Advertising's (over)consumption problem

No conversation with an ad executive these days cannot start with the recession/depression question. Everyone is hurting nowadays, though some plucky digital firms – hello R/GA! – claim the cratering economy is helping them. That aside, advertising is in for a rough ride.

While layoffs get the headlines, the real story is advertising itself is in uncharted territory. This is beyond a cyclical economic problem, where a downturn means advertising and marketing is the first to get cut and the last to be restored. Smart people like Umair Haque, Idris Mootee and Karl Long have sounded the alarm. What happens when we move beyond the mass consumerism that’s propped up our economies for so long? For kicks, I often ask ad types this question during meetings to see the responses. I often get quizzical looks. This is impossible, I'm told. But is it? Many of the problems we face right now are at their root an indictment of debt-fueled consumption. Cheap credit made us feel rich to buy big houses, then use the fake wealth of them to buy more stuff. Cheap fuel means bigger cars, more pollution, etc.

Every step of the way, advertising was there to underpin this untenable cycle. We are a nation of spenders that needs to become savers. This is a major challenge for an industry premised on making us buy stuff we don’t need. Don't take my word for it, listen to WPP CEO Martin Sorrell's words from last year.

“All our habits of clients, agencies, media owners is to encourage people to consume more – super consumption. That is still embedded in the consumer’s psyche, so we’re going to have to respond by doing things differently and making sacrifices if we’re going to deal with issues such as climate change.”

Umair thinks the old playbooks need to be thrown out. He’s arguing for radical businesses that provide real value to people. There are companies out there doing this. Zappos, of course, with its use of a customer service culture as marketing. Etsy is a fascinating example of a company using community and digital technology to subvert our mass consumerist mindset. It’s empowering armies of handmade goods makers. Rob Kalin, the founder, told me he wanted to extend into agriculture. Yes, agriculture. Now that’s a radical business idea – not some widget company.

My guess is building great brands will be more about services, making people’s lives better, even improving society. What we see going on in social media, however chaotic, gives a clue of what great brands will do in the future. It will be more about connecting people, listening to them and collaborating with them. Things like the (very imperfect) Nike+ point the way to a different way of marketing. Adrian Ho even points out that marketing might become something like Apple’s emailed receipt. It has to be less about spitting out messages, whether TV spots or banner ads, convincing them to buy more stuff.

Comments

[Ana Andjelic]

hey brian, i am missing your bigger point here. yes, marketing is less about messages and more about designing systems of action. But what do you suggest? are you just pointing a finger at something that everyone is aware of (except maybe people from saatchi&saatchi or other traditional ad agency). Digital was never really about messages, just think how people don't like banners. Also, Nike Plus is a terrible example. It's a totalitarian regime where you can participate only if you are part of the brand. For me, that's just another promo effort to buy more (Nike) stuff. It's not about people at all, as you know very well. Sure, it helps you train, but so does the community in DailyMile and any other similar site that has yet to emerge, w/o the need to have Nike shoes (and iPod, and HRM, and whatever other gadget they are selling under the idea of the training "system"). The only way to a different marketing, as you say, that NikePlus points is a long-term lock-in in buying its products.

Don't use something as an example just because there's nothing better around. Try to explain it, and then maybe someone will build it. The real understanding of the problem, which i don't really see here, is to move away from examples and see a pattern common to all of them (if any). "It will be more about connecting people, listening to them and collaborating with them" is so general that it really does not make the cut.

[Alan Wolk]

Started to write a response to this and it turned into a blog post all its own. A multi-parter, no less.

In a nutshell: there are three ways to sell a product: Price, Selection and Service. Service has been neglected for a very long time, creating opportunity for those who do it well. On top of that, the tools of social media make service-positive interactions easy. As soon as service becomes a price-of-entry feature, we'll need to figure out a way to distinguish one customer-centric widget from another.

[Dave Allen]

Ana,

I'm far more inclined to support Brian with his statement "It will be more about connecting people, listening to them and collaborating with them" than perhaps you are, because I believe that social media ad folks have long missed that point. They never sought out online the very folks that happily talk up brands without being nudged into action.

I agree that the point of Nike+ is to make people buy Nike granted, but then so did Apple when it introduced iTunes. iTunes was a game-changing service that allowed everyone to finally organize all those damn MP3s scattered around our hard drives. And of course it lead us all by the hand into purchasing iPods. Apple may not have used "community and digital technology to subvert our mass consumerist mindset" but they sure were "listening and collaborating" - to music consumers, musicians and record labels, and that helped them build a brand within a brand successfully. And I argue, provide a service to consumers. It clearly worked...

[Alan Wolk]

Oops. Just realized you can't use "widget" as a synonym for "generic product" anymore. So make that last line "...we'll need to figure out a way to distinguish one customer-centric product from another."

[eaon]

this is great.
ps @alan i'm loving 'service-positive interactions'

[vinny warren]

that's a good point brian. business in general has to re-orient itself away from simply "consume mass quantities". but i wonder the extent to which it can. simply because, frankly, most businesses are not exceptional. and being exceptional is, like, hard and stuff. ;-)

[Alan Wolk]

@eaon - I have a night job inventing corporate doublespeak ;)

@vinny - very true. Most of the businesses the Haques of the world love to point out as models of the future are run by very driven, very controlling CEOs. And while businesses of that ilk may well be the next round of super success stories, they only represent the top percentiles of companies. Other, unexceptional companies will be around and providing the bulk of the work for marketers who need to help consumers distinguish one from the other.

[Eric Wittlake]

Brian, the comments show just how difficult any change will be. Zappos saw a different way to market, by providing a unique level of service and allowing their audience to spread the word. A different approach to marketing though has not changed the fundamental profit objectives of Zappos or any other company.

I think the most interesting examples of our drive to mass consumerism are new must buy categories. Sitting on mass transit this morning, I'm surrounded by white earbuds. Cell phones are now a necessary expense for many consumers, I can't imagine life without one (as I write this from my phone, with a full keyboard and data plan).

For marketers, search fits this bill as well. It is a new 'required' investment, Google, Yahoo, and SEM's have created an environment where marketers 'must buy' search, and as a consumer I expect any business to be easily found through Google.

Fueling these innovations are smart companies with solid products, and long-term profit objectives. They have improved our lives, but ultimately we pay for the improvement. As marketers look for ways of delivering value through marketing, they will be using new tools. The objective will still be the same.

If we see consumers drive an end to today's over consumption, the result will be much more dramatic than a change in how brands are built.

[Adam]

The opposite of 'super consumption' is (obviously) not the 'absence' of consumption, it is merely the 'reduction' in consumption. Martin is just letting is know that he anticipates that the market is retracting, and there will be pain.

And yes, as ideally all businesses always seek ways to increase profitability, they will increasingly look for better 'systems of action' (sales channels?). And as consumers consume more digital content, Marketers will need to engage them in any way they can to maintain relevance.

Yes, advertising was there to 'underpin this untenable cycle', but so was every other link in the chain (manufacturing, finance, distribution, et al). All of us will be affected the same way when the market shrinks.

Advertising did not invent mass-consumerism any more than did China.

The question, for the ad world, is: "How do you maintain your relevance as an industry?" To do that you need to understand that the role of advertising is to build Brands. Period.

Advertising works on an anthropological level. A Brand is simply an idea. People choose Brands because of what it says about them to other people. This has not changed.

Mass consumption will disappear as quick as easy credit did. I do think that our culture will adopt a more thrifty POV, and I anticipate Marketers will recognize this immediately or they will disappear.

[Debbie Horovitch]

Business world wide is changing. Contracting, yes, but consumers ARE still spending. I was laid off from my ad agency Media Manager position last year (media budgets are often the first to go, last to be recovered), and I see nothing but opportunities everywhere I look. Sure, there are fewer senior media positions and more people competing for them (including myself), but I'm also considering how to take my 10+ years experience as a media negotiator & find a whole new income source.

Primarily, I've been looking at which industries will not contract, or may even grow, during the worldwide recession. What type of industries/businesses can actually grow???

The businesses that provide clear, concrete & continuous VALUE to their customers may grow. It requires a relationship, person to person, available at no $ cost through social media activation (it does take a time commitment).

The businesses that accept the world has changed, credit card debt will no longer be cool (not that it ever was, but it seemed we were all living lives owned by somebody else), and clients/consumers will be looking for more efficient products/services.

A lot of people are talking about sustainability in business (considering 3-bottom-line: Financial, Social & Environmental in all business decisions)

As big business bleeds worldwide, maybe the answer is a new business model for people who are laid off (like myself) - take what you love, what you are an expert at, where you can see a clear NEED that you can fill with your special brand of value, and SHARE IT. What you put out there will come back to you tenfold.

I noticed the Toronto LCBO (Liquor Control Board of Ontario) stores were busier New Years Eve this year compared to any other year I've been - I went to two large LCBO's both that had cash register line-ups of 45 minutes+!!! I have to believe this was a demonstrated shift even in financially sheltered Canada, that people just don't want to spend the extra money to go out, so instead of SPENDING LESS at the bar, they decided to change the game all together & either host or attend a private NYE party. So the money spent instead of going to many bars, went to the LCBO, in Toronto at least.

The businesses who can't keep it going & close up shop will be abandoning their remaining customers. Will you be there to offer the orphans a new edition of these services/product?

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Google gets into the messy business of telecommunications. I don’t mean to say Google’s day job is easy but the telecom market gets it involved with government agencies like the FCC on a more regular basis. Like many other large telcos the company will have to spend more and more money lobbying and technology differentiation may be less important than government regulations in ensuring future success.