KAI RYSSDAL: It's tough not to be cynical about this one, but the advertising industry's holding a big bash in New York starting today. Cleverly enough, it's called Advertising Week 2006. Fifty-thousand people getting together to talk about ads and marketing and getting the message out. Which, I guess, we're helping them do right now.
But not all the money that's spent on ads and marketing works. In fact, a good part of it doesn't. Market researcher Rex Briggs has been looking into exactly how much ad money is misspent. Rex, good to talk to you.
REX BRIGGS: Good to be here, Kai.
RYSSDAL: It's not new, this whole theory that a lot of advertising is wasted. I mean, you know, you sit there and watch an NFL game and you flip through some of those ads and you're like, "Alright, this is stupid."
BRIGGS: Oh, you mean the game or the advertising?
RYSSDAL: That's right!
BRIGGS: Or, the other one is you say, "Wow, that's really funny" but it doesn't actually sell the product. I mean, Taco Bell ran into that issue with the "Yo Quiero Taco Bell." That cute little chihuahua was fun but didn't sell any burritos. And there's billions spent there.
RYSSDAL: How many billions?
BRIGGS: Well, if you look at in the U.S. alone there is over $300 billion spent each year on advertising.
RYSSDAL: Alright, well, run it a little farther for me. How much of it is wasted?
BRIGGS: Well, you know, over $100 billion of that $300 billion is wasted. We're estimating about 37 percent. So, a little bit better than the old Wannamaker quote "I know half my ad dollars are wasted." But still not enough working for marketers to celebrate. And, what we're suggesting in "What Sticks" is that the agencies really should move more to measurement and metrics so that there's a quantitative understanding of what's working, what's not, and how to improve it.
RYSSDAL: Explain that for me a little bit farther, if you would.
BRIGGS: Well, imagine that we're talking about this radio and you put in advertisement. Maybe in a couple cities we decide randomly to select them and not to have that same advertisement run. Now we can measure if the difference between the cities that had the radio airing, compared to the cities that didn't, change the fortunes of that company.
RYSSDAL: Other than the massive amount of money that's being spent in advertising, why does any of this matter?
BRIGGS: Well, I think it is just the, uh, . . . Other than the fact that billions of dollars are being spent, and potentially wasted, of shareholders' money, that is the point. Our expectations for advertising isn't that every ad impression influences every single consumer. Rather it's that enough of the consumers are influenced to buy the product that it pays for the investment that you're making. You might have a simple reminder of a Coke message right around lunch time, and that might be "Hey, I'm thirsty." It works. And even though it wasn't amazingly memorable back to the Mean Joe Greene ad of old, it still might be effective. It might have a positive return on investment.
RYSSDAL: What kind of reaction do you get when you go into major marketing firms and ad companies and say, "You know what, about 30 percent of what you do just doesn't work at all." It would be terrible if somebody said that to me about my job.
BRIGGS: Oh, that's considered the F-word in advertising. The F-word is Failure. You don't say it. Cuz that leads to another F-word which is Fear, which leads to another F-word which is Fired, for the agency or the chief marketing officer. So, most marketers want to focus on the constructive ability to improve results over time.
RYSSDAL: And what about the consumer products companies? I mean, when you walk in and say, "You collectively are throwing away $100 billion a year," that must generate some frowning faces.
BRIGGS: It does, especially when you can quantify that some of it is because they moved too slowly to adopt the Internet. I mean, you know, you're a decade in and some marketers — even though they have a teen audience — still have been slow to shift their budget in that direction. And you see a few people cheering in the back because they were the advocates for change in moving marketing along. And then you have a few curmudgeons saying, "Well, I still like my old TV ads." And so there are always battles within companies to do the right thing, to spend the money in the most efficient and effective way.
RYSSDAL: Rex Briggs is the founder of the market research firm Marketing Evolution. He's also the author most recently of "What Sticks: Why Most Advertising Fails and How to Guarantee Yours Succeeds." Rex, thanks a lot for your time.
BRIGGS: Thanks, Kai.