On the Value of Advertising

Blitz Magazine, March 2000

advalue

As soon as the first issue of Blitz came out, back in 1997, I started getting calls asking, “Do you know what the Canadian advertising industry is worth, or do you know anyone who does?” Ever the professional, my response was always “Nope”.

Now we know. The Institute of Canadian Advertising finally had KPMG conduct a study (based on 1997 stats). The results surprised everyone, including industry insiders.

The study reports absolute expenditures of $14.5 billion. This is over 1% of Canada’s GDP and comes from industries and organizations that use advertising, the companies that create it, the media that carry it, and related industries.

As Institute of Canadian Advertising president Rupert Brendon notes: “This is a lot of money circulating through the economy, especially when you add the multiplier effect that kicks in as advertising helps businesses grow.”

The advertising sector accounts for 212,000 jobs, or 1.7% of all jobs in Canada—139,000 in direct employment, 73,000 in related services. The value-added to the Canadian economy is $11.4 billion—$7.5 billion in employment income and $3.9 billion in business income (direct and indirect). This is greater than the financial contribution from such sectors as insurance, real estate, accounting and legal services.

“It also matters where the money goes,” says Brendon. “For a lot of Canadian industry, a high proportion of the money leaks off-shore. In the advertising sector, 80% stays at home. Advertising is a driving force in the economy. This news, from respected and independent sources, shows that advertising is far more significant and positive than some detractors would have us believe.”

Note the qualifier. It’s funny how people in the ad biz are always on the defensive, apologetic for a whiff of shadiness hovering over their industry—the perception that there’s something low-rent about the business.

At a school reunion a few years ago, I asked someone what had become of a classmate. She replied: “Oh, he did really well at Yale, but then he went into advertising.” You tell someone you’re writing an annual report, they say ‘Oh!’. That you’re working on an ad campaign for toilet paper, they say ‘Oh.’ As if you’ve fallen from the rank of Chief Surgeon to that of Hospital Janitor. 

Advertising is essential—businesses can’t compete, or survive, without it. But it is interesting to note that even those in the industry don’t understand how important it is. You would be astonished if I told you who has told my sales staff that they never advertise and that they rely on word of mouth to generate new business and stay ahead of their competition. These are people whose incomes, and those of their employees, are derived solely from creating or selling advertising and related services. It’s inexplicable. A head-shaker.

Perhaps KPMG should study this perception—that advertising is somehow inferior as a career choice, a communications medium and a business practice. Clarity would be helpful.

 

 

On Advertorial

Blitz Magazine, July 1999

advertorial

I’m standing in line behind two women; mid-30s, middle-class. One reaches into her bag and retrieves a magazine article. She presents it to her friend and says: “Look at this article on cellulite-reducing cream. It says it works.” We all look at the paper. The word ‘Advertisement’ does not appear, but it is clearly advertorial. The friend replies: ‘It’s not an article. It’s advertising made to look like editorial. You can never believe that stuff.’

                Most people know the difference between editorial and advertorial. The ploy works with some consumers but most, when they see the telltale conflicting fonts and absence of by-lines etc., know that the piece was written by the firm’s marketing department or agency. A well-designed ad with some creative juice behind it is much more effective, for the simple reason that advertorial has no credibility. If people know you paid for it, they don’t believe it.

                I’m not talking about contract publishing, which is OK because readers know, when they see a show guide or catalogue, that the enclosed editorial is meant to be self-serving. But it disturbs me to see publications which purport to be journalistic in content print glowing pieces about companies which have paid for that editorial, without telling readers that it’s advertising.

                Another, similar, practice has lately been growing at an alarming rate. A publication says to a corporate president or marketing director: ‘You give us your client list and we’ll do a feature on you. We’ll approach all of your suppliers and sell advertising around your story. We’ll supply the writer, or you can write the article yourself. Either way, you’ll have editorial control.’

                I used to write for a company whose business was based on this practice. The parameters were simple: Say nothing negative or controversial. Speak only to the people on the pre-approved list. Send the article to the client. The client will remove anything objectionable.

                There are three reasons why this practice is disturbing. First, the subject sells his supplier list to the publication. Those suppliers are approached by the publication’s sales reps. While the suppliers may not be overtly pressured, they may feel that they’ll insult the client if they don’t advertise. Their marketing budgets are reduced by what it cost to advertise in a vehicle which may be inappropriate for them; they wind up resenting both the client and the publication.

                Secondly, publications involved in this practice lower themselves to a decidedly unattractive level. When a magazine or newspaper slaps its logo and journalistic reputation onto editorial which it has sold, it receives a short-term profit and a long-term loss of respect amongst both advertisers and readers.

                Finally, today’s savvy readers are not fooled by these artificial ‘articles’. The pieces are not read. The ads are not read. The featured subject loses credibility. The publication loses credibility. People do not read publications which they do not find credible. No readers, no revenue.

                There’s a lot of doom and gloom now about the publishing industry. It seems to me that if newspapers and magazines focused on providing readers with useful and accurate information, rather than on generating short-term monetary gain, everybody would be a lot happier.