3. How ad agencies lost the media business
Ken Auletta's highly-anticipated new book "Frenemies: The Epic Disruption of the Advertising Industry (and Why This Matters)" is out and there are some juicy details about how the most powerful global ad agencies went from being agents of strategic vision to vendors.
Some of the major themes and excerpts:
- Corruption from kickbacks beginning mostly in 2015 has caused a massive trust gap between agencies and marketers, creating an opening for consultancies to come in and drive strategic vision for advertisers.
- Cost pressures from clients causes agency pay to plummet, leading to mass volatility in employee retention. "A LinkedIn survey ... found that when nine industries were ranked by ten questions, advertising came in last in “work/life balance” and ... next to last in “comp & benefits,” “strong career path."
- The consumer is in control, and now increasingly the challenge for advertisers is to create experiences that people will flock to. Auletta cites ad tech mogul Rishad Tobaccowala of Publicis, who said consumers began to drive the power in these relationships beginning with the rise of the smartphone in 2007.
- Fear of the robots rocks the advertising industry, which collectively "worries that what they think of as their art—big creative ideas—will be replaced by machines weaponized with data and algorithms and artificial intelligence."
- The CMO feels trapped: "Their CFO or procurement officer demands that the company stop wasting money on false clicks and ads that were paid for but never delivered to an audience. But how?"
- New frenemies have begun to take hold. Clients fear agencies and publishers jacking up prices, keeping margins, and passing off additional costs to the marketers. Agencies have become fearful of ad tech companies and big tech, as well as publishers creating their own in-house agencies that compete with them. Consumers are also frenemies, as they control ad blocking and the direction of advertising trends.
There are two chapters devoted to two of the biggest media heavyweights: MediaLink's Michael Kassan, and WPP's Martin Sorrell.
- While many groups and people are labeled "frenemies," there's also a chapter devoted mostly to Facebook titled "Frenemies."
- The book also touches on major themes of advertising disruption, including privacy, big data, native advertising and new technologies.
The book name drops: Michael Kassan, Rishad Tobaccowala, Anne Finucane, Beth Comstock, Linda Boff, Meredith Kopit Levien, Lou Paskalis, Martin Sorrell, Keith Weed, Jon Mandel, Bob Liodice, Brian Wieser, Adam Smith, Maurice Levy, Charlotte Beers, Irwin Gotlieb, Laura Desmond, Bill Koenigsberg, Dave Morgan, Wenda Millard, Bernhard Glock, Paul Starr, Naomi Klein, Tim Wu, Jeremy Bullmore, Bob Greenberg, Randall Rothenberg, Wendy Clark, Keith Reinhard, David Sable, Jeremy Bullmore. Carolyn Everson, Howard Weitzman, Michael Roth, Tim Andree, Les Moonves, Shelly Palmer, Jack Haber, Marc Pritchard, Brad Jakeman, Alan Cohen, Gary Vaynerchuk, Don Baer, Joel Benenson, John Wren, Maurice Levy, Bill Koenigsberg, Maurice and Charles Saatchi, Kenneth Roman, David Ogilvy, David Moore, Keith Reinhard, Nick Brien, Nick Brien, Andrew Robertson, Harry Kargman, Rob Norman.
Go deeper: Consulting firms put the squeeze on ad agencies.