Some developments will resonate for years. Others may be forgotten by spring.
Find a comfy chair, pour some coffee, flip through back issues of the magazine, ask colleagues what they think the biggest events and trends were in the past 12 months, and voilà! History!
That's the trouble with year-in-review stories. They feel certain and unshakable. But have a look back in a few years, and things look a little different. Some events —the dot-com collapse, for example—prove monumental in the evolution of the business. Others—such as the big-budget consolidations of client business—garner huge headlines, only to fade quickly in importance.
So this year we set ourselves a different task. Rather than simply recap the top events, we go a step further—looking at the 10 biggest stories in the ad business from 2003 and divining, for each one, which developments really mattered and which didn't. Will people be talking about WPP's acquisition of Cordiant a few years from now? How about Nike v. Kasky? All those big media consolidations? Product placement? The obesity epidemic? Spam?
Here are our best guesses.
2003 was supposed to be the year media-ownership rules were relaxed, allowing TV networks to own stations reaching 45 percent of the country (up from 35 percent). The implications of such a change are huge: Media groups say it would help them grow and stay competitive. Those opposing it fear the consequences if a handful of companies were to control what Americans watch, hear and read. Congress and the FCC haggled this fall; by early December, Congress agreed to a cap of 39 percent. But with final passage not complete, and a hearing to address the very legality of the rules scheduled for February, the tussle is beginning to look like a reality series. Call it Survivor: Capitol Hill.
Massive media reviews resurfaced in a big way late in 2003, as Coca-Cola, America Online, MasterFoods and American Express launched searches with combined billings of almost $1.4 billion. McDonald's was lovin' consolidation, too, parking its $1 billion global media business at Omnicom's OMD this month. But big names and big budgets do not a meaningful trend make. The recent uptick seems more a sign of business getting back to normal than a paradigm shift. The surprising thing, in fact, is that more clients didn't use the recession as an excuse to review their media business—asking shops, of course, to put their media clout to the test.
In signing on as presenter of ABC's Extreme Makeover: Home Edition, Sears has become one of the highest-profile advertisers in the abbreviated annals of product placement—the practice that promises to surpass the 30-second spot in terms of brand-building power. Lowe's and Home Depot have both been, um, em-bed with cable's Trading Spaces, and all three branded-entertainment initiatives bank on a close connection between program content and the clients' products. But Sears' is a prime-time network initiative, putting it in a whole different neighborhood. If it doesn't move sales, it could put a damper on the product-placement phenomenon. But if it's a success—and it's a good bet it will be—there won't be enough channels in prime time to satisfy all the advertisers who come flocking.
Should you be a struggling mass retailer trying to distinguish yourself, here's what not to create: another boring 30-second spot. The Kmart work that Grey unveiled in October—its first ads for the client since winning the account in August—is a textbook example of why advertising in a fragmented media world is often so stunningly ineffectual. With its montage-happy series of vignettes featuring shiny, happy, diverse people, the campaign is not only painfully reminiscent of a host of ads that came before it, it has the same numbing visual feel a couch potato gets while desperately flipping through channels, looking for something to watch. What this brand needs is something more than blue-light specials, Joe Boxer, Martha Stewart and ideas that are 30 seconds long.
When the age of the personal video recorder dawned, the fevered talk was about how the time-shifting, ad-skipping technology introduced by TiVo and ReplayTV would reinvent the world as we knew it. It still might; it just likely won't be TiVo and ReplayTV doing the reinventing. In the final analysis, cable operators may end up with most of the market. Time Warner Cable introduced PVR services in more than a dozen markets in 2003. Cox, Comcast and Charter did so on a more limited scale, with a promise to go broader. The market is heating up considerably: Earlier this month, Cablevision changed strategies, ordering up PVR-enabled set-top boxes rather than wait for a technology that wouldn't necessitate new boxes. Either way, it looks like PVR will soon achieve critical mass, and that the technology itself—not the companies that spawned it—will be the thing that ends up a household name.
After years of anticipatory buzz, TiVo finally hit its stride in 2003, embarking on a joint venture with DirecTV (which brought in almost three-quarters of the 200,000-plus subscribers TiVo gained in the third quarter) and signing up its 1 millionth customer in November. But if its stock performance is any indication, TiVo the company may have peaked, even if TiVo the phenomenon hasn't. The stock hit a 52-week high of $14.51 in July but has trended downward ever since—trading at about half that figure last week, even as the market surged. Don't blame the technology. DirecTV has had trouble keeping up with demand for its TiVo offer. But the aggressive plays of cable operators—whose PVR services come packaged snugly inside the cable box, not in a separate component—may doom TiVo to the role of also-ran in the revolution it started.
Most of the famously missing 18-34-year-old men—the ones that the broadcast networks claim Nielsen simply misplaced this fall—are likely gone for good. They ain't coming back to network TV. In late November, Nielsen tried to quell critics with a report that suggested "methodological improvements" to its measurement system accounted for 40 percent of the drop. But the rest comes down to this plain fact: Plenty of other burgeoning entertainment forms are drawing young men away—and we're not referring to the Great Books. The one thing that doesn't make much sense is the claim that DVDs are a major factor. The Internet and videogames are far more alluring alternatives to TV than what is essentially an improvement on the videocassette.
Nielsen's effort to measure product placement—announced this month—is well-intentioned and will get clients excited. But don't expect it to transform the measurement universe. The service, scheduled to be up and running in prime time by February, will detail which products are showcased on which shows, and that data will be merged with minute-by-minute ratings information. But the system will be incomplete at best, since brand messaging itself—like those hard-to-miss Mini Coopers in The Italian Job—is a moving target. Ad messages are getting imbedded in unusual places, so limiting tracking to TV misses the big picture. If Nielsen were also to track branding on DVDs, in viral marketing and within The Sims, it'll be onto something.
Even Congress is getting into line extensions. President Bush last week signed into law the Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003. The sequel to this year's mega-hit National Do Not Call Registry for telemarketing (which has 50 million happy customers), the so-called CAN-SPAM Act calls for the creation of a do-not-spam list that people can join to block unwanted marketing and porn e-mails. Fines for violations could reach $6 million. It won't stop spam entirely, but it should thin out in-boxes significantly and make opt-in e-mail a useful marketing tool again. It also marks the first time a piece of legislation will benefit legitimate advertisers, consumers and, from the looks of the typical in-box these days, Paris Hilton.
The offensive by Ralph Nader's Commercial Alert to require product placements to be disclosed "when they occur" in programming made for some tasty sound bites but probably won't amount to much more. In September, the consumer watchdog group petitioned the FCC and FTC with its request, calling product placement "an affront to basic honesty." The Freedom to Advertise Coalition (made up of the 4A's, the ANA and other advertising organizations) countered that the idea of as-it-happens disclosure "borders on the ludicrous." Some predict that programmers will be asked to disclose advertisers at the end of their shows. But that's hardly a big change: Game shows and talk shows have observed those kinds of rules for decades.
Client procurement executives and their Excel spreadsheets took up residence on Madison Avenue in 2003, and there's no sign they're leaving anytime soon. In February, Deutsch parted ways with Pfizer after an impasse on contract renegotiation. And Kraft, long a trendsetter in compensation issues, took a renewed interest in the issue this year, with an eye toward cutting costs. For agencies, the antidote to procurement fever may be to stand up for their rights—and circle the wagons. In October, production companies put the brakes on doing business with Ford, citing its stringent new pricing practices, which severely limited their ability to make money on the automaker's business. By December, the client had compromised.
Having worked out new compensation guidelines with its media shops, Procter & Gamble in October said it would soon do the same with creative agencies in an effort to more closely link creative to sales growth. But it's hard to see how this is so different from the incentive-based compensation structures that major clients (including P&G) have had in place for years. And while it's heartening to know that P&G is taking its creative product more seriously—as evidenced by its decision to send an entire delegation to Cannes this year to be immersed in world-class work—the process of proving why certain creative works, and compensating agencies accordingly, will always be closer to an art than a science.
If you talk to any media-agency executive except Carat's David Verklin, you'll hear that the idea of them getting into message creation is patently absurd. Yet in 2003, many such agencies surreptitiously sipped the Kool-Aid, hiring message makers and rethinking the notion of who is in charge of shaping a brand. In January, MindShare hired ex-CBS creative executive Peter Tortorici to run programming; by year's end, the shop had a development deal with ABC. PHD just hooked up with Roger Mosconi's Cooper Square Creative Group, which specializes in branded entertainment. And Universal McCann hired—gulp!—a creative director, Alan Schulman. At media agencies, it looks like the "C" word isn't assumed to be CPM any longer.
Jim Heekin. Mike Dolan. And, of course, John Dooner. They were among the big-name executives to tumble from top advertising jobs in 2003. But was the high-level bloodletting really much of a surprise? We've suffered through corporate-governance scandals, grimly obsessive fiscal evaluations and ceaseless stockholder pressure, all of which has made it seem like there's more high drama than usual in corporate America. There really isn't. Heads roll in good times and bad. If anything, agency chiefs may be in more danger in 2004—they won't be able to blame the economy. In any case, when was the last time anyone saw a CEO's job as secure, especially in a service business like advertising? Nike settled its years-long legal battle with California activist Marc Kasky in September—and for a piddly $1.5 million contribution to the Fair Labor Association, no less. The two had been fighting over whether ads and letters to the editor in which Nike defended its overseas labor practices constituted commercial or free speech. (Before it was settled, the case reached the Supreme Court, which declined to rule on it.) Don't let the outcome fool you into thinking the debate is over. The idea that companies could be sued for false advertising because of their corporate communications is a dangerous one, and the lack of a definitive court ruling on the matter leaves the question, if not the case, very much open.
OK, the two guys who say they invented the Taco Bell Chihuahua won their lawsuit against the company in June—and raked in $40 million in the process. (Taco Bell is appealing.) That doesn't mean the courts will be flooded with no-namers screaming that they once built an Energizer Bunny prototype or dressed up like Ronald McDonald. The issue of intellectual property—the who, what, when and where of an idea's birth —is frequently controversial. Fortunately, there are reliable safeguards in place. Most companies know better than to try to benefit from ideas presented by people not under contract to do just that. Oh, unless you're talking about spec creative.
Having bought almost everything in sight, the major agency holding companies leveraged their assets like never before in 2003—and will continue to hone such skills in the coming years. Among the high-profile examples: Omnicom's move in August to set up a new direct marketing shop, Javelin Direct, to circumvent a looming client conflict with SBC Communications; and WPP's creation of Soho Square to service the $40 million Yahoo! account. There is also the related trend of the holding-company blitzkrieg—a strategy of flooding the zone that can leave a holding company with everything to gain in some reviews. One example: The $115 million Tylenol review, decided in November, in which four of the six contenders (including the winner, Deutsch) were owned by IPG.
Yes, WPP and Sir Martin Sorrell's July purchase of Cordiant Communications Group—including, notably, its legendary Bates brand—was the biggest acquisition in the agency business this year. But compared with the deals of years past for blue-chip agency brands, this one more closely resembled a Fourth of July sale at Filene's Basement. With the best Bates accounts (including Hyundai and Wendy's) long gone, there was not a lot to rummage through—or much reason to lament when Bates, which created the Unique Selling Proposition, closed its doors in most of the world this fall. If the creation of Omnicom in 1986 was agency consolidation's Big Bang, this was its whimper.
Fast-food reviews felt as
ubiquitous as stories about fat kids in 2003, and the two seem destined to be joined at the supersized hip. McDonald's spent the year holding a global creative free-for-all, launching premium salads and introducing fruit into the Happy Meal. Burger King served up a new agency (Young & Rubicam), as did Subway, which asked Fallon to find new ways to use fast food's great light hope, Jared. But KFC topped them all in terms of notoriety: In October, its new shop, Foote Cone & Belding, broke ads that pitched fried chicken as a healthy diet option—a notion that was met with widespread derision. (The work was pulled after the FTC issued a civil subpoena.) Things won't get any easier for the category as it tries to reposition itself in the face of the obesity crisis. Which is why fast-food reviews should continue to be hot. It'll take bigger ideas than a salad ad or two to crack this one.
Several agencies and their wireless clients got disconnected in 2003, but not because the category is going through any real gut-wrenching changes. Rather, it looks like the various players are in an old-fashioned search for better creative—a quest that's been familiar in the telecom world since the breakup of AT&T (which, strangely enough, resurrected the "Reach out" phrase in its first campaign from Goodby, Silverstein & Partners in October). Nextel said it was done with Mullen and Dennis Franz, and hired TBWA\Chiat\Day in May. At year's end, Verizon Wireless was still running two IPG shops —Lowe and McCann-Erickson—through creative hoops in a shootout. Since the wireless category spent most of the year making noise throughout the ad industry, its ringer may be surprisingly muted as it heads into 2004.