Already a Bloomberg.com user?
Sign in with the same account.
Watching their ad dollars, companies are eschewing untested campaigns that try to reach customers on smartphones, social networks, and other new media
In recent years the advertising world has enjoyed something of a renaissance. Companies pushed Madison Avenue to come up with edgy marketing—online and off—that would grab people's attention amid the 24/7 noise and clutter. Some clever ideas emerged (Nike (NKE) built a hot social network for running geeks), as did some dumb ones (Sears (SHLD), Coke (KO), and others hung shingles in the online virtual world Second Life but attracted few visitors). Still, the main point was to get feedback and learn what worked and what didn't.
Now, the lousy economy is prompting chief marketing officers to reexamine their priorities. "We're not making huge bets on things that are unproven," says Dave Burwick, head of marketing for PepsiCo's (PEP) North American beverages division. For a campaign launching this month, Burwick says, "we're not going to put millions of dollars behind social networking, for instance, but we're going to be there." Translation: The experimentation will continue because companies need to figure out how to reach consumers in this Digital Age. But CMOs like Burwick are hedging their bets—and Mad Ave. is feeling the pinch.
Few agencies have worked harder to build a reputation for outré stunts than Crispin Porter + Bogusky. To help Burger King (BKC) promote its chicken sandwiches, for example, the Miami-based agency built a much trafficked Web site where visitors can boss around a man in a rooster suit. But Crispin, says CEO Jeff Hicks, is now having a harder time selling clients on innovative tactics. So Crispin is running more focus groups and other tests to help judge the efficacy of a new ad concept before asking clients to commit money to it.
In these hard times, advertisers wield more power than ever. Packaged goods behemoth Unilever (UN) is forcing media companies to throw in experimental marketing for free. The Anglo-Dutch company made a proposition to the broadcast and cable networks, as well as Yahoo! (YHOO), Google (GOOG), AOL (TWX), and Microsoft (MSFT): Develop creative ways to reach customers, Unilever told them, and it will buy a block of traditional ads. The Food Network was happy to oblige. For Unilever's Hellman's brand, it created a "Leftovers" recipe menu for mobile-phone users and filmed several online cooking videos, all starring mayonnaise. "We're shifting risk onto the media companies," says Rob Master, Unilever's North American media director.
Media agencies, which buy ad time and space for companies, are falling over themselves to make sure clients keep experimenting with ads placed next to online videos. "This is the kind of thing that could get back-burnered in today's climate," says Curt Hecht, who helps companies buy digital ads at media agency Starcom MediaVest. He is coaxing clients to pool their resources and share the risks and rewards. Allstate (ALL), Capital One (COF), Applebee's, and Nestlé Purina have put their money together to experiment on such sites as Hulu, MSN, and Yahoo. Each company gets its own video ads, but they are collaborating to standardize them because retooled 30-second television commercials work poorly on the Web.
Not all companies are so easily persuaded. In 2007, Travelocity, the online travel agency, set up a page on MySpace for its "Roaming Gnome" mascot. But unable to verify a return on its investment, Travelocity has since stopped supporting the page. The company's CMO, Jeff Glueck, says he will continue experimenting. But he's putting his money into technology that can deduce where Web surfers want to travel, provide matching information on the best hotel and airfare deals available, and put it all in an online ad, either on Travelocity's home site or elsewhere. "We love our MySpace page," says Glueck. "But we're not going to spend money just to acquire more friends for the gnome."