News’ Biggest Challenge: Marketing That Isn’t Ads Next To Words


November 5, 2012

Not so long ago, businesses looking to increase sales had two basic choices: They could cut prices and announce a sale or they could advertise to extol their products’ value. If the new prices were low enough or the products’ value was high enough, customers would beat a path to the door.

But like with everything else, the internet has changed everything. Now business owners, large and small, compete with practically everyone in the country–in the world. The digital economy has forced down prices so that only the biggest chain stores can afford to cut more and if a customer wants high value products, they have a dozen alternatives to order “the best” whatever-they-want online.

Making matters worse, our inundated, post-modern, over-communicating world drowns out marketing messages so that consumers have learned to tune them out.

Marketers are well aware of this fact and are adapting. The New York Times‘ ad revenues are down and so is Google AdSense revenue, because the CPC is declining. Where is all that money going? Well, all over the place. One answer may be in a recent Borell study that found only 12% of SMB digital marketing spend is actually going to advertising, the rest is going to additional services like SEO consulting and web site design.

On the street level, I can tell you that when businesses flatly object to advertising with me, it’s because they’ve usually committed to a completely different kind of marketing. The alternatives essentially fall into the following categories:

  1. Events – Many small retailers have created-oiled event machines in their stores where the product is not the main event. Some times they host local charity fundraisers, allow insurance agents to hold pitch parties, or conduct regular wine-tastings where they introduce new product lines. The point isn’t to sell, it’s to get people in the door so they feel comfortable with coming back to buy stuff regularly.
  2. Daily Deals – While it seems like the luster has burned off for this route, some savvy retailers and restaurants closely manage their deals, using tools like Mob Manager. If the ROI is plotted out carefully, daily deals can be lucrative–but retailers that make cash register decisions are usually not the ones to do well with deals.
  3. Social Media Promotion – Tweeting and Facebooking about a business’ great deals is no longer enough, it’s all about engagement now, where brands work to closely involve prospective customers with their product. It is not unusual for a small retailer to spend $1,000 a month on a contract social media manager to encourage local influencers to talk about their brand.
  4. Loyalty Programs – Anyone with a coffee shop punch card knows how these work. But some retailers have extended loyalty programs to co-brand with other stores, local theaters (show your ticket and get 10% off) and even special discounts just for living in the neighborhood. Belly.com is trying to gamify the experience and tie together many local stores – you can get rewards for store Y by going to stores X and Z!
  5. Charity Co-op Marketing – I hear more and more about businesses partnering with local charities. Here’s how it works: A business holds a “charity day” where some percentage of sales that day goes to the local charity. The local charity promotes the charity day, and thus the business. Both groups make out like bandits. Small retailers aren’t the only ones doing this, Homemade Pizza and Core Power Yoga have used this method liberally to attract new customers.

Large media companies could tell you that this change has been underway for some time, and they’ve been adapting too. In Chicago, Tribune operates 435 Digital, to manage social media and all the ancillary digital services the Borell study shows. The Chicago Reader has Reader Real Deals and everyone holds marketing events with their biggest advertisers as an add-on.

As profitable as these new lines of business might be–and it’s difficult to parse that out since these sorts of revenues aren’t reported publicly–they are far from the core business of news media companies: Putting ads next to words.