Tuesday, January 30, 2007

The People Era

(continued from Dawn of a New Era, see 12/22/06 below)

Picking up where we left off…. As we closed 2006 in our historical review, we introduced what I call the People Era, a new era in our advertising history. Time magazine’s crowning of “You” as Person of the Year, and Advertising Age’s anointing of “You” as Agency of the Year would seem to confirm that we are, indeed, now firmly in the People Era. Born from the internet, the People Era began (or so I peg it) with the commercialization of the world wide web in 1994.

The first web banner ads were introduced on HotWired in October, 1994. It was also at this time that the browser Netscape was launched. Netscape was originally the dominant web browser, and later had its successful initial public offering on August 9, 1995 which, it may be argued, triggered the dot.com bubble that became the “dot-bomb” bust. The stock was to be offered at $14 per share. Its value on the first day of trading reached $75. After Netscape, valuations of internet stocks that had no significant revenues, and sometimes no revenues at all, climbed off the charts. It wasn’t until the Spring of 2000 that reality overtook the hype, and the dot.com stock balloon came crashing down.

Yet among the high-flying circus-performing stocks were some real companies with real business models that would develop into real powerhouses. Ebay comes to mind. So, too, does Google.

It never ceases to amaze me how quickly we adapted and how easily we now take for granted the powerful information at our fingertips, searched through millions of web pages, and brought to us in nanoseconds by Google. The Google search engine receives about a billion search requests per day. Incredible, isn’t it?

Google began as a research project in January, 1996 by Larry Page and Sergey Brin, two Ph.D. students at Stanford University. They hypothesized that a search engine which analyzed the relationships between websites would produce better results than existing techniques (existing search engines at the time essentially ranked results according to how many times the search term appeared on a page). Their hypothesis worked, and Google became far and away the most popular search engine among internet users.

Google was incorporated on September 7, 1998 at a friend's garage in Menlo Park, California. In 2000, Google began selling ads associated with search keywords. Google's initial public offering took place on August 19, 2004. The IPO gave Google a market capitalization of more than $23 billion. Many of Google's employees became instant paper millionaires.

On March 30, 2006 – 10 years from its inception as a research project – Google was added to the S&P 500 index. In a 2006 report of the richest people in the U.S., Forbes reported that Sergey Brin was #12 with a net worth of $14.1 billion, and Larry Page was #13 with a net worth of $14.0 billion. They’re companies like eBay and Google that brought us the People Era.

It’s been the purpose of this historical review to try to put our rapidly changing times in perspective. Advertising and media have continually evolved throughout the years, yet there have been only two major “eras” before this one. Let’s take a brief look back. We talked about the Media Era, a period of 62 years from 1841 to 1903. During the Media Era, the advertising business was a media buying business. Power resided with those agencies and entrepreneurs, such as J. Walter Thompson, who controlled advertising access to the media.

By 1903, however, access to the media alone was not sufficient for any agency to command a unique position in the market. It was in 1904, after a fateful meeting between Albert Lasker, head of Lord & Thomas (third largest agency of its day, and forerunner to Foote, Cone & Belding), and John E. Kennedy, a copywriter, that the creative message became the focus of attention and changed the industry forever. Lasker had wanted desperately to know the meaning of advertising; he was not satisfied with the answer his contemporaries gave of “keeping your name before the public.” Kennedy defined it for him. Advertising, Kennedy told Lasker, was “salesmanship in print”. And just that fast, the Creative Era began, lasting 90 years from 1904 to 1994. In the Creative Era, power resided with those agencies and entrepreneurs who could turn perception of a brand into real brand strength. Its leaders were men like Bill Bernbach, Leo Burnett, and David Ogilvy. The crowning achievement of the Creative Era was the Marlboro Man, the masculine image of the rugged, independent cowboy who turned a failing cigarette brand into the most powerful brand in world in a campaign that has lasted decades. No campaign before it or since has had such a demonstrable effect on a brand that can be tied solely to its advertising image.

But the Creative Era was also fueled by mass media. As mass media began to fragment in the 1980s, the Creative Era began to wane, too. Then came the internet.

In the People Era, power has shifted once again. It now resides with ordinary people. In the People Era, perception isn’t reality…reality is reality. Authenticity counts more than image. Information and technology have empowered ordinary people and put them in charge. Success will belong to those companies and entrepreneurs who can harness that power as, for example, American Idol has done.

This concludes our historical review. We hope you enjoyed our journey of highlights through the years. Now we turn to face the challenges in front of us, armed with the lessons of the past but knowing, too, that these are extraordinary times. If history is any guide, the People Era will prevail for many years to follow. It’s a rare and exciting opportunity to be a part of such an historic time in advertising. The rules are changing again and we have a real chance to shape the future of our industry.

So, let’s write some history together, shall we?

Sources and additional reading:
Doubleclick, The Decade in Online Advertising, 1994-2004, April 2005, www.doubleclick.com

Wikipedia, Google, http://en.wikipedia.org/wiki/Google

Monday, January 08, 2007

Parallel Universe

There’s a change in the air. Can you feel it?

This week, President Bush is expected to announce his new strategy to achieve success in Iraq. Most are expecting him to announce a surge of new troops. The new Democrat majority in Congress has already expressed their opposition to such a move. Meanwhile, Bush has already replaced his generals in the region.

What does any of this have to do with advertising, you wonder? I’d like to take a moment to explain.

History is strange and funny in the way seemingly unrelated subjects and events seem, nevertheless, to parallel each other. Marketing is often viewed as analogous to warfare, and we can look back in history and see parallels between the two.

For example, historians have compared the build-up and organization of the military prior to World War II with the build-up and organizational changes that took place in industry at that time and gave rise to our present system of brand management.

Massive bombing, called “carpet-bombing”, which occurred in Vietnam during the 1960s can be compared to the barrage of tv commercials in broadcast media that occurred during the same period. Carpet bombing as a military strategy gave way to “smart bombs” used during the Gulf War. (Remember those images on tv as you followed the path of a smart bomb right to the point of its impact with a targeted building?) Wasn’t it about this time that the term “narrowcasting” came to describe the strategy of targeting advertising more precisely through cable versus broadcast?

In the present war in Iraq, the military has embarked on new strategies. Smaller U.S. forces go in and train a proxy army, the Iraqis, to fight for them. As a result, U.S. casualties are much lower compared with previous wars, but there is also less control and slower-than-expected progress. Compare that military strategy with new marketing strategies using product placement, viral videos, and especially word-of-mouth, where marketers solicit brand ambassadors to spread their marketing message for them. Are you seeing the similarities?

Also, compare the partisanship between Democrat and Republican to the divide between supporters of “old” media and supporters of “new” media. Are these just coincidences, or are we captives of our Time?

What will be the new strategy for Iraq? How will Democrats and Republicans work together now that there is a Democrat majority in Congress? What will any of this foreshadow for the future of marketing? It will be interesting to watch as history unfolds.