Taco Bell feeds a growing trend in advertising
Taco Bell's decision to part ways with TBWA\Chiat\Day may have created tremors within the ad business. But for an increasing number of Web entities, it just reaffirmed a shift in the role of advertising.
A consequence of the recent Nasdaq roller-coaster ride is that investors are now putting Internet companies under the microscope, demanding profits sooner rather than later (imagine that) and refusing to back companies that spend money without a greater return on investment. Marketers are now put in a Catch 22 situation: They need to quickly increase their customer base while operating under a dramatically reduced marketing budget.
Although some marketing executives are throwing up their hands in despair, more are looking beyond traditional advertising models and converting to alternative tools, such as performance-based advertising.
For instance, in performance-based advertising used with search engines, advertisers bid for search words and the higher the bid, the higher their Web site will be placed on the search engine. Advertisers pay nothing to be listed, however, paying only when a consumer clicks through to their site. It's the ultimate return on investment for marketers--and it's a growing trend. Forrester Research predicts that performance-based advertising will represent more than 50 percent of the estimated $18 billion spent on Web advertising by 2003.
While this is an important trend economically, and initially will help Web sites looking for better use of limited dollars, performance-based advertising could be the beginning of the big bang. It could reverberate throughout the industry and change the way we measure advertising effectiveness.
Imagine if performance-based advertising was employed during last year's Super Bowl. Few dot-com advertisers (or anyone, for that matter) would have had to fork over the big bucks for a 30-second commercial.
Not only did few dot-coms experience any measurable traffic increase from being a part of the world's greatest advertising stage, post-Super Bowl research showed that people weren't even sure which companies were being talked about in the individual ads. Not a good performance.
Already taking hold on the Web right now, performance-based advertising is the beginning of a sea change in this business. How many Fortune 500 companies would be willing to trade in some of their "brand awareness" advertising dollars for a concept that costs nothing to implement? One in which companies are charged only by the customers who are driven to its business. With the merging of Internet companies (AOL) and media concerns (Time-Warner), the day may arrive sooner than you think.
While the decision by Taco Bell to cut loose TBWA\C\D caused shock inside the industry, the idea of result-oriented brand advertising should be a welcome concept for marketers which have struggled to show how their advertising makes a difference. And it should put an end to this question: "What has your advertising done for me lately?" K