Beyond Branding: The Future of Advertising (1995)
Charting the future of public relations
Holmes Report

Beyond Branding: The Future of Advertising (1995)

Two-thirds of the consuming public believe there’s little or no difference between most products in most categories. Only six per cent of people find advertising credible. Is this a great time to be in the ad business, or what?

Paul Holmes

Ground Zero, one of the hottest ad agencies on the west coast - its client list includes divisions of Disney and Virgin, L.A. Gear and Porsche - crystallizes this idea by talking about its search for the “soul” of a brand, a strategy that led it to focus its campaign for Disney’s Buena Vista home video unit not on the company’s cartoon characters or animation expertise but on the ability of a mother to make a meaningful impression on her child in its formative years.
“We want to discover the soul, the essence of a brand and let it permeate everything a client does,” says agency principal Kirk Souder. “That doesn’t mean you do X number of print ads and X number of TV spots. We want to break away from tradition and formulas for the freshest approach. That may mean outdoor advertising or a sales video.”
Even some of Rothenberg’s subjects echo this view: “We believe the key to selling product is emotional,” says David Altschiller, of Altschiller/Reitzfeld/Tracy Locke, in Where the Suckers Moon. “We work very hard to find what a product is all about, what makes it relevant. Essentially, we find that if we can make that link, we’ll make a sale.”
The Coalition for Brand Equity has collected and reviewed more than 800 studies on how to build, nurture, defend and develop strong brands. Among its most important findings is the fact that it costs four to six times as much to win a new customer as it does to retain an old customer. Building brand loyalty, clearly, can help a company to slash its marketing costs.
Not only that, but loyal users don’t wait for sales, or deals. They buy products when they want them. And when there are sales, they don’t use those sales to cut costs but to buy more product. More than that, over the years a brand loyalist can become a brand advocate.
“You’re at a restaurant with four friends and the waiter asks everyone in the group what they’d like to drink,” says Mullen, to illustrate the point. “The first asks for a Scotch, naming a broad category and indicating that he’d be willing to accept any scotch the bar was serving. Your second friend is a little more precise. He asks for a single malt, refining his choice to a specific set within the larger category.
“The next knows exactly what he wants, and says it proudly: ‘I’d like that new J&B brand, JET.’ Unfortunately the waiter shakes his head and says, ‘We haven’t got JET, sir, will Johnnie Walker Black suffice?’ Your friend says it will. This marks him as a brand ally, one who asks for a product by name. Brand allies are good customers to have, but not the best. Your fourth friend is the man we all want to own. ‘What, no JET?’ he says, pounding his first on the table. ‘In that case, just bring me a Perrier.’”
If brands and customer loyalty are important, Mullen says, then advertising is important, because advertising - good advertising, at least - remains the most effective way of building brands and reinforcing loyalty. Promotions, conversely, encourage disloyalty and erode brands, they sacrifice the meaning of the product for a transient sales spike; they give up long-term share of mind in exchange for short-term share of shelf space.
Brand reputations, however, are built on more than advertising. Says Ogilvy’s Kelly O’Dea: “Brands are defined by the consumer’s total experience with that brand, and that includes all forms of communication.” Logically, then, agencies need to understand all of the communications disciplines that may influence reputation, not just advertising.
Richard Fizdale, ceo of Leo Burnett in Chicago, observed three years ago that agencies had been locked out of the client planning process, and that the way to make themselves relevant to that process was to demonstrate their mastery of disparate forms of communications, and of the communications process itself, rather than a single product of that process.
Last year, Chiat/Day chairman Jay Chiat initiated what he called “Project Chrysalis” to figure out what the agency of the future should look like. One of the conclusions the agency came to was that as technology eroded or eliminated product differences, corporate images and corporate branding will become more important, and consumers will make more and more purchases on the basis of a firm’s role in society: how it relates to employees, communities and shareholders as well as the way it sells its products.
“Global brands are going to be judged on the basis of how companies live in the world,” says agency president Lee Clow. “The choices that consumers make will have much more to do with how they feel about Nissan or Sony or Nike or Microsoft, and what they have come to expect from these companies. It will be much more about the total reputation of that company, not only its advertising but how it is covered in the press.”
Under such circumstances, Clow believes that agencies like Chiat/Day have two things to offer clients. The first is research. The second is the ability to coordinate advertising, public relations and other communications disciplines in a synchronized manner. There may be questions about the credibility of ad agencies in both of these areas, however.
As the industry went into decline, advertising agencies largely surrendered their role as intelligence gatherers and suppliers. (Whether this was cause or effect is unclear.) There was a time when agencies, with their sophisticated research capabilities, knew more about their clients’ customers than the clients themselves. But at the same time as supermarket checkout scanning and direct response campaigns were providing clients with increasingly detailed information, ad agencies were cutting back on research, which were suddenly viewed as a cost-center as agencies struggled to pay down debt, focusing on the creative product.
Today, agency research is being reinvented in accordance with the “account planning” model that originated in the United Kingdom in the mid-’80s, which involves less quantitative information and a greater emphasis on getting close to the consumer, understanding how he or she relates to the company or the product, and through that understanding arriving at the “soul” of a brand.
Says Clow: “I think the value we can add is in being really tuned in to what the consumer is thinking and feeling. It’s a much less linear approach to research than most companies have taken.”
Young & Rubicam is another agency that shares Chiat/Day’s belief in the importance of research. Vice chairman Joe di Deo talks about a massive worldwide study of brands the agency has conducted recently, called the Brand Asset Evaluator. He says Y&R hopes again to become a source of cutting-edge intelligence for its clients.
“Originally advertising agencies were a repository for an enormous amount of proprietary information about brands and consumers,” he says. “That has eroded over time. We have to become that again.”
As for the ability to offer a full array of communications services, almost everyone concedes that the advertising industry’s earlier efforts to become “full-service providers” in the past were not especially successful. Some believe those agencies that tried it - buying up PR firms, sales promotion houses, direct marketers and corporate identity specialists and then bundling them together - were simply ahead of their time; others believe their approach was wrong.
Fortune magazine assessed the failure of agencies to sell integrated marketing: “The ancillary services, the so-called below-the-line services, were treated with disdain by the agency’s creative hotshots, who preferred making sexy TV commercials that won international awards to designing coupons and posters.”
O&M was one of the first agencies to talk about the management of a brand’s communications across the whole marketing mix, calling the concept orchestration. Says Kelly O’Dea: “A lot of clients thought this was the agency’s way of selling them more services as opposed to supplying more complete support for their brands. Today, clients are coming to us and demanding that we change, that we offer more than we have in the past.”
In January last year, Ogilvy & Mather launched 15 special units to work with its largest clients, each headed by an account supervisor and incorporating executives from several marketing disciplines, including advertising, direct marketing, sales promotion and public relations. The approach is designed to make clients feel as though they are working with a small, boutique type agency.
“One of the challenges we face is helping people understand the need to be sensitive across the whole mix of communications, and not just their own discipline,” says O’Dea. “One of the reasons this has not taken off is the way that agencies are organized, with autonomous departments and little collaboration between them.”
One of the clients for whom the approach is working, O’Dea says, is Jaguar, which the agency added to its roster two years ago. From the outset, the Jaguar account team has included representatives from the ad agency, from Ogilvy Direct and on occasion the public relations people at Ogilvy Adams & Rinehart. O’Dea believes Jaguar has received better advice on the best way to allocate its budget and a better coordinated presentation of its brand in the marketplace.
Young & Rubicam, meanwhile, points to its work for Xerox. The giant document company worked with Y&R’s corporate identity affiliate Landor Associates to come up with its new logo, while Y&R handled the advertising that unveiled the new image and Burson-Marsteller, another sister company, was brought in to handle public relations. An account such as that is headed by a worldwide account director who is responsible for delivering all the resources of Young & Rubicam, Inc.
Few agencies have embraced the integrated marketing communications ideal as fully or as fast as Price/McNabb, however. Based in Charlotte and headed by Thomas Eppes, whose experience spans both advertising and corporate public relations, the $45 million agency has been hailed by Stan Tannenbaum of Northwestern University and Bob Lauterborn of the University of North Carolina, two of the authors of the definitive textbook on IMC, as the first agency to organize itself completely around the principles they preach.
“Price/McNabb has taken IMC to heart as no other agency I’ve come across,” says Lauterborn. “They looked at their company from a zero base and reorganized themselves around IMC principles. They are delivering real-time programs that follow the concepts outlined in our book. We think they’re setting a standard for other agencies to follow.”
The most remarkable change Eppes has made is to abandon the agency’s reliance on the traditional commission-based billing system and switched most account billing to a project or hourly basis. This accomplishes two important tasks. The first is to ensure that clients know they are paying for the agency’s thinking. The second is that it removes the temptation to steer every client towards advertising solutions just to boost revenues.
There’s also a strong reliance on research, a process Eppes says usually takes a couple of months. “The whole point of this process is that it starts with the customer,” he says. You are trying to build a relationship with a customer that will last over a period of time, and so the first thing you have to do is listen to what the customer is saying. It’s a very outside in perspective. Most agencies start inside out, with the fact that they sell advertising, and they try to find a way to show that advertising to the consumer.
“The fact is that most clients are not looking for advertising, or public relations, they are looking for solutions to their problems. Ad agencies have always been forced to come to the conclusion that the solution is advertising, but that’s not always the case. Sometimes the solution is PR or direct mail. Sometimes the solution isn’t even communications, it’s a change in the product, or in the way the company conducts itself in the community. Those are the kinds of things you are free to find out and point out once you break out of the traditional way of doing things.”
In fact, what Eppes is talking about is not only integrated marketing, which focuses almost exclusively on the consumer, but total communications, which includes messages targeted at employees, shareholders and local communities, audiences which overlap and interlock in ways that agencies such as Price/McNabb and Chiat Day are only just beginning to understand.
Agencies are beginning to recognize that their role can be not only to produce advertising for a brand, not only to become the manager of a brands reputation among consumers, but possibly to become consultants on a whole array of communications, brand and corporate, to a whole array of audiences.
“I think consumers, and other stakeholders, now want to know more about you than what you sell,” says Joe Plummer, head of strategic planning at DMB&B. “I think they demand to know more about you than what you sell. We need to be able to help manage a company’s equity in the marketplace, and manage that equity with all the stakeholder groups who are important to the company.”
Whether clients are ready to let agencies assume that degree of power is another question, however. In a recent survey by the American Association of Advertising Agencies (4As), 85% of clients said they don’t trust their agencies to coordinate their integrated marketing efforts.
If they are to assume such a role, ad agencies need to grapple with two additional issues. The first is the way in which technology is changing the way in which companies and consumers communicate, the second is the fact that advertising alone is ill-equipped to deliver what consumers crave most: credibility, trustworthiness, integrity.
As far as technology is concerned, the on-line advertising currently available on services such as Prodigy and America On-Line differs from conventional advertising in one key respect: it becomes visible only when the viewer requests it. This, in turn, has an influence on content: to make consumers want to access these ads, the information contained in them must be of value.
For this reason, the first companies to take advantage of on-line advertising opportunities have generally been those marketing products such as consumer electronics, financial services, cars and, of course, computers. Consumers like to collect considerable information about such products before making their purchasing decisions. So the ads contain pricing information, specifications, performance comparisons, quotes from reviews, and in some cases even the opportunity to ask questions.
Says Rishad Tobaccowala, a vp at Leo Burnett in Chicago: “This changes the definition of what is an ad. The information always has to be good, because people will take you up on it. Direct access removes the filter between the consumer and the company. You can get information when you want, from whom you want.”
Others, particularly public relations people, believe they are better equipped to provide this kind of information. They are used to compiling detailed fact kits on the companies and products they represent, they are comfortable with the challenge of packaging material for people who must make a conscious choice to read it, and they are trained to establish dialogue, not only to lay out facts but also to answer questions, often tough ones. These are disciplines that not all advertising people have learned.
For that reason, many of the early forays into interactive media have looked suspiciously like TV ads adapted to the computer screen.
“It’s very clear to us that once they get a new medium, consumers don’t want traditional messages or traditional message forms,” says Paul Alvarez, president of Ketchum Advertising, which is based in Pittsburgh. “They don’t want traditional 30 second commercials, and I think that’s where a lot of agencies are right now. They don’t know what the new form is going to look like and so they are going with what they know best.”
As far as credibility is concerned, most advertising agency executives deny that they have a problem. There has always been skepticism about advertising, they say. Advertising has always had its critics. And the responses people give to pollsters are similar to those they give about their Congressmen: sure, advertising as a whole sucks, but this particular ad is great.
“The great advertising, the advertising that consumers really respond to, has always been more dialogue than monologue,” argues Chiat/Day’s Lee Clow. “Great advertising must be based in dialogue because it has so much to do with constantly listening to consumers, having your finger on the pulse of where they are emotionally. The response you are looking for all the time is for the customer to say ‘How did they know that was what I was thinking?’”
On the subject of credibility, as on so many other subjects, O&M’s Kelly O’Dea turns to the words of his agency’s founder, David Ogilvy, who once famously opined that: “Nothing will destroy a bad product faster than great advertising.” To which O’Dea adds his own simple solution: “All we need to do is to maintain the truth in all our communications.”
And at Leo Burnett in Chicago, J. Thompson Ross dismisses the notion that advertising as a whole has lost credibility. Of course there is skepticism, but there has always been skepticism. It can be overcome by advertising that is credible, that speaks to the consumer.
“I continue to be amazed at the power of really good advertising,” Ross says. “We produced a spot for our client First Brands, which produces Glad Lock Zipper Bags, called ‘Angry Bees.’ We had to stop running that spot for a while to give the client time to build new production capacity, the product was moving so fast. I think advertising today has to be damn good to work, but when it is it is still extraordinarily effective.”
On the whole, the advertising industry appears to be getting its confidence back. Marketers have learned a lesson from their foray into price-based competition, that brands are worth a premium, and that brand reputation must be managed and nurtured constantly. And agencies are recognizing that managing brand equity gives them the opportunity to sell partnership rather than product.
Says Lee Clow of Chiat/Day: “Reputation management is a much more exciting challenge than simply producing advertising.”
Joe Plummer of DMB&B agrees. “As advertising agencies we have always been sitting down with the company at the brand manager level and selling a single product. But I believe there is an opportunity for us to become more like management consultants, to sit down with the chief executive and help him solve his problem, help him build the equity of the company and its brands with all his stakeholders. That’s a whole new level. We’re not ad guys any more, we’re strategic planners.”
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