Posted February 22, 2011 by admin @ 3:48 pm
Marketing experts G. Michael Maddox and Raphael Louis Viton pose a radical theory in a recent Bloomberg Businessweek article. They contend that advertising budgets are nothing more than symbolic taxes that companies must pay to compensate for a lack of creativity. This scathing analysis reaches a hyperbolic conclusion, yet their rationale deserves further exploration.
The crux of their argument lies within the advent of social media as a means of interpersonal communication. Research demonstrates that people are more likely to purchase a product or service based on a friend’s recommendation as opposed to a company sponsored advertisement. After all, friends have nothing to gain by telling each other about useful items, cool gadgets, or tasty snacks. If anything, they stand to lose credibility should their suggestions prove ill advised. Social forces dictate sharing worthwhile tidbits because advice makes or breaks an individual’s reputation. Advertisers, on the other hand, aren’t interested in preserving their good names. Brand loyalty isn’t always their top priority and some products are intended to be fly by night gimmicks. Besides, no one holds marketing executives accountable for promoting inferior products. In many cases, the free market does not determine their success or failure because they aren’t pushing their own inventory to begin with. Basically, social networks give consumers the option of truly considering the source of an endorsement.
Maddox and Viton believe that companies with large advertising budgets should reevaluate their business strategies. They cite the infamous Super Bowl ads as a perfect example of ultimately wasteful spending. These primetime TV spots cost literally millions, yet the return on that substantial investment is minimal at best. Lots of companies don’t even bother trying to sell new stuff on game day; they simply toss the same old pieces into a funny package and hope that the punch line sticks.
Maddox and Viton correctly point out that the money spent on ads could be diverted into research and development of novel ideas. Nevertheless, their sweeping generalizations have limited applicability outside of Madison Avenue. Big corporations needn’t depend on aggressive marketing to get the word out, but small businesses get lost in the shuffle without a competitive adspend. Local mom and pops rely on word of mouth to a certain extent to stay afloat. Still, it’s never wise to depend on chatty customers alone. Visibility is a chief concern for independent entrepreneurs, which justifies supporting a steady string of advertising campaigns. Companies interested in expanding their consumer bases should take Maddox and Viton’s advice in stride. Innovation means next to nothing without brand recognition.