Art & Commerce: E-volution

Advertising is experiencing profound change online
The Internet is accelerating the way ad dollars will be invested, and it is the first mass communication medium that is surviving without the support of advertising. Magazines, radio and television owe their very existence and profits to consumer advertising. In fact, advertisements have always walked hand-in-hand with the delivery of those mediums–consumers have never had a real choice.
Given a choice, Internet users are showing how little they care about it. Clickthrough rates of less than 1 percent are proof–another example of how consumers will bypass advertising if given the technology. They have been exhibiting this behavior with their remote controls for years now. The networks and their advertisers would be stunned if they could measure the extent of channel surfing between ads.
This scenario is especially scary for packaged-goods companies, which have traditionally been the key supporters of the mass mediums and their ad agencies that create highly profitable TV commercials. Now, packaged-goods companies are struggling to define themselves on the Internet. They are searching for the newest interruption technology, which will catch the consumer’s attention and therefore improve clickthrough rates. These are gimmicks and not about selling or brand building. They may soon realize the idea of mass consumer advertising will never find a place on the Internet as long as people can vote with a click.
The Internet will prove to be the most efficient means to deliver on the promise of one-to-one communication. This type of communication will combine the best principles of direct response and well-managed databases. On the Internet, advertisers will have to ask permission to interrupt the visitor–which runs counter to what has happened over the past 100 years.
Advertising will work on sites that have developed a level of trust with visitors, and those sites will act as gatekeepers and protectors of an individual’s privacy. This will lead to more targeted advertising, which fits the content of the site and appeals to the reason why the site is being visited.
Advertising built on one-to-one communication and based on trust will lead to more commerce for that site. In time, clients will start devoting more of their budgets to their core customers, spending money where they can best communicate with them. Advertising will work well for companies that offer products or services directly related to the site or that have the technology to serve ads based on accrued knowledge of the visitor’s interests. For example, pharmaceuticals will do more business on health-related sites, and packaged-goods companies will find a home on shopping sites that focus on selling mass products, like grocery stores and drugstores. It will be point-of-purchase driven.
The Internet will demonstrate what works and what doesn’t. It will take a lot of the guesswork out of mass advertising and help redistribute dollars to the targeted investment areas. K RON BARRETT’s Agency ReviewOn Web Sites and the First Amendment, the 4A’s Speaks
Skip Pile and Rick Hooker make several interesting and valid points in “Running the Gauntlet” [Art & Commerce, Nov. 1], but they fail to tell the whole story of the American Association of Advertising Agencies’ plans for a new-business Web site.
To a large degree, Mr. Pile and Mr. Hooker (and, I might add, the media) have misinterpreted the 4A’s efforts. From the beginning, the 4A’s has publicly stated its desire to work with search consultants on the many thorny issues surrounding the new-business process, and we have actively sought their input on our initiatives. That has always been and will always be the case. In their article, the two men say search consultants are here to stay, and I agree. The 4A’s is the first to recognize that a good search consultant can play an important role in the review process and can be beneficial to agencies and clients alike. Our goal is not to compete with them, but to complement their services.
I’d also like to point out that Pile and Co. is one of the more professional and well-respected among the abundance of search consultants who have proliferated over the past few years. However, the same cannot be said of all the company’s competitors.
The fact remains that Pile and Co. is not the only search consultant that 4A’s members must deal with, and not all of them provide the same kind of service. Many require agencies to “pay for play” and a number of them are now offering Web sites that require participating agencies to pay substantial annual fees. The cost for a large agency with multiple locations to participate in all of these databases could cost as much as $50,000 a year. The 4A’s Web site will be a low-cost, neutral and authoritative alternative.
I must also say that I find Mr. Pile’s contention that the 4A’s no longer “solely represents” the ‘industry’ ” as particularly ironic coming from someone whose own industry has no visible or credible “representation” whatsoever, and never has.
As for the 4A’s, I would note that our members account for more than 75 percent of all U.S. ad spending. Additionally, all the major holding companies are members and, as such, all their divisions and subsidiaries in communications fields, including media buying, sales promotion, direct marketing, interactive marketing and public relations, are represented by the 4A’s. Most of those subsidiary companies are the leading firms in their respective disciplines. If that’s not indicative of representing an industry, I don’t know what is.
O. Burtch Drake
President, CEO
New York

Wendy Melillo’s recent column on the protection of advertising under the First Amendment raises some serious issues and critical questions, but unfortunately comes to the wrong conclusion [Art & Commerce, Sept. 20].
Sure, “puffery” is a staple of American advertising. Sure, some exaggerated claims seem so silly as to undermine the usefulness and value of all advertising. But remember, it is that same license to “puff” that provides the humor and creativity in much advertising. It also gives
Madison Avenue the creative license that makes the advertising on the Super Bowl more interesting to most Americans than the game itself.
The fact is, the kind of ads Ms. Melillo dislikes are the most likely to self-destruct because they don’t persuade viewers and readers to take the desired action. Meanwhile, if the programming or editorial material brought to the consumer at low or no cost is unacceptable, consumers have the option to switch to a different channel or medium to find what they want.
Further, in those rare cases when poor judgment leads to a false or misleading ad, the Federal Trade Commission, state attorneys general and plaintiff lawyers have big, ugly and expensive weapons to punish the advertiser or the agency.
Regardless, the suggestion that the First Amendment should not apply to advertising misses the point of every First Amendment case to reach the Supreme Court in the past 20 years. None involved puffery. Instead, every case revolved around the information contained in the advertising–and whether or not the government could block the public from receiving that information.
In other words, the issue is not puffery. It’s censorship.
One of the first commercial speech cases came to the Supreme Court because the State of Virginia sought to ban price advertising of prescription drugs. In striking down that ban, Justice Blackman laid out the constitutional basis for protecting commercial speech that guides the Court today:
“Advertising, however tasteless and excessive it sometimes may seem, is nonetheless dissemination of information as to who is producing and selling what product, for what reason, and for what price. So long as we preserve a predominately free enterprise country the free flow of commercial information is indispensable.”
So, the First Amendment and the courts protect commercial speech because it is indispensable. It spurs competition and helps bring us better and cheaper products every day. It also controls those in government who would rule our commercial choices by keeping us ignorant.
Simply, the Supreme Court says: If the advertised product is legal and the advertising truthful, then the seller has a right to advertise and consumers have a right to see it.
Thus, commercial speech rightfully falls under the First Amendment, no matter how distasteful some advertising may be to some people. The alternative is to put someone in charge of deciding what’s good or bad. I certainly wouldn’t want that job, and in a more lucid moment, I doubt that Wendy Melillo would want it, either.
Harold A. Shoup
Executive vice president
Washington, D.C.

For the Record: Jeff Armstrong, former head of commercials at Satellite Films, a division of Propaganda Films, was not fired from his job [Creative, Oct. 18]. After Armstrong’s contract expired, says Propaganda CEO Trevor Macy, it was not renewed In Best Spots [Sept. 20], the director of the Adidas/UCLA ad “Cheerleaders” was Young Kim of Hungry Man West; Bob Nelson was director of broadcast production/executive producer on Heineken’s “The Correction”; and the art director on EDS’ “Speech” ad was Chris Robb.