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Ag businesses, beware of charlatans

Some ethically challenged businesspeople believe that many involved in agricultural businesses, especially farmers, are ignorant of the “ways of the world.”

As ag-related businesses, especially producers, become more aware of the competitive advantages of branding products that have been viewed as commodities for centuries, providers of advertising and other marketing services are taking notice. They see opportunities to add a new segment of customers in an era when global competition and pricing pressures from major customers are eroding their profit margins.

If an advertising agency sees lower profits from formerly reliable and sophisticated users of consumer advertising such as Procter & Gamble (P&G) and AT&T, they will begin to seek new markets that offer the potential for higher profit margins. That’s where the agriculture industry comes into play.

An understanding of the backstory will provide interesting insights into what is going on and how a changing environment will lead to seeking of new customers in agriculture by providers of advertising services.

In early 2017, Marc Pritchard, P&G’s chief brand officer, delivered a stern warning to digital media giants such as Google (owner of YouTube) and Facebook that if they did not make the measurement of advertising’s impact more transparent, P&G would significantly reduce the amount they spend in this form of communicating with its markets.

Research done by major users of digital advertising clearly indicated that advertising producers (with Google being the largest) were “stretching” their results through the use of “bots” (Web robots) that indicated that a human had been exposed to an advertisement when, in fact, only a machine had “seen” the message.

I won’t try to get into a lot of depth here, but the basic claim is that advertisers were being intentionally cheated (defrauded, if you prefer) by providers such as Google and Facebook through the use of technology that would exaggerate the audience of their digital advertising (generally measured as the number of “clicks”). That is, the providers (e.g., Google) were stealing from the advertisers by intentionally making false claims as to the numbers of people who were being exposed to their digital ads online. These practices clearly indicated that these purveyors were charlatans.

Pritchard and other senior executives of major buyers of digital advertising indicated that any seller of digital advertising who did not become “certified” by the Media Rating Council (mediaratingcouncil.org) as having valid, reliable, and effective processes (use accurate and transparent if you prefer) for measuring exposure to advertising (of any type) would no longer be able to sell their advertising services to companies such as P&G.

Billions of dollars

Since these advertising expenditures are in the billions of dollars annually, this threat was not to be taken lightly. The initial responses from providers such as Facebook and Google indicate that they are not taking it lightly. The advertisers have determined that the only way to protect themselves from such fraudulent practices (that is, to keep the providers honest), is to have humans verify the claims providers make about the size of the advertising audience.

It’s interesting to note that Facebook has hired over 1,000 employees to “police” the content of its online ads (think Russian and racist ads) since the “bots/machines” didn’t seem to be doing such a great job of that. Coincidentally, it might be possible for Facebook to assign some of these employees the task of verifying the claims as to the numbers of folks being exposed to the ads of P&G, GM and AT&T. Maybe that’s part of proactively policing yourself before your customers insist on a third party doing the policing.

It’s also interesting that in the face of all of this, P&G reduced their digital advertising during 2017 by over $140 million. Can you say disciplining those who misbehave? When you lose that type of revenue, you start to look for other places to replace it.

Enter the agriculture industry. It’s well-known that some of the large players in ag (e.g., Cargill, Tyson Foods, Archer-Daniels-Midland, Land-O-Lakes, etc.) have long understood the necessity of using their marketing activities as the foundation of building strong, consumer-facing brands. As their focus on marketing, and brand development specifically has become stronger, their level of sophistication in this area has begun to approach long-standing consumer giants such as P&G.

So, these ag giants are joining the likes of AT&T in pushing for more honest measurements of advertising effectiveness. However, there are some in the marketing and advertising industries that see an opportunity to sell their services to less “savvy” buyers who have had little, if any, experience in activities such as brand building.

Whether they refer to themselves as advertising agencies, sales promotion agencies, or more broadly marketing agencies or consultants, they are hungry for profitable growth of their revenues.

Unscrupulous

Unfortunately, there is a long history of unscrupulous folks in the areas of marketing and sales. Most of us have witnessed practices ranging from unfair to downright fraudulent when dealing with vulnerable populations such as the elderly.

Well, guess what. Some of these ethically challenged businesspeople believe that many involved in agricultural businesses, especially farmers, are ignorant of the “ways of the world.”

As someone with years of experience in both marketing and agriculture, I think these charlatans who will try to convince farmers and the broader agriculture community to spend money on questionable advertising practices and other marketing activities are in for an unpleasant surprise.

My experience has been that farmers have always been a savvy lot and are becoming even more so as modern marketing practices aimed at building direct relationships with consumers are becoming more common. Having been a professor in the “Show Me” state of Missouri for a number of years, my observations indicated that this philosophy of demanding proof of performance of new business practices is widespread in the farming community.

So, my hope and belief is that as marketers and advertising agencies inevitably look for new market opportunities in the ag sector they will be met by folks willing to try new practices but demanding that they receive verifiable proof that the money required to make these practices effective will offer a good return on the investment.

As President Reagan said about dealing with the Soviet Union on nuclear weapons, “Trust but verify!” There are numerous talented and honest practitioners of marketing and advertising that can be very helpful to you as you develop and grow your brands. But, as the old professor says, “Do your homework!”

William Smith is Professor of Marketing in the Graziadio School of Business and Management at Pepperdine University in Malibu, Calif., and a licensed realtor at Rainbow Realty in Hot Springs National Park, Ark. He has been buying and selling farmland for 40 years.

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