Advertising and direct consumer promotions are overlapping like never before. Now, consumer promotion was developed at the storefront, and traditionally did not come under the purview of ad agencies. So, how suited are ad agencies to compete with the new breed of multi-discipline marketing shops that deliver customers rather than just brand equity? Is advertising’s long run as the showpiece of marketing about to come to a close?

Brand Building & Promotion
Samsung recently commited Rs 149 million (US $ 3 million) of its annual marketing budget to prizes for consumers who find freebies in its promotion campaign ‘Nariyal phod ke dekho’ (‘Break the coconut & find prizes’ contest). The big-budget accompanying ad campaign merely announced the “scheme”, telling consumers how to avail of goodies through this “unique” promotional offer.

Sometime earlier, the ‘Ek Din Ka Raja’ winners were the lucky chaps who got treated like kings in a city of their choice at the expense of at Unilever India’s Kwality Walls Ice Cream. The role of the accompanying ad campaign? In addition to announcing the “scheme”, it also portrayed the winners reveling in their chosen city.

And awhile ago, Navjot Singh Sidhu (that inimitable ex-cricketer!) was seen teaching Britannia biscuit consumers how to scratch cards and come with a “Britannia Tiger”. Once again, the big-budget ad campaign merely announced the “scheme”, with Navjot telling consumers how to ‘Britannia Khao, World Cup Jao’ (‘Have Britannia, See the World Cup’)!

Could consumers ask for more?

Result Oriented Advertising
More is the order of the day, for marketers as well. The old order – advertising – isn’t big enough to sustain a brand by itself these days. We have entered the age of integrated marketing.

Marketers have come to realize that their strategy must include & integrate the various marketing disciplines. Given today’s short business cycles, it is clear that promotion is the engine that drives the numbers. That is why promotion takes the driver’s seat, as it focuses on measurable sales results.

Below-the-line disciplines are booming thanks to pan business adoption of “customer equity management” - a strategy that asks every marketing rupee to build image and sell product at the same time. (The Britannia scratch cards campaign for example, reinforces brand image all right, but with an immediate offer to consumers.)

In other words, advertising has developed a healthy respect for measurable results !

Sharing the Limelight
Traditionally, brand managers focused on brand equity with advertising as the main tool. (Sales promotion was handled independently.) Today’s brand management strategy is focused on short-term measurable results (sales). Naturally, promotion, direct marketing and events are playing a dominant role in brand building – overshadowing the once exclusive domain of ad agencies.

So to the question : Is advertising’s long run as the showpiece of marketing about to come to a close?

Let’s take a look at the statistics*: ad spending is up 13% this year. At this rate, measured media could rake in Rs 11,815 crore for 2004 according to industry estimates. Promotion spending however, is on the upswing. Between 2003 and 2004 it grew by a whopping 59%.
        
* Figures garnered from various industry sources & estimates

Trade promotion still accounts for some 30% of the marketing pie. While media advertising and direct consumer promotions are almost neck and neck in terms of spends (35%).

Collectively, Trade + Direct Consumer Promotion accounts for nearly 65% of marketing budgets. Do you see the measured media pie going down to its country cousin?

If any further proof was required that direct consumer promotion is the order of the day, just look at the increasing importance of retail outlets. The savviest marketers have opened their own retail chains. (Pantaloons, Nike, VIP, Maruti … the list is increasing with each passing day.)

In fact, the retail outlet has become the hot medium for branding. And soon, out-of-home media will include Retail Outlets in a major way. And TV GRPs may be augmented with In-store GRPs.

And finally
Ad agencies probably started losing their importance when their work became a ‘commodity’. This may have happened because agencies were late in acknowledging the dynamic changes in the market / environment, viz. direct consumer promotions. That’s when marketers probably turned to consultants instead of agencies. Today, creative duties are farmed out to boutiques and media to buying services.

Suddenly, the ad agency’s importance seems cut down – they are no longer the men behind the curtain co-ordinating it all.

However, there's no doubt that advertising is still as essential for building & sustaining a brand’s promise and personality. What’s changed is that promotion and direct marketing – disciplines that build customer equity – have taken center stage alongside advertising. The new mandate of advertising is to deliver consumer experiences that deepen each shopper’s relationship with the brand.

It is clear that media weight needs to be designed to support both consumer and/or trade promotions objectives along with brand equity..

The question is: are ad agencies’ ears close (enough) to the ground?