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Advertising: The Next Transactional Tool?

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Karl Heiselman, CEO at Wolff Olins, thinks that advertising is destined to become a hyper-aggressive, transactions-focused battlefield. His vision is very similar to what I once referred to as “The Doomsday Brand Scenario.” Heiselman believes that transactional advertising will be balanced by tangible brand building activities, but I am not so sure.

Unfortunately I have little doubt that Heiselman’s vision for advertising is going to prove at least partly correct. You only have to look at the way online ad targeting has evolved to see that access to deeper data profiles on individuals will enable more specific behavioral targeting. Heiselman puts it this way:

We will see advertising that is contextual to our actions and designed to encourage a specific transaction. Searching for a lawnmower? Here’s a deal for that. Eating at the same restaurant regularly? Here’s a deal for the one next door. Friends who like a certain store? Here’s a discount for you to try it too.

This is why Heiselman thinks that advertising will become a sales tool not a brand building one. The only way to clinch the deal is to offer a deal,  and that is my big concern. If people are constantly bombarded with special offers, they will soon become sensitized to them. Worse still, they will learn how to game the system to ensure they get the lowest price on their purchase. In my 2007 post, I wrote:

If consumers learn which behaviors will get them the best price, then I think brand preference and loyalty will become a thing of the past–particularly since increased price and promotion activity will hide eroding base sales in a tumult of wildly fluctuating sales volume. Bye-bye, brand value, hello, lower margins and increased volatility.

In his vision, Heiselman proposes that brand builders will not be disadvantaged versus discounters, because access to enhanced information profiles will enable them to build more value into their products. Brand builders will be able to innovate with confidence that what they build will be met with consumers’ approval. The mechanisms suggested all involve creation of tangible value: delivery of superior experiences across all touch points, locking consumers in with product and content ecosystems.

Don’t get me wrong, brand builders should be aiming to create exemplary experiences anyway, but I can’t help feeling that training consumers to buy on price will undermine much of the value created by the tangible brand offer. We already see many consumers value getting the best price more than getting the best brand, and this seems likely to get worse over time when all advertising focuses on the deal not the brand.

What about the interaction between advertising and experience? One of the most under-valued roles of advertising is to create expectations of the product experience and enhance that experience by focusing attention on its most positive aspects. Will the future really give up the ability to create intangible value by shaping consumer beliefs and expectations?

So what do you think of Heiselman’s vision of the future? Is advertising going to become purely transactional?

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1 Comment

Ted Grigg
Twitter:
on April 23rd, 2013 said

In your article, you make the assumption that all transactional advertising requires a discount.

In direct marketing, we call this an offer that often does not include discounts to stimulate response.

An offer for B2C could include membership in a frequent shopper program,a contest, a survey offering a reward for response, a premium, free shipping or hundreds of different offers that do not erode the brand’s value.

In B2B the offer could be registration in a special website for valuable information, a white paper or proprietary research of interest to the respondent. Such “leads” are then developed over time for a face to face appointment.

Advertising should not only create an image, but go further in soliciting prospect or customer engagement that leads to a sale.

Positioning or general advertising often does not go far enough up the AIDA ladder wasting dollars.

The bottom line: build brand while simultaneously building a database of interested prospects. So I see a maturation of advertising rather than doom for the industry. It’s about time that clients demanded more sales for their advertising dollars.

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