Alan Mitchell: Why the old advertising model is breaking down

How are advertisers supposed to judge today’s ever more labyrinthine maze of new media opportunities and technologies? Consider some recent straws in the wind: an appeal from ITV commercial director John Hardie for clients to reappraise their attitudes (and budgets) in favour of TV; a threat from Nestlé Rowntree marketing director Andrew Harrison to “walk away” from TV unless it stems media inflation; dot-com denouement driven by plummeting ad revenues; last week’s letter from Curve Marketing’s Sally Horrox predicting that interactive TV and TiVo “will kill off interruption advertising as we know it”; and an observation made by Rupert Howell at a seminar on one-to-one marketing, organised by consumer agent Mongrel, that every time people predict the death of the TV ad it bounces back, ever stronger.

Here’s a suggestion: there is a way through such conflicting opinions, but it requires a shift in advertising priorities – towards a renewed attempt to generate the best possible “win-wins” with consumers. The fact is, “interruption advertising”í as Horrox calls it, is among the most powerful and robust of commercial systems ever invented. Its win-wins work at three levels – industry, medium and message – simultaneously.

At the industry level, advertising helps drive demand, which repays investment in research and development and plant and creates improved economies of scale. The win for the consumer: New! Improved! products at lower prices.

At the level of the medium, consumers receive free or heavily subsidised news and entertainment in return for handing over their attention to media owners, who then sell it on to advertisers. This is an amazing bargain, considering the richness of modern media.

Finally, at the level of the message, advertising makes consumers aware of choices, new products and offers: useful information which helps them, as buyers, to buy.

New! Improved! products at lower prices, plus free or heavily subsidised news and entertainment plus information that helps buyers buy – all in exchange for being able to sit back and let ads “wash over you”, as Howell put it at the Mongrel seminar. You couldn’t really ask for more. Considering these benefits, it’s hard to imagine a better alternative system.

The trouble is, that system is disintegrating. At all three levels. Simultaneously. In many industries, overcapacity is now endemic, or product and technological parity has set in, and advertising no longer generates incremental demand. Instead, it has fallen foul of the Red Queen effect: advertisers having to run ever faster just to stand still, while consumer benefits in terms of New! Improved! products at lower prices evaporate. Alternatively, depending on the sector, word-of-mouth-driven reputation has become more important than purchased fame; or the economic “win-wins” have shifted from economies of scale to personalisation and customisation (which need a rich exchange of information, rather than a thin flow of one-way messages); or customer retention has become more important than customer acquisition. In each case, the industrial or economic wins offered by traditional mass advertising are doubtful compared with new forms of electronic interaction.

Meanwhile, the information age is wreaking havoc on traditional media ecology: bartering of content for attention. As we move from information scarcity to information overload, the value of most “content” is falling, while the “price” of attention rises inexorably. Paradoxically, truly exceptional content may become more prized, attracting ever more valuable attention. But the underlying dynamic is in the opposite direction: power is passing from the media owner to the attention owner. As Horrox commented, consumers are taking control.

So what about consumer wins at the level of the message itself? Consider this comment from Sergio Zyman, former chief marketing officer at Coca-Cola and a high priest of traditional marketing: “Even if your product isn’t that different, better or special, it’s the job of the marketer to make people think that it’s different, better and special.” With such sentiments taking hold, advertising risks degenerating into an elaborate and expensive conspiracy to confuse and delude consumers, to confound their attempts to make the best possible choices – a conspiracy for which consumers literally have to pay the price.

One simple conclusion emerges from these trends. For decades, the advertising industry – clients, agencies and media owners alike – have been able to take the consumer advantages of advertising for granted. This has left them free to focus on seller-objectives, such as how to get the best bangs from their advertising bucks. The result has been seller-centric myopia. Just one example: how many debates about advertising effectiveness and advertising accountability ever stop to consider advertising effectiveness or accountability from the consumer’s point of view?

Today, however, as rapidly changing economics and technologies erode the old “win-wins”, this seller-centric myopia is coming under severe scrutiny. We have to make explicit what has always been implicit: that at some level or other – whether at the level of industry economics, medium or message – advertising has to be a win for the consumer if it is to be effective for the seller. For the simple reason that if it isn’t, consumers will go elsewhere.

The emerging challenge is to pinpoint the richest “win-wins” – whether new or old. This isn’t easy. The ad break during Coronation Street may bombard me with irrelevant messages, but at least I can let them wash over me and still get my favourite programme free. A one-to-one permission-based message may contain information that helps me, as a buyer, to buy. But I do have to invest precious personal time and effort in this sort of communication. So each answer will be highly dependent on sector, brand, context, consumer willingness to “invest” in a relationship, and so on. Hardie and Harrison, Horrox and Howell may all be right, depending on the circumstances. But as the war for consumer attention intensifies, maximising the win for both sides will become the key to successful advertising strategies.

Alan Mitchell’s book Right Side Up: Build Brands in the Age of the Organised Consumer is available from Harper Collins Publishers, at the special price of £16.99 (rrp £19.99) including postage and packaging. Telephone 0870 900 2050 and ask for department 832D