ISSUE 259 : Wednesday, August 12, 2009

There is no longer a debate as to whether or not the traditional business model for Marketing and Advertising is broken. The question before global business leaders is what can be done to fix it. At the base of this issue is the growing disconnect between the advertiser and the audience.

The overwhelming majority of advertisers still believe that network television is the most effective way to reach the audience with their message. Yet every day more and more members of their audience abandon their flat screens for other forms of amusement, information and enjoyment. The tale of the “Emperor’s New Clothes” is certainly brought to mind.

A recent poll conducted by the Harris organization and LinkedIn indicated that this misalignment is significant. For example:

• While over half of advertisers believe in ads that make people stop and think (53%), just three in ten consumers (30%) feel the same.
  
• One-quarter of advertisers (25%) say they are using cheerleading: "We’ve made it through tough times before, we’ll do it again, and we can help you do it." Almost (38%) of consumers, however, say that these types of ads do not work at all.

There are many more examples in the poll but suffice to say the disconnect helps to prove the point that the advertising decision makers are woefully out of touch with those they are charged with motivating.

Why is this? Could it possibly be that the audience is getting smarter and smarter while the advertiser is still caught in the twin headlights of network TV and agency hype? If this is the case then the audience will continue to advance and at a certain point the advertisers and their agencies will begin to regress to cover their ineffectiveness.

In many cases this is already happening. Myopia is on the rise on Madison Avenue. Denial is spreading through corporate America. Accountability is both an empty threat and an empty promise.

Meanwhile, the people who can’t afford the luxury of self-delusion have long abandoned the status quo and are making startling discoveries as a result. The emerging field of Behavioral Economics is uncovering that those traditional assumptions about the way things are supposed to work have failed us in the hyper-rational world of Wall St. And the same collapse that battered the financial markets is now shaking other organizations and institutions made up of other fallible, less-than-logical people.

The combination of Psychology and Economics creates a much more accurate lens by which to evaluate the changes required to fix our broken business models. The economic meltdown was the product of bad assumptions run amok. “Behavioral Economics offers a radically different view of how people and organizations work,” claims the Harvard Business Review. Not that Madison Avenue gives a hoot. But Silicon Valley? Microsoft just sold Razorfish. What did they see through the lens? What does Google think?

Standing on the terraces of Rome as his Generals pointed out the encampments of Barbarians just outside the gates of the city, Emperor Nero was said to have proclaimed," I see no Barbarians, I see only the glory that is Rome."