An advertising-centric world.

June 1, 2005

You might have missed it, but a 10-page cover article in The New York Times Magazine (April 10, 2005) accurately profiled the mindset of the marketing community.

“Watching What You Watch

” was the article’s headline. “How technology is about to radically change TV-audience monitoring — and how that will transform advertising, the networks and, possibly, the very nature of television” was the article’s subhead.

What was all the smoke and fire about? For the past few months, Arbitron has been recruiting a couple of thousand volunteers in Houston and asking them to wear a black box the size of cellphone every waking hour.

Called a PPM (for portable people meter), the box will record exactly how much TV and radio programming a person is exposed to. Before going the bed, the volunteers will dock their PPMs in cradles which will then automatically send the data to an Arbitron computer center in Maryland.

The rating firm will measure not just how much programming, but also exactly what programming each volunteer is exposed to. Arbitron is asking radio and television stations to run their broadcasts through an encoding device so that a PPM can tell the dates, the times and the stations that each volunteer has listened to. Comparing this data with the stations’ logs will produce the first totally accurate measure of a TV or radio spot’s actual audience.

But that’s just for starters. Arbitron has a joint venture with the parent company of the other broadcast rating firm (Nielsen’s parent VNU) to measure not just the ratings, but the impact of the advertising. The venture is called Project Apollo.

If all goes according to plan, 70,000 people across the country will be wearing PPM boxes in the next future. The advertisements these people see or hear will then be matched to the purchases they make. (Even the Internet usage of the 70,000 people will be monitored.)

Voila! We have entered Marketing Nirvana. Apollo will finally answer that eternal question, Does advertising really work?

“Apollo is basically something that’s been the holy grail of measurement since people were drawing wooly mammoths on the side of caves,” said David Verklin, CEO of Carat Americas, one of the biggest media-buying agencies.

But is it the holy grail? Is Apollo going to turn broadcast advertising into a research-oriented discipline, much like direct mail? I don’t think so.

When was the last time you saw, heard or read an advertisement and then went out and bought the product or service advertised?

It happens, of course. But most of the time the trigger is not a conventional brand-building ad at all. Most of the time the trigger is a deal. (A sale, a coupon, a special offer.)

What do you find in a research-oriented discipline like direct mail? That’s right. Sales, coupons, special offers. Deals don’t build brands.

If Apollo gets off the ground, you are going to see an explosion of consumer promotions. These are the same consumers who are already bombarded with some 250 billion coupons a year.

In my opinion, Apollo is chasing the wrong model. Marketing people live in an advertising-centric world, but consumers don’t. Advertising is the bread and butter of the marketing community, but consumers see advertising mostly as an annoyance. If Apollo is the holy grail of the marketing community, TiVo is the holy grail of the consumer community.

Many marketing people believe that brand building is essentially an advertising game. The brand with the best advertising, the brand with the most advertising is going to win. So they launch programs with heavy, upfront advertising campaigns. The theory is if you can win the advertising battle, you will win the marketing war.

In a recent issue of Advertising Age, the first year cost of a major product launch was estimated to be $68.3 million, of which the advertising accounted for $40 million, or about 60 percent of the budget.

Something is out of whack. Sure there have been plenty of new brands launched with advertising budgets of $40 million or more. ( and quite a few of the early dot.coms, for example.) But when you look at the brands that really made it big, you see a different pattern.

Starbucks, Red Bull, Google, Amazon, eBay, Linux and many other powerful brands weren’t launched with big advertising budgets at all. In its first 10 years, for example, Starbucks spent less than $10 million (total) on advertising.

Take Apple’s iPod, a classic example of a billion-dollar brand launched primarily with PR. Sure they ran heavy advertising, but only after the brand had already been established.

And what do you make of the iPod television commercials? Colorful silhouettes of young people dancing with white wires in their ears. The iPod TV spots don’t tell what product is, what it does or what it costs. Viewers already know that.

What the commercials do is to reinforce the perception that the iPod is the coolest product on the planet.

Ditto for Sony’s PlayStation Portable, except that they haven’t run any advertising at all, yet they sold hundreds of thousands of PSPs the first week they were on sale.

It’s time for marketing to ditch its advertising-centric model and look at the real world. Where do consumers get most of their information about brands? It’s not advertising. Most of what consumers learn about products and services they get by word of mouth or by PR.

That’s not to say that advertising doesn’t have a function. It does. But that function is not to inform. Advertising’s function is to reinforce what’s already been put in the consumer’s mind by other means.

So when will we see a 10-page cover article in The New York Times Magazine on the virtues of launching a brand with PR? Probably not very soon. That would go against the publication’s self interest.

The New York Times Magazine sells advertising space. It doesn’t sell PR space.