‘Most advertising is wasted’  ( September '3,2001, BS)

Professor John Philip Jones likes to describe himself as an iconoclast. So it is not surprising that he swears by Lewis Carroll’s Alice in Wonderland. He starts all the chapters in his books with quotes from that classic. “Inside the fantasy in that tale, there’s a truth,” says Jones.

For this advertising veteran (he’s been associated with J Walter Thompson for more than 25 years) and lecturer at Syracuse University, New York, brands hold a childlike fascination in the dynamic world of marketing.

Despite the fact that the new economy has brought in its wake a great deal of uncertainty, marketing, for him, remains business as usual. The role and effectiveness of mass media marketing hasn’t changed in the digital age, Jones believes. Even if it has, the changes are “unimportant”. In the US, where the Internet boasts of a high degree of penetration, it hardly accounts for 1 per cent of all advertising spend. Net advertising is so inconsequential that he didn’t even think it was worth considering ways of maximising ad spend on this medium. “If I knew the answer to that I’d be in the Bahamas,” he says.

What about the role of the brand in an era where technology is narrowing product differentiation? Strong brands always carry their own differentiators, otherwise they wouldn’t be strong. There is always a tendency for one manufacturer to move towards the best in the market. When that happens, says Jones, the first offering that was considered the best, gets better. “So all the time there is this constant race, and the so-called functional parity is never attained,” he says.

This has been evident in blind product testing where differences have been perceived by consumers. “The differences on functional basis underscores the differences in the brands,” he says.

And when uncertainty manifests itself in the form of a slowdown and recession, media spends are the first to get slashed. Marketers know that they need to be brave and keep their ad spend high in a slowdown situation to gain market share for long-term gains. “The increased market share can be retained with little effort when things get back to normal,” says Jones. Therein lies the irony: all manufactures know that, yet advertising cost is the first thing that gets the axe in any slowdown situation. There are few advertisers who decide to buck the trend. One such company is Toyota.

This, feels Jones, is the ideal situation. However, it would be unrealistic to expect the companies to keep their ad spend high in a slowdown situation. There is a great pressure on publicly-held companies to stay out of the red. Declining profits, logically, can lead to share prices collapsing — making these companies soft targets for corporate takeovers. “While the desirability is to increase advertising, the priority is to stay in profits.”

So should the role of advertising change in such situations? No way, asserts Jones: “It’s a very weak force and not really important.” He adds that advertising is effective in the narrow sense: “Most advertising is a waste.” And by his estimates, as much as 70 per cent of advertising goes waste. “I’ve got hard evidence and that’s what my books are all about,” says Jones. No amount of efficient account planning can help there. “The rate of success of those who use account planning is no better than those who don’t.”

The rate of success in the US — where agencies don’t have the account planning function — is exactly the same as the UK where account planning function is widely used.

Jones’ advocacy of accountability in advertising is well known. In fact, he has developed several measurement devices based on strong quantitative research. The Advertising Intensive Curve (AIC or Jones Curve) is one such device that establishes a relationship between a brand’s advertising budget and the brand’s size in the marketplace. Jones works are essentially a measurement of the long-term effects of advertising. “Strong brands bring in extra profits because they are underadvertised,” he says. “Weak brands, on the other hand, overspend and hence are less profitable.”

Jones’ second discovery, Short-Term Advertising Strength (STAS) is a cost-saving measure and gauges the short-term effectiveness of advertising within a certain timeframe. “Initially, it raised some controversy, but is now pretty well acceptable in professional practice,” he says. It is based on simple but extremely expensive research which forms the basis of his deduction that only 30 per cent advertising is effective.

With such enormous spillage in mass media advertising, marketers could turn to other tools of reaching to their customers, such as direct or database marketing which offers far more accountability for every media rupee that an advertiser spends. “Direct marketing is wonderful, far more effective and measurable, but the trouble is, it is only viable for high involvement products,” feels Jones.

In the past, many brands had a tendency to become totally dependent on advertising agencies to shape their future. Today, brand consultancies and even the traditional management consultancies are increasingly becoming an option for marketers. And that’s a threat to the agencies. But while this may be a cause for concern for advertising agencies, for Jones it’s not: for him, what is far more important is the fate of brands. As long as the brands get their inputs from different sources, it does not really matter. “I do not think that we should be too dependent on advertising agencies, given that their failure rate is so high,” says he. “You need a shake-up.”

Increased competition in today’s global marketplace has led to a tendency among the marketers to copy their rival brands. That’s a dilemma, says Jones, because it forces brands to constantly improve upon their functionality. “The strategy is that you have got to re-stage all the time with a new formulation theories or advertising stories,” says he. Across the world, successful brands make major improvements every three years. The secret behind building great brands, according to Jones, is the combination of functionality and the added value. “Functionality is provided by the scientists and added values are provided by the advertiser.”

Market share, penetration and consumer purchase behaviour are the criteria that are taken into consideration when marketers set out to build successful brands. Creating and building new brands could be a costly proposition. The easier way out for marketers is to introduce variants and brand extensions of well-established brands in the portfolio. “Brand extensions cannot be done cheaply,” says Jones. “You cannot do it by borrowing the idea and repeating it.”

Another challenge that strong brands face today is from discount brands. There are numerous examples within India where cheaper brands have given their premium cousins a run for their money. Whether it is Robin Blue versus Ujala or Surf versus Nirma, strong premium brands have had a tough time protecting their turf. Yet Jones is of the belief that discount brands can never pose a threat, if the established brands are confident about what they are doing. What established brands need to do is to continue keeping their full-price franchise without taking the risk of price-cutting. Price-cuts mean a loss in profit.

“Established brands should compete with the discount brands by providing added value,” suggests Jones. “Consumers are perfectly happy in paying a higher price if you provide added value.”

It is difficult to cite many truly global brands, but Indian companies aspire to create and build one. At least, they are vocal about it. Or do they mean transnational brands? The term is nothing more than a textbook concept, says Jones. “It’s a fallacy,” he adds. “The market for globalisation is retreating and not expanding.” One of the biggest companies in the world, Unilever has dismantled its global structure and brands so as to allow its local arms in different markets to address local issues.