The Future of Advertising : Marketing: Improved technology and tight times are reshaping the ways products are touted. Ads in the future may depend as much upon Silicon Valley as Madison Avenue.
The postcard pictured a Club Med yacht sailing the Caribbean on the front, a Virgin Islands postmark and a racy, handwritten note signed “Richard” on the back. Linda, the Los Angeles woman who received it, had to scroll through her mental Rolodex of Richards before she realized that the missive was a fake.
Advanced computer software had selected Linda from among millions of potential clients, and complex laser technology wrote her a postcard that appeared to be penned by a friend. Club Med had snookered her into reading an ad.
This might seem to be advertising at its most personal level. In fact, it isn’t personal at all. High technology has just made it seem that way. As improved technology and tight times reshape the ways products and services are pushed to the public, the look and tenor of advertisements in the future may depend as much upon Silicon Valley as Madison Avenue.
“Ultimately, you will be able to forecast the probability of every household in America buying your product,” said Watts Wacker, executive vice president of the Yankelovich Clancy Shulman, a Westport, Conn.-based trend analyst firm.
Marketing plans will soon be customized to every household, he adds. “The technology is just about here,” said Wacker. “It’s only a question of when people will accept it.”
Thirty years ago, a national advertiser needed only to place a TV spot on the “Ed Sullivan Show”--and perhaps some ads in Look magazine--to pretty much cover the bases. But just as television and magazines have changed, so has the world of advertising.
Ads cost more than ever today, and they face a world of competitive clutter in which most get ignored. At the same time, with all the mega-mergers, leveraged buyouts and bankruptcies among the big retailers, the number of major advertisers continues to dwindle.
Total ad spending grew a paltry 3.8% in 1990, and one top forecaster predicts that ad revenue may grow a sickly 3% in 1991. Some pessimists even say ad spending might not grow at all in 1991--and remain flat for the first half of 1992.
The pain is being felt across the board. In the first half of 1991, network ad spending fell 7.1% compared to the same period last year. During that same time, newspaper ad spending dropped 7%.
And increasingly, when big companies see their business decline, they don’t follow tradition and pour more money into national advertising. Instead, they try to focus their reduced ad spending by mailing notes to current customers--and probable clients--hoping to entice them with special promotions and fat coupons.
Advertisers are desperate to make their advertising stand out--or at least get noticed. As a result, a growing portion of the $125 billion spent annually on advertising is being stretched in two divergent directions at once.
Some big advertisers are working overtime to establish brand images globally, images that look the same--and represent the same thing--in Boston or Bangkok. At the same time, advertisers are finding new ways to reach individual consumers where they shop, work and live.
Behind all this is improved technology. Fast and clear satellite transmission improves global marketing. More powerful computer software improves personalized marketing. Although global and personalized advertising will continue to grow, “everything in the middle--like local, regional and maybe even national advertising--may eventually disappear,” said Laurel Cutler, vice chairman at the New York agency FCB/Leber Katz Partners.
Ad agencies will feel the pinch as advertisers turn to computer wizards and even talent agencies for advice. Proof of this came last month when Coke hired a Hollywood talent agency to help give some oomph to its sagging image.
“The tried-and-true marketing techniques that have served so many marketers so well for so many years are dead,” said Clive Chajet, chairman of the New York image consulting firm Lippincott & Margulies Inc.
While Linda--who received the Club Med postcard--is being so narrowly targeted, she will also soon be reached by a brand-new TV ad campaign for Club Med. In trying to broaden its image beyond that of a place for swinging singles, Club Med hired an agency that just shot four TV spots for broadcast later this fall.
“We’re doing the micro thing and the macro thing, and we’ll see what works,” said William Vervaeke, senior vice president of sales and marketing at Club Med. “Whatever works, we’ll stay with; and what doesn’t work, we’ll abandon.”
Advertisers will try just about anything to get an edge on the competition. That advantage can be driven by technology or creativity--or both. But these days the winner is often the one who figures out the best way to use computer databases. By finding out who orders what from which catalogues--or who buys what from which supermarkets--marketers can quickly zero in on their most likely customers.
Meanwhile, for better creative concepts, advertisers are also starting to look in new places.
Certainly Coca-Cola shook up the advertising world last month when it decided to broaden its creative think tank beyond its two big ad agencies. With Pepsi’s image makers clearly more hip to pop culture trends than those at Coke, executives at Coke turned to Hollywood for help, hiring super agent Michael Ovitz and his Creative Artists Agency to help the soft-drink maker develop a global image.
“The driving force is to market uniformly on a global basis,” said Peter S. Sealey, Coke’s director of global marketing. “In 1992, we hope to use the same strategy in 170 countries.”
Traditionally, formulating that strategy has been a big part of its ad agency’s job. But with Pepsi’s image bubbling and Coke’s image gone flat, the latter invited Ovitz to the party. “By asking him to be their marketing strategist, they’re also asking him to be their agency,” said Andrew Jaffe, editorial director at Adweek.
“Coke is losing the battle of the ‘cute’ to Pepsi, so they felt they had to do something,” said Jerry Della Femina, chairman of the New York agency Della Femina McNamee. “If Michael Ovitz doesn’t work, maybe they’ll call for a priest.”
Others commend Coke for looking beyond its agencies for help. By hiring Ovitz, Coke is asking, “How do we look ahead of the curve?,” said Tim Willard, editor of the Futurist.
Even top executives at Pepsi’s agency are impressed with Coke’s decision. “This says to me Coke is not content to conduct business as usual,” said Phil Dusenberry, chairman of the New York office of BBDO Worldwide. “Whether or not it will start a trend remains to be seen.”
At the same time, however, Coke and Pepsi are so eager to steal each other’s consumers that they have also found ways to appeal directly to one another’s most loyal customers.
Supermarket shoppers who buy a six pack of Coke increasingly find themselves handed a discount coupon for Pepsi--along with their receipt. Likewise for Pepsi drinkers. Special scanners can quickly detect such purchases and prompt the register to spit out a rival’s coupon.
Yet, as new as the technology is, even these supermarket scanners are fast becoming outdated. To track who really buys which products--and when--consumer researchers are reaching beyond the supermarket.
A. C. Nielsen, the same company that tracks the TV shows people watch, has developed a special “magic wand”--a fancy scanning device--that consumers “wave” across the bar codes on virtually every product they bring home. That way, Nielsen can track complete buying habits of families and then sell that information to the big packaged goods makers.
Most of all, advertisers want information about the people most likely to purchase their products, and they want to contact them directly. This is far afield from the expertise of most Madison Avenue agencies. So advertisers are increasingly turning to specialists in direct mail and telemarketing, and to database consulting firms.
“The most important thing to find out is who your real prospects are,” said Tom Collins, co-author of the book “The Great Marketing Turnaround.” “A great deal of advertising is wasted on people who won’t buy the product. You can’t sell dishwasher detergent to people who don’t own dishwashers.”
Club Med, for example, hired a Boston consulting firm, Sterling Partnership, to help develop its recent postcard mailing. The initial postcard was followed by a second postcard that also explained that a Club Med brochure was on its way. The brochure, which arrived about two weeks later, tried to coax prospects to send for 20-minute Club Med videos.
But how did Club Med decide whom to send them to? It left that up to Sterling.
Club Med sent Sterling a list of clients who went on the maiden voyage of its upscale sailing cruise last year. “We looked at the list and tried to figure out what common characteristics the people share,” said Tim Muroney, chief executive at Sterling.
It compared ZIP codes to see which communities the people came from. Then, by searching through various computer databases, it was able to determine everything from the average age (35) to the average annual income ($60,000) of its most likely travelers.
The next step was to purchase the names and addresses of people from a special listing service--such as American Express--that has clients who match these same characteristics. Some 100,000 postcards were mailed. Club Med will be satisfied if 2% of those who receive them eventually sign up for the $1,800 cruise.
Similarly, Gatorade is being marketed on a global and individual basis at the same time.
Its maker, Quaker Oats, recently introduced the athletic beverage to several countries in Europe and South America. To get the most impact, it spent $15 million to sign on basketball superstar Michael Jordan, who dropped his Coke sponsorship to promote Gatorade. “Michael Jordan is a global personality, and basketball is a global sport,” explained Jerry Perkins, vice president of promotions at Quaker Oats.
Meanwhile, Gatorade is also trying to recruit new customers from special databases. For example, it recently began to test market Gatorade Lite in some Southern states. It is marketing this lower-calorie version to the 35-and-over crowd and will send discount coupons to people who belong to certain health clubs and who subscribe to specific health magazines.
The upscale Japanese nameplate Lexus is also trying hard to target its potential customers in somewhat unconventional ways.
In just two years, Lexus has clearly established an image as one of the finest cars on the road. A splashy image campaign with glitzy ads had been part of it. Toyota, the parent company of Lexus, now wants to introduce a similar upscale model in Japan. And it recently approached Lexus’ U.S. marketing arm to help it develop a marketing strategy for that yet-to-be-named automobile.
But a key part of the Lexus marketing strategy in America has had nothing to do with advertising. It has everything to do with closely tracking the characteristics of Lexus owners. Lexus initially thought its owners would come from households with annual incomes of about $100,000. After all, the cars cost up to $45,000. But it has since found that its owners are even more upscale--with household incomes exceeding $150,000.
“We have 20 characteristics we’re mapping to determine who our future buyers are,” said Robert C. Neuman, national marketing operations manager at Lexus. He declined to reveal the other 19 characteristics.
The company’s next move is to “tastefully” approach people who meet those qualifications. For example, Lexus has sent hundreds of its owners--and potential owners--to showings of the play “Phantom of the Opera.”
In cities from Chicago to Los Angeles, Lexus has asked its dealers to send it lists of satisfied owners as well as “influential” prospective buyers. Lexus then invites the group of 300 to 400 people to dinner and the play.
“Mixing owners and non-owners creates unique dynamics,” said Neuman. The object, of course, is to get the Lexus owners to brag so much about their cars that the others will be influenced to buy them.
At the dinner, there is a low-key display of the cars. Each non-owner who attends the festivities is eventually sent a personalized “thank you” note. At the bottom of each note, in small print, is a query that offers more information about the cars--and, of course, the opportunity to request a test drive.
The Big and Small of Advertising
Advertising is moving in divergent directions: micromarketing to target specific customers and macromarketing to send out a consistent global image. Club Med and Gatorade are examples of the respective strategies.
Micromarketing: Club Med
* Purpose is to reach individual customers likely to go on an expensive sailing cruise.
* Consultant develops a computer-generated profile of likely consumers.
* About 100,000 personalized postcards are mailed to those consumers.
* Follow-up postcard is sent, followed by Club Med vacation brochure.
* Consumers are asked to send for a 20-minute video.
Macromarketing: Gatorade
* Purpose is to establish a brand image for the international market.
* Michael Jordan is picked a pitchman because he is recognized worldwide as a basketball superstar; also he has recognition as a previous spokesman for Coke.
* Limited print campaign and a broader television campaign built around Jordan are developed.
* Global campaign is supplemented with more targeted ad efforts.
Marketing’s Money Madness
Annual spending on advertising has increased nearly seven-fold in the past 20 years, as costs have increased in the battle for the consumer’s attention.
