• by Joe Mandese  @mp_joemandese, November 28, 2006

Well, it's December. And seeing as I'm not one to break from tradition, here's my year-end prediction. Get ready - it's a biggie. I predict that in 2007, we'll see the start of a massive migration away from marketing budgets and promotion, and a dramatic trend toward certain forms of consumer media, especially the kind that can stimulate buzz and generate traffic, both online and in stores. How do I know this? From watching mass marketing history repeat itself.

We've just entered a third wave of consumer marketing that promises to be every bit as big and transformational as the two waves that preceded it. The first wave occurred after World War II, when pent-up consumer demand coupled with the most powerful media selling tool of all times - television - created mass marketing as we know it. It was a period in which the biggest brands and consumer marketing organizations were born. Big brand advertisers ruled the consumer marketplace until the 1970s and 1980s, when the power of consumer marketing shifted to mass retailers due largely to the deployment of universal product code (UPC) and electronic scanner technologies, which put consumer marketing intelligence into the hands of the retail trade. It was a period that radically altered marketing budgets, driving both consumer and trade promotion spending: consumer promotions to drive customers into stores and trade promotion to push brands within the stores. Marketers bent so far backward in their promotional support that for a while it looked like advertising might take a subordinate role in the marketing mix.

Thankfully, that period ended in the 1990s as brand marketers came to their senses and began reinvesting in what actually drives consumers to their products: brands. The reign of trade promotion officially ended in the late 1990s, with the rise of the Internet as a genuine marketing platform. In hindsight, I think this also heralded the beginning of the end of consumer marketing as we have known it. It was a last respite prolonged by the dot-com crash. But the Web is back and has triggered a shift toward the third wave of consumer marketing: one that puts consumers in control.

Clear signs that the shift has begun appeared during the Association of National Advertisers' annual conference this fall. But equally significant was Wal-Mart's decision to shake up its agency roster and its ad strategy. By initially tapping Draft FCB as its ad agency and Carat as its media shop, Wal-Mart signaled it was time for a change. Though Draft FCB has subsequently been dumped by Wal-Mart following new disclosures surrounding former Wal-Mart marketing executive Julie Roehm's handling of the review, the agency is trying to create a new model that fuses the hard marketing science of direct response with the persuasive power of great brand advertising. Carat, which is re-pitching the Wal-Mart assignment, meanwhile, is trying to mine consumer insights to activate media engagement.

Those original agency selections spoke volumes about Wal-Mart's intentions, but two other pieces of the puzzle tell the whole story: Wal-Mart's decision to join Arbitron and VNU's Project Apollo study, and Carat's affiliation with MMA. Apollo is an ambitious research study that will track the actual media usage and product purchases of thousands of individuals. MMA, the preeminent marketing mix modeling firm, deploys sophisticated regression analysis to determine how media and advertising decisions impact product purchases. What will Wal-Mart's insights yield? Only time will tell, but I think we'll see a big drop in promotional spending and newspaper FSIS and an increase in forms of media that spark word-of-mouth marketing.

Correction:Last month, I referred to former Procter & Gamble Chairman-CEO Ed Artzt's 1994 American Association of Advertising Agencies' conference speech in which he challenged Madison Avenue to embrace the Internet. In fact, Artzt addressed several interactive media technologies - interactive TV and video-on-demand - but he never mentioned the Internet once.