Here we go again with another self-serving ‘prophet’ predicting the end of brand advertising.

In this case it’s a fellow by the name of Alex Rampell, CEO of a company called TrialPay. He predicts something he calls ‘Transactional Advertising” will replace brand advertising in the near future.

Why? Presumably because that’s what he does.

He explains the value of a brand this way:

What’s the value of Coca-Cola’s brand? Pure math – it’s the Net Present Value (NPV) of the difference that consumers will pay for Coca-Cola versus, say, RC Cola, for the lifetime of the consumer and duration of the brand. When you pay $1 for a Coke versus $.50 for an RC Cola, the $.50 difference is chalked up to the “brand.” (Yes, perhaps there are differences in taste, too – but even with an identical formula and taste, I would argue RC Cola wouldn’t sell as well as Coke). Multiply $.50 times billions upon billions of cans of Coke, and you see the power of brand.

An ok explanation, however, Interbrand estimated Coke’s brand value at $68.7 Billion in ’09. Up 3% from the previous year. Their valuation method is explained here.

As much as I can understand it, here’s Mr. Rampell’s argument in a nutshell:

...what if Walmart refused to stock Coca-Cola, instead stocking just RC Cola? Granted, Walmart stocks Coca-Cola because consumers demand it, and consumers demand it because of the brand that Coca-Cola has created, but that can easily be reversed. If Walmart decided to stock only RC Cola and expel Coca-Cola from its shelves, this would change RC Cola’s fortunes, and harm Coca-Cola, quite a bit.

Why exactly would Walmart do that? A self-defeating, circular argument to be sure.

He goes on to explain the concept further with a little help from Captain Obvious:

Preferential placement of a good or service at/near the point of a transaction is something I call “transactional advertising,” which I predict will expand as a category in the coming years.

But where’s the “advertising?”

This form of transactional advertising exists today, although you might not know it. Proctor & Gamble spends great effort and expense (though it pales in comparison to their brand advertising spend) to ensure eye-level placement wherever its products are sold.

Oh, I get it. Shelf placement and POP!

To be fair, point-of-sale is becoming more sophisticated and will continue to do so, especially with mobile transactional software, mobile apps, 2D bar codes, augmented reality and the like. Still, it’s not competitive to brand advertising, neither will it replace it. It’s simply the final stage of the purchase funnel.

Oddly enough and as much as Rampell claims that he coined the term – ‘Transactional Advertising’ has been around since the ‘80’s. I recall a couple of Canadian retail agencies using it as their unique point of difference.

He finishes with an admission about his masterplan:

Today you see very little in the way of transactional advertising online; rarely does one brand pop up in another brand’s checkout experience.

Unless it’s a house brand, wouldn’t a brand have to pay for that opportunity? And if so, given Rampell’s earlier comparison, what if it’s RC Cola versus Coke, who’s going to win that bid?

Why, the one with the best known and valued brand I suspect.

Who is this guy and why is TechCrunch giving him a soapbox? Another argument that belongs with “A Marketing Era of False Prophets and Failing Results.”

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An excellent article on the history of advertising written by Randall Rothenberg for Ad Age. Certainly an article that new people in the business should read and study.

He finishes the article with this:

But as we near the end of the broadcasting era, at the twilight of the advertising century, this much is now clear: In the spark of creativity lies the future of business.

Advertising is fundamentally persuasion and persuasion happens to be not a science, but an art.

However much we would like advertising to be a science-because life would be simpler that way-the fact is that it is not. It is a subtle, ever-changing art, defying formulaization, flowering on freshness and withering on imitation; where what was effective one day, for that very reason, will not be effective the next, because it has lost the maximum impact of originality.

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Avi Dan makes some very good points in this AdAge article. Rapid change in technology and consumer behaviour is something every brand marketer should be paying close attention to. However, given the average 11% budget allocated to online marketing (in Canada), most aren't. Failure is the consequence, as the tenure of the CMO will continue to decline from the current average of just 18 months.

• While consumers and retailers embrace these innovations, one group seems to be conspicuously lagging behind the rapid technological evolution of the marketplace: marketers. Consider this: Ten years ago, at the beginning of the decade, consumers spent 30 minutes online. Today it's four hours, according to Media Metrix, twice as much time as they watch TV.
• In this decade broadband expanded from 3% to two-thirds of American homes. Yet marketers barely adjusted their approach. While investment in digital advertising has crept up some, roughly 90% of budgets is still spent on traditional channels like TV.
• A good place to start is reviewing the scope of their relationships with their agencies. CMOs must demand that all of their agencies, and not just the digital shop, become technologically savvy.
• Marketers should strive for mutuality and non-partisanship in brand stewardship. Today, it is ensconced with the "traditional" agency, while other disciplines play a supporting role. Of course, if you spend 90% of your budget with traditional agencies, that makes sense, but it also leads to silos and makes integration hard.

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