Borrell: BIG spike in promotions spending

New data to be released later this week by Borrell Associates reveals a skyrocketing spike in advertiser spending in the “Promotions” category as compared with advertising. Another eight percent increase this year will put promotions spending at $630 billion, over twice that of advertising spending. Borrell’s promotions category has long been a barometer of advertiser spending related to the Web, and this dramatic increase includes the raging hot category of content marketing.

Promotions' spending skyrocketing

To be fair, Borrell’s promotions category is very broad and includes a great deal of different types of spending, including coupons and discounts. Borrell research guru Kip Cassino likes to refer to a discount deal on a can of peas. The money spent to tell people about the discount would be advertising, but the price difference between the can of peas before the discount and after comes from promotions. However, the category also includes efforts by companies to recruit customers online.

Now that business and industry are able to function as media companies themselves, their spending habits are shifting. The Content Marketing Institute reveals the kinds of tactics that businesses are using with consumers. The graph below shows that social media, articles on their websites, eNewsletters, videos and blogs are the top ways businesses are using to reach customers.

CMI tactics 2013

The Borrell report shows a flattening of advertising, which ought to speak to those in the pure advertising business. Advertising is not going away, but the growth is clearly in promotions. Looking ahead to 2017, the report projects that digital promotions will begin to close the gap on digital advertising, growing at a rate of 150% compared to 90% growth in online advertising.

Borrell has always been ahead of everybody else in projecting what’s happening with businesses away from advertising, and this report is no exception. The company hosts its annual Local Online Advertising Conference March 4–5 in New York.

Brands need to emulate people

Stowe Boyd

Stowe Boyd

The brilliant mind of Stowe Boyd has come up with a concept that really fits something I’ve been struggling with over the last few months. The question is how do businesses function best in the network? Here’s Stowe from a GigaOm piece yesterday called “We’re at the customer support stage of social business:”

I believe that brands will try to look and feel as much like people as possible, online. For example, brands have their own Facebook pages and Tumblr accounts. A winning strategy of the near future might be to get Tumblrers to follow your brand’s Tumblr blog, and to make the posts look and feel as much as possible the way your prospective customers’ posts do. This is what is going to replace ads: following.

This is one of the most profoundly insightful paragraphs that I’ve read in years. Those of you helming media companies, for example, need to begin having blue sky sessions to define your company’s personal brand, and then you need to execute that brand across all forms of social media. Local media companies need to become experts at this, so that they can then lead businesses in the community in doing likewise.

At WLEX-TV in Lexington, KY, news director Bruce Carter handles Facebook duties throughout the day. It is experienced newsguy Bruce and his personality that speaks on behalf of his station and his newsroom on LEX18’s most important social media venue. I’ve long thought that this was a terribly smart tactic, because who knows the station’s wants and needs AND the news better than the news director? (Bruce was a client of mine when I worked with AR&D).

I’ve long said that all any business is in the network is a single node, just like everybody else. The network doesn’t “see” any company as bigger than any other node, for all are equal according to the Web. People follow people, or as Stowe is suggesting, people follow brands that appear as people. Here’s more from Stowe:

So the ‘answer’ to the issue of the future of advertising is already starting. Stop trying to advertise on mobile, and instead participate in the streams that people want to use on mobile, and people will follow your brands if you contribute to whatever it is the people are up to. I think this will have profound societal impact. And maybe less billboards.

I really have to applaud Stowe for this wonderful piece of thinking. And to you, dear reader, whether you represent media or any other business, please tune into this vibe. Your future is at stake.

We’re all shilling for something

Here is the latest in my ongoing series of essays, Local Media in a Postmodern World.

We’re All Shilling for Something

This will probably be received as the most controversial essay of the whole series, because I’m proposing that we re-examine the absolute negative assumption of the concept of shilling. My conclusion is that a hierarchical culture — where knowledge exists at the top — demands the policing of claims of truth, but in a horizontal culture — where knowledge is spread sideways — it’s up to the individual to police themselves. This assumes a weakening of the power to manipulate from the top, but that’s a subject for another day.

TV numbers add up (to a BIG problem)

According to Advertising Age, the folks at DISH have declared the TV commercial dead. Actually, it’s DISH’s new ad campaign for the Hopper, its ad-skipping DVR. You know, the one the networks are suing to try and stop. The nets feel that if they can at least slow down the technology, their business model will continue to be viable, so there’s a lot at stake.

The problem is that this isn’t about technology; it’s about viewers’ outright disdain for the inanity of 30-second ads and their relentless repetition. Ads on TV crossed the line of viewer disrespect a long time ago. Technology that the networks view as the enemy is viewed by viewers as a friend.

But wait! There’s more!

One weeks worth of viewing for Fox's The FollowingFox released numbers that show a significant increase in viewing for the première episode of The Following, starring Kevin Bacon, when adding delayed viewing. Take a close look at these numbers, because Fox doubled the viewing of this program by adding all the options available to viewers. Doubled! No doubt Fox is selling the 20 million number, but the same number cannot be applied to the advertising for the program, because each of the opportunities for growing the overall program number include the ability to skip the commercials. Nielsen provides “Live plus Same Day” viewing numbers, but they don’t tell us how much is live and how much is same day. God forbid, because same day includes the ability to skip commercials.

The war between Madison Avenue and the networks over commercial ratings is going to get super ugly in the months and years ahead. It has to. Who in their right mind will look at that 20 million viewer number from Fox and buy the spin that the same number of folks watched the commercials?

Ain’t. Gonna. Happen.

Advertising Disrupted

Jack Trout and Al RiesAt the height of the Mad Men era — the year was 1969 — two New York ad men penned an idea that has driven advertising ever since. Al Ries and Jack Trout discovered and innovated the concept of “positioning,” and followed it up with articles and then a series of books that established methods of manipulating audiences through branding. Madison Avenue quickly responded, and the rest, as they say, is history.

But history evolves. Seasons end as easily as they begin, and the season of positioning is running into the realities of empowered consumers and what Jay Rosen calls the Great Horizontal. It cannot last, and those who pursue it and only it may well be left holding an empty bag.

Ries and Trout’s original book is still considered foundational to contemporary marketing. It was called “Positioning: The Battle for Your Mind.” Here’s a brief definition from the book:

Positioning…has revolutionized the way products are advertised. It’s the first body of thought to deal with the problems of communicating in our overcommunicated society. With this approach, a company creates a “position” in the prospect’s mind — one that reflects not only the company’s own strengths and weaknesses but those of its competitors as well.

Ries and Trout knew that this could be controversial, so they “positioned” it not as a form of advertising but as a form of communications, of which the examples chosen were from the advertising field.

And most of the examples are from the most difficult of all forms of communication—advertising. A form of communication that, from the point of view of the recipient, is held in low esteem. Advertising is, for the most part, unwanted and unliked. In some cases, advertising is thoroughly detested.

To many intellectuals, advertising is selling your soul to corporate America—a subject not worthy of serious study.

In spite of its reputation, or perhaps because of it, the field of advertising is a superb testing ground for theories of communication. If it works in advertising, most likely it will work in politics, religion, or any other activity that requires mass communication.

What’s never really discussed is the potential for mischief through deceit. The sneaky nature of it likewise assumes, up to a point, an ignorant mass, and that has a great potential to backfire.

There are two enormous problems with the whole concept today. One, mass marketing is increasingly problematic, for mass audiences are a dying breed. Oh, there are still events like the Superbowl and the Academy Awards that draw big audiences for advertisers, but now, even popular “second screen” activities get in the way by giving viewers something new to do during commercial breaks. Positioning just doesn’t do as well in a fragmented environment or in a network. Everybody functions as a media company in the network, so any “position” can be spread virally, especially if the product or service being positioned doesn’t work as advertised. Two, it’s hard to “position” somebody when they’re hip to being positioned (and don’t like it). Ries and Trout’s “The Battle for Your Mind” doesn’t ask for approval to wage war in such a private place, and this is its most challenging aspect, especially in a world where people can do something about it. The idea of waging war in our minds was advanced in Ries and Trout’s second book, aptly named “Marketing Warfare.” The rude assumption that enough money buys a ticket to play war in the battlefield of the mind is revealed for what it is, a self-centered effort at human manipulation.

What the leader owns is a position in the mind of the prospect. To win the battle of the mind, you must take away the leader’s position before you can substitute your own.

Good luck with that in a world of equal nodes on a vast network.

One of the problems with this business is that it relies on tolerance as the measurement of what “works” and what doesn’t. The assumption of tolerance is a dangerous proposition in a world where people are actually able to not tolerate, and one would hope that this is troubling to Madison Avenue.

Nearly ten years ago, Umair Haque wrote that the best marketing for tomorrow would be the product itself, and that business resources would be better used in product improvement instead of marketing about products. In other words, positioning and all that fancy Madison Avenue footwork won’t “move” people to like something of poor value that simply doesn’t work. In a network, business is helped by people talking to and sharing with each other, because the idea of a “mass” audience is blown apart in a network. The best position, therefore, is one of reliable quality. People may pass around fads for a season, and perhaps enough to make a difference, but people in general today tend to not be easily switched, and especially when the attempt is through old-fashioned mass marketing.

Positioning, however, is Madison Avenue’s lifeblood. Starting with research, the smart marketer can determine what it is that people are seeking from whatever product is being researched. From this data, sophisticated campaigns can be created to help move the product, either by shifting the brand in the minds of consumers or by creating an entirely new brand. Some are better at this than others, and so much of advertising’s pecking order is based on success stories brought about by Ries and Trout strategies and tactics. Success, of course, is determined by how the concept impacted sales, not by how it impacts people. Corporate America marches onward, while the recipients of the marketing magic are unaware that they’ve been shifted, or so the thinking goes. Again, contrary to what the advertising world would have us believe, what the people in today’s network think matters. Tolerance, again, is a poor measuring stick.

If Madison Avenue is to thrive in tomorrow’s universe, it will have to find a replacement for positioning, but mostly, it’ll have to find a replacement for trickery and deception. Until that happens, however, there’s simply too much money at stake to even begin to entertain the idea that contemporary communications is at odds with advertising’s practices. The first thesis in the network’s seminal book The Cluetrain Manifesto is “Markets are conversations,” and there are plenty of people playing with concepts of conversational marketing. Marketing in the network is and will always be one-to-one instead of one-to-many. Consider a party. Which is more likely to produce success, signs on the walls of the party or direct communications with individual party-goers. This is the conundrum for advertising, circa 2013.

Above all, corporate America — the target of everything Ries and Trout — has to stop insulting the very people who support it through purchasing the products and services it makes. This sounds so logical, and yet it’s not even top-of-mind with those who practice the selling of what America makes.

The expanding sphere of defense

The advertising industry is running into a block that’s going to challenge any new attempt to use technology to “target” people. I call it the expanding sphere of defense. It’s been around for a long time (circle the wagons), but let me show you how expanding spheres work in dealings with human nature.

One day in the mid 1980s, I assumed command of the television fundraising for The 700 Club. I asked Pat Robertson to teach me, so we went to lunch. There was an old joke at the time that the devil didn’t want Billy Graham, Oral Roberts or Pat Robertson in hell, because Billy would get everybody saved, Oral would heal everybody, and Pat would raise the money for air conditioning. Cute at the time and apropos, because the world has known few people who could raise money like Pat.

At lunch, he said, “People give money to ministries for these reasons and in this order:”

How does it help me?
How does it help my family?
How does it help my neighborhood?
How does it help my community?
How does it help my state?
How does it help my country?
Finally, how does it help somebody else?

This is a spherical diagram of self-centeredness, the default position of human beings, at least according to a Judeo-Christian heritage. It’s that old “sinful nature” stuff, and if you can get past the religious references, it’s surprisingly helpful in observing life.

I’ve found this to be especially useful in examining my own assumptions and motives and those of many others. You can use it almost anywhere, and I think the advertising industry would do well to examine it in light of the kinds of technological advances referenced in my previous post. Think about it. If we’re self-centered in drawing things to us, then we’re equally self-centered in keeping things away, even those “targeted bombs” that Madison Avenue so enjoys playing with.

The expanding sphere of defenseIn terms of defending all that’s near and dear, let’s look at the expanding sphere this way:

How do I defend myself?
How do I defend my family?
How do I defend my neighborhood?
How do I defend my community?
How do I defend my state?
How do I defend my country?
How do I defend somebody else?

I make this point to say that targeting the very center of that expanding sphere — with or without an individual’s approval — simply isn’t going to happen. Nobody feels comfortable letting strangers that far inside, where so much destruction can take place, so the number of people who’d approve such a thing is limited. And let me repeat that a small, mobile device is very much deep inside the sphere. It is a highly, highly personal instrument.

Okay, let’s assume that access isn’t granted or “approved” and that Madison Avenue simply finds a way to penetrate to the core. How long do you think that’s going to stay viable? Not very long, because the empowered bottom — the great horizontal — will find a way to spread the word, and nobody’s going to allow that kind of personal invasion. Moreover, this is just another example of business-by-toleration, which is not, frankly, a workable model for business in the 21st Century.

We have to reimagine this whole concept of advertising. Hang on; it’s going to be a bouncy and bumpy ride.