P&G bankrolled commercial television and was the biggest spender on broadcast advertising.
But P&G have realised that this dinosaur of a business model is no longer financially tenable. That the costs of marketing are rising whilst the effectiveness of that activity is significantly reduced. Damaging the profitability of the company.
Furthermore, P&G are changing the way they compensate agencies. Once upon a time it was a percentage of the media spend. But today it is about performance. This means agencies are paid less if they fail and more if what they deliver drives sales success.
Stengel also talks about engaging customers and this is achieved I believe by providing context and meaning around marketing strategies. For example, services which are relevant and that are 'Just in Time' rather than 'Just in Case'. This is as relevant to retailers as it is to FMCG and SMCG (slow moving consumer goods), telecoms and financial services to name but a few.
However this requires a rethink of how companies market themselves and how they go to market. And this focus is all about creating value and putting the customer at the beginning, not the end of the value chain. It neccessitates a move from push to pull marketing.
But what is value? Value creation is whatever will drive your customers to willingly buy your products and services, and for them to want to repeat the exercise over and over again. That may be a service, product innovation, community driven activity. Think Apple iPod.
When Tesco's introduced their loyalty card they were at the time the biggest spender on UK TV broadcast advertising. A year later advertising spend had been slashed by 90%. The Guinness visitor centre in Dublin or Twins mobile phone service from Hong Kong are all examples of how businesses can engage their customers.
This new approach will deliver ROI through the marketing budget. Equally this means that operations and marketing must work together to deliver value more precisely. Which will drive down operating costs and cost effectively increase sales. The low cost airline Go is a great example of this or more recently Thomas Cook TV. Who shift £150m of inventory on a £2,5m operating base. 92% of the people that buy a Thomas Cook holiday in this way have never bought a Thomas Cook holiday before.
The number of brands and messages competing for consumer attention has exploded, and consumers have changed dramatically. They show an increasing lack of tolerance for marketing that is irrelevant to their lives, or that is completely unsolicited. Traditional marketing methods are diluted by a hurried lifestyle, overwhelmed by technology, and often deliberately ignored.
It is for these very reasons businesses need to move from an interruptive model of marketing to one of engagement. Businesses need to create innovative engagement marketing strategies that deliver real value to the customer.