tech biz CMO markets big for nanotechnology
January 6, 2003
BY MICHAEL KRAUSS
seem to be growing apocalyptic about the advertising business,
at least in thinking up the titles to peddle their latest books.
Former Coca-Cola chief marketing officer Sergio Zyman named his
current book, The End of Advertising As We Know It. His thesis:
Thirty-second television spots that build awareness are not enough.
Advertising needs to sell harder. It's about the bottom line.
Madison Avenue must rethink its model.
Marketing pundit Al
Ries christened his newest book, The Fall of Advertising &
The Rise of PR. He opened his recent talk in Chicago saying, "I've
seen the future and it's Botox," a glib reference to the
creation of a brand worth millions, without a nickel of investment
in advertising. Botox succeeded by using PR.
Reading Zyman and listening
to Ries, I thought there wasn't much new in their arguments that
wasn't in Don Schultz's 1993 book Integrated Marketing Communications:
Pulling It Together & Making It Work. Maybe Schultz would
have sold a few more books if he'd predicted something apocalyptic.
Still, Zyman's and Ries' angst feels vaguely reminiscent of the
dot-com boom when the youngsters from Silicon Valley and Route
128 outside Boston told us technology would change everything.
Of course, back then the advertising industry was booming as millions
were spent (and wasted) on Super Bowl ads for companies that would
soon be out of business.
To try to make some
sense out of all of these arguments, I decided to call Brody Keast.
Keast, the former head of worldwide product marketing at Cupertino,
Calif.-based Apple Computer Inc., is really changing the world
through technology, just as promised in the technology boom. Only
the revolution isn't coming through a personal computer; it's
coming through your living room television.
Keast is senior vice
president and general manager of San Jose, Calif.-based TiVo Inc.
TiVo, for those not yet introduced, is a personal video recorder
(PVR). It connects to your television like a VCR but uses a hard
drive to record programs. The device is intuitive and easy to
program and operate. It can learn your personal viewing preferences
and record programs it thinks you might like. It can help you
be more selective in your viewing choices. Best of all, it allows
the viewer to fast-forward and skip the ads. It's the ultimate
can of Raid for those pesky commercials.
Call me a couch potato,
but TiVo is some awesome technology. I never miss watching ER,
Law & Order (in any of its forms) or NBC Nightly News though
I'm rarely home when these shows record. I don't have to fiddle
with videotapes. And, I never watch any ads. It seems that TiVo
holds all the industry disruption potential we used to talk about
before March 2000.
Mass.-based Forrester Research Inc. conducted a survey with members
of the Association of National Advertisers. As reported in The
Wall Street Journal, PVRs currently reside in only 1.7 million
homes, but penetration is forecast to increase to 30 million homes
before 2007. Forrester predicts, "The shift to on-demand
TV will cut traditional ad viewing by 19%, shaving $ 7 billion
from traditional ad revenues." That may not be the end of
advertising, but it certainly stings.
Yet Forrester sees
a silver lining. According to the research company, advertising
and fees from on-demand TV programming will more than compensate
for this loss. The impact on traditional Madison Avenue agencies
and their 30-second commercials is harder to predict. As Zyman
and Ries like to remind us, ad agencies aren't always the most
flexible and adaptive organizations. They're going to have to
work harder and be more nimble to maintain their role in the marketing
mix. I'm sure they'll survive, and even prosper, once they step
out of the headlights of the enormous truck that's headed right
Knowing that Keast
is the fellow at the helm creating all this change, I thought
it only fair to learn what marketing tools he is applying to achieve
the 30 million-household penetration level that will reshape the
market environment. Partnerships, celebrity product placements,
public relations and word-of-mouth communication are the key elements
in TiVo's marketing plan.
"As a small company,
we can't do this alone," Keast says. "While we sell
TiVo off our Web site and through retail channels, we have some
important partnerships with DirectTV and Sony. We provide the
TiVo service to DirectTV on an OEM (original equipment manufacturer)
basis; they assume responsibility for all new customer acquisition,
support and billing. They set the price and pay us a fee on a
Early on, TiVo recognized
the power of word-of-mouth communication. They gave their product
away to entertainment industry and sports celebrities to generate
interest and stimulate awareness and trial.
"For us, public
relations has become the new advertising," Keast says. "We've
done everything from product reviews to lifestyle stories to a
massive amount of product placement with people who are influential
in pop culture.
"We've seen the
product written into scripts on everything from Friends, Will
& Grace, and (HBO's) The Mind of the Married Man. We've been
on the 'Top 10 List' of Letterman and in Jay Leno's opening monologue,"
Does he advertise TiVo
on network television, or is he afraid his own ads will be zapped?
Keast admits to running an advertising program to help launch
"We're not doing
Super Bowl advertising, though we did invest in a national advertising
campaign to build awareness of our brand and interest in our service.
We think it served its purpose. While building a brand is the
sum of many influences both large and small, advertising did a
lot to get the initial awareness, to define a personality and
tone for our brand and to pique interest," Keast says.
"It was really
expensive," adds Keast, who has to educate customers about
his new service. "Advertising has some constraints.
"At TiVo, we're
talking about a mass change in consumer behavior, in how people
watch TV. With a 30-second spot, by the time you break through
the clutter, grab somebody's attention, entertain them, deliver
some sort of simple message, tag it with your brand and a call
to action around your Web site, you're pretty much in and out
Does Keast feel advertising's
days are numbered as Zyman's and Ries' book titles might suggest?
just builds awareness and is brute force. But building a brand
gives you pricing power. Early on it was a good tool for us to
use. I don't know that there's ever a cookbook thing where it's
always good or always bad. It depends on who you are, what you're
trying to get done and the environment," he says.
But, agencies and marketers
are going to have to adapt.
"I don't think
the advertising business is going to go away. I think the future
of the 30-second spot is definitely a question mark. As TiVo and
our competitors grow, the advertising industry will have to accept
(that) they are operating in an environment where the viewer is
completely in charge and has total control. It's an 'opt-in' environment.
"That just requires
a different approach. I don't think it's the end of advertising.
It means that advertising has to get better and the judge of that
will be the consumer," he says.
Listening to Keast,
I realize TiVo may not be the death knell for advertising, but
one thing's certain: You won't see a new book entitled The End
of Technology any time soon.
I guess the technology
revolution isn't over after all.
is a partner with DiamondCluster International in Chicago. He
can be reached at email@example.com