Thursday, July 19, 2007
I have been thinking a lot about advertising for several months. In my industry, we're seeing the cost of reaching consumers with advertising, and generating leads, absolutely skyrocket.

Advertising costs are increasing and response rates are plummeting. Consumers are finding more and more ways to "tune out" advertising either physically or psychologically.

As an example, 20 years ago, if you put an insert in a newspaper, you could pretty much bank on a response rate of 1/2 of one percent. That is .005. Today, I am told the expectation can be as low as .0001. That is a whole lot less. That means leads cost more. If sales leads cost more, you know who ends up paying for that, of course -- consumers.

So, we're caught in an odd situation. Consumers are better at avoiding advertising but ultimately it is increasing the cost they must pay for things.

I may be going out on a limb here but I am convinced that, in the future, "social networks" are going to replace traditional advertising. Anyone who sells anything will always tell you that their best sales leads -- the ones they can most easily close -- come from referral. Social networks are how those referrals are achieved.

And, whereas in the past our individual social networks were our friends and neighbors, it is so much bigger than that today. Things like LinkedIn, MySpace, and FaceBook are opening up the world. And there are many others, too. A new search engine, now in beta form, called, is all about just tracking down and networking with people.

The end result, I believe, is that anyone who sells anything to consumers is going to be forced to stop traditional advertising and instead divert their money to generating referrals and tapping into social networks.

The interesting thing about all of this is that traditional advertising is what supports most of the internet-based social networks. If all traditional advertising is found to be cost-ineffective, as odd as it may seem, the internet could potentially collapse.

The good thing is that things are always changing ... new answers and ideas will evolve ... I just am not sure what those will be in the future. Perhaps, as dollars are pulled from traditional advertising, ways will develop for manufacturers to pay to tap into social networks in a much more integrated manner than just advertising. Eventually, that could reduce total marketing costs, benefitting consumers.

But, mark my words, the next 5 - 10 years will have to see a huge shift from traditional advertising to working social networks for referrals in order to generate sales leads. The companies that sell stuff have no choice ... and the opportunity is huge.

  posted at 8:22 AM  


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Todd M


An ordinary guy. A wife I love very much. A great son. Wonderful friends. A metal roofing business and a sales training business. A loving church family. A few trade associations. A Christian school. And a four-pound poodle. Just trying to follow God and see where He leads.

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