Wednesday, May 23, 2018

THE NEW LOYALTY ECONOMY

"Melts in your mouth, not in your hands."

Marketing and advertising experts like to analyze how ads have changed over time, how various movements and epochs in advertising took place.   It is my opinion that we're entered a new era of advertising but most companies and ad businesses haven't caught up yet.

A BRIEF HISTORY OF ADS
Originally, the first ads were very crude and direct.  An image, a sample.  They relied on basic senses such as smell (wow that food smells good) and other local influences.  Word of mouth would let this spread a bit further over an area, but it was very local.

In time, advertising began to reach out further, through posted notes on public areas, mailings, and such.  In 1704, the first newspaper ad was published, reaching everyone who bought that paper, even if they weren't in the same city.  Newspapers would travel with migrants, and were passed between people on the frontier just to have something to read, and if necessary insulate walls with, light fires with, or use for toilet paper.  A New York ad could reach a cowboy in Texas and a miner in California.

By 1835, billboards showed up in big cities, allowing an ad to stay in sight and be visible for long distances as people passed it.  Advertising was still passive at this point; they were relying on people coming across their product or ad, reaching people as they would come within range.
In 1920, advertising became more aggressive.  Instead of waiting for people to come to an ad, they began sending advertising out over the air on radio shows, primarily soap operas (which got their name by the soap ads).  Companies began to sponsor a radio show: you'd have one business paying for advertising on that show, and that's the only ads you'd get.  Fatima Cigarettes on Dragnet.  Canada Dry on Jack Benny's show.

This allowed companies to directly target potential customers rather than hoping they'd contact someone by putting their advertising out for all to see.  Shows had advertisers based on their audience, trying to reach an audience based on the content of the show.  When television advertising appeared in 1940, this was even more directed -- but now instead of a single advertiser, there would be multiple companies competing to reach viewers.
By 1960, advertising was becoming scientific.  Focus group studies and market research began, trying to find the ideal way to reach and target their audience.  Who was buying these products?  What kinds of things did they like?  What sort of ads were most effective?  By studying this kind of thing, companies found out how to best spend their money and hone in on their buyers.

THE CHANGING APPROACH
Yet there's more to this than a simple history of techniques.  Advertising first started out primarily informative: you can get this here.  Then it became descriptive: this is what my product is like.  In the descriptions, "pitches" developed, explaining why this product is superior and desirable -- even if they had to lie to get there.  That snake oil salesman was just telling you how great his bottle of goo is, at the risk of a few lies and exaggerations.

Ads shifted from merely information about a product to being more about enjoyment.  It wasn't enough to simply tell people Coca Cola was refreshing and tasty, they had to show wonderful people being happy drinking coke.  Products promoted a happier existence simply by using this product.

From there, lifestyle ads began to be produced.  In these ads, a business tried not to sell their product by its merits so much as to sell their product by associating it with something people wanted to be part of.  Instead of Coca Cola being tasty and making you happy, now Coke was something young and hip people liked: you were cool by association.  The Marlboro Man was not about great tobacco and flavor, they stopped even mentioning any of that.  Now the product was an image, a symbol of being cool, independent, rugged, and masculine.  Advertisers tried to associate the product in peoples' minds with a certain lifestyle or image in addition to or rather than sell the product its self.

So now, instead of an ad on how dependable, safe, fuel efficient, or fast a car is, there are beautifully shot scenes of cars sliding over wet pavement, driving along roads, parked by partying college students, etc.  How good is the car?  Who cares, you'll be like this if you drive it!

The internet had a huge impact on advertising, though.  With search engines and later social media sites feeding advertisers data on who looks for or talks about what, and demographics on those people, advertisers could more specifically target their ads.  Now instead of looking at general groups they could pick 20-something hispanic college graduates who like pizza and computer games.  Ads could be shown only to those groups and people, with multiple different types of ads for different folks.  When you log onto your site, you get a suite of ads targeting you based on what you do when and why.

Yet there was a problem here: people were finding it easier and easier to avoid ads.  With ad blocking software, ad-less streaming services, digital video recording, and other tools, people were able to consume content without even seeing ads.  And what's worse, when they saw ads, they were not likely to even pay attention to them.  If an ad runs, they're usually fast forwarded, or muted while someone looks at their phone instead.

So advertisers responded by trying to make advertising interesting and memorable.  Instead of being informative or associating with a lifestyle, ads started to become little skits, little stories.  They were surprising, ironic, visually stunning, bizarre, shocking, and even confusing.  The idea was that if you could get people to pay attention and talk about the ads, then they'd be noticed, and take effect.  So Burger King runs a series of odd and slightly creepy ads about a guy wearing a plastic mask showing up in the morning in uncomfortable places.  You get ads with punchlines that people remember "she sounds hideous!"  You get ads with little goofy skits and memorably strange characters like a gecko or reenactments of odd insurance events.  In many ads it isn't even clear what they are advertising, and the product sometimes never even appears.

How well these work is a matter of some doubt.  The "Breakfast with the King" campaign won tons of awards and lots of people talking about it... but BK dropped the campaign because it not only cost a lot but was not increasing sales.  It was "viral" in the internet sense, but not effective.  It was great for the ad company, winning awards and making lots of money... but not so much for Burger King.

And to complicate matters, several traditional and valuable platforms for reaching customers are dying out or no longer in use.  Radio advertising is not nearly as valuable as it was in the golden age of the wireless.  Television advertising is not useful as it once was when people don't watch TV as much -- and when they do, often are watching content without ads (Netflix, etc).  Newspaper circulation numbers have plummeted from their zenith in the early 2000s, and classified sections are virtually worthless with the rise of alternatives such as Craigslist.  And as I said above, its trivial to block out and ignore computer advertising.

And to make matters worse, viral ads get people talking and enjoying the entertainment (or at least puzzling over it) but how well do they work to sell products?  Here's a quiz to help consider this.  What product or business are these familiar ads promoting?  (answers at bottom)
  1. The Most Interesting Man in the World
  2. Wife thinks husband is talking to another woman, he's wearing khakis
  3. Sketches convince women they are more beautiful than they think
  4. Handsome black man rides a unicorn and surfs waterfalls
  5. Blendtec Will It Blend?
  6. Pop Starlets in the arena as gladiators
  7. You turn into someone else when you're hungry
  8. Where's the beef??

Do you even remember who these famous, memorable ads are about?  What companies? What products?  How effective are the ads if you remember them... but not what they are selling?  Just because you like the ad and enjoyed it playing doesn't mean you're going to remember, let alone buy the product.

So where do you advertise to reach people today?  How does a company hope to actually reach people with their product to help with sales?

THE NEW REALITY
In my opinion, the entire landscape of advertising and customer base has shifted away from what ad companies and businesses are used to and aware of.  While they focus on demographics and targeted ads and viral marketing, they are missing the next phase which has already come so swiftly on the legs of the previous.

There are two aspects which advertisers and businesses need to be aware of and think about rather than what they are trying at present.  The first is loyalty-based buying.

It has long been a principle in advertising and business that brand loyalty is a major power.  People will tend to buy the brand they are familiar with and have been using over other brands, simply out of a desire to not spend money experimenting on something new.  What if its no good? Then you're out the cost of the item and the time of getting to the store.  People will cling to what they know unless given good reason not to.

LOYALTY
What I'm talking about here is not brand loyalty but what I'll call "association loyalty."  This sort of loyalty is not to the brand or product at all, but to someone the buyer likes and want to promote, assist, or associate themselves with.  This kind of loyalty will prompt people to buy a product that their favorite team or writer likes, not out of any understanding of the product, but out of association with that person or event.  Now, this isn't entirely new, this is why companies spend a lot having celebrities push a product or having ads at the ball park.

But its changed over time, and become more sophisticated.  Now, its less about thinking the product is cool because X person likes it, and more about liking that person and wanting to help them or their cause.  In other words, previous advertising tried to get you to like Oxydol detergent because Sandy Duncan advertised it, and today, people buy a product because they want to help the person advertising it and their work.

Podcasts are the strongest example of this effect: if someone has a show I like, say Gilbert Gottfried's Amazing Colossal Podcast, and he advertises for Floont's Widgets, I'll be more likely to buy those Widgets.  Not because of the ad or the product, but because the podcast relies on that product to continue and I want to reward Gilbert for his great podcast.

And it works in reverse.  If someone truly annoys me and is obnoxious, I'm a lot less likely to purchase what they promote, use, or are advertising out of annoyance with that person.  Their toxicality spreads over into the product, esteem in my eyes and hence sales.  So having someone noxious advertising your product means you're damaging sales at least to part of their audience or potential audience.

This effect seems partly recognized by advertisers, but I don't think people recognize how strong its becoming.  In these kind of platforms, people are more likely to tolerate or listen to the ads, because like Jack Benny so effectively did, they weave their ads into the show and make it part of the overall experience rather than an annoying interruption I have to tolerate until it gets back to the show I want.
That is why, despite mangling the ads and sometimes even mocking them, Bill Burr's advertising does well: its funny and interesting because he's making it part of his show rather than a break in the entertainment.  So he mispronounces and misreads the text, that's funny and he makes it work, which makes me enjoy the product and want to help him out by considering it.

How else do you think My Pillow got anywhere?  The guy is selling pillows for crying out loud.  But he's made a huge business out of pillows by targeting specific podcasts and events to connect his product to and its working.

FRONT LOAD
Another concept almost totally unnoticed by mainstream businesses and advertisers is the crowdfund.  With this system people pay someone in advance to help invest in and assist them in producing something useful or entertaining.  I can run a crowdfunder to pay for the cover of my next novel, and raise money to pay for its product, and other costs.  In return, people get books, merchandising, personal thanks, and more for their donations.

This not only builds interest in the new product, but it also makes people feel as if they are a part of the business and that some of them goes into the final product.  Again, this builds loyalty and affection for the brand, rather than trying to trick or entice people into trying it.

How this could work out for a business isn't clear, but the idea of getting people to pay forward into a product and be a part of its development and production is something intriguing for companies to consider.  At present this is almost exclusively done by small businesses and start ups trying to get off the ground, but there's potential for a lot more.

What if Burger King crowdfunded development of a new food line, giving away free meals and more to folks who funded it to begin with?  This would develop buzz and interest before the product ever comes out, help determine what would and would not appeal to potential customers, and helps pay for costs of development.

Putting the ads in front before the product is finished means customers are part of the creation process and feel a sense of belonging and commitment to it rather than being bystanders lured in.  I think there's a lot of potential for this in the future.

CONCLUSION
In other words: advertisers have been left behind by changing internet culture and are caught up in the old ways, trying to use the internet's information for ways to use those old ways rather than taking advantage of what could be done new and fresh in the new technology.

Like Sears, Penny's, and Wards who started with catalogs not seeing the future of online purchasing and being left behind by new businesses like Amazon, these advertisers are caught in the past and not grabbing what is new to take advantage of the future's possibilities.
At least, that's how I see it.

*The Answers:
  1. Dos Equis Beer
  2. State Farm Insurance
  3. Dove Soap
  4. Old Spice Deodorant
  5. I Phone
  6. Pepsi
  7. Snickers
  8. Wendys

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