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Welcome to the Marketing Evolution...Marketing Today (tm)

 

Permission Marketing
by Seth Godin


CHAPTER THREE

THE EVOLUTION OF MASS ADVERTISING.
MASS ADVERTISING CREATED MASS MARKETERS.

One hundred years ago, small companies ruled the earth.

Virtually every retail dollar went to a small, individually owned business. Local businesses were responsive, trusted and capable. They had the infrastructure to deal with clients who didn't have credit cards, telephones or Federal Express account numbers.

Without a mass communication infrastructure or the technology to expand, businesses stayed small and local.

It was impossible for them to imagine a nationwide advertising campaign. New customers were acquired one at a time, usually by word of mouth or by door-to-door canvassing.

Companies knew exactly what a new client was worth, and they acted accordingly. A proprietor would spend hours with a prospect, knowing that the individual interaction would pay off many times over.

Consumers responded to this personal care and developed the expectation that they would be sold to personally. The local bookseller would read a book before recommending it. The local cheese merchant would happily offer a taste of a new flavor to a customer. It wasn't unusual for a shopkeeper to spend some extra time with a customer, old or new, or for the merchant's supplier to also be his neighbor.

GIANT BRANDS GAVE RISE TO INTERRUPTIBLE MEDIA

Giant brands and multi-national companies were created as the result of several interconnected socio-technological changes that occurred simultaneously.

The first change was the industrial revolution. Without the economies of scale that came from building factories, there was no reason at all to get big. When everything was handmade, having more craftsmen didn't make your business more efficient or lucrative.

Once there were economies, though, businesses faced a choice. They could grow or they could wither. Many entrepreneurs saw the opportunity that came from scaling their businesses and raised the money to do just that.

Second, the development of the car and the truck made it possible to deliver things that were made more than a few miles away. Suddenly, companies could buy things in bulk, manufacture many items and then ship them around the country, and even around the world.

As a result of these investments, companies needed mass advertising. It did no good to build a factory that was efficient at mass production if it was impossible to deliver those goods to a larger market. And you couldn't do that if you couldn't persuade consumers to buy them. Instead of relying solely on word of mouth and personalized sales, big companies had no choice but to discover a way to get lots and lots of people to buy the output of their factories.

The big surprise is that it wasn't factories or the car that caused the big increase in corporate profitability. It was advertising. The economies that came from establishing a product as the leading brand, the huge premiums that were derived by charging extra for a trusted name, dwarfed the savings in production.

Marketing rapidly became the most profitable part of the enterprise. In the words of one pundit, "everything else is an expense." The ability to attract large numbers of customers with advertising was a revelation to these new companies. First enamored and then addicted, they based their entire business model and organization around the ability to reach the masses.

In the 1920s, advertising men were considered the saviors of industrialized society, the sophisticated men who would harness the awesome power of the crowd to uplift society. Advertising was credited with bringing the clean, the pure, and the powerful to ordinary citizens, lowering prices and vastly increasing the direct responsibility that manufacturers had over their products.

Once manufacturers began to advertise, they discovered (some quite by accident) an extraordinary truth: the more they advertised, the more sales they gained. And the value of the sales exceeded the cost of the advertising! The perpetual motion machine of commerce had arrived.

The development of content-filled media to hold all this advertising was a direct consequence of this discovery. Interruption Marketers needed something to interrupt, so newspapers flourished and magazines were started by the thousands. Did interruption marketing lead to the creation of mass media as we know it? Absolutely!

This evolution is best summarized by the story of Crisco.

CRISCO: PRODUCT-DRIVEN MARKETING EVOLUTION

In 1900, the folks at Procter & Gamble were heady with the success of Ivory soap. Ivory was the first packaged, branded soap that was able to compete with handmade soap, or unpackaged, bulk soap from the local general store. It was an insanely profitable, fast-growing business for this young company, but Ivory's success quickly brought about a problem. There was a limited supply of cottonseed oil, a major ingredient in the manufacture of Ivory.

Cottonseed oil was produced by just a few tightly controlled trusts, and three huge vendors were able to purchase virtually all of the oil on the market. P&G desperately needed a product that would use lots of cottonseed oil. This increased consumption would give P&G more clout and lead to more reliable supplies and better pricing.

For four years, researchers worked to create the ideal product that would use a lot of cottonseed oil. Eventually, they created Crisco, a product designed to replace lard just as Ivory had replaced homemade soap.

In 1908 when P&G introduced Crisco, there was no Time Magazine, and no General Hospital on which to advertise. Without reliable mass media, P&G relied on permission marketing.

They started by paying the train lines (the equivalent of today's airlines) to use Crisco instead of lard in the pies they served onboard (and to inform their customers when it was served). They secured testimonials from doctors and even rabbis, one of whom said that Crisco was, "The greatest advance for Judaism in 4,000 years."

P&G held society teas in all the major cities, asking a leading citizen to invite the leading ladies to attend. Of course, everything offered to go with the tea was baked with Crisco.

Finally, P&G introduced a series of free cookbooks. In a classic Permission Marketing technique, P&G didn't try to sell the product. Instead, they promoted the free cookbook. Once a prospect raised her hand for this information, the stories inside the cookbook taught her about the benefits of the product. The book quickly became a "bestseller."

The campaign succeeded. Crisco rapidly became a major profit center for P&G. It also impacted grocery stores and changed the way people cooked.

But once the ball began rolling, Crisco realized that Permission Marketing alone couldn't expand the brand's popularity fast enough. So they took advantage of the lack of clutter and switched gears to an Interruption Marketing campaign. Now that they had a sales base, they wanted to expand it, fast. So they began buying advertising anywhere they could find it. And because there was so little clutter, the advertising popularized the brand quickly and cheaply.

HOW INTERRUPTION MARKETING CREATES PERMISSION

OPPORTUNITIES

Once the corporate world caught a glimpse of mass brand advertising, mass marketers were hooked on Interruption Marketing. The reasons were simple:

- Interruption Marketing was easy. Build a few ads, run

them everywhere.

- Interruption Marketing was scaleable. If you need more sales, buy more ads.

- Interruption Marketing was predictable. With experience, a mass marketer could tell how many dollars in revenue one more dollar in ad spending would generate.

- Interruption Marketing fit the command and control bias of big companies. It was totally controlled by the advertiser, with no weird side effects.

- Interruption Marketing was profitable. The right product generated more profit than it cost the company to advertise.

Mass marketers optimized their organizations for this approach. They created brand managers and advertising agencies and measurement companies and focus groups and a myriad of other techniques to institutionalize their attachment to Interruption Marketing.

This focus on Interruption Marketing allowed the big brands to become even bigger and more dominant. The top 100 advertisers account for more than 87% of all advertising expenditures in this country. And more than 80 of these companies have been advertising for more than twenty years.

This has two important implications. First, behavior by these top advertisers dictates and drives the market as a whole. Second, and more important, is the fact that there are virtually no first generation marketers working at these companies.

To put it bluntly, big companies don't hire people to reinvent their already successful marketing techniques. Instead, they hire and train people to do exactly what the last advertising people did. They market Crisco the same way they did 80 years ago. The Rice Krispies box hasn't changed in years. Ford uses a marketing and distribution network they built in 1920.

Second and third generation marketers don't want to rock the boat in which they're sailing. They may have noticed that their current marketing techniques don't seem to work as well as they used to, but they weren't hired to demolish the distribution channel or to question the very foundation of their marketing heritage.

Permission Marketing represents a huge threat as well as a huge opportunity. Just as the fax machine altered the landscape of courier services and Federal Express,

Permission Marketing will change the way companies market products.

Many of the big companies will stick to their knitting and remain faithful to the marketing methods that got them to where they are today. This creates mammoth opportunities for new companies, for companies with nothing to lose, for companies with the flexibility and initiative to try a very different way of gaining and keeping customers.

CLICK HERE TO READ CHAPTER FOUR

Copyright 1999, Seth Godin. All rights reserved.

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Permission Marketing : Turning Strangers into Friends, and Friends
into Customers

by Seth Godin

Seth Godin is a very important  voice in the marketing field. Permission Marketing is  must reading for every marketer who plans to succeed in information age. A significant concept that will be more relevant as interactive  technology impacts marketing.

CLICK HERE FOR MORE INFO OR TO BUY: Permission Marketing at Amazon.com

 

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