A client looks to the future

The prospect of 500 TV channels at one's fingertips, plus full electronic interactivity, digital compression and the convergence of TV, computers and telephones, CD-ROMS, cross-pollinating databases and the already fragmented media marketplace has created a new industry of its own -...

The prospect of 500 TV channels at one’s fingertips, plus full electronic interactivity, digital compression and the convergence of TV, computers and telephones, CD-ROMS, cross-pollinating databases and the already fragmented media marketplace has created a new industry of its own – the business of speculating where all of this is leading us.

So far, the prognostications have come mostly from media pundits and the various suppliers of hardware and software.

For a client’s perspective on what lies ahead for the Canadian marketing community, Strategy approached Peter Case, vice-president, advertising at the Royal Bank.

Case and his department have already ventured into new frontiers. The bank has joined in the Videotron interactive experiment in Quebec, and is moving into the Infomercial genre.

Case’s responsibilities at Royal Bank bring together the management of media advertising, direct response and event marketing into one group.

According to Case, one of the benefits of the combination has been the cross-fertilization of direct marketing database techniques with media advertising initiatives.

In his view, the emerging technological capacity for what he describes as ‘interactive advertising to segments of one’ is an exciting prospect that will expand the role and value of traditional advertising and have substantial, positive impact on virtually all elements of the indystry.

Case began by imagining how things might look six years from now.

My scenario involves a fairly large consumer goods manufacturer and advertiser in the year 2000. To make it simple, I’ve stripped away to bare essentials.

Let’s assume the corporation – a long-time user of media advertising – has a customer database of 500,000 names with complete demographic and buying pattern profiles, possibly with some psychographic information thrown in as well.

The organization has satellite retail outlets across the country, each with access to the company’s central database, and the data can be manipulated to reflect nuances of their own local area. They also have immediate and direct access to media data, which have been cross-tabbed with the corporation’s own database, indicating local reading, viewing, listening habits.

These data embrace all forms of media – traditional and ‘new’ and are available, on-line, to all the appropriate units within the company.

The company’s ad agency is largely a synthesizer of database information being generated by the huge array of media options.

The agency’s task is to ensure that media databases are compatible with, and applicable to, data held in the company’s marketing database.

Their challenge is to build or rebuild a variety of data files so that they are parallel and friendly – one with the other.

Because the company has become adept at manipulating available data, it uses in-house resources to make most of its media planning decisions, and it uses the agency to negotiate and process the buying requirements, as well as handle the trafficking aspects.

Let’s assume the corporation’s objective is to increase sales by 12% in a competitive market across the country. The product is generally targetted at households with incomes over $75,000.

Drop-off in awareness

The advertiser’s challenge also includes the fact that there’s been a drop-off in awareness of its previous reputation for product and service quality. There has been a subsequent flattening of the sales volumes.

Advertising and promotional options for the company include the obvious: traditional media forms such as tv, print, out-of-home, and so on.

But, traditional media will be used principally for image enhancement and brand awareness, focussing on the broader need to rebuild appreciation for the company’s ability to deliver product and service quality.

Direct mail will be used for product-specific solicitations to target existing customers and, in fact, the same data used for direct mail will be used by the company to pinpoint whether any traditional media vehicles exist that can be used for prospecting non-customers.

Point-of-sale materials throughout the retail chain will also be used to support the campaign.

But, unlike the old days, the company will also have in play a set of new media initiatives, with the happy sound of measurability, measurability, measurability.

Use of the new media will be aimed almost entirely at satisfying the product information needs of consumers.

In fact, a portion of the task will be ensuring that consumers are able to obtain specific information they wish to have without wading through long educational or promotional pitches.

In addition to its buys in traditional media, the company will be placing a 15-minute, full-motion infomercial on local infomercial channels, supported by a 1-800 direct response commercial that will enable viewers to obtain more information or place an order.

Requests will be fulfilled with an information package in the form of a full-motion cd-rom that will either be sent by mail or electronically to inquirers. Telemarketing follow-up will quickly kick in.

All of this would be enhanced by a fully interactive sales or transaction package with an on-line service to cable or speciality service subscribers in the area using software dedicated and tailored to that product category.

And inside those packages, will be a 30- to 90-second infomercial to reinforce the product message and provide purchasing instructions.

Once the sale is closed, there would be follow-up with phone, screen or infofax service to provide installation instructions. Prospective upselling at a later date would be available using the same techniques.

Printed receipts

All these interactive transactions would be accompanied by printed receipts as a follow-up to what has transpired.

Because the company’s database is an integral part of the entire promotion, daily reports on the campaign’s failures and successes are automatic.

To me, that’s a simple way of imagining what will happen in the year 2000 for a corporation which has both a marketplace reputational challenge as well as aggressive sales targets. The company will be able to use two forms of media, traditional and new, in highly efficient ways.

It occurs to me that traditional media will continue to have an important role to play in 2000, but that their use will be more common for corporate or brand awareness campaigns targetted at broad segments of customers with a preference for the particular medium selected.

The addition of new media alternatives creates a marriage made in heaven for advertisers who must maintain their brand equity and, at the same time, respond to the no-nonsense, tell-it-like-it-is and tell-us-what-it-does preferences of consumers in 2000.

In my estimation, advertising departments, with their access to so many ‘media’ options will literally be at the hub of it all in the year 2000.

One of the big questions, then, is what role traditional ad agencies will play in this scenario.

My view is that the infrastructures of today’s agencies will be much more technology- and data-driven.

Less or altered

While the proverbial ‘hot’ creative shop may still be generating noise in the marketplace, advertiser reliance on intrusive forms of communicating will be either significantly less or altered by new options.

I think it’s quite probable the most important individual in an agency over the next five or so years will be the media director.

His or her role, as it expands to embrace the new media, will make or break the utility an agency delivers to clients. Media is where the action is going to be as we move toward the year 2000.

I think there’s a data synthesizing task that has to be done. In terms of the new media, agencies which are able to efficiently produce information to be used in interactive advertising will be offering a valuable service.

The creative applications of the new media are clearly different, becoming more information- and demonstration-oriented. Creative shops will obviously add new skills to their repertoires, going beyond traditional ‘big idea’ or ‘breakthrough’ creative.

Much of the creative material will be computer-generated and electronically distributed, saving time and expense in the handling of creative materials.

I would guess that by 2000, more and more advertisers will be ordering services a la carte or taking many of the tasks in-house. They’ll have the computer power to do much of it themselves.

I am in no way trying to be critical of agencies. I’m simply saying that if I were on the agency side of this business, I would sit down and say, ‘Okay, what do I have to do to be ready for this stuff?’

On the one hand, it probably would be easy to build an infrastructure that would allow agencies to handle the new media. But I also think that a lot of it can be done internally by advertisers, simply because we’ll have the data at our fingertips and will know how to use them.

The new media and the evolution of interactive advertising to ‘segments of one,’ will be much more advertiser-driven, and the capability to do that will be advertiser-built.

Perhaps the question for the agency isn’t as much, ‘How am I going to do it?’ as ‘What am I going to be doing?’

Suppliers, if they’re required on the outside to perform support activities, will be those that succeed in doing each of those components well.

For example, producing cd-rom materials is not an agency strength today. Now, tomorrow, it could be, if they bought or built something to do it. But if they stick to traditional forms of advertising as their mainstay, then they have no more a place in our mix than that. That’s their test.

I suspect that a critical aspect of the self-examination that agencies will be conducting will revolve around the very definition of creativity.

Traditonal forms of media have had to be intrusive, obviously. You had to go for attention and create a headline or an illustration that drew attention.

We’ve seen clear evidence over the past four or five years that value and value-added is important. Consumers are saying, ‘Please, give me information.’

We’ve tested more print executions over the past few years than I care to remember. And the one clear message we get consistently is, ‘Give us some information. Tell us something we need to know. And if I have a particular need in mind, tell me something about that.’ It’s common sense, not brain surgery.

If the new emerging interactive advertising provides that opportunity – of giving consumers relevant information – then intrusive advertising and ‘cute’ advertising is going to be just that.

It may well be that people look at this type of creative for its novelty value more than anything else. And they may remember it because it is memorable creative.

Little value

The dilemma is that it provides little value-added for the customer – at a time when value-added and information is a clear preference.

Today, most traditional agencies have a bias towards the creation of cute and creative ideas that are appealing to one side of the brain, while new and emerging interactive media appeal to a much broader information field and use an entirely different creative environment.

If I had to place my bets, I would put my investment in operations which are able to communicate meaningfully, with relevance and in a way that is value-added.

And, I believe that when the business shifts towards this type of creativity, we will see the beginning of a whole new era of commercial communication. Believability becomes a very big issue given the nature of the information environment. And if it’s not a believability issue, it’s an issue of appropriateness.

This interactive advertiser will provide a whole new age of legitimacy to this thing called advertising, because we are going to be able to provide customers with what they need to know at any given point in time in a direct, accessible and transactional manner.

This new world we keep talking about is definitely going to be a challenge. There will be multiple vendors and competing technologies. It’s going to be hard to sort it out. We’ll need help to do it.

That doesn’t have to come from an agency, though. It could be anybody who understands what’s going on. I am really struck by the number of solicitations that I’m getting these days, from people who say they can produce informercials when, in fact, very few have been done in Canada. I’m really struck by it.

Everybody seems to want to get on the bandwagon, including many large advertisers. But I think it’s easy to go overboard initially.

So, what we’re trying to do, at the bank, is make some careful investments in research, without necessarily worrying about pay-off, but, rather, being more concerned with understanding.

When we do get to the point of making bigger investments, we should be able to do it with the background of some decent understanding and knowledge.