Three years after first going down the rabbit hole that is digital advertising, longtime New Yorker contributor Ken Auletta has emerged with another book, Frenemies, which publisher Penguin Random House describes as “Auletta’s reckoning with an industry under existential assault.”
But the book also marks Auletta’s effort to understand the increasingly complicated web advertising has become, as well as the interplay of actors old and new and how advertising itself will survive consumer backlash as we evolve beyond the age of targeted advertising.
Adweek spoke with Auletta as he prepared for his upcoming book tour. And while he says he doesn’t have answers to the ad industry’s problems—arguably, anyone who claims to know the answer should be committed—he’s spent a lot of time with a veritable who’s who of advertising, including Martin Sorrell, Allan Gotlieb and Bob Greenberg, since 2015. Here’s what he learned.
The following has been edited for length and clarity.
Adweek: Where did the idea for this book come from? Why write it?
As I thought about the old Watergate adage, “Follow the money,” I thought, “What supports most media? Advertising.” That’s the financial engine that not just newspapers [or magazines or blogs] are heavily relying on, but also Google and Facebook. Ninety-seven percent of Facebook revenue is from advertising and almost 90 percent of Google’s. [I thought,] oh my god, what is happening to the ad business? And wouldn’t that be an interesting visit to another planet for me … and as I began to poke around, I thought, “Oh my god, I think maybe the kind of disruption written about music, TV, magazines … maybe in the ad business, the consequences are greater because they fund everything.” That’s how I started.
Adweek: I’m guessing the term “frenemies” refers to a number of players: advertisers and consumers, as well as brands and platforms like Google and Facebook. Is there a way for these frenemies to become friends? Or is that impossible?
At first, they were friends. The reason I came to the title of Frenemies is if you think about the agency business, suddenly they’re surrounded by people who used to be their partners. … If you look at clients themselves, they’re increasingly taking things in-house, the brands are competitors as well. The same is true of consulting companies—the McKinseys, Deloittes … are increasingly and actively getting into the advertising business themselves.
They become frenemies, as do PR firms—there are fewer magazines to spin to. They increasingly become ad agencies themselves, so agencies [are] surrounded by frenemies. But the more important and real existential threat to everyone in this who relies on advertising is the public—including [those who don’t] want to be interrupted by ads—many of them shitty ads, pre-roll ads, banner ads … who gave you permission to advertise to me on my personal device?
Look at ad blockers—[in] roughly one-third of Western Europe. Look at DVRs and recording shows on TV. Nielsen says roughly 55 percent of people who record shows skip ads. There’s a whole generation growing up on HBO and YouTube and now increasingly on Netflix where there are no ads. What impact does this have on the advertising world? That’s the existential question.
Adweek: So what’s the solution?
We know increasingly [consumers] don’t like advertising. They don’t like being interrupted by it. Advertisers say is there’s a way around this … maybe six-seconds ads. Think about that—if you have a two-minute block of six-second ads, that’s 20 ads. Do you want to be one of those ads? You’re going to get lost.
So you say, wait a second—maybe advertising has to become a service, and there’s so much data on people. We can target ads and offer a deal—“Hey, Ken, you’re passing by a clothing store, Barney’s, and we know you bought a blazer two months ago, would you like to come in and get 10 percent off?” [Will consumers] see that as a service or an interruption? But then another question, is how do you know so much about me? The more you target … privacy goes down, but if you want to put emphasis on privacy as in Europe, targeting goes down. These are broad issues. I don’t pretend to know the answer.
Adweek: What are some of the other takeaways you learned in reporting this book?
[A]s you interview people in the media world, there are two different types—it’s the same in the advertising world: One type is the person who says, “Oh my god, woe is me, what a problem this is and the digital world is decimating the business and, oh, god it’s terrible, it should stop.” That’s a person who leans back and wails.
The other type of person leans forward and says this: “I’m not going to treat this as a problem—I’m going to treat this as an opportunity. I’m going to figure out what I can do to transform this business to a new world and get away from my legacy media world and do things in a different way.” The same applies in the advertising world—I encountered those in the ad world leaning back and leaning forward and who say, “This is an opportunity.”