The Future of Advertising: Part 2

Joe Cappo’s book, The Future of Advertising: New Media, New Clients, New Consumers in the Post-Television Age traces ad agency consolidation, the impeding demise of television as an ad force, and more -- then lays out a startling yet ultimately logical roadmap for the future of bran marketing and advertising. Cappo recently retired from Crain Communications, Inc., where he was senior vice president. He was publisher of Advertising Age, and is a world-class speaker. Few people know the industry as well as Cappo does, or have as intriguing a perspective on what’s to come. Here’s another piece of the transcript of his conversation with moderator Doug Weaver, president of Upstream Group, at the iMedia Brand Summit in February.

DW: What I wanted to talk about here for a minute was television, specifically, the 30-second spot. Yesterday, Jeff Cole from the UCLA Center for Communication Policy got up and brought up the novel notion that advertisers are paying as much or more to be on ‘Friends’ now as they were on ‘Cosby’ 20 years ago, and while they’re getting a 12 share, which is a fraction of what they got on ‘Cosby,’ the advertising, in his opinion, was only getting about a 5 share. The efficacy of the 30-second spot. We saw a really, in my opinion, abysmal parade of 30-second spots at the Super Bowl last weekend. What are your thoughts of the 30-second commercial? Is it going to be with us for a while? What’s going to drive that?

JC: About two years ago, Hal Riney, who is one of the great creative genius of the latter part of the 20th century -- and the voice of many of them, was quoted in Advertising Age as saying the 30-second spot is dead. Well, it’s not dead. Things like that don’t die. What they do is they lose their strategic significance, and what’s happened -- a typical example. Here’s television’s erosion. Twenty-five years ago, if you took a 30-second spot, ran it in prime time on ABC, CBS and NBC, you would have reached 90 percent of the households watching television, which is basically the whole country.

Today, if you made that same buy -- the three networks -- and you added the FOX Network, you would reach less than 40 percent of the households watching television. The proliferation of the media, the growth of cable, the growth of satellite, video games, the VCR, the DVD, everything else that’s counted among that universe of households watching television, that is what has happened, and that’s why the book is titled In the Post-Television Age. Television is no longer the 800-pound gorilla that’s pushing all of this stuff ahead. In fact, I might even say that right now, what’s going on e-commerce and what’s going on the Internet is rapidly becoming the 800-pound gorilla.

Now, why are they still advertising on the Super Bowl? There are still companies out there who reach mass audiences. They want to reach as many people as possible. The number of opportunities to reach huge numbers of people is declining. So they will overspend in order to get an audience of 20, 30, 40 million or 90 million, in the case of the Super Bowl. They will overspend in order to get that amount. That’s why the up-front area -- that’s like in April and May when the clients start negotiating with the broadcasters -- still generated a lot of money for television because they want to be on Friends and they want to be in the Super Bowl and the Academy Awards and the Golden Globes, et cetera.

But what we see now is that there are fewer of those instances. A top-rated show is now getting half the audience a top-rated show got 25 years ago, and this makes it harder on the agencies because they have to look at these narrower little segments of markets in order to reach people. That’s why, in my opinion, media and media selection is becoming far more strategic than it ever was before.

DW: Media is driving the business now where creative used to drive it.

JC: And it should drive the business. Why? Because if you believe in the principles of integrated marketing communications, the message does not start with the client. The message starts with the audience. So in a perfect world, you would say, ‘I’m going to advertise on the Man Show.’ You create a commercial for me to run on the’Man Show, which sure as heck is going to be different than the commercial that runs on Oxygen Channel, even though it might be the same product.

And so it should be a consumer driven situation as opposed to the past where we created this whole image, we created million-dollar commercials, and then we ran them all over the place. Well, now they should be more targeted.

DW: A lot of us thought that quality television was over until the ‘Man Show’ came along and (inaudible). We have a question back here.

Question: Hi. Chris Theodoros from Google. Quick question: as Sarbanes-Oxley has clearly changed many industries out there, advertising stands to change, in many ways more than most. Can you comment on that? Is the billing scandal that we just saw with ONDCP the tip of the iceberg? And how else do you think the advertising business is going to change as a result?

JC: Well, it’s going to change in many different ways. If it continues on this same track, it’s going to decline in importance in the marketing structure because the old-fashioned principle of we start with our advertising, then we put the sales promotion, then we do this and then we do that -- everything else is extra in addition to the advertising. The world ain’t like that anymore.

What’s happened now is that clients are creating huge, global types of sales promotion campaigns, and they even have the sales promotion agency… creating the commercials that run to promote the sales promotion effort.

McDonald’s does it all the time. That’s why you see so many different messages from McDonald’s because you don’t have the same agency creating all these commercials. The fast-food business is a very sales promotion driven business, and giving away Beanie Babies, people will come into buy the Beanie Babies. They don’t care about the damn hamburgers. They want the Beanie Babies, which is, I believe, a big flaw in the whole marketing picture.

So I believe that advertising, as we have known it, is declining and will continue to decline in importance. It will become a provider of advertising services the same way a printer prints your brochures -- not part of the strategic thing. They just do it. And it’s already evidenced in advertising.

In fact, there is what I call a fungibility of advertising, and I’ll give you a typical example. A couple years ago…. the chief creative officer of BBDO, I was sitting at a conference he was doing. He played a Pepsi commercial and he played a Coca-Cola commercial, and he played them, and everybody is there and watching the commercials. He said, “Did anybody notice they put the soundtrack for Pepsi on the Coke commercial, the soundtrack for Coke on the Pepsi commercial?” and nobody even got it. People are singing, happy, kids running around and stuff like that. Now, that’s fungibility. It means being able to substitute one thing for another thing, and that’s what happening in advertising. You get your generic ad.

The other thing is you see a commercial. There’s a grandfather, he’s smiling, and he’s holding a kid, and then they're walking down and fishing at the pier, and then there’s a family walking down the mall. What’s the commercial for? Could be a bank. Insurance company. It could be for ADM. It could be for GE, which brings good things to life. It’s the generic commercial. We have all of these pictures and images, and then at the end, we say, ‘Welcome to’ whatever it is. That’s the fungibility of advertising, and that’s what’s wrong with it because it has more to do with writing lines and slogans and funny pictures and everything than it has to do with identifying an audience and communicating with that audience.

Question: Alan Gerson, iMedia Communications. I understand what makes the media channels new -- new media. I understand even new clients. What, in your judgment, makes the consumer new? Your subtitle is New Channels, New Clients, New Consumers.

JC: Actually, a few years earlier I wrote a whole book about what makes people different. If we just take our market, for example, the US, a tremendously different ethnic mix in the US, a tremendous difference in education among Americans, a difference in taste of younger people. If you don’t know the difference between a generation Y and a baby boomer, you’re talking to two people who come from different worlds, a Martian and a Venusian. That’s the way these are.

I was born in the Depression. I was part of the reason it was a Depression because I was born then. But I grew up during World War II. I was ten years old at the end of the war. I was affected by that. In no way are my kids or even my younger relatives affected by it in the same way I was affected by that, and we are all products of the era in which we were brought up in.

How about a kid today? I didn’t see a computer until I was 35 years old or something. My kids had a computer when they were nothing. That’s the way it is, and that’s going to change. These are new consumers.

DW: One of the topics, when we were talking yesterday at dinner -- and I suggested Joe write a book about this -- was the idea of media graphics -- that people will be defined by the media they consume and how they consume it. So I think that when we look forward, we may end up seeing people who are really defined by how much they rely on wireless communication and so forth, and the strategy for reaching them will almost be completely dictated by what media they choose.

JC: We went from mass media to class media, and we’re moving very rapidly to individual media. If you take TiVo, for example, you can create a profile of a person just the way they have their TiVo programmed, and that’s what TiVo is doing.  TiVo is now talking to advertisers about communicating with people, based on the types of programming they watch because that says a lot about the people, and we’re in that era.

What gets me about most of you or business is that you’re not really taking great advantage of the individual identification nature of the Web, and many of you think of yourselves as mass communicators, and you should be thinking of yourselves as individual communicators.

DW: One of the things I read recently, I think it was last week, ABC and NBC came out and said that they wanted to blow up the programming schedule for the year. They’re no longer going to have TV seasons. They’re pushing back on the idea of the up-fronts and the sweeps period and so forth. TV keeps making these incremental steps to change themselves, and it reminds me of Gorbachev with communism back in the last ‘80s – “We’re going to make communism better, a little bit at a time, till it’s happy and friendly.” Doesn’t TV really need a Yeltsin at this point? Isn’t it time to rethink television in its entirety and how it works for marketers and how it works for consumers?

JC: I think they deserve an Osama bin Laden rather than a Yeltsin at this time. Here’s what television is doing. We’re getting this money in, and audience is shrinking. So they rationalize, “We can’t spend as much money on programming. So we’ll get ‘Friends’ off the air because that’s costing us millions of dollars a week, and we’ll put on ‘Survivor’ and ‘Who Wants to Marry a Millionaire’ and ‘Who Doesn’t Want to Marry a Millionaire’ and ‘Average Joe.’” I mean, I’m the average Joe. They don’t have me on there. So they’ve gone toward cheap programming. Cheap.

If you watch all of these reality shows, the MCs are always not ready for prime time or beyond their prime time players. Monty Hall will come on on the next kind of reality show because they don’t want to spend a lot of money on programming. So that’s why television has become tawdry. The sexual innuendo in television is just incredible. The violence factor on television is -- how many dead bodies you have to see on ‘CSI’ to say okay, I know. I was a police reporter for the first six years of my career. I saw a lot of dead bodies. I smelled them too. You don’t smell them on ‘CSI.’ If they had smell-o-vision, you would never watch that show again because you want to take your clothes off after you’ve been through that.

DW: Actually, FOX is working on that right now.

JC: I’ll bet they are. Talk about smell . . .

Tomorrow: Cappo performs an autopsy on the "big idea" and ecplains why he hasn’t seen any great creative on the Web.