A marketing tsunami with no relief in sight
Predictions of a collapse in the traditional advertising model have stirred up vigorous debate in the industry, as Simon van Wyk writes.
In international advertising circles, the waves are just starting to subside after a big stone thrown in the pond by Advertising Age columnist Bob Garfield. In April, Garfield published a 5,100-word thesis on the coming crisis in marketing, brought on by the rise of the new media.
He points to a number of warning signs of the crisis, such as:
- A decline in network TV audiences in the US by an average of 2% per year over the past decade (while the population has grown by 30 million)
- An increase in the cost of reaching 1,000 households through prime time TV from US$7.64 in 1994 to $19.85 in 2004
- A shrinking of the ratio of time spent watching TV vs. using the Internet from >8:1 in 2000 to <4:1 in 2005
- An increase in broadband penetration from 8% in March 2000 to 56% in March 2005 (similar growth rates have occurred in Australia)
- The ‘real cost’ of obtaining 30 seconds of a consumer’s attention is the same in 2005 as it was before the invention of television
Garfield’s article paints a contradictory picture, which offers, on the one hand, the promise of new marketing opportunities, but on the other, the reality that while a big change is on the way, no one is ready for it.
He writes, “It’s a brave and exciting world that the near future holds, a democratised, consumer-empowered, bottom-up, pull-not-push, lean forward and lean back universe that will improve the quantity and quality of entertainment options, create hitherto unimaginable marketing opportunities and efficiencies and, not incidentally, generate wealth that will make the current US$250 billion domestic ad market seem like pin money.
“Alas, the future“ - near or not - “ doesn’t happen till later”. There is nothing especially orderly about media’s New World Order. At the moment, it is a collection of technologies and ideas and vacant-lot bandwidth, a digital playground for visionaries and nerds.”
Garfield says that the advertising industry’s current response is to hold tight to the status quo in the face of all the evidence. Despite the decline in TV viewing, network TV spending in the US went up in 2004 by 10.7%, which Garfield explains by saying, “Network TV audiences remain coveted because - shrinking though they are - they represent the last vestige of mass media and marketing.”
The problem is that there is no marketing model ready to replace the current one when it becomes obsolete. According to Garfield, even if all the technology were in place for the new media to take the place of the old, clients, agencies and media companies aren’t ready for the change.
The result, as the old systems are abandoned and the insufficient new systems struggle to carry an impossible advertising load, is what Garfield calls “The Chaos Scenario” - “a period of serious disruption moving like a tsunami through the marketing business as well as the economy and the broader society itself.”
Garfield predicts that before we get to the New World order we will have to go through what he calls ˜Yugoslavia’. “Yugoslavia used to be a country, ruled by an authoritarian criminal. Then it began to fragment”. The unshakeable Slobodan Milosevic, who had fomented four wars in the name of Greater Serbia, was overthrown. Democracy! Empowered individuals! A new model! And five years later, unemployment is 32%. The average monthly income is US$336. The prime minister was assassinated by organised criminals and the country’s most notorious war-crimes suspect is at large.”
He quotes Drazen Pantic, who was a freedom fighter in Belgrade and now runs a blog on new media, who says, “There is no way to make the transition into anything that is different or new or whatever without chaos”. You need to replace people who have ties to the old regime. Likewise, the new paradigm is not going to be established overnight. There are too many obstacles.”
Garfield is not all doom and gloom. He predicts that “what emerges from the ruins will be superior in every way to what it replaced. Better for marketers, better for the economy and especially better for George Jetson (the consumer of the future), who won’t have a robot maid but very likely will have a million-channel universe.”
He quotes media pundit Rishad Tobaccowala, who says, “Those who come to destroy TV are those who are eventually going to save it.”
Garfield concludes: “And the world will rejoice, happily awash in electrons. But before the liberte, fraternite and egalite, beware. This is revolution, and first we will be awash in the blood of the old guard.”
The backwash
Not surprisingly, Garfield’s article created a wave (if not a tsunami) of its own. AdAge ran a poll on its website asking if readers agreed with him and perhaps surprisingly, more than two-thirds of readers said yes. Keep in mind that the core audience of AdAge has a vested interest in keeping things the way they are, and is weighted heavily in favour of people whose preferred marketing medium is TV.
The publication also received more than 100 letters to the editor, with feedback such as:
- “Viewership of single programs may decline, but advertisers do not care about viewership over time; they care about persuasion per dollar spent.”
- “Digital media is ubiquitous. It’s uniquely available, surprisingly affordable, highly engaging and incredibly compelling to its burgeoning market. And it will be hugely destructive to any marketer who doesn’t treat it with respect.”
- “I disagree that the effect of new technology will be like a tsunami. It will be more like Chinese water torture - but at a gradually accelerating rate.”
- “The ‘old’ media aren’t going to disappear; all that is happening is that their relative importance is being shifted (When did a medium last disappear? The panels on sedan chairs?)”
- “The scary part is how advertising pretends to evolve with knowledge of multiple media, but can’t step forward and discover how best to reach a consumer.”
- “I think the medium’s survival depends on creative that captures the mindset of the market more than what is delivered by the content it advertised. What if our work was so good that folks TiVo-ed through that content to get to the commercials?”
- “The deeper problem can be traced to the chasm that has opened between the marketing theory taught in business schools and the practical realities of those who create the communications. Few business students are taught that aesthetics and the ability to tell a story are relevant to the practice of running a business.”
- “Garfield misses the undercurrent of measurable marketing communications that are already and will increasingly gobble up advertising share in huge chunks as his scenario plays out.”
- Mr. Garfield, the sky is not falling - “It just has a few transient wispy clouds. We are innovative, properly greedy and economically driven. We will be fine.”
Commentators in the blogosphere have largely agreed with Garfield.
David Wolfe wrote in his Ageless Marketing blog: “Let those who cannot see the scale of change Bob Garfield sees step aside and make room for the visionaries who will show us how to adapt to the epochal challenges arising from these time when - almost everything you thought you knew is wrong.’
“In predicting a period of great chaos, Garfield could well be right, for we’ve arrived at what physicists call a bifurcation point as an old order fights for continuation against a new order whose emergence cannot be thwarted. Chaos attends the period prior to the new order’s ascendance.”
Hal O’Brien, writing in his Libertango blog, says that “what I think is really happening here isn’t that advertisers are getting fed up with television and other older media as such. They’re realising that advertising itself, in any medium, is a fool’s game.
“It just might be that we’re finally getting to the point where both everyday people and companies have come to the conclusion that their money is maybe best spent - well, on each other.”
Results of a research survey released at the annual convention of the American Research Foundation soon after Garfield’s article was published revealed that 56% of survey respondents avoid buying products that overwhelmed them with advertising, up slightly from 54% in 2004. And 69% said they were interested in ways to block, skip or opt out of being exposed to advertising, the same percentage as in the survey last year.
However, respondents did admit they valued advertising that they could choose to see “when it is most convenient”; when it was personally communicated “by friends and experts I trust”; when it was “customised to fit my specific needs and interests”; or provided useful information about competitive brands and products.
This survey confirms Garfield’s predictions for the challenging times ahead. Whether you agree with Garfield or not, he has created debate on a critical issue. The question is: will the debate lead to positive action?