A Funny Thing Happened When I Cut My Ad Spend -- Nothing

A Recession Will Expose Nonworking Parts of a Marketing Plan

Posted by Peter Daboll on 12.02.08 @ 12:15 PM

The current economic crisis will undoubtedly leave a lasting imprint on how all business gets done from this point forward and undeniably be a catalyst for unprecedented change in the advertising industry. And we had better be ready for it.

In any economic crisis, reduction in ad spending is inevitable and necessary as companies adapt, Darwin style. Today's environment is no exception. We're keenly aware that in past recessionary periods advertising has taken more than its share of cuts. This time, while the cuts in spending have already begun, the impact will have even more dire and long-term consequences. As the cuts continue, brand managers will begin to realize that "my current advertising level and spend really wasn't helping to build my brand the way it used to, and when I took it away, nothing bad happened." Or at least "it wasn't as bad as I expected."

Ouch. This time, the cuts won't be just because advertising is viewed as discretionary or as a non-essential part of running a business; it will be because the current marketing plan isn't working.

I have studied consumer behavior for 25 years, particularly looking at consumers' response to marketing stimuli. I have done this across media, from the early BehaviorScan TV studies in the '80s and '90s and the Marketing Mix Modeling craze to digital media analysis at Advertising.com, ComScore and Yahoo. One thing is undeniable: In almost any set of metrics or test results, the impact and influence of the current advertising approaches are diminishing.

Too often, we have a view of marketing as pushing more and more impressions to a consumer who doesn't want to see them, doesn't respond to them and, in extreme cases, doesn't even see them when exposed. Add this to soaring production costs and media costs that have somehow no connection to effectiveness, and you have marketing programs that are doomed from the start. What's wrong with this picture?

Measuring the wrong things
As I have often said, "If baseball were measured like advertising, you would only count the pitches." To be fair, there have been attempts to improve on this. But while some approaches to measure effectiveness, or ROMI, have been made by addressing advertising-impact models, many of these approaches are allocation-based and force assignment of sales volume to particular actions. The models arithmetically allocate sales to particular marketing actions based on many assumptions that, at the end of the day, do nothing to understand consumers but do everything to keep our finance departments off our backs. But until we get inside the heads of consumers and really measure their behaviors that lead to improved engagement or motivations, the false sense of security derived from these models will only expedite a bigger departure in budgets. Bottom line: Consumers don't care what your models say.

This is not just me talking. John Gerzema and Ed Lebar support this contention in their recent book, "The Brand Bubble," one of the best I have read in identifying the core problem -- that "most of the brands lining supermarket shelves, hanging from department store racks or touting their superiority on television are experiencing a rapid diminution of perceived value. Consumers are simply falling out of love with a majority of brands they buy." "The Brand Bubble" contends that many brands are overvalued and are headed for a fall. The authors base this contention on 15 years of research of brand and financial data from Young & Rubicam's BrandAsset Valuator, the world's largest study of consumer attitudes and perceptions on brands. (We used BAV extensively at Yahoo.)

They conclude there is a growing divergence between brand valuation and brand speculation. Their data indicates that investors are irrationally overvaluing brands and that if leading companies don't take steps to change their approach, more than a few of them might soon experience dramatic declines in market value. The bottom line is that campaign-based push marketing is dead. Welcome to what I call the "continuous consumer conversation."

It is the perfect storm against "us vs. them" marketing practices, where brand managers and agencies determine what messages to push on their unsuspecting subjects. First, consumers have unprecedented control and can be inaccessible to brands by zipping through commercials on their DVRs or watching YouTube instead of TV. Second, consumers are getting better at ignoring the message, and if they do reach a medium where they are actually exposed to messages, they have trained themselves to ignore them. Finally, consumers have realized they have their own voice, which has been dramatically amplified and aggregated through the social web. As Gerzeba and Lemar state: "You can't just go after them. You must attract them." It's not just about measuring reach and frequency or even marketing mix modeling that matter. Success will be measured by motivating the right consumer behaviors that drive engagement and connection. Those are the new key-performance indicators for marketing.

The wrong metrics lead to the wrong strategies
Many companies approach the solution to our advertising woes by trying to improve delivery. They improve the scope and scale of what they're buying and build bigger reach by aggregating more and more inventory into one place. This ad network model of "size matters" is convenient for buyers and planners and is based on the efficiency theory of rational markets. But this approach is neither rational nor efficient because it does nothing to address the consumer receptivity problem. The fundamental reality is that buying distribution for my ad has never been the problem. Reach is easy. Getting consumers to pay attention is the hard part.

In addition, as "The Brand Bubble" points out, marketing departments in many companies are in denial: "The problem is many companies still operate their marketing departments according to the old thinking of persuasion metrics and an 'us vs. them' landscape. They're blind to the behavioral shifts transforming customers right in front of their eyes. As a result, consumers drift further away, and we continue to see brand measures decay and crack. It's those enterprises that can't see the brand bubble blowing up around them." Tough stuff.

The new marketing paranoia
Consumers still want a voice and consumers have a method to amplify their voices. Much has been written about the empowered consumer in blogs, news articles, even plain old conversations. Andrew Grove popularized the concept that only the paranoid survive. Marketers need to heed these words, adopt this approach and not only be paranoid but be paranoid that my competitor is listening and participating with more consumers than I am.

Any good news?!
The Mark Twain view that "the rumors of the demise of the 30-second spot have been greatly exaggerated" is only a short-term comfort. The spending in traditional forms (and I include digital in this push-based paradigm) has been due not to the effectiveness of the media but to a lack of a viable alternatives. It is much easier for a media or marketing person to do what he or she did last year plus 10% than to really try to understand and test how to do something completely different. In this economy, sticking to old formulas could doom not only a marketer's job but his or her entire brand.

Dove's Campaign for Real Beauty was a great example of early innovation along these lines. Dove used innovative digital distribution via Youtube and creative use of outdoor to begin a meaningful conversation with women about self-esteem. The campaign created a veritable love fest between consumers and the Dove brand. The result: positive (and much-talked-about) feelings about the brand, making it a facilitor to empower consumers and address a real issue. That's something far more effective than a preachy 30-second spot. The message continues to be fresh and relevant and a great example of the continuous consumer conversation.

This campaign was breakthrough at the time but is now one that can easily be replicated across verticals -- from movies to yogurt, from pharmaceuticals to automobiles -- with the right technology. The right consumer is out there and is ready to talk, it's just a matter of finding them and engaging them. And there has truly never been an easier time to do this. As "The Brand Bubble" says, one of the principles of an "irresistible brand" is "the ability to engage a customer on his own terms."

New and innovative ways to interact and engage with consumers (think "advertising innovation" -- two words seldom used in the same sentence) are not only available now but are essential for a brand's survival. And the type of innovation that is required is not incremental innovation, such as developing a new ad unit or creative, but fundamental innovation based on science, on how to improve consumer engagement and create a lasting connection to them. Using technologies, like those from Bunchball and others, brands can cost-effectively integrate technology that fosters this continuous consumer conversation. This type of "innovation overhaul" is not unlike what will happen in the automotive and financial industries. It is the key to advertising's survival. Marketers who realize this now will win. Those who don't will lose.

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As of Dec. 2, Peter Daboll is CEO of Bunchball, a company funded by Granite Ventures and Adobe Ventures that enables brands to measure and drive consumers' most valuable behaviors. Clients include Hearst, NBC and Comcast. Mr. Daboll was most recently Yahoo's chief of insights. Prior to that he was president-CEO of ComScore Media Metrix, president and chief operating officer of MarketTools, COO of MediaPlan and exec VP at Information Resources Inc.