This started with a blog post that talks about the IPA’s The Long And The Short Of It (TLATSOI) role in the planning and strategy process of the ad industry.
The IPA’s original research had flaws in the methodology:
Focusing purely on successes brings in biases due to the research being taken out of context. Context provided by the ‘complete’ population of good, mediocre and awful campaigns rather than award winners
There aren’t any lessons on how not to truly mess up
TLATSOI isn’t a LinkedIn article
Its easy to throw shots over the table when someone has done a lot of work. TLATSOI isn’t an article on the ‘five morning habits of Warren Buffet’ to make you successful.
Les Binet and Peter Field analysed 996 campaigns entered in the IPA Effectiveness awards (1980 – 2010). That would have taken them a considerable amount of time to do. They then managed to write it all up and distill it down into a very slim volume on my bookshelf.
The work is an achievement and Binet & Field deserve our gratitude and respect. Secondly, other marketing disciplines don’t have their version of TLATSOI. We couldn’t critique TLATSOI if it didn’t exist.
Let’s say we want to stand on their shoulders and build something more comprehensive than TLATSOI. Just what would it take?
Working with what you have
Binet and Field worked with what they have. If you’ve ever written an award entry you’ll know pulling it together is a pain in the arse. 996 award entries represents thousands of weeks of non-billable agency time. This was also strained through their empirical experience in the business, which adds a ‘welcome’ bias.
Now imagine if that kind of rigor in terms of documentation and analysis was put into mediocre campaigns. The kind of campaign where the client logo barely makes into the agency credentials deck.
Without a major agency (nudge, nudge, wink, wink BBH) providing all their warts-and-all data, the initative won’t start.
It will be hard to get what is needed. Agency functions aren’t geared up to deliver the information. A technological solution would take a good while to put in place; and like all IT projects would have a 70% failure rate.
In an industry where careers are made and talent attracted on ‘hits’; theres a big chunk of realpolitik to address.
How would you keep a lid on the dirty laundry?
We live in a connected world. To the point that there are now likely to be four certainties. Birth, death, taxes and data breaches. Imagine a data dump, some Excel skills and what was a bit of snark would do to an agency’s reputation? The stain of an ad agency equivalent of the movie industry Gold Raspberries would likely bury careers.
What do we measure?
My friend Rob Blackie started some of the thinking on effectiveness data SLA tiers
A = Tests the objective directly using a Randomised Control Test (RCT) in a real world environment (e.g. measured at point of sale).
B = RCT tests of proximate objective (e.g. brand), direct measurement of impacts without correction for population bias or confounding factors (e.g. a sunny week drives a lot of ice cream consumption). Or case studies (independent), quality survey data on changes in behaviour, testing in an artificial environment. For instance a Nielsen Brand Lift study
C = Case studies (non-independent), data sources that may contain significant bias compared to the underlying population. For instance: Award entries.
D = Indicative data such as PR coverage, social media Likes and similar.
E = Anecdotes. Extra points for quality, and reproducibility across different suppliers / evaluators.
There are challenges capturing long-term branding factors such as advertising ‘ad stock’ or ‘carryover‘. That then takes you into fundemental questions:
How long is the minimum viable time of campaign duration to be considered for assessment?
How long should we be measuring long term branding effects? How do you measure ‘clientside’ quality issues:
Resourcing / budgets
Product
Ambience in the case of client-owned channels
Adequate quality briefs. Are the objectives written well? Are they relevant to the business
Mission creep or changing company agendas
All of this means that getting to the greater volume of poor campaigns as well as the best is easier said than done. The best way to kick it off would be having large agencies to work together on putting together data sets.
The Holmes Report came out with their top 250 (biggest) PR agencies around the world in terms of billings. I decided to delve into the numbers for financial years 2014 – 2017.
Macro picture
What the numbers suggested at a macro level were three things:
Overall billings growth was declining year on year
The amount of agencies that were appointed into the top 250 (and were dropped) declined year on year. There is less market disruption
The bottom 190 agencies (by size over successive years) accounted for less than half the billings of the top 25 for financial year 2017
This supports a hypothesis of slowing market growth and solidifying market dynamics at a macro level. Strategic acquisitions start to make less sense compared to improving efficiences and effectiveness. But if you were going to buy an agency MC Group in Germany looked to be the stand out choice in terms of changing the fortunes of a large agency billings
We’re also seeing a likely tyranny of large numbers kicking in for the biggest agencies. Mid-sized agencies can be more agile due to less layers of management and less complex environmetns to worry about. They may be multi-market; but they’re not truly global. Which makes strategy and planning much easier.
PR agencies are people businesses. At the core they sell manpower by the hour. Bigger agencies have more people, which means a greater management overhead, not unlike Fred Brooks’ The Mythical Man-Month essays on software engineering. There are more processes, which have built up over time and greater inertia to change. Then you get office and intra-office real politik. You can try and keep this down, but it is a function of scale; the battle against it becomes ever harder and you can only focus on its worst excesses. It tends not to surface when its impact only goes downwards in the management structure.
Agency-specific hypothesis
This next part was inspired by David Brain’s post on the performance of large agencies.
PR seems to be acquired in a more tactical manner than previously. This has been happening for a number of reasons.
A decline in Full Metal Jacket syndrome in comms planning. This nonsensical quote about Vietnamese people in Full Metal Jacket makes similar false assumptions. I’ve seen similar false assumptions in past global comms campaign planning that I have seen. Usually that meant creating something in the US and then expecting it to work on a fraction of the budget elsewhere. This means that there is less international work for agency networks. This has a negative impact on inter-office best practice transfer and building relationships.
The influence of Byron Sharp. For many consumer marketers, How Brands Grow – based on years of marketing science research is the bible. When you look at Sharp’s work there are a couple of clear points when you use public relations as a tactic.
Zero-based budgeting (ZBB) has changed the marketing planning game. It pits public relations campaign efficiency and effectiveness versus other disciplines in sharp focus. In addition, some organisations have mistaken ZBB as a one-way ratchet tightening marketing spend. ZBB isn’t about continual cost-cutting, but continual optimisation – something that seems to have been lost in translation.
PR agencies haven’t taken full advantage of the opportunity afforded by digital and social for a number of reasons:
There is a tension. Between the focus on financial efficiency and effectiveness that the macro numbers suggest versus the investment in tools and personnel required. Where are the studios, strategists, planners and media desks?
There has been an expertise drain across the industry as agencies deskill; paying new people into roles less than the person who previously filled it. This means that over time there is a trench in expertise between office leaders and the rest of the team, making it harder for the office to scale and a loss of institutional knowledge. This has led to a lack of diversity in thinking amongst many PRs; let alone gender, race and age diversity. From experience I’ve found that digital natives aren’t necessarily the best digital strategists
Clients haven’t embraced the change. Social in particular sits elsewhere amongst the marketing team. There is a similar division with paid media. The focus (particularly in Europe) on performance marketing over brand marketing hasn’t helped. Hubspot-style content marketing is a reductive process that isn’t the friend of PR agencies; despite their expertise in content
The window of opportunity closes as organic reach declines. Social media marketing effectiveness requires paid media budget. Agencies have jumped in too late with insufficient confidence. Traditional senior management agency PRs have been curiously hung up on this. Yet we see: corporate communications as adverts in the FT and WSJ and consumer PRs do paid advertorials and paid product placement
The debate over privacy on Facebook got me thinking about the internet we envisaged. Reading media commentary on Tim Cook’s recent address at Duke University prodded me into action.
What do I mean by we? I mean the people who:
Wrote about the internet from the mid-1990s onwards
Developed services during web 1.0 and web 2.0 times
I’ve played my own small part in it.
At the time there was a confluence of innovation. Telecoms deregulation and the move to digital had reduced the cost of data and voice calls. Cable and satellite television was starting to change how we viewed the world. CNN led the way in bringing the news into homes. For many at the time interactive TV seemed like the future of media.
Max Headroom
Starship Troopers
The Running Man
Second generation cellular democratised mobile phone ownership. The internet was becoming a useful consumer service. My first email address was a number@site.corning.com format email address back in 1994. I used it for work, apart from an unintended spam email sent to colleagues to offload some vouchers I’d been given.
My college email later that year was on a similar format of address; on a different domain. I ended up using my pager more than my email to stay in touch with other students. Although all students had access to the internet at college, the take-up was still very low. At college I signed up for a Yahoo! web email. I had realised that an address post-University would be useful. Yahoo! was were I saw my first online ads. They reminded me of garish versions of classified ads in newspapers.
After I left college I used to go to Liverpool at least once a week to go to an internet cafe just off James Street and check my email account, with a piece of cake and a cup of coffee. I introduced my friend Andy to the internet (mostly email), since we used to meet up there and then go browsing records, clothes, hi-fi, studio equipment, event flyers and books at the likes of HMV, the Bluecoat Chambers, Quiggins, The Palace and Probe Records.
I found out that I had my first agency job down in London when I was called on my cell phone whilst driving.
The internet was as much as an idea as anything else and the future of us netizens came alive for me in the pages of Wired and Byte. Both were American magazines. Byte was a magazine that delved deeper into technology than Ars Technica or Anandtech. Wired probed the outer limits of technology, culture and design. At the time each issue was a work of art. They pushed typography and graphic design to the limits. Neon and metallic inks, discordant fonts and an early attempt at offline to online integration. It seemed to be the perfect accompanyment to the cyberpunk science fiction I had been reading. The future was bright: literally.
Hacking didn’t have consumers as victims but was the province of large (usually bad) mega corps.
I moved down to London just in time to be involved in the telecoms boom that mirrored the dot com boom. I helped telecoms companies market their data networks and VoIP services. I helped technology companies sell to the telecoms companies. The agency I worked for had a dedicated 1Mb line. This was much faster than anything I’d used before. It provided amazing access to information and content. Video was ropey. Silicon.com and Real Media featured glitchy postage stamp sized clips. My company hosted the first live broadcast of Victoria’s Secret fashion show online. It was crap in reality, but a great proof of concept for the future.
I managed to get access to recordings of DJ sets by my Chicago heroes. Most of whom I’d only read about over the years in the likes of Mixmag.
All of this pointed to a bright future, sure there were some dangers along the way. But I never worried too much about the privacy threat (at least from technology companies). If there was any ‘enemy’ it was ‘the man’.
In the cold war and its immediate aftermath governments had gone after:
Organised labour (the UK miners strike)
Cultural movements (Rave culture in the UK)
Socio-political groups (environmentalists and the nuclear disarmament movement)
I had grown up close to the infamous Capenhurst microwave phone tap tower. Whilst it was secret, there were private discussions about its purpose. Phil Zimmerman’s PGP cryptography offered privacy, if you had the technical skills. In 1998, the European Parliament posted a report on ECHELON. A global government owned telecoms surveillance network. ECHELON was a forerunner of the kind of surveillance Edwards Snowden disclosed a decade and a half later.
One may legitimately feel scandalised that this espionage, which has gone on over several years, has not given rise to official protests. For the European Union, essential interests are at stake. On the one hand, it seems to have been established that there have been violations of the fundamental rights of its citizens, on the other, economic espionage may have had disastrous consequences, on employment for example. – Nicole Fontaine, president of the european parliament (2000)
I advised clients on the ‘social’ web since before social media had a ‘name’. And I worked at the company formerly known as Yahoo!. This was during a brief period when it tried to innovate in social and data. At no time did I think that the companies powering the web would:
Rebuild the walled gardens of the early ‘net (AOL, CompuServe, Prodigy)
Build oligopolies, since the web at that time promised a near perfect market due to it increasing access to market information. Disintermediation would have enabled suppliers and consumers to have a direct relationship, instead Amazon has become the equivalent of the Sears Roebuck catalogue
Become a serious privacy issue. Though we did realise by 2001 thanks to X10 wireless cameras that ads could be very annoying. I was naive enough to think of technology and technologists as being a disruptive source of cultural change. The reason for this was the likes of Phil Zimmerman on crypto. Craig Newmark over at Craigslist, the community of The Well and the Electronic Frontier Foundation. The likes of Peter Thiel is a comparatively recent phenomenon in Silicon Valley
We had the first inkling about privacy when online ad companies (NebuAd and Phorm) partnered with internet service providers. They used ‘deep packet inspection’ data to analyse a users behaviour, and then serve ‘relevant ads.
Tim Cook fits into the ‘we’ quite neatly. He is a late ‘baby boomer’ who came into adulthood right at the beginning of the PC revolution. He had a front row seat as PCs, nascent data networks and globalisation changed the modern world. He worked at IBM and Compaq during this time.
Cook moved to Apple at an interesting time. Jobs had returned with the NeXT acquisition. The modern macOS was near ready and there was a clear roadmap for developers. The iMac was going into production and would be launched in August.
Many emphasise the move to USB connectors, or the design which brought the Mac Classic format up to date. The key feature was a built in modem and simple way to get online once you turned the machine on. Apple bundled ethernet and a modem in the machine. It also came with everything you needed preloaded to up an account with an ISP. No uploading software, no errant modem drivers, no DLL conflicts. It just worked. Apple took care selecting ISPs that it partnered with, which also helped.
By this time China was well on its way to taking its place in global supply chains. China would later join the World Trade Organisation in 2001.
The start of Tim Cook’s career at Apple coincided with with the internet the way we knew it. And the company benefited from the more counter culture aspects of the technology industry:
Open source software (KDE Conqueror, BSD, Mach)
Open standards (UNIX, SyncML)
Open internet standards (IMAP, WebCAL, WebDav)
By the time that Facebook was founded. Open source and globalisation where facts of life in the technology sector. They do open source because that’s the rules of business now. It is noticeable that Facebook’s businesses don’t help grow the commons like Flickr did.
Businesses like Flickr, delicious and others built in a simple process to export your data. Facebook and similar businesses have a lot less progressive attitudes to user control over data.
Cook is also old enough to value privacy, having grown up in a less connected and less progressive age. It was only in 2014 that Cook became the first publicly gay CEO of a Fortune 100 company. It is understandable why Cook would be reticent about his sexuality.
He is only a generation younger than the participants in the riots at the Stonewall Inn.
By comparison, for Zuckerberg and his peers:
The 1960s and counterculture were a distant memory
The cold war has been won and just a memory of what it was like for Eastern Europeans to live under a surveillance state
Wall Street and Microsoft were their heroes. Being rich was more important than the intrinsic quality of the product
Ayn Rand was more of a guiding star than Ram Dass
They didn’t think about what kind of dark underbelly that platforms could have and older generations of technologists generally thought too well of others to envisage the effects. You have to had a pretty dim view of fellow human beings.
Cialdini’s Influence is now over ten years old and still stands up. It is a good guide on the psychology of why people say “yes”. The accessible style of Influence reminded of Douglas Rushcoff, or Malcolm Gladwell. Ok Malcolm Gladwell is a poor analogy, Cialdini’s work isn’t candy floss for the mind. This is deceptive as there is usually an inverse relationship between value and accessibility. Exceptions to this heuristic would be the likes of Sun Tzu – The Art of War.
Cialdini hasn’t been researched within an inch of its life in the same way Byron Sharp’s books have been.
Cialdini provides planners and strategists with starting points for customer experiences. The book isn’t a how to guide for digital journeys but provides first principles. Psychology is not channel-specific.
The Journal of Marketing Research described it as
…among the most important books written in the last 10 years.
The book’s style allowed me to pick it up and put it down, to fit in with my holiday schedule of train travel and family time.
Why should you have Cialdini’s Influence?
If your work includes marketing planning or strategy, your bookshelf should have this book. If you are thinking about customer interactions, this book outlines the first principles that you need
If you’re a consumer and want to know how you’re being sold to; read this book
If you want to get on better with people ( your kids or co-workers); buy this book
My copy is well-thumbed and stuffed with post-it notes around the edges as I go back and forth into it on a regular basis.
Sometimes the most straightforward posts take the longest to write. When I started on this one last week the big question in the minds of people who watch the big advertising conglomerates is are WPP numbers a company problem or an industry problem?
WPP is looking to simplify its structure with a view to becoming a more agile and transparent business from a client perspective.
Or as it was put in the New York Times
WPP plans to accelerate a programme to simplify the business by aligning digital systems, platforms and capabilities to provide bespoke teams for its clients as opposed to the different agencies that currently compete with each other to win contracts.
Other conglomerates, notably Publicis had already started on this path when it started realigning the group under the ‘Power of One’ vision. WPP is bigger with a fuller offering and wider range of specialisms than many of its peers, no one can be under the illusion about the size of this undertaking.
Let’s talk about the tectonic plates shifting around beneath the feet of ALL the large advertising and marketing combines:
Interpublic Group (IPG)
Omnicom
Havas
Publicis
WPP
Dentsu
The tectonic plates are:
The Four
Amazon
The decline of brand marketing
The new competition
The Four
The Four is a label that Professor Scott Galloway put on Apple, Amazon, Google and Facebook. All of whom he considered to be monopolists that created value for their shareholders by putting the ‘real world economy through a shredder.
In this case I would swap out Amazon and Apple for Alibaba and Tencent, but the allusion to a quartet of horsemen portending a digital apocalypse is a useful allegory for the advertising and marketing sector. Amazon deserves a section of its own later.
Galloway’s predictions of their destructive power led to an accurate prediction of WPP’s share price tumble this week. (see the video below)
Correlation does not prove causality however — it doesn’t mean that he got the right numbers for the right reasons.
Depending whom you believe Facebook and Google are responsible for 90 percent of online advertising growth outside of China. This represents a massive concentration of media power. It has implications for the creative and planning functions of an agency. Google and Facebook also run much of the advertising technology that purchase are made on. This has decimated much of the advertising technology sector and made it harder to differentiate media planning and buying based on the technology stack.
L2 came up with this research last year based on Google and Facebook revenue targets. If they hit their numbers they would be treating around 14,193 jobs. But it would mean that the corresponding projected number of jobs lost in the advertising industry would be roughly the equivalent of every man and woman around the world employed at vehicle maker Nissan. And that’s just 2017.
L2’s calculations don’t take into account China where the advertising industry has been digitising at a much faster rate than in the west with the bulk of growth going to companies controlled by Tencent or Alibaba.
Given that most of the agencies within WPP and its peers operate on a billable hour model; this represents a considerable potential loss of value. Since the number of people directly equates to revenue.
The consolidation of online media also means that many clients will look to take back control of their media planning and buying process. The argument goes something along the lines of ‘a consolidated media landscape allows for consolidated buying by a global media trading desk due to the inherent simplicity in suppliers. The data comes from the inhouse data management platform and the media vendor (Facebook, Google, Tencent or Alibaba)‘.
The always on creative needed to fuel this process is also being increasing done in inhouse studios, in partnership with their creative agencies as a kind of hybrid model.
This is what Marc Pritchard meant when he talked about taking back control of Procter & Gamble’s marketing as part of a process to save $1.2bn by 2021. In the latest financial results, WPP claimed that their media buying margins had not suffered – only creative had.
Amazon
At the time of written Jeff Bezos is worth about 112 billion dollars, or just under double the annual defence budget of the UK for 2018. Amazon impacts the advertising and marketing industry in multiple ways.
It is starting to become a big player in online advertising in its own right. I think it would be fair to say that this competition to Google is welcome for the marketing conglomerates judging by Sir Martin Sorrell’s commentary on the likes of CNBC.
Amazon has decimated the high street. Toys R Us, Borders Group, Tower Records, Radio Shack, Maplins are just some of the names which have disappeared. It took a good number of years for people to realise that retailers are locked in a zero sum game when Amazon competes against them. Amazon has unique access to exceptionally cheap capital via its shareholders. There have been companies who have beaten it back like Alibaba’s Taobao and TMall in China. But the company has built up a huge amount of retail power and decimated brands that would have been advertising agency clients.
Amazon has become the default search engine for buying things. This has already displaced up to 20 percent of Google searches depending on whom you believe. It also means that they can place imitation goods and private label goods against branded products.
Amazon has got great data. Amazon has data at the centre of its business what consumers like, what they don’t like, what sells well on marketplace resellers. This has driven a number of the product decisions:
Increasing customer basket sizes
Expanding into new areas by screwing over marketplace resellers
Focusing their efforts on private label products which directly impacts branded products across categories. Amazon Basics is the most obvious private label to consumers, but there are many more where the link isn’t so obvious
Depending on your brand category the answer may be:
Owning your own retail chain like Apple or LVMH’s DFS Group
Direct sales and subscription services have piqued the interest of FMCG brands like Dollar Shave Club
All of this impacts the advertising sector. For more information on the power of Amazon, I can recommend Scott Galloway’s The Four.
The decline of brand marketing
The relative decline of brand marketing has been driven by a number of factors, some of these factors are good and some aren’t.
Let’s talk about the good reasons first of all.
‘Performance marketing’ driving customers directly to a sale has been transformed by the rise of modern online advertising techniques including search advertising and retargeting. Retailers can zero in on intent to a much greater degree than shopping television or direct response print adverts ever could. Google and social media have turned into reputation platforms which then displayed below-the-line spend from the likes of public relations agencies. This was happening at a time when journalist employed by publications have declined; implying a natural progression
At least some consumers can’t be reached through traditional media channels with sufficient frequency for brand advertising. Social media, online video and banner ads make sense as part of an omnichannel approach
The bad reasons:
The focus on ROI rather than profits has meant that a balance longer term brand building and shorter term sales has fallen out of kilter. Marketing then becomes a reductive process. To use a farming analogy; its like moving from arable farming with crop rotation to slash and burn. This is particularly noticeable in the way private equity management has affected fast moving consumer brands under its control. Zero-based budgeting is seen as a source of cost cutting rather than ensuring the efficient and effective use of marketing resources
Digital first strategies – for many marketers this has meant a move from media-neutral, let the communications problem define the channels used to a digital dogma. I make my living with digital media, but I recognise the flexibility required in thinking to deliver an effective strategy
It isn’t about one approach over another but finding balance that works for sales now and in the future.
The new competition
The rise of digital advertising has seen business services expand ways that we couldn’t predict. Advertising agencies like Ogilvy understood the potential for digital early on. Consultancies were focused on systems integration and the use of technologies to change business functions. As they became interconnected internally and externally; the progression into marketing made sense.
A reduction in creative budgets caused marketing agencies to move into areas like service design. Consultancies have looked to inject creativity into their values and skills set by mirroring the kind of acquisition strategy that built the marketing conglomerates.
In the meantime technology companies, notably Adobe have treated marketing like any other business function with a sale conducted at the c-suite level just like Oracle or similar. In many respects this move is understandable as companies use a data management platform (DMP) to derive audience insights and improve their digital marketing. This isn’t vastly different from historic data warehousing and data mining applications.
The enterprise software companies allow large companies to do internally what they have previously asked media agencies to do.
