Wednesday, August 10, 2005

Advertising vs. PR: Kotler on Kotler

Here's an interesting article on advertising versus public relations (PR) expenditures:

The following article deals with the relative merits of advertising and public relations in the marketing mix—with some conclusions that are sure to rattle your cage.

Philip Kotler is Distinguished Professor of International Marketing at the Kellogg School of Management. He is the author of Marketing Management, one of the most widely used marketing books in graduate business schools worldwide, and numerous other books and articles. Kotler is renowned for pioneering "social marketing," campaigns for nonprofits or causes as "an alternative to coercion or legal action in solving social problems."

His new book, According to Kotler (AMACOM), is a summary of the key principles of marketing and how they relate to current events such as corporate accounting scandals, outsourcing, globalization, warehouse shopping and online marketing. It includes controversial new topics such as "demarketing," "reverse marketing," "body advertising," and other tactics.
What follows is an excerpt of the book, based on the thousands of questions Kotler has been asked over the years by clients, students, business audiences, and journalists.

Question: Can you please say something regarding "the need for a new marketing mix"?
Kotler: The original marketing mix was not 4Ps but about 14. Neil Borden many years ago used a large list of marketing tools. We can always add to the list. So the question isn't "what tools constitute the marketing mix" but, rather, "what tools are becoming more important in the marketing mix."

For example, I feel that advertising is overdone and public relations is underdone. This is seconded in Al Ries's book, The Fall of Advertising and the Rise of PR. And direct-marketing tools are also rising in importance in the marketing mix.

Question: TV advertising seems to be losing its effectiveness. What are alternative ways to get attention?

Kotler: The average American is exposed to several hundred ad messages a day and is trying to tune out. TV advertising is losing its effectiveness because of growing advertising clutter, the increasing number of channels, the availability of zapping mechanisms, and reduced watching of television by certain groups. The result is that marketers must consider other methods of getting consumer attentions.

Here are a number of possibilities:

Sponsorships. Companies have put their names on stadiums, on whole teams and on individual athletes in order to gain exposure.

Mentions on talk shows. During his evening show, David Letterman sent a camera crew out to buy Snickers candy bars and ended up talking about it on three subsequent shows, including when Mars sent a whole van of Snickers to feed the audience.

Product placement. In the movie Die Another Day, James Bond drove an Aston Martin, used a Sony cell phone and prominently featured an Omega wristwatch. Products are also mentioned in novels—in fact, Bulgari commissioned a whole mystery novel to be written called The Bulgari Connection.

Street-level promotions. Companies have hired actors and actresses to walk in busy areas and ask passersby to take a snapshot of them using their new camera phone. Hopefully the picture takers are impressed and tell others about the new camera phone.

Celebrity endorsements. Michael Jordon's endorsements gave a boost to Nike shows, McDonald's, Hanes underwear, and Rayovac batteries. Ex-Senator Bob Dole's surprising endorsement of Viagra put Viagra on the nation's mind.

Body advertising. College kids agreed to paste Dunkin' Donuts logos on their foreheads during an NCAA basketball tournament.

Question: What is the main communication challenge?

Kotler: The major challenge today is getting people's attention. Consumers are pressed for time, and many work hard to avoid advertising messages. The main challenge is to find new ways to capture attention and position a brand in the consumer's mind. Public relations and word-of-mouth marketing are playing a growing role within the marketing mix to build and maintain brands.

Question: There is a great deal of hype about integrated marketing communications. What is the status of this subject today?

Kotler: In the past, we taught separate courses on advertising, sales promotion, public relations and other communication tools. Each student became a specialist in one of these areas, remaining ignorant of the other tools and having a tendency to defend the primacy of her tool. Within companies, the advertising person always received the biggest budget for marketing communication (leaving out the sales force), and the others would fight for the crumbs.
Clearly, this is not a good situation, especially considering that the effectiveness of different communication tools changes over time. The decision on how much to allocate to the different promotional tools cannot be left to turf battles. Someone must be put in charge. Let's call that person the chief communication office (CCO). That person should be responsible for everything that communicates anything about the company—not only the standard communication tools but also corporate dress, office decor and even the look of the company's trucks.

Today, an increasing number of business schools are teaching marketing communications using an IMC-oriented textbook. First, this prepares the student to understand the role of different communication vehicles. Second, it makes the point that the company's brand and customer message must be communicated consistently through all media. Thus, if a company wants to be known for its high quality, it has to produce high quality and communicate high quality in all of its messages.

Question: Do you see companies as setting their communication budgets optimally?

Kotler: Marketers develop a certain mindset concerning the most effective communication mix. They will continue the same mix even when evidence shows diminishing effectiveness. Allocations become frozen, and the chief marketing officer is loath to change the allocation.
This would change the power positions of different communication managers in the organization. Also, it will be done at some risk.

Question: Companies continue to spend more money on TV advertising, even as channels proliferate and more channel-switching takes place. Aren't companies being slow to realize TV advertising effectiveness has fallen?

Kotler: Companies are still fairly blind to the cataclysmic changes in the communication marketplace. The days of mass advertising, with its waste and intrusiveness, are passing quickly. I have advised clients to reduce their TV advertising budgets, especially mass advertising. Fewer people are watching TV, many are zapping commercials, and most commercials are too brief to be effective.

If a country had only a few TV stations, radio stations, and newspapers, mass marketing would be effective. When a country, such as the United States, has thousands of TV stations and radio stations, reaching a mass audience is very expensive.

Among the few mass audience vehicles are the Super Bowl and the Olympics. The growing fragmentation of media audiences requires marketers to shift to target marketing and even one-to-one marketing. The good news is that this will reduce wasted media exposures. What good is it to advertise cat food on national television if only 25% of families own a cat?

Question: What should advertising agencies do in response to the declining effectiveness of mass advertising?

Kotler: Advertising agencies can no longer prosper just by creating ads and choosing media. There are so many new ways to communicate today. Smart ad agencies will transform themselves into full-service communication agencies. They will work with their clients to choose the best messages and media vehicles, whether these are in the form of ads, press releases, events, sales promotions, sponsorships, direct mail, email or telesales.

Some advertising agencies have added these communication capabilities—they have created them or networked with public relations firms, sales promotion firms and direct-marketing firms in a move to becoming total communications firms.

Ogilvy called its system "Ogilvy Orchestration" and promised to deliver integrated marketing communications.

In practice, however, the dominant voice in this comprehensive agency is still that of the agency's advertising group. These agencies still make most of their money from their advertising billings. So how can they be fully objective when advising on the best mix of communication tools?

Yet advertisers are demanding more communication effectiveness. They want to shift more of their promotion dollars into direct marketing, public relations, and newer promotion tools. Advertising agencies would be wise to transform themselves from being narrowly defined advertising agencies into broad communication agencies.

Question: What is advertising's main limitation?

Kotler: Traditional advertising works primarily as a monologue. Today's companies would gain considerably by setting up systems that would enable dialogue to take place between the company and its customers and prospects.

Question: Will the Internet become an effective advertising medium?

Kotler: A few years ago, the CEO of Procter & Gamble said that he would happily switch a large portion of P&G's huge advertising budget to the Internet if he could find effective ways to do Internet advertising. So far, the Internet has not become a full-blown advertising medium like television, radio, newspapers, or magazines.

It is true that the Internet carries banner ads, but they are being opened less than 1% of the time. Advertisers are pressuring popular Web sites to carry skyscraper or pop-up ads, but the Web sites see this as risky. Also, consumers can choose to block pop-up ads.

Google has developed a system to align paid-for ads next to topics being searched by consumers. For example, if I type "BMW" on Google, the right side of Google's page will show a BMW ad. BMW will quickly learn whether its ad is leading to sales. All said, it is too early to tell how widespread or effective Internet advertising will become.

Question: How can companies effectively reach mass audiences?

Kotler: Advertisers won't see again the glorious days when they could reach millions of people in the evening with the same TV show or mass magazine.

There are three options today: One is to advertise on a number of media channels in the same time slot. Another is to advertise on Super Bowls, the Olympics, and other major worldwide events that attract large audiences. A third is to build a giant database containing the names of people who have the greatest interest in the company's offerings.

Question: Some media analysts call for more spending on public relations. Do you agree?

Kotler: I agree. Advertising has been overdone in the past, especially mass advertising with its "hit or miss" quality. PR has been underdone. PR consists of many tools, which I call the PENCILS of PR: publications, events, news, community involvement, identity tools, lobbying, and social investments.

When a customer sees an ad, she knows it is an ad, and an increasing number of customers are tuning ads out. PR has a better chance of getting a message through.

Furthermore the message can be fresher and more believable. PR is better equipped to create "buzz" about a new product or service. Interest in PR is increasing—witness the title of the recent book by Al and Laura Ries, The Fall of Advertising and the Rise of PR.

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