Pubic-Com, where advertising's future is clear

It's difficult to predict what the fallout will be with the Publicis-Omnicom merger, Pubic-Com as George Parker calls it.  It creates the Uber-Holding Company that will shake off many of the executive level types to reduce duplication.  It will unchain the galley slaves (the ones who do the actual work), despite its claim to the contrary,  at the Leo Burnett, Publicis, Saatchi & Saatchi, Starcom, ZenithOptimedia, Rosetta, Rokkan, VivaKi and Razorfish from Publicis, and BBDO, TBWA and DDB, Rapp, Omnicom Media Group, Organic, Proximity, and Tribal from Omnicom.  But who really believes a bunch of lawyers and accountants? Believe me, these assholes will squeeze every dime they can out of the new company except when it comes to their own salaries and "performance" bonuses. 

Maurice Levy meets with the creative department

The one thing I haven't seen mentioned is what happens to the thing it is supposed to produce.  There is no word about the advertising, though both companies seems to have given up on that.  It's unclear how the new company will deal with client conflicts, such as Pepsi and Coke, GM and competing automakers (including Mercedes, Volkswagon and Nissan among others), McDonalds and Burger King. I'm sure the new company will swear to build a Chinese Wall around these businesses but I don't think the smart clients will buy into that.  But more nimble agencies, like W+K could benefit if clients who can see through the bullshit decide move elsewhere. 

The reason behind all this seems to be control of media buying, both conventional and digital.  The new company will certainly be the gorilla in the room as it battles Google, IBM, and Facebook for control of data.  What the brains behind the merger seem to have forgotten is that no amount of data insight will create better, more effective ads.  Technology is just a tool, a commodity, not a strategy. Without breakthrough creative ideas, the Big Holding Companies have diluted the quality of the end product to the point where it is more like bottled water: cheap to make and totally flavourless, only now it comes in Big Gulp size. 

Of Madeleines and Music

Memories are not like lost car keys. To find cars keys, we have to force ourselves, usually by retracing our steps to track them down. Memories, especially distant ones, are found usually by accident, a chance encounter.  A passing scent, a brief taste, or a few notes of music can unleash a torrent of long-forgotten faces and events.

Artists, poets, and writers have been fascinated with memories for eons.  Neuroscientists, aren't, at least not in the same way as artists. They can tell us exactly where we store memories in our brain—they just can't tell us how we stumble upon a box of memories stashed under the stairs or crammed onto the top closet shelf of our mind with only the slightest prompt. (I've never much cared for neuroscientists.  They take all the fun out of stuff. Like those smarty-pants types who feel compelled to tell you the ending to The Sixth Sense before you've seen it.)

Marcel Proust had a lot to say about memories and their triggers in his work, Remembrance of Things Past. What set him off on his six-volume examination of the subject happened one day when he was having a cup of tea with his mother with which she included a little something, something he had seen in shop windows countless times but never given it a thought. But, once it "touched my palate, a shudder ran through my whole body, and I stopped, intent upon the extraordinary changes that were taking place."  He had tasted a madeleine, a little scallop-shaped cake. 

"And once I had recognized the taste of the crumb of madeleine soaked in her decoction of lime-flowers which my aunt used to give me (although I did not yet know and must long postpone the discovery of why this memory made me so happy) immediately the old grey house upon the street, where her room was, rose up like the scenery of a theatre to attach itself to the little pavilion, opening on to the garden, which had been built out behind it for my parents (the isolated panel which until that moment had been all that I could see); and with the house the town, from morning to night and in all weathers, the Square where I was sent before luncheon, the streets along which I used to run errands, the country roads we took when it was fine."

With me, music triggers equally as strong memories. Almost are delightful and are of people long gone—Billie Holiday sings and I'm back sitting with my father on the porch on a warm summer's night; listen to Strunz and Farah and I'm with my wife lying on the bald rock in front of the cottage at Nipissing looking at the stars during one of those rare times when our two-year old was asleep.   A few, though, are just bizarre. 

Yesterday I listened to Trick of the Tail by Genesis, an album I hadn't heard front to back for decades.  And as it played, I recalled someone from nearly 40 years ago.  His name was Peter and he was the worst scoundrel I have ever met.

We met at Calgary airport in 1976, which at that time a cluster of ATCO trailers surrounding a dinky terminal.  I was tagging along with my crush Mary Liz (pre-wife) to Banff, having dropped out of the geology and Earth Sciences programme at Waterloo to live in the mountains for a few years. While Mary Liz and me were waiting for the Brewster Bus to Banff, we spotted Peter, a handsome young man (we were 20, he was about 26) in the parking, lot frantically emptying his bags, pockets, and wallet onto the hood of his Bavarian; mentally retracing his steps, he soon realized he had left his keys in Montreal and his spare was in Banff.  Not thrilled of the prospect of riding the bus, Peter asked if we would split the cost of a one-way rental car.  In return, he let us stay with him until we got established.  Fortunately, he lived above the Avis car rental place and occupied the whole top floor of the house.  A virtual mansion for Banff. 

Over the next few weeks we got to know Peter.  He was nice, funny, and always generous with his liquor. Quite often, though, he'd ask us in the morning to not come home until around 8 or 9 in the evening as he was "entertaining" a woman.  He must have been good at it because there was always a stream of them coming and going. 

One day, when passing by his bedroom I noticed the handle of a substantial knife poking out from under his pillow.  Worried for our safety I asked him why he felt the need to keep a large knife on his bed.  He said it was for protection.  When asked, "protection from what?" he said, "from husbands."  You see Peter had a penchant for boinking Banff's married women.  Only married women.  He also said, with no shame whatsoever, that he made sure to lie next to the wall so he'd be behind the woman he was bedding in case an enraged husband burst in with a gun—he believed her body would stop any bullets directed his way.  When I told Mary Liz this, she looked at me with that look and said, "We leaving. Now." 

We didn't see much of Peter after that.  He never did get shot or have to stab anyone, and about six months later he, and his knife, went to Whistler.  He had simply run out of unboinked married women and went off in search of a new crop.  Fortunately, he gave us his apartment, which, for our visitors, was the easiest to find in town—we told them simply ask a woman wearing a wedding ring. 

Is the future of advertising all in your head... or a bit lower?

According to Marketing Magazine—my go-to source for trivia and 26 pages of Fall TV previews—the boomers are the segment to go after not the young people.  The piece quotes Michael Smith from Nielson Neurofocus who says that big brainy brain neuroscience guys studying whole bunch of pictures and graphs with squiggly lines from electroencephalograms are learning the way consumers respond to things. And, (better sit down) they've discovered that "older brains respond to things differently than younger brains." Smith says that as people get older the brain changes, sometimes caused by disease or degeneration and "There are differences in the ease with which the brain can recall words and memories.  There are changes in the way the brain responds to emotionally loaded information."

Good Heavens, Captain Obvious, what are we supposed to do and how are you planning to cash in on this? Well…

“It is becoming more and more important to understand how best to target that demographic,” he says. That could mean surveys, market research and focus groups to try and figure them out. But if you really want to know what they think, don’t ask them. Read their mind. That’s just basic neuromarketing.

There are some obvious steps – think, repetition in ads – for advertisers to make their ads more resonant, says Smith. But marketers need to think about the implications for an older marketplace at a more basic level – like product names. Many new products or online-based services want to come up with names that are unique to stand out online. “But that often results in names that have odd spellings or that may be hard

Much advertising follows the time-tested format of presenting a problem and then offering a solution with the product. The flaw in that format, says Smith, is that the problem is often presented in a very emotional way and, simply put, older brains don’t react the same way to those messages. “They are less easily frightened or less easily prone to be worried about negative information,” he says. “As a result they pay less attention to that sort of thing and you are less likely to hook them…Where as they respond relatively well to positive information.”

In a nutshell: to succeed, say your message often as Boomers tend to forget (because they might have brain damage); don't get to clever with brand names as Boomers get confused with all this hipster talk (brain damage, again) and; don't try emotional messaging or negative stuff because Boomers have no real feelings (possibly caused by brain damage) and aren't affected by guilt, so keep it bright and sunny

Neuroscience is the latest in a long line of pseudosciences that consumes marketers every few years.  My favourite was subliminal advertising.  You remember, the one that said advertisers were putting subliminal pictures of tits and dicks in ice cubes to make consumers unconsciously buy Pavlov's Vodka so they can get laid more often. Unfortunately, this epic example of academic phrenology has the persistence of antibiotic-resistant clap because it flares up occasionally to infect those unprotected from rational thought.

For the sake of argument, say in 20 years time Michael Smith and his neuroscience experts find the combination of brain chemicals and wiring that explains how consumers react to advertising.  This may help us target people better or make us more relevant, but it will never explain why it does.  It will never explain why art and music affect us, or why certain words or images can fill our heart with sadness or make us laugh out loud.  It will never explain why true love can happen when two people lock eyes for the first time. 

The how isn't important. No, it is the why that makes us human. And knowing the why can only come from understanding the human heart.  Good luck with that.

Are big brands wasting money on SEM?

If you have ever Googled Ford, Amazon, or Rogers (try it) you'll see two listings at the top of the page—the top one is a paid ad the other is organic (free).  Now, try it with eBay. Spot the difference? There is just one listing at the top, the organic one.

Why the difference and what does EBay know that other big brands don't? 

In 2012, eBay wanted to know if there was any benefit to paid search ads that contain the word "eBay," i.e. branded keyword ads.  So, it stopped buying these ads on Bing and Yahoo, while keeping them on Google.  The result?  No difference in sales from Bing and Yahoo compared to Google.  Customers simply clicked on the organic link in the absence of the ad.

The company then wanted to see how effective non-branded keyword search ads would be.  In this case, it chose "used les paul guitar."  Conventional wisdom told it that without a targeted ad a guitar reseller, like Chuck's Used Guitar Barn, would appear ahead of eBay.  So, it shut off all Google search ads in one-third of the US while keeping them in the remainder to see what would happen.  The result?  In the cut off region, people who had used eBay before and were looking for a used guitar found their way there either through the free listing or eBay's site.  And, in places where the paid ads were still in running, this same category of customers clicked on the paid ad—eBay had to pay Google for existing customers who were already on their way to eBay to buy a used guitar.  The only bump it got was a slight increase in users with little or no history with eBay; they were potential customers looking for information. 

This is not to say all paid search ads are worthless.  They have a practical use for smaller companies with no brand recognition or without a high Google page ranking.  They are a way to inform new customers about their services.  They may also be more profitable for smaller companies breaking into a new, local market.  The challenge for the big brands is the need to determine, despite what the experts say, what, if any, benefit do paid search ads (branded and non-branded) provide?  Are they worth the expense? It was clear to eBay that people found their way to its site either way without a drop in sales and that its was wasting money attracting existing, converted, customers with its ads.  So it stopped buying and saved millions.

You can read about it here. 

Incoming!

  

           

WARC published a release from the Fournaise Marketing Group in the UK that CEOs are suspicious of creativity.  That got my attention.  So off I went to the Fournaise Group to get the skinny on this creativity thing, and it turns out it these guys aren't fooling around:

1) 76% of CEOs feel Ad & Media Agencies are not business-pragmatic enough, are too inward-looking, talk too much about “creativity as the saviour” without really being able to unquestionably prove or quantify it, and are often too opportunistic.

Indeed these CEOs view agencies as often being too quick to claim credit for business results that they were not able to unquestionably prove came directly from what they created (such as attributing year-on-year sales growth to their creative/media activities when in fact growth came from product, sales force, channel, pricing and/or operation factors);

2) 74% of CEOs think Ad & Media Agencies are too disconnected from the short- and medium-term business realities: they keep on talking about “giving time to creativity to see the impact” and fail to truly understand the type of Shareholder/Board pressures the Management is facing;

3) CEOs admitted they initially assumed (at the start of their Management careers) that Ad & Media Agencies were the ultimate specialists when it comes to understanding customers and target audience’s behaviours, and to knowing how to best engage with them: however, 72% of these CEOs admitted they soon realised Ad & Media Agencies were not as data- and science-driven as they had expected, relied too much on gut-feelings, hearsay, wrong methodologies and questionable information – greatly reducing the trust these CEOs have in these agencies;

4) 70% of CEOs feel Ad & Media Agencies too often hide behind technicalities such as not having enough budget or not being paid fast enough as a way to justify their inability to deliver the (real and P&L-quantifiable) business results expected of them.

Now, to show that they aren't all cold-hearted bastards, CEOs said they were willing to kiss and make up if agencies agree to the "Payment-by-Result (PRM) Model—naturally forcing them to cut the fluff and to become the business and demand generator partners CEOs expect them in the first place."

My first reaction to this peace offering is that this is a shot across the bow of the HMS Social Media.  All the points the CEOs make seem aimed at the fuzziness of Social Media accountability. Yeah, sure, there are a few companies that have a large presence on Facebook but these examples need some perspective.  Let's look at Coke's Facebook page. As of this writing, it has 69,331,714 likes and 875,499 people taking about it, whatever that means. Coke, however, sells 1,700,000,000 servings EACH DAY, which is several of orders of magnitude larger than the 69,331,714 likes it accumulated since the page went live in 2009.

Up Periscope

Now, let's get down to customer level.  Using a "simple" method, the average Coke drinker buys (in the UK at least—US figures are nearly similar but measured differently) 12 servings a year.  But as Byron Sharpe (buy his book, damn it!) points out, this figure is skewed towards the miniscule group that buys it three or more times A DAY, and that the average buyer is nowhere near that amount. In fact, the "typical" Coke customer (~50% of total customers) actually buys between one and two servings PER YEAR. That's it. With so many customers buying so little product per year, it makes one wonder would it not make more sense to get those who typically buy one to three per year to, perhaps, buy one or two more?  Still, Coke's FB presence is pretty benign and gives fan boys an outlet but it still pours much more into traditional channels than Social.  Perhaps Coke learned that lesson from Pepsi, which went full-on stupid with Social and lost about 5% market share, or $350 million, in 2010.  Their slide continues to this day.

To be fair to some of the Social Media folks, I have to wonder what exactly CEOs expect their advertising to achieve and are those expectations realistic.  If they are hoping to get an immediate bump in sales when advertising an established brand into a mature channel chock-a-block with competition, without any earth-shattering change in the product's features or its price, they will be disappointed.  Part of the reason is because they base their ads and campaigns around tired and meaningless USPs.  Saying their product is different and does X might have worked when the product was first in category but that won't cut it anymore because their competitors have caught up—and are likely using a version of that USP—and any differentiation is purely subjective.

CEOs need to recognize that, if they have nothing "new" to sell, they need to focus on the product's distinctiveness, if any, and build brand salience.  They need to find and exploit what makes sets their product apart, what makes it stand out on the shelf and be easily recognized in those fleeting seconds of the consumer's decision-making process.  And that takes time with not much return in the short run.  It must also be consistant and on bran.  This is where Social Media can be added to the mix.

Or maybe the CEOs need to stop thinking agencies can solve all their business problems and let them focus on creative.  They should also leave the task of business-building to those who are supposed to do it—themselves. 

Last Word

Anyway, the only area online that is getting results is email.  Wired reported last week "Email is crushing Twitter, Facebook for selling stuff online."  Their graph makes it quite clear:

I find it funny that the red-headed step child of advertising, Direct Marketing, leads the way in generating and maintaining online sales.  And I won't say I told you so because that would be gloating…