Monday, August 09, 2010

The commoditisation of advertising and the rise of social media

How the dynamics of media economics was turned on its head and how thinking and planning must become the most valuable assets in marketing communications.

The world of marketing communications has dramatically changed in the past few years. You will be familiar with the statistics that are frequently exercised to demonstrate the rise of social media. If Facebook accounts were national population then it would be the third most populous on the planet – succumbing only to China and India. More than 500 Billion minutes are spent viewing Facebook pages every month. I don’t even want to think about the implication that has for the world’s productivity…YouTube has 24 hours of new video every minute.

There is no doubt about the gravity of social media as an influential force in the world. As a subset of the world – that means it influences marketing and marketing communications.

There has been decline in ‘legacy media’. But that decline is less interesting than the rise of social on the business radar.

But here is the nub of the problem. The economics of contemporary media are somewhat different to the economics of post World War 2 mass media.

Rewind: Before 1984 (in NZ) advertising agencies derived most of their income from media commissions. Owners of the media appointed agents to sell time and space (hence advertising agency) to marketers on their behalf. Agencies were ‘accredited’ by the media. This was the equivalent of a license to print money.

If an advertising agency’s client spent a million dollars under the system of accreditation (pre 1984) they received $150,000 for booking the media and a further $50,000 for ‘prompt payment’. Given the terms of accreditation prompt payment was assured.

So, aside from the difficult business of coming up with ideas with which to fill the time and space, making money in advertising was a doddle.

Here’s the other twist: Advertising agencies would relinquish their golden goose if they rebated any of the commission to their clients. They had to keep the cash.

The problem arose when the business was deregulated in ’84 – a curiously out-of-character move by the Muldoon government which had a propensity toward central control and status quo.

From there on marketers (AKA clients) were able to negotiate terms with the agency. A client that spent millions in media could now argue that a week of media planning and buying for a year campaign was worth three percent and not 20 percent of the budget.

Where creative work had been underwritten by media spend it was now something of an orphan. Clients had been spoiled by the fact that creative was thrown in at the cost of an hour but the thinking behind execution was subsidised by the commission and could not be recovered. Planning and house cleaning suddenly had exactly the same monetary value.

While execution could be valued the thinking behind it could not.

And then…along comes no-cost media.

Media buying and selling is a low value service.

Coming up with headlines and pretty pictures is a low value service.

Creating innovative business ideas and communicating them well at the lowest possible cost is a high value service.

The future of marketing communications doesn’t depend on the skill in tweeting or setting up a Facebook fan page.

Marketing needs big ideas that differentiate you from your competition. It relies on people feeling they are part of something bigger than themselves alone – without  simply becoming part of the herd.

Monday, August 02, 2010

Food Fight!

The recent release of the new standards relating to advertising food to children has led to a flurry of praise from stakeholders in the food industry who have a burning desire to be seen as responsible – processed food manufacturers like McDonalds and the advertising agencies that present their stories to the populace.

On the other side of the debate are ginger groups who feel the new standards do not go far enough to address issues relating to the effect of advertising on the consumption behaviour of the hoi polloi. The aggressively named FOE (Fight (the) Obesity Epidemic), for example, say on their web-site: “The new Code, and the accompanying fanfare from the food and advertising industries, is all about ensuring no government regulation of advertising. Its aim is to protect what, from health and child protection perspectives, is a completely ineffective self-regulation process. It has nothing to do with protecting the health of our children.”

It is probably safe to say that both sides of the debate have ideological differences that will never be broached. Unfortunately they are often at crossed purposes.

It makes sense that the food industry does not want its customers to be unwell or die of dread diseases relating to diet.

It is equally fair to say that the anti ‘junk food’ advertising campaigners are reasonable people with genuine concerns – many of whom feel they are in a ‘David and Goliath’ duel where the foe is are massive multi-million dollar enterprises. Unfortunately they can seem a little hysterical as a result.

Consumers are the meat in the sandwich. Some families have limited budgets and are time-poor. The result is a reliance on convenience foods. These aren’t inherently bad, except when consumed too often or without inhibiting the quantity consumed at each sitting.

The cost of fresh foods is often higher than processed foods and can be stocked and stored for longer periods of time. Supermarkets often move high volumes of processed food at a very low profit margin – in the low single figures (sometimes called loss-leaders) . By comparison fresh produce can deliver storeowners profit margins as high as 40% or more.

For families who have little time to spend with children the idea of ‘treat’ food as an expression of love and devotion can’t be ignored. A mother whose child is in day-care while she works a full-time might well feel a desire to please her child or compensate with exaggerated ‘treats’.

I have to confess I have been guilty of this behaviour myself; sometimes packing a variety of foods for school lunches or asking what kind of snack bars my children wanted at the grocery store – and allowing dubious choices (those with cartoon characters or ludicrously garish packaging designs are usually the most toxic – and usually the inevitable choice of a child).

Having entered stage left I must make my own ideological point. The food choices I have made for my children have always been my choices. In spite of the fact that I ‘know better’, I have bowed to convenience and pleasing behaviour myself.

I don’t blame television advertising for those choices and I think any parent who does is copping out. That said, both of my kids are as skinny as beanpoles. My daughter, in particular, has little interest in crappy foods and eats in moderation. My son burns as many calories as he consumes through a busy regimen of activity. I’ve never subscribed to a ‘clean plate’ viewpoint about meals – when you are satisfied, stop.

If enough of us want better diets for our children then it is we as parents and consumers to choose that happier alternative.

If the price of fresh food is too high – demand that the manager of your supermarket take note of your concerns. Shop around, start a blog, form a group…take action.

It is too easy to sit back and rely on vested interest groups to duke it out, ostensibly on our behalf, while we feign helplessness.

Likewise it is not the role of central government to regulate what we feed our kids (especially when the parliament has its own ideological divisions). I am not sure I am interested in the opinions of Gerry Brownlee (Nats), Parekura Horomea (Lab) or Russel Norman (Green) when it comes to the nation’s diet.

The new advertising standards seem silly to me in places. There are snags in them that make the creation of messages to promote food and drink absurd (rather like Coca-Cola’s claim to create happiness…when there is nothing in any data to suggest it has that magical capacity).  Beware existential pap that implies a mood or positive association with the brand that has no substance.

Functional messages about better food choices will be subject to the same fetters as those for highly occasional foods – like KFC or Oreo cookies. Vocal members of the public will, undoubtedly, snipe at them in spite of the best intentions of the advertiser – especially if the axe they grind is intended to chop all advertising of food that children might eat from the screen.

In effect the new standards must apply to all foods advertised if children are likely to be exposed to the message. According to the law firm AJ Park: “The Code applies to all advertising that influences children.  This is a subtle change from the previous code, which regulated advertising to children.  While not a major change, it’s now clear you need to think about the impact your ad could have on children regardless of whether they are the target audience or not.”

I couldn’t help but laugh when I read that some of the Code was informed by a desire to comply with the United Nations Convention on the Rights of the Child.
I assume that is same United Nations that sanctioned the illegal occupations of Iraq and Afghanistan that has resulted in the indiscriminate slaughter of hundreds – if not thousands of children?

We have odd priorities and sometimes even odder responses to problems in New Zealand.

Affiliate Links

Advertising to Children (Essential Viewpoints)
Advertising to Children on TV: Content, Impact, and Regulation
The Omnivore's Dilemma: A Natural History of Four Meals
Food Rules: An Eater's Manual