Bye Bye Mad Men and Three Martini Lunches

The only place where traditional advertising is prospering is in the Mad Men series on AMC. It showcases a bygone era when men wore suits to the office and drank alcoholic beverages at lunch, and few women occupied an executive suite. Hefty magazines, fat newspapers and seven minutes of advertising for every thirty minutes of broadcast television has led us to a culture where 70% of our GDP is based on consumer spending. Even more frightening is how our media culture has trained the rest of the world to aspire to consume the way we do. A seven-yearold from the favelas of Rio has almost the same vocabulary of brands as a child of the same age living in Grosse Pointe.

At the start of the recession, many Americans woke up and realized their debts, houses, cars and waistlines were too big and we needed to go on a diet. Call it a recalibration. Our relationship to advertising and media is going through a similar transformation.

We as Americans will still spend. We’ll eat and drink, clothe our children, take vacations, fix up our homes and drive our cars. We just won’t spend the same amount of money as we used to. Roughly a third of American households have gone through downward mobility – from uber rich to rich, middle-class to lower middle-class. The rest of us have learned that conspicuous consumption is bad manners and that if we ask for a discount we often get it. Our perception of what something is really worth has gotten very fuzzy.

We are still vulnerable to advertising messages, but thanks to changes in our media viewing and reading habits, the way we take in those messages has changed. In a sense, the old-fashioned media and advertising business made the same mistakes as the music industry —being closer to the creators of products than the end consumer. Nielsen ratings and circulation data are even more suspect now than they were twenty years ago.

The shake-out for retail, consumer durables and apparel has been particularly hard. Smart marketers have reallocated their budgets, and the traditional tools of 20th century marketing have suffered. Television is awash in low budget “reality” programming, and even NASCAR, the nation’s most popular sport, is retrenching.

The Sunday New York Times is positively anorexic. The idea that you can charge five dollars for something that weighs a third of what it did three years ago is a question many readers are asking. The Sunday Times Magazine, once filled with fashion brand ads, is a quarter of its former size. The newspaper and magazine world are in free fall, with declining ad pages. The Wall Street Journal is one of the few newspapers whose circulation has actually shown a modest increase. Almost every  other major newspaper in the country is reporting double-digit declines in circulation.

It isn’t as if marketing has disappeared,  but those dollars are going to other places as our global marketing community adds 21st century arrows to its quiver. One of those new tools is what we are calling Place Marking. It is taking a brand and putting it physically in a high-traffic location. It’s a new kind of retail. Place Marking can be temporary. Target puts up a Pop-Up Store at a location that may be open for a month, or just few days. Uniqlo, when it did its store launch in Manhattan, put shipping containers into Union Square Park. This concept of portable retail—pioneered by the merchants that followed the PGA Tour selling golf clubs, or a Grateful Dead  tour peddling Jerry Garcia t-shirts—is a natural evolution.

The Robin ReportBrands have decided that they need a place where they don’t have to make love through an interpreter – or the traditional multi-brand store. The M&M Store in Times Square, The Nintendo Store in Rockefeller Center, The Prada Store in Soho, and Marc Jacobs’s invasion of the West Village are all examples where brands have chosen to go to high-traffic locations where they can find their customers and set up temples in which they have complete control. Some of the aforementioned places sell product, and a few may even make some money, but this is secondary to the brand placement.

One of the best examples is the Samsung (005930.KS) Experience in the Time Warner Center in New York City’s The Shops at Columbus Circle. It’s a store where nothing is for sale. It is meant to be an exhibition of the brand. The store is a reallocation of advertising and media dollars that are now paid out to a landlord and an interested staff. This idea came from a Korean consumer electronics company, who, in twenty years, has gone from being a manufacturer of cheap TVs to one that is eclipsing Sony (SNE) as the largest manufacturer of consumer electronics and appliances in the world. At the Samsung Center, because nothing is for sale, the interaction between staff and visitor is a free and easy exchange of information. The average time spent in the location is more than the average 12 minutes that characterizes the specialty retail visit. It is a playpen filled with brand actors. It could be a young man showcasing how a laptop and a DJ’s mixing board intersect. The visitor is invited for quick lesson in Hip Hop. A display at the front of the store showcases the newest washing machine technology, which uses ionized bubbles as its medium – and less water and soap. At the back is a complete Samsung kitchen with coordinated appliances, with a look a feel closer to a luxurious Toll Brothers model home than an appliance section at Lowe’s. Samsung Experience employees report the puzzlement and sometime anger when shoppers reach for their wallet and find out they can’t use it.

Place Marking is changing the rules of retailing. At a time when vacant retail litters our commercial landscape, in places where you can find the right traffic, the prices per square foot are going through the roof. To turn a Yogi-ism around – it’s so crowded that everyone wants to be there.

Paco Underhill is the CEO of Envirosell (www.envirosell.com) a behavioral research and  consultancy firm focused on commercial environments. His first book, Why We Buy, was an internationally bestseller. Call of the Mall, released in 2004 is a humorous walking tour of an American shopping mall. His columns and editorials have appeared in The New York Times, Money Magazine, The Washington Post and The Wall Street Journal, among others. Underhill is the only foreigner to hold a position on the Board of Advisors at Hakuhodo—Japan’s second largest advertising agency. His latest book published in July of 2010 is entitled What Women Want. It is not a sex manual.

Paco Underhill About Paco Underhill

Paco Underhill is the CEO and Founder of Envirosell, a behavioral research and consulting firm with 10 offices globally. Paco and Envirosell’s work has been featured in The New York Times, 20/20, National Public Radio, Smithsonian Magazine, Wall Street Journal, and other major news media. Paco is also the author of What Women Want, which was published in soft cover edition by Simon & Schuster in July 2011; Call of the Mall, a walking tour of the American shopping mall; and Why We Buy, the bestselling book about retail in history. In addition, Paco’s columns include regular features in major trade publication DDI Magazine, as well as Goldman Sachs’ in-house publication.