Think of a world without advertising. A world where your mailbox, both the electronic and physical version, aren’t filled to the brim with direct mail or spam emails. A world where billboards don’t exist. A world where commercials don’t exist, or magazine advertorials, or online banner ads, or pop-ups, or clothing with corporate logos plastered all over them. Advertising and marketing have become so pervasive that people are even getting permanent tattoos of brand logos on their foreheads. Sure, It’s an extreme example, but it does prove how connected people have become with corporate brands.
Although marketing and advertising have long existed, the industry as a whole is currently experiencing a groundbreaking revolution. Companies are realizing more and more that traditional advertising methods just aren’t working as well as they used to. The birth, growth and massive rapid adoption of the internet has changed the way companies are advertising. Never before have consumers been so skeptical of traditional advertising’s messages. My goal in this post is to give you a brief history of global marketing and prove why offline advertising is dying, while online marketing is growing. In order to adapt companies must be transparent and add value to their marketing.
When people hear “marketing,” they often think of it as a new invention. If asked to put a timeline on when marketing was created, a casual observer would more than likely point to the Mad Men era of advertising in the 1940s through the 1960s. This may have been when advertising and marketing established themselves as valuable and measurable methods of increasing a company’s return on investment, but it wasn’t the beginning.
Marketing existed long before the creation of clever advertisements for Lucky Cigarettes or the red and white messaging that has been plastered in every country on earth by by Coca-Cola. In fact, Coca-Cola has a published list of slogans by year on its corporate website that dates all the way back to 1886. The slogan that began it all, according to Coca-Cola, was simple and to the point “Drink Coca-Cola.”
Coca-Cola’s slogan is a great example of how simple marketing was fifty years ago. Although, they were allowed to be a bit more creative back then. A mix of Bordeaux and cocaine also helped boost Coca-Cola’s early adoption rate and brand loyalty. A more accurate slogan for the original Coke recipe might have been “A Touch of Addiction in Every Bottle” or “Here’s to You 1980’s Miami!.”
Marketing existed before Coca-Cola was convincing the world to drink something now used to remove stubborn rust or clean your toilet. But before we jump into the history of marketing, I want to establish a framework.
“The beginning of wisdom is the definition of terms.” – Socrates… and every English professor.
Webster’s defines advertising as, “the action of calling something to the attention of the public especially by paid announcements.” This definition gets to the heart of why marketers will spend $540 billion US Dollars in 2015. Advertising has become the lifeblood of business. A modern marketer has a more sophisticated platform to work from, with tools like, website visitor tracking, unique advertising experiences, non-intrusive surveys and automated marketing sequences; But no matter how “sophisticated” interruption based advertising becomes, the heart of the concept is still the same — advertisers are still willing to pay someone to tell someone else, hopefully their target consumer, about their product.
Now that we have our crappy definition for advertising, let’s define marketing. Traditionally marketing is defined as, “the process or technique of promoting, selling and distributing a product or service.” But this definition is incomplete..
Marketing is now anything a company does. Today’s most effective marketing campaigns don’t fit the traditional definition. Companies like Zappos market with excellent customer service. Zappos’ phenomenal customer services is a product of both a more selective application process than Harvard and heavy investment in employee happiness. The investment pays off, because customers spread the word for the company and remain loyal. But before we get to how modern companies are adjusting globally to a more educated consumer base, it’s helpful to first look at the origins of global marketing..
If you were to look back in time and observe some of the earliest forms of trade, where consumers were able to freely choose between two competing merchants, you’d have a good idea of where marketing got started. The reason one hypothetical blacksmith became more popular than another blacksmith in a small rural village, wasn’t because of fancy marketing messages. It was because he provided more value to the consumer and word spread naturally of the advantage of using Good Blacksmith “A” over Average (and maybe drunk?) Blacksmith “B”. At its core, this seems to be the origin of good marketing: the bubbling proclamation of excellent products and services. In the case of the successful blacksmith “A”, his products may have simply lasted longer, cost less, been produced faster or just been much easier to deal with than drunken Blacksmith B. Although this is in no doubt a humorous over-simplification, it offers a good starting point and contrast for the global marketing landscape that developed from such humble origins.
Today’s traditional advertising and marketing methodology has its roots grounded in the invention of the printing press and the improved physical communication networks that eventually would follow. Although the printing press was created in the mid 15th century, it wasn’t until the 18th and 19th centuries that we have documented proof of “modern advertising practices” being put to use.
Perhaps one of the oldest examples of effective advertising, can be tied back to an American founding father. Benjamin Franklin began publishing Poor Richard’s Almanac on December 28, 1732. According to Scott Aughtmon of the Content Marketing Institute , this is one of the very first examples of print-based marketing. Aughtmon argues that Franklin’s intent for publishing the Almanac was to promote his printing press. Franklin, unlike many modern marketers, focused first on developing useful and engaging content. The advertorial was always secondary for Franklin. This value focused approach proved incredibly effective. Franklin, writing on the success of Poor Richard’s Almanac, said, “In 1732 I first published my Almanack under the name of Richard Saunders; it was continued by me about twenty-five years, and commonly called Poor Richard’s Almanack. I endeavoured to make it both entertaining and useful, and it accordingly came to be in such demand, that I reaped considerable profit from it, vending annually near ten thousand.” The success of Franklin’s press also grew, so much so that it was used to print America’s first paper currency. It probably didn’t hurt either that Franklin had a pretty deep network in government… that aside, this type of advertising would have never been possible if the technology for cheap printing and low cost shipping didn’t exist.
Technological advancements have always been the driving factor for new marketing opportunities. Franklin’s Poor Richard’s Almanac is just one of the very early examples of what would now be classified by marketers as direct mail or an educational upsell vehicle. These two concepts are still in practice today and remain very popular.
The next major advertising method that began to rise to prominence was the billboard. Referring to the creation of the first “fixed graphical advertisements” in use during the 1830s, the Outdoor Advertising Association of America (OAAA) writes, “In the beginning, American roadside advertising was generally local. Merchants painted signs or glued posters on walls and fences to notify the passersby that their establishments up the road sold horse blankets, rheumatism pills, and other useful items.” The OAAA also writes that the first use of an advertisement “poster” measuring more than 50 square feet was used in New York to promote the circus in 1835. It wouldn’t be until late 1800s that a national association would be formed and standard billboard sizes and placement prices were established. That association was known as the “Associated Bill Poster’s Association of the US and Canada” which was formed in Chicago. This organization would later change its name to the Outdoor Advertising Association of America that is still in existence today. Although billboard image quality has improved, the same concepts that companies use to make drivers aware of their products today were the same concepts they were using 100 years ago.
At this point, you might begin to wonder why so many historical origins and examples of now standard advertising are focused around America. The fact is, US has long been and still remains the global authority in advertising and marketing. It’s one of the main reasons our economy had such a substantial growth rate, especially during the earlier parts of the 20th century. With that being said, you probably won’t be surprised that the next major trend in advertising would arise from a technological advancement that started in the ol’ US of A .
According to NYU, The first electronic television was demonstrated in San Francisco on September 7th, 1927. It would take only 14 years for the very first paid advertisement to run on American television. During a baseball game between the Brooklyn Dodgers and the Philadelphia Phillies on July 1st, 1941, BULOVA ran the very first paid advertisement. The slogan was simple, the ad announced, “America runs on BULOVA time.”
According to American Heritage Magazine, the ad cost Bulova all of $9.00. According to Bullova, the advertisement was seen by millions of people — that seems like a fantastic return on investment. This would only be the beginning though. Over the next few decades, the television advertising industry would grow at an astonishing rate. At the same time, marketers also created better methods for tracking campaign success. The Neilsen Rating System was implemented in America as a means of measuring audience size of specific television programs. They could only provide a statistical estimate, but this data was a goldmine for American advertisers who could now calculate an ad campaigns ROI based on number of expected viewers. It wasn’t long until marketers were able to establish what type of target market was watching each show. Advertisers could now create messaging that targeted children during cartoons and cigarettes during the evening news.
Slogans that are still used today got their start during this goldenage of television. DeBeers came out with “A diamond is forever” in 1948. The “Marlboro Man” premiered in 1955. The ads were largely unregulated, made speculative claims at best and, most importantly to companies, produced tremendous return on investment.
Print media, billboard advertisements and television ads still make up the bulk of traditional advertising today. But companies and ad agencies began focusing on a new technological advancement, one that made communication instant and eliminated printing cost all together. In 1991 Tim Berners-Lee pioneered the world wide web and sparked a technological revolution that advertisers were drooling to capitalize on. Advertisers were also getting quicker at adapting to new technology. It took a few hundred years for print advertisements to become common after the invention of the printing press. It took just 14 years for ads to start running on the television. That’s a significant decrease in companies time to adapt. The trend continued and It would take only 3 years for the first ad to be deployed on the internet. The first banner ad, according to Harvard Business Review, was deployed in October 1994. The results were more successful than anyone could imagine. With a click-through-rate of 44% and users voluntarily sharing the ad while noting how much “they loved the experience” — the world of online ads had begun.
However, major players still hesitated on whether or not the internet was a viable resource for advertisements. In the early days of the internet, users were forced to be technical and were the very definition of “early adopters.” In response, most companies ignored it and began to invest even more money and time into proven methods like TV and print but the ROI was steadily diminishing. Not knowing how else to proceed, advertising companies began transitioning what was working in traditional media into an electronic format. Direct mail became email marketing. Billboards became banner ads. And TV ads became online video ads. But something was different, the data and analytics were so much more detailed and readily available online.
As the internet grew, so did the tracking and data statistics. The primary reason Google is now worth over $367 billion dollars is its ability to deliver highly targeted advertisements. Google pioneered the idea of pay-per-click traffic (PPC). PPC at its roots is very simple. For example, say a user searches for the term “best coffee maker” in Google. Before PPC, only natural results would show up. Google’s search algorithm would then categorize and rank listings on the page. But now, it’s a pretty different result. For example, companies like Mr. Coffee and Keurig can bid on how much they are willing to spend if a user clicks on their advertisement after searching for the term “best coffee maker.” To make online advertising even more lucrative, Google can now tie in demographic info based on social profiles. Suppose a company wants to target only individuals who are female and over the age of 26, now Google has all of that data and can show ads only to that specific subset of people.
Never before has a company had the ability to target such specific consumers. The same is now true for banner ads and online video ads. Television advertisement creators during the 1960s would have given their left kidney in order to see exactly how many people saw the ad, they probably would have agreed to saw it out themselves in order to know exactly how many people and what kind of people interacted with the ad. This is exactly the kind of data that internet advertisement was able to track.
As of 2015, the internet now outpaces every other vertical in terms of time spent on consuming content. Mobile media is consumed on an average rate of 1.8 hours per day, 1.6 hours per day via desktop and only 1.5 hours per day via TV. According to a study of 32,000 internet users in 31 countries, 5.6 hours or 57% of media consumption per day was consumed via digital sources such as mobile internet and social media. According to Strategy Analytics, the trend for ad spend is clear. Ad spend has grown on the whole by 3.2% in 2015. Outdoor has grown by 4.8%, cinema by 3.4% while print advertising has decreased by 7.9%. Compare that to digital ad-spend which has grown by 13% this year alone and is on pace to outperform all other outlets by 2020. The shift to digital is clear, but will it be the advertising method that cutting edge companies rely on to grow their brand for the next few years to come?
Progressive companies are moving toward a new form of advertising. In a documentary film entitled “The Naked Brand”, Patagonia’s founder Yvon Chouinard says, “Traditional advertising, I think, is finished.” The documentary centers around interviews with Chief Marketing Officers and Chief Executive Officers of some of the world’s leading brands like Unilever, Under Armour and Zappos. Perhaps one of the largest themes that is discussed in the documentary is the growing distrust in corporations by global consumers and the unprecedented access to educational resources that a typical consumer now has. According to Advertising Age, “fewer than 25% of U.S. online consumers trust ads in print publications, and the numbers are even worse for digital media.” With digital advertising growing so rapidly, why does such a sharp and growing distrust exist?
The reason is simple, the majority of the global population has been bombarded with ads since birth and has been fooled, swindled and mislead far too many times to blindly trust in the institution of corporate brands. According to CBS News, in the golden age of television, an ad on one of the big three networks could have reached 70% of the viewing audience.. But times have changed. Caitlin Johnson of CBS writes, “we’ve gone from being exposed to about 500 ads a day back in the 1970’s to as many as 5,000 a day today.” This is a classic example of desensitization.
No longer are the days when Coca-Cola can simply say “Drink Coca-Cola.” The consumer has caught on to the false perceptions and has access to information that 1970’s Coca-Cola would have never wanted the public to know about. Johnson continues, quoting the president of the advertising firm Yankelovich, Jay Walker-Smith, “All of this marketing saturation that’s going on is creating this kind of arms race between marketers where they have to up the ante the next time out because their competitors have upped the ante the last time they were out,” Walker-Smith said. “And the only way you can win is to have more saturation — be more creative; be more outrageous.” But perhaps even more saturation, crazy antics and overexposure isn’t the answer.
According to Jeff Rosenblum, director of The Naked Brand and President of the highly successful marketing agency Questos, the opposite is true. Rosenblum points to the erosion of corporate trust as demonstrated by the global anti-capitalist occupy protests and anti-sweatshop movements that targeted companies like Nike and Apple. These are clear examples that consumers expect more from brands now than ever before. Rosenblum is a strong proponent of unrelenting transparency, a growing movement in companies that are benefiting from higher trust ratings and higher profit margins than the average company. According to a survey of 11,000 people from 8 different countries, 90% of responders want corporations to be as transparent as possible. Joseph Dumont of Questus, explains the difference in their marketing philosophy, “We want to tell the truthful stories about why these companies are great versus a company that wants to be great and hires an ad agency to manufacture a fictional tale.”
During the supposed golden era of marketing, companies were afforded the luxury to promote brand images that didn’t accurately represent the corporate scorecard. Data was hidden and manipulated at an astonishing rate. For example, cigarettes were commonly sold to mothers as a form of stress relief from dealing with infants long after data revealed that it was harmful. But the internet has created an open discussion and forced companies to become much more transparent… even if they don’t want to be. Consider Amazon product reviews as a prime (pun intended) example of what the new transparent advertisement landscape looks like. According to AdWeek, product reviews influence conversion percentages by as much as 97%. This is a new phenomenon that technology has created. No longer are companies able to pay a reporter to give a glowing review of their product that will be blindly trusted by the consumers. The power has been given back to the consumers and that is a good thing.
Earlier in this article Zappos was mentioned as an example of unconventional yet successful marketing. According to Harvard Business Review, “Zappos was founded in 1999, during the Internet boom, to sell shoes online. The company’s founding premise was to provide the ultimate in selection to its customers-all brands, styles, sizes, and colors.” But Tony Hsieh the founder of Zappos goes even further to foster a brand that embodies this new idea of effective marketing. Zappos offers every employee $2,000.00 to quit after the first month. The goal of this offer is to eliminate those employees who haven’t bought into the radical customer service approach of Zappos.
Hsieh is acutely aware of the type of company he is building. Hsieh speaking on the role of marketing, “”The training and education, the free shipping both ways, the surprise [shipping] upgrades, that’s very expensive. Our warehouse is 24/7, which is purposely less [cost] efficient, but faster,” Hsieh said. “Our whole point of view is [to look at it] as our marketing costs, but they all have extra costs.” The president of Sterling Consulting Group Karen Leland agrees with Hsieh’s method on a practical level. Leland writes, “It costs five times more to get a new customer than to retain an old one,” Leland said. “Anytime you have to spend marketing dollars, the financial benefit is high to retaining an existing customer.” Of the few outbound advertisements that Zappos has created, the majority are just recordings and recreations of actual customer service calls that agents have handled.
Zappos is a great example of what future-looking companies should emulate in order to achieve success. Just like in the past with the printing press, the advent of billboards and the invention of the television — companies need to advance their understanding of what “marketing” means in lieu of technological advancements. If the internet continues to grow along its current path, consumers will continue to become more and more educated. Traditional advertising will continue to be filtered out, ignored and distrusted. Modern companies must resort back to the fundamentals that made primitive companies great. No longer can a company create a false image through clever advertising and expect its brand image to go untainted. Consumers are finding more and more ways to create a system of checks and balances..
The global marketing system is changing rapidly. Companies who fail to adapt to consumer demands, like the drunken blacksmith who provides average service, are doomed to fail. Never before have we seen a consumer base who purchases products based on more than price and perceived value. The masses demand more from corporations. If a company is to succeed in this current and competitive global economy, they must first assure that not only their final product exceeds expectations but also prove that their company is worth doing business with in the first place.