Posts about ads

‘Loyalty through decency’

Tim Leberecht, frog design’s VP of marketing and communications, riffs on my post about moving past selling advertising as scarcity and about decency as the new ad (my emphasis):

Equity is the accumulation, the repeated occurrence, of actions, interactions, and transactions that add value. The best way, then, to build brand equity is to repeatedly and consistently add value through all your interactions with customers. Advertising doesn’t add value; branded content does (information). Promotions don’t add value; branded entertainment does (entertainment). When you brand something, you don’t just market scarcity and advertise your products and services, you market your ability to add value that is relevant.

The web, and the social web in particular, reconciles artificial scarcity with relevance, and that’s why more and more branding dollars are moving online. It is the ideal forum for creating an abundance of scarce moments, thousands of small great ideas instead of one great big one. These small great ideas come to live in brief moments of attachment with customers that are personalized and truly relevant for them.

“Advertising is failure,” says Jeff Jarvis, and he thinks “media only get in the way of customer relationships.” And indeed, how will you make more friends at a party? Showing up with a big banner around your neck that says “I am a great friend” or engaging in a handful of conversations with strangers, listening to their stories and detecting affinities whilst accomplishing a sense of privacy that gradually becomes intimate? Right. In the end, that’s what we should be doing as marketers to build real, sustainable brand equity – creating publicity through intimacy, loyalty through decency.

Stop selling scarcity

You have to love – or at least pay attention to – Digg’s new advertising system enabling users to vote on ads: The more that users digg an ad, the less the advertiser pays. That’s a reversal of advertising but it’s the way advertising probably needs to go: The better your relationship (which springs from a better product and service), the more your customers will market it for you, the less you’ll have to pay to market it. That is the ideal. Advertising is failure.

Or look at it another way: We in media – including us online with our banners and buttons – are still selling scarcity – and pricing it that way – when there is no scarcity. Google sold performance instead and that motivated it to create ever more ads across more of the internet – aka Adsense – to get ever more relevant ways to be ever more effective.

I’ve been wanting for sometime to have users vote on ads and tell a site which ads are worthwhile to them and which are not. This creates data that valuable for the advertiser (who likes me, who doesn’t?) and it enables media and marketing to become far more effective (Google allowing us to correct the targeting assumptions it makes about us reduces our irritation with irrelevant ads and improves Google’s effectiveness).

When I tweeted this earlier, Angus Batey worried that popularity can be a danger, and that the better-resourced companies that can create better (more entertaining, popular) ads will win. Except I’d say that may be the case with old advertising – commercials – but it’s hard to do that with text ads on Digg: Fool me once (“Free Sex Now!”) and I’ll vote you down the next time. The Digg system rests on a Cluetrainy need to deliver authentic value and relevance – like Google’s ads.

The future of advertising needs to be selling – that is, enabling – relevance instead of selling scarce space, time, or eyeballs. The future needs to be about adding value – relevance – rather than selling scarcity (extracting what the market will bear). I’m not sure whether Digg’s system is a step in that direction; Batey’s right that there could be unintended consequences. But it’s worth watching. I hope Digg shares data and experience in its fascinating experiment.

Advertising is failure

Steve Rubel sent me some questions for his AdAge column and I sent him some answers. A snippet:

Mr. Rubel: Are customer service and peer-to-peer advocacy the new advertising? And if so, how does that change the ad industry?

Mr. Jarvis: Advertising is failure.

If you have a great product or service customers sell for you and a great relationship with those customers, you don’t need to advertise.

OK, that’s going too far. There is still a need to advertise — because customers don’t know about your product or a change in it or because, in the case of Apple, you want to add a gloss to the product and its customers. But in the book, I suggest that marketers should imagine stopping all advertising and then ask where they would spend their first dollar.

In an age when competition and pricing are opened up online and when your product is your ad, you need to spend your first dollar on the quality of your product or service. If you’re Zappos, you spend the next dollar on customer service and call that marketing. If the next dollar goes to advertising, there has to be a reason — and if the product is good enough, that reason may fade away. . . .

Mr. Rubel: If Google were a Super Bowl ad, what would it look like?

Mr. Jarvis: It wouldn’t. Google does not treat us as a mass. And it has better ways to spend its money.

Inefficient print

We already knew that newspapers’ classified business was as good as gone, but even so I found these stats from the Wall Street Journal this morning devastating:

Last March, Baylor Health Care System, a large Dallas-based nonprofit, began purchasing keywords on Google, Yahoo and employment-related search engines SimplyHired.com and Indeed.com. The search-engine ads generated more applicants, at less cost, than the other recruiting methods, says Eileen Bouthillet, director of human resources communications.

In the first six months of the program, Ms. Bouthillet says, the search-engine ads delivered 5,250 applicants, at an average cost of $4. By contrast, Baylor paid an average of $30 for each of the 3,125 applicants who came via job boards, and $750 each for the 215 applicants who replied to a newspaper or magazine ad.

As a result, Ms. Bouthillet says Baylor has reduced spending on job boards and print ads. . . .

UPS says it received more than 150,000 applications from [its holiday hiring] campaign, at an average cost 75% to 80% cheaper than print ads. “We’re cutting newsprint wherever we can and trying to move more to online media,” says Matthew Lavery, corporate work-force planning manager. “Google is outperforming other online media.”

If this is true of job advertising, it will be true of other categories – including papers’ last hope: retail – especially local ones as mobile makes Google even better at targeting. Google has the mechanism to serve small, local advertisers who were never served by papers; papers don’t. I think this probably means that the best opportunity local outlets have is to help local advertisers with their SEO – to place ads on Google for them. (See Fred Wilson’s tweet on this model at CUNY’s New Business Models for News Summit.)

Print has always been inefficient. Now advertisers are learning just how inefficient as online becomes more efficient. This is another reason to develop the strategy to drop print now.

The inside-out agency

PR magnate Richard Edelman takes me to task for arguing in What Would Google Do? that PR people, like lawyers, can’t be Googlified. After saying nice things about the book, he adds: “But it is hard to love a book that assigns your profession to the scrap heap of history. Jarvis contends that lawyers and PR people cannot evolve their business models ‘because they have clients….'” He urges me to reconsider (or at least to separate PR from lawyers).

OK, I’ll try. I’ll take inspiration from Doc Searls’ VRM (vendor relationship management, as opposed to customer relationship management) and from adman Rishad Tobaccowala’s argument, in the book, that agencies should focus on consumers – on agencies’ customers’ customers – and “should be the champions of those people.” [Snippets below.]

PR and ad agencies are at war – undeclared or at least quietly declared – to take over more of clients’ marketing budgets and also to help recast companies’ and brands’ relationships with their customers given the realities of the new world I describe in WWGD?. Those goals may be in conflict. Let’s start with the latter.

I argue in the book that the goal of companies and brands must be to have direct relationships with customers, cutting out the middlemen of ads and PR (and – newspapers, magazines, and TV be warned – media). This new agency should try to help them have that direct relationship. Then it should, in the words of Craig Newmark in the book, “get out of the way.” In that sense, the agency is a consultant and when its job is done, it should exit. That’s not a very sustainable business model, particularly for ad agencies, which make a cut of what they spend for clients and thus are never motivated to help companies spend less on ads. In that way, PR agencies have an advantage; they already act as consultants.

PR also acts as a company’s mouthpiece and that puts them in conflict with the ethos of the Google Age, when we distrust the institutional voice and expect to have a human conversation (see Cluetrain: markets are conversations held by humans). Don’t you hate it when so-called customer-service people at phone, cable, and airline companies say they they won’t do what you want as they insist on explaining their policy. I tell them that I have a policy, too, and they should listen to it. They don’t. It’s not in the script.

So if there is any vestigial middleman in our relationship with companies, shouldn’t that be our advocate who explains our policy to the company? That would be the new, inside-out agency. It would represent our interests and help make our case and make the company smarter (which will make them more money). If you want a good relationship with your customers, doesn’t that simply make sense? When I visited Google, I met someone at the book talk who said her job was “customer advocate.”

There’s just one problem with being a customer advocate as an employee or agency: Who pays you? Who’s the boss? I come back to the reason I argued in the book and the reason Edelman argues with me: Being paid by the client puts you in the service of the client. Can there be a church/state wall, as there has been in newspapers, that allegedly separates the holder of the public’s interest – the journalist – from the revenue – the advertisers? Well, indeed, perhaps a PR agency could be that. Perhaps it could act as the voice of the customers.

But to maintain its credibility with those customers, this advocacy agency would need to fire clients when they don’t behave. To get quite specific, if I were the agency for Wal-Mart – which Edelman is – I would have fired them (or as an employee, I would have quit) after so many of the deaf-and-dumb things that company has done to harm its relationship with its public. (I’ll let you fill in your own litany of sins.) But Edelman hasn’t fired Wal-Mart and I well understand that. Wal-Mart pays them a lot of money. Wouldn’t it be foolish to pass that up? Wouldn’t firing them make the next client skittish about hiring an agency might embarrass them by firing them?

Richard Edelman argues in his blog post, as he punctures my myths: “No client is worth the risk of long term damage to the reputation of the PR practitioner or its firm. We recognize that relationships with reporters, with the public and other stakeholders are a true asset, imperiled by obfuscation or prevarication.” Does that necessarily say that Edelman endorses Wal-Mart’s behavior and its sins, or at least slow learning? Or if they are trying to fix Wal-Mart, aren’t they judged on that success? It does affect the company’s reputation with consumers and those other stakeholders.

That is the PR agency’s risk. That is why I still wonder whether PR people can be open and transparent and keep their income.

But perhaps there the possibility of creating a new kind of agency that is really is owned by the public – the people formerly known as consumers – that is so good as representing customers that companies gain credibility by working with it and paying attention to its precepts. That, I think, is what Doc Searls is trying to build with VRM: a platform for that new relationship. Is that the new agency?

* * *

For today’s 30 Days of WWGD? snippet, then, we bring you snippets from the advertising chapter:

To quote Google’s own No. 1 rule, “Focus on the user and all else will follow.” Australian ad executive Peter Biggs spoke for much of his industry when he told ABC Radio National’s The Media Report: “It’s a consumer-driven business, but they are not our most important audience. Our most important audience is our clients, and their brands.” Tobaccowala says the opposite. “Our fixation should not be on our clients. It should be on the people our clients want to engage, sell, and interact with. We should be the champions of those people. That is where we are missing the boat.”

I wonder whether focusing on the consumer instead of the client ends up usurping much of the job of the agency as we know it. Fixating on customers should be the job of everyone—everyone—in a company. In business, we’ve long said we’re customer focused. But today you have to mean it or your customers will call your bluff. Focusing on customers can’t be outsourced to agencies.

Agencies will resist change until the economics of the industry change. Because agencies make a cut of what they spend, they are motivated to spend more on ads rather than to replace ad dollars with more valuable relationships between brands and customers. So clients may be the first to evolve. Just as I tell newspapers to imagine a day when they stop the presses and book publishers to think past the book, so I advise marketers to imagine as an exercise firing the agency, canceling the ad budget, throwing out the ads, and starting over. What is your relationship with your customers then? Where should you put your money? Where should you spend your first ad dollar and why?

Start, of course, by investing in your product or service. Tobaccowala said no amount of advertising will make up for a bad product. “Stop this yelling and screaming about what’s your Facebook strategy,” he tells clients. “Make absolutely certain that you have a great product or service. Make absolutely certain you have great customer service. Those are the first two rules of so-called advertising in this world. If you don’t have those, don’t pay any money to anyone to do anything.”

Then turn the relationship with the customer upside-down. First, invest in customer service, making it a goal to satisfy every single customer. Remember that your worst customer is your best friend. Second, invest effort in social tools that enable customers to tell you what you should be producing; hand over as much control to them as you can (I examine this idea from another perspective in the chapter on manufacturing). The goal must be to produce a product people love. All companies claim that customers love their brands. But I mean customers love your product so much they want to tell the world—that kind of love, Apple love. Third, hand over your brand to your customers—recognizing that they have always owned it. Don’t tell them what your brand means. Ask them what it means.

Every product is great; every relationship is satisfying—shoot for nothing less. So now you are spending quality dollars and relationship dollars over advertising dollars. You have handed over control of the product and the brand and gotten out of the way. If you haven’t gone out of business by now and convinced every boss, board member, analyst, reporter, and stockbroker that you’ve gone mad, then it probably worked.

Won’t you still advertise? Ask yourself why. To interrupt and irritate random people? No. To convince customers that a bad product is good? No. To inch ahead of your competitor with the brute force of media spending? No. To get people watching Sunday morning shows to buy your stock? Please, no. Do you advertise to tell customers something they didn’t know and need to know about your product, such as an improvement or a better deal? Well, OK. Tobaccowala defines advertising as “the economics of information” (the title of a 1961 essay by Nobel laureate and University of Chicago professor George J. Stigler). Advertising is supposed to tell us about a product or its price so we can save effort, time, and money in our search for it. The internet has made that much more efficient. If the customers’ goal is to reduce their transaction cost—the effort to find the right product at the right price—then doesn’t the internet itself replace advertising? Often, yes. . . .

The agency and advertising need to get out of the way in the relationship between companies and customers. Agencies may help solve problems—teaching companies how to build networks with customers, assisting them with product launches—but once the consultation is done, the good consultant leaves town.

And here is what I said about PR people and lawyers (note that lawyers already protested):

The problem for public relations people and lawyers is that they have clients. They must represent a position, right or wrong. As they are paid to do that, the motives behind anything they say are necessarily suspect. They cannot be transparent, for that might hurt their clients. They cannot be consistent, for they may represent a client with one stance today and the opposite tomorrow, and we’ll never know what they truly think. In a medium that treasures facts and data, they cannot always let facts win; they must spin facts to craft victory. They must negotiate to the death, which makes them bad at collaboration. It’s not their job to help anybody but their clients. They are middlemen. They won’t admit to making mistakes well; clients don’t pay for mistakes.

* * *

Here are the other “myths” Edelman answers in his post:

Myth #2—PR people must spin facts to craft victory. This is to define PR by a tiny minority of political PR agents who are masters of leaking, attacking and exaggeration. The best PR work combines policy and communication, because truth is the most effective approach. Jarvis himself notes the possibility of companies having sites where they share information and are factual as part of “the new ecology of information online.”

Myth #3—PR people only help their clients. PR campaigns work when they premised on both public interest and private gain. There is a mutuality of benefit from a partnership forged between a non-governmental organization and, say, a corporation to grow bananas in a more environmental manner.

Myth #4—PR folks won’t admit to making mistakes well—quite to the contrary, we constantly fight lawyers to get clients to acknowledge their actions, to apologize, and to provide a way forward that is measurable and accountable. . . .

In Jeff’s world, companies speak directly with consumers, giving up control of product development, focusing on customer service instead of marketing/advertising, building strong relationships within communities of interest. Public relations actually plays a vital role in this new construct by making valuable information easily accessible and open for improvement. We provide big ideas that bring together constituencies (such as the Quaker Oats Substance) for action. We also offer advice to companies, encouraging them to take on the big issues of our day that inspire employees while offering new opportunities to make money.

What do you think? Can PR live by the ethos of the internet age: open, honest, transparent, collaborative? Is the inside-out agency possible? Or does the paycheck rule the relationship?