Brand Advertising and New York City's Economic Future

Yesterday morning, I participated in another meeting sponsored by the Mayor’s office and the NYC EDC to talk about the economic future of New York City.  Up for discussion this time: the media industry.  There is a lot of concern about employment in “old media” disappearing more rapidly than jobs will be created in “new media” (I have put these terms in quotes since I don’t really like them but they make ok placeholders for the basic idea).  The morning was organized in breakout groups.  The group I was in, talked about what is happening in advertising.

The most interesting part of the discussion was about the future of brand advertising.  The question was whether it is possible that something akin to what is happening in classified advertising might happen here.  Classifieds used to be a large advertising category in dollar terms for newspapers.  Then along came Craigslist and dramatically changed the economics.  Now most classified advertising is free.  The size of the segment is being compressed from multiple billions of contribution margin across many papers into maybe a couple of hundred million dollars for one or two companies.  At the same time though, the size of the classified market in terms of activity is actually increasing as more things are now economic to list.

At first it would seem that a similar implosion could never happen for brand advertising.  After all, what could substitute for the power of images and stories?  Just then along comes the latest Microsoft ad, Laptop Hunters.  I saw the ad first via Bijan, who quickly had a negative reaction to it because it emphasizes price-based competition over innovation.  My own reaction was equally negative because I felt the story was designed to mislead consumers about what they would actually be getting and connect the Apple brand to “elitism,” making this seem like a low blow political ad.  The beauty lies in what happened next.  Stories started popping up on the Internet dissecting many of the aspects of the ad, such as pointing out that the HP laptop that “Lauren” picks was an outdated model that had received fairly bad reviews by both editors and consumers.  The best summary was produced by Bob Lefsetz (again discovered via Bijan - thanks!), who goes on to write:

if you think you can pull the wool over the public’s eyes, with your lame excuse denying the truth, you’re wrong.  The twenty first century is about transparency.  Reveal the facts, admit the truth and move on.

I think it is a bit soon to pronounce the death of brand advertising as someone in my group did, but it is clearly getting much harder to tell a story if that story is not authentic.  That is Apple’s brand ads seem to work because they tell a story (e.g. of simplicity) that is actually backed up by the product.

This alone could result in some contraction of brand advertising (which clearly would hit New York City which seems to be more brand than say direct response oriented – although that may just be a view that is skewed by the higher visibility of brand advertising).  But what could really accelerate that trend is the availability of an alternative to classic brand advertising.  I believe that alternative is already with us but in its infancy – it is “peer-to-peer” brand advertising or “social” brand advertising.  Brands (and social networks) that figure out how to get more consumers who are fans to genuinely recommend the product or service to friends will have the most effective brand advertising.  That might involve a lot fewer dollars changing hands than any traditional brand advertising buy.

It will be interesting to see what role New York City based companies will play in the future of brand advertising!