It just isn't easy for either business or customers to make sense of media and marketing today. For example, recently I watched a video stream of a conference. Just as someone said something key - a commercial pops on. As the customer I was frustrated. If the streaming service had given me the choice, which they didn't, I would have paid to watch uninterrupted. As an advisor to brands I am frustrated. The only way to reach enough people to make a difference to a business is to rely on ad networks which interrupt the customer and risk doing more damage to a brand's "good will"* than generate business leads. Surely we can do better than this.
I left the advertising industry in search of something better back in 1990 when many factors were eroding mass advertising ROI. In addition to a highly competitive marketplace, the abundance of media choices (100's of cable channels vs. 3 networks) lowered the average individual advertising spot rating to single digits and most are now less than 1%. Back in the day, you could buy a spot at the same exact time on all networks in Prime Time and reach 80-90% of US Households. The result had the same ripple effect as a live event. The next day, a typical ice breaker with complete strangers - on the train, at the watercooler, or in the elevator - was "did you see that (fill in the blank with a brand) ad last night?". You were pretty sure if you saw it - everyone else did too. Imagine the ROI.
Today, using the same networks + FOX you might get 40% of US Households. That's still exponentially higher than any other alternative, driving the premium sky high.
Many brands, like P&G, choose a more efficient route to achieve year round reach. They buy tens of thousands of spots in those one rating-or-less programs, in a rotation across multiple dayparts and channels. But a lot of those spots are being seen again and again and again by people who spend a lot of time watching television. The people who have that much time to watch television aren't at the watercooler, in elevators, or on the train. So the likelihood that they influence anyone else, well, is pretty low. This is probably why P&G is experimenting more than most with alternatives.
Recently, I attended a conference where CRM and data technology experts tell me that they have access to so much data that they can accurately predict what we will do in the future. Since that's not consistent with my experience (see post "What They Think They Know"), I asked if that accuracy is consistent among everyone or really accurate among certain people. Without sharing any detail, my suspicions were validated. And that just makes sense when John McKean, a CRM expert says that the average response rate is 3%.
But that's better than FSI's which average around 1%, depending on several variables.
But that's better than online advertising where click thru rates are less than 1%, on average.
UPDATE: Which is better than Facebook at less than a tenth of a percent.
What if that 3% in CRM, the 1% in FSI's, less than 1% online, and less than a tenth of a percent on Facebook are the same heavy TV watchers with nothing better to do?
You'd think there would be a lot of investment in innovation to develop "something better", but innovators are getting mixed signals from advertisers. Most businesses still advertise in order to convince retailers and/or Wall Street that they are supporting the brand.
Few outsiders understand that advertising has become a business to business marketing tactic more than a business to "consumer" tactic.
Instead of paying attention to advertising spending trends - dropping from 40.6 % of the total media/marketing industry in 1975 to 17.2% in 2009 . . . . . . the Venture world pays attention to the proportional amount spent on different tactics: "what this chart (provided by GOOGLE's Hal Varian) says is that over that past decade Internet has gone from nothing to 5% of all the ad spend in the US". As I point out in my comment on this post, "At 5% of 17.2% that puts internet advertising at less than 1% of total media/marketing revenues. "
Ignoring this fundamental change in the market, an amazing amount of money is wasted on investing in incremental change. For example, the race is on (reportedly, over $40 Billion a year) to upgrade CRM technology to improve predictive accuracy so that 3% will go up.
I'm all for continuous improvement process . . . but, when the starting point is single digit success and that success may not even be among the desirable demographic who leaves the house, doesn't it make sense to spend some of that money developing Plan B?
Hey if everyone on the team is aiming for the same corner of the goal with a single digit success rate, doesn't it make sense to develop the skill to go after the remaining 90%+ of the goal?
Until something better comes along, a market leader, P&G is quietly investing in the "new media" segment, "custom digital publishing", to reach their target with less waste and to identify "thought leaders" to engage in their leading edge open innovation process. Two examples are beinggirl.com and the partnership with NBCU to produce lifegoesstrong.com.
A new technology movement is creating a possibility to offer something even better: making it possible to shift the paradigm from improving Business to Customer communications to improving Customer to Business communication. Instead of wasting money on better ways to interrupt customers with messages, the customers are enabled to tell business when and what they want information. Project Vendor Relationship Management is the thought leadership evangelizing this premise and encouraging technology development. On August 26-27, a workshop called VRMCRM2010 introduced many of these technologies to VRM fans and receptive CRM professionals.
Media has an opportunity to use this technology to give all participants "The Freedom to be Ourselves". Instead of self-censuring because of uncertainty over what, with whom, or when their participation will be available for exploitation in "cyberspace", participants may manage the release of identity, content, and information "in context". AND this control can be mutual - for the "formerly known as audience", the "formerly known as creative content producers"**, and the "formerly known as advertisers".
Mutual benefit has the potential to breakdown the siloes which are barriers to collaborate on innovation. Indeed, VRMCRM- like technologies offer a blank canvas of possibilities for media and marketing innovation to disrupt ambiguity.
SIDENOTES:
*ironically the term "good will" has become rather warped. You'd think it would be a good thing - intrinsic value of a brand. But it is perceived by business to be a bad thing - how much an accountant can "write off" when a company overpays for an acquisition - specifically, more than the value of the assets of a company. Making sense of this is a different post.
** In another post "When the Innovative & Creative Play it Safe" I share a comment from the Artistic Director of the American Film Institute and a writer of "Cold Hand Luke", Frank Pierson, who is concerned that shifting the creative risk from the Hollywood Studios to independent freelance writers is inhibiting creativity. In a speech at Chautauqua Institution, August 7, 2009, Frank Pierson, shared his concern that the quality of today's film industry suffers from independent, freelance writers practicing self-censorship - "Why would a writer spend a year to write a screenplay that no banker would finance?"
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