Marketing, Not Advertising

Marketing, Not Advertising By Mary Collins
TVNewsCheck, October 8, 2010 6:14 AM EDT

Do you remember the metaphor that contrasts dropping a frog in a pot of boiling water as opposed to placing it in lukewarm water and then gradually bringing it to a boil? While the frog will quickly jump out of the boiling water, the story goes, it will allow itself to cook to death if the water temperature increases by just a few degrees at a time.

I heard someone cite that scenario when I was in New York last month. It’s certainly a fitting allegory to describe what Magna Global’s Brian Weiser posed as one of the possible ways technology can impact the advertising products we now offer.
With the online world’s ability to cater to “name your own price” business models, traditional media’s supply-driven business models could seem like asking new media marketers to jump into a boiling cauldron. On the other hand, if traditional media outlets fail to assess the impact of conforming to new media’s pricing metrics, they could experience irreparable harm to the market value of their broad reach and high levels of audience engagement before realizing what happened.

However, Weiser’s description of the changes we are experiencing in the marketplace can be very helpful in making us more aware of their incremental impact. This should help us keep our cool and remain focused on growing our businesses no matter how torrid and turbulent it gets around us.

That process begins with understanding the shifts that are occurring as a result of technology’s impact on media consumption. Weiser points out that these shifts include the replacement of non-ad-supported activities that once occurred offline with online ad-supported activities that can grow advertising. Examples include the shift from board games to video games, which now feature online and dynamic advertising opportunities.

In addition, lower value ad-supported behavior that occurred offline, like phone directories, may be replaced with higher value, ad-supported behavior that’s available via online and mobile search engines. These instances of higher value ad-supported behavior online may in turn be replaced with lower value ad-supported behavior online, such as the shift from reaching customers via Yahoo to using Facebook.

As we see with the Yahoo versus Facebook comparison, these new technologies fragment audiences. Weiser reminds us that this fragmentation can reduce the value of a medium to large advertisers. However, the lower media price points for fragmented media allows for the use of a medium by smaller advertisers. Fragmented audiences technology can deliver a higher value per unit of media.This, in turn, allows advertisers to achieve their objectives through smaller ad budgets. And if we’re not careful, smaller ad budgets can result in turning up the heat.

Another change that can threaten traditional advertising models is the impact of advertising systems on ad revenues. At the organization design level, Weiser observes, an advertiser’s corporate structures can pre-define marketing choices. In this scenario, reach and frequency becomes a proxy for the organization’s marketing objectives. For advertisers that use the R&F paradigm, traditional media choices represent a rational decision.

Meanwhile, there are developments that Weiser describes as “universe changes” that affect the advertising marketplace. The advertiser universe itself is not fixed. The types of businesses operating in different countries change over time, affecting who is buying media and what they want their buys to accomplish.

Twenty-five years ago, cell phones were luxury products not sold with television or radio spots. The earliest national commercial I could find for Apple aired in 1984. Think about the last time you saw an ad for a long-distance telephone carrier and compare that to the last smart phone commercial you saw or heard. These new mass market categories are critical to the growth of total advertising and they demonstrate the shifts that have occurred among advertisers over the past decade.

Another change that has occurred among mature advertisers, according to Weiser, is that they are shifting the focus of their budgets away from buying media and more toward marketing. We are also experiencing the creation of “endemic ecosystems,” which he views as a key source of growth for the media business.

We must also be aware of the operational friction that is being created by ad systems. Contrary to the build-it-and-they-will-come approach, Weiser points out that the mere presence of a medium is insufficient to enable advertising. And, a medium offering limited distribution will be considered insufficient for advertisers that require reach. Weiser also reminds us that large advertisers have many operational requirements that are competing for a finite quantity of financial resources.

Taken in total, these changes illustrate the role of technology as a catalyst for potential. Rather than becoming distracted by the disruption it creates, we can focus on where we can incorporate these areas of potential into our business models. Reach still matters, as does frequency, especially as new businesses seek to achieve the recognition and interest that are precursors to engagement and relationship marketing.
What is the media outlook for 2011? As Brian Weiser reminds us, the answer depends only in part on what the market projections may be for a particular form of advertising, such as spot or online. The station or company that turns the potential created by these technology-driven opportunities into smart, 360 marketing campaigns with a predictable ROI for its advertisers will have the best outlook for 2011.

It’s also the best way to ensure we’re not like that frog who didn’t notice how the changes in his surroundings were leading to his demise.