Advertising works... kind of.

I was tickled by Paul Ashby’s forum thread on Brand Republic, stating that advertising works. If by “works” you mean wasting huge amounts of marketing budget and duping the customer into believing it is effective with ever having produced data to support the fact.

So why do firms still spend millions on advertising? I was party to a nugget of insight this week on a client trip to Paris. There’s not much to do on the Eurostar for two and a half hours, so the client was happy to chat about their recent marketing activities. It turns out that they’d just spent $800,000 on an airport advertising campaign. And the manager knew he’d get no tangible return on his spend.

Why would a sane person do this?

Here’s the reason. This firm, a large US-based technology firm, wants to increase its profile in Europe. Standard practice in these cases is for corporate HQ to dictate how and where European “satellite” operations spend their marketing budgets. Sometimes this centralized command-and-control process manages budget to the dollar.

So when corporate marketing offers $800,000 as long as it’s spent on marketing, what is a European marketing VP to do? Especially when they know that advertising will make little impact on sales.

This smart VP decides to advertise not where prospects might see the advert (because they’d tune it out anyway) but where his company colleagues and senior management would see it. If you work for a firm, then you tune in to its adverts, rather than tune them out (like prospects would).

The marketing VP then gets plaudits from his senior management for the high visibility. “You’re doing a great job – we saw the adverts in the airport.” This raised kudos allows the VP to attract more support for marketing and, importantly, more budget to do the things that he knows will actually affect sales.

So this VP is not insane after all – in fact he’s playing the game skilfully. But why do other people assume that advertising works? Perceived wisdom is defying hard facts – nobody can establish a link between advertising and sales. Is it the case that marketing is insane because everyone else is? And are marketers the only sane people around, but bound by the prevalent insanity to do daft things, like spend $800,000 on airport advertising?

Three myths of influence

Infoweek has a well-balanced article on the impact of social media on influence. I suggest you read it. While I don’t disagree with the analysis, the article highlights three key misunderstandings about the nature of influence.

The first is that influence on social media is somehow different to influence in the real world. Everybody these days seems to have a Web 2.0 centric view of the world. The hype reminds me of the “New Economy” – and we all know what happened to that. Social media is being overstated, and the influence of those participating in it is also overstated. Remember that only 6% of communication occurs on line – the lion’s share of interaction remains staunchly in the real world with face-to-face conversations.

The second misunderstanding in the article relates to the disappointing results of influencer outreach programmes. All of the activities discussed in the article targeted consumer influencers. But in fact the most important influencers in consumer markets are not consumers – they are retailers and distributors, consultants and professional advisers, lawyers and doctors. You can target these people, because they are easily identified, and you can measure their impact (if you’ve given them some tools of influence).

The final issue with the article is the assumption that links are equal to influence: the more link the greater the influence. Wrong. Malcolm Gladwell’s The Tipping Point identified three types of influencer (connectors, mavens and salesmen) – why does everyone want to be (or target) connectors? Connectors are necessary but not sufficient to influencer prospects. Only 3% of people are true connectors – the rest are link gatherers. In fact, we see that salesmen (persuaders) are the most effective influencers on decision makers.

There are several other myths of influence which I’ll be addressing in coming weeks. Unless these myths are challenged they will choke the notion that influencers can be identified and reached.

Silicon's Top 50 CIOs

I’m not a fan of top 50 lists. I think they are usually meaningless and pointless, naming obvious people in obvious companies.

Not so the silicon.com Top 50 CIOs. This identifies the top IT executives in the UK, across private and public organisations. The list makes interesting reading, including less obvious organisations such as Oxfam and Hampshire County Council.

As I recall, the average tenure of a CIO is around 18 months, so the chaps (and they’re almost all male) must appreciate some profile-building to aid the hop to their next post.

In the meantime, I pity them. The number of unsolicited calls from eager salespeople will reach industrial proportions. The CIO community is the most sought-after group of prospects. But appearing on the list means that these CIOs are even less likely to respond to marketing in traditional forms.

No, … and yes

Seth writes a neat couple of posts on the observation that some people just say no. it doesn’t seems to matter what the issue is, they just resist it. There is a natural inclination of many, particularly in a business setting, to preserve the status quo, even when it’s mad to do so.

So what to do about the Nos? One method is to target the Yeses, those people that do want to change.

What’s this got to do with Influencer Marketing? Simply, that Nos equate to detractors and Yeses are promoters or advocates. You can use promoters of your products or services (assuming you know who they are) to outweigh the detractors. This approach is at the heart of the Net Promoter Score concept.

In fact, most influencers are neither promoters not detractors. They just call it as they see it. One day they’ll be arguing for you and the next for someone else. Why is this? Because influencers don’t care about you. They have their own agendas, and they are different from yours.

There is a difference between influence and advocacy. Advocacy tends to erode influence, because the more one advocates the less independent they appear. The best form of advocacy (best = most benign) is where an influencer advocates a strategy or position, which is subsequently adopted by a vendor. Influencers like this, because it demonstrates their influence, and they can use it as an example when they are influencing others.

Brands are an outcome

I’ve just finished the major part of the book we’re doing, published by Butterworth-Heinemann. Hence the long gap between the last post and this. So expect more content from now on.

Anyway, one of the research themes we look at is the influence of brand on decision making. Did you know that there is no research available that supports the assertion that “building the brand” leads to more sales? None.

In simple terms, this means that any money pumped into branding is unlikely to translate into business success. This, presumably, would include the hilarious London Olympics 2012 pink splodge. Spookily, Seth Godin comments on more or less the same thing here.

But if brand is not a prerequisite for success, what is it? Firstly, brand is a consequence of success. Google is successful, so its brand becomes trusted. Secondly, brand is a measure of trust and expectation, not awareness. Anyone can get awareness is they spend enough. Ford is well-known – does it have trusted brand? (Answer: not if business success is the measure.)

Finally, it’s interesting to see how fragile a brand is, only as robust as the product or service quality it represents. In the UK, the banks are taking an absolute pasting on their charging regimes, and it seems that the US banks are having a few problems too. The trust with which we approach banks is being severely dented. And I predict that the first bank to promise no more unfair charges will be deluged with new custom, irrespective of their current brand status.