February 21, 2017

Why Tiffany Doesn't Make Infomercials

We advertising people often spend months trying to develop the correct messages for our brands. We do consumer research, we create strategy documents, we write briefs, we develop many rounds of creative material, we test and refine these materials, and then we launch them.

It is not hyperbole to say that we are obsessive about "messaging."

However, there are some very smart people who think that there is an equally important aspect to advertising success that we pay almost no attention to. It's called "signaling."

This is well-known in academic circles, but let me try to explain it in idiot blogger terms (if you want to read what grown-ups say about it, check out Don Marti, Rory Sutherland, and Doc Searls.)

I walk into a room. I announce that I am the handsomest man in the world. I have just "said" one thing, but communicated another. What I have communicated is that I am a big jerk.

My message was undermined by what I signaled.

This is one of the most important arguments against tracking-based, data-driven advertising.

Data-based advertising is nothing new. We've had it for decades. It first arrived as "junk mail", oops, I mean direct response marketing. It later morphed into 800 numbers and junk faxes and infomercials. Display advertising of the "click here" variety is just its latest, most technologically advanced incarnation.

Consumers recognize this type of communication as advertising's lowest level of quality. They may not understand why, but they recognize the form.

I am not trying to denigrate direct response. It is clearly effective at certain types of selling. But is hopeless at building major brands.

I cannot think of one major brand of anything in any major consumer product category that has been built by direct response advertising (beer? soda? soap? fast food? shampoo? snack foods? clothing? paper goods? pain relievers? toothpaste? cars?... okay, I'll stop.)

One of the reasons is signaling. The knowledge that an ad was personally targeted at us, that it includes mechanisms of direct response, and that it appears in a certain type of (sorry DR people) cheap and cheesy media, signals to the consumer that it is not a high quality brand.

This is why Tiffany doesn't run infomercials.

The value proposition of display advertising is re-targeting -- that we will find the most valuable target for a product at the least expensive site. In other words, we will find the most luxurious eyeballs in shittiest possible location.

This is essentially the promise of tracking, adtech and re-targeting.

And this is where signaling kills you. Most people are pretty good behavioral economists. They may not know anything about how the products they buy work, but they know how to read the advertising signals.

According to an article I read recently, the average Western household has about 10,000 items. People can't possibly take the time or energy to learn how every product they buy is made or the variables behind its efficacy. So they take what they can understand about the product as a proxy. And one of the variables they use as a proxy is advertising signal.

Their subconscious logic (is that an oxymoron?) goes something like this: A quality brand has a reputation built over years and worth billions. As a result, they have sufficient resources to advertise in proper places and with a set of skills that is unavailable to less successful, less reliable companies.

They know how and where quality brands advertise and what advertising for quality brands feels like. And they also know where shitty brands advertise.

When your re-targeted ad appears on a crappy website among the ads for divorce lawyers and discount dentists -- as it unquestionably will -- are you building a brand or sabotaging one?

You may be saying that you are the handsomest man in the world, but you may be signaling that you are a big jerk.

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