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

 

Chapter 1
Permission Marketing

by Seth Godin


CHAPTER ONE

THE MARKETING CRISIS THAT MONEY WON'T SOLVE. 
YOU'RE NOT PAYING ATTENTION. NOBODY IS.

It's not your fault. It's just physically impossible for you to pay attention to everything that marketers expect you to-like the 17,000 new grocery store products that were introduced last year, or the $1,000 worth of advertising that was directed exclusively at you last year.

Is it any wonder that consumers feel like the fast-moving world around them is getting blurry? There's TV at the airport, advertisements in urinals, newsletters on virtually every topic, and a cellular phone wherever you go.

This is a book about the attention crisis in America and how marketers can survive and thrive in this harsh new environment. Smart marketers have discovered that the old way of advertising and selling products isn't working as well as it used to, and they're aggressively searching for a new, enterprising way to increase market share and profits. Permission Marketing is a fundamentally different way of thinking about advertising and customers.

There's no more room for all these advertisements!

I remember when I was about five years old and started watching television seriously. There were only three main channels-2, 4 and 7, plus a public channel and UHF channel for when you were feeling adventuresome. I used to watch Ultraman every day after school on channel 29.

With just five channels to choose from, I quickly memorized the TV schedule. I loved shows like The Munsters, and I also had a great time with the TV commercials. Charlie the Tuna, Tony the Tiger and those great board games that seemed to magically come alive all vied for my attention. And they got it.

Growing up, it seemed like everyone I met was part of the same community. We saw the same commercials, bought the same stuff, discussed the same TV shows.

Marketing was in a groove - if you invented a decent product and put enough money into TV advertising you could be pretty sure you'd get shelf space in stores. And if the ads were any good at all, people bought the products.

About ten years ago, I realized that a sea change was taking place. I had long ago ceased to memorize the TV schedules, I was unable to keep up with all the magazines I felt I should be reading, and with new alternatives like Prodigy and a book superstore, I fell hopelessly behind in my absorption of media.

I found myself throwing away magazines unopened. I was no longer interested enough in what a telemarketer might say to hesitate before hanging up. I discovered that I could live without hearing every new Bob Dylan album and that while there were plenty of great restaurants in New York City, the ones near my house in the suburbs were just fine.

The clutter, as you know, has only gotten worse. Try counting how many marketing messages you encounter today. Don't forget to include giant brand names on T-shirts, the logos on your computer, the Microsoft start-up banner on your monitor, radio ads, TV ads, airport ads, billboards, bumper stickers and even the ads in your local paper.

For ninety years, marketers have relied on one form of advertising almost exclusively. I call it Interruption Marketing. Interruption, because the key to each and every ad is to interrupt what the viewers are doing in order to get them to think about something else.

INTERRUPTION MARKETING-THE TRADITIONAL APPROACH TO GETTING CONSUMER ATTENTION

Almost no one goes home eagerly anticipating junk mail in their mailbox. Almost no one reads People magazine for the ads. Almost no one looks forward to a three minute commercial interruption on Must See TV. Advertising is not why we pay attention. Yet marketers must make us pay attention for the ads to work. If they don't interrupt our train of thought by planting some sort of seed in our conscious or subconscious, the ads fail. 

Wasted money. If an ad falls in the forest and no one notices, there is no ad.

You can define advertising as the science of creating and placing media that interrupts the consumer and then gets him or her to take some action. That's quite a lot to ask of thirty seconds of TV time or 25 square inches of the newspaper, but without interruption, there's no chance or action, and without action, advertising flops.

As the marketplace for advertising gets more and more cluttered, it becomes increasingly difficult to interrupt the consumer. Imagine you're in an empty airport, early in the morning. There's hardly anyone there as you leisurely stroll towards your plane.

Suddenly, someone walks up to you and says, "Excuse me, can you tell me how to get to Gate 7?" Obviously, you weren't hoping for, or expecting, someone to come up and ask this question, but since he looks nice enough and you've got a spare second, you interrupt your train of thought and point him on his way.

Now, imagine the same airport, but it's three in the afternoon and you're late for your flight. The terminal is crowded with people, all jostling for position. You've been approached five times by various faux charities on your way to the gate, and you've got a headache to top it all off.

Same guy comes up to you and asks the same question. Odds are, your response will be a little different. If you're a New Yorker, you might ignore him altogether. Or you may stop what you were doing, say, "sorry," and then move on.

A third scenario is even worse. What if he's the fourth, or the tenth, or the one hundredth person who's asked you the same question? Sooner or later you're going to tune out the interruptions. Sooner or later, it all becomes background noise.

Well, your life is a lot like that airport scene. You've got too much to do and not enough time to get it done. You're being accosted by strangers constantly. Every day, you're exposed to more than four hours of media. Most of it is optimized to interrupt what you're doing. And increasingly, it's getting harder and harder to find a little peace and quiet.

The ironic thing is that marketers have responded to this problem with the single worst cure possible. To deal with the clutter and the diminished effectiveness of Interruption Marketing, they're interrupting us even more!

That's right. Over the last thirty years, advertisers have dramatically increased their ad spending. They've also increased the noise level of their ads-more jump cuts, more in-your-face techniques-and searched everywhere for new ways to interrupt your day.

Thirty years ago, clothing did not carry huge logos. Commercial breaks on television were short. Magazines rarely had three hundred pages of ads (as many computer magazines do today). You could even watch PBS without seeing several references to the "underwriter."

As clutter has increased, advertisers have responded by increasing clutter. And as with pollution, because no one owns the problem, no one is working very hard to solve it.

CONSUMERS ARE SPENDING LESS TIME SEEKING ALTERNATIVE SOLUTIONS

In addition to clutter, there's another problem facing marketers. Consumers don't need to care as much as they used to. The quality of products has increased dramatically. It's increased so much, in fact, that it doesn't really matter which car you buy, which coffee maker you buy, or which shirt you buy. They're all a great value and they're all going to last a good long while.

We've also come a long way as consumers. Ninety years ago, it was unusual to find a lot of brand name products in a consumer's house. Ninety years ago, we made stuff, we didn't buy it. Today, however, we buy almost everything. Canned goods. Bread. Perked coffee. Even water. As a result, we already have a favorite brand of almost everything. If you like your favorite brand, why invest time in trying to figure out how to switch?

We're not totally locked in, of course. It wasn't too long ago that cake mix was a major innovation. Just a few years ago, we needed to make major decisions about which airline was going to be our supplier of frequent flyer miles. And today, if you're going to get health care, you've got to make a serious choice. But more often than not, you've already made your decisions and you're quite happy with them.

When was the last time someone launched a major new manufacturer of men's suits? Or a large nationwide chain of department stores? Or a successful new nationwide airline? Or a fast food franchise? It can be done, certainly, but it doesn't happen very often. One of the reasons it's such a difficult task is that we're pretty satisfied as consumers.

If the deluge of new products ceased tomorrow, almost no one would mind. How much more functional can a T-shirt get? Except for fast moving industries like computers, the brands we have today are good enough to last us for years and years. Because our needs as consumers are satisfied, we've stopped looking really hard for new solutions.

Yet, because of the huge profits that accrue to marketers who do invent a successful new brand, a new killer product, a new category, the consumer is deluged with messages. Because it's not impossible to get you to switch from MCI to Sprint, or from United Airlines to American Airlines, or from Reebok to Nike, marketers keep trying. It's estimated that the average consumer sees about one million marketing messages a year-about 3,000 a day.

That may seem like a lot, but one trip to the supermarket alone can expose you to more than 10,000 marketing messages! An hour of television might deliver 40 or more, while an issue of the newspaper might have as many as 100. Add to that all the logos, wallboards, junk mail, catalogues, and unsolicited phone calls you have to process every day and it's pretty easy to hit that number.

A hundred years ago, there wasn't even a supermarket, there wasn't a TV show, and there weren't radio stations. MASS MEDIA IS DEAD. LONG LIVE NICHE MEDIA! Technology and the marketplace have also brought the consumer a glut of ways to be exposed to advertising.

When the FCC ruled the world of television, there were only three networks and a handful of independents. Networks made a fortune because they were the only game in town. Now there are dozens, and in some areas, hundreds of TV channels to choose from.

The final episode of Seinfeld made media headlines. Yet thirty years ago, Seinfeld's ratings wouldn't have made Neilsen's list of top 25 shows of the season. With an almost infinite number of options, the chances of a broadcast, even a network broadcast, reaching almost everyone are close to zero.

Even worse is the World Wide Web. At last count, there were nearly 2,000,000 different commercial web sites. That means that there's about 25 people online for every single website...hardly a mass market of interest to an interruption marketer.

Alta Vista, one of the most complete and most visited search engines on the internet, claims to have indexed 100 million pages. That means that their computer has surfed and scanned 100 million pages of information, and if you do a search, that's the database you're searching through. It turns out that in response to people who do searches online, Alta Vista delivers about 900 million pages a month. That means that the average page that they have indexed in their search engine is called up exactly nine times a month. Imagine that. Millions of dollars invested  in building snazzy corporate marketing sites and an average of nine people a month search for and find any given page of information on this search engine.

This is a very, very big haystack, and interruption marketers don't have that many needles. Marketers have invested (and almost completely wasted) more than a billion dollars on web sites as a way of cutting through the clutter. General Electric has a site with thousands of pages. Ziff-Davis offers a site with more than 250,000 pages! And a direct result of this attempt to cut through the clutter is the most cluttered, least effective marketing of all.

THE FOUR APPROACHES TO KEEPING MASS MARKETING ALIVE

A quick look at the newsstand at Barnes & Noble will confirm that the problem of clutter saturation isn't limited to electronic media. There are enough consumer magazines (ignoring the even larger category of trade magazines for a moment) to keep a reader busy reading magazines full time, 24 hours a day, seven days a week.

Obviously, the mass market is dying. The vast splintering of media means that a marketer can't reach a significant percentage of the population with any single communication. That's one reason the Super Bowl can charge so much for advertisements. Big events are unique in their ability to deliver about half the consumers watching TV, so they're the perfect platform for Interruption Marketing aimed at the mass audience.

Other than buying even more traditional advertising, how are mass marketers dealing with this profound infoglut? They're taking four approaches: (1) First, they're spending more in odd places. Not just on traditional TV ads, but a wide range of interesting and obscure media. Campbell's Soup bought ads on parking meters. Macy's spends a fortune on its parade. Kellogg's has spent millions building a presence on the World Wide Web-a fascinating way to sell cereal.

Companies have seen that a mass market broadcast strategy isn't working as well as it used to, especially when targeting the hard-to-reach upper income demographic. As this lucrative audience spends less time watching TV, marketers are working overtime trying to find media with less clutter, where their interruption techniques can be more effective.

Marketers hire Catalina Corporation to print their coupons on the back of receipts at the grocery store. They buy ads on the floor of the cereal aisle. There are ads atop taxis in New York City and on the boards around the rink at the hockey game. Fox even figured out a way to sell the rights to the small area over the catcher's shoulder, so TV viewers would see the ad throughout an entire baseball game.

(2) The second technique is to make advertisements ever more controversial and entertaining. Coca-Cola hired talent agency CAA to enlist top-flight Hollywood directors to make commercials. Candies features a woman sitting on a toilet in its magazine ads (for shoes!). Spike Lee's ad agency did more than fifty million dollars in billings last year.

Of course, as the commercials try harder to get your attention, the clutter becomes even worse. An advertiser who manages to top a competitor for the moment has merely raised the bar. Their next ad will have to be even more outlandish in order to top the competition, not to mention their previous ad, to keep the consumer's attention.

The cost of making a first-rate TV commercial is actually far more, per minute, than a major Hollywood motion picture. Talking frogs, computer graphics and intense editing now seem to be a requirement.

A side effect of the focus on entertainment is that it gives the marketer far less time to actually market. In a fifteen second commercial (increasingly attractive as a cost-cutting way to interrupt people even more often), ten or even twelve seconds are devoted to getting your attention, while just a few heartbeats are reserved for the logo, the benefit and the call to action.

Take the interruption challenge! Write down all the companies who ran commercials during your favorite TV show last night. Write down all the companies that paid good money to buy banners on the Web during your last surfing expedition. If you can list more than ten percent of them, you're certainly the exception.

(3) The third approach used to keep mass marketing alive is to change ad campaigns more often in order to keep them "interesting and fresh." Tony the Tiger and Charlie Tuna and the Marlboro man are each worth billions of dollars in brand equity to the companies that built them. The marketers behind them have invested a fortune over the last forty years, making them trusted spokesmen (or spokesanimals) for their brands.

Nike, on the other hand, just ran a series of ads without the swoosh, arguably one of the most effective logos of the last generation. Apple Computer changes its tagline annually. Wendy's and McDonald's and Burger King jump from one approach to the other, all hoping for a holy grail that captures attention.

In exchange for these brief bits of attention (remember the hoopla when they replaced Mikey on the Life box?) these marketers are trading in the benefits of a long term brand recognition campaign. It's a trade they're willing to make, because Interruption Marketing requires it. Without attention, there is no ad.

(4) The fourth and last approach, which is as profound as the other three, is that many marketers are abandoning advertising and replacing it with direct mail and promotions. Marketers now allocate about 52% of their annual ad budgets for direct mail and promotions, a significant increase over past years.

Of the more than $200 billion spent on consumer advertising last year in the US, more than $100 billion was spent on direct mail campaigns, in-store promotions, coupons, free standing inserts and other non-traditional media. Last year alone Wunderman, Cato, Johnson, did more than $1.6 billion in billings for its clients (folks like AT&T).

The next time you get a glossy mailing for a Lexus, or enter an instant win sweepstakes at the liquor store, you're seeing the results of this trend toward increased direct marketing efforts. Advertisers are using them because they work. They are somewhat more effective at interrupting you than an ad. They're somewhat more measurable than a billboard. Best of all, they give the marketer another tool to use in their increasingly frustrating fight against clutter. After all, there are only five or ten pieces of junk mail in your mailbox every day-not 3,000. And another few feet of shelf space at the supermarket can lead to a dramatic upturn in sales.

Direct marketing breaks through the clutter, temporarily. Even though they work better than advertising, these techniques are astonishingly wasteful. A 2% response for a direct mail campaign will earn the smart marketer a raise at most companies. But a 2% response means that the same campaign was trashed, ignored or rejected by an amazing 98% of the target audience! From the perspective of the marketer, however, if the campaign earns more than it costs, it's worth doing again.

Of course, just as suburbanites learned when they fled the city to avoid the crowds, if a strategy works, other people will be right on your heels. That bucolic countryside rapidly fills up with other people looking to get away from it all. Correspondingly, as each of these promotional media becomes measurably effective, every smart marketer rushes to join in. Finding a unique approach that cuts through the clutter is usually very short lived.

Virtually every supermarket now charges a shelving allowance, for example, which manufacturers pay for if they want more shelf space for their products. Every liquor store is already jammed with promotions. Every mailbox in the country is brimming with catalogs for clothes, gardening equipment and fountain pens.

Direct marketers are responding to this glut by using computers. With access to vast amounts of computerized customer information, marketers can collate and cross-reference a database of names to create a finely-tuned mailing list, and then send them highly targeted messages. For example, a direct marketer might discover that based on past results, the best prospects for its next campaign are single women who are registered

Democrats, who make more than $58,000 a year and have no balance on their credit card. This information is easily available, and marketers are now racing to make their direct marketing ever more targeted. Of course, database marketing is a weapon available to any marketer, so like all trends in Interruption Marketing, this one will soon lose its edge. When others jump in as well, the clutter will inevitably catch up.

The last frontier of Interruption Marketing appears to be exemplified by the movie Titanic. James Cameron showed the world that outspending any rational marketer will indeed cut through the clutter. Hollywood has jumped on this bandwagon with marketing campaigns for Godzilla and other films that at first glance, can't possibly bring in enough ticket sales to justify the expense.

Nike uses the same approach to sell sneakers, and now this radical overspending strategy is being used by others, especially on the internet. The thinking behind it is based on an all or nothing roll of the dice. Basically, because clutter is so pervasive, anyone who can successfully break through and create a new mass market product will reap huge rewards. And betting vast amounts of other people's money on that breakthrough is one way to play.

Of course, once there's a proven pattern that big spending can win, others in the category will jump in as well. The bar will be raised yet again, and the only winners will be the media companies that sell the air time and ad space in the first place.

Why ad agencies don't work to solve the problem

What about the ad agencies? With so many talented people, why aren't they working to solve this problem?

Unfortunately, the clutter wars are taking their casualties at the agency side as well. The big agencies, the ones who could afford to take the lead in this challenge, are faced with three dismal problems:

(1) First, clients are giving the agencies a much shorter leash. Leo Burnett used to keep clients for twenty or thirty years. Levi's stayed at FCB for 68 years. That's so long that not one person at either company was probably born when the account work was started on Levi's.

Today, however, it's not unusual for a marketer to change agencies after two or three years. Companies that fired their ad agencies in the last year include Bank of America, Compaq, Goodyear, and many more.

(2) The second problem is that the stock market has been conducive to agency consolidations. The best way to make money in advertising today is to buy ad agencies and take them public. As a result, some of the best minds in the business have been focusing on building agencies, not brands.

(3) And last, the commission structure that every ad agency was built upon has been dramatically dismantled.

Traditionally, agencies were paid by media companies. They got to keep 15% of all the ad money that the client spent on ad space in the form of a commission from the magazines and TV networks where they ran their ads.

This meant that big clients could generate huge profits for the ad agencies, which funded work on new approaches to advertising as well as the innovative ads for new, smaller clients. But now the big guys have decided to put a stop to this subsidizing, and it's rare to find an ad agency who still gets a straight 15% commission on media buys for their big clients.

INTERRUPTION MARKETERS FACE A CATCH 22

To summarize the problem that faces the Interruption

Marketer:

1. Human beings have a finite amount of attention. You can't watch everything, remember everything, or do everything. As the amount of noise in your life increases, the percentage of messages that get through inevitably decreases.

2. Human beings have a finite amount of money. You also can't buy everything. You have to choose. But because your attention is limited, you'll only be able to choose from those things you notice.

3. The more products offered, the less money there is to go around. It's a zero sum game. Every time you buy a Coke, you don't buy a Pepsi. As the number of companies offering products increases, and as the number of products each company offers multiplies, it's inevitable that there will be more losers than winners.

4. In order to capture more attention and more money, Interruption Marketers must increase spending. Spending less money than your competitors on advertising in a cluttered environment inevitably leads to decreased sales.

5. But this increase in marketing exposure costs big money. Interruption marketers have no choice but to spend a bigger and bigger portion of their company's budgets on breaking through the clutter.

6. But, as you've seen, spending more and more money in order to get bigger returns leads to ever more clutter.

7. Catch-22: The more they spend, the less it works. The less it works, the more they spend.

Is mass marketing due for a cataclysmic shakeout?

Absolutely. A new form of marketing is changing the landscape, and it will affect interruption marketing as significantly as the automobile affected the makers of buggy whips.

CLICK HERE TO READ CHAPTER TWO

  Copyright 1999 Seth Godin. All rights reserved.

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Permission Marketing : Turning Strangers into Friends, and Friends
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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.

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