Yesterday's Wall Street Journal (10/27/94) reported that CBS will have to give advertisers $25 to $40 million worth of free ad time to make up for a "severe ratings shortfall." Basically, CBS sold advertising prior to the current prime time season, and guaranteed advertisers that they would reach a certain number of viewers in certain age groups. But the network has been unable to deliver the viewers.
This is another indication of the continuing demise of old-style mass marketing. Last year, there were more than 200 articles in the Wall Street Journal detailing the ongoing problems in the advertising industry. With dozens, and even hundreds, of cable channels, with VCRs, remote control channel surfing, people are just not watching commercials any more. And on top of that, people have been so over-exposed to commercial messages that they don't believe what they do see.
In yesterday's article on CBS, there was a very interesting statistic. When it comes to reaching adults age 18 to 49, in the five-week season-to-date ratings, ABC is number one. But that means reaching only 7.4% of U.S. homes with television sets. So to sell products using the old-style mass marketing approach, and advertiser would pay millions of dollars upfront, with no guarantee of generating any sales, and if that advertiser went with the number one network they would reach a whopping 7.4% of U.S. homes.
Contrast that with the network marketing approach. Network marketing companies have no up front advertising costs, in fact they have no advertising costs at all. Their marketing costs are incurred, for the most part, only when sales are actually made.
But even more importantly, network marketing has the ability to reach people in a much more effective way than television or magazines or radio or direct mail. Network marketing can reach people -- lots of people -- on a person-to-person basis with powerful word-of-mouth advertising.
With traditional mass media you have to keep spending money, week after week, month after month in order to keep your message in front of people. In fact, a lot of mass marketing resources are spent just to maintain sales, for if you stop advertising, your sales go away. But network marketing turns that on its head. With network marketing, sales grow as your message takes on a life of its own and is repeated from person to person to person.
In his book by the same name, futurist John Naisbitt articluates the "Global Paradox" -- The bigger the world economy, the more powerful its smallest players." In this world where the individual is king, network marketing is a very effective way to market products.
Ralph Marston
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