The advertising industry has not kept up with sweeping changes in the market or with consumer mindsets and must quickly embrace a shift to "permission marketing," Procter & Gamble's marketing chief will tell the American Association of Advertising Agencies this morning.
In remarks prepared to be delivered as the keynote address of the 4As Media Conference and Trade Show that opens at the Royal Pacific Resort at Universal Orlando, Fla., P&G's global marketing officer, Jim Stengel, offered a critical 10-year overview of the business.
He said the marketing industry is close to failing the task set out a decade ago by Procter & Gamble Co.'s former chairman-CEO, Edwin L. Artzt, and needs to embrace holistic approaches, a universal commitment to "permission marketing" and new forms of measurement to change.
In a point-by-point report card on how the industry has responded to Mr. Artzt's call to embrace and develop new media at a 1994 4As meeting, Mr. Stengel gives the industry a C- overall.
"These kinds of grades aren't acceptable," he said. "I've got two children -- a son and a daughter. I can tell you that if this was one of their report cards, we would be having a heart-to-heart talk -- more homework, less socializing, more tutoring, more commitment to improve!"
Unlike Mr. Artzt, whose call helped usher in an era of experimentation in interactive media, Mr. Stengel isn't calling so much for new media as he is better use and measurement of the plethora of media now fragmenting the media landscape.
"All marketing should be permission marketing," he said. "When we think of permission-based marketing, most of us think about opt-in online newsletters. We really need to expand this mentality to all aspects of marketing. ... For each element of the marketing mix, we should ask ourselves, 'Would consumers choose to look at or listen to this,' and let that be the benchmark."
P&G already has done this in part, he said, by weighing its copy testing more on whether consumers say they'd like to watch the ad again. But he decried a market research marketplace where the focus is primarily on TV while the measurement of other elements of the marketing mix is underdeveloped. Even TV research, he noted, often fails to measure the most important thing -- whether it makes people buy things.
"This is a $450 billion dollar global industry and we're all making decisions with less data and discipline than we apply to $100,000 decisions in other aspects of our businesses," Mr. Stengel said. "We lack an industry standard for measurement. We need a method to determine the effectiveness of our efforts. We need to measure how effective our advertising is at influencing purchase intent -- the ultimate goal."
Particularly in a data-driven organization such as P&G, money tends to follow the data, Mr. Stengel acknowledged in an interview last month. Lack of data regarding the sales impact of everything from print to Web sites and wireless messaging.
"We're asking our [research suppliers] to stretch, but we'll also bring some of our innovation to [new measurement systems]," he said. "If the General Motors and P&Gs are not out there leading that, it's not going to happen."
Too many research tools are "backward looking" without offering projections, he said, yet also don't integrate enough historical information.
"Marketing mix modeling does a great job of refining what you know and saying your TV may not [work as well] in these dayparts," he said. "But I think the real magic will be to understand how involved your consumer is with your brand and the message, both rationally and emotionally."
As P&G has expanded its marketing horizons, it remains committed to its roster of ad agencies, though it is also reaching out to a growing array of new marketing services providers, Mr. Stengel said. Among those he singled out are Viacom in media, IDEO in design, Thompson-Murray in in-store marketing, CAA and Grey Alliance in entertainment, Northlich in influencer marketing and TargetBase in database marketing.
The speech also decries growing industry conflict over financial issues. "Sometimes, when we're afraid of change, it's easier to focus on the smaller issues," Mr. Stengel said. "There's too much conflict in the industry today about purchasing, procurement, the pitching process, fees, etc. It's time to recognize we are part of something bigger than our financial interests."