I've heard that companies are now using advertising created by customers and hobbyists online. Are these ads inexpensive enough for a small business to use?
—J.C., Tacoma, Wash.
Over the past couple of years, major consumer brands such as Sony (SNE), Doritos (PEP), and Dove (UL) have tested what are called "consumer-generated ads." This means that instead of using advertising agencies to write and film TV and Internet advertising, the ads are created by customers (BusinessWeek, 2/19/07) using their own ideas and technology.
In a sense, this newfangled approach is a throwback to the last century, when companies did "man on the street" commercials soliciting customer endorsements and held brand jingle contests, often awarding their merchandise as prizes to customers who coined the catchiest slogans. What's different today, of course, is that motivated amateurs not only come up with clever ad copy but also the acting, music, and video to go along with it, says Neil Perry, acting chief executive officer of XLNTads, a consumer-generated-ad firm in Conshohocken, Pa. And instead of getting merchandise as compensation, they expect to be paid.
However consumer-generated advertising costs one-third to one-quarter as much as professional TV and Internet advertising does, Perry says. "A small company could walk away with a finished piece of creative for $60,000, whereas a [professionally produced] 30-second spot on network TV would cost in the range of $350,000 to $375,000," he notes. The video (BusinessWeek.com, 1/16/07) that results can be used on a company Web site or as a paid ad online, or a small company with a bigger ad budget could buy incremental television air time, perhaps in a local market.
"The fundamentals of this new trend make it ideal for smaller businesses and emerging brands. A new company can reach out to ad creators and videographers online with a few key pieces of their business model—their logo, brand description, or tagline—and ask consumers to create an ad around that," Perry says.
Even if the business winds up not using the material in an ad campaign, the feedback it gets about how its brand comes across can be invaluable—particularly to startups. "These consumer ad makers, acting much like a large focus group, can give the new company ideas for messaging and ad campaigns because they help the business owner gain a better understanding of how consumers view their new product or company," Perry says.
Although consumer-generated ads are typically not as slick as professionally filmed and edited ones, technological advances now allow hobbyists to produce commercials that look similar to what the pros turn out. Creators of these ads tend to be young people looking for experience and exposure, Perry says. "They see themselves as budding film and TV directors. They're not in it for the money yet, they just want to get their product seen. At the very least, they want to be able to call their moms and let them know their work is appearing online."
Perry's company takes work orders from business owners looking for new ads and posts them online, where creative types looking for jobs can submit their ideas. He typically gets 100 ad submissions for every work order he posts, he says. While 20% may be unusable, the top 20% are generally quite good. "You could pick up these ads and put them on cable TV tomorrow and feel comfortable that your company, product, or service was represented pretty professionally. Of course, you won't have a GMC (GM) truck sitting alone on a mountain peak being photographed by a helicopter, but for many small companies a less slick presentation can be good. It's more sincere, has less advertising words in it, and contains a real message from real people talking about your company."