"You're Too Into Real Business to Understand Advertising and Social Media" - Shelly Palmer - MediaBizBloggers

I had a very interesting discussion with a tech-savvy, Internet veteran the other day. He is a self-proclaimed, "serial entrepreneur" with an impressive track record of successfully exited start-ups. For reasons of decorum and political correctness, I will call him "Joe." It's not his real name (obviously), but this is a true story and you would recognize this person's real name instantly.

A mutual friend introduced me to Joe at a cocktail party. His new start-up is focused on reinventing advertising and marketing using social media. We were in violent agreement about the power and potential of social media, so I thought the conversation was going to evolve into a serious business conversation. I was wrong.

To my surprise and amazement (hyperbole intended) Joe presented his theory of the future of online advertising empowered by social media. He articulated a future where traditional media and big brands were dead, and, just for good measure, he postulated a consumer-controlled, self-selected future of infinite choices of goods and services. His monologue was pervaded by phrases like, "advertising doesn't work" and "people don't want to be interrupted." And, my favorite, "Social Media marketing is the only possible future ... brands are completely out of control and marketers have to realize that. Consumers control everything! Besides, everyone wants targeted, measurable messaging, it's all going to be online."

Because of Joe's reputation and stature, I listened attentively for a while. Then I asked a question. "What do you mean by advertising?" He answered, "You know, TV commercials and stuff like that." So I asked, "What do you mean by marketing?" He answered, "... ideas to help sell stuff."

I don't think you can lump all advertising into one category, and I can assure you that marketing is more than just "ideas to help sell stuff." Definitions matter and semantics are important. And, in this case, Joe simply didn't know what he didn't know. You may have a different way to describe the following (I hope you do) but here's my take:

First of all, advertising does work. Far from being one thing, there are at least three major types of advertising: brand/lifestyle, call to action and direct response. The efficacy and ROI of direct response advertising is accurately measured because you are asking the consumer to directly respond. So Joe and I did not need to discuss this $200+ Billion use of advertising dollars. He admitted that DR is actually a pretty good business and actually works. But not until it was pointed out.

Then, there's call-to-action advertising. This kind of message asks you to do something at a later time such as, "Come in to our car dealership for a test drive and a free glass of soda this weekend and get zero percent financing." You can't directly respond and it's not an emotional, ethereal hard-to-measure, non-temporal request -- you can measure the efficacy of a call-to-action by tracking how many people came in to the car dealership before you ran your campaign, how many people came in during your campaign and what happened when the campaign was over. Call-to-action measurement is more of an art than a science, but it is measurable to a fair degree of accuracy. This really can't be what Joe was referring to, this system is clunky and old-fashioned, but it's not really broken.

Perhaps Joe really meant, brand/lifestyle advertising. It is hard to measure because it does not require a direct response, but there are plenty of organizations that will tell you how to measure the efficacy and ROI and you know who they are. For example: How many BMW "Ultimate Driving Machine" ads do I need to see before I start dreaming about driving one? It's an important question, it will always be. Perhaps this is what Joe really thought he was talking about. It's where $60+ Billion gets spent annually. And, to quote John Wanamaker ... well, you know the quote.

As my conversation continued with Joe, he informed me again and again that not only was big media dead, but big brand's days were numbered. "We are in the information age," he said, "consumers want to completely control what they consume."

While this is probably true for some percentage of items that we consume, let's not get crazy. You need to wash your clothes. You need to brush your teeth. You need inexpensive, nutritious food. You need durable goods, soft goods, hard goods and you need them packaged and delivered to a venue near you ... everyday. In fact, the more organic, unpreserved, special and perishable the produce and goods are, the more time and energy must be expended to get them as close to you as possible. Not just in your town, nationwide -- and in some cases, worldwide.

So I asked Joe if he thought that people were giving up Cheerios or Tide or Crest or Ivory soap or cold cuts or spices or dog food or disposable diapers any time soon. And then he said it, "You're too into real business to understand advertising and Social Media in the 21^st century." You know, I never thought about it that way. "Too into real business?" I really didn't know what he meant by that, so I asked. He told me, in a very authoritative (and pejorative) way, that he wasn't really talking about the benefits of the Internet or social media for big, incumbent, multi-national brands with just-in-time inventory systems and EDI-based replenishment and RFID systems on loading docks. He'd never heard of "adjusted case volume" or "velocity at retail." ROI in his mind was about the return of investment capital from the Venture Capitalist and Private Equity firms that substantially own his start-ups. He, to use his words, was talking about "all the new businesses that were forming in the Information Age."

I'm glad he cleared that up. As it turns out, he agreed, there is room for both of these types of businesses to coexist. What a relief! We're not all doomed. Wow, that was close.

All kidding aside, no matter how much new communication technology evolves, some businesses will be quick to evolve and others won't. Manufacturing, distribution, marketing, advertising and financing all respond to market pressures the best way they can. It's the nature of business.

I think it is a huge mistake to focus or fixate on what the universe will "eventually" look like. It's not a good strategic exercise and it's not a good practical or tactical exercise. Most astrophysicists agree that at some point the sun will expand and consume the earth. Is it really helpful to put that in your long-range plan? So why try to guess when technological efficiency will usurp incumbent, massive, inertial systems? Why not simply profit from the delta between the two and be best practices at both?

I enjoy a Socratic debate about how technology is going to destroy everything we know as much as the next guy. And, I get hired to scare people with stories of technologically empowered consumer behavior changes on a regular basis. But it's important to remember that the technology does not exist in a vacuum. As long as the VP of marketing at XYZ Company's main focus is to become the SVP of anything at Any Company, we are going to live in a world that doesn't work as designed ... but works as evolved. So relax ... you're NOT too into real business to understand Social Media ... most self-described Social Media-types are too into technology to understand real business.

Shelly Palmer is the host of MediaBytes with Shelly Palmer, a daily show featuring news you can use about technology, media & entertainment. He is the author of Television Disrupted: The Transition from Network to Networked TV (2008, New York House Press) and the upcoming, Get Digital: Reinventing Yourself and Your Career for the 21^st Century Economy. (2009, Lake House Press). Shelly is also President of the National Academy of Television Arts & Sciences, NY (the organization that bestows the coveted Emmy Awards). For information about Get Digital Classes, visit http://www.shellypalmer.com/seminars.Watch Digital Life with Shelly Palmer Tuesdays at 10p ET on WNBC's NY Nonstophttp://www.shellypalmer.com/digitallife.

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