Blogger: Mike Gotta
I thought these two articles published by Knowledge@Wharton on advertising and marketing stood out when read together. The first article (see below), while focused on advertising, does raise the thought of how social media can be included as a key component to marketing strategies. The second article (also included below) examines the risks of aggressive forms of promotion that ultimately prove to be deceptive or otherwise unacceptable.
Why is this important?
Enthusiasts often point out the need for authenticity and transparency when it comes to effective use of social media. That viewpoint may seem naive to some, based on a simplistic view of how the world works (after all, the skeptic would believe that ultimately, the point of marketing is to improve brand, sell products, etc). However, there is a true cautionary tale here. Strategists exploring use of social media do indeed need to be aware of its risks and the dynamic (re: unsettled and undefined) regulatory environment under which they may be operating.
I was recently talking to a client in a regulated industry who is closely tracking what the FDA is doing which is outlined in the third article below. If you are an FDA regulated industry, the last article citation below should be of direct interest.
Bottom Line: Social media is no longer about marketing and should not be owned by marketing groups. Social media initiatives need to be governed as other strategic initiatives that cut across many business areas - including legal, audit, compliance, and so on. IT organizations need to be much more closely involved with social media initiatives. Security and identity issues are becoming more apparent. The situation is not about "saying no" to such efforts but making sure that decision-makers are aware of the risks and that proper risk mitigation efforts are undertaken as the business moves forward with social media strategies.
Will the Future of Advertising Be a Blend of Old and New Media? - Knowledge@Wharton
It hasn't caught on yet in the U.S., but a global ad campaign for Unilever's army of laundry detergents -- sold in Asia as Omo, in France as Skip, and by other names around the planet -- hailing that "Dirt is Good," is considered by experts to be a perfect example of a new path for marketing in the 21st century.
The marketing push merges memorable images of children splashing in mud with a customer-engaging social message -- "every child has a right to play and explore." Some claim the ad helped push Singapore to increase recess time at its academics-heavy, stress-inducing schools.
The early success of Unilever's advertising strategy is exactly the type of information that company marketing executives and ad agencies need to discuss as they struggle to develop new ideas to handle the cataclysmic changes in technology and communications -- from Tivo to Twitter -- that have altered the ways companies interact with customers. But until now, there has been surprisingly little coordinated effort to re-invent the science of advertising or to rewrite the basic manual of what advertising strategies don't work and which ones do -- and under what set of circumstances.
Value Destruction: The Cost to Companies That Engage in Deceptive Marketing - Knowledge@Wharton
On September 2, Pfizer agreed to pay $2.3 billion to settle civil and criminal allegations that it violated federal rules governing drug sales. The pharmaceutical manufacturer was charged with illegally promoting its pain-killer Bextra and three other medications by offering doctors speaking fees and subsidized trips to resorts, among other benefits. The settlement was the largest ever levied against a U.S. company.
While the amount of the settlement is significant, the indirect costs to the company may be even higher over time in terms of lost shareholder value.
A new research paper now puts a price on the less tangible costs to a company's value that can arise when marketing efforts backfire. Titled "Regulatory Exposure of Deceptive Marketing and Its Impact on Firm Value," the paper examines declines in financial market value experienced by drug companies that have been the target of deceptive marketing citations by the U.S. Food and Drug Administration. The paper's authors are Diana C. Robertson, a Wharton legal studies and business ethics professor; Sundar Bharadwaj, a marketing professor at Emory University's Goizueta Business School and currently a visiting professor of marketing at Wharton; and Martha Myslinski Tipton, a marketing professor at Singapore Management University.
Public Hearing on Promotion of FDA-Regulated Medical Products Using the Internet and Social Media Tools
National Transportation Safety Board Conference Center
429 L’Enfant Plaza, SW., Washington DC, 20594
The Food and Drug Administration (FDA) will hold a public hearing to provide an opportunity for broad public participation and comment on promotion of FDA-regulated medical products (including prescription drugs for humans and animals, prescription biologics, and medical devices) using the Internet and social media tools. FDA is seeking participation in the public hearing and written comments from all interested parties, including, but not limited to, consumers, patients, caregivers, health care professionals, patient groups, Internet vendors, advertising agencies, and the regulated industry. This meeting and written comments are intended to help guide FDA in making policy decisions on the promotion of human and animal prescription drugs and biologics and medical devices using the Internet and social media tools. FDA is seeking input on a number of specific questions but is interested in any other pertinent information participants in the hearing would like to share.