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December 3, 2008
A Cheap High and New Lows
We’re addicted to low prices--and advertising has to cope

Last week, a worker at a Long Island Wal-Mart died as he was trampled by the rush of shoppers when the doors opened at 5 a.m. on Black Friday. Somewhere in Bentonville, a marketing manager smiled. Mission accomplished—shoppers showed up in droves for the chance to save a few bucks.

Look all around you. Advertising has won. We have finally convinced the public and our elected officials that consumption is the only way out of our current economic malaise. But we got too good at our job and too adept at mandating consumption. Now, if shoppers don’t show up and spend, the whole country is screwed. The problem is, cash-strapped shoppers won’t spend if they don’t think the price is right or they’re getting a deal.

Welcome to the Age of Cheap. Brands don’t mean much anymore. Can any industry—especially the advertising industry—survive?

Price is now everything, and companies are living—and dying—by the cost squeeze. About 6 months ago, I discovered a store called Steve & Barry’s. It was sort of an Old Navy-type store where all the clothes were about $8 or $10. I thought, “How can they possibly stay in business selling clothes this cheap?” Well, they couldn’t. Steve & Barry’s is now going out of business. They, of course, are not alone. Stores all over the place are closing for good.

But price sensitivity is here to stay. And it has trumped the power of branding. Walk into the cereal aisle at the supermarket or pain reliever aisle at a drug store and you’ll see name brand products sitting next to generic products with similarly colored packaging. The message is clear: This is the same stuff, just cheaper.

Even the one growth area of our business, new media, is a Trojan horse. The Internet has enabled global commerce, instant communication and easy shopping. But on the Net, brand-building takes a back seat to price. We turned the world into a third world bazaar, where prices on everything are driven down and the cheapest price is only a few clicks away. If you could wait a week for delivery, there’s no reason you’d pay $30 for an HDMI cable at a nearby Radio Shack when you can get it for $5 on eBay.

This is the world advertising is left with. And we have to strategize accordingly. Every client will be looking to us to position them in the Age of Cheap. Naturally, the marketing consultants and strategic know-nothings will be quick to trot out the useless buzzwords: “Quality.” “Service.” “Save time, save money.” No matter what we try, the pressure is on to make the sale today, because there may not be a tomorrow.

We rarely have the luxury of getting consumers to like a brand. Forget about the nonsensical garbage like “we can engage your customers with the brand and make them friends.” Customers aren’t looking to make your product their friend. They’re looking for a cheap one-night stand.

And that presents an even bigger challenge to brands: Customers aren’t loyal to stores or brands just because of low prices. If some other retailer undercut the Wal-Mart price, shoppers would go there as well. (It’s worth remembering that in 2004, Wal-Mart didn’t have Black Friday “doorbuster” specials and as a result few people showed up that day.)

There are, of course, a few brands that can still command a premium price and rarely discount. But for most marketers, in other words most of our clients, they’re stuck—they can’t charge what they ideally would like to because their products simply aren’t worth it to consumers. Hence, they pursue strategies and concepts that consumers don’t care about, and the creative work sucks.

Unfortunately, the mentality of cheap is now pervasive in the business world. It’s why clients are insisting you pull images from iStockPhoto that cost $10 rather than pay for a rights-managed exclusive image or actually hiring a photographer. It’s why agencies are scaling back bonuses and holiday parties.

For consumers, cheap crap is here to stay. The challenge for agencies is not to produce cheap crap of their own and pass them off as good ideas. They certainly don’t have to be. A million-dollar idea doesn’t need a million-dollar budget.

Agencies may need to learn to survive by producing great ideas on the cheap. I doubt it’s a sustainable business model. Don’t ask me how to do it, but it would certainly involve getting rid of layers of do-nothing, slow-thinking management. 

But trust me, if you could do great ideas on the cheap and still manage to keep your employees happy, clients would be killing themselves in order to bust down your agency’s doors, too. 

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Since 2002, Dan Goldgeier has been writing the most provocative advertising columns about advertising and marketing -- over 170 of them, covering every related topic you can think of. Now based in Seattle, Dan is a copywriter and ad school graduate who's worked at shops big and small. 

Visit his copywriting websitesee his LinkedIn profile or follow him on Twitter.

And please, buy his book for 99 cents.


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