Is Bad News for Advertising Good News for PR?

Posted on February 12, 2009 
Filed Under General

This week, the heads of big advertising conglomerates like Omnicom and WPP confirmed what most of us already suspected: The ad outlook for the near future is incredibly grim. As the Financial Times reported on Tuesday, Omnicom President and CEO John Wren said, “We think the first nine months of this year are going to be difficult.”

Difficult might be an understatement, with expectations for the group’s revenue to fall more than 7% this year. The FT article also noted that the Publicis Groupe expects revenues to decline, and WPP CEO Sir Martin Sorrel expects 2009 revenues to be flat.

But what does this mean for the PR agencies that fall under these behemoths’ umbrellas? Omnicom is the parent company of Fleishman-Hillard, WPP of Burson-Marsteller, Ogilvy and Hill & Knowlton, and Publicis of MS&L. In talking to many communications executives, I’ve heard that the dismal advertising outlook might mean good things for PR, especially as organizations shift dollars from marketing to efforts that do more to protect brands and bottom lines.  Agree or disagree? Why?

By Courtney Barnes

Comments

  • http://www.formbycycles.co.uk road bikes

    In advertising, you can use a lot of over the edge techniques. But PR requires a little more restraint.

  • http://www.enewsbuilder.net/techimage/e_article000442814.cfm?x=b1,0,w Tracy Matsumoto

    I read a really good article I read in the past about PR vs. Advertising–

    “The Fall of Advertising & The Rise of PR”. It’s an interesting article about the relationships between PR, branding and advertising.

    Article from PR Intelligence Report (August 18, 2005)

    PR VS. Advertising : 3 Facts of Life
    An interview with Al Ries, Best-Selling Author of “The Fall of Advertising & The Rise of PR.”
    by Cincom’s Expert Access Steve Kayser

    Steve: In your book the Fall of Advertising & The Rise of PR you state that today’s major brands are born with publicity – not advertising…

    Al Ries: Yes, all the recent brand successes have been PR successes, not advertising successes. Red Bull, Starbucks, Harry Potter, Linux, Palm, The Body Shop, JetBlue, and Google.

    Steve: Examples?

    Al: Starbucks spent less than $10 million in advertising its first 10 years. That’s less than one million a year, a trivial amount for a national brand. Here’s what Howard Schultz, CEO of Starbucks, has to say about advertising. “It is difficult to launch a product through consumer advertising because customers don’t really pay attention as they did in the past. I look at the money spent on advertising and it surprises me that people still believe they are getting returns on their investments.”

    The Body Shop is a worldwide brand that has never advertised. Instead, Anita Roddick travels the world looking for ingredients for her natural cosmetics, creating many publicity opportunities. Actually The Body Shop needs to do what Botox has done. Shift from a PR mode to an advertising mode. (Ms. Roddick was recently fired because sales have stagnated at The Body Shop.)

    The fastest-growing retail chain in the world is Zara, headquartered in Spain and now operating in 27 different countries. As a matter of fact, their tags show the price of their merchandise in 27 different currencies. Zara does no advertising except for two sale ads a year.

    JetBlue is flying high, primarily because of PR. The October 14, 2002 issue of Forbes, referred to them as “Lord of the Skies.”

    PlayStation and PlayStation 2 were introduced with a fanfare of publicity and went on to become the leading video-game brand.

    Microsoft Xbox followed the same pattern. As a matter of fact, 75 percent of the target audience expressed an “interest to buy” before the first Xbox ad ran.

    Linux has not advertised because no one owns the brand. It’s open-source software. Yet Linux has some 99.9 percent name recognition in the high-tech community.

    The Wall Street Journal has become a high-technology trade paper. If you are in the high-tech field and your brand is not mentioned favorably and frequently in The Journal, you are not going to make it in the high-tech field.
    It was publicity in The Wall Street Journal and other management publications that built brands like Cisco, Dell, Oracle, Microsoft, Palm, SAP, Sun Microsystems and Yahoo.

    Steve: But didn’t some major dot.coms succeed with advertising?

    Al: What dot.coms are successful? Amazon, Ebay and other dot.coms that relied on PR to build their brands. Those that tried to do it with advertising were notable failures. Google is another dot.com brand that rode to the top primarily with PR.

    Fact of life number 1:
    Advertising often gets the credit for PR successes.

    Advertising Age recently ran a special issue on the best advertising campaigns of the 20th century. The number-one advertising campaign, as you might have guessed, was the Volkswagen campaign. The first advertisement in the campaign, “Think small,” was run by Doyle Dane Bernbach in the year 1960. Almost everyone credits this campaign for building the Volkswagen brand.

    But in the year before the campaign was launched, Volkswagen was already the largest-selling imported car in the country with 19 percent of the imported car market. Volkswagen was already a successful brand due primarily to favorable publicity. Granted, the DDB campaign accelerated Volkswagen’s sales, which is exactly what the best advertising should do.

    The best single advertisement of the 20th century, according to many commentators, was a Rolls-Royce ad. “At 60 miles per hour, the loudest noise in the new Rolls-Royce comes from the electric clock.”

    David Ogilvy said: “The best headline I ever wrote contained 18 words: “At 60 miles per hour, the loudest noise in the new Rolls-Royce comes from the electric clock.”

    Have you read the first paragraph of the ad? I’ll read it for you. “At 60 miles per hour, the loudest noise comes from the electric clock,” reports the Technical Editor of The Motor, the leading automotive publication in the United Kingdom.

    David Ogilvy took his headline directly from a road test in a motor magazine. Do I think any less of Ogilvy’s genius? Of course not. That’s what advertising ought to do. Pick up and reinforce ideas put into the mind by PR.

    Fact of life number 2:
    Advertising often gets the credit for campaigns that don’t deserve it.

    Take the Energizer Bunny, one of the most admired advertising campaigns of all time. Is Energizer the leading appliance battery brand? Of course not. The leading appliance battery brand is Duracell, by a big margin.

    Recently, MasterCard’s “Priceless” campaign has gotten a lot of publicity. Terrific, but Visa leads MasterCard by more than two to one.

    Steve: So when it comes down to bottom-line ROI?

    Fact of life number 3:
    Advertising dollars cannot compensate for the lack of favorable PR.

    Al: No-brainer. The largest advertised brand in America spent $780 million on advertising last year. Do you know the name of the largest advertised brand? It’s not McDonald’s, Budweiser or Coca-Cola.

    The largest advertised brand in America last year, would you believe, was Chevrolet. Now let me ask you a question, what’s a Chevrolet? If I told you I would meet you out front in my Chevrolet, would you be able to recognize my car?

    What’s a Chevrolet? A large, small, cheap, expensive car … or truck. But you already knew that. $780 million and there probably isn’t one thing stuck in your mind that you can connect with Chevrolet. What a waste.

    The largest corporate advertiser in America last year was Chevrolet’s parent, General Motors. As a matter of fact, the company has been the largest corporation advertiser for five of the last eight years.

    In eight years, General Motors spent $23 billion on advertising. What did they get for their money? They lost six percent of market share, that’s what they got – from 34 percent in 1995 to 28 percent in 2001.

    Big advertisers often are companies with big problems. Advertising can often accelerate success, but it usually does nothing to forestall failure.

    When US Airways went bankrupt, for example, what was the first thing they did? They ran full-page advertisements signed by the chief executive in The Wall Street Journal, The New York Times and USA Today. “Foundation for the future.”

    When United Airlines went bankrupt, what did they do? They ran full-page advertisements in The Wall Street Journal, The New York Times and USA Today. It’s not really Chapter 11, it’s Chapter 1.

    When Firestone got in trouble, it ran full-page advertisements signed by the chief executive in The Wall Street Journal, The New York Times and USA Today. “Making it right.” Translation: We have been making our tires wrong for 50 years, now we are going to start making our tires right.

    When Arthur Andersen got in trouble, it ran full-page advertisements signed by the managing partner, the ex-managing partner, in The Wall Street Journal, The New York Times and USA Today.

    When Merrill Lynch got in trouble, big trouble, it didn’t run full-page advertisements in The Wall Street Journal, The New York Times and USA Today. It ran two-page spreads in those publications signed by both the CEO and the president.

    “Lately you’ve been hearing a lot about Merrill Lynch.” Now we are going to set you straight. And what two guys in two thousand dollar suits tell you, you know you can believe.

    Steve: PR vs. Advertising … biggest takeaway?

    Al: Advertising’s Achilles’ heel is not a heel at all. It’s the mind of the prospect. Advertising has little credibility in the mind.

    Enamelon, a toothpaste that adds enamel to your teeth, spent $25 million dollars launching the brand and received $10 million in sales. Adds enamel to your teeth? A product like this needs to start with a PR program in publications like The Journal of the American Dental Association.

    Advertising is self-serving. What you say about yourself has little or no credibility in the mind.

    “I did not have sexual relations with that woman, Miss Lewinsky,” said Bill Clinton. Did you believe that? Did Hillary believe that?

    “I will not resign,” said Richard Nixon and then promptly resigned.

    PR has credibility in the mind. It’s the third-party effect.

    It was PR that built the safety position for Volvo. And advertising reinforced it. It’s what we call PR-oriented advertising. PR first to establish the credibility of the brand, advertising second to reaffirm and reinforce the brand’s credibility.

    This ad works because “safety and Volvo” are synonymous in the mind. “We design every Volvo to look like this.”

    But this ad doesn’t work. “We design every Dodge to look like this?” The steering of a Dodge must be defective because look at all the accidents they have been having.

    Advertising agencies, as you know, generally ignore the credibility issue and focus on creativity. Take the sock puppet owned by Pets.com. The sock puppet received $60 million in advertising yet delivered only $22 million in sales.

    As it happens so often in advertising, creativity dies again.

    As strange as it might seem, the ad agency disagrees. Here is what the world’s most famous creative director said about the Pets.com campaign. “Business models, market conditions, the Nasdaq, VCs – they’re not in my control. This has nothing to do with the success of the advertising. Ad agencies are hired to create brands, and we did that in spades.”

    It’s the classic advertising error. The ad agency apparently thinks the brand is the sock puppet. But consumers don’t buy sock puppets. Consumers buy pet supplies. And few did because the advertising didn’t build the Pets.com brand.

    About Ries & Ries
    Al Ries is one of the world’s best-known marketing strategists. He is also the coauthor of the best-selling Positioning. Along with his partner and daughter, Laura Ries of The 22 Immutable Laws of Branding, their Atlanta consulting firm, Ries & Ries, works with many Fortune 500 companies. For more information, visit http://www.ries.com.

    About Steve Kayser:
    Steve is currently Cincom’s Expert Access Editor and PR Manager. In his spare time, Steve models kilts for Un-Vanity, Non-GQ and The Manly Kilt Wearing Man’s monthly magazines. Steve also headlines fundraising events for his run at an Olympic Gold Medal in the kilt-wearing mechanical bull riding competition to be held in Cincinnati, Ohio in 2050. For more info you can contact Steve via e-mail at skayser@cincom.com.

    Published by Tech Image®
    Copyright © 2009 Tech Image®. All rights reserved.

  • Susana Machado

    I agree. It is not a question of judging the efficiency of the tool, but some things are clear: PR can be must cheaper than advertising; PR has better results in increasing confidence, and arouse the credibility of the brands/company. So , I believe in times of crisis, PR can have some more oportunities than advertising.

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