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As if the advertising business doesn't have enough problems, here's a new one: smarter consumers.

Their smartness manifests itself in all sorts of ways -- they don't panic when the stock market plummets; they're savvy about how to avoid high interest rates; and they even assess presidential conduct and a possible war in Iraq in unexpected ways.

As Walter Goodman wrote in The New York Times the other week: "For the persistent watcher, the two wars that have been raging on television for weeks -- one having to do with Bill Clinton in the White House, the other with Saddam Hussein in this or that palace -- both have been exasperating and heartening. Although the screen has been befogged by effusion of all sorts and from many sources, viewers have shown a stubborn resistance to being snowed.

"The masters of the tube have found themselves trying to catch up with their audience instead of leading it," Mr. Goodman asserted.

Exasperating and heartening, indeed. Exasperating to people who have gotten used to feeding off the predictability of the public; heartening to people who think that democracy works best when citizens see things in shades of gray.

It gave me great pleasure last fall to watch the fat-cat professional investors bail out of the stock market when the Dow Jones Industrial Average dropped 500 points in one day and the small investor stay cool as a cucumber.

The stock market boys preach that investors should take a long-term view, but of course they make their money when the little guy panics and dumps his stock at the first sign of adversity. It looks like they can't count on such knee-jerk behavior anymore, so the purveyors of stocks are now worrying that investors are becoming too trusting of the market.

(You've got to ask yourself how smart the big boys really are when Warren Buffett tries to corner the silver market; I believe the Hunt brothers tried to do something similar a few years ago without much success).

Here's another indication that consumers are smartening up: The Wall Street Journal reports that "working-class borrowers, long regarded as too unsophisticated to realize or care that they were paying some mighty stiff interest rates, are starting to fight back." They're refinancing and consolidating their loans and "jumping from one promotional low-interest rate lender to the next, just like shopping for the lowest-price tank of gas."

The new approach is playing havoc with lenders' profits. Beneficial Finance ("at Beneficial, you're good for more") has put itself up for sale, and other "sub prime" loan companies are feeling the pinch. It couldn't happen to a nicer bunch of guys.

So what does this new-found consumer sophistication mean to the advertising business? Plenty.

It means, for one thing, that consumers won't be moved by ads that don't provide meaningful information about why they should buy a product or service. But at the same time, the ads had better be provocative, compelling, entertaining -- anything that commands attention.

Dumb ads or ads that make innocuous or superficial claims (you know who you are) won't make the cut. And just relying on a lower price won't automatically get you the business. Consumers want value, and that can relate to styling or performance or even coolness.

If Levi or Nike isn't considered cool anymore -- for reasons far more tangible and less frivolous than before -- a lower price won't help.

David Ogilvy once said: "The consumer isn't a moron; she's your wife." Ad people better start thinking the same way about the rest of the population.

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