Wednesday, January 9, 2008

Advertising is Dead

Ok, I finally know what “they” mean when they say that advertising is dead. It isn’t, of course – there will always be a need to inform and generate awareness, and to do it to a broad, rather than narrow, audience. But the idea of advertising as the dominant form of communication to customers is certainly dead. Those for whom it is their living may not know it yet, but it is.

I’m late to the game because I don’t really focus on consumer marketing or advertising – talk to me about retail, and retail technology. But I keep finding myself sucked into this realm, despite efforts to stay out of it – for two reasons.

First, as online commerce evolved, we saw that technology capabilities in the hands of consumers changed the way they shopped. It’s still changing the way they shop. And we’re only at the very smallest beginning of the learning curve. Ubiquitous WiFi, persistent mobile connections, home servers and networked homes, smaller and more powerful computers that you can carry around in your pocket, and more intuitive user interfaces to help you make the most of all this stuff show that technology penetration in daily life still has a long way to go.

We’re social creatures, and at least in the US, consummate consumers. Which means that as soon as a technology penetrates our lives, we’re going to go shopping with it. I really appreciate the irony of this. In 1994, I was still convincing my boss that we needed barcode scanners at our POS. She was convinced that it would ruin the “hands-on” experience that our staff provided – that it would equate our “boutique” image to a grocery store. Oh yeah, and it would require shelling out capital that was pretty hard to come by. Retailers are technology laggards, so it is the height of irony that they now find themselves on the forefront of consumer technology adoption.

So even though my focus is primarily on retail operations, these pesky consumers keep bringing technology into the equation – and I find myself at places like the Consumer Electronics Show, trying to stay enough ahead of the curve to see what consumers will be bringing to their shopping trip next year, so that I can figure out what this will mean to retailers trying to create a great customer experience.

Second, as part of my coverage of in-store technology, I started writing about digital signage – what I now call Retail Media Networks, thanks to Laura Davis-Taylor’s definition. In its first incarnation, it was all about bringing advertising into the store – dynamic advertising that could change by time of day or even depending on where the screen is in the store. This dumped me – all unwilling, believe me – into the world of advertising. Media buyers, advertising agencies, producers, content creators of all kinds… A world I don’t understand and don’t really want to. I like retail – I like writing about shopping. Heck, I like shopping! When I first started writing about CPM’s, I had to look up what it meant.

But when I started going to advertising-heavy conferences that focused on in-store, I got scared, because they were talking about in-store advertising for the first time ever, but they didn’t get it – many still don’t. The store is different. It’s not a home, it’s not a billboard, it’s not the internet, and it’s not even like a mobile phone. It’s different and you have to treat it differently. I remember, I was at a conference last year where a guy from an advertising agency asked plaintively, “How do we get retailers to standardize on a rate card [for in-store advertising]?” Uh, I hate to tell you this, but… Never! Are you kidding me? Retailers don’t even want to share the kind of information that goes into a rate card, like demographics, like dwell time, with their suppliers – people who they are ultimately dependent on to sell stuff – let alone to media-types, and most especially NOT to other retailers.

But I digress. The point is, like it or not, in order to stay on top of the impact of technology on retail, I have to keep a finger on the pulse of both the future of consumer electronics, and the future of advertising. From what I’ve seen at CES, here’s what my humble little take is – from an outsider, late to the game, but nonetheless.

It used to be that advertising was the king of the hill. And for a lot of people it still is. But I think we will see – possibly even before the end of this decade – a switch. When advertising was on top, there was beneath it a little exotic bunch who specialized in “immersion” – building holistic experiences around brand messages. They were the weirdoes who staged guerilla marketing campaigns, who built up campaigns slowly over time, building to a crescendo of hype and awareness – and most importantly, ENGAGEMENT. But they were stepchildren in advertising. Kinda cool, but not sexy, like TV advertising.

Those Immersive people are going to have their day. Out of necessity, they will have to become the king of the hill, with advertising only playing a role in an immersive experience. Why do I say this? Look at the role of marketing in the store. It used to be at best, shelf talkers and maybe in-store demos. At worst, it was basically coupons that you hoped consumers brought into the store. You priced those coupons with the understanding that the redemption rate of those coupons would be low. So you could afford to plaster newspapers with 50-cent off offers, knowing that say, 2% of the people who got them would actually go to the trouble of cutting them out and bringing them into the store. But technology has changed this paradigm. Instead of plastering the world with coupons, you offer a select few people – the ones you know who actually want the offer – a select few offers, and you get 75%+ redemption rates, along with some tidbits of information about who these people actually are, so that you can keep providing them with relevant offers and learn from them in ways that will help your brand.

Because technology enables consumer access to so many new avenues of information, and because of the fragmentation of audience that this creates, you have to get more targeted. And if you’re more targeted, you have to be very consistent in your communication to that audience because these are your most valuable customers – if you screw it up, it will hurt you a LOT more than if you screw up a coupon offer that only 2% of the audience redeems. How do you avoid screwing up? You build immersive experiences. You might use a TV ad to find the people that you want, but between web, phone, store, print, you build an experience that draws people deeper into a relationship with you, providing a conversation that yields so much more than just a bump in sales.

And when advertising people, who barely understand what the store experience is about as it is, are speaking with enthusiasm about the coming “integration” that will be created when we add mobile phones to the in-store mix, then I know that advertising’s reign is over. And at a panel session I attended at CES on in-store advertising, that is EXACTLY what they did. Advertising is dead, long live immersion!

2 comments:

James said...

Hi Nikki -
As usual, your perceptions are on target. Laura and I have discussed this exact issue in some depth and she is one of the handful who see it clearly.

Following the digital signage world closely as I do, I find myself on the verge of shouting sometimes: "Don't let the glowing screen fool you - This is NOT TV."

The agency establishment (and the media measurement interests) are desperately trying to adapt the mass media model to the retail store - overlooking, of course, the fundamental fact that retail stores are not mass media.

I can go on and on - but you probably know that already. Point is, you're on target here, and I want your audience to know that I couldn't agree more.

Tamar Belkin said...

Nikki,

I agree with you that the world is moving away from traditional mass media advertising models and towards the consumer experience --> conversation --> relationship cycle. The only question is how quickly this will happen. Consumers are way ahead of the curve on this and it will take retailers quite a while to catch up to them.

As you mentioned, they're typically technology laggards and, with a few exceptions, that's not going to change as quickly as consumer tech is changing. Even though there are some signs which show that retailers are responsive to new ad models - more targeted, personalized, consumer-controlled, user-generated, online-type ones.

Having said that, we should keep in mind that traditional print-based advertising methods such as newspaper inserts and coupons are still going to be with us for quite a while, as recent studies have shown that they're still the most influential media in certain situations.

Are you planning to be at the Retail Advertising Conference next week? I'm hoping this issue will be widely discussed there.

By the way, our Retail Advertising, Marketing and Promotions blog is at www.retailamp.com.