Abstract
If you digitised everything that humanity produced from the beginning of time to 2012, every book, painting, advertisement, photograph, article and film, from the cave paintings of Lascaux through to Bridesmaids, it's estimated it would require 500billion gigabytes of storage.
Today humanity produces 500billion gigabytes of content every 10 minutes. The curve of change ushered in by the social mobile age is Everest steep. Smart phones have turned us all into producers, directors and distributors of a tsunami of content. Digital streaming services such as Netflix, freed from schedules and advertiser-funded models, produce millions of hours of commercial-free programming designed to appeal deeply to thousands of narrow audience segments. Simultaneously, the duopoly of Facebook and Google hoover up incredible quantities of data on their users whilst accounting for 73 per cent of all US digital advertising.
The new world with its hyper-abundance of distractions has little room for the old interruptions of advertising. In his overview of this moment in time, Ken Auletta ably illustrates that, as a result, the marketing and advertising industry is in turmoil, as every Don Draper within it tries to adjust to the massive and accelerating change that digital culture is inflicting.
Confronted with this disruption, one of the colourful characters in Auletta's book quotes a brief exchange from Hemingway's The Sun Also Rises: “How did you go bankrupt?” “Two ways. Gradually and then suddenly.”
And Auletta certainly gives us a clear picture of the moment in the marketing industry where everything is suddenly changing. But the book is more of a snapshot of a moment of change than, as its title promises, an argument as to why this change matters.
Beginning with the fallout from the former Mediacom CEO Jon Mandel's whistleblowing 2015 speech, in which he revealed to furious advertising clients that at least four out of five of the big media-holding companies were routinely taking illegal and undeclared kickbacks, Auletta follows a central cast of players from both sides of the marketing industry's widening fault lines as they navigate this brave new world. From Sir Martin Sorrell, the Napoleonic (now ex) head of WPP, the world's largest ad-agency holding company, to Michael Kassan, the slickly charming founder of the intermediary MediaLink, to Bob Greenberg, the founder of agency R/GA – a man “whose self-confidence borders on the messianic” – these flamboyant masters of the advertising universe are watching their empires crumble.
Whilst Auletta's portraits can verge on the hagiographic, he provides a thorough tour of the many “frenemies” that are invading the advertising industry: consulting groups such as Accenture that are buying up agencies; publishers from Condé Nast to Disney that are building creative units that can go straight to brands (not to mention companies such as AirBnb that are creating their own internal agencies); and PR firms that are expanding their remit with brands. It appears everyone is trying to eat the agencies’ expensive sushi lunch.
The biggest appetite for that lunch comes from, of course, Google, Facebook and Amazon. Companies that are by their very nature disruptors that want to eradicate extraneous middlemen in any industry where they find them. That they see advertising agencies as more middlemen is the “existential threat” perceived by Sorrell.
Auletta highlights what we already know: that these digital giants also control the new currency of the digital era – namely, data. Reams of data, plucked from every aspect of our digital lives, often with only the slimmest consent. Data with power to nudge consumers to purchase – or, say, to sway the results of elections. Facebook used to boast that its data allowed them to predict when a couple would get engaged two weeks before the engagement happened. Post-Cambridge Analytica, they boast less. As Tim Wu, author of The Attention Merchants, notes, “when an online service is free, you're not the customer, you're the product”. And Google, Amazon and Facebook won't share that incredibly valuable product with agencies, something that makes Sorrell furious: “Amazon knows what sells and what doesn't, they provide 25 per cent of all cloud computing and they don't share their data.” Although why would they share, given the value of this data? Is Sorrell's viewpoint fair or is this an ageing prince raging against the decline of his reign?
Because data has shifted the power balance in the world of advertising. Auletta quotes Kassan as saying: “It used to be Mad Men. Then it became Media Men. Now it's Math Men.” And the Math Men of Facebook, Google and Amazon have a vision of advertising that is about relevance rather than creativity. Their bet is that serving personalised “programmatic” adverts that use the data they hold on where you are, how you voted and where you went on holiday to better persuade you to buy a product will trump the Smash Martians and Guinness Surfers of old-world advertising. When she joined Facebook from agency-land, Carolyn Everson, Facebook's vice-president of Global Marketing Solutions, remembers, early in her job, when she would use the word “magic” to talk about the power of a creative ad. “The engineering folks said: ‘We don't use the word magic here.'” Indeed.
But the agencies are trying to fight back. As the frenemies descend on their turf at the same moment that consumers increasingly avoid, fast-forward and block advertising, the more nimble shops are changing. “What I'm interested in is to have a new model to replace the traditional agency model,” says Bob Greenberg of R/GA. “People want to interact with brands and avoid annoying advertising.” So the advertising agencies are evolving beyond the advert. Tesla does no advertising, but its stock is above that of most other companies – at least it was until Elon Musk began insulting heroic cave divers. Designing the Apple store as a tourist attraction has been a brilliant marketing tool for Apple, and brands such as Red Bull are rewriting the contract between advertiser and advertised, creating entertainment rather than interrupting it.
Behind all this change is the fact that people don't like ads. Never have. And technology is now allowing them to avoid them. So they do. Of course.
Behind the fretting over Google and Facebook is the truth that the consumer is the ad industry's greatest frenemy. They always have been, but the balance of power is now shifting in their favour, leaving advertising looking like carriage-makers confronted by the Model T.
Auletta notes this, but is on the side of the Ad Men and is rooting for them to change. He is of the view, along with Rishad Tobaccowala, chief growth officer of Publicis Groupe, that although “people say agencies are dinosaurs”, in fact “we are not dinosaurs. We are cockroaches. Everybody hates us. Nobody likes to see us. But cockroaches have outlived everyone”.