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Chances are more than likely the Board of Directors has approved the Chief marketing Officer to make ads…and lots of them. Expected, but explicably ineffective.
Millions of dollars going towards ads, not content.
Perplexed?
You should be. So are most Board of Directors when it comes to marketing and advertising. There’s usually no one on the Board of Directors expert in marketing, and if they are, they’ve enjoyed a career primarily outside of today’s tumultuous TiVo/DVR era.
When was the last time your CEO or Board of Directors asked your Chief Marketing Officer the following question: “I know we’re spending a lot on advertising, but how much are we spending on content?”
Content produces a 500% higher Return on Investment than advertising.
Just by asking this question, Board of Directors begin to head in the right direction for shareholders.
Find out how I created $300 million and later $480 million in market cap value…but first let’s put this in context beginning with my failure.
Here’s My Story of Failure Like Many a Chief Marketing Officer (We Only Learn From Failure)
I was the number two ad man for a U.S. based retailer. At the time, we had just hired a well-known ad agency owned by one of the top three conglomerates.
We increased our budget to $40 million dollars. We committed to five new TV ads costing $1.2 million dollars in production alone. We followed the yellow brick road which was supposed to lead to a new destination for our brand, and increased market share that would surely follow.
Sound familiar?
The TV ads began to run.
Before long, the tens of millions of dollars expended in media proved a total loss. It failed to move the needle. The $1.2 million dollars to produce commercials also wasted, not to mention the time lost in failing to make an impression on the marketplace over many months. Our Board of Directors also languished.
What the agency had presented with much fanfare, and we had dutifully approved, screamed of mediocrity. We had run a campaign that followed the creative fad of the moment, ads that didn’t create a stir, and didn’t stand out.
Nobody talked about the ads.
Nobody wrote about what the ads said or did. They were just one more piece of the prevailing advertising clutter, fading from sight and comment along with the $1.2 million dollars spent to produce them and the millions of dollars that disappeared buying the media to expose them.
Quite simply, our ads looked like ads.
And thus, they came and went and were little remembered…in an environment where people care little about ads and today’s early adopter homeowners either multitask in TV or simply fast forward with the controls of their DVR.
You might say we picked the wrong agency.
But you’d be wrong.
It was not so much a matter of picking the wrong agency as it was about following the wrong belief system. It is a costly fact of life that most brand-building agencies put their creativity to the wrong use. They go down the blind alley that equates success with delivering the right number of rating points to reach the right target audience for admiration of their hopefully award-winning brilliance.
I, too, followed that belief system (no longer). I too, wasted millions of dollars.
 The paradox is that John Wanamaker wondered a century ago about which 50% of his advertising was wasted.
With the exception of the Internet, today’s CEO’s, Board of Directors, and Chief Marketing Officers all too often wonder about the waste in 90% of their ad budget.
We see evidence of ad waste in the trade press all the time.
Even the very best of brands falter…with their Board of Directors and Chief marketing Officers accepting the plate served to them.
Advertising Age magazine recently reported Miller Beer’s sad experience. “Despite spending hundreds of millions of dollars during the last decade on advertising featuring a host of ex-jocks, a quirky guy named Dick and a bevy of brawling babes, Miller has accepted that its name means little to the average beer drinker.” Bob Mikulay, EVP-marketing, was quoted as commenting ”We found ourselves more focused on form than substance.”
The Financial Times chimed in with a story headlined “TV ads ‘a waste’ for car groups.” It seems that according to a survey run by Cap Gemini Ernst & Young:
“Only 18% of U.S. consumers believe TV advertising influences their buying decisions while 57% of carmakers and 76% of dealers believe it does.”
It’s a misperception that can get expensive for automotive marketers when General Motors alone spends billions a year trying to influence car buyers on TV. Reaction is slow to change, as only 5% of GM’s total ad funds are now spent online.
Service companies fare no better than the product advertisers.
AT&T Wireless’ 2002 “M-Life” campaign puzzled and annoyed millions of consumers while costing AT&T Wireless $120 million in production and media expense…only to scrap the name in favor of Cingular and now Cingular will be scrapped in favor of AT&T again. This was no slouch agency, it was Ogilvy & Mather. It was advertising, and bad advertising (read Chapter 6 of my book to discover the turn-around for AT&T Wireless was content, not ads).
Millions of dollars wasted here, millions of dollars wasted there. Given that most Board of Directors and Chief Marketing Officers can’t pinpoint the waste, it’s lost opportunity for shareholders.
So What’s The Solution for Board of Directors and Chief Marketing Officers?
Think about what we ignore and what engages us.
We ignore ads and we pay attention to content.
You do it yourself. Try to remember an ad in a magazine to which you subscribe. Now try and remember an article you read in that same magazine. I’ll bet you a free copy of my book, that you can’t remember an ad, but you can remember an article (content).
Even data from three decades ago courtesy of advertising and research guru David Ogilvy show that on average:
“People pay attention to content in magazines and on television 6X more than advertising.”
6X: that’s 500% better return for content vs. ads.
Not convinced of the 6X factor of content vs. ads?
Read Chapter 7 of my book, the data are crystal clear from my days at eBay’s half.com (my data are 6.2X, not 6X).
Still need more data?
Let’s look at the Jupiter Research study of something you and I use every day: search engines. On average, you and I click on search engine content 6X more than we click on search engine ads.
Content vs. ads. 6X better results. That’s 500% higher return on investment.
Given a choice, wouldn’t your CEO, Board of Directors, and Chief Marketing Officer prefer to start from a platform with a 500% higher return on investment? I know your largest shareholders would. I know your smallest shareholders would.
More Proof for My Board of Directors and My Chief Marketing Officer -- $300 Million and $480 Million Worth of Proof
If the above isn’t enough, here’s my own proof.
After I left the comfortable world of incomplete knowledge (wasting millions of dollars), I joined the ranks of the dot-commers. And while most of them were wasting even more money, I was doing the opposite.
From a marketing and PR standpoint, I built half.com with a basis of content…word-of-mouth content bent on creating discussions. Media content bent on creating media stories about our brand, creating media stories from nothing that ended up as TV news content, print news content, radio news content, and Internet news content.
To make a long story short, 19 days after we launched (by renaming a town from Halfway, Oregon to Half.com, Oregon) eBay came calling. And six months later, they bought the entire company for $300 million.
Content sparked that $300 million from eBay.
Fast forward several years after my book is published by Penguin/Porfolio and lands in the Top Ten Business Book of the Year lists from London’s Financial Times and Fast Company magazine.
Medicis, the maker of Restylane, needs a different approach given that its competitor (10X its size) is coming out with a rival product after Restylane has enjoyed virtually unchallenged market share. Estimates were that its competitor would be spending $50-$75 million to launch the rival product.
To make a long story (18 page white paper) short, our sister company (Buzznation) created content for them in the form of a TV show (harking back to the 1940’s when Procter & Gamble created TV content in order to sell soap products).
That content, however, was one part of a three-part process and plan. Before the show content airs, a run on the company’s stock is sparked (well above the S & P 500 and its rival competitor which mirrored the S & P 500), producing a $481 million market cap increase. Shareholders received their value through content, not ads.
The One Question CEO’s and Board of Directors Should Ask the Chief Marketing Officer?
“I know we’re spending a lot on advertising, but how much are we spending on content?”
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