Gad Romann

Advertising agencies, especially the big holding companies, are buying up every type of communication companies just to stay in the game. And the name of the game is betting on the future. But it can be a dangerous game.

If you happen to know the way in which it is going, you can safely place your bets. But if you do not, you are in for a very expensive ride. And according to reliable sources, 86% of us will get it wrong. So you do not have to be a palm reader or look into a crystal ball to see which way the business is going.

Maybe it has not happened yet, but brands and their agencies are likely to follow in the footsteps of the music industry. But agencies will not be the real victims, brands will. Brands now bear the risk of losing power both domestically and globally—transitioning from high power brands to low power brands. So what needs to be done to keep brands alive? At the very least, we need to understand how these brands were built and what is happening to them now.

Are consumers falling out of love with their brands? Are they replacing their favorite brands with other resources? With the sudden deluge of content, are brands becoming “the parasites of content,” feeding off every piece of entertainment that comes streaming across your screen? Have brands simply lost their grip on successful communication?

Remember when commercials were fun? When no one minded that they were sprinkled among your favorite shows? When you and the advertiser had a clear understanding: “You watch the following program for free if you agree to let us also run commercials.” Under those terms, both you and the advertiser benefited. Occasionally, as a sign of gratitude, you were willing to go out and actually buy the product. How nice!

This economic model exited for decades. It is the stuff that held the advertiser, the consumer and the TV stations together. But this model, this wonderful quid pro quo that was built through the power of communication is breaking down. In those days, commercials had a chance of being more enjoyable: 85% were used for brand building and only 15% were used for promotions. Today, it is the exact opposite. And the economy certainly is not helping things.

In fact, according to new WSL Strategic Retail poll, to save money, 48% of consumers have traded down from their usual brands to lower-priced brands. Sixty percent said they are now more likely to wait until something goes on sale rather than buy it at full price. And 33% of the poll’s respondents said they now haggle for lower prices in stores. And if that is not enough to dampen the spirits of the most perverse sync, Ford just cut their budget by $200 million.

Advertising, to a large extent, is finding its analogy in the music business. In much the same way Napster has impacted the music business, so are YouTube, Facebook and MySpace impacting brands. Once music was free, consumers felt there was no reason to pay for it. Now that content is free — well, you get the point.

To combat this, new media companies like Google and Yahoo wax eloquent about clicks. But be careful before you join in the euphoria. Take a look at this: when you consider clicks, 50% of the clicks come from 50% of the users, and 80% of the clicks come from 16% of the users — this is for display ads. And of the 16%, the average income is slightly under $30K.

Further, this past March, there were over eleven billion videos viewed by online visitors. How does any brand ever begin to break through this clutter? As you know, clutter on television was always considered a problem. But clutter on the Internet? Did I hear someone just say eleven billion videos? And the wear-out factor is but one exposure.

Today, no one argues with the fact that the consumer is boss. Brands have always have been co-created. Smart brands have always known who the boss is. But there are more important issues that are suddenly leading back to the crux of the business: What is the value of the brand? And what is the value of its communication? What meaning are they receiving from its commercials? And what value do they receive when they purchase the brand?

Right now, when it comes to brand communication, consumers seem to have no reciprocal obligation. The brand is making no demands upon them. They have walked away from the communication equation. How they evaluate and respond to brand communication is changing.

It is little wonder that Sergey Brin of Google keeps repeating the point that ads have to get better, and he is right. A new value equation has to be created. A new deal has to be struck with consumers.

Like self-believing merchants hawking their wares on a summer boardwalk, everyone claims to have the answer. As yet, no one has created a new “value matrix.” Everyone wants to stop talking and start doing. I could not agree more.

I have been exploring new ways to glean brand meaning and new ways to create brand narrative. It is not about storytelling, but it is about finding a new way to define a brand—finding the language of cinema as opposed to the language from the printed page. Narrative is meant to be reinvented Godard would be amused.

But brands cannot afford to go through the next several years making mistakes especially in this economy. And it is our job not to make any. Will brands survive into the future? Yes, if we stop looking in all the wrong places. The value of the communication is still in the value of the brand.

Competition, as we’ll discover during the Olympics, doesn’t seem to scare off the Chinese. A few decades ago, when they contemplated making a move on American capitalism, they chose to go into the beer business. Perhaps naively, perhaps because of the overwhelming challenge, they chose a category with fierce competitors like Budweiser and Miller who have been known on occasion to eat their young.

Who would ever have thought that the Chinese would choose the beer category? But leave it to them to surprise us. How they got into to the beer business is almost hysterical—it easily deserves an episode on Larry David’s Curb Your Enthusiasm.

Marshall Goldberg, the son in-law of the man who owned Manischewitz Wine, traveled to China, and struck a deal with the Chinese government to import Tsingtao beer. And what, you ask yourself, did the Chinese people know about brewing beer? Right. Nothing! But the Germans do.

According to drinking lore, the Germans never went anywhere without eventually building a brewery. So, in 1903, with gusto and enthusiasm, they built one and named it for the town. The Larry David irony is hardly missed on anyone: The Germans build a brewery that is owned by the Chinese whose beer is distributed by a nice Jewish company from Brooklyn. Global marketing has its roots in this success story. Who would have guessed?

Upon getting the rights, the Manischewitz people were out to prove to the Chinese government they could successfully sell Chinese beer to beer-hugging, beer-loving Americans. The Chinese government was skeptical but the Manischewitz people were up for the challenge.

Several advertising agencies were asked to pitch the account and show how they would ignite the American beer drinkers to embrace Tsingtao. At the time, I co-owned an ad agency with a good friend of mine Barry Tannenholz, called Romann & Tanneholz. Naturally, we accepted the invitation to pitch.

Our effort helped put Tsingtao on the map.

First, we conducted consumer tests to gauge the likelihood of someone buying a beer imported from China. As we discovered, the likelihood was nil and none. Consumers responded with laughter and ridicule. On the whole, beer drinkers categorically rejected the notion of buying an imported beer from China. So we had to reverse engineer our strategy.

Failing the success of pursuing the hardcore beer drinker, we set our sites on the wine drinker, hoping they’d provide more luck. And surprisingly, they did: For every four glasses of wine a wine drinker drank, they also drank one bottle of beer. And their choice of beer was selected on different criteria: it was selected on the beer’s “cultural power,” not its “popularity” among the happy-go-lucky belly-flopper market.

The scenario went something like this: When a wine drinker walked into a party and was offered a glass of wine by the host or hostess, they would on occasion, reject the offer of wine and opt for a beer. “No thanks,” they would rejoin, “I’ll have a bottle of beer instead.” Here comes the cache-laden request: “In fact, make it Tsingtao, you know, that beer from China.” At this point, we figured we nailed the strategy, now all we had to do was nail the creative. With no money and far from having the ability to create Internet-buzz, we created a 10 second TV spot that literally broke the bank.

Remember when you were kid on the beach digging through the sand and you would ask your mother: “Hey, Mom, if I dug all the way down, where would I get to?” and she would reply: “China.” (Talk about the early days of metaphor.) That got our creative juices flowing and lead to a TV spot that got both the Chinese government and the Manischewitz people very excited.

Now for the TV spot: Imagine on top of your TV screen, a glass turned upside down and from the bottom of your screen a bottle of Tsingtao was being poured up against gravity into the glass as the voice over intones: “Tsingtao, the beer from the other side of the world. Once you taste it, you’ll flip.” At this point the picture flips placing the glass and the Tsingtao bottle, still pouring, into an upright position as the voiceover continues: “Tsingtao, imported from China.”

After the introduction of that commercial, China was headed towards its first capitalistic success in the U.S. Today, thanks to an awful lot of people, Tsingtao is the best-known Chinese product in the world.

Possibly, the true beginning of the global Olympics.