Sunday, August 17, 2008

Thorstein Veblen and advertising

Again we dip into 1904 for an early industrial age explanation of advertising. According to Thorstein Veblin, the "monopoly of good will" is a way to dominate the minds of customers, to increase your market share.

Not by improving the raw materials, or the manufacturing process, or the product performance, but by outsmarting competitors with clever slogans. A better, but more difficult approach, is to improve the product, then say something creative and smart about how the customer's problem is now solved more efficiently or completely.

Instead, they ignore actual users, and dream up new ways to sell a product they really only know this about: "we need to sell more of it."

"We want you to think of our product in this manner. Why? Because we say so, that's why" is the underlying basis of fabricated hype.

Shape the customer's imagination, redirect the desire, and conquer by psychology!

First in mind. Positioning. Top of mind choice. Automatic purchase reflexology.

Our new marketing is Not Marketing. We reject the emotional trigger theory and seek to return to the Advertising As Information concept.

We the People are influencing each other. We use peer to peer recommendation systems of internet channels like Twitter, blogs, MySpace, and other social networks. Personal credibility, i.e., online reputation, is the value by which the others judge your user or beta tester report.

CEO blogs, and forays into Twitter and other online message sharing communities, are an effective path for letting customers, recruits, and colleagues know more about the essence of your company and its expertise in solving their problems.

True marketing, good advertising, guaranteed viral buzz rests upon the sure foundation of altruism. If you really understand the problem, and genuinely care about those who have the problem, and honestly provide a reasonably priced solution, get your message out there.

Now, an ancient but still valid observation from over a century ago.

The end sought by the systematic advertising of the larger business concerns is such a monopoly of custom and prestige.

This form of monopoly is sometimes of great value, and is frequently sold under the name of good-will, trademarks, brands, etc. Instances are known where such monopolies of custom, prestige, prejudice, have been sold at prices running up into the millions.

The great end of consistent advertising is to establish such differential monopolies resting on popular conviction. And the advertiser is successful in this endeavor to establish a profitable popular conviction, somewhat in proportion as he correctly apprehends the manner in which a popular conviction on any given topic is built up.

The cost, as well as the pecuniary value and the magnitude, of this organized fabrication of popular convictions is indicated by such statements as that the proprietors of a certain well-known household remedy, reputed among medical authorities to be of entirely dubious value, have for a series of years found their profits in spending several million dollars annually in advertisements.

This case is by no means unique.

It has been said, no doubt in good faith and certainly with some reason, that advertising as currently carried on gives the body of consumers valuable information and guidance as to the ways and means whereby their wants can be satisfied and their purchasing power can be best utilized.

To the extent to which this holds true, advertising is a service to the community. But there is a large reservation to be made on this head.

Advertising is competitive; the greater part of it aims to divert purchases, etc., from one channel to another channel of the same general class. And to the extent to which the efforts of advertising in all its branches are spent on this competitive disturbance of trade, they are, on the whole, of slight if any immediate service to the community.

Such advertising, however, is indispensable to most branches of modern industry; but the necessity of most of the advertising is not due to its serving the needs of the community nor to any aggregate advantage accruing to the concerts which advertise, but to the fact that a business concern which falls short in advertising fails to get its share of trade.

Each [business] concern must advertise, chiefly because the others do.

-- Thorstein Veblen
The Theory of Business Enterprise (Charles Scribner's Sons, 1904, chapter III)

1 comment:

Josh Carr Superstar said...

Nice post - long :) but very good.

I wrote a similar post about a month ago talking about Conversations, not Interruption Marketing Old Advertising was all about interrupting a lot of people. Modern Marketing is ancient again because it is more about one on one conversations than mass interruptions.