Chapter 1
Permission Marketing
by Seth Godin
CHAPTER ONETHE
MARKETING CRISIS THAT MONEY WON'T SOLVE.
YOU'RE NOT PAYING ATTENTION. NOBODY IS.
It's not your fault. It's just physically impossible for
you to pay attention to everything that marketers expect you to-like the 17,000 new
grocery store products that were introduced last year, or the $1,000 worth of advertising
that was directed exclusively at you last year.
Is it any wonder that consumers feel like the fast-moving
world around them is getting blurry? There's TV at the airport, advertisements in urinals,
newsletters on virtually every topic, and a cellular phone wherever you go.
This is a book about the attention crisis in America and
how marketers can survive and thrive in this harsh new environment. Smart marketers have
discovered that the old way of advertising and selling products isn't working as well as
it used to, and they're aggressively searching for a new, enterprising way to increase
market share and profits. Permission Marketing is a fundamentally different way of
thinking about advertising and customers.
There's no more room for all these advertisements!
I remember when I was about five years old and started
watching television seriously. There were only three main channels-2, 4 and 7, plus a
public channel and UHF channel for when you were feeling adventuresome. I used to watch
Ultraman every day after school on channel 29.
With just five channels to choose from, I quickly memorized
the TV schedule. I loved shows like The Munsters, and I also had a great time with the TV
commercials. Charlie the Tuna, Tony the Tiger and those great board games that seemed to
magically come alive all vied for my attention. And they got it.
Growing up, it seemed like everyone I met was part of the
same community. We saw the same commercials, bought the same stuff, discussed the same TV
shows.
Marketing was in a groove - if you invented a decent
product and put enough money into TV advertising you could be pretty sure you'd get shelf
space in stores. And if the ads were any good at all, people bought the products.
About ten years ago, I realized that a sea change was
taking place. I had long ago ceased to memorize the TV schedules, I was unable to keep up
with all the magazines I felt I should be reading, and with new alternatives like Prodigy
and a book superstore, I fell hopelessly behind in my absorption of media.
I found myself throwing away magazines unopened. I was no
longer interested enough in what a telemarketer might say to hesitate before hanging up. I
discovered that I could live without hearing every new Bob Dylan album and that while
there were plenty of great restaurants in New York City, the ones near my house in the
suburbs were just fine.
The clutter, as you know, has only gotten worse. Try
counting how many marketing messages you encounter today. Don't forget to include giant
brand names on T-shirts, the logos on your computer, the Microsoft start-up banner on your
monitor, radio ads, TV ads, airport ads, billboards, bumper stickers and even the ads in
your local paper.
For ninety years, marketers have relied on one form of
advertising almost exclusively. I call it Interruption Marketing. Interruption, because
the key to each and every ad is to interrupt what the viewers are doing in order to get
them to think about something else.
INTERRUPTION MARKETING-THE TRADITIONAL APPROACH TO
GETTING CONSUMER ATTENTION
Almost no one goes home eagerly anticipating junk mail in
their mailbox. Almost no one reads People magazine for the ads. Almost no one looks
forward to a three minute commercial interruption on Must See TV. Advertising is not why
we pay attention. Yet marketers must make us pay attention for the ads to work. If they
don't interrupt our train of thought by planting some sort of seed in our conscious or
subconscious, the ads fail.
Wasted money. If an ad falls in the forest and no one
notices, there is no ad.
You can define advertising as the science of creating and
placing media that interrupts the consumer and then gets him or her to take some action.
That's quite a lot to ask of thirty seconds of TV time or 25 square inches of the
newspaper, but without interruption, there's no chance or action, and without action,
advertising flops.
As the marketplace for advertising gets more and more
cluttered, it becomes increasingly difficult to interrupt the consumer. Imagine you're in
an empty airport, early in the morning. There's hardly anyone there as you leisurely
stroll towards your plane.
Suddenly, someone walks up to you and says, "Excuse
me, can you tell me how to get to Gate 7?" Obviously, you weren't hoping for, or
expecting, someone to come up and ask this question, but since he looks nice enough and
you've got a spare second, you interrupt your train of thought and point him on his way.
Now, imagine the same airport, but it's three in the
afternoon and you're late for your flight. The terminal is crowded with people, all
jostling for position. You've been approached five times by various faux charities on your
way to the gate, and you've got a headache to top it all off.
Same guy comes up to you and asks the same question. Odds
are, your response will be a little different. If you're a New Yorker, you might ignore
him altogether. Or you may stop what you were doing, say, "sorry," and then move
on.
A third scenario is even worse. What if he's the fourth, or
the tenth, or the one hundredth person who's asked you the same question? Sooner or later
you're going to tune out the interruptions. Sooner or later, it all becomes background
noise.
Well, your life is a lot like that airport scene. You've
got too much to do and not enough time to get it done. You're being accosted by strangers
constantly. Every day, you're exposed to more than four hours of media. Most of it is
optimized to interrupt what you're doing. And increasingly, it's getting harder and harder
to find a little peace and quiet.
The ironic thing is that marketers have responded to this
problem with the single worst cure possible. To deal with the clutter and the diminished
effectiveness of Interruption Marketing, they're interrupting us even more!
That's right. Over the last thirty years, advertisers have
dramatically increased their ad spending. They've also increased the noise level of their
ads-more jump cuts, more in-your-face techniques-and searched everywhere for new ways to
interrupt your day.
Thirty years ago, clothing did not carry huge logos.
Commercial breaks on television were short. Magazines rarely had three hundred pages of
ads (as many computer magazines do today). You could even watch PBS without seeing several
references to the "underwriter."
As clutter has increased, advertisers have responded by
increasing clutter. And as with pollution, because no one owns the problem, no one is
working very hard to solve it.
CONSUMERS ARE SPENDING LESS TIME SEEKING
ALTERNATIVE SOLUTIONS
In addition to clutter, there's another problem facing
marketers. Consumers don't need to care as much as they used to. The quality of products
has increased dramatically. It's increased so much, in fact, that it doesn't really matter
which car you buy, which coffee maker you buy, or which shirt you buy. They're all a great
value and they're all going to last a good long while.
We've also come a long way as consumers. Ninety years ago,
it was unusual to find a lot of brand name products in a consumer's house. Ninety years
ago, we made stuff, we didn't buy it. Today, however, we buy almost everything. Canned
goods. Bread. Perked coffee. Even water. As a result, we already have a favorite brand of
almost everything. If you like your favorite brand, why invest time in trying to figure
out how to switch?
We're not totally locked in, of course. It wasn't too long
ago that cake mix was a major innovation. Just a few years ago, we needed to make major
decisions about which airline was going to be our supplier of frequent flyer miles. And
today, if you're going to get health care, you've got to make a serious choice. But more
often than not, you've already made your decisions and you're quite happy with them.
When was the last time someone launched a major new
manufacturer of men's suits? Or a large nationwide chain of department stores? Or a
successful new nationwide airline? Or a fast food franchise? It can be done, certainly,
but it doesn't happen very often. One of the reasons it's such a difficult task is that
we're pretty satisfied as consumers.
If the deluge of new products ceased tomorrow, almost no
one would mind. How much more functional can a T-shirt get? Except for fast moving
industries like computers, the brands we have today are good enough to last us for years
and years. Because our needs as consumers are satisfied, we've stopped looking really hard
for new solutions.
Yet, because of the huge profits that accrue to marketers
who do invent a successful new brand, a new killer product, a new category, the consumer
is deluged with messages. Because it's not impossible to get you to switch from MCI to
Sprint, or from United Airlines to American Airlines, or from Reebok to Nike, marketers
keep trying. It's estimated that the average consumer sees about one million marketing
messages a year-about 3,000 a day.
That may seem like a lot, but one trip to the supermarket
alone can expose you to more than 10,000 marketing messages! An hour of television might
deliver 40 or more, while an issue of the newspaper might have as many as 100. Add to that
all the logos, wallboards, junk mail, catalogues, and unsolicited phone calls you have to
process every day and it's pretty easy to hit that number.
A hundred years ago, there wasn't even a supermarket, there
wasn't a TV show, and there weren't radio stations. MASS MEDIA IS DEAD. LONG LIVE NICHE
MEDIA! Technology and the marketplace have also brought the consumer a glut of ways to be
exposed to advertising.
When the FCC ruled the world of television, there were only
three networks and a handful of independents. Networks made a fortune because they were
the only game in town. Now there are dozens, and in some areas, hundreds of TV channels to
choose from.
The final episode of Seinfeld made media headlines. Yet
thirty years ago, Seinfeld's ratings wouldn't have made Neilsen's list of top 25 shows of
the season. With an almost infinite number of options, the chances of a broadcast, even a
network broadcast, reaching almost everyone are close to zero.
Even worse is the World Wide Web. At last count, there were
nearly 2,000,000 different commercial web sites. That means that there's about 25 people
online for every single website...hardly a mass market of interest to an interruption
marketer.
Alta Vista, one of the most complete and most visited
search engines on the internet, claims to have indexed 100 million pages. That means that
their computer has surfed and scanned 100 million pages of information, and if you do a
search, that's the database you're searching through. It turns out that in response to
people who do searches online, Alta Vista delivers about 900 million pages a month. That
means that the average page that they have indexed in their search engine is called up
exactly nine times a month. Imagine that. Millions of dollars invested in building
snazzy corporate marketing sites and an average of nine people a month search for and find
any given page of information on this search engine.
This is a very, very big haystack, and interruption
marketers don't have that many needles. Marketers have invested (and almost completely
wasted) more than a billion dollars on web sites as a way of cutting through the clutter.
General Electric has a site with thousands of pages. Ziff-Davis offers a site with more
than 250,000 pages! And a direct result of this attempt to cut through the clutter is the
most cluttered, least effective marketing of all.
THE FOUR APPROACHES TO KEEPING MASS MARKETING ALIVE
A quick look at the newsstand at Barnes & Noble will
confirm that the problem of clutter saturation isn't limited to electronic media. There
are enough consumer magazines (ignoring the even larger category of trade magazines for a
moment) to keep a reader busy reading magazines full time, 24 hours a day, seven days a
week.
Obviously, the mass market is dying. The vast splintering
of media means that a marketer can't reach a significant percentage of the population with
any single communication. That's one reason the Super Bowl can charge so much for
advertisements. Big events are unique in their ability to deliver about half the consumers
watching TV, so they're the perfect platform for Interruption Marketing aimed at the mass
audience.
Other than buying even more traditional advertising, how
are mass marketers dealing with this profound infoglut? They're taking four approaches:
(1) First, they're spending more in odd places. Not just on traditional TV ads, but a wide
range of interesting and obscure media. Campbell's Soup bought ads on parking meters.
Macy's spends a fortune on its parade. Kellogg's has spent millions building a presence on
the World Wide Web-a fascinating way to sell cereal.
Companies have seen that a mass market broadcast strategy
isn't working as well as it used to, especially when targeting the hard-to-reach upper
income demographic. As this lucrative audience spends less time watching TV, marketers are
working overtime trying to find media with less clutter, where their interruption
techniques can be more effective.
Marketers hire Catalina Corporation to print their coupons
on the back of receipts at the grocery store. They buy ads on the floor of the cereal
aisle. There are ads atop taxis in New York City and on the boards around the rink at the
hockey game. Fox even figured out a way to sell the rights to the small area over the
catcher's shoulder, so TV viewers would see the ad throughout an entire baseball game.
(2) The second technique is to make advertisements ever
more controversial and entertaining. Coca-Cola hired talent agency CAA to enlist
top-flight Hollywood directors to make commercials. Candies features a woman sitting on a
toilet in its magazine ads (for shoes!). Spike Lee's ad agency did more than fifty million
dollars in billings last year.
Of course, as the commercials try harder to get your
attention, the clutter becomes even worse. An advertiser who manages to top a competitor
for the moment has merely raised the bar. Their next ad will have to be even more
outlandish in order to top the competition, not to mention their previous ad, to keep the
consumer's attention.
The cost of making a first-rate TV commercial is actually
far more, per minute, than a major Hollywood motion picture. Talking frogs, computer
graphics and intense editing now seem to be a requirement.
A side effect of the focus on entertainment is that it
gives the marketer far less time to actually market. In a fifteen second commercial
(increasingly attractive as a cost-cutting way to interrupt people even more often), ten
or even twelve seconds are devoted to getting your attention, while just a few heartbeats
are reserved for the logo, the benefit and the call to action.
Take the interruption challenge! Write down all the
companies who ran commercials during your favorite TV show last night. Write down all the
companies that paid good money to buy banners on the Web during your last surfing
expedition. If you can list more than ten percent of them, you're certainly the exception.
(3) The third approach used to keep mass marketing alive is
to change ad campaigns more often in order to keep them "interesting and fresh."
Tony the Tiger and Charlie Tuna and the Marlboro man are each worth billions of dollars in
brand equity to the companies that built them. The marketers behind them have invested a
fortune over the last forty years, making them trusted spokesmen (or spokesanimals) for
their brands.
Nike, on the other hand, just ran a series of ads without
the swoosh, arguably one of the most effective logos of the last generation. Apple
Computer changes its tagline annually. Wendy's and McDonald's and Burger King jump from
one approach to the other, all hoping for a holy grail that captures attention.
In exchange for these brief bits of attention (remember the
hoopla when they replaced Mikey on the Life box?) these marketers are trading in the
benefits of a long term brand recognition campaign. It's a trade they're willing to make,
because Interruption Marketing requires it. Without attention, there is no ad.
(4) The fourth and last approach, which is as profound as
the other three, is that many marketers are abandoning advertising and replacing it with
direct mail and promotions. Marketers now allocate about 52% of their annual ad budgets
for direct mail and promotions, a significant increase over past years.
Of the more than $200 billion spent on consumer advertising
last year in the US, more than $100 billion was spent on direct mail campaigns, in-store
promotions, coupons, free standing inserts and other non-traditional media. Last year
alone Wunderman, Cato, Johnson, did more than $1.6 billion in billings for its clients
(folks like AT&T).
The next time you get a glossy mailing for a Lexus, or
enter an instant win sweepstakes at the liquor store, you're seeing the results of this
trend toward increased direct marketing efforts. Advertisers are using them because they
work. They are somewhat more effective at interrupting you than an ad. They're somewhat
more measurable than a billboard. Best of all, they give the marketer another tool to use
in their increasingly frustrating fight against clutter. After all, there are only five or
ten pieces of junk mail in your mailbox every day-not 3,000. And another few feet of shelf
space at the supermarket can lead to a dramatic upturn in sales.
Direct marketing breaks through the clutter, temporarily.
Even though they work better than advertising, these techniques are astonishingly
wasteful. A 2% response for a direct mail campaign will earn the smart marketer a raise at
most companies. But a 2% response means that the same campaign was trashed, ignored or
rejected by an amazing 98% of the target audience! From the perspective of the marketer,
however, if the campaign earns more than it costs, it's worth doing again.
Of course, just as suburbanites learned when they fled the
city to avoid the crowds, if a strategy works, other people will be right on your heels.
That bucolic countryside rapidly fills up with other people looking to get away from it
all. Correspondingly, as each of these promotional media becomes measurably effective,
every smart marketer rushes to join in. Finding a unique approach that cuts through the
clutter is usually very short lived.
Virtually every supermarket now charges a shelving
allowance, for example, which manufacturers pay for if they want more shelf space for
their products. Every liquor store is already jammed with promotions. Every mailbox in the
country is brimming with catalogs for clothes, gardening equipment and fountain pens.
Direct marketers are responding to this glut by using
computers. With access to vast amounts of computerized customer information, marketers can
collate and cross-reference a database of names to create a finely-tuned mailing list, and
then send them highly targeted messages. For example, a direct marketer might discover
that based on past results, the best prospects for its next campaign are single women who
are registered
Democrats, who make more than $58,000 a year and have no
balance on their credit card. This information is easily available, and marketers are now
racing to make their direct marketing ever more targeted. Of course, database marketing is
a weapon available to any marketer, so like all trends in Interruption Marketing, this one
will soon lose its edge. When others jump in as well, the clutter will inevitably catch
up.
The last frontier of Interruption Marketing appears to be
exemplified by the movie Titanic. James Cameron showed the world that outspending any
rational marketer will indeed cut through the clutter. Hollywood has jumped on this
bandwagon with marketing campaigns for Godzilla and other films that at first glance,
can't possibly bring in enough ticket sales to justify the expense.
Nike uses the same approach to sell sneakers, and now this
radical overspending strategy is being used by others, especially on the internet. The
thinking behind it is based on an all or nothing roll of the dice. Basically, because
clutter is so pervasive, anyone who can successfully break through and create a new mass
market product will reap huge rewards. And betting vast amounts of other people's money on
that breakthrough is one way to play.
Of course, once there's a proven pattern that big spending
can win, others in the category will jump in as well. The bar will be raised yet again,
and the only winners will be the media companies that sell the air time and ad space in
the first place.
Why ad agencies don't work to solve the problem
What about the ad agencies? With so many talented people,
why aren't they working to solve this problem?
Unfortunately, the clutter wars are taking their casualties
at the agency side as well. The big agencies, the ones who could afford to take the lead
in this challenge, are faced with three dismal problems:
(1) First, clients are giving the agencies a much shorter
leash. Leo Burnett used to keep clients for twenty or thirty years. Levi's stayed at FCB
for 68 years. That's so long that not one person at either company was probably born when
the account work was started on Levi's.
Today, however, it's not unusual for a marketer to change
agencies after two or three years. Companies that fired their ad agencies in the last year
include Bank of America, Compaq, Goodyear, and many more.
(2) The second problem is that the stock market has been
conducive to agency consolidations. The best way to make money in advertising today is to
buy ad agencies and take them public. As a result, some of the best minds in the business
have been focusing on building agencies, not brands.
(3) And last, the commission
structure that every ad agency was built upon has been dramatically dismantled.
Traditionally, agencies were paid by media companies. They
got to keep 15% of all the ad money that the client spent on ad space in the form of a
commission from the magazines and TV networks where they ran their ads.
This meant that big clients could generate huge profits for
the ad agencies, which funded work on new approaches to advertising as well as the
innovative ads for new, smaller clients. But now the big guys have decided to put a stop
to this subsidizing, and it's rare to find an ad agency who still gets a straight 15%
commission on media buys for their big clients.
INTERRUPTION MARKETERS FACE A CATCH
22
To summarize the problem that faces the Interruption
Marketer:
1. Human beings have a finite amount of attention. You
can't watch everything, remember everything, or do everything. As the amount of noise in
your life increases, the percentage of messages that get through inevitably decreases.
2. Human beings have a finite amount of money. You also
can't buy everything. You have to choose. But because your attention is limited, you'll
only be able to choose from those things you notice.
3. The more products offered, the less money there is to go
around. It's a zero sum game. Every time you buy a Coke, you don't buy a Pepsi. As the
number of companies offering products increases, and as the number of products each
company offers multiplies, it's inevitable that there will be more losers than winners.
4. In order to capture more attention and more money,
Interruption Marketers must increase spending. Spending less money than your competitors
on advertising in a cluttered environment inevitably leads to decreased sales.
5. But this increase in marketing exposure costs big money.
Interruption marketers have no choice but to spend a bigger and bigger portion of their
company's budgets on breaking through the clutter.
6. But, as you've seen, spending more and more money in
order to get bigger returns leads to ever more clutter.
7. Catch-22: The more they spend, the less it works. The
less it works, the more they spend.
Is mass marketing due for a cataclysmic shakeout?
Absolutely. A new form of marketing is changing the
landscape, and it will affect interruption marketing as significantly as the automobile
affected the makers of buggy whips.
CLICK HERE TO READ CHAPTER TWO
© Copyright 1999 Seth Godin.
All rights reserved.
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