Advertising Goes High-Tech

It's about data and arithmetic. And it's about time!

Vol. 5, Issue No. 22 | November 10, 2009 By Denny Hatch

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Of the eight key copy drivers—the emotional hot buttons that make people act—the most mysterious is exclusivity.

I never really understood exclusivity until Bernie Madoff’s $50 billion Ponzi scheme put a spotlight on it. As Laurence Leamer wrote in The Huffington Post:

It was an honor having him handle your fortune. He didn't take just anybody. He turned down all kinds of people, and that made you want to give the man even more of your money. When he took your fortune, he told you that he would tell you nothing about how he achieved his returns. He was a god. He had the Midas touch.

Web sites have been built on this exclusivity thing. Among them: Gilt.com, RueLaLa.com and HauteLook.com. They offer to “members only” the same upmarket designer merchandise sold by Saks, but at deeply discounted sale prices during specific time periods.

Saks is fighting back with an exclusive online “private event” that the CEO of HauteLook.com calls “the new way of retail.”

It ain’t new.

Saks is engaging in a technique as old as the hills. It’s called good, ol'-fashioned, time-tested, accountable direct marketing.

A Business Model to Emulate
Quite simply, Saks is sending an e-mail alerting selected customers to a 36-hour sale on its Web site.

At expiration, three proprietary pools of information will be in the hands of the Saks marketing people:

1. The number of responses and revenue, enabling Saks to do simple arithmetic and know quickly whether the promotion made or lost money.
2. A database of customer purchases (behavior), so relevant offers can be made to those buyers.
3. The most popular items, enabling Saks to tweak future offers for customers around the world who are online and also shop at the 109 owned and leased retail stores.

This is the Web version of a store sending snail-mail invitations to customers in the geographical area to alert them to an after-hours private showing where they can take advantage of tremendous savings before a major sale is announced to the general public. (“And please be sure to bring this invitation with you.”)

The Mind-Numbing Waste of General Advertising
What triggered this column was foraging around my vast archive of stories and coming across a file titled “Ads Everywhere U Look”—a dizzying array of venues where the consumer can be hit with an advertising message. Consider the effectiveness of ads on:

• The sides of private automobiles and garbage trucks driving around town.
• Grocery store conveyor belts at the checkout register.
• McDonald’s-sponsored school report cards.
• Jet plane bodies.
• Over urinals in men’s rooms.
• Golf carts.
• Online game sites.
• High school sports uniforms.
• Airport baggage carousels.

“Somewhere between 254 and 5,000 is a number that represents just how many commercial messages an average consumer gets each day,” wrote Matthew Creamer on AdAge.com. “Attempts to beat clutter only end up yielding more of it, a bitter irony bound to have dire consequences for a business already struggling with questions of relevance and effectiveness.”

On top of this clutter is “guerrilla marketing” (which former David Ogilvy colleague Drayton Bird calls “gorilla” marketing):

• Ambush marketing. Mars candy people dressed up staff in M&M character suits along the Olympic marathon route with instructions to jump onto the course as the runners went by and wave madly at the TV cameras.
• Word-of-mouth (buzz) marketing.
• Product placements. A $1.9 billion annual business where advertisers paid to have:
  • Durex condoms inserted into podcasts.
  • McDonald’s iced coffee on the desk of FOX affiliate KVVU news anchors in Las Vegas.
  • Continual mentions of Rolaids on a FOX episode of “Bernie Mac.”
  • An unbelievable 7,502 mentions or appearances of products in NBC’s reality show “The Contender” in 2005.
  • In the 1966 revival of Neil Simon’s “Sweet Charity,” a waiter asked the customer if he would have “Gran Centenario, the tequila?”
• Naming rights.
  • The Nationwide [Insurance] Children’s Hospital broke ground in 2008 for a trauma center to be named for Abercrombie & Fitch, which donated $50 million.
  • Also, a newborn baby's mother, Melissa Heuschkel of Connecticut, was paid $15,500 to name her the little girl “GoldenPalace.com Benedetto.” Known as Goldie, the child has over 16,000 entries on Google.
• Ad space on bodies. In my files are stories of ads being sold on hands, foreheads, breasts and bottoms (see illustration below).

All this nuttiness is advertising aimed at reaching people, for the most part, in situations where it's impossible to respond. In the case of an occasional response, no mechanism exists to correlate the sale or inquiry back to the cost of the specific ad.

Add to this financial bloodletting the so-called “awareness” advertising—page after page of beauty shots of competing products in Vanity Fair and Vogue that go in one eye and out the other with no way to respond.

Think of the overpowering number of TV commercials that make no offer, but simply hope the viewer will remember the brand on the next trip to the supermarket or driving by a car dealership.

Again, no way exists to track the purchase vis-à-vis the specific advertisement.

General advertising is measured by the number of “impressions.” This is the same idiocy as the acquisition of “eyeballs” on which the entire dot-com boom was founded (and resulted in the dot-com bust).

In the immortal words of Agora’s Bill Bonner, “The only bank that takes eyeballs is the eye bank.”

The bottom line: Consumers are barraged and harangued with trillions of ads by advertisers pissing away billions of dollars without a clue as to whether the ads are effective or the money well spent.

The only true measure of advertising success is response—return on investment and lifetime value.

Happily for advertisers, change is in the wind.

The Vespa Story
In 1954, I spent six weeks in Rome and came away with many images etched in memory. One of them was the vast number of motor scooters—Lambrettas and Vespas—darting through the dense traffic. The driver was usually a guy and very often—perched sidesaddle on the back—was a young lady with legs crossed and trench coat or skirt flying in the wind.

This image was immortalized in William Wyler’s 1953 masterpiece “Roman Holiday” with Audrey Hepburn and Gregory Peck.

The Vespa was born in 1946, the brainchild of aeronautical engineer Corradino D'Ascanio who encased the little putt-putt engine in a metal covering that protected the rider’s clothes from oil and gook. After myriad up-and-down vicissitudes, the company was bought in 2003 by maverick industrialist Roberto Colaninno, who installed Rocco Sabelli as CEO. Sabelli redesigned the manufacturing process and instituted a bold new management style, described by Gabriel Kahn in The Wall Street Journal:

Mr. Sabelli also injected a culture of accountability into a company where — as is often the case in Italy — management had previously kept its distance from workers. On one of his first days on the job, he gave his email address to every employee, demanding that even assembly-line workers let him know personally about any problems or delays. "We knew that execution had to be our focus," says Mr. Sabelli. "No magic recipe, just execution."

With the skyrocketing price of gasoline and the glut of city traffic, Vespa is once again on a roll as a low-cost, attractive (and fun!) alternative to gas-guzzlers. For example, Pennsylvania has 16 Vespa dealerships across the state.

Enter Serial Entrepreneur Darren Herman
So how do you sell Vespas?

In the old days, the agency account executive would tell the creative department to design a bunch of ads, and he'd run the one he liked best.

Darren Herman is a 2000 graduate of Skidmore College with a B.S. degree and an approach to advertising that is emphatically not the usual industry BS.

For starters, he believes in testing—not using time-consuming and wildly expensive old media such as print, direct mail, telemarketing or TV. Instead he tests on the Web, where (1) it’s cheap and (2) results can be read in nearly real time with tweaks and major adjustments made instantly.

At the end of this column there are a dozen down-‘n’-dirty Vespa ads that Herman tested on the Web, often using the digital equivalent of ol'-fashion remainder space. With such a campaign, once a solid control is in place, the offer can be blasted across all media internationally. The only constraint is the speed at which the factory can deliver product.

“It’s putting numbers to an industry that never had numbers before,” Darren Herman told The New York Times.

Uh, not quite true. Direct marketers have always operated on numbers. Now at last a new breed of whiz kids is using the Internet to take advertising into the 21st century.

I urge everybody to read Stephanie Clifford’s New York Times story on Darren Herman. (The link is below.)

And then go and do thou likewise.