Is Promotion a Dirty Word?

What do you do when the new neighbor asks about your occupation? Confess it: You tell them you work in advertising.

It’s easier, it’s sexier, and it doesn’t stop block-party banter the way the word “promotion” does.

“We all have the same dilemma. We can’t write what we do on a matchbook cover,” laments industry consultant Bernie Trueblood. “I let people conclude I’m in the ad business, because if I say the word ‘promotion,’ I have to explain it.”

Agency veteran Wes Bray is slightly more forthright: “I tell them I am a marketer, and listen with interest to see what they think that means. Much of the world can’t seem to differentiate between ‘promotion’ and ‘coupon,’ so there is a lot of confusion about promotion.”

Visa USA’s senior vp-marketing services Bob Pifke concurs. “Say ‘marketing’ and people have no clue what that is. Say ‘advertising’ and they think it’s the movies. Say ‘promotion’ and it’s like, ‘Oh, you’re getting promoted?’”

“Twenty years ago, promotion people were defensive because the image was tchotchkes and questionable ethics. Today, the industry is infinitely more professional.”
— Bob Pifke, Visa

The promotion industry has matured so much these past 20 years that it may have outgrown its own name. Strategy has elevated the discipline since its trash-and-trinket start in the late 1970s. Consumers have changed dramatically over the last 10 years, and promotion has too, earning respect along the way.

That raises some questions: How must promotion evolve further to fully serve marketers? And as it evolves, is it still promotion? Is it time for a new definition — or a new word to use with business acquaintances and the neighbors?

It’s easier for marketers, who have their brands as touchstones. “I tell people that I put toys in cereal boxes,” says Kellogg USA senior vp-marketing services Kevin Smith. “I get to be Peter Pan.”

Pifke tells folks, “My basic job is to convince consumers and businesses that they want to get, accept, and use a Visa card.”

RESPECT

Three changes in the business landscape have made promotion more strategic. First, the crucible of marketing shifted from TV to retail. Image is built in so many places besides the tube; the decision is still made at the shelf. Second, Wall Street’s influence rose sharply, emphasizing short-term sales over long-term branding. Third, consumers got more sophisticated about marketing; with less time to waste, they expect more value from offers, and increasingly want a one-to-one conversation with brands.

Look at the money: Promo spending hit $93.4 billion in 1999, up from $60.3 billion in 1993, the first year PROMO tracked the industry. That’s partly because all marketing has gotten more layered — most campaigns have online, in-store, on-air, and on-the-street components. Continued evolution will result in more melded marketing. Separate disciplines may merge into a single entity with its own name: Marketing. Of course, the silos (and budget distinctions) need to come down first.

So do old biases. “Packaged goods chief executives cringe when you say ‘promotion’,” says Jim Holbrook, president of Zipatoni, St. Louis. When PROMO vets agencies for the PROMO 100, some balk at being called promo shops — they want to be known as “integrated marketing agencies,” “marketing strategy consultants,” or “holistic marketing agencies” (June PROMO). The Council of Sales Promotion Agencies changed its name to the Association of Promotion Marketing Agencies Worldwide in the early ’90s. Many — (PROMO included) — prefer “promotion marketing” to “sales promotion.”

“‘Promotion’ isn’t a dirty word,” says Jim Petzing, founder of Exceleration Training & Consulting, Chicago, and, until recently, a principal at Colangelo Synergy Marketing, Darien, CT. “’Sales promotion,’ though — ‘sales’ is the dirty word. I cringe when people say it because it [implies] the 1970s trash and trinkets, not integrated with other disciplines. ‘Sales promotion’ applies when only price cuts are used.”

A little history: Ad agencies did some ad-based promotions (mostly couponing) in the ‘60s, spawning the birth of promo shops in the early ‘70s. At first, “it was hard to find them, really,” says Kellogg’s Smith. Budgets were tight but marketers — mostly packaged goods companies then — could raise prices to fund marketing. During the early ‘80s, the power of retailers increased, sales forces gained control of more marketing dollars, and trade promotion blossomed. “From 1980 to 1985, most marketers spent more time launching new trade deals than new products,” says Holbrook. “In 1975, there was one way to execute a trade deal. In 1985, there were 90 ways.”

“In the near-distant future there will be no such thing as promotion — and then no such thing as advertising. Promo shops are best equipped for it, but ad agencies are best positioned because they feed higher on the food chain.”
— Jon Kramer, J. Brown/LMC

Eventually, trade promotion siphoned off half of packaged goods marketing funds (and a quarter of the budgets outside packaged goods), leaving brand managers grumbling and casting a shadow on “promotion.” Manufacturers countered retailer clout in the early ’90s with efficient consumer response (ECR), category management, and co-marketing designed to squeeze consumer benefit from trade dollars. These days, “budgets are as tight as ever, but we can’t raise prices to raise budgets,” Smith says.

Budget constraints force efficiency, so promotion takes a second role: building brands. “That role has always been there, but hasn’t been maximized,” Petzing says.

Consolidation among retailers and manufacturers means fewer players “who need bigger, eye-catching events,” says Sarah Gleason, Kraft Foods vp-consumer scale strategy and communications. Kraft does more umbrella promos that let sales reps sell brands in a bundle and give retailers solutions-based campaigns.

Trade promotion still accounts for 49 percent of CPG budgets — twice what’s spent on consumer promotion (27%) or advertising (24%), per Zipatoni. Trade efforts helped promotion pros, because it forced them to learn retail, making them better versed in boosting sales than ad pros. But it hurt, too: It made “promotion” a dirty word.

“I don’t want to be a promotion agency,” says Jon Kramer, president of J.Brown/LMC Group, Stamford, CT. “We’ve built our business since 1994 on channel marketing. Now it’s time to decide: Do we become a promotion agency? An ad agency? I’d rather become an integrated marketing communications agency.”

Actions Speak Louder Than Image

Who wouldn’t? And what brand marketer wouldn’t want to work with an agency that produces seamless campaigns to extend branding and spur consumer action?

Increasingly marketers plan promotions first, ads later. Kellogg did it twice last year, first with Pokémon, then with Dr. Seuss’ How the Grinch Stole Christmas. Both campaigns had special food items, in- and on-pack offers, and aggressive ad support. “Promotion provides the platform to drive the entire marketing effort,” Smith says. When that happens, brand managers “aren’t leading the parade.” Instead, the marketing vp orchestrates with an assist from the promo staff. It’s tricky, though: Everyone wants a say, and “sometimes you get a platypus,” says Smith. “Have you ever worked with a product manager who didn’t want to change what you gave them?”

Veeps Speak: Part One

Everyone up and down the corporate ladder feels pressure for short-term performance. “Results are mandatory,” Pifke says. “Even dot-coms have succumbed to that reality. It forces everyone from the boardroom to the rank-and-file to pay attention to measurable marketing.”

Almost half of marketing executives (45 percent) think promotion is more effective than advertising, according to a Zipatoni survey conducted by NFO Research, Northwood, OH, last summer. (Forty-three percent say it’s less effective; 12-percent don’t know.)

But 84 percent believe promotion can build long-term brand equity, mostly by reinforcing brand message and generating trial. (Those who disagree about building equity say promos don’t communicate enough imagery, are too temporary, or are price-focused and harm brand loyalty.)

Agencies can take most of the credit for promotion’s evolution from tactic to strategy. Bray calls it “self-generating.”

“Agencies led promotion to become more linked to brand objectives, which spawned more creative, strategic ‘marketing services companies’ that in turn began to view ‘promotion’ strategy more broadly and offer more executional services,” he says.

“Twenty years ago, promotion people were defensive because the image was tchotchkes and questionable ethics,” Pifke says. “Today, the industry is infinitely more professional. A few key people — Bud Frankel, Bill Robinson, the folks at Glendinning — established ethical practices and were so successful that it became the new standard. Now, more MBAs are entering the field and pay is on par with advertising.”

Factor in the decline of TV and promotion’s stature — based mostly on its ability to build equity — rises as the media landscape shifts. With more “media” to choose from — think Internet and pagers, but also events and guerrilla marketing — marketers consider those access points as valid as TV. “It’s about reaching the consumer with a message at the most appropriate and advantageous touchpoints,” says Shireen Moore, president of Communicator, Chicago. “Marketers are looking at more tactical approaches. That has really accelerated in the last three or four years.”

Channeling the Energy

So what do TV executives say? Is promotion a nemesis that funnels money away from ad buys? Not if the network is smart.

“Promotion is hero here at Nick,” says Pam Kaufman, Nickelodeon senior vp-promotions marketing. “It’s one of the most valuable tools ever to maximize on-air real estate, get off-air visibility, and earn extra money.”

Nick uses promos to drive ad sales by requiring advertisers to participate in a promotion if they want added visibility on-air. Nick characters work off-air, too: A Halloween tie-in between SpongeBob SquarePants and Nabisco let SpongeBob talk to consumers who called a toll-free number on Nabisco packages.

“When I joined [agency] Beaumont Bennett 14 years ago, I got a handbook called ‘Ten Things You Can Do with Promotion,’” Kaufman recalls. “There’s so much more we can do now. It’s a different world in how we communicate, set prizes, and deliver a sweepstakes,” such as dumping 60 tons of snow on the California school that won the grand prize in Nick’s sweeps for the 1999 film Snow Day.

More sophisticated consumers demand top-notch campaigns. Consumers make time only for something special, and they don’t need much explanation to participate. “We do sweepstakes for three-year-olds,” Kaufman says. “We had a two-year-old win a minivan last year.”

If everyone’s hip to promotion, that ups the ante on creativity — better games, cooler prizes, funkier execution — to make a campaign stand out. The quickest way to get there is through the brand’s unique selling proposition — by coincidence, the best route for brand-building, too.

By concentrating on consumers, marketers move beyond mere transactions. “Instead of ‘get the sale,’ the goal is ‘get the consumer,’” Holbrook says. Adds Petzing: “Consumers want to feel special, and have an added reason to interact.”

Two caveats: Stay simple, and keep it relevant. “Sometimes we make things so complicated people can’t understand,” says Smith, who’s recycling a 1960s premium for Kellogg’s tie-in with Disney’s Atlantis. Toy versions of Atlantis vehicles use baking powder to submerge and rise, just like Frog Man did 40 years ago.

Veeps Speak: Part Two

What’s Next

The industry may move forward by harking back to the five Ps, restoring “promotion” to mean all marketing communications. Let ad agencies do the “positioning”; promo experts are best suited to handle “promotion” that impacts attitude and behavior. (One note on price: It isn’t synonymous with “discount.” Says Smith: “Price is very motivating — the first time.” After that, it just trains consumers to wait.)

Agencies will continue to “move upstream, setting strategy and positioning” for brands, Holbrook predicts. With that will come more research, he adds, citing a Pace salsa campaign that grew from focus group findings. Salsa fans like talking about how they eat it, so Zipatoni created What Do You Do with Your Pace?, an online recipe contest with a direct-mail offer for a free jar sent to heavy users.

Promos have always been easier to measure than ads, via redemption rates or sales. But some executives bristle at being held more accountable than advertising. “When you can show me what advertising has done, I’ll do the same on promotions,” challenges Kellogg’s Smith.

The blending continues as all disciplines tackle the same two-pronged goal: building image and sales.

“The cold reality is, in the near-distant future there will be no such thing as promotion — and then no such thing as advertising” as marketers pursue integrated marketing plans, says Kramer. “Promo shops are best equipped for it, but ad agencies are best positioned because they feed higher on the food chain.”

Expect a seismic shift in how agencies hire. As company acquisitions slow, shops will round out their skill sets with individuals. Watch for more multi-discipline training as integration-hungry agencies shop for staffers the way they’ve been shopping for other agencies the past three years. “It’s not enough today to just be a promotion professional,” Petzing says. “You need a general background in all disciplines to be an industry expert.”

Consumers Speak

“It’s not enough today to just be a promotion professional. You need a general background in all disciplines to be an industry expert.”
— Jim Petzing, Exceleration

The upcoming crop of multi-discipline marketing agencies — the first generation to actually start with a mission of strategy, not grow from tactical strength — will be acquisition fodder in two or three years. That should change the complexion of integrated marketing.

Most of the agency buyouts which promised integration have resulted in little more than “gangbanging,” says the president of one promo shop owned by an ad agency. “They bring their subsidiaries together and everyone starts grabbing his turf.” Hiring individuals skilled in different disciplines sidesteps the problem of asking sister agencies with separate P&Ls to play nice.

On the other hand, having sister shops “gives our people added exposure to other disciplines,” says Communicator’s Moore. “Our network makes us smarter, and gives us more resources.”

Even better is a single agency like Marketing Drive Worldwide. “We’re a company, not a network,” says Bray, who left the agency in January after five years at the helm. “The downside is, our offices are more vulnerable to client conflicts.”

On the client side, expect more consolidation with fewer agencies and a possible return to the brand manager as Renaissance man. In the past 10 years, responsibilities have shifted away from brand managers to free them up to set strategy. The problem is, “there’s no place where the buck stops,” says Bray. Marketing is stronger if it’s ruled by a single brand champion, especially if he’s a senior-level, multi-disciplined pro.

Watch for longer timelines, too, thanks to widespread adoption of AOR contracts. Continuity lets marketers spend two to three years building an equity-based platform with related promotions, rather than one-offs that reinvent the wheel with every window. Watch for more evergreen campaigns, like Pillsbury’s Bake Off or Campbell’s Labels for Education, which contribute to equity over time.

Change will come first to small and mid-tier marketers that don’t have huge ad/promotion budget silos — or territorial internal staff. As always, the exception is Procter & Gamble, which already has made its ad agencies accountable for sales (July ‘99 PROMO).

So how should we redefine promotion? “With this blurring of marketing, why call it ‘promotion’ at all?” asks Petzing. “It’s going into a blur of total marketing.”

Trueblood suggests this alliterative option: “It’s about branding, bargains, and bonding. You can’t skip any of them.”

At least he can write that on a matchbook cover.

Semantics

How top marketers define “promotion.”

“Providing consumers with a reason — beyond price — to buy now or again.”
— Kevin Smith, Kellogg

“Reinforcing the brand and creating an action.”
— Shireen Moore, Communicator

“The element of the marketing mix that triggers the consumer to take action.”
— Wes Bray, formerly Marketing Drive Worldwide

“The ability to use third parties to create awareness for our message.”
— Pam Kaufman, Nickelodeon

“Giving consumers a reason to buy now.”
— Jim Petzing, Exceleration

(Petzing’s classroom definition: “The key component of the marketing communications mix that delivers a set of programs or events designed to reinforce, stimulate, or change consumer behavior by offering incentives that add value beyond the basic brand benefit.”)

“Finding a behavioral trigger. Smart marketers should ask ‘So what?’ and ‘Now what?’ Promotion can answer both.”
— Jim Holbrook, Zipatoni

“Short-term incentives to get humans in the door to do stuff.”
— Jon Kramer, J. Brown/LMC Group