Friday, March 15, 2013

BIG’s Blog: Trend No. 7: Successful Advertising Will Be About Service

Max Kalehoff is one of those people who is followed by many in the marketing/tech world. He is currently VP of Product Marketing at Syncapse… one of those fairly unheard-of tech companies that is really changing things.

Max recently published a paper for the University of Pennsylvania’s Wharton School’s Future of Advertising 2020 Program. His paper entitled 11 Big Trends That Will Reshape Advertising In 2020 And Beyond has garnered a lot of attention.Over the next few blog posts, I will attempt to take each one of his eleven points and give it my interpretation from the nonprofit Development perspective. Let’s take a peek into the future together.

7. Successful Advertising Will Be About Service. The idea of “advertising as service” is nothing new. Some of the wisest, gray-haired advertising luminaries I know have told me this as far back as I can remember. However, if you look around, it seems that few advertisers live up to this ideal. It seems most are interested in only serving themselves. With daily messaging exposures continuing to rise to stratospheric heights, avoidance and intolerance will only increase as a matter of survival. As a result, there will be a growing premium and receptiveness to marketers and messages that actually serve and deliver value. Of course, this would mean that customer service be aligned with advertising.

In advertising… and, by extension, marketing… what is the difference between “Service” and “Agency discount” or “mark-up or margin” in direct mail as the author is describing it above?

In the old world of advertising agencies, they made their money buying media (TV, radio, print advertising) for their clients. Agencies made the difference between the cost of the media and the agency discount [normally 15%]. So for every one million dollars in advertising that a client bought, the agency generated $150,000 in fees. When your client is Ford Motor Company or Proctor & Gamble, and is spending tens of millions of dollars, the agency can provide a lot of service.

This is similar to direct mail. The charge to the client to create, print, sort and mail a package might be 20 cents, but the cost to produce that package might be 10 cents. Again, you can offer a lot of service to a direct mailer that is mailing 10 million pieces of mail a year.

There is nothing wrong with either the advertising agency or the direct mail company making money on the work that they do for clients, so long as the agency or direct marketing company delivers a return to the client that is greater than what they charge the client.

What do advertising agencies and marketing companies do today when everybody fast-forwards through commercials and fewer and fewer people open their advertising mail? When all the new media, including social media, [think Facebook] are essentially free, how do they stay in business?

Well, Mr. Kalehoff argues that they help their clients … including fundraisers … in the same old way…bringing in more revenue for their clients than their clients pay in fees. This Mr. Kalehoff correctly refers to as “value.”

The service is to deliver value.

Here is where it gets hard and complicated for nonprofit fundraisers who are used to generating donors through marketing campaigns… most direct mail. What do you do when Marketing is Dead?


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