Advertising

Networked Selling

Selling has gone social. Advertisers can now rely on consumers and their interests in locating bargains and evaluating shopping experiences to promote the advertisers’ products. Most of us have had experience with a Web site such as Amazon.com, for example, where one’s purchases are instantly calibrated in terms of other like-minded consumers’ purchases and a targeted list of additional “recommendations” is presented for consideration. That was an early application of networked selling. Today, there are many more such “apps” and services, and with each new one consumers are asked to reveal ever more information about themselves, their personal preferences, and their buying habits. Using the smart-phone application Shopkick, for example, consumers are provided with advice on where to find bargains in local retail stores and can earn points, or credits toward purchases, merely by visiting a store—their presence is automatically recorded by an onsite Shopkick tracking device (Cliff ord 2010). Additional points can be earned by entering a dressing room to try on goods or by using one’s phone to scan barcodes on items being promoted in the store. Shoppers also can invite friends to visit (thus earning more points) or share their shopping experiences through links to Facebook and Twitter (two popular social networking services). Swipely, another social shopping service, allows consumers to publish their purchases online merely by swiping their credit or debit cards at the time of purchase. Other users of the service may then comment on those purchases or, as Swipely’s motto puts it, “turn purchases into conversations.” The idea is that by sharing and rating their buys and bargains, users will be able to discover new shops, restaurants, and products and find daily bargains (PBN Staff 2010).

In doing so, however, what used to be private information—how one spends one’s money—becomes a public conversation. Obviously, not everyone will be attracted to these types of services, but Swipely, Shopkick, and a growing number of others seek to tap into a trend, particularly among young people, toward increased willingness to share the details of one’s life with others as part of a digitally connected social network. The trend is clearly present and growing, but as of mid-2010 it represented but a small portion of the advertising industry’s overall efforts to win buyers and influence shoppers.

Advertising in the Movies

In the 2006 comedy film Talladega Nights: The Ballad of Ricky Bobby, viewers probably were not too surprised to see the obvious pitches for NASCAR, Sprint, Wonder Bread, and Power Ade as the story unfolded. In fact, the advertising connection between the movie and products continued into the retail environment, as grocery stores began to sell NASCAR-branded hotdogs and other Talladega-branded merchandise —a phenomenon known as branded entertainment. Sports events, particularly auto racing, have long been associated with corporate sponsorships, which have grown to be an acceptable part of the experience. However, is the blitz of products as props or part of the story line in a movie an invasion of the customer’s privacy? Consumers pay to be entertained by a movie, not to be exposed to a two-hour-long commercial.

Corporate sponsorship through product placements in movies, TV shows, and video games has become an increasingly prevalent method of promotion. Global spending on paid product placement promotion increased by 42 percent in 2005 and by another 39 percent in 2006. It declined by a few percentage points for the first time in its history in 2009, owing to the global economic recession. The United States is the world’s fastest growing market in the phenomenon, estimated to have generated nearly $4 billion in 2009. Companies have found that this method of promotion is more precise in reaching their targeted audiences than regular television advertising since technology has allowed customers to stream ad-free or “ad-lite” versions of shows online or skip over TV commercials by using the TiVo digital system.

Movie executives have embraced the use of product placement and branded entertainment as a means to bolster their movie budgets and off set costs before the film is ever introduced to the public. One of the most profitable product placement agreements was in the 2002 movie Minority Report, starring Tom Cruise. Corporate sponsors paid close to $25 million in product placement fees for their products, representing onefourth of the movie’s total budget. Even the plot itself deals with the business of advertising. In the film, the character played by Tom Cruise walks through a shopping mall bombarded by holograph advertising messages as he passes each store. In the movie, this was a scene from the future year 2054, but today’s technology has increased the many ways that marketers are getting to their prospective customers. The future is already here in the world of advertising.

Searching for the Customer

Advertisers have used many forms of media to get their messages to potential customers over the years. Spending on advertising through radio, magazines, newspapers, and outdoor media (billboards) all peaked in the mid-1940s with the advent of television. Until 1994, newspapers were the largest ad medium. In 2009, television was the largest medium (including network, cable, and local), with magazines a distant second. While marketers are looking to other technologies to communicate to their customers—for example, mobile media (smart phones and other handheld devices)—the majority of media buys are still for the older types of media. One reason for this may be that costs to place ads on radio, on TV, in newspapers, or on billboards are higher than those for the Internet or other forms of direct marketing, and the returns may be better, or at any rate more predictable.

The cost issue may also be the reason companies are looking for other ways to reach their target audiences. One of these ways is for advertisers to show regular 30- and 60-second commercials in movie theaters before the featured movie begins. Advertisers look to this venue for two primary reasons: (1) they are able to reach a specific target segment with their ads, and (2) they have a captive audience. It is easier for a company to determine who is watching a certain genre movie than it is to target who is watching a television program, and it is likely that the viewer is not going to switch to another station on the remote or TiVo the ad. An additional benefit to the advertiser is the effectiveness of this medium. Research shows that the audience retains the information in an ad shown in a movie theater better than in one provided by television or other media. Cinema advertising has grown almost 40 percent in the last five years and is expected to double to over $1 billion by 2011.

Another fast-growing method for targeting specific audiences and delivering advertising is through radio signal tracking. When radios are tuned in, they not only receive signals, they also transmit them. Technology allows companies to pick up radio signals from passing cars, determining what station the occupants are listening to. Although the technology was first used to measure consumers’ actual listening habits of various radio stations, it is now being used for a more interactive purpose. MobilTrak, a company specializing in this technology, can pick up radio signals and give retail businesses specific data about the type of radio stations that the passing traffic is listening to. While a radio station can claim that it is the number one station in the market, it may be number one on the east side of town but not on the west. MobilTrak can help retailers target their advertising buys more specifically, so that they can place their commercials on the specific stations that are most popular in their geographical area.

This type of technology is also being used in outdoor advertising, where radio signals from passing traffic help to determine the specific ads that are on billboards. With the advent of multiple-ad billboards, where the ads change frequently through computer panels, several companies can share the cost of a single location. These electronic billboards can be set to change and show a new commercial every few seconds. However, with radio signal tracking, the ads change depending on the average demographic driving by at the time, determined by which radio stations they have tuned in. If the majority of the drivers are listening to a country station, the ad might be for a local truck dealer; however, if most of the drivers are listening to a public radio station, the ad might be for the local symphony.

Reaching the Customer by Phone

The idea of tracking specific customers as they pass by is not limited to radio signal technology. Marketers realize that people are spending more time on the Internet and cell phones than watching television, and so they are finding ways to develop commercials that get to the customer on these types of devices. Nearly 300 million consumers in the United States own mobile phones, providing a viable format for reaching large numbers of potential customers. In the film Minority Report, the character played by Tom Cruise is bombarded by holographic messages as he walks by stores. Today, the technology exists (based on the Global Positioning System, or GPS) that allows retailers to text message commercial ads as customers walk through a mall. They can identify specific customers and send a message about new items that are in the store or about specific items that are on special that day. Marketers can also send commercials to cell phone screens. Many companies are revising the usual television ads and formatting them for the smaller screen. For now, it does not appear that consumers are offended by the ads; however, as more companies engage in this type of promotion, the public’s attitude may change. The trend for mobile marketing is expected to grow significantly in the next few years.

Technology Enables New Methods

Technology has also enabled marketers to target their customers more specifically. For several years, personalized ads have run in magazines that are targeted to specific subscribers. Ads are included in magazines with the individual’s name imprinted on the page, making the ad not only more personal but also more recognizable, therefore increasing the likelihood that the individual will read the message. This same type of technology is now being used to print special commercial messages on bank statements. Companies like Chase and Wells Fargo have been foregoing the usual mail inserts and instead have been imprinting personalized messages in the statements, through print and online. The messages typically are for other products that the companies offer or related products in which consumers may have an interest, like a financial planning seminar. However, in the future, these specialized ads could be for other companies’ products and services.

Older technologies have also been employed for new purposes. In some larger retail outlets, managers use video cameras to track shoppers’ movements and observe their buying habits. Companies such as Envirosell specialize in providing retailers with this service, supplying trained personnel to monitor the cameras and analyze the results. In some cases, the cameras have been used to monitor the behavior of floor salespersons— for example, to see whether they approach customers in a specified amount of time. Privacy advocates, such as those belonging to Consumers Against Supermarket Privacy Invasion and Numbering, find the practice to be a clear violation of individual privacy rights (Rosenbloom 2010).

Some Alternative Forms of Advertising

Whether enabled by technology, a spark from a creative advertiser’s mind, or just plain common sense, there are many new, alternative means for the world of advertising to reach the potential customer.

The company marketing Purell hand sanitizer invented a new campaign that would reach potential customers in doctors’ offices. The company placed bright yellow, two-by-three-inch stickers on the top right corners of the magazines in a doctor’s office waiting room. The stickers read “Caution” in large type: “How many patients have coughed on this” or “gently sneezed on this” or “Exposing patients to more than germs,” all pointing to the need for Purell hand sanitizer. The ads further suggested that hand washing was not enough—that a hand sanitizer was necessary to kill the germs.

Another unique form of advertising was reported by National Public Radio; US Airways was planning to begin placing advertising for other companies on its air sickness bags. Seeing the blank space on the bags, a clever marketer felt that it would be able to bring some needed cash to the airline’s bottom line.

Other companies have found blank space on city sidewalks, street posts, and even trees. Called wild posting, companies spray paint ads on sidewalks and street posts. Although the practice is illegal, the fi nes imposed on the companies are a fraction of what legitimate advertising would cost. In 2006, Reebok painted over 200 mini billboards on the sidewalks of Manhattan. Their fine was $11,000 in cleanup costs; however, if they had placed the same ads on 200 phone booths during the same period, it would have cost over $400,000. Old Navy found blank space on the trees along one Manhattan street and tied Old Navy logos on them (McLaren 2007).

On the golf course, many of the conveniences offered to golfers are also media for advertising messages. GPS screens mounted on golf carts offer several services: golfers can place orders at the clubhouse restaurant so that they can be ready when the game is over or keep electronic scores and compare themselves to other golfers. The screens also provide space for advertising, which can be tailored to the specific hole the cart is approaching. Additionally, ads have been placed in the bottom of each hole on a golf course so that when the player picks up the ball, the ad is seen. The golf course is an attractive medium to marketers due to the demographics of the players. It is estimated that there are 27 million golfers in the United States, a number that continues to grow—perhaps at a more exaggerated rate, with the number of baby boomers who will be retiring in the next decade. The players tend to be men (85 percent), own their own homes (80 percent), well educated (47 percent are college graduates), and have an average household income of over $100,000 (Prentice 2006).

Perhaps the most invasive form of alternative advertising is following consumers into public bathrooms. Initially, the ads were in the form of posters, primarily on the back of stall doors and above the urinals. However, they have gone to new locations to reach the captive customer. Companies are placing ads on urinal mats in men’s rooms, and, while not every company relishes the idea of men urinating on their logo, there are many that do. In fact, urinal mats are big business in bar bathrooms, and bathroom advertising is currently the fastest growing form of indoor advertising. In addition to the urinal mat are audio ads delivered via talking toilet paper dispensers, interactive poster ads that will emit a fragrance sample when pressed, and digital screens placed in the floor right in front of the toilet. All of these media are designed to reach a captive audience and can be tailored to fit the demographic of the audience. Ads can be placed in men’s or women’s rooms and can be targeted to the age group likely to be customers. Most interactive bathroom advertising is in the restrooms of nightclubs, bars, and restaurant-bar combinations.

When Is It Too Much?

While consumers have grown to expect advertising messages to appear through various forms of media, the proliferation of ads and the means by which marketers reach us could have negative consequences. At some point, consumers may say “enough.” Consider a couple who have traveled out of town to attend a friend’s wedding. After checking in, they retire to their hotel room and see the message light blinking on the phone. Expecting to retrieve their messages, they first hear a 30-second commercial for the restaurant down the street. Later, they go to dinner, maybe in that same restaurant. The man excuses himself to go to the restroom and, while relieving himself, reads an advertisement printed on a urinal mat. But our couple’s exposure to commercial messaging does not stop here. When they get to their friend’s wedding, they find that corporate sponsors have been invited to the wedding. The food is sponsored by a local restaurant, which has imprinted its logo and ad on the wedding tableware. The florist has a mobile billboard located just inside the reception hall, and the photographer’s business cards are located at each table setting. The wedding has become a promotional event.

From the Marketer’s Point of View

While there are many critics of advertising, the fact that our culture is exposed to advertising is a sign of an open society. Additionally, research suggests that the public actually likes advertising—but prefers that it be less obtrusive and on a time schedule that they select (see the sidebar “Customer Preferences in Advertising”). Marketers consider advertising to be a form of free speech and a part of doing business in a capitalistic society. Additionally, advertising is necessary for informing the public about the many products that are offered for sale. Gone are the days when Henry Ford offered his car only in black. Today, improvements in industrialization processes and technology have made it possible to offer a proliferation of products that can be tailored to every need. No longer does a customer go to the store to simply buy toothpaste; he is now met with a number of choices that even a decade ago was not thought to be possible. One can buy toothpaste made by Aim, Aquafresh, Colgate, or Crest, in paste or gel, and in fl avors of mint, cinnamon, or orange; moreover, one has choices for sensitive teeth, tartar control, whitening, cavity prevention, and so on. The average supermarket in the United States offers approximately 33,000 products to choose from. It is estimated that every year there are an additional 25,000 new consumer products offered for sale; some are truly new products, and some are modifications of existing ones. However, the majority of these new products fail—as many as 90 percent of them in some industries—which keeps down the total number in stores at any given time. To cut through the product offering clutter, marketers feel the need to get the word out to their customers and inform them of the product’s benefits, both tangible and intangible.

However, marketers also know that there is a saturation point for advertising, a point at which any additional expenditures are wasted on the customer. This saturation point differs by industry, type of product, content of the ad, and other variables, but it can be calculated for the specific ad and product. The question is, at what point does the customer become saturated by advertising in general? It is difficult for marketers to calculate this saturation point due to the number of products, ads, and media by which we are exposed to advertising every day. The number of messages each of us is exposed to every day is estimated to be as high as 3,500. However, it is suggested that we can only process and recall about 1 percent of them (Kitcatt 2006).

Will marketers continue to search for new methods to reach their targeted audiences? Will consumers grow weary of the onslaught of advertising or, worse, grow indifferent? At what point does it all become overkill?

Also check the list of 100 most popular argumentative research paper topics.

Bibliography:

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  4. Kirkpatrick, Jerry, In Defense of Advertising: Arguments from Reason, Ethical Egoism, and Laissez-Faire Capitalism. Claremont, CA: TLJ Books, 2007.
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  7. PBN Staff , “Swipely Goes Live to U.S. Consumers as a Way to Share Purchase Experiences.” Providence Business News (August 18, 2010).
  8. Prentice, Kathy, Fore! The Latest on Golf Course Ads. 2006. http://www.medialifemagazine.com:8080/news2003/jan03/jan06/1_mon/news5monday.html
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