Advertisers have paid much of my rent for most of my professional life – indirectly at least. It’s like relying on alchemy for a living. How does it work? What’s it all about? Why do people pay huge sums for ads that I myself would never watch or read? Do other people read them or watch them?
In Britain, the National Grid used to have standby turbines ready to roar into action during commercial breaks on TV when viewers would rush to put on the kettle or go the lavatory and flush (causing water pumps across the country to burn up electricity). It was an eloquent commentary on the appeals of TV advertising.
Print is not much better. When I read the New York Times my mind usually blanks out the ads while I concentrate on the one column of news squeezed along the side of the page. I once spent an hour looking for a cell phone ad I knew was there, and my mental filters were so strong that I could not see it despite repeated runs through the paper.
Most of us find ads intrusive and frequently an insult to our intelligence. (Needless to say, this does not apply to Investor Relations magazine, whose readers scrutinize all adverts and digest them with the same assiduous attention they give to The Speculator and other editorial pages. Keep that ad revenue rolling in guys!) The ones we look at and remember have had thought and care – not to mention cash – thrown at them.
Indeed editors themselves often have blank spots about the extent to which their high ethical standards and editorial sermonizing are maintained by the flow of cash from ads for nostril-hair mowers, snake oils and fortune-telling phone lines. A friend of mine was once selling an editor an investigative story about brothels in mid-town Manhattan. She reported that his crusading fervor was at fever pitch until he shifted into critical editorial mode and asked where and how the establishments got their customers. The fact that lustful potential punters pawed over the classified ads pages of his own weekly killed the story as dead as if it had met Jack the Ripper on its way to the typesetters.
Naive people may think newspapers, magazines, radio and TV stations exist to tell the truth and keep people informed. This is humbug. Mostly they exist to make money and they do that through advertising. The exceptions are papers run by eccentric press lords like Conrad Black or the Reverend Moon who are trying to make a political point or a career with their publications, and even they would prefer to make a buck while doing so.
A temporary exception was all the dot-coms that lived their brief mayfly-like lives on a diet of clicks and gulls’ nest-eggs. Almost all those that made steady money are sex sites which, although they benefit from First Amendment protections, are not usually regarded as the cutting edge of journalism when the Pulitzers come around.
Until the 1950s the London Times front page was all small ads and announcements, since it was considered vulgar to blare news at gentlemen first thing in the morning. However, even then it was an affected anachronism. To get people to look at the advertising there has to be some editorial material in the vicinity and that has to be aimed at the target group for the ads.
When Rupert Murdoch owned a New York tabloid, he remonstrated with the owner of Bloomingdale’s, Robert Campeau, about Campeau’s failure to advertise his cornucopic wares in the paper. Campeau allegedly responded, ‘Your readers are shoplifters. We’d rather they didn’t know what we have in the store – it’s less temptation.’
One thing we do know about advertising is that, as with IR, targeting can pay dividends. One wouldn’t showcase the latest Porsche in the Daily News or the Weekly Sun, and likewise, discount Spam and Hamburger Helper aren’t likely to pay dividends on your advertising dollars in Forbes or the Financial Times. However, apart from such broad brush strokes, advertising is hardly an exact science. The old story about the executive who felt sure half his advertising budget was wasted – but he didn’t know which half – gets to the nub of the problem.
Now with the recession and September 11 biting, we know the answer. Ad budgets have halved – and retail sales are plummeting, from which it necessarily follows that in general terms the ads that were not used and not paid for were probably those that were fueling the spending that drove the bull market. Let this be a warning to CEOs and cost-cutting boards. Ad cutbacks reduce budgets for media people, who get laid off. Their remaining beleaguered colleagues’ gloom is transmitted and amplified to the general public. Cutting your ad spending leads directly to recession, low stock prices and lousy stock options. Support free speech and a booming economy. Get out and buy loads of ads, now.
