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Don't Overestimate the Power of Advertising

By: John Malmo

John Malmo began an advertising agency on a cardtable above a delicatessen in 1967 and built it into the largest in the mid-south. He also owned a travel agency, a clock shop, and a snack food manufacturing company. He is president of Koenig, Inc., Management Consulting, specializing in marketing, and he writes a weekly business commentary column for The Commercial Appeal. His 45 years of marketing experience encompass, virtually, every business category. Email him at: jmalmo@archermalmo.com

It’s certainly not unusual, and it’s probably good, that most people believe their job functions are the most important to their company.  There are wonderful cliches to support almost every claim.  To a salesman, nothing happens ‘til somebody makes a sale.  Factory workers, from top to bottom, believe that if you make a better mousetrap, etc.  The folks in traffic and distribution espouse you can’t sell from an empty wagon.  Even in personnel (pardon, human resources), the belief is if we take care of our people they’ll take care of us.

In the one business, advertising, in which cliches are always available at closeout prices, there doesn’t seem to be one adequate to deify its role above all others.  No matter.  For no cliche could match the sheer audacity of a proposal made seriously last year by the head honcho of one of the world’s largest advertising agencies.  Keith Reinhard, chairman-CEO of DDB Needham Worldwide, proposed a "guaranteed results" plan to his agency’s clients, including such as Anheuser-Busch, General Mills, H.J. Heinz, Hershey Foods, Mobil Oil, McDonald’s, Ralston Purina, the New York State Lottery and State Farm Insurance.

Reinhard’s plan, which sounds reasonable on the surface, was that his agency’s compensation would be based on whether specified sales and/or other client performance goals were met.  The agency, of course, would also control the consistency of what the advertising would say.  But below the surface, the idiocy of the proposal is summed up best by a spokesperson for the New York Lottery, who said, " . . . the amount of the lotto jackpot has a lot more to do with sales than advertising does."  Not bad also was the comment from State Farm, that " . . . there wouldn’t be any way to clearly identify the results of advertising vs. service."

Fortunately for all concerned, when interviewed none of the agency’s aforementioned or other clients admitted to being interested in Reinhard’s compensation proposal.  It must be the most arrogant, insulting and stupid proposal these clients ever heard.  For it totally obviates any importance of those other roles and factors such as manufacturing, sales, real estate, distribution, product and packaging improvements, competitive activity and economic conditions.  It sends the clear signal that only advertising matters.  And of all of the business tools that could possibly be chosen as exclusively or most important, advertising would, in all but a few cases, be less than No. 1 on the list.

Surely the boys and girls at his client Hershey Foods, who for decades taught America to spell chocolate H-E-R-S-H-E-Y without one dollar of advertising, must have hooted the loudest at the idea.

But, regrettably, it’s the kind of thinking that influences many executives to truly believe that if they throw enough money at advertising it will solve non-advertising problems.  Problems like outdated products, spotty distribution, old, poorly located or mismanaged stores, poorly trained or inadequate personnel.  The kind of anti-wisdom that has turned advertising into an objective in many firms, rather than its true role as one element in a complex mix that determines a brand’s overall marketing strategy.

It also overlooks some of the truisms of the advertising business that have earned exalted cliche status such as, no product or service can achieve success with advertising that would not have achieved a modicum of success without it, and nothing will kill a poor product faster than great advertising.

About 30 years ago the most awful advertising in Memphis from a professional’s view was run constantly by Leader Federal.  Despite the sophomoric and unattractive execution of that advertising, Leader Federal became one of the most successful S&Ls in the U.S.  Many Memphians make high sport of our city’s high profile Jolly Royal and his folksy, often embarrassing redneck repartee.  Yet most retail furniture dealers in America would be happy to swap sales-per-square-foot numbers or bottom lines for Jolly’s.

Should the advertising agency have not been paid because ZAPP Mail was an expensive failure?  Speaking of which, Federal Express abandoned one agency and one of the most brilliant advertising campaigns in history for another agency with TV zombies, and then another agency and a different campaign.  All the while package volume just kept on, keeps on climbing every quarter.  Regardless.  And it’s the first agency that is still probably more responsible than the others combined.

The fact is, that when companies say the right thing to the right people at the right time, and then do what they say, how they say it is not unimportant.  It’s just not the most  important.  So-called great advertising can influence, but not determine solely, how high is up.  Best of all cliches that damn Reinhard’s proposal is alternately attributed to department store founder John Wanamaker and the Wrigley who first made chewing gum, "I know that half of my advertising is wasted.  I just don’t know which half."

© Copyright 2000, John Malmo

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