Adweek 2000 Media and Technology: Everything Old Is New Again

Sure they've got new high-tech tools at their disposal, but the admen of the future will face the same old challenges Imagine an average day at an average advertising agency in the waning hours of the second millennium. Suddenly, inexplicably, a mysterious cloud forms above the agency's offices and slowly descends on the staffers. As its vapors creep under closed doors and seep through the ventilation system, they fall into a deep magical sleep, like Sleeping Beauty under the Wicked Fairy's spell. One month, one year, one decade and then another passes, and still they slumber. Then one day, the magic cloud disappears as unaccountably as it came. When they awaken, the calendar reads 2020. Will they recognize their industry? With all due respect to Jules Verne visions of the future, the answer is yes. That's the funny thing about the future: Much of it happens in retrospect. In the early '80s, "The Future of Media" conferences rang with the cry that cable TV was coming. No longer would audiences accept the lowest-common-denominator, mass programming of the networks. Instead, they'd roam the expanded dial to satisfy their individual tastes. It happened as predicted. But it took a decade before cable was fully integrated into media buying. It was six years more before optimizers, computer programs utterly indifferent to any distinction between network and cable, came to the fore. In the '80s, "integrated marketing" was a much-flogged buzzword. But between the dream of integration and its realization stood institutional inertia and long-held prejudices that separated glamorous "above the line" services from those "below." It is only in the last few years that agencies began realigning their resources to provide integrated strategies and service--and there is a long way to go. Albert Einstein said that everything should be made as simple as possible--and no simpler. A corollary is that the future happens as quickly as possible--and no quicker. Says Paul Woolmington, president of Young & Rubicam's The Media Edge, "The world of advertising as we know it will be around for a long, long time." So when our sleepers awake, it is safe to say that much will be familiar. Marketers will still want to make their brands known to masses of people because, as Bartle Bogle Hegarty chairman John Hegarty points out, fame is something no brand can do without. There will be events that attract multitudes of domestic and global eyeballs, and they will be more valuable than ever. A client who wants 5,000 gross ratings points will be able to get them. TV commercials as we know them will still exist. The cult of "great work" will be flourishing, and there will be agencies that make a good living creating great ads. Yet everyone in the ad business must know that the "old ways" will operate in new and as-yet-unknown contexts. Media advertising will no longer be the revenue engine of the industry. In fact, this has already happened; Omnicom and WPP now report that more than 50 percent of its revenues come from below the line. As media-based compensation takes its last breath--another long-predicted "future of advertising"--the line between "above" and "below" will disappear. The goal of mass awareness won't change, but the art of creating it will. In a world in which the consumer controls the communications process, mass attention will be built from the bottom up as well as from the top down--in part because top-down marketing will be so expensive. From 1999 to 2000, the cost of a 30-second Super Bowl spot leapt from $1.6 million to $2 million or more, an increase of 25 percent; at this rate, the same 30 seconds would sell for around $20 million in 2010 and more than $200 million by 2020. Thus, the much-touted Super Bowl ad may serve as the culmination of the fame-making process rather than its beginning. Even if everyone in the early '80s knew that cable would fragment the marketplace, they didn't yet know what to do about it. Today, the erstwhile "advertising" industry understands that the great digital convergence is in motion, but it's unsure where it will take them. When our enchanted ad agency regains consciousness in 2020, broadband television, projected by Forrester Research to be in 24 million households by 2004, will be a fact of life in most American homes. This appliance will at once be a passive entertainer, communications device, information retriever and gatherer, game player and shopping mall. At the same time, Generation Y will be at the high tide of household formation, its oldest members entering their middle years. Multitaskers from a tender age, they will bring their everything-on demand-anytime-anyplace expectations with them. No one really knows what will happen when, beginning around 2010, these enabling technologies and this enabled generation meet. When they do, the future will have arrived. Broadband will be the moment of truth for the ad business because it will transform television, advertising's home turf. The ad business invented television. Will it continue to do so, as TV evolves from a medium people watch to one they also use? If it doesn't, it will end up on the wrong side of the future. "We [in advertising] are a very reactive kind of animal, and I don't think that's stood us in particularly good stead," observes Chris Clark, executive vice president of business development at Bates North America. True, reactive behavior is a distinct disadvantage for businesses that need to rush into the future, and the ad business is already suffering from it. Witness its inability to recruit the best and the brightest. But there are limits to what the ad business can do. The nature of the business is such that it can't move any faster than its clients, the media and, above all, the consumers it hopes to influence. On the other hand, it can't move any slower than them, either. The client of the future may still want 5,000 gross ratings points, but if that's all an agency can give them, it will be a bit player. Conceding that there's an inevitable lag between the promise of the future and its realization, Woolmington says, "You don't want to get too far ahead of clients. But if you don't get fit for the future in advance, it will be too late. The question is--how to do it in a relevant, controlled way. " Part of the answer may lie in the name game. What's in a name? A lot, based on the number of erstwhile ad agencies which are greeting the millennium as "marketing communications" companies. While "advertising" is not a dirty word, it says "20th century," not 21st. The move to integrated marketing was motivated by the desire to create new revenue streams. It still is, but at the end of the '90s and into the next century, it is driven by something more urgent: elusive consumers who don't know above the line from below, and clients determined to reach them. "The nature of clients is changing. They come with less baggage," says Eric Salama, WPP group director of strategy. "IBM and Ford are looking for solutions to the problems they have. They're not looking to do better advertising." In the bull-market '90s, holding companies and the international shops within them have been accumulating businesses that supply these solutions. At the same time, businesses such as telecommunications, packaged goods, banking and automobiles have been acquiring and merging within their industries. Ditto in the media industry. As these global oligopolies coalesce, a marketing communications oligopoly will quickly take shape between them. In the not-so-distant future, there'll be about five truly global marketing megaliths, either Anglo-American or Japanese. The move toward consolidation is far from over. Yet it's also true that owning the resources clients need will not be enough. How should agencies combine the grab bag of interactive shops, sports promotions companies, research outfits, identity firms, retail consultancies and the like that the holding companies have been collecting so that they add up to solutions? Says WPP CEO Martin Sorrell: "There's no point in a communications company existing unless they add value to their clients and to the people who work for the company." Nor is it just a matter of blurring the line demarcating above and below the line. Ironically, that is today's solution to yesterday's problem. Tomorrow's problem, says Woolmington, is the vertiginous blurring between "what is a marketing channel and what is a business channel." The confluence between branding strategies and corporate strategies in the past few years has turned consultants into ad business rivals. As convergence goes to the next level, agencies will face even more competition for access to the corner office. "Both the consultants and the agencies want to be able to say smart things to the CEO. They both want time in his office, says Sam Hill, the once-and-future consultant who did a one-year tour of duty as worldwide planning director at DMB&B before co-founding Helios Consulting Group. As the competition between consultancies and agencies illustrates, shops are at a disadvantage when it comes to battling for face time with the CEO. Unlike consultants, agencies do not have marketplace permission to charge for their thinking. "Agencies lead a schizophrenic life," says Clark. "Our financial success is predicated on grabbing media dollars. So we give the most valuable piece--our thinking--away to grab the media piece, which is just a commodity." Which brings us to agencies' next disadvantage: talent. Beginning in the '80s, the ad business began decreasing its investment in personnel training. The result is that when American agencies needed intellectual firepower in the '90s, they had to import it from London. Sorrell, in the what's-in-a-name spirit, insists on calling WPP a "parent," not a holding company, and touts the agency's cross-disciplinary employee training programs. "The biggest indictment of the industry is its total lack of interest in developing and attracting young people," he says. Now, after almost 20 years of neglecting their own, the ad business has to compete with a host of start-ups flush with Wall Street funny money that can promise young talent instantaneous paper fortunes. Agencies compete for access to a CEO's office with the same people they once had on salary. But buying brains through acquisitions only goes so far. Agencies and holding companies that lack skills and expertise will have to go outside. Hill says the emphasis on acquisitions has been based on a "department-store model, with one-stop-shop capability." He suggests thinking in terms of a mall instead, in which agencies bring more value to their clients by way of informal alliances and handshake agreements with outside firms. "It's a way of working with people you'll never own," Hill says. "You'll never own McKinsey, you'll never own Goldman, Sachs. Alliances allow you access to better quality people." Salama calls it the "Hollywood producer approach," bringing together different skill sets wherever they can be found. The bad news the future brings to marketers is that consumers will become more elusive as their media options proliferate. The good news is that wherever they wander in the dense media forest, they'll leave a trail of bread crumbs for marketers to follow. In the age of broadband, the prophets declare, marketers will know what specific households watch, what ads they see and whether they respond to them. Their behavior as TV viewers will be combined with their behavior on the Web. That, in turn, will be crunched with data on what they do and buy in the "dirt world" to create a single-source portrait of the complete consumer. Targeting audiences by demos will seem like performing brain surgery with a chain saw once mass-customized messages can be aimed at a couple with two children under 6 and a taste for vintage movies and bagels. Or the bachelor baseball fan who drinks imported beer and travels frequently on business. Or the overweight single mother who watches VH1, frequents chat rooms and drives an SUV. Two observations inevitably accompany this vision of a data-rich future. The first is that John Wanamaker's rule--the apocryphal observation that half of any ad budget is wasted and no one knows which half--will be overcome. The second is the invocation of the Holy Grail: establishing advertising as a predictable science, the blessed condition generations of ad pros have prayed for. Even now, consumer data is being stockpiled, online and off, in hopes of generating the critical mass that will blow open the black box of consumer behavior. But then, the whole point of the Holy Grail is that one never finds it; it's a metaphor for what is ardently desired yet eternally elusive. The dream: that marketers will never waste a penny reaching an unlikely or uninterested prospect, and that consumers will never see an ad irrelevant to their desires. In the early days of the Web, observes Michele Slack, online ad analyst at Jupiter Communications, "Everyone was saying that this was the most accountable medium. But it turns out it's not so accountable." Click rates, subsequent research has shown, do not predict the likelihood that a consumer will take a "desirable action." Nor does response data reveal the cause or motivation of the action; they merely set up a correlation. Finally, there's no way of knowing how an encounter with a brand on the Web affects a purchase in the brick-and-mortar world. No one yet knows how to meaningfully combine online and offline data. Plus, it's expensive. Says Slack: "The data loop has not yet been closed." Can it be? Consider an example from old-fashioned direct mail. Anyone who contributes to a charity knows that her mailbox will soon be flooded by solicitations from other charities. But is one who gives to cerebral palsy likely to respond to a plea for aid to starving children abroad? Or is some other behavior--subscribing to The Economist or a history of travel to the developing world--more predictive of an interest in global welfare? Which are the "relevant" behaviors that "relevant" messages should target? An increase in the amount and detail of data alone cannot answer these questions. They may not be answerable. And if they were, the answers cost so much that they aren't worth finding out. While the mountains of consumer data may never reach to the heavens of one-on-one marketing, more information about how consumers behave will have a profound effect on the ad business. The line between general advertising and direct response will blur. As advertisers learn how dimensions such as time of day affect response rates, Kevin Coyne, director of media and new technologies at Bates North America, says the ad business will be more focused "on how you are going to communicate to the consumer, not just what you are going to say." The old metaphor of the ad "campaign," with its suggestion of a sustained assault, may yield to a more fluid model in which ads are always in test mode. Agencies "will need to make changes more quickly," Coyne says. "There will be more pressure on results. Clients will say, 'Show me that something works.' " Forrester Research analyst Chris Charron predicts that advertising will go "from a reach/impression basis to a performance basis." Dollars now invested in the "awareness" stage of the marketing model of "awareness, consideration, preference, purchase" will migrate to later stages. Charron calls it an "advertising value shift." In the future, he says, "the value of just an impression will be very small. What good is [creating an impression] if you don't sell the product?" Charron's question is central to the fate of "traditional" advertising. What will be the value of "just an impression?" To Hegarty, who has said the Wanamaker rule is "probably the most stupid thing ever said about advertising," such talk betrays an ignorance of brands' function as public meanings. "A global brand," Hegarty points out, "isn't something that everyone in the world consumes. It's something everyone has heard of." Performance-based metrics by definition cannot measure the branding impact of the perceptions of those who don't buy a brand. But immeasurable is not the same thing as valueless. Advocates of creativity and advertising's mission to create public meaning, such as Hegarty or Jeff Goodby, can take comfort in the knowledge that the same technologies that promote performance-based metrics increase the value of branding intangibles at the same time. As B. Joseph Pine II and James H. Gilmore claim in their book, The Experience Economy, "The Internet is the greatest force of commoditization ever known to man." Creativity is arguably the most efficient way to create those intangibles and more cost-effective than a thousand algorithms churning a database. Whatever else the future brings, it won't decide whether advertising is science or art. When our slumbering ad agency wakens, the business will still be searching for its Holy Grail. The Jetsons' vision of life on the other side of the millennium is usually painted as a paradise of consumer convenience. They'll never have to wonder if they've "Got milk?" because their refrigerator will know when they are running low and automatically order more. When they want to make a purchase, they'll type or speak the name of the product category into one of their networked devices, which will scope out brands, features and prices. Or they'll search dozens of stores for a global selection. Maybe they'll post their need or desire in cyberspace and companies will come to them. Perhaps they won't think about the purchase at all, relying on an intelligent agent to fill their shopping cart with the right brands at the best prices. In this Jetsons version, networked devices, both wired and wireless, will keep consumers connected to each other, the resources of cyberspace and all other networked devices at all times. Every point at which the networked world passes through their lives provides an entry for marketing messages. And all today's interactive entrepreneurs know it; virtually every wanna-be in the constantly morphing world of network interactivity is counting on revenue from advertising to make his stock options soar. The one-on-one enthusiasts speak of a world in which consumers will only get messages they find relevant or which they requested because they'll have the power to avoid everything else. But the flip side of that vision is they will also live in a world completely saturated by marketing messages. The more networked consumers are, the truer this will be. Will advertising endure to 2020? The real question is: Will anything that's not advertising endure. With technological convergence, the consumer will experience other kinds as well. One is the convergence of advertising and information on one side and advertising and entertainment on the other. Today on the Web, says Charron, "We see traditional media sites that are becoming more interested in e-commerce. And we see commerce sites looking for advertisers. A Dow Jones and an E*Trade both need to work together." Broadband technology ups the ante. Today, J. Crew and American Eagle vie to dress the stars of Dawson's Creek and feature its stars in a catalog. Tomorrow, Dawson's Creek will be a catalog, the duds purchasable right off the backs of the characters with a click of the remote. Another convergence is one between the consumer and the marketer. The tie that binds is information, not just the kind that consumers passively leave behind, but the kind they actively provide. As the privacy issue becomes more visible, consumers will demand more control over personal information. That doesn't mean they won't surrender it, provided they are asked for it, paid for it or get something free in exchange. Marketers are now paid for identifying and targeting consumers; they make their living doing qualitative and quantitative research and matching audiences to brand messages. In the future, consumers will be paid to identify and target themselves; they'll take the marketer's job on their own shoulders, much as ATM users have assumed the tasks of the bank teller. Amazon.com, that paragon of e-commerce, has branded itself by gathering information from consumers and then returning it to them in the form of services, such as product recommendations, sales rankings and reader reviews--a literal case of consumers creating a brand. The same networks that offer marketers portals into consumers' lives also allow them to talk to each other. In fact, this many-to-many communications capability is the one characteristic of the Internet that is fundamentally new. Every other practice in dot.com-dominated cyberspace is borrowed from the one-to-many world and has been in use from time immemorial: direct response, catalog merchandising, promotional giveaways, contests, sales pricing, image-building, co-promotions, couponing and, of course, advertising. Thus, the race is on to commandeer noncommercial "civilian to civilian" communication for use by commercial interests. It can be done by hook (friends-and-family recruitment, brandcentric online "communities") or by crook (creating fake word-of-mouth by cyberstealth). We won't have to wait until 2020 before we'll all be in the marketing business. One does not go to a "Future of Advertising" conference to hear that advertising is not going to change. And surely there are many ways in which the business is in flux. Old-line agencies are not where clients now go to create their branding/e-commerce presence on the Internet. Online ad service companies resemble ad agencies circa 1870. Personal video recorders and digital set-up boxes, Coyne suggests, may come to function as networks that sell masses of individual eyes. Old institutions will morph or fade, while new ones come to the fore. The elusive consumer--always demanding more for less and increasingly empowered to get it--will see to that. "One has to begin with the fact that the consumer is the center of the universe," says Woolmington. From there, the future belongs to those businesses, existing and yet-to-be-invented, that know how to understand, reach and enable consumers. On the other hand, there is very little that the new marketing technologies can do that isn't already done by old ones. Their impact is more quantitative--more choices and greater speed--than qualitative. In the 1950s, James Webb Young, then doyen of J. Walter Thompson's creative department, was asked how the ad business had changed in the course of his career, which began in the teens and encompassed the rise of radio and television. His response: It hadn't. Read the ad trade journals of the 1920s and you'll find that agencies at the time were consumed by the same issues that obsess the business today: unprecedented consumer choice, rapid technological change, increasing competition for audience attention, mounting advertising clutter and the growing demand of consumers to be treated as individuals. Every generation has a future it both fears and hopes to conquer--and it's always the same future, yesterday, today and 20 years from now.

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Adweek 2000 Media and Technology: Everything Old Is New Again

Debra Goldman

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Debra Goldman