• Edward Nevraumont

Bloomberg and What Advertising Does


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Thanks for reading and keep it simple,

Edward Nevraumont

Billionaires and Ballots

On March 4, billionaire Michael Bloomberg ended his Democratic presidential campaign. If advertising is so effective, why didn’t Bloomberg — who spent extraordinary sums on his candidacy — rise to the top of the field? In an article published the morning of Super Tuesday (March 2, before Bloomberg quit the race), the Wall Street Journal provided some context for the former NYC mayor’s strategy:

TV viewers in Super Tuesday states know this: Michael Bloomberg and his presidential campaign are on almost every channel. All day. And nearly all night. … It will be a test of whether Mr. Bloomberg can leap ahead of his primary rivals by vacuuming up a substantial number of delegates—and whether pouring more than a half-billion dollars into political advertising, including more than $160 million into TV in Super Tuesday states, will pay off.
That unprecedented amount of spending has bought him an overwhelming presence in American households in just a few short months… Through last Tuesday, Mr. Bloomberg was behind almost 62% of all the political ads from Democratic presidential candidates aired on television in the 14 Super Tuesday states. [Emphasis mine]

FiveThirtyEight posted the following chart that visualizes TV ad buys for each candidate:

If you look closely at the image, you will notice that Bloomberg is not the only billionaire to purchase a massive amount of television time. Tom Steyer — a NY-based hedge fund manager with no previous record of public office — also threw his hat into the ring for the Democratic nomination. Steyer dropped out of the race on February 29.


Citing Bloomberg and Steyer, many pundits voiced concerns about unchecked spending limits for political campaigns. The Morning Dispatch analyzed the difference between the wealthy and the super-wealthy, wondering, “$1 Billion Can’t Buy the Presidency — But Can $60 Billion?”

...beating down his opponents through financial shock-and-awe was the same play Tom Steyer had already been attempting for more than a year.
Well, we’ve learned a valuable lesson since then: There are billionaires, and then there are billionaires. Steyer’s copious spending dwarfed the field for all of 2019, but even that was pennies compared to what Bloomberg—whose $61.8 billion fortune is nearly 40 times greater than Steyer’s—has brought to bear since he declared back in November.

Bloomberg’s spending (about 2x Steyer’s, not 40x) DID seem to secure better results. Steyer dropped out before Super Tuesday, when the writing on the wall was clear: despite massive spending in Nevada, he failed to collect a single delegate. Bloomberg — who skipped the first four state contests — still managed to rack up 53 delegates, including a win in American Samoa.


Perhaps Bloomberg outperformed Steyer due to non-television spending? As noted in a New York Times article, Bloomberg also spent lavishly on social media and campaign operations:

He has hired more than 2,400 people to fuel his campaign, paying them premiums and outfitting them in sweatshirts and fanny packs bearing his name. He has opened more than 200 offices from Maine to California, with more than 100 in states that will participate in Tuesday’s coast-to-coast Democratic primaries… But behind the numbers is a robust organization that looks like nothing else in politics today, having grown so large so fast, with the goal of shattering fundamental assumptions about how a presidential candidate can win the nomination… What other campaigns took more than a year to build, with visits to fish frys in Iowa and cable news studios, the Bloomberg campaign did over the three months from Thanksgiving to Presidents’ Day…

Without question, Bloomberg’s massive campaign spend — especially on television ads — boosted his national profile. Despite outspending the field, Bloomberg never found himself anywhere near the final nomination. Why not? Haven’t we always heard two popular refrains: (1) money corrupts politics, and (2) advertising can convince people to buy anything? So why didn’t everyone “buy Bloomberg”?

What Does Advertising Do?

Let’s step away from politics and think about some fundamental concepts in advertising. We can split advertising into two rough groupings:

  • Early funnel

  • Late funnel


Early funnel advertising includes strategies to build brands through television spend — tactics that major companies like P&G have employed for more than fifty years.


Late funnel advertising covers platforms like Google AdWords, which help your company to inform people about your product when they are considering a purchase. (These techniques are sometimes called “Direct Response”).


In some ways, late funnel strategies are not really “marketing” at all. Advertising on Google bears closer resemblance to paying for good shelf space at Walmart than to creating demand with a television spot. By securing the top spot of the Google results (or the endcap at Walmart), your product becomes more “available” to the consumer. As a first step to good marketing (or at least good “business building”), you need to increase your product's availability so that people who might be interested will buy it. Here is a real-world example: I regularly buy my groceries at Safeway. The reason has nothing to do with my personal opinions about the quality of their stores or the effectiveness of their marketing. I frequent Safeway because there is a location two blocks from my house; even better, the store remains open 24 hours a day. Safeway is “winning” my household’s grocery spend because of its availability.

Awareness and Availability

For the purposes of marketing, we can think about two different types of availability. Physical availability is a straightforward idea: Safeway is two blocks away, or Expedia is at the top of the Google results. Mental availability, on the other hand, is a less tangible concept.


Marketers often quantify mental availability by identifying a brand’s “awareness.” Researchers will ask people to name as many grocery stores as possible. All of the mentioned brands compose the person’s “unaided awareness.” Next, the researchers might recite a list of grocery stores and ask which ones a person recognizes. Any affirmative responses are categorized as the person’s “unaided awareness.”


Awareness is the foundation of mental availability. If you don’t think about Safeway, then you will not visit a Safeway. A possible exception: physical availability can trump your need for mental availability. Imagine you are driving home and realize that you need an ingredient for dinner. You might stop at the first grocery store you see — even if you were not mentally aware of the store’s existence before you remembered the need for the ingredient.


Mental availability includes more than just awareness; the concept also encompasses “consideration.” As an example, awareness could be evaluated by asking, “Do you recognize the name of this grocery store?” Consideration involves more specific CONTEXT: “Which grocery stores would you consider if you wanted fresh fruit” or “Which grocery stores would you consider if you were shopping with small children?”


After narrowing a list of which brands to “consider,” you need to make a purchase decision. Your choice will be determined by not only physical availability, but also the actual product — something that matters a lot during the last step of the decision process. Suppose you wanted to buy some apples. You might consider Safeway or Fred Meyer, but you prefer the quality of the apples at Fred Meyer, which is only a few blocks farther away.


In that case, we get a flow like this:

  1. Awareness

  2. Consideration

  3. Physical Availability

  4. Product

“I know of dozens of grocery stores (1), but there are only two I would go to for fresh fruit (2). Safeway is closest (3), but Fred Meyer is not much farther away and I prefer their apples (4), so I am going to Fred Meyer to buy some apples!”


Marketing has a significant influence on awareness (#1). Advertising can be an effective way to make people aware of products' existence. Good advertising strategies can also improve consideration (#2). For instance, McDonald’s once ran a campaign to persuade people to think about eating breakfast at their restaurant. When people saw the ads, they began thinking of McDonald’s as a “maybe option” for their morning meals. Marketing can also help with physical availability. Whether that involves securing an endcap with Walmart or optimizing Google search results, marketing is often (somewhat) responsible for ensuring that products are available when customers are ready to buy. (Once again, whether you call this “marketing” or “merchandising” or “retail management” or “SEM” is fairly arbitrary — it is a strategy that companies employ to drive sales).


Here is something that marketing CANNOT domake the product better or different. Although the McDonald's campaign encouraged some people to consider the restaurant as a breakfast option, no ad could sway someone who hates the taste of Egg McMuffins. Likewise, if McDonald's marketing team had launched an ad campaign to convince people to “consider McDonalds for your next business dinner,” it is unlikely they would have succeeded — even if the ads were incredibly well-crafted. The product itself is not good enough for that use case.

Back to Billionaires

Let’s return to political ad campaigns, mindful of the ideas about awareness and availability. Michael Bloomberg (and, to a lesser extent, Tom Steyer) were able to spend extravagantly, boosting the likelihood that just about everyone was AWARE of their existence. Bloomberg’s ads communicated some of his policies and indicated how he could defeat President Trump. These ads prompted future voters to CONSIDER him as a potential candidate. Moreover, Bloomberg spent massive sums of money to build an organization that ensured he was on the ballot — providing physical availability — for the specific states he sought to contest.


Unfortunately for Bloomberg and Steyer, their ad dollars were NOT able to convince (enough) people to vote for them, instead of the other candidates they were considering. Ad dollars could not change Bloomberg as a PRODUCT. If you don’t like what he is offering, no amount of advertising will compel you to buy his Egg McMuffin.


Bloomberg and Steyer’s money got them into the Democratic race. Neither man would have appeared on the ballots — let alone the debates — without ample spending. But money alone was not enough. Once Bloomberg and Steyer stood on stage, they were no better off than the other candidates. Money allowed people to “know what they were buying,” and even to “consider voting for them.” Ultimately, though, people voted based on their perceptions of the candidate. As we learned, most people did not want to vote for Tom Steyer. Bloomberg was more successful (and would have been, with or without his money, because of his profile as a former mayor of NYC), but still not as popular as frontrunners Joe Biden and Bernie Sanders.

Final Thoughts

One last point: you can appreciate why money is more important in the nomination process than in the general election. Achieving consideration in this year’s Democratic primary was HARD — many top-tier politicians were unable to capture public attention. Additional money would have certainly helped Senators Cory Booker, Steve Bullock, and Michael Bennet (and many other of the candidates). All of those politicians could have used some of Bloomberg’s (hundreds of) millions to drive awareness and consideration. But once we get to the general election, neither Trump nor the eventual Democratic nominee will be lacking in awareness.


The final candidates might find ways to boost consideration, probably by running ads that target specific issues (“I didn’t know Biden believed in subsidizing local gardens, which is my number one issue. Perhaps I will vote for him.”). How influential are those types of ad campaigns? In most cases, the impact is marginal. Earned media is FAR more important in the general election than paid media.


Advertising is effective, but only when used to do the things it is capable of doing. We need to stop thinking of advertising as some kind of manipulative device that can magically change (other people’s) minds.


Keep it simple,

Edward


P.S., Although last week’s letter did not go viral, my tweet about the lack of toilet paper at my local Safeway was picked up by Buzzfeed.


If you enjoyed this article, I invite you to subscribe to Marketing BS — the weekly newsletters feature bonus content, including follow-ups from the previous week, commentary on topical marketing news, and information about unlisted career opportunities.

Edward Nevraumont is a Senior Advisor with Warburg Pincus. The former CMO of General Assembly and A Place for Mom, Edward previously worked at Expedia and McKinsey & Company. For more information, including details about his latest book, check out Marketing BS.