A big beer executive posed a very good question the other day to my pal Ted Wright of Fizz Corp., the word-of-mouth consultancy.
“If all of this is true, why aren’t the big ad agencies doing word-of-mouth marketing?”
That’s how you get to be a CEO. You ask incisive questions, and this guy asked a word-of-mouthful. But the answer is disturbingly simple:
Agencies don’t employ WOM marketing because they don’t know how to make enough money doing it. No matter how nominally “fee based” their client relationships are, their revenue is still correlated to the size of their media buys. The straight 15% commission is long gone, but agency compensation still tracks parallel to media tonnage. And, because they are owned by publicly traded holding companies, they have to make their numbers. WOM, like other digital-marketing disciplines, is too piddling in cost for them to bother with. In other words, they have a structural conflict of interest.
They’re not stupid. The know they have to change their business models (if they can locate one) to survive in a digital world, but they can’t do so without euthanizing the cash cow.
Editor at Large, “Advertising Age”
Co-host, NPR’s “On the Media”
Author, “The Chaos Scenario”