Advertising is heading to its doom -- again. So declares prolific marketing guru Al Ries, ex-ad executive and coiner of the phrase "positioning." In a forthcoming August book, The Fall of Advertising and Rise of PR, he joins his daughter and consulting partner Laura Ries in contending that public relations quietly has become the most powerful marketing-services discipline.
The Rieses still see a role for advertising, but primarily as a defense mechanism for established brands and products, not as a builder of new ones. Public relations -- specifically publicity and the resulting word of mouth -- is what really build new brands, they maintain.
The notion is far from comforting for the ad industry. Given that a substantial amount of advertising today goes to launch new brands and products, Ries acknowledges that his advice, if heeded, could mean a reduction in ad spending. The other logical result, he said, would be more new brands but fewer product launches or line extensions.
He and former consulting partner and Positioning co-author Jack Trout have long railed against brand and line extensions, arguing that they dilute or distort brands. But clients invariably want to extend old brands rather than launch new ones, in part because of the cost of advertising, he said. By launching new brands with PR, they dramatically reduce the marketing cost, making it practical to launch more brands, Ries argued.
But not all PR executives, however, are quite ready to agree. Thomas Harris, former co-principal at PR shop Golin Harris and now a Highland Park, Ill.-based PR consultant, calls the book "a gross generalization" that overlooks the vast majority of public relations beyond product publicity, and says that in some ways both overplays and overlooks the usefulness of PR.
Ries concedes that advertising is necessary for many launches, even in cases where PR can work. He cites the movie industry, which, despite a long history of extensively using publicity to launch movies, also needs to spend heavily on advertising to build first-week audiences.
Linda Recupero, vice president of the brand marketing practice of Burson-Marsteller, New York, agrees with the Ries' central premise that PR builds brands while advertising sustains them. "PR is more effective at building a brand in the beginning."
Burson has been the firm behind two of the bigger PR fueled launches in recent years Botox and Segway. Though PR revenues have joined ad revenues in falling since the dot-com crash and recession, Recupero said PR has still grown faster than advertising in the past five years.
Both suffered last year, however. According to Advertising Age figures, while Worldwide gross income for U.S. based ad agencies was down 2.5% to $31.74 billion, , the Council of Public Relations Firms reported worldwide revenue for PR in 2001 was $4.31 billion down 2.7%.
PR spending has long paled compared to ad spending, given the lack of media expense and relative lack of production expense involved. A 2001 survey by Thomas L. Harris/Impulse Research found consumer-products companies, for example, spend about 0.05% of revenue on PR. That's a tiny fraction of the 2% to 10% of revenues such companies ordinarily spend on overall marketing expense. Those figures don't count salaries and overhead.
The survey also found that marketers cut PR budgets as a percent of sales from 0.09% to 0.07% last year, a 29% drop. The percentage of client PR budgets earmarked for product publicity, however, actually went up five points to 23%, even though total spending on product publicity actually went down 10% to $518 million.
Recupero said lack of understanding among many marketing executives or top managers holds back growth of PR. "Advertising is something people see and understand," she said. "I still tell my mom I work in advertising."
"I think it would be wrong to say advertising will be totally supplanted by communications, but the mix is certainly changing," said Gary Bridge, a former IBM Corp. executive and now senior vice president of marketing of Segway, the motorized transport device that blanketed the airwaves with free TV coverage late last year.
Segway's publicity barrage last December alone generated 758 million impressions, valued in the $70 million to $80 million range, the company said, followed by similar levels in January and February. The company plans a much smaller ad campaign coming some time between late 2002 and mid-2003 to back the brand's consumer launch.
But Segway's publicity keeps paying dividends, Bridge noted. The Segway HT has made prominent appearances in NBC's Frasier and the season finale of CBS's The Education of Max Bickford and will be in upcoming movies, he said.
Peter Himler, managing director of Burson, said there's plenty of room for PR to grow without cutting into ad budgets or significantly closing the gap in billings, because PR costs so much less. "Six-figure programs are healthy programs for us," he said, "whereas six figures in advertising won't get you very far."
But he disagrees with the Rieses' contentions that confinement of major PR firms representing two-thirds of industry billings within agency holding companies has prevented PR from promoting its superiority to advertising in brand building.
"I don't think that's entirely accurate," said Himler, whose company is owned by WPP Group. "Because many traditional marketers don't understand or haven't taken the time to learn what we do, it's hard for advertising executives to sell in PR. It's much easier for PR people to sell in advertising."
Some traditional advertisers, however, do appear to be sold on PR. When Unilever acquired Ben & Jerry's in 2000, the deal wasn't about turning a brand built on publicity into a big media advertiser. Instead, in a December interview, Unilever Co-Chairman Antony Burgmans praised Ben & Jerry's for its "low-budget, high-impact marketing." He added: "Something we can learn from is their ability to create awareness of news about their brand."
That said, Burgmans wasn't willing to sign up Unilever for Ben & Jerry's $3 million spring-summer marketing-publicity effort, which uses a partnership with the Dave Matthews Band to help get consumers and businesses to pledge specific cuts in greenhouse gas emissions.
Gillette is one established marketer that has become a big believer in PR, which helped propel the launch of its Sensor, said Michelle Szynal, communications director.
"We tried to come up with a number [to approximate the advertising spending equivalent] and all I can say is we couldn't have afforded it," Szynal said. "Every launch after Sensor we used public relations as the lead vehicle, and we built that into the strategic plans. It's become increasingly more important to Gillette because it works."
Gillette's faith in PR was borne out again during the 1998 launch of Mach 3 razors, which generated 750 million PR impressions pre-launch and 1.6 billion in all, ranging from ubiquitous business media coverage to a full-length feature in The New Yorker. Last year's launch of the Venus women's razor got similar levels of media attention, though more in beauty and women's magazines and TV shows, Szynal said. Omnicom Group's Porter Novelli handled.
Despite abundant free publicity, Gillette has spent plenty on advertising. Gillette Chairman-CEO James Kilts has increased Gillette's ad budget this year, up 17% in the first quarter to $137 million. Omnicom's BBDO Worldwide, New York, is Gillette's ad agency. Even brands that use PR as their primary marketing vehicle can find it's a mixed blessing, since the message isn't always quite the one they wanted to send.
H.J. Heinz Co. got $10 million worth of free publicity for its 2000 launch of Heinz EZ Squirt ketchup based on the novelty of green ketchup, which was part of the new line, said Kelly Stitt, senior brand manager for Heinz, at a recent talk to the Cincinnati chapter of the American Marketing Association. The free publicity amounted to more than three times what Heinz spent on media advertising for EZ Squirt on cartoon networks and children's programming via Bcom3 Group's Leo Burnett Co.
But it wasn't quite the same as what media dollars would have bought. The green-ketchup story leaked two months before Heinz was ready. The publicity generated so much retailer interest that the product had to be put on allocation during early months of the launch, Stitt said, meaning Heinz didn't have enough product to support in-store displays it planned.
In a sense, the publicity hijacked the marketing plan. While media attention focused on green ketchup, Heinz had planned to focus more on how the bottle was designed for ease of use by kids. "It was great publicity, but it sent us to market a little differently than we had planned," she said.
Segway's Bridge admits getting the right messages across using PR can be a nail-biter. "I took a giant, potentially career-ending risk in announcing the product on [ABC's] Good Morning America on live TV," he said. "If either one of those [hosts] had done a face slam on live TV, our product was gone."
The other problem is what Bridge describes as second-day syndrome. "One of the things about media that drives me crazy is that the second guy who writes the story doesn't want to write anything the first guy wrote," he said. "And all he's left with is negatives."
Consider, for instance, Segway's entry in Time Inc.'s Business 2.0's recent report "101 Dumbest Moments in Business History." The report contrasts its two years of pre-launch hype to the reality of a product that costs 30 times what a bicycle does yet makes a rider look, according to the magazine, like "a total dork who's too lazy to walk."
"It's very hard for marketing people to not have control over the message," said Bryan McCleary, communications manager for personal health care at P&G.
That said, and despite criticism in the Rieses book for relying on $50 million in media advertising for a product that could have been a PR success, P&G put an extensive PR effort behind its launch last year of Crest Whitestrips. P&G generated 400 million pre-launch media impressions behind Whitestrips and another 130 million earlier this year when it signed Canadian figure skating gold medalists Jamie Sale and David Pelletier as spokespeople for its Crest Healthy Smiles 2010 cause marketing program.
P&G also used a variety of other methods to build buzz prior to Whitestrips' June 2001 launch, including selling the product for a year on a limited basis in dentist offices, online or on the QVC home-shopping channel and about $2.7 million in print advertising. Those efforts combined to build 15% consumer awareness and $23 million in sales prior to retail availability, Mr. McCleary said. By using codes linked to discounts specific to each marketing method, P&G was able to determine that 33% of those pre-launch sales were linked directly to PR.
The brand has since reached $200 million in annual sales. Interpublic Group of Cos.' DeVries Public Relations worked on White Strips, while Bcom3's D'Arcy Masius Benton & Bowles, New York, does the ads.
P&G isn't spending any more money on PR than it did three years ago. But it has learned to be more media savvy than five years ago, when its Scope brand named talk-show host Rosie O'Donnell to a list of the 10 least-kissable celebrities. O'Donnell later launched a "just say nope to Scope" campaign and urged viewers to buy rival Pfizer's Listerine. With some wooing -- including a $2 million donation on behalf of P&G's Pantene brand to O'Donnell's foundation for children -- O'Donnell later endorsed WhiteStrips.
Georgia-Pacific Corp.'s chairman-CEO, A.D. "Pete" Correll, told an investor conference recently that while he intends to increase marketing behind the company's consumer brands, that support won't necessarily come from media. Instead, other communications channels, including PR, will play a bigger role. And its Angels in Action cause-marketing program for Angel Soft, from which Georgia-Pacific expects to generate more than 100 million PR impressions, is part of that effort.
"Adding PR is a reach extender and awareness builder beyond traditional advertising," Brand Manager Patrick Dodson said. "It does that in a very cost-effective manner. ... We are not going to do less media."
As attention-grabbing as the idea might be, Ries doesn't expect his book to signal the death of advertising.
"It could even mean more advertising, but after a brand is launched," he said. "We definitely are not saying that advertising is dead. ... You can fan the flames with advertising. You just can't start the fire."