Entries Tagged 'advertising' ↓

Starbucks surprised Wall Street recently with better than expected quarterly earnings. One of the primary reasons for the uplifting results? The halo effect Starbucks received from the massive ad assault for McDonald’s McCafe brand.

McDonald’s advertising spend increased Starbucks’ sales. OK. A quote from Starbuck’s CEO Howard Schultz, found in this article in AdAge, follows at the end of this post.

This has to be another example of the inefficiency in the current value exchange in the advertising economy. Despite McDonald’s spending $100 million to buy your and my time and attention, we started going to Starbucks more often. We went to McDonald’s for coffee too, so the ads worked, but couldn’t it be better? Couldn’t McDonald’s get more value out of their ads while reduce the value the ads create for their huge competitor?

The ad sales reps at USA Today, NBC, Facebook, et al…the people who got paid a good amount of money for selling $100 million worth of our time and attention to McDonald’s…do you think they remember the ads are from Mickey D’s? Or do they go home to their spouse and say, “I landed some coffee advertiser today…forget their name”.

If the money flowed directly to consumers, maybe we would remember, and be more loyal to, who delivered the message. And the money.

Oh…and Mr. Schultz’ quote on the subject:

“As you know, extraordinary advertising dollars have been spent by fast-food companies trying to attract coffee consumers during this quarter,” Mr. Schultz said. “Many commentators and industry watchers have been concerned that this marketing spend would have a negative adverse impact on Starbucks.” But on the contrary, he said, the “various marketing campaigns,” including Starbucks’ own first branding campaign, have “created unprecedented awareness for the coffee category overall and has actually had a positive result on Starbucks’ business.”

Good news, bad news.

The Good News: Study after study is confirming that marketers are spending more on word of mouth advertising at the expense of more traditional advertising. Marketers are finding consumers to be far better and more valuable marketers of their product than media companies. Nice Work!

The Bad News: We don’t get the money.

But volunteering makes you feel all warm in the inside right? Not in this case. You and I provide the value. We do the work. Advertisers write the check. The money just isn’t flowing to us. But it can.

Over the next 2 weeks, I’ll be blogging more often and more specifically about an effortless way to redistribute the flow of advertising dollars to consumers. To you and me. After all, advertisers are spending more on word of mouth. We should be getting a raise.

There’s a storm brewing this week in the advertising world due to a pot stirring TechCrunch post by Wharton Professor Eric Clemons. He predicts the demise of online advertising due to four factors:

1) Consumers do not trust advertising
2) Consumers do not want to view advertising
3) Consumers do not need advertising
4) There is no shortage of places to put ads

Defenders of the status quo are crying foul and giving the professor a lot of heat. I applaud Professor Clemons for bringing to light that it begins and ends with the consumer. Many in the ad community do not understand that yet. The norm has been too comforting and too rewarding to accept change. The power has belonged to media companies forever, and they are slow to see it slipping away. He is shining a light on the dramatic shift in power and hopefully some will pay attention.

But while illuminating the status quo shift in the balance of power, he also gets caught in accepting the status quo of the existing advertising economy. What happens if we shorten the first three items on the list to one:

1) Consumers do not get compensated for viewing advertising.

If we join together to create a consumer-centric advertising economy, don’t the three doom predictors go away? Consumers will be far more trusting of advertisers, consumers (who choose to) will want to view advertising, and while I won’t go so far as to say consumers will need advertising, some may become quite dependent on it as a valuable source of extra income.

Professor Clemons is right that advertising is broken. But he’s wrong that it can’t be fixed. It’s all about consumers. See what happens as we shift the advertising economy from intrusive to inclusive.