Advertising Age just came out with their top 200 brands report – in which they measure brands by their ad spending on “measured’ media. As can be expected when you measure brands by their ad spending, the top 25 list is littered with losers – including Verizon, in the top spot, Ford (#3), AT&T, Dell, etc.
Verizon spent almost $1B in “measured” media in the first half of 2006, while Ford, Chevrolet, and Dodge combined spent over $1.2B on “measured” media in the first six months. Ford spent 3X as much as General Motors Corp. on “measured” media. And when looking at the top 200 brand spending by media, they allocated a whopping 6.7% of their “measured” media spending on the Internet – with the rest spent on TV, Radio, Newspapers and Magazines.
What the heck are they thinking? And what are they “measuring”? Do you think that if Ford were to stop spending on traditional advertising for six month or even a year and instead invest $1 B in a clean energy research they would lose a ton of marketshare? And what if they were to spend their marketing dollars more wisely – like use the information that they already have about their existing customers to market more effectively to their existing base. If you have a Ford, how many times did you hear directly from the company since you purchased your car? Or what would happen if Verizon were to spent 1/2 as much as they did in the first six months – and by doing so still spend as much as their nearest competitors – and instead spend the other $1/2 B on customer service and customer retention programs?
Economist Steven Levitt – from Freakonomics fame – found that money spent by candidates in political races hardly mattered at all. In fact he found that a candidate could cut his spending in half and lose only 1% of the vote. The same research found that a losing candidate could double his spending and expect to shift the vote in his favor by only that same 1%.
Verizon – are you listening?
There is no question that advertising plays a role in marketing – but those numbers prove that a majority of ad dollars are being wasted and miss-prioritized!
First you need a product that will WOW your customers. And while Geoffrey Moore will tell you and Apple prove to you that you should not care about customer service while your product is in the Tornado, when you have mature products like Verizon and Ford, customer service and retention are key to your success. In fact, they can lead to a ton of free advertising – generated by your very own consumers and delivered with much higher precision than TV advertising!