Freeman. They're reinventing where they are and where they're going.

There's a misconception that Coke used to hire agencies left and right. It's not true. When I took over marketing at Coke I had 125 brands around the world. I had one agency that was servicing us very poorly. Already the decision had been made to go to CAA. I didn't make that decision.

I started looking at each of the brands and realized if we wanted to grow these brands we had to put a full complement of resources against them. McCann, which was the agency of record, had a chance to pitch every single one of the brands. But they were fixated on Coke.

The other thing that was very important. There was this Adam model where there was this agency many, many years ago and they took a rib out and made Eve. Every one of these agencies that is out there today is either a fusion of something else or a rib that was taken out of another agency.

AA: You also say agencies should focus on creating brilliant ads while the marketer controls the strategy.

Mr. Zyman: Strategy is the purview of the client. You can involve the agency as long as you are in firm control of the strategy. An agency is never going to know all the inner workings of a company, what's going on with finances, acquisitions, divestitures. All of those things influence how you position a product. The strategy has to come from the company. That's not to say you don't avail yourself of good thinkers. The problem is agencies like that more than they like producing ads.

Last time I checked they were advertising agencies, not strategy agencies. I say give me ads that make people buy more of my stuff then I'll let you do whatever you want. But first give me ads.

AA: But more agencies say they're not ad shops but marketing communications specialists.

Mr. Zyman: In some cases, it makes sense for an agency to grow what they are. I remember this chain of restaurants called Del Taco. And they had burgers, pancakes, everything. And the guy who was running it said we're not a Mexican restaurant, we're a total fast-food entity. If you start doing your core activity poorly and then try to get revenues from other places, that's not a good idea. If you are doing your core activity brilliantly and you want to extend what you're doing, that's terrific.

AA: What is the relationship between marketers and agencies? Are they really partners or just vendors?

Mr. Zyman: This is really going to irk every advertising agency all over the world: They're more a vendor than a partner. What is a partner? A partner is somebody who shares in the success and the failures of an enterprise. What happens when business goes down? Does an agency share in the losses? No. Well, they share because advertising gets cut.

But I think there are maybe better words than vendor or partner. I consider my bank to be my ally, part of my team. I have my banker, my financial planner, my accountant, my investment adviser. I go to them for what they do best. They will be with me forever. I have a great relationship with them. They're not my partners.

AA: So you support compensation models that let agencies share risks and rewards?

Mr. Zyman: Absolutely. I did it. You talk to agencies and say, you need to change the way you do business, and by the way I don't need the chairman to come see me and run around the hallways talking to everyone once a week. But they don't listen. We went to a compensation system that was born out of frustration more than anything. My attitude was, you tell me how much money you need to make. We'll debate it. We'll figure out who you want to put on my account and I'll pay you for it, because you should be profitable.

It can't continue to go on the basis of winks and nudges and friendships. It just can't.

AA: New compensation models also make agencies media-neutral. Are they too dazzled by the glamour of TV today?

Mr. Zyman: If you're an art director, there's no sex appeal in doing a print ad. They all want to do the big movie with Joe Pytka.

AA: You talk in the book about how Levi's and Snapple and Nike were great brands that lost touch. What's the common element of their missteps?

Mr. Zyman: They start talking to themselves, they start believing that preference is not perishable. Preference is perishable. You have it today and it goes sour tomorrow morning. It's really hard to gain it, but it's very easy to lose it. And a lot of these companies either lost focus or diversified too broadly. In the case of Levi's, they were bored with Levi's after the great success of 501 and they were mesmerized by the success of Docker's. It's going to take a long time to fix that company.

AA: Is there arrogance?

Mr. Zyman: Leadership is a lot of things, it's not one thing. If your leadership is focused on one thing, you're going to lose it sooner or later. If you really are on the cutting edge, you're going to be constantly reinventing yourself. Look at The Gap. Those guys are really good and they basically run scared all the time. They are by far the No. 1 retailer of any kind, and every day they get up and say what are we doing wrong and how do we have to change it. That's what you need to do.

AA: Is Coke doing it right?

Mr. Zyman: I think so. I'm out of touch with what's going on right now. We definitely were when I was there. That's not a Sergio thing. The whole company was into it.

AA: There are some great brands like Virgin and Starbucks that have been built with almost no use of traditional advertising. What does that say?

Mr. Zyman: You just made my whole point. Here is the ultimate example of everything communicates. Starbucks told us that drinking coffee was part of our persona. And they did it with almost no commercials. They had a lot of advertising, they just didn't pay for it. The advertising was the signs and the cups and the cup holders and the names of the drinks they sold in the stores. Fundamentally, that's where the world is going. You're going to have to have a name that works, a package that works, a public relations thing that works, maybe paid media as well, and pricing. Everything communicates.

AA: You say everything is marketing. I don't think enough companies realize that extends to how front-line employees interact with consumers.

Mr. Zyman: Your impression of McDonald's is formed more by what happens at the counter than what you see on the air. The thing that connects people is what happens at the point of purchase.

AA: You don't talk a lot in this book about how the Internet is changing marketing communications.

Mr. Zyman: You need to think of the Internet as part of your overall strategy. It is our first two-way medium -- you talk to people and they talk back. It's fundamentally taking us from 9 to 6, Monday to Friday shoppers, to 24/7. You can buy a jar of English Devonshire cream at 2 in the morning. You can buy steaks from New York today and grill them in Vail tomorrow. It's a major change in our

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