What I took away from last month's annual conferences of the Association of National Advertisers and the Magazine Publishers of America is that both groups sense the need for urgent change, but neither is sure how to accomplish it. Or even whether they have the tools to get there.
Members of both the ANA and MPA feel the heat to prove their worth. Advertisers need to show proof of advertising's effectiveness, and magazine publishers need to prove they can play in the same game as TV. The good news is the groups faced up to their critics' complaints. The bad news is they didn't know exactly how to satisfy them.
Let's take advertisers' big issue: return on investment. Advertisers fork over billions of dollars to network TV in the face of rising costs and declining viewers. How do they justify this out-of-whack equation to their management? And even if TV is only part of an integrated marketing push, how do they evaluate the worth of the various components?
One result, said consultant Peter Sealey, is that big advertisers are forced to rely more and more on mega-brands. "Our brand profits are not keeping pace with TV cost increases, so we sold, discontinued or simply let die our smaller brands. We concentrated our dwindling media dollars on our core mega-brands, and at the same time we vastly expanded what these once-focused brands promise" by pumping out hundreds of line extensions. Mr. Sealey indicated advertisers need to take more control of their destiny by doing a better job of tracking and measuring results. "We are on the threshold of making advertising accountable," he said.
That's easier said than done.
Home Depot Chief Marketing Officer John Costello put his dilemma this way: "As a retailer, I get overly focused on daily sales, but am I building a long-term relationship with customers?"
Other members of an ANA panel moderated by Ad Age Editor Scott Donaton agreed it's possible to evaluate the various individual silos of marketing but said the tools aren't there to assess the impact of involvement across media. "We can't quantify the interrelationship," as one panelist said.
At the MPA confab, publishers picked up on the theme that TV is vulnerable, but Readers Digest Association CEO Tom Ryder said the challenge is to get salespeople "to stop bashing each other and start selling the competitive virtues of magazines."
The publishers like to think of their products as brands, but they don't act like brands. David Pecker, chairman-CEO of American Media, said most publishers don't bother to call on big retailers like Wal-Mart Stores, nor do they put together in-store events to promote their magazines with other products.
"Circulation is our most difficult challenge because the model is broken," Mr. Ryder said. "We have convinced consumers that magazines are cheap. We tell advertisers there is unlimited demand for them"-even though 70% of newsstand copies are shredded. "We set rate bases that make no economic sense. ... How crazy is that?"
Not any crazier than advertising not being able to provide ROI data when every other corporate department does so on a routine basis.