Is Marketing a Strategic Resource or a Procured Commodity? is must-read-article by Randall Rothenberg. He writes on the historic war between two different views on marketing and the business modell of ad-agencies. There are two business-models for ad-agencies at the moment:
- Contact Provider: Selling consumer contacts or page views to the client like selling stocks or apples. As an intermediate acencies buy media space and stuff it out with a funny idea.
- Solution Provider: Selling creativity to provide a strategic support to recognize market needs and to improve products.
Randall argues that relying only on the first business model will put agencies in danger of becoming indistinguishable in the long run - even with better targeting and measurement.
Because if business history is any guide, the procured-commodity experts will get it right. The "digital media trading solutions, "algorithmic audience targeting platforms," "networks of networks," and "demand-side exchanges" will make a difference.
But when technology succeeds in driving the cost of reaching the perfect audience down to zero, what are you left with? Everyone with the same low costs, the same perfect efficiency, for doing the same exact thing ... and nothing unique to say or do or offer to consumers.
The real value of advertising lies in the creativity to improve products and services. To proove this statement Randall look at the history of adverting from the beginning of the last century until now.
My favourite quote:
Mr. Hoffschnagel, you and I are practical men. I don’t need to tell you that advertising is not an end in itself. Neither is selling. The end, Mr. Hoffschnagel, the true objective of the manufacturer and dispenser of products and services, should be the efficient and economical delivery to the consumer of precisely what the consumer wants and needs: what the consumer needs to buy, I repeat, not what the manufacturer needs to sell him. In any functional relationship between producer and consumer, advertising and sales expenditures are just so much frictional loss; in the ideal setup, which of course we can’t even approximate under present conditions, released buying energy would be substituted entirely for the selling energy which you now spend breaking down ‘sales resistance.’ My task, therefore, is to redefine and reinterpret your relationship with your customers; not to pile up sales and advertising expenses… but to cut them. What do your customers want from you? Service! What do you want to give them? Service! Not advertising – the less advertising the better – that’s just so much friction and loss. But service! The end, Mr. Hoffschnagel, is service!
James Rorty, Advertising Expert, around 1930
(Link via Jeremy Abbett. THANKS!)