The power of word of mouth

Bobby Ghosh writing in a recent issue of Time described a country so:

“This is the last authentic place on earth. Authenticity is a rare and valuable commodity and people will travel far to find it”. Mr Ghosh uses the word to mean real and genuine in a positive sense. He goes on to say “It’s the closest thing to Shangri-La I’ve ever seen”. For readers unfamiliar with James Hilton’s classic novel, Shangri-La was a beautiful land in the Himalayas where good gentle people lived long happy lives untouched by so called civilization.

He is describing Bhutan, a country sandwiched between China and India with a population of 700,000 with their own version of Buddhism and a democracy with two distinct differences in their belief in what constitutes progress in the 21st century.

Bhutan has an alternative to the western gauge of the Gross Domestic Product. Their version is the Gross National Happiness index based on what they describe as “The four pillars”. These are sustainable economic development, conservation of the environment, preservation of culture and good governance. 

The nine components of happiness are psychological well-being, health, work-life balance, education, good governance, cultural diversity and resilience, community vitality, ecological diversity and resilience, and finally living standards.  

Unlike many western democracies, Bhutan’s government will not abandon everything in pursuit of growth and know that wealth alone does not guarantee happiness.

The Government has also decided what sort of tourist they would welcome. Not the hippies on the trail of cheap marijuana that damaged Goa and Nepal. Bhutan wants the rich visitor interested in the beauty of the preserved countryside, it’s culture and religion. Birdwatchers, and adventure seekers are also welcome. These folk pay a daily tariff to limit the number of tourists and help with the maintenance of authentic Shangri-La.

Go before they change their mind.    

Some advertisements work better than others

There are some great advertisements and though there are more poor, irrelevant and wasteful ones, the good successful ads help justify a huge industry and the many clever people it employs. Advertising expenditure accounts for about 1.4% of the gross domestic product. That’s more than 16 billion pounds sterling.

One explanation why it’s so hard to eliminate waste in advertising is the mass-market nature of the business.

Most advertisers need to influence only a small proportion of the people reached by their advertising. Household detergents hold no interest for most people who see their commercials. Yet Proctor and Gamble continue to invest heavily on Television. Tena panty liners are used by even fewer women, yet can support a £4 Million TV spend. Perhaps this is demonstrated more simply by an example from direct response advertising.

You wish to sell a lightweight vacuum cleaner for £19.95 inclusive of Vat. You can make a profit if you spend no more than £5 on advertising per sale. A colour page in a leading up market colour supplement is negotiated for £4000, so it needs to generate 800 sales. The magazine has a circulation of 800,000 and a readership of 2,000,000. Success therefore requires one out of 2,500 readers to buy.

Even targeted online advertising impressions, have a click through rate on average of 0.6 %, and a click to your website is still only an indication of interest and a long way from an actual sale.  

Another problem is the lack of interest in advertising by the general public. A leading French expert said:

“We interrupt people’s activity when they watch TV, read a newspaper or travel around by bombarding them with advertisement messages for cars, chocolate and other more mundane products. Not surprisingly, most are ignored.”

Successful campaigns emerge from a clear brief, more precise media targeting, relevant messaging and engaging advertisements.  

How does advertising work?

It’s a good question. It implies that there is a definite objective for advertising and that an evaluation of its effectiveness will be undertaken.

In reality, few advertisers bother with a formal listing of objectives and even when these are formulated often consist of general business goals. Increasing sales, brand share, distribution and so on are not communication tasks. Advertising’s function is to inform and persuade and these objectives are much harder to articulate and monitor.

Another problem is isolating advertising contribution from the other elements of the marketing mix. Brand success may be relatively more reliant on product innovation, pricing strategy, and packaging than the advertising campaign.

Advertising in a general sense must work, but not always and often not very efficiently. The drive to make advertising more efficient is akin to the search for the Holy Grail. You will have heard the quote attributed to John Wanamaker of the USA or Lord Leverhulme:

“ I know that 50% of my advertising is wasted. The problem is that I don’t know which 50%.”

In the early half of the 20th century, Mr. Elmo Lewis developed his AIDA model for advertising. It described four stages for good advertising. Attract attention, make the advertisement relevant and engaging so as to engender interest, create desire and finally generate action in the form of a sale.

In the early 60’s, Russell Coley developed his DAGMAR model, which stands for: Defining advertising goals for measured advertising results. He postulated that customers went on a journey from unawareness to awareness and comprehension of the message. If well done, this leads to a positive attitude being formed of the brand and a conviction of its suitability.

Stephen King, the doyen of JWT’s London account planners warned that the nature of the advertising message may cause success to be measured on varying time scales. A Television commercial announcing a retail sale will have the tills ringing, or not, almost immediately. A campaign promoting Nuclear energy will need a longer time scale for the measurement of advertising success.

Most older advertising models are linear and pre suppose rational decision-making. These days we know that emotional triggers are also important. Behavioral economics is the flavour of the moment.

It seems that we have been asking the wrong question. We cannot generalise and must be specific. The question should be: How does my advertisement work?

Or even better: How do my customers use my advertisements?   

Answers to these questions will lead to less waste and more effective determination of the ideal advertising budgets. 

Far away places with strange sounding names...

Most British holidaymakers know what sort of holiday they want.

If its sun, sea and sangria, then they will never be persuaded to go jungle trekking. So, for the main holiday, Barbados has to compete with Jamaica and the Costa Brava with The Algarve. Yet every destination offers differences even within these parameters.

Tenerife attracts different sorts of tourists than Menorca. Knowing who your best prospects are should be easily determined. In reality it appears to be difficult. Try finding out the differences between destinations on the same shortlist for yourself.

A simple graph comprised of prospects opinion of relative merits of different destinations is shown below. It is small in scale but makes our point.

Click to enlarge the chart below

Then consider New Zealand and Australia. Their distance from the UK make the travel an onerous experience and a promise of 'The pure Country' or 'The land of wonder' will not make up for the long boring journey. These countries attract relatively small number of British tourists. However they stay for an average of six and a half weeks. A safe guess would be that this long stay can only be afforded by time rich holiday takers such as the retired older folk and gap year young people. You will not find any mention of these prospects in their advertisements.

Another factor for countries that once provided immigrants to Britain is the lure of familiar things. India does attract a few Anglo Saxons. However, about one third of UK residents who travel to India have Indian passports and it is a safe bet that a sizeable number of visitors who are British now, were originally from the sub-continent. For them ‘The incredible country’ is not a justification.

A common language, familiar food and culture should be promoted more strongly in advertising for Canada and the USA.

Success in tourism advertising comes when you understand the importance of identifying your prospects and then find exciting and relevant ways to express your differences.

Recession proofing

Some brands do well even in a recession.

Expensive prestige brands do so because their reputation has been cultivated over the years to rich people who are largely unaffected by our economic malaise. Witness Burberry’s success or the queues at Fortnum’s and Mason.

Some brands, in a stagnant or declining market do well, because they win share from their rivals by providing innovation, good design, competitive pricing and excellent service.

And some relatively inexpensive brands benefit from the lipstick factor, otherwise referred to the feel good mood they engender.Women buy and use lipstick because it makes them happy. And it is relatively cheap.

Most successful brands are promoted. The better ones identify their desirable unique characteristics. Patek Phillipe sells on the basis of longevity and investment value.

The adage about building a better mousetrap misses an important point. The world will beat a path to your door only if you tell them about your invention.

This recession has made people question whether they actually need a product. They will make a purchase if a good logical reason is provided to enhance the emotional tug of the brand.

Good advertising can do that.

Truth, half lies and downright dishonesty

The world is full of liars. Politicians lie. Bankers and businessmen are economical with the truth and most people tell fibs, at least some of the time.

Advertising has a mixed reputation. Post war movies like the Hucksters showed how difficult it was to attain success in advertising whilst retaining integrity. Kirk Douglas in Elia Kazan’s The Arrangement showed the shallow world of advertising agencies, with Douglas selling an advertising pitch for ‘Zephyr’ cigarettes. In Britain though we have the code of advertising practice, which contains the principle that all advertising must be Legal, decent, honest and truthful. This is supported by a raft of legislation and monitoring bodies; so surely all our own advertising must be above criticism.

However advertisements for short term loans, with interest rates in excess of 4000% cannot be decent and some of these commercials appear to have by-passed the need to show the APR details. A cleverly cut commercial showing a vacuum cleaner gliding across the room with no visible electric cord is misleading. Snake oil adverts promising eternally rejuvenating skin, spend millions of pound on advertising that cannot surely be completely honest.

Occasionally you spot an advertisement that you believe. This one is a 60 second commercial for Hiscox insurance.

There is a new light.

VO: Male: Reassuring.

“It’s not hard to view the world as something beautiful. But somehow broken. Institutions have let us down. And today, it seems, a person’s word has lost its worth. Yet if the fading of these values disturbs us, then surely they must still matter. We still admire honesty and fairness. Whatever you choose to call it, honour is still at the heart of how most of us try to live our lives. At Hiscox, we exist to make good in times of loss and give our word that we will be there when you need us. If you believe that business can still be done on the strength of a handshake and that promises are still worth keeping then you are, most definitely, not alone. Hiscox Insurance: as good as our word.”

A confident promise that rings true and wonderful copy too.
Why can’t more advertisements be as good?
And as honest?

Like the curates egg, the news is good in parts

Let’s taste the medicine first. Air X Asia has announced that it is pulling out of Europe at the end of March. They blame the torpid European economy, high oil prices, the European carbon-trading scheme and Britain’s airline passenger duty. All these factors may help justify their withdrawal but some aviation experts expressed doubts about the business viability of the low cost, long haul concept.

The latest Overseas Travel and Tourism report for Quarter 3, 2011 suggests that the travel numbers whilst significantly down since 2008, haven't got any worse since the slump in 2009/10. This despite oil prices, APD, natural disasters and political revolution. Visits abroad by UK residents is 19% lower than in 2008, but we appear to have reached the nadir. Tunisia has made a strong recovery suggesting that tourists have short memories when there's value to be had.

The British Post office conducts a yearly audit of additional holiday costs across 40 destinations. These costs are aggregated for eight items such as a cup of coffee, bottle of lager, packet of Marlboro cigarettes and a three-course meal for two adults in a local restaurant with a bottle of house white wine. All 8 items cost £27.95 in Sri Lanka and at the other extreme, £115.69 in Brisbane Australia.

The drift to value continues, so the countries with a favourable rate of exchange like the Czech republic and Eurozone countries that provide value should do better in 2012.

Recent information from the British Airports Authority, suggests that travel from its airports in December benefited from the clement weather. Passengers using Heathrow in last month increased by 14.7% over the snow affected month of December 2010. Heathrow’s problem is that it has a flight capacity of 480,000 per year and it is already near that figure now.

Recessions end when people realise that the banking crisis, Euro sovereign debt and spending cuts haven't really affected them as individuals. Savers, disenchanted with their returns can be persuaded to spend, and for the cash strapped there are signs that borrowing for holidays is again rising in the USA.

New beginnings

Winter is the time we traditionally think about mortality and the end of things.

Kipling thought that amongst many eastern people, the fear of death was the beginning of wisdom. He was wrong. It is the acceptance of mortality that is the beginning of wisdom. In the ancient epic, Mahabharata, wise Yudhistra is asked. “What is the greatest mystery?" His answer: "why man surrounded by so much evidence of death, continues to behave as if he is immortal".

For some death comes as a complete surprise. Rico in Little Caesar, shot and lying in the gutter asks: "Mother of mercy. Is this the end for Rico?"
Sheridan on his deathbed, still in good humour said: "I always knew that all men must die, but thought somehow in my case they’d make an exception "
Many are simply not ready, others accept it reluctantly.

Rutger Hauer played an android in Bladerunner, a God like being with a built in termination device. His life was lived with intensity in the knowledge of its brevity.
His creator, a scientist named Tyrell explained the process so:
"The light that burns twice as bright burns half as long.... and you have burned so very, very brightly, Roy".
At the end of the movie, Roy says:
"I've seen things you wouldn't believe. Attack ships on fire off the shoulder of Orion. I watched C-beams glitter in the dark near the Tannhauser gate. All those moments will be lost in time, like tears in rain. Time to die."
A movie moment to remember. A replicant in his final moment accepting his own humanity.

Marcus Aurelius thought that it was the quality of the life lived not its length that mattered. Whether 30 years or 300, it would be just a blink in the eye of eternity.

Is there something after death? Do we possess at the genetic level a deeper understanding or is this simply the body's way of coping with termination?
One thing is certain, in life, all experiences have a finite element.

All the pleasurable diversions can only be done a number of times. Take sex for example. Some journalist calculated that the average number of sexual encounters in an lifetime was 4,200 in total. Pat yourself and enjoy feeling smug if you have already passed that number. There will be lots of sad souls who will never make that norm. Perhaps you have only 1000 fucks left inside you.

If you enjoy going to the theatre, work out on the basis of visits made last year, how many shows you will see in your possible future. Surprised by the small and finite number?

The best you can do is to improve the quality of these remaining experiences or endeavour to increase their frequency. Or do both. No more cheap plonk. Or unsatisfactory fumbles in unromantic situations.

The countdown has commenced. It is still too difficult to live life on the basis that this could be your last day, but what if you had ten thousand left?

Would you emulate Jack Nicholson and Morgan Freeman in the Bucket list?
Could you ever do something boring and unrewarding ever again by choice?

Underneath the ornamental clock in Liberty’s in Kingly street is the legend: ‘No moment gone ever comes back again. Take heed and nothing do in vain’.