When consumers like a particular campaign, it is facetiously observed that they are ‘buying the advertising’ as well as the brand. Rory Sutherland examines an economic theory that suggests this may be literally the case: that advertising itself has a value that complements the product
Every time anyone takes over the presidency at the modestly named Institute for Practitioners in Advertising, they receive a small flurry of letters and emails suggesting a change of the IPA's name. Often, but not always, it is the 'advertising' bit people think should go. 'Advertising' is often seen to be too narrow a word to describe everything the IPA's membership does.
I understand this point of view. However, I fear that whatever word is chosen to replace it may be worse. In particular, I am averse to anything involving the word 'communication'. This common catch-all word fosters the widely held assumption that marketing people and agencies should be principally concerned with messaging. What we actually need is a wider definition of advertising, not a new word that constricts us in a slightly new way.
This conflation of marketing and communications – and its portmanteau description 'marcoms' – is, to use a word coined by George W. Bush, a 'misunderestimation' – something which fails to understand what something is for and at the same time undervalues it. The Chinese using gunpowder only for fireworks, or the behaviour of the Aztecs (who invented the wheel, but used it only on toys) are both misunderestimations.
In reality, the role which communication – as conventionally defined – plays within marketing may well diminish. Why? Well, first there is the sudden explosion in the volume and granularity of data which marketers have to guide them – information which will often drive actions and behaviours other than communication; for instance, new methods of price discrimination.
Second, there is the change in the nature of advertisers, more of whom are service brands, who may build their brands experientially through behaviours rather than messaging.
Finally, there is the unprecedented explosion in the number of ways by which consumers can engage with brands at their own instigation. We need a new definition of 'What is advertising?' Fortunately, one has emerged from economics.
Now, I can't understand most of the original paper written by (Nobel Laureate) Gary Becker and Kevin Murphy since much of it involves complex maths to do with shifting demand curves and inframarginal consumers, though you're welcome to read it at http://twurl.nl/ztudn7. More accessible is an interview with Murphy published by the University of Chicago at http://twurl.nl/whmghj. Here he draws on the economists' idea of complementarity.
'Think of advertisements as complementary goods that you buy along with the product that's being advertised,' says Murphy. 'Take the example of movies and popcorn. Going to the movies makes you want to eat popcorn, and eating popcorn makes you think of watching movies. There's a complementarity there between the two items. We believe that advertising is basically the same thing. There is a tie between the product and the advertisement.'
Each time we stay tuned to a commercial or read an ad in a newspaper, we have, according to the authors, made a 'transaction'.
This theory earns extra weight when applied to today's advertising campaigns for popular items such as Levi's jeans, Coca-Cola or Nike shoes … in some of these campaigns, little or no information is presented, but consumers nonetheless experience and sometimes even enjoy the ad as 'consumer goods' unto themselves.
Consider a study by psychologists which showed that consumers paid more attention to ads for the car of their choice after they bought it. Becker and Murphy say their treatment of ads as complements to the goods advertised can explain these findings. They believe that if ads are complements to goods advertised, those goods are complements to the ads. That is, greater consumption of advertised goods would raise the marginal utility from, and the demand for, advertising.
What if marketers and advertisers stepped back from assuming their job is to cajole and instead defined their purpose as the creation of goods complementary to their own products?
Looked at through this prism, John Betjeman's Shell Guides of the 1930s are not an anomalous form of promotion for a petrol brand – they are a very pure form of advertising indeed. But so, too, are a host of new possibilities – for instance, adding a social component to car ownership, or Flora's Heart-Age mass-testing campaign.
The first question is no longer 'What do we say?' but 'What can we do to add complementary value to our product?' A liberating thought.
ABOUT THE AUTHOR
Rory Sutherland is executive creative director and vice chairman of OgilvyOne London and Ogilvy Group UK.