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Critics say stealth marketing is tinkering with our minds. Jeffrey Chester, executive director of the Center for Digital Democracy, dubs the phenomenon the "brand washing of America." Many ad-industry executives are worried that it could all too easily backfire, making consumers even more wary. "I'm against any form of deception," says Keith Reinhard, chairman of DDB Worldwide. "In the end, it's bad business."
Like it or not, consumers are probably going to see more and more unexpected, and undercover, pitches. That's because the old model, the 30-second TV spot, is proving less and less effective. Digital video recorders such as TiVo now give viewers the ability to banish commercials, prompting network executive Jamie Kellner, CEO of Turner Broadcasting System (which, like TIME, is owned by AOL Time Warner), to warn that commercial-supported free TV is an endangered species.
That may be a stretch, but there's no denying that the major ad holding companies are having to justify the value of their creative work as never before. They are already hedging their bets, setting up or funding alternative shops in New York City or Los Angeles with such hip monikers as Brand Buzz, Renegade Marketing Group and Interference Inc. Al Ries, a veteran marketing strategist and co-author of the just-published book The Fall of Advertising & the Rise of PR (Harper Business), says the reason is simple: traditional advertising has lost most of its credibility. "Anything you say about yourself is now automatically suspect," he says.
It is no wonder, then, that so many companies are relying on celebrities, trendsetters or even seemingly ordinary consumers to say it for them--often with no hint that money or merchandise has changed hands. The New York Times revealed that drug companies are making payments to celebrities or their favorite charities in return for their touting pharmaceutical products on talk shows: Lauren Bacall praised Visudyne as a treatment for macular degeneration, Rob Lowe plugged Neulasta to combat a side effect of chemotherapy, and Kathleen Turner directed viewers to a website for a drug for rheumatoid arthritis. Sometimes, as with Bacall's controversial appearance on NBC's Today, the celebrities fail to mention that they are being paid. Just last week CNN (which is owned by AOL Time Warner) announced that from now on, it will always disclose any such financial ties during an interview, and the three major broadcast networks have suggested that they will follow suit.
For all of TV's reach, the real action in covert marketing is on the streets. Sony Ericsson has hired a troupe of actors this summer to pose as tourists in New York City and Los Angeles and to ask passers-by to take their picture with the company's new T68i, a combination cell phone and digital camera. Vespa promoted U.S. sales of its scooters last summer with a biker gang of beautiful people who were paid to ride them around such cities as Los Angeles and Houston.