Bang for the Buck?

Consultants Al and Laura Ries, in their provocatively titled book, The Fall of Advertising and the Rise of PR, contend that “[t]he purpose of advertising is not to build a brand, but to defend a brand once the brand has been built by other means.” Furthermore, while many companies may think of advertising as a key marketing weapon for creating better brand perceptions, the father-and-daughter Ries team reviews the evidence and concludes that this simply isn’t true.

Another noted consultant, the former Coca-Cola marketing head Sergio Zyman, has issued his own critique of advertising and its inability to build brands and enhance brand relation- ships. Unlike the Ries team, who maintains that advertising? Cannot establish brand relationships because it is neither believed nor trusted, Zyman espouses that advertising fails simply because it ignores or neglects its major purpose, which is not to create brand or ad awareness, but to convey a clear and compelling sales message.

How far the Mighty have Fallen

So regardless of statements by leading academics that ad agencies can provide strategic insights, it appears that most companies don’t consider advertising a crucial resource for achieving their growth goals. And as Gallup consultants have noted, there are reasons that company leaders are becoming increasingly disenchanted with advertising.

In addition, in spite of projections that total advertising spending may increase 2.9% this year, there is mounting evidence that leading companies may be questioning the role of advertising and the amounts they have been spending on it. Mega-advertiser Philip Morris recently announced that, rather than increase its advertising budget, it would greatly increase its promotional expenditures in the fourth quarter of this year, adding $600-650 million on top of an already announced $350 million targeted for price promotions.

Procter & Gamble, long noted for its marketing and advertising leadership, describes its new brand manager training program as one that now spends “relatively little class time with conventional media advertising” and trumpets the performance of companies such as Starbucks and In-N-Out Burger that “spend practically nothing on marketing.”

Advertising’s well-publicized woes don’t appear to be ending with the threat of budget shifts from advertising to promotions. Witness the continuing disappearance of once-proud multinational ad agencies, such as 96-year-old D’Arcy, which was absorbed into the Publicis Groupe. For additional testimony, review the recent hammering that ad agency holding companies have been suffering on Wall Street. Advertising giant Interpublic has seen its stock dive more than 70% in the past few years, and other traditional agency powerhouses are experiencing precipitous market cap slides as well.

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