I’m sure you’ve all seen this quote. It’s attributed to Robert Stephens, founder of Geek Squad, and goes something like: “Advertising is the tax you pay for being unremarkable.” (I was reminded of it most recently reading Josh Porter’s blog, Bokardo.) It sounds good and, at first blush, correct, but it’s not for lots of reasons.
Broadly, the line between advertising, marketing, branding, and communications has always been a blurry one. Depending on who you talk to they have a very different definition. For the purposes of the quote, let’s assume when Stephens was talking about advertising he was specifically referring to the buying of media space across platforms like television, magazines, and websites.
With that as the working definition, there are lots of complicated reasons big companies advertise their products. Here are a few:
- Distributors love advertising: If you’re a CPG company you advertise as much for the supermarkets as your do for your product. The more money you spend the better spot they’re willing to give you on the shelf (the thought being that people will be looking for your product). I don’t think there is anyone out there that would argue shelf placement doesn’t matter. At the end of the day supermarkets are your customer if you’re a CPG company, so keeping them happy is a pretty high-priority job.
- Advertising is good at making people think you’re bigger than you are: Sometimes a company or brands wants to “play above its weight,” making people think they’re bigger than they’re actually are. When we see something on TV or in print, we mostly assume there is a big corporation behind it. Sometimes that’s more important than actually selling the product.
- Sometimes you’re not selling a product at all: There are many companies who advertise for reasons wholly disconnected from their product. GE, for example, isn’t running TV commercials about wind turbines to solely try to communicate with the thousands of people who are potentially in the market for a multi-million dollar purchase. A part of why they do it is to communicate with the public at large who is both a major shareholder for the company and also the end consumer of many of their products (many planes we fly on run GE engines and our electricity probably wouldn’t reach our house without GE products). How remarkable their products are has no bearing in this case, since we would never actually be in the market for the vast majority of the things they produce.
Broadly, though, the point I’m trying to make is that while many write off advertising as having no purpose (or being “a tax”), it’s just not true. What’s more, as advertising becomes a more seamless part of the process of being a brand in social, I think this will only become more true. If you see a piece of content performing well on Twitter or Facebook why would you not pay to promote that content and see it reach an audience beyond the core? At that point you’ve eliminated the biggest challenge traditionally associated with advertising (spending tons of money to produce something and having no idea whether it will actually have an effect on people). Seems to me if you’re not willing to entertain the idea you’re just standing on principle.
I’m going to write about NASCAR and marketing, if you don’t care about either of those things, you can quit reading now. I’m writing this for three reasons:
- I’m a big NASCAR fan (it’s more than just going around in circles, I’m happy to explain it sometime)
- I spent some time working with a NASCAR team and learned a lot about how the business side of the sport operates
- The New York Times had a story yesterday about how the NBA can learn something from NASCAR in regards to it’s thought about adding sponsors to jerseys. This article almost entirely missed the real point of NASCAR sponsorships. (I can’t say I find this shocking as NASCAR is hardly the number one beat for the Times.)
For some reason the article focused on how sponsors can affect the behavior of the athletes. This is sort of interesting, but pretty far from the real story of NASCAR sponsorships. While the business of NASCAR is struggling for a bunch of reasons (financial meltdown, arms race in technology raising the cost of fielding competitive teams, more competition than ever for ad dollars), what makes it work has not changed. When a brand buys into a NASCAR sponsorship (which goes for ~$20 million for a full season), they are buying two big things: Loyalty and activation opportunities.
Let’s start with loyalty. This is what the article really misses. When brands sponsor NASCAR they get a real understanding from the fans that they are responsible for the car on the track. The drivers get it, the teams get and the fans get it. This is hugely different from slapping your logo on something (whether it’s soccer where it’s displayed in giant form on the player’s belly or basketball, where they seem to be thinking about some little sponsorship patch). People in those sports think the sponsor is responsible for the team in the same way no one will ever walk into a Brooklyn Nets game and say “thank you Barclays for making this possible.”
The numbers in NASCAR back this up. I used to have them, but the league and teams generally trot around a number of 80%+ loyalty of a fan to its driver’s sponsor. If Jimmie Johnson is your guy you go to Lowe’s not Home Depot. That’s just how it works.
Okay, onto activation. Take a look at the official sponsors of NASCAR teams and you see a few different kinds of companies: Car-related companies (NAPA, Shell, Mobil 1), CPG (Budweiser, Mars, Miller Lite) and a lot of retail/franchise businesses (Burger King, Target, GEICO, Farmers Insurance, Home Depot, Lowes, Office Depot). The first set is obvious, the average NASCAR fan likes cars and car-related stuff. The second is about audience as NASCAR skews heavily male and sometimes guys are hard to reach. The last, though, is the most interesting to me.
What all these companies have in common is lots of employees (you could throw FedEx in this group too and UPS was a long-time sponsor of the sport). One of the more interesting things about how brands actually utilize their sponsorship is that they do fully integrated program where they use a sponsorship to reach not just consumers, but also employees. Target, Home Depot and Lowes have 900,000 combined employees (365, 331 and 204). That’s a lot of people to keep happy. One of the ways they do it is give them something to root for. It’s not shocking, or even all that interesting, it just sort of makes sense and means that the investment is offset into a few different departments.
Anyway, I don’t have a real conclusion to all this, just felt like writing a little bit about what I know about NASCAR. Hopefully it was relatively interesting.
I’ve been saying the ability to build awareness is the biggest strength of Facebook (and more broadly social). Intent is great and Google has built an incredible advertising machine, but most brands need to create intent, not harvest it. Interesting to see that Fab agrees with me:
Forbes says retail site Fab it’s spending $25 million in Facebook ads this year. CEO Jason Goldberg is adamant on his company’s “digital ads” preference according to Forbes. “Facebook ads are more effective than Google search or display ads, because Google ads are based on intent, while Fab is designed for people to discover new items they aren’t searching for. Fab is designed to be a site people sign up for and browse around and eventually make purchases, Goldberg says.”
This post is the intersection of a few different things I’ve been thinking about lately. First is Percolate. Part of the process of introducing the company to new people is frequently recounting the story of where the product came from. James and I have probably sent each other a thousand different articles back and forth and I asked him recently for his list of top articles that really inspired his thinking in the space. The second thing is Robin Sloan’s Fish which is all about the difference between liking and loving content. It made me think about the list of the content and marketing-related articles I’ve read that I come back to frequently. This is that list. Some of these are newer and may not hold the test of time, but most of them are things I’ve come back to (at least in conversation) about once a month since I’ve read them (they are distributed over the last 10 years).
Without any further ado, here’s my list:
Stock & Flow
Not specifically about marketing, but it’s all about content. Stock and flow is how we’ve taken to thinking about content at Percolate and this is really where that idea came from. I’ve written a few things inspired by the idea and use it frequently to explain how brands should think about content (and why Percolate exists).
Many Lightweight Interactions
This is the most recent article of the bunch and comes by way of Paul Adams, who works in the product team at Facebook. It was a really nice way to explain a lot of the stuff I’ve been thinking and talking about with clients over the last five years. Specifically it talks about how the web (and specifically social) offer brands an opportunity to move from a world of few heavyweight interactions (stock in Robin’s parlance) to many lightweight interactions (flow). The one thing I’d add is that I think the real opportunity is to take the many lightweight interactions and use them to understand what works and inform the occasional heavyweight interactions brands need to succeed.
Who’s the Boss?
This was written by a friend of mine 10 years ago. It’s short, but the core point is that brand’s live in people’s heads. This was what inspired Brand Tags and has colored lots of my thinking about how brands behave.
Why Gawker is Moving Beyond the Blog
Not specifically about marketing, but Denton’s explanation of why he’s moved from the classic blog format is a great explanation of how content works on the web.
How Social Networks Work
Another slightly older one, this was the first time I had read someone talked about the idea of social as exhaust data (basically our digital breadcrumbs), which seemed like a really good way to think about it (and helped explain why brands struggled). Lately I’ve been using this to help explain why brands struggle in social: Exhaust data is a very human thing. You need to consume in order to create this trail and most brands don’t do that.
How Owned Media Changed the Game
From Ted McConnel who used to be head of digital at P&G. I really liked this quote: “Recently, in a room full of advertising brain trustees, one executive said, ‘The ‘new creative’ might be an ecosystem of content.’ Brilliant. The brand lives in the connections, the juxtapositions, the inferences, the feeling of reciprocity.” This was one of those articles that really wrapped up a bunch of stuff I had been thinking about. It’s nice when that happens.
That’s it for me. What would you add? What am I forgetting?
This is a cross-post from the Percolate Blog. I thought you all might enjoy reading it here as well.
Let me get something out of the way before we get started: In case you haven’t heard, Facebook is going to IPO this week.
Okay, seriously, all this IPO talk has driven people to dive into Facebook’s business model and lots of folks are coming up with doubts. As Peter Kafka points out, even Facebook has its doubts, mentioning as much in their IPO filing: “We believe that most advertisers are still learning and experimenting with the best ways to leverage Facebook to create more social and valuable ads.”
But what does that mean really? And what’s the opportunity? And, most importantly in many people’s eyes, does Facebook really have the opportunity to be a bigger company than Google?
While I don’t know the precise answers to those questions, I do have lots of opinions and since it happens to be Internet Week in NYC, I’ve been having these conversations a lot (mostly on panels). The bulk of the argument against Facebook revolves around their lack of “intent” data. This, of course, is what Google has in bulk and is the reason they are a multi-billion dollar business. Being able to target people at specific points in the purchase process changes the way marketing works. It allows advertisers to do something that was all but impossible (you could buy in-store and outdoor around stores, but that’s a whole lot less efficient). This is an amazing thing for marketers and Google’s market cap reflects it.
But if you ask most advertisers why they spend millions (and sometimes billions) on traditional ads, it’s not to harvest people who intend to buy, it’s to create demand: continuing to grow a business requires continuing to bring in new customers constantly. However it makes you feel, most ads exist to remind you that you need something new. That shoe company with billboard isn’t trying to get you to buy their shoes over a competitor, they’re trying to remind you that you need new shoes and, they hope, when you walk into the store you’ll spring for their brand.
That’s where brands spend real dollars. When startups show off “the chart” (you know, the one with the gap on time spent versus ad spend), they are looking at the effect of digital platforms not having a good answer to intent creation.
That, I believe, is where the opportunity for social is. We’re not there yet, but the promise is that you can use your understanding of a user’s interests to present them with messages that let them know about things they want before they want them. If Facebook figures this out it will be a bigger company than Google.
So how does content fit in?
Using the traditional purchase funnel, I think you still have a gap between awareness and intent. Once someone knows about your brand or product, how do you create need? One really good way of doing that is to remind them you exist (a large portion of CPG ad spend is used for just this). The way to remind people you exist is to create content they’ll see. To create content they’ll see on Facebook you need to a) be engaging enough that it builds organic activity and pushes beyond the base distribution you get through EdgeRank or b) buy Reach Generator. The two big goals (awareness and intent creation) have paid actions associated with them in Facebook, Twitter and Tumblr. If these companies continue to build on these ideas and find better ways to target users based on their interests they will be solving a real problem for advertisers, something that hasn’t really been done on the web since paid search in the early 2000s.
Of course, there are lots of ifs here. The products are not quite there yet (targeting, for instance, is still largely based on social connections instead of interest connections), but I think these platforms will get there and I think they’ll succeed.
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