Why Marketing Had to Change

Marketing methodologies developed back in the 1960s and 1970s are now so far out of date that they would bankrupt any business using them.

In those earlier times marketing consisted largely of coming up with a showy, big-budget commercial and buying as much expensive airtime as possible. Products that weren’t advertised on radio or television, or promoted extensively in national magazines had little chance of gaining shelf space in stores owned by the big retailing chains.

The advertising agency was the source of most companies’ marketing advice. Most businesses therefore fought for their share of market in largely the same way, and their market share was closely related to the advertising funds they expended, mostly to those spent on television. Growth was dependent on spending more to achieve it.

And when it came to evaluating advertisements in the 1960s and 1970s fairly primitive technique were used. The advertising was pre-tested on small groups to see if it was liked and whether it communicated the desired messages, then it went to air. Afterwards — usually within the following week, a random audience sample was selected to see how many recalled the advertising and the points it made.

Print advertising received a similar post-appearance evaluation technique. Ads appeared in the press or magazines and were then shown to research subjects who were asked to comment on whether they’d noticed them and what information they got from them.

Missing Metrics

A lack of analytical measurements applied to most areas of marketing. To sell more, companies simply spent more, and calculating a genuine ROI on expenditure was so difficult that few businesses even attempted it.

It’s almost impossible now to believe that this simplistic approach to marketing was applied by large and successful companies that included corporate giants like Proctor & Gamble, Kellogg’s, General Electric and United Airlines, yet that’s how the world worked at the time.

It worked because audiences were tightly-held by a few major advertising channels. Families watched TV each evening and that meant choosing between three major networks. Big brands dominated marketing channels and consumers responded fairly predictably to the messages sent through them. “As seen on TV” was a marketable phrase.

Compare the way things were thirty years ago to today’s market conditions and the degree of change is staggering. The proliferation and fragmentation of the media has opened up marketing channels undreamed of by marketers back then. Consumers have overthrown the “one size fits all” treatment and are now segmented by generation, gender, and even subculture.

The changes in the market have been dramatic!

Television – In the US, the marketplace that was once under the control of just three major networks is now serviced by thousands of broadcast sources, from independent local operators to cable and subscription broadcasters. The situation is similar in Europe and the Asia Pacific region.

The Internet – Marketers have been forced to seek new ways of getting products into the hands of consumers who can shop online and receive product information from blogs and newsgroups. Search engine optimization has become as essential as point-of-sale display advertising.

Advertising — Consumers are now bombarded with thousands of advertising messages daily. To achieve “cut through” an advertiser has to be noticed by doing something special to attract the attention of prospects. The rapid growth of “viral” and “buzz” marketing is part of the response.

Legislation — Various “truth in advertising” laws have been enacted that make it difficult for advertisers to make any claim that could even possibly be considered misleading. Some products — notably tobacco and alcohol, have been restricted or prohibited from advertising. In these cases the onus is often put on the advertiser to prove that no laws have been broken if a complaint is made.

How are Marketers Responding?

To cope with these changes marketers have had to change their ways of setting goals and measuring results. They’ve had to recognize the fragmentation of the “traditional” media — radio, TV, print — as well as learning how to use the Internet and other new arrivals on their marketing horizons.

This doesn’t mean they’ve been entirely successful in adjusting their methodologies to the changing situation. Nine out of ten new products are failures, and the growth in “home brand” products indicates that at least some of the marketers’ targets reject their messages entirely.

Perhaps most surprising is that advertising revenues for the major television networks have continued to increase despite the need for the application of marketing budgets into less traditional media. This would suggest that the marketing ROI on consumer products is declining when compared to earlier times because marketers haven’t yet broken free of old ways of thinking and budgeting.

There’s little doubt that marketing had to change in response to the significant changes happening in the marketplace. There is, however, some reason to doubt that marketers have yet made the degree of change necessary to optimize their results.

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Copyright 2005, RAN ONE Inc. All rights reserved. Reprinted with permission from www.ranone.com.