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My $150 Billion Economic Stimulus Package

  |  February 1, 2006   |  Comments

More ads are not the answer.

In 2002, Turner Broadcasting exec Jamie Kellner stated ad-skipping consumers violate an implied contract and should expect to pay "as much as $250 per year" in additional fees if they want ad-free TV. More recently, Forrester Research estimated ad-free TV would boost monthly fees by about $40, about double Kellner's estimate but still in the same range.

On the other hand, it's estimated removing some portion of the $150 billion spent on advertising each year could reduce consumer costs by about $400 annually per household. See where I'm going here?

Add to this a 2004 Yankelovich study in which a substantial share of consumers equated the present intensity of interruptive advertising with a degraded quality of living. Apparently, people are at the saturation point, a term I hadn't thought much about since Chemistry 101.

What If?

What if marketers cut ad budgets by 50 percent and lowered the price of their products in return? Maybe we'd actually buy more! Wouldn't that $200 household savings be kind of like the check we all got from the government intended to stimulate the economy? This check would keep showing up, year after year. I could even use some of it to pay for programming I'm really interested in. No more of this contract-violation stuff; just a straight-forward $3 per episode, thank you very much. Kellner would be pleased.

Preposterous? Amazon.com did exactly this. Rather than spend money on ads, it offers consumers free shipping. As a results, the business grew. Maybe there's something to this: spend less on ads, lower prices, improve the experience, and boost sales.

If only it were that simple for everyone. Advertising really is an important marketing element. Our economy depends on the intended outcome: consumers buying products. Lots of products. So the question isn't, "Can we chuck the ads?" but rather, "How do we connect consumers and businesses in a way that respects the desires of both?" Clearly, more ads are not the answer.

E-marketing and word of mouth come to mind. Combined with core brand advertising, whether delivered as traditional interruptive media or on-demand via TiVo's showcase, e-marketing allows you to put your message directly in the hands of consumers interested in learning more about you.

Word of mouth goes further by placing consumers, be they business-to-consumer (B2C) or business-to-business (B2B), in control of not only the message delivery but the message itself. This invites the remixing that makes e-marketing in general, and word of mouth in particular, so powerful.

I'll bet more than one major brand declares one of the following as a core pillar in its 2006 marketing strategy:

  • A reduction in traditional mass interruptive media, which sadly includes most online media, and a corresponding lowering of consumer costs for noticeably better stuff

  • A leveraging of the resultant consumer's conversations, activated by participative campaigns, to drive the increase in purchases formerly pushed largely by ad frequency alone.

Cutting through clutter? Try nuclear weed-whacker. Amazon reduced its frequency to zero and gave consumers a specific benefit (free shipping) that perfectly addresses the number one objection to buying from it: shipping fees. According to Jeff Bezos, "More and more money will go into making a great customer experience, and less will go into shouting about the service. Word of mouth is becoming more powerful. If you offer a great service, people find out."

Your model may be more complex, and you may not be able to duplicate those results at the start. But ask around your office or agency: "If we could lower the cost of what we sell, and at the same time make it better, do you think our sales would go up, stay the same, or go down?" Choose the first answer, and you're off to the races. Choose the second, and maybe an experiment is needed. Choose the last answer, and you're either selling Prada handbags, whose high price is part of the allure and as close to perfection as a mere mortal is likely to encounter, or somewhere near you lies a vested interested in the current media model. Go back and ask the question again.

Ready to give it a go? Any of the following e-marketing techniques are available now and perfectly suited for those wanting to try something new. All will at least get you noticed for innovative marketing, so even if the campaign flops you'll get a nice PR bump or kudos from your boss. I've had worse days.

Advergames

Go beyond simply placing your message in the game landscape: build genuinely compelling games around your brand. Wild Tangent can help you with this. I worked with them to develop an advergame for a major consumer product's brand. The game worked and has been the subject of multiple case studies at ad:tech and other conferences.

Podcasts

I talked about marketer-generated versus ad-supported podcasts before. WOMMA used this technique to encourage people to attend its recent Basic Training conference. It, too, worked. Many attendees commented though they hadn't initially planned to go, after hearing the podcasts they ponied up $1,000 and jumped on planes bound for Orlando, FL.

Broadband Branded Entertainment

Twentieth Century Fox teamed up with Maven Networks to release full-screen, high-definition movie trailers and bonus content over the Internet. CTRs (define) for show-time information and ticket purchase was an amazing 24 percent along side a 26 percent CTR for the movie Web site. Sounds like a winner to me.

Educational Marketing

CNET worked with Powered to launch a series of technology classes: taking digital pictures, building game PCs, designing home theater systems, and similar fare. These online classes worked because the content was essentially neutral. Rather than boasting about themselves, the brands involved simply provided consumers with the background information to understand why products like theirs were good choices.

It's very similar to what Progressive does with its automobile insurance quote service. It presents itself along with competitors' quotes, helping consumers make informed choices. Informed choice plus satisfaction equals evangelical talk. What's the math for your brand?

Measure Your Results

The critical elements of your e-marketing and word-of-mouth campaigns should be measured. Firms such as Intelliseek, BuzzMetrics, and Cymfony are recognized experts. Tap them. Hook up with PlanetFeedback or Bazaarvoice to get a solid handle on what people are saying about you and how you can improve what you offer. Close the feedback loop; link operations, marketing, and product design at the hip; and don't look back.

In the end, Kellner's on to something. Instead of paying for a format that consumers are rejecting, put your money into building better products that cost less. Your customers will be happier, and with the money they save they can uphold their end of the deal by simply buying Kellner's content. After all, he's got to eat, too.

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ABOUT THE AUTHOR

Dave Evans

Dave is the VP of social strategy at Lithium. Based in Austin, Dave is also the author of best-selling "Social Media Marketing: An Hour a Day," as well as "Social Media Marketing: The Next Generation of Business Engagement." Dave is a regular columnist for ClickZ, a frequent keynoter, and leads social technology and measurement workshops with the American Marketing Association as well as Social Media Executive Seminars, a C-level business training provider.

Dave has worked in social technology consulting and development around the world: with India's Publicis|2020media and its clients including the Bengaluru International Airport, Intel, Dell, United Brands, and Pepsico and with Austin's FG SQUARED and GSD&M| IdeaCity and clients including PGi, Southwest Airlines, AARP, Wal-Mart, and the PGA TOUR. Dave serves on the advisory boards for social technology startups including Palo Alto-based Friend2Friend and Mountain View-based Netbase and iGoals.

Prior, Dave was a co-founder of social customer care technology provider Social Dynamx, a product manager with Progressive Insurance, and a systems analyst with NASA| Jet Propulsion Labs. Dave co-founded Digital Voodoo, a web technology consultancy, in 1994. Dave holds a BS in physics and mathematics from the State University of New York/ Brockport and has served on the Advisory Board for ad:tech and the Measurement and Metrics Council with WOMMA.

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