In his Business of Software speech from 2008 Seth Godin points out that advertising is a severely endangered creature and that people instead need to focus on creating high quality products.
A good product will sell itself, since a good product equals satisfied customers and satisfied customers are the best sales people in the world. A happy customer will of course share his joy over your great product with the people around him, and since people tend to listen more to people they know, these recommendations are a lot more worth than any TV ad. This is regardless of whether it cost millions of dollars to create or was aired during the Super Bowl, it will probably still be less effective than traditional word of mouth marketing of a high quality product.
To make you product or service even more appealing to its intended user base, you should also refrain from trying to create something that EVERYONE should want. The more you focus your product towards a specific user base, the more likely it is that those users will be satisfied with the product. As Seth Godin says, it is wrong to assume that niche products are less likely to be profitable, as a niche product is likely to be of more use to its intended users. If it is exactly what they want, and there is no better alternative on the market, their willingness to pay for the product will increase.
On a side note, this phenomena of trying to make your products appeal to more and more people has really gotten a hold of the games industry, to the dismay of many a niche audience, and myself. As budgets increase, publishers and developers are less likely to take risks, and so they streamline their games in order to not alienate any potential users. More and more genres and franchises are moving away from their original niches, creating more accessible experiences that lowers the bar for new users, but in turn leaves many of their original fans behind.
I personally find it regrettable that many of the genres and franchises I have come to love are now turning into something I find less enjoyable, dumbed down versions of their former selves. There is much to say on the subject, but I’ll leave that for another time. Now back to the issue at hand.
So, instead of spending all that money on advertising, Godin means that you should put it towards increasing the quality of your product, thus also increasing your chances of satisfying your customers (sales people).
This seems to be a particularly wise assessment since people are getting more and more numb to traditional advertising. After being bombarded day in and day out, from multiple directions and through different types of media, it’s no wonder that we are starting to filter out all of this information. This is especially true since the majority of all those ads are not targeted at specific individuals, and so we constantly have to deal with boat loads of irrelevant information.
So what happens when people seize to take in any form of advertising, and ad related profits dwindle into nothingness? What will happen to all those ad funded products and services when advertising stops being a viable source of income?
I believe that this is already happening behind the scenes, but that it is not that apparent since the effects of advertising are difficult to turn into hard data. I think that there is a risk that we, within a couple of years, will see a collapse not unlike the IT bubble, where all ad funded businesses suddenly find themselves without income. As it is now we spend billions upon billions of dollars on advertising, and as Seth Godin have already pointed out, people are not responding as they used to.
Still, copious amounts of ad money are constantly being shifted around the world, supposedly without any real hope of actually turning into profit. Since we are used to this, and believe that this is the way things are supposed to work, I think that we might suddenly find ourselves in a situation where all the supposed value of advertising more or less turns out to be equal to dust. When that happens, I think we will see the downfall of hundreds of companies that can no longer sustain their businesses, which in turn will result in a major hit to the global economy.
There are of course alternative methods of marketing. Ad funded businesses could in theory find other ways to generate profit, but I believe that all this will happen too fast for people to adapt to the circumstances, resulting in a veritable domino effect of collapsing companies.
What will you do when that multi million dollar advertising deal of yours turns out to be castles in the air? Will you be able to handle the consequences?