Over the past ten, fifty or even two-hundred years, there has been a sea change in how firms have marketed to their customers. Most of this change has been driven by the prevalence of information in the marketplace, where sales channels have existed to drive up consumption and where individuals could go to obtain “the truth” about a given product or service.
At the very founding of America, advertisements were quite simple: a sign hung outside one’s shop indicated the type of service to be obtained within. Small periodicals contained advertisements as well, but as a group, the information density was quite low. Individuals in both towns and rural areas generally “came to town” to acquire goods and services and purchased from one of a few vendors. Competition might be a single alternate provider, or potentially two. In this sort of environment, customers and businesses had few choices to make, so personal relationships were extremely important. Because a particular vendor might be in business for many years, products of substandard quality had to simply be accepted as is, or fixed by the purchaser themselves. There were a limited number of products and services and customers though, so not much choice on either side of the counter.
With the advent of the modern era, consumers suddenly found themselves inundated with products. Advertising became a critical way to separate a consumer (or a business) from their money, as for any specific item, there could be a multitude of sellers and channels. Outlandish claims became the norm, and often the reason for government regulation, especially with respect to particular industries. In this environment, customers (and consuming businesses) were overwhelmed by a glut of information, much of it divorced from the truth to a large degree. Prices varied wildly, as did quality of services delivered. Fortunately, with more mature sales channels in place, customers could begin to shift to other providers if products were inferior. Still, all of the information was going in one direction: from product and service providers to consumers. As time progressed, organizations sprung up to help businesses “optimize” their advertisements in an effort to garner more listeners, visitors or eyeballs. These optimizations were never designed to help customers reach “the best” service: they were designed instead to funnel them to your service.
That advertising-based framework has remained largely in place (with new channels like radio, television, the internet and social media popping up every few years) but in the past ten years, the unidirectional nature of marketing has begun to fracture due to two recent changes. First, as companies have embraced social media more aggressively, information flows that used to be one-sided (e.g. “buy our product because it is 40x better!” ) have become true conversations with customers responding in real time to service outages, product failures, or even feature improvements to help drive changes before release dates. Second, customers (whether businesses or consumers) have begun to sift through the information using peer review systems, online websites, etc to select products and services well in advance of anyone explicitly marketing to them via advertisments. These two changes have resulted in glut of omni-directional information being passed back and forth from consumer to consumer, business to business and every which way in-between.
A good example of this takes place each day when consumers look to enjoy a meal out: many individuals bring up a peer-review application, sort by the type of cuisine and the ratings and select a dinner option. This ultimately drives up the satisfaction in the product, and even helps to anchor some choices (if one is expecting a “cheap” product, the level of satisfaction may be fine, vs when one expects a “luxury” meal only to find out it is not that good) and expectations.
In this new, social, conversation-drive world, the classic advertisement begins to have some specific challenges for both marketing groups and especially for firms that depend upon advertising revenue. Historically, studies have shown that the most effective ads are ones that introduce “new” product lines, as ignorance of a particular service can be trumped by novelty. By contrast, getting consumers to switch brands once they’ve select a particular brand is tough: simple levers to pull such as price discounts often don’t sway customers, even when they are purchasing so-called “elastic” items such as Milk or coffee. This preference for brands ensures that many advertising dollars are simply misspent in a fruitless effort to get customers to switch. When it comes to social or mobile scenarios, advertisements run into a bigger problem than brand preference: the desire to achieve the truth.
Turning back to the dinner example can help illuminate this: the parties looking through a review of restaurants is looking to achieve a specific goal in mind: that could be an inexpensive quick dinner, or a particular cuisine that is tasty, or to celebrate an important occasion. Everything in that search is an effort to achieve that goal. Ultimately, advertisements can help sway that search process if they alert a consumer to something they might have otherwise missed: if someone was looking for “the least-expensive taco food truck that was still very tasty” a price discount by a particular vendor might move one option into the selection group. But price discounts and menu alterations are advertisements that take advantange of the lack of information on the part of the consumer.
And that’s where advertising and our information dense society start to rub customers the wrong way: if an individual business has access to *all* possible information, then the value of an advertisement begins to decrease. If I’m looking for a particular restaurant type, and am instead led to a place that I would be less satisfied at, simply because a review system rated it more highly (based on advertising dollars) I am less likely to use that review system. But in a truly equitable review platform, the truth tends to come out about which services are the best, which means that advertising dollars can’t sway the system in any direction. Even when consumers and business perform web searches online, in an information-dense environment, they aren’t looking to be led to the second-best, or third-best option, based on advertising: they’re looking for the true best fit for their needs.
Getting ahead of this curve has never been more critical for businesses and requires an Internet, Social and Mobile strategy to get in front of potential customers with accurate, real-time information about your goods and services. While dollars spent on traditional advertising channels may decline, those investments can be redirected to helping customers reach “the truth” about your organization: that great customer service and quality products really do, sell themselves. Instead of tricking customers to purchasing your product based on advertising, you’re helping savvy shoppers reach your doors and website already armed to the teeh with your prices, detailed information about your products and fully prepared to evangelize your way of doing business to their peers to help drive more sales.
What steps can your organization take to make this transition from traditional advertising to a concrete set of strategies paired with tactical tools and services to help your customers reach you? The first step is simple: reach out to New Signature today to help us guide you on this journey.