As almost everyone knows, advertising is in the . It isn't just the recession. Advertising started to plummet early in 1989, well before the recession really began to bite.
Advertising's problems are more fundamental, and the decline is worldwide. The unhappy truth is that advertising has failed to keep up with the pace of economic change.
Advertisers like to think in terms of mass markets and mass media; but as brands and media have proliferated, target markets have fragmented. Even campaigns for major brands ought to be targeted at minority audiences, but they rarely are. That is the principal way in which advertising has gone astray.
Think about your own shopping habits. If you visit a supermarket you may leave with 30,40 or perhaps 50 items listed on your check-out bill, the average number of items of all kinds purchased per visit of all kinds.
Many of these will not be advertised brands; some others will be multiple purchases of the same brand. At a maximum you will have bought a handful of advertised brands from the 15,000 lines on sale in the store. Over a year you are unlikely to buy more than a few hundred brands.
Consumer durables? perhaps a dozen a year. Cars? If yours is a new car, the statistical likelihood is that it is supplied by your employer. If it isn't, you only buy one every three years. And though it may seem otherwise, you do not buy that many clothes either, and most of them will not be advertised brands.
Even when you throw in confectionery, medicines, hardware, all the services you can think of, it is virtually certain you do not buy more than 400 different brands a year. Compare that figure with the 32,500 branded goods and services that, according to Media Register, are advertised. Let's ignore the 23,000 which spend less than £50,000 a year, and concentrate on the 9,500 brands that Media Register individually lists and analyses.
Mr and Mrs Average have bought 400 of that 9,500, and not all because of their advertising. That's about 4 per cent. So you can forget that naive claim usually attributed to Lord Leverhulme: 'Half of my advertising is wasted but I've no way of knowing which half.' You could say that 96 per cent of all advertising is wasted, but nobody knows which 96 per cent.
When you're watching TV tonight, count how many of the commercials are for brands you buy or are likely to buy in the future. For most people the figure seems to be about one in 16 (6 per cent) so the commercials for the other 15 (94 per cent) are, on the face of it, wasted.
You probably think you're a special case, that you are impervious to advertising. Almost everyone thinks the same. But you aren't and they aren't. The truth is nobody buys most the brands they see advertised.
Waste is inherent in the use of media for advertising. The notion that every reader of a publication or every viewer of a commercial break might immediately rush out and buy all or even many of the brands advertised is ludicrous. People register only a tiny number of advertisements they see and ignore the rest, so waste cannot be avoided. That does not mean advertising isn't cost-effective. Millions of advertisements have proved it is.
Advertising has to communicate with large numbers of people to reach the relevant minority because the advertiser cannot know, in advance, exactly wich individuals will respond to his blandishments. Media advertising works, despite its much publicised expense, because it is a cheap means of mass communication.
Nonetheless, all waste is gruesome. With smart targeting the advertiser can minimise the wastage by increasing the percentage of readers or viewers who will respond; but he can never know precisely who will respond. Even the most accurate and finely tuned direct mail-shot never achieves a 100 per cent response. This is one of the fundamental differences between the use of media and face-to-face selling. It is possible, just, to envisage a salesman scoring with every prospective client he speaks to. The same could never happen when media are used. If the advertiser knew exactly which people were going to respond there would be no point in using media at all. The advertiser could communicate with them directly.
This is as true of Birth, Marriage and Death notices as it is of soft drink commercials. Any advertiser who can net one million new customers (2 per cent of the adult population) is doing well. Of soap powder, the two top-selling brands in supermarkets would be delighted with a million extra customers. So that any advertising campaign, for any product (or any political party for that matter) which would win over 2 per cent of the population would be outstandingly successful: and that, as I began by saying, is but a tiny minority of the population.
The most cost-effective way to reach them may be the use of mass media, but if advertising is to get going again its message will need to be more tightly targeted than ever before.