Tech Companies Rediscover Advertising

On Monday, The Wall Street Journal announced that web companies are turning to television advertising to reinforce their brand names among the general public. The article “Web Companies Embrace TV Ads” by Suzanne Vranica tells us that the online ads and social media on which these companies have been relying aren’t doing the trick. They have come to recognize that only television advertising can give them the broad reach and messaging power they need to become a household word.

The Wall Street Journal, web companies, TV advertising, Edmunds,com,eHarmony.com, Zillow, Kelley Blue Book, Homes.com, PopSugar, TripAdvisor, WayfairWe haven’t seen this kind of investment in advertising by technology companies since the days of the dot com bubble. The problem then, however, was that a lot of the advertising dollars were spent unwisely, to say the least.

The $3.5 Million Giggle

I remember seeing a Super Bowl ad in which a handful of founders sat in lawn chairs in front of the garage in which they supposedly started the company and chatted and giggled for 30 seconds. They clearly had no idea what to say or why they were saying it. What company were they promoting?  Who knows? I read about a venture capitalist who took the ads developed by one of his portfolio companies home to his wife to ask what she thought of them. That’s like a Hollywood director showing a script to his cab driver and asking him what’s wrong with it.

Creatively, many of the ads were poorly thought through and badly executed. Some were done by ad agencies but many were developed by the company founders themselves—sure they knew what would work. After all, who needs experts when you’re the smartest guy in the room?

In terms of media placement, they typically got the equation wrong. There’s Reach—how many people will see your ad in a given time period—and there’s Frequency—how often your target audience will see your ad in that time period. Frequency is preferable to Reach because people forget what they have read or heard or seen pretty quickly. And the minute they forget your ad, the company’s brand awareness falls off a cliff.

Take the Super Bowl ad I mentioned, for example. Advertising time on the Super Bowl is Super Bowl Trophyextremely expensive: Last year, companies paid an average of $3.5 million for a 30-second spot on this sports extravaganza. For that kind of money, an advertising agency can create a professional campaign that reaches the target audience multiple times, whether in print and on TV. The agency’s media department does exactly that kind of planning—along with negotiating the most advantageous rates for their clients. So when I see a group of young men giggling and smiling and talking nonsense on expensive prime-time TV, I know that no ad agency was involved.

Share of Mind and the Engineering Mindset

When the dot com bubble burst, so did the kind of broad thinking that is required to become a household word. We used to call it “market awareness” and understood that “share of mind” was essential to creating share of market. Share of mind also had to come first because people buy why is familiar to them, even when they don’t recognize that they are doing so.

Technology companies tend to be founded and run by people with engineering degrees and even the Vice President of Marketing is usually an engineer. That’s because understanding how the product works is deemed (by engineers) to be more important than understanding how to communicate what makes the product great, why it’s better than competing products, and what benefits will accrue to the customer who buys it, much less how great it will make you feel. In this equation, there is no room for emotion, even though emotion actually plays a big role in brand awareness.

My First Lexus

Lexus ls400Years ago I worked for a technology company in which the founder and CEO bragged about his most recent automobile purchase. He was clearly very proud of the vehicle he had just acquired and said, several times, “When I bought my first Lexus . . .” Had I probed as to why he had bought not one but two of the same brand he, being an engineer, would have explained logically about horse power, gas mileage, performance, torque, comfort, and other “features” of the car.

What I saw, however, was the sparkle in his eye, the smile on his lips, the straight posture that told me what he felt about owning a Lexus. That purchase told him that he had Made It—whatever that meant to him. And that feeling of success was far more important that the features that justified the purchase. That’s what good advertising does for a brand. And that’s why it’s important to have a good agency creating ads that are memorable, generate emotion, and create share of mind.

They Are Doing It Right This Time

I have never worked for an ad agency but I have run advertising for many technology companies, from global organizations to small start-ups. I have worked with small ad agencies and Madison Avenue giants.  I also understand the engineering mindset and how it hinders the marketing effort. For many, many years it has limited technology advertising to online media so that only the big boys—Microsoft, Apple, Cisco, etc.—have invested in TV. So I’m really happy to see that Web companies have gotten the message and are thinking big.

I am also encouraged that, this time around, the companies mentioned in the @WSJ article are hiring good agencies to do professional work so they get the most for their money. Here’s the breakdown:

This development is good for the economy because it creates business across the board, from ad agencies to media companies, from copywriters to media salespeople. That pumps up hiring as well as driving business for the tech companies. It’s a big step in the right direction.

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