The Future of Advertising, Part 3

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 an intriguing a perspective on what’s to come. Here’s the final installment of his conversation with moderator Doug Weaver, president of Upstream Group at iMedia's February Brand Summit. Click here to catch up on pat one and part two.

Question: Sean Cummings, American Express. Shouldn’t the promise of the digital model, aka the Amazons of the world, eventually eliminate …shelf-slotting spaces… and are we poised for yet another shift away from the traditional distribution that we just spent the last 15 years going towards?

DW: Has e-commerce and Amazon changed that model? 

JC: They can. It’s possible to do that. But the limitation, of course, is in the distribution. The problem is not ordering online; the problem is getting the order to where you live.

One of the strangest things is Sears and Montgomery Ward’s largest customers were in rural areas, but biggest customers for e-commerce are in urban areas. So I don’t know what that means. I’m just telling you that maybe there’s a whole market out there that many of you folks are not looking at as an important market, and if you don’t think farmer don’t have computers, believe me, they do.

So is it possible? Yes. But what percentage is ever going to be coming over e-commerce? I don’t know. Will it grow? I think it will grow to some extent. Is it ever going to be 30 percent of total retail sales? Uh-uh. It’s never going to be more than a fraction of supermarket sales, for example.

DW: You may buy a DVD player or you may buy office supplies online. There’s a big jump from that to everyday groceries.

Question: Tim McHale, Madison Avenue Consultants. Joe, we see there’s a pressure on the sales function at marketer and, of course, a pressure on the marketing side. Yet the VP sales and the VP marketing work for the same company, but more often than not, their objectives and their strategies are often different. There are some companies where there’s one person or one group where it’s VP sales and marketing, and I was just curious, based on all the marketers in the room, how do the marketers, the brand people, really coordinate between the sales function and the marketing function so that they are reconciled and work together rather than on conflicting sides of the table?

JC: I mentioned this before, the siloization within companies. Somebody has to do the strategic function of saying what are we, where are we going, what are we going to do, who are we, how we define ourselves, how do we identify ourselves, how do we sell our products, how do we -- and I think this is even a bigger question -- how do we develop a loyalty among our clients and our company? How will they always ask for our product?

I did a seminar a few years back for Chiquita banana. Bananas are a commodity. You buy a banana. You go to the store. Give me some bananas. And you buy the banana that they have there. You don’t go in and say, “Well, do you have any of these?” No. You don’t ask for bananas. So the job of Chiquita was to sell itself into the wholesale distribution and then into the supermarket and then persuade the customer to spend five cents a pound more for Chiquita bananas because they’re yellower and have little green on the edges.

So it’s not a single product one goes out and sells, and you don’t sell it to a single customer. You have to go through this whole distribution process, and of course, in a supermarket case, the bigger the supermarkets, the less important the consumers are and the more important the buyer at the supermarket is.

So to get back to the client, it’s that everybody has to have a goal, has to know what part they play in it. And one of the most important things is that companies, ad agencies, clients, generally compensate people on how well they do in their own little particular area and not how the whole company does as a whole.

I cover the compensation aspect of this in the book, and it’s once again the sales promotion guy is paid on how well the sales promotion works, not on how well the advertising works, even though advertising might be the best way of selling this product.

DW: By the way, if you haven’t picked up the book, I’m carrying this thing around like the Book of Mormon now. It is amazing, and it’s something that I…

JC: God Bless You, my friend.

DW: You got it. Joe’s got me on a 15 percent commission. I’m not sure how long it’s going to last. We have another question.

Question: Hi. Matt Freeman with Tribal DDB. We’re part of a plucky little startup called Omnicom. I’m just wondering if you are going to start a new…

JC: Have you called your office lately? Oh, I’m sorry. Go ahead.

MF: If you were going to start a new agency today, what would it look like, and then, of course, could we buy it?

JC: Absolutely. Well, I wouldn’t call it an agency, first of all. Agencies… were agents of the media when they began, which is the only reason we use that “agency” name, and that is the agencies in the late 19th century went to newspapers and magazines, bought bulk space, then went out and resold that space to people at a markup, and then those people finally said, “Well, you know, I’ll buy this advertising, but I don’t know what to put in there,” and they said, “Well, we’ll help you.” And it really wasn’t until about 1920 or so, led largely by Albert Lasker at Lord and Thomas, when the agencies finally said, “You know, we’ve got to do something, like, creatively. We’ve gotta create some catchy slogans and stuff.” So what’s why they’re called agents. So I wouldn’t use the word “agent.”

I would create a different terminology. I also wouldn’t use the word “consultant.” I would say a “marketing partner” or something else, like that would be maybe the proper name to use in that regard. And I would be the consultant. I would say, “We can create a strategic marketing plan for one of your products, and it will include all of the aspects in different ways to sell to market your product. We will emphasize what you should do most, what you should do least, or disregard some at all, where you should put your money, how you should spend it, and who you should hire to create these various things.”

That’s the position that agencies are trying. I believe Omnicom is working on a strategic partnership type of situation, but the lack of integration was mentioned to me, among other people, by Brian Williams, who is the president of Element 79, which is an Omnicom-owned agency. So did I answer the question? You want to get more detailed than that?

DW: One of the things that you talk about in the book is the fact that clients don’t trust agencies or holding companies to really deliver them agnostic strategy recommendations because ultimately, the recommendation is always, “Buy more of our stuff.”

JC: They haven’t done it. So it has to be a different entity to come in. Now, if Omnicom wants to buy somebody, buy Accenture. Buy a management consulting firm that has some credibility in the corporate world, and management consulting firms are dealing with the CEO of the company whereas the ad agencies are dealing with middle management. I think the reporting structure and the relationship has to be at a higher level, and it does have to be impartial in terms of the various media and the types of marketing strategies used.

DW: It sounds like the only vacuum that’s really left to fill here is strategy, and if you’re not providing that, then you’re just providing more of the same. Jordan?

Question: Hi. My name is Jordan Berman, with Showtime Networks, and before I joined…

DW: He loves cable, by the way.

Question: Hey, my kinda guy.

JC: I like satellite even better.

Question: Showtime, satellite or cable, we love it. We don’t care. Before I joined Showtime, I worked for a couple of agencies, including George Lois’… one of his last agencies. Many people in this room may know “I want my Maypo,” or my generation, “I want my MTV,” which I thought was an interesting repurposing. But George became a little crusty in his later years and would always rale against the death of the big idea, and I guess when you’re the crazy Greek of advertising, I guess he felt he had a monopoly on the big ideas.

I disagree with him, but I know you made comments about the fungibility of advertising. But I think there are a lot of great marketing ideas. What’s your thought in terms of is the big idea dead or are other people coming up with the big ideas and they don’t happen to work at ad agencies?

JC: You know George used to play basketball. As his game got worse the older he got, advertising got worse, and that is that the big idea ain’t a slogan. A big idea is not a new product. Purple Jell-O is not a big idea. I think the big ideas are going to be more involved with media selection, and when I say “media,” I don’t mean radio, television, magazines, newspapers, and outdoor. I mean direct contact, event sponsorship, everything else like that. We have to look at this thing very holistically.

So the big idea five years ago was “We’ll make the Rosemont Horizon outside of Chicago the Allstate Arena.” That was the big idea then. Next year, we need another new big idea. I think the changing nature of how you market and the necessity to change to reach different people all the time is the big idea itself. That is, we don’t talk to everybody the same way. We’re going to talk to kids differently than when we talk to adults, and I think that’s the big idea.

DW: Let me toss in a quick opinion here, and I think this may answer the question as well. One of the reasons why sitcoms just suck so bad -- I mean, look at the sitcoms on TV. Can you remember a hit from the last eight years? Nothing is happening in sitcoms. One of the reasons why sitcoms are so bad is that the people who write sitcoms have no point of reference in reality, other than watching other sitcoms. So they keep writing the same one again and again and again.

We have to challenge ourselves. In my opinion, we have to challenge ourselves in that are the people who are creating advertising solutions, do we have any point of reference other than other advertising? Are we breathing our own fumes so much that we’re not really out there in the real world, touching consumers and bringing back real new ideas that are rooted in consumer behavior?

So I think we’re saying very much the same thing. These good ideas are going to come from how people live their lives, not how we create better advertising.

JC: But let’s look at the market and how consumers are changing. If you take away the people watching cable and the people watching satellite and the people playing video games and the people on the Internet, what’s left are the least educated, the least affluent, sort of the older audience that’s still watching old-fashioned network television.

So what’s happened is that the best part of the audience -- and that is the best educated, the most affluent people who are in the best years in terms of consumers -- has migrated from television, except for those places like the Academy Awards, the Final Four, the Super Bowl, the Golden Globes, which are invented for television. So that’s the problem we face. The better part of the audience has left network television. Their cable, to them it’s television, but to the advertisers, it’s not television, it’s cable. It’s more specialized.

DW: It’s like Atlas Shrugged. All the really smart people are finding their way out.

JC: Well, they have disappeared from the scene.

DW: We have time for two quick questions and quick answers.

Question: I want to get back to ‘Bewitched.’ Oh, I’m Melissa Barron from Salon dot com, and I wanted to get back to ‘Bewitched’ because I think Joseph Jaffe yesterday was saying let’s talk about the sexy part of the business. And to me, creative execution, the big ads, the Super Bowl ads, the Got Milk? Campaigns… I’m wondering if you think one of the liabilities of our medium and why we won’t get, as one agency said a year ago, our natural-born right of this big pie is because the creative executions have really sucked and we’re trying to quantify something that inherently has an emotion attached to it and that we lead with technology and technocentric and media placement versus creative execution sometimes? I know it’s a little bit against the grain of the group sometimes, but where is our Got Milk? campaign online? We saw some good stuff from Kraft earlier, but generally, when I first came into this business five years ago, a gerbil exploding and saying, “Click here” was good creative.

DW: Yeah. How can we avoid the creative pitfalls and come up with great creative ideas on the Web, given the technology?

JC: I haven’t seen great creative ideas on the Web. I don’t want to criticize anybody that’s here, but the Web has proven to be, and will prove to be, a terrific sales tool. It has yet to prove itself to be a good advertising tool. Can it create brand names? Yes, it can create brands. But it doesn’t do it with effective advertising, which tells me that you don’t have to have effective advertising to create a good brand. Amazon? Starbucks? Yahoo? Google? All global brand names that have never really advertised very much.

So I think we’re going back to the thing of where is the big idea, and the big idea is as much in the medium as it is in the message, and that you talk to people in different ways, depending upon who they are, what their background is, and we just have to learn cookies. That’s what we have to do, and learn how to work those cookies.

DW: And one thing that I think we might have to get used to is the idea there may not be a big idea.

JC: Yeah. Right.

DW: It might be a million little ideas. One of the things that I tell my customers all the time is go out and solve a business problem today for a customer and you’ll get rewarded. I think we keep waiting for the big breakthrough campaign or the big breakthrough technology that’ll get us there. It may not be coming.

Joe, we are out of time. I cannot thank you enough for just a fantastic -- I’m sorry. One more. I’m going to thank you profusely in just a minute. Next question.

Question: Colleen Braithwaite from the Dannon Company. I wanted to get back to the question Matt was asking about what can an agency do to help integrate marketing. One of the things that our company started a couple years ago was getting all the agencies around the table and trying to identify what role each medium would play meeting the brand’s objective. I wonder if you see that as a trend in other companies, and does it work? I think it’s still an open question for us.

JC: We live in an era of change, and what works today might not work tomorrow. Remember when we were all on bulletin boards? It’s not just technology. People are changing. Your competitors are changing. The marketplace is changing. Distribution. Everything is changing all the time. If there is one mantra for the future, it’s you better have track shoes on…