Debra Goldman’s Consumer Republic

Last week’s announce ment by Interpublic Group that it had revised its earnings forecast downward made pretty grim reading. Yet I could not help but be struck by one of the reasons cited for the below-par performance of its public relations, corporate identity and point-of-sale marketing operations. Apparently, as the economy crawls its way out of the trough of recession, marketers have been putting their dollars into traditional advertising.

Come again? Are they talking about the same traditional advertising that is said to be on its deathbed? The kind that is being superseded by product placements and Web films and soccer moms on the take? The type of advertising that has been ravaged by media fragmentation? The sort that no longer has any credibility compared with the power of word-of-mouth? Do they mean the old-fashioned 30-second spots that in the very near future everyone will ignore with the push of a PVR button?

Yep, that’s the one. One can hardly open a business magazine these days without reading about marketing’s diminishing faith in the effectiveness of TV commercials and its search for alternatives. Yet the numbers not only don’t reflect this anxiety, they outright contradict it. This year’s upfront set yet another record, with NBC alone recording a 59 percent growth in profits over last year’s third quarter. Time on next year’s Super Bowl—aka National Television Commercial Day—was snapped up as soon as ABC put it up for sale. Gannett recently attributed its strong financial showing in the third quarter to big advertising gains at its local television stations. And despite a recent report in The New York Times that political marketers, like their consumer brethren, are re thinking TV-centric campaign strategies, political spending on TV ads has already surpassed 2000 levels and is headed toward $1 billion.

The fate of traditional advertising is, of course, closely tied to that of the networks. Network TV, we’ve been told for a decade, is a dying medium. But not since Franco lingered on his deathbed has an institution so successfully survived predictions of its imminent demise. The nets’ share erodes, and yet, absent an ailing economy, they still hike the price of airtime every year, and every year advertisers pay up. What a way to go.

How to account for the huge gap between the rhetoric about advertising and the real-life behavior of advertisers? Is it that, like donors lavishing soft money on politicos in the few remaining days they can legally do so, advertisers are throwing money at mass audiences while there still are a few audiences worthy of the name. Could this behavior be a symptom of entrenched attitudes in corporate marketing departments, a suicidal reluctance to face the new reality of empowered consumers and proliferating choices? Are we simply witnessing traditional advertising’s last hurrah before inevitable doom?

I would suggest that the death of traditional advertising is purely a myth, albeit a very useful one for the marketing business as a whole. For the more that “old” forms of marketing fail, the more new marketing forms are needed to take up the slack and the bigger marketing budgets as a whole grow. Dollars that these days go to product “seeding” or event marketing are not being taken from TV budgets but added to the total. In fact, the lesson of IPG’s current balance sheet is that when the economic going gets tough, “alternative” marketing suffers first and worse.

By this logic we can see that the threat of PVR technology is the best thing to happen to advertising and marketing since television itself: By creating the perception that technology is about to render traditional advertising ineffective if not extinct, it has helped spread advertising far beyond the commercial pod. Thus Coke buys ads on American Idol and also becomes part of the show. Thus we have onscreen bugs, virtual billboards and product placements on “commercial-free” HBO. Thus, after decades of ad length shrinking, long-form ads are now being accepted for airing. Thanks to the “growing ineffectiveness” of traditional ads, some lucky agencies have actually been able to go into the film business—which, let’s face it, is where a lot of creatives would rather be in the first place.

In the meantime, the vast major ity of TV viewers have the exact same means of skipping commercials—remote controls and VCRs—that they’ve had for 20 years. And so new ad forms proliferate even as traditional advertising goes about its business as though nothing has changed. Because nothing has changed, except that marketing budgets are bigger, strategies more complex and brand names more ubiquitous and unavoidable.