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Advertising world facing a day of reckoning

June 9, 2018 by Terry Murden Leave a Comment

Don Draper
The days of Don Draper are much-changed

Book review: Frenemies

Much has been written about the seismic shifts in the media industry, and here comes some more; a devastating assessment of the fractured state of the advertising industry which is struggling to keep its place at the top table.

The new media is a different territory to the one in which Don Draper strutted his stuff. The advertising agencies are not only unrecognisable from the Mad Men days, they are in danger of being snuffed out by new players taking advantage of changing consumer behaviour and – crucially – the widespread ability to access data.

As author author Ken Auletta puts it in his new book, the old, simple framework in which a client paid an agency to place its advert in a handful of media outlets, is being ruthlessly swept aside. Today there are hundreds of media channels, living in billions of smartphones, carrying hundreds of apps. They have largely replaced newspapers and television as the dominant forces in communicating the message and they are accessible anywhere and at any time of day.

Combine this global spread of devices with a rich seam of data and the ability to target the consumer by more sophisticated means is re-writing the advertising model.

Social media and online discussion platforms have changed the journey between client and consumer, providing more direct and alternative means to communicate, often through PR companies which now commonly supplant ad agencies. The glut of information now available has made older advertising models seem dated and static, replaced by podcasts and branded content, or native advertising, providing a product ‘story’ that is more appetising.

It is not only the ad agencies which are seeing change, the New York Times has hired more than a hundred copywriters and art directors so that its advertising sales staff no longer just sell space, but work with clients creating content. Guardian Labs has 200 staff helping brands to tell their stories, in the process turning its ad sales department into a content studio.

In this new era, old adversaries become allies, or ‘frenemies’, as they fight to keep pace with the changes disrupting the status quo. Chief among those facing change are the advertising agencies which are being forced to adapt or disappear.

The challenge is clear and relentless. PR has moved into the advertising and marketing space, providing a direct communication channel between client and consumer and exercised by the need for greater agility in a 24/7 world in which reputations can be ruined at the click of a mouse. This invasion into adland prompted WPP to respond by acquiring big PR agencies such as Hill & Knowlton and Finsbury.

In turn they are both challenged by Facebook, Google, Amazon and the emerging ‘influencer’ with his her ability to sell products by crediting them in blog posts followed by millions.

They also pose questions for those trying to keep a lid on access to private data. Facebook offers advertisers more than 1,300 categories for ad targeting.  Google has merged all the data it holds from 3.5 billion daily searches offering advertisers everything about its users from date of birth to nickname and where you last travelled.

Auletta, a US journalist and critic, explodes the myth of a world increasingly concerned about access to personal data, quoting experts who argue that social networks have created a new culture in which the sharing of information is the norm and the young are willing to trade personal data for benefits such as discounts.

This valuable data mining is not unique to the new media channels: every bank, credit card company and many others is rich in data, while the emergence of analytics has seen older companies re-invent themselves for this new age. At the end of 2015 the three largest global digital agencies by revenue, according to Advertising Age, were companies new to marketing:  IBM, Accenture and Deloitte which have gobbled up marketing companies. The market cap of IBM alone was double the combined value of the six largest advertising and marketing holding companies – WPP, Publicis, Omnicom, IPG, Havas and Dentsu.

As Auletta observes, it is not too difficult to see why this shift has happened. They already have access to top management and have been vetted for their credentials in selling the brand story. One further step is the creation of in-house marketing agencies, with companies like General Electric and PepsiCo developing internal content creators to interact with consumers online.

Common to all these changes is the availability of information and how it can be used to tap into consumer behaviour. As one professional tells the author: “We have to stop just creating ads and start creating experiences.”

Frenemies, by Ken Auletta is published by Harper Collins, £20 hardback

 

 

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Filed Under: Cover Story, Working Life Tagged With: advertising, Frenemies, Ken Auletta

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