Branding Strategy Insider

How to Fix the Advertising Industry

The press is abuzz with stories about big companies moving dollars out of traditional advertising media and into product placements and other newer marketing methods. One expert after another is predicting that the ad industry as we know it has lost its way and is in decline. Stories about TiVo, buzz and the Internet are all the rage. But before everyone packs up their resumes and jumps ship, I think it's time for a more reasoned view of things--or at least one that gets us away from all of the negative hype and the doom and gloom. Let's start with what should be the role of the advertising agency.

Traditionally, the agency's role is to be the objective "outsider." The agency counsels the client on how to best sell their products or services to their marketplace, how to position the brand vis-a-vis the competition, and how to verbalize their message with that "reason to buy." Candor and honesty were always the hallmarks of a good agency/client relationship, as agencies played a major role in developing strategy for their clients.

A true story is in order here: Many years ago, a senior account supervisor was reminiscing to me about the old days in the business. He recounted a meeting in a hotel where the CEO of the client and the head of the agency were lying in bed together discussing strategy. The account supervisor said to me, "Jack, the industry problem is that we're not in bed with the CEOs anymore."

He was right. As the years have rolled by, I've seen less and less of that kind of relationship. Agencies have backed off on pushing strategy, as clients became more assertive in this regard. Instead, agencies retreated to creativity, emotion or humor as their contributions to the brand. The net result: Today, a lot of advertising lacks that reason to buy. Too many people looked at the advertisement and said, "What are they trying to sell? It's no wonder clients are beginning to question traditional advertising's usefulness. As Pogo would say about the ad business, "We have met the enemy and he is us."

Step One: Get Back To Strategy

The Research Trap

One of the pitfalls of the multibillion-dollar marketing research industry is that researchers don't get paid for simplicity. Instead, they seem to get paid by the pound. A true story may be in order.

The scene: The office of a brand manager at Procter & Gamble. The problem is what to do with one of their largest brands. I ask a simple question as to the availability of their research. I'm surprised by the answer: "Research?" We've got a computer full of it. How do you want it? In fact, we've got so much of it that we don't know what to do with it."

A flood of data should never be allowed to wash away your common sense and your own feeling for the market. You'll never see that obvious solution. It's worth reviewing what this flood is washing ashore. I checked in with Robert Passikoff of BrandKeys, my favorite research company. Here are some of his and my observations.

Awareness studies neither link to real customer behavior nor reinforce (let alone create) brand differentiation. In fact, although the phrase, "That's nothing that a whole lot of awareness won't cure" has become something of a research industry joke, those studies keep getting done. Note to everyone: Everybody is aware of General Motors and few are buying their cars.

Segmentation studies get fielded by the sector. True, segments are ultimately identified but are they segments you really want? Or need? Or can actually market to? Often these studies end up identifying individual segments that you can't actually reach via any known media. But there they are. And then there's the problem of changing your strategy to appeal to different segments. When you become everything for everybody, you become nothing in the mind.

Brand Name Overload

Twenty-eight years ago, in a book entitled Positioning: The Battle for Your Mind, I wrote: "The single most important marketing decision you can make is what to name the product."

By now, the world seems to agree.

A booklet from Johnson & Johnson says: "Our company's name and trademarks are by far our most valuable assets."

The former chairman of Quaker Oats says: "If this business were to be split up, I would be glad to take the brands, trademarks and goodwill, and you could have all the bricks and mortar--and I would fare better than you."

A former commissioner of the Patent and Trademark Office said that a trademark is "frequently a more valuable asset of a business than all other assets combined."

A survey of 400 companies by our naming partner Steve Rivkin shows that, compared to three years ago, marketers are introducing more names, trying more ways to nail down a name and finding it more difficult to get the job done.

The availability of names is today's No. 1 problem. Communications overload is strangling the world of names too.

There are about 2.5 million registered trademarks in the United States--and at least 3 million more in the rest of the world. Last year, more than 500,000 new names were registered around the world. A standard dictionary has about 100,000 entries. We're running out of words to use for names. So, how hard is it to come up with a good name for a product? Here's how hard. A number of years ago, the industrial products sector of Kimberly-Clark actually trademarked the name "Brand X."

How hard is it to name your company?

Of Branding and the Parent Company

How does a Tyco or a United Technologies or even a General Electric get investors excited about a company that's in multiple businesses? The answer: with great difficulty.

The inherent problem with these kinds of programs is that you have to advertise a client with multiple personalities. And it's exceptionally difficult for an analyst to get his or her head around these types of  companies. How do I evaluate all these different businesses and assign a buy, a hold or even a sell recommendation? How does an investor do the same? You might like one personality but dislike the others. It's all very confusing.

This is an old problem that has led corporate America to act like an accordion. First, they expand and acquire a lot of diverse businesses. Diversification is good, but then they realize not only that it is hard to manage all these different businesses and competitors, but that Wall Street doesn't understand them. So they contract and sell off all their acquisitions. Focus is good. Wall Street gets it--at least for awhile.

The standard reason for all these marketing-the-stock activities is "to create a brand for the parent company." Another favorite is expressing a need “to educate the public investors and analysts about our far reaching operations." Well, history has pretty much proved that these types of multimillion-dollar programs rarely live up to expectations.

Beware of Brand Schizophrenia

Powerful brands have distinct personalities: Duracell’s batteries last a long time. Volvos are safe in a crash. But even dominant brands can fade if they fall prey to multiple personality disorder.

Consider General Motors. What’s the difference between a Chevrolet, a Pontiac and a Buick? The company has woken up to the problem in recent times; In 2005 GM announced it would narrow its selection of cars. But this belated effort to bring the automaker’s brand schizophrenia under control is too little too late.

General Motors mucked up its brands over decades of endless line extensions. But Mercedes Benz has done it in less than one decade. Once upon a time, it was a high-quality, highly engineered, prestigious car. But now, if you wander into a dealership in Europe, you’re faced with the following lineup: A-Class, B-Class, C-Class, E-Class, S-Class, CLK, CLS, CL, SLK, SL, M-Class and G-Class. The prices range from 20,000 to 200,000 euros. The result is that in Europe, Mercedes Benz is not listed as the top brand. The Audi A8, BMW, Maserati and Jaguar have taken over this position.

The GM and Mercedes stories are not unique. Once a company abandons its brands' distinctive personalities or positions, it's just a matter of time before confused customers start to drift away. In 1985, Coca-Cola infamously introduced an identity-blurring new brand, New Coke. A massive consumer backlash ensued, and the company quickly reinstated its familiar Classic Coke.

You’d think Coca-Cola would have learned from that experience the importance of having a unique product personality.

In Search of the Obvious

Whenever I travel around the world, I'm often asked the same question: "What are your favorite books?"

Well, I'm going to let you in on a secret. The best book that I have ever read on marketing is one that was written 90 years ago, in 1916. And here's the good news: It is only 40 pages long, and it contains no jargon or graphs or complex research. In fact, it's more like a pamphlet. Now the bad news: It's not easy to find and could be called a collector's item.

The book is titled  Obvious Adams: The Story of a Successful Businessman. It's written by Robert R. Updegraff. The book was an instant hit.  The New York Times wrote, "The young man who is going to seek his fortune in the advertising business should have  Obvious Adams for a handbook. Indeed, any young man who is going to seek his fortune in anything might be aided by the common sense and business acumen displayed in this little volume."

Why do I like this book so much? Well, because the search for any marketing strategy is the search for the obvious. Consider the dictionary definition of the word "obvious": easy to see or understand, plain, evident. With that definition you begin to see why an obvious strategy is so powerful. It's simple, easy to understand and evident. That's why it works so well.

Interestingly, when presented with a simple, obvious strategy, many clients are not impressed. They are often looking for some clever, not-so-obvious idea.

Perception vs. Reality

“I'm not interested in trying to work on people's perceptions. I am who I am, and if you don't take the time to learn about that, then your perception is going to be your problem.”
                                   - Jim Brown

Jim Brown is right: Perception is not reality. Reality is reality. But Jim is deluded if he thinks that people are going to take the time to learn the facts about him. Not today. Not when time is people’s most scarce and precious resource. Instead, they’ll speed read him  They’ll make meaning out of what little bit they hastily perceive.  It’s up to Jim Brown to capture their attention, stimulate their interest and strategically help shape those perceptions. But alas, Jim is not interested in that kind of work.

Truth vs. Fact
In his book Story, the legendary screenwriter Robert McKee wrote, “What happens is fact, not truth.  Truth is what we think about what happens.”  Facts are reality (Smaller cars are safer than SUVs).  Truth is perception (Bigger is safer).  Facts are the way things are (It doesn’t matter what golf ball you hit; it’s still going to end up in the woods).  Truth is the way your brain view things; your thoughts, opinions, evaluations, feelings and conclusions (You’re a winner . . . like Tiger.  So you need a ball with a swoosh on it).  You believe that your truths are the facts. We all do.

This is a difficult concept to grasp.  Not because it’s intellectually challenging; it’s not. Rather, because it’s difficult to feel.  For example, do you feel that you are the outgrowth of a spinning sphere that is rocketing through space at more than twenty times the speed of a bullet?  Probably not, but those are the facts.  So what does this have to do with marketplace success? Everything!  Because the cold, harsh reality is that your audience judges you based upon the very little bit of you that they hastily perceive.  They speed read you, and prejudge you with their resultant feelings.

So, what do most organizations do to address this reality and influence customer perceptions and behavior? 

The Fall of Newspapers?

The press in recent times has been all about the press. The Murdoch takeover last Fall of The Wall Street Journal dominated the news for weeks. Is he a white knight or a spoiler? Beyond that, there have been many articles recently about the glum future of newspapers. Are they dying? Can the Internet save serious journalism?

The fact that these big newspapers have gone public makes things worse as Wall Street has weighed in with attacks on the management of The New York Times and their lack of financial performance. Even Warren Buffett has pronounced that the present model--meaning print--isn't going to work. Being publicly owned puts all the focus on the numbers. And when you're trying to improve your numbers to make investors happy, you cut the things you should be investing in such as people, promotion and innovation.

No one has worked harder to improve the numbers than Donald Graham, the CEO of the Washington Post Co. He was one of the first to aggressively push into the digital world, yet critics say Graham needs to move even faster to get the business online.

In an effort to recapture young readers, the Post in 2003 started a free weekday tabloid called the Express, which now publishes 185,000 copies a day. It's profitable. A year later the company acquired El Tiempo Latino, a Spanish-language weekly. It also publishes five paid-circulation suburban newspapers, 34 free suburban weeklies, 12 military newspapers, and real estate and auto guides. To squeeze a few more dollars out of its presses and trucks, the Post Co. distributes The Wall Street Journal in Washington, and it prints and circulates the local edition of the satirical newspaper The Onion. Bar mitzvah invitations may be next.

Product Creation: Sacrifice To Win

For many years, I've been writing about sacrifice. In other words, to get something, you have to give something up. Trying to be everything for everybody undermines a clear perception of what makes you special or different. If Volvo is to preempt "safety," they can't be a convertible or a fancy-looking car that tries to compete with BMW and Mercedes. And they have to innovate new safety ideas.

Convergence is the opposite of sacrifice, as it is all about products that do more. And it's hard to avoid predictions about converging products in the worlds of computing, communications, consumer electronics, entertainment and publishing.

These predictions go way back. A July 18, 1993, front-page story in Newsday predicted that convergence will cause the eventual demise of videotapes, video stores, newspapers, TV channels, telephone operators, the Yellow Pages, mail-order catalogs, college textbooks, library card catalogs, beepers, VCRs, checkbooks and cassette players.

(We suspect you've noticed that many things expected to go away are still alive and well. So much for that prediction.)

More recent predictions have telephones, video, and the Internet all converging at our television sets. Even the cartoonists are getting into the act. Our favorite has a gentleman with his large-screen Sony on his shoulder saying hello into it.

If you study history, convergence rarely happens. Products that do more than they should are quick to die.

Visual versus Verbal

Have you ever been asked which is more powerful, the eye or the ear? Probably not, because the answer is obvious. I’ll bet that deep down inside, you believe the eye is more powerful. Call it "visual chauvinism," if you like, but it's a preconception held by many marketing people.

I’ll bet, too, that you share a related preconception, first expressed some 500 years before the birth of Jesus Christ. Confucius says: "A picture is worth a thousand words."

Those seven words--not pictures, mind you, but words--have lived for 2,500 years. And the way things have been going lately, it seems like those seven words will never die. What agency president, creative director or art director hasn’t quoted Confucius at least once in his or her career?

After analyzing hundreds of effective positioning programs, we ran into a surprising conclusion: The programs were all verbal. There wasn’t a single positioning concept that was exclusively visual. Could Confucius have been wrong? We have come to the conclusion that the mind works by ear, not by eye. A picture is not worth a thousand words.