The Death of Advertising
Advertising has always been the art of persuasion. It has always been a push strategy. As a form, it has its roots in Ancient Egypt, Pompeii, Greece and Rome and the rudiments have largely remained the same until recently. Put a message in front of an audience and attempt to persuade them to buy.
Persuasion, of course, has always been far more difficult and expensive than meeting a latent need. It is, by nature, a game of chance, narrowed to some extent by the quality of the aim, an understanding of the quarry – and perhaps the frequency of the pitch.
Whilst advertising executives have always been good at using numbers to support expenditure through test research and brand tracking, the old truism coined by John Wanamaker - “Half the money I spend on advertising is wasted; the trouble is I don't know which half” – remains pretty accurate.
Today it is also a rather absurd proposition: that 50% of the considerable amount that businesses spend on advertising is pure waste. To put this in perspective, in the US, over much of the last 100 years, advertising costs have represented in the region of 2.2 percent of GDP. That’s an extraordinary amount of money, equivalent to the entire GDP of Norway or South Africa or Finland amongst many others.
My view is that advertising’s core measurable strategic value today is as an awareness driver or as a PR stunt. Everything else is accidental. When you consider Christmas TV advertising by retailers or the Super Bowl ads, a large part of the intention is to drive conversations and media headlines. But how much of it can be truly said to deliver a measurable commercial return? That advertising has been around for thousands of years, largely unchanged but for the wrap of justifying analysis, says it all. One to many communication is anachronistic and past its sell-by date.
Unless, that is, it is linked to individual customer insights based on data analytics, AI and behavioural science. The days of a blunderbuss approach are over. This is the era of precision one to one marketing, which, if it makes you happy, you can continue to call advertising.
Here’s how the better marketing process works: It is possible today to predict with high levels of certainty what a customer’s buying behaviour will be. You can tell what their needs and desires are, even if they don’t yet fully understand them themselves. This, incidentally, is not all about data. It is about the blend of data and behavioural science. The old phrase, “I can read you like a book”, turns out to be true. From a selfie alone, a behavioural scientist can now determine with remarkable precision what an individual will buy. Those selfies are, in effect, reverse precision ads, shouting to sophisticated marketing and data analytics platforms precisely what it is that we want to buy. We are, in other words, the ads themselves, and based on these ads, savvy businesses are able to offer their wares to obliging audiences.
Remarkably, the technology and the insights that enable this transformation in the utility of marketing budgets is affordable and accessible to businesses of all sizes. Powered with the analysis and the knowledge of likely customer needs and choices, organisations can gear their promotional expenditure in ways that are considerably more likely to yield sales and profit whilst at the same time serving real customer needs and providing with a level of promotional utility that is hugely refreshing. Retailers, luxury brands, financial services companies and more are deploying the new techniques with great effect.
We live in a hyper-social age, in which we are accustomed to dialogue as opposed to linear one-way communication. The dialogue is in the permission-based sharing of data and the reciprocal understand, interpretation and fashioning of a need into an outcome in the form of a product or service. What we used to understand as advertising will progressively become invisible. We won’t be told what we want to buy anymore, because we’ve actually known it all along. We’ll be initially surprised by the new techniques and then delighted and then finally satisfied that what used to be poorly-executed appeals for our attention are now everyday appearance of the things that we subconsciously knew that we needed and suddenly find that are there with a buy button beside them.