The Thinking Person's Guide to Media, Chapter Two: Advertising Philosophy

Are online advertising tactics limiting the possibilities for digital media and strangling the flow of brand marketing dollars to new media?

For any discipline, including advertising, there is a science and a philosophy. When people strive to understand quantifiable, repeatable processes, they are focusing on the science of a discipline. When they create theories to tackle questions unanswerable by the science of a discipline, they are working with that discipline's philosophy.

While all professions have elements of both art and science, fields that lend themselves to quantifiable, repeatable processes are often referred to as the "hard sciences" (e.g., physics, chemistry), whereas those fields where it's more difficult to discern the laws governing actions and reactions are commonly, and often pejoratively referred to as the "soft sciences."

Advertising has long been considered the "soft science" of the business world even as it has endlessly sought a seat at the table with its "hard science" counterparts such as finance and operations. Ironically, with the "hard science" designation seemingly within reach, it seems that the realization of its quest will eliminate the most valuable aspects of advertising achieved through philosophy - the art of building brands.

Beating the ROI Drum

The interactive nature of the Internet and its ability to provide unprecedented data regarding consumer behavior, combined with recent advances in measuring the return on investment of advertising expenditures, has given new tools to the practitioners of the science of advertising. It's also begun to change the way advertisers and heir agencies look at ad spending. This change has become most apparent in the online marketing community's addiction to ROI data and metrics and the never-ending race to try to tie every dollar spent directly to that dollar's corresponding sale.

But the trend toward increased accountability and the greater demand for demonstrable ROI ironically may have adverse affects on all advertising. Achieving ROI is a good thing, of course. In fact, in a for-profit business it may be the most important thing. But a more important question for the advertising and media industries to answer now might look like a Zen-like riddle: If a scientific process doesn't exist to measure the precise ROI of branding, does that imply ROI for brand advertising doesn't exist?

The philosophies of brand advertising have allowed advertisers to create theories regarding the value of advertising for which there hasn't historically been a precise measurement of ROI. These theories have driven trillions of dollars in ad spending and have historically represented a majority of all ad spending. The pursuit of brand awareness and brand differentiation has given TV advertising its primacy in the media mix. It's also protected image advertising in magazines and position ads in newspapers for much of the past century. And, maybe most importantly, brand advertising has subsidized the very existence of nearly all media prior to the Internet.

For example, Coca-Cola's iconic "Have a Coke and a Smile" campaign from the 1980s gave the soft drink marketer a sturdy brand platform for several years. Nike's "Just Do It" and Intel Corp.'s "Intel Inside" ad campaigns serve as stellar examples of long-term and winning brand propositions. De Beers' diamond advertising looks like it may generate ROI - much like the slogan - forever. Imagine if De Beers had simply attempted to track conversions to diamonds sold. Coke, Nike, Intel, and De Beers all tied their campaigns to sales and promotional goals, but they also used them as significant anchors for brand enhancement. Their efforts resonated well beyond a mere campaign launch.

Lately, the ad industry has shifted its focus in pursuit of a new Holy Grail that some believe will inexorably prove the intrinsic value of brand advertising - engagement. But while there are continually improving methods for measuring "engagement" and "attention," the philosophies themselves are based on relatively finite metrics and experimentation that would appear to fall into the "soft science" category at best. Copy testing based on relatively small samples and focus groups are used to extrapolate larger affects of such things ass creative impact, along with reach and frequency.

The Dearth of Brand Advertising Online

There has been a seemingly endless quest to discern and refine the correlations between specific brand advertising and sales. But in the end, the battle for brand supremacy rages in the hearts and minds of the people - including those who never intended to purchase a given product and those who already have - and therefore brand advertising, even online, will continue to resemble a "soft science" despite the strides direct response online marketing has made toward becoming a "hard science."

As consumer attention dedicated to online media has grown, increases in online ad spending haven't been proportional. The major reason for the lack of proportional spending is that current online advertising philosophies, and the online advertising technologies based on them, have restricted advertising to the quantifiable and repeatable science of direct response marketing - search, click-throughs, lead generation, and their ilk. It's far easier to justify spending $20 million on traditional, offline media, because there are accepted philosophies regarding the value of impressions and accepted means by which to distribute for reach.

Industry conventions assume that traditional media generate brand effects that have an intrinsic value beyond direct response. Online media has not proven that and so far, has actually done the reverse, proven that beyond a reasonable doubt that it can generate immediate responses. A majority of the top online advertisers don't even turn up as top offline advertisers - marketers like LendingTree, Orbitz, and lead-generation companies. A disproportionate number of offline ad dollars have not moved online. It's not so much that online media is more or less efficient for branding than offline media, but that the existing philosophy of advertising favors traditional media as a brand-building agent and online as a lead generator. But if "attention" is the market necessary for advertising to occur then the disproportionate spend of advertisers online vs. offline doesn't compute.

Think about it. There are relatively few singular properties (such as the Yahoo and MySpace home pages) that generate anything near the massive reach and controlled environment that traditional media have historically offered. And it's that lack of such properties demonstrating traditional media qualities that has led to a perceived shortage of inventory and increased prices for these few online properties. In turn, the price increases for these massive properties create a market in which virtual inventory shortages make it difficult to achieve desired levels of ROI, even when assuming a value for brand advertising using traditional methods. This makes online branding opportunities appear equally or, more often, less efficient than television, a medium of obviously declining effectiveness and increasing prices.

The Inventory Shortage Myth

In reality, there is no shortage of online inventory. There is the same amount of total consumer attention across media that there was five years ago. In fact, there may be more, given the increasing ability of people to consume media on new screens and in new places. There are certainly more total advertising opportunities. What there is is a lack of philosophies developed for the new world of attention fragmentation and user-generated content in which brand advertisers must now live. And, equally important, there's a lack of technologies based on these yet to be developed philosophies of brand advertising for the 21st century.

Applying traditional brand advertising philosophies online will be as ineffective as attempting to deliver brand advertising through today's performance-based technologies. But these philosophies shouldn't be discarded, nor should potential applications of components of today's technologies. The goal should be to evolve the philosophies of brand advertising and build technologies from the ground up,with these philosophies in mind.

Our industry should be asking the following questions: How should the content surrounding an ad be weighted when considering the value of a brand impression online? How does user personalization of advertising affect the value of an impression? What is the value of building a brand image with people outside a target demographic when it is possible to achieve precision targeting? How do interactivity and engagement add to brand-building? What must advertising look like in order to achieve effectiveness in a world where nothing less than explicit consent from consumers and publishers will garner any attention? What lies beyond the impression, and what kind of ad unit can convey the true effectiveness of brand advertising in new media?

As the dialogue surrounding these questions is ratcheted up, and even small areas of consensus are reached, technologies will be built to allow agencies to deliver the next generation of brand advertising. Technologies developed before the agencies and advertisers of the world put these philosophies in place, or without leaving room for their integration, will continue to fail to provide the outlet brands are looking for to build emotional connections with generations of consumers in the digital age. But these technologies can play a huge role in facilitating the development of the new philosophies of advertising.

The implications of falling short in developing accepted philosophies regarding brand advertising for the 21st century may mean ignoring the immeasurable (in scientific terms) value of brand advertising and, therefore, discarding decades of knowledge and the trillions of dollars spent to build the great brands of previous generations. Brands will begin to cannibalize their own ability to build a premium image and reap the benefits associated with it. Competition for long-term, high-margin success in gaining favor in the minds of generations of consumers will shift to a constant battle for short-term, low-margin successes in gaining individual purchases. Brands will cease to gain customers, but rather battle over transactions, eroding their own margins in the process and dismantling what was once their greatest barrier to entry.

While prices may drop, consumers will be starved for defining brands that can help them address areas that are higher on Maslow's hierarchy of needs. Abraham Maslow's famous psychological study described five levels of human needs to suggest that lower level needs such as safety, love, belonging, food, water, sex, and sleep must be fulfilled before high order psychological needs can be met. Until higher level growth needs are met, iconic brands will be forced to redefine the nature of their communication to consumers, as well as the manner in which they "target" and deliver their message. If they fail to do so, they risk losing what may be their most valuable and intangible resource - consumer mindshare and brand equity.

To this end, thought leaders must emerge from within agencies and marketing organizations who will work with and become experts in emerging technologies. In addition, philosophies must evolve that will enable brand advertising to account for new media creation, distribution, and content consumption.

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