The music business has been disrupted by technological change. As has the book business. And, of course, newspapers. Heck, the presidency even has been disrupted.
But no enterprise — no corner of the economy, no element of the culture — has been disrupted as dramatically as the advertising business, which began with Egyptian, Greek, and Roman wall paintings and which now provides those irritating intrusions on your iPhone. But that is only the beginning, as Ken Auletta tells us in “Frenemies: The Epic Disruption of the Ad Business (and Everything Else).’’
Some may ask at this point: Why should I care what happens to the advertising industry? The answer is simple, Auletta argues. The $2 trillion business is the lifeblood of media and touches every part of our lives as consumers, from funding audio, visual, and print content to providing information (much of it, admittedly, self serving) about goods and services. So what happened (and happens) touches us all.
All this is fodder for Auletta, who is known as one of the shrewdest, and best connected, media writers in the country; his pieces in The New Yorker are events in the media world, as this latest book, which stretches him from news to advertising, almost certainly will be. His volume is hinged on scores of interviews and on insights like this one, from Rishad Tobaccowala, the chief growth officer of Publicis, the multinational public-relations and advertising giant: “The single single biggest difference between today and Don Draper days . . . is that consumers are increasingly determining what they want to interact with, and when.’’
Indeed. Gone is the monopoly major media had on consumer eyeballs so all the agencies had to do was create TV spots, buy ads in publications, send out direct mailings, and collect big fees. Welcome to the new hypercompetitive world of traditional and digital rivals chasing fragmented audiences and ad dollars.
Kickbacks to ad agencies, the primacy of the traditional ad firm, the old-fashioned media strategy plan, the swagger of Madison Avenue — all are things of the past. So, Auletta tells us, are the old ways of doing business — one which, in some cases, former allies become competitors and vice versa, the frenemies of the title.
One major player, MediaLink, for example, represents rival companies (Disney, 20th Century Fox) in a way that no agency would before, offering greater expertise about the industry they share. Native ads, which mimic the look of the publications in which they appear, are proliferating — making it difficult to tell what is an ad and not. Companies such as Unilever and Airbnb are bypassing agencies and doing their own creative work.
Former Hill Holliday senior executive Anne Finucane makes several cameo appearances in this volume in her role as vice chairwoman of Bank of America and a force for keeping the bank top of mind and atop its peers. But at the center of Auletta’s book are the disrupters, especially Facebook and Google, which are siphoning ad dollars by offering more targeted audiences at attractive rates compared to traditional mass-market media.
Auletta argues that the agent of revolution is the iPhone sitting in your pocket or resting in front of the knife and spoon at your restaurant table. “We carry it with us always, unlike a TV set,’’ he writes. “We store our personal information and pictures and preferred apps on it. We don’t loan the phone to others. And because a mobile phone is so personal, to be effective, ads can’t feel like an interruption and have to be more personal.’’
If the phone is the weapon, then the ammunition is Big Data. “To an engineer, data is virtuous,’’ Auletta says. “It offers clues to the mysteries of human behavior, suggests efficiencies, offers answers that will better serve customers. Data yields facts, advances engineers’ quest to be more scientific. But first Google, and then Facebook, discovered, that data made it possible to attract advertising dollars.’’ (Such data collection by those companies and others like Amazon also represent a privacy threat for consumers unlike any seen before.)
That is the origin of the big disruption, and once disruption starts, it doesn’t stop, forcing all in its way to adapt, and to adopt functions and outlooks it used to outsource. “Prominent brands like General Electric and PepsiCo,’’ he argues, ‘’envision a day when they will spend less on advertising and become content creators, marketing and interacting with their consumers online.’’ That’s not all: James Murdoch predicts that before long, “[t]he bulk of Fox advertising will be sold by machines.’’ It sure saves on heath benefits and short-term disability insurance.
In these pages Auletta is a painter who sketches an entirely altered ad landscape. But an important question remains: “How to reach consumers with messages that don’t feel like an annoying and interruptive sales pitch?’’ Once ad execs and technology nerds figure that out, we will enter another brand new world. It’s coming, and probably soon.
The Epic Disruption of the Ad Business (and Everything Else)
By Ken Auletta
Penguin Press, 358 pp., $30David M. Shribman, executive editor of the Pittsburgh Post-Gazette, can be reached at firstname.lastname@example.org.