A post about the ice age now and what must follow it. The week after the management consultancy Accenture bought the advertising agency Karmarama, I had the privilege of watching Dave Buonaguidi in full flow talking about the current state of the advertising industry. So you have him to blame for starting me off along this line of thought. His rant reminded me of the extraordinary concentration among intermediaries that we have in the UK at present. Which is not good news for marketers. I think we’re in an ice age at the moment and I want to explain how bad things have got. I don’t propose to make forecasts for 2017 but simply to observe that ice ages don’t last forever. This ice age will break up like all the others, though in the grip of this particular one it’s hard to see what is going to thaw first. Though the Brexit and Trump triumphs have convinced me that all is not well for the monopolistic powers at work.
Dave started off by pointing out that 2 accountants run most of the London advertising market. WPP and Publicis between them own most of the major agencies. And quite a few consultancies and research agencies too.
The agency Dave founded had according to him, turned into a management consultancy the week before. Campaign magazine led with a sensation story that now all the other independents were due to be snapped up by management consultancies. With not a word of criticism – why would they? Macmillan is another publishing conglomerate.
Award winning advertising that customers never see
Buonaguidi went on to bewail the lack of creativity – his evidence – the multiplication of award schemes where agencies pay to submit their work and all win prizes. Who is on these juries? Oh other creatives of course who have not excused themselves from winning awards of their own, by going on juries. It’s a gigantic Ponzi scheme where no one knows which ads are really the best because all win prizes. The Cannes Lions company floated for 800 million this year. This is only one of the best known award schemes. There are plenty more. So are the ads any better? Ask a panel of creatives. Heaven forbid you ask members of the public who are supposed to be on the receiving end of this. It turned out that none of the general public had seen at least one of this year’s submissions at all. It still got a prize.
How much of this advertising is any good? Well, at least we have a crop of IPA advertising effectiveness awards and a back catalogue of effectiveness winners that spreads back nearly 40 years. The catch is that advertising effectiveness is only as good as the submissions. And if the only candidates are those which those who submit them believe to be above average then we don’t have any examples of ordinary or even bad advertising to compare them with. Proper statistical testing, tests samples right across the board. Without this, we know which effective campaigns are more effective than others submitted. But we don’t know whether a campaign with indifferent creative can also increase sales or if a bad campaign can actually reduce sales. Not unless we have a balanced sample.
All good knockabout stuff from Buonaguidi. But I believe we’re in an ice age not just because of the concentration of ownership of agencies and awards. But because of the concentration of advertising spend online between just 2 companies Google and Facebook. More than 50% of advertising spend is spent online now and more than 80% of the online spend is split between these two. That concentration of power isn’t helpful.
Firstly because there is no separation of powers. In a healthy democracy, we split the executive, the judiciary and the military to stop all sorts of unpleasantness from crooked judges who won’t pursue crooked leaders, rogue generals who seize power, dictators who jail judges, and presidents who abolish inconvenient laws. Our separation of powers in advertising used to separate media owners, content providers, and advertising sales. To that list could be added news providers too. And direct communications with customers. Google and Facebook don’t make a distinction. Oh and I nearly forgot – they also provide their own auditing in terms of audience impacts.
If you’re a marketer this is a nightmare
You don’t know if your advertising has been seen. By how many people. Or for how long. You’ve got media auditors and procurement crawling all over your figures beating down production and media budgets but that doesn’t save you a lot of money if the currency you are trading in to reach your customers is forged. And a lot of the content your ads appear alongside is faked so those posting it can collect your advertising spend.
It’s not Google and Facebook’s fault. They can’t help being monopolies. They CAN help how much tax they pay and it’s a pity that with a significant proportion of the UK population on the road delivering packages to UK homes at all hours of the day that these companies (shall we bring Amazon in here too?) aren’t paying their fair share of road maintenance, education for literacy and numeracy and upkeep of the environment in the UK which is what our taxes go to pay for. They funnel that advertising money out of the UK economy so we no longer benefit from advertising spend. Sorry, that was a cheap shot but it is a consequence of monopoly, the weight of the ice crushes the life out of everything. And don’t expect our politicians to do anything about it soon. Remember their relationship with Rupert Murdoch? Quite.
What you need to do is to form direct relationships with your customers. Email marketing? Only the arrangement we have with email providers means that emails are read and tagged so that the monopolistic intermediaries (can I bring in Microsoft at this point?) are using your own customer communications to find out more about what they’re interested in. The result is that the monopolists sell this data to third parties which means that your competitor advantage in talking directly to your customer is eroded as content from your competitors is targeted at said customers. Worse still, the content providers are using keywords to identify and hurl more and more content at customers meaning they have less and less time for you. At least good old fashioned media providers like the TV and newspapers gave you a fixed allocation on the page or in the hour so you had your few seconds in the sun. But your share of voice is falling. You are getting further away from your customers and the company doing it is the one taking your advertising budget.
It is an ice age for communications theory. Paul Feldwick in The Anatomy of Humbug has written eloquently about the dominance of the persuasion theory. But the prevailing culture of behaviourism means that observation has replaced the customer perspective. We need both behavioural AND cognitive models. This is a particular problem for digital marketing. Online analytics is not sufficient on its own.
This blog you are reading has been redacted, not for human readers but for SEO, otherwise you’ll never see it
Enough hand wringing. What is going to happen?
I think marketers are going to vote with their feet. It was bad enough when Lord Leverhume was misquoted about half his advertising budget being wasted. It’s a lot higher than that now – and eventually, marketers are going to have to develop their own channels routing around intermediaries and in particular monopoly intermediaries. You have to maintain direct respectful relationships with your customers which can’t be appropriated by new-fangled media channels who don’t behave like the old ones. Why fund someone who is trying to steal your lunch and who falsifies the receipts?
If you are committed to the extra effort of managing your own channels and content then make sure you employ 3rd parties who can measure your impact. Who don’t have a vested interest in their holding group.
What about the issues with the concentration of creative agencies? Nice to see Accenture buy in a bit of creative talent. But the trouble with M&As is that the clients can often be kept but the talent walks out of the front door. None of the staff at Karmarama were asked if they wanted to work for a management consultancy. Let’s see how many stick around.
The great thing about digital is that it is possible for independents and start-ups to get traction without needing massive funding. So I expect a new crop of creative communication which is not dependent on these legacy platforms. Samsung and Apple might be interesting places to look for emergent delivery channels which the big 2 don’t control.
Marketers need healthy markets to trade in and the current market of marketing services is far from healthy. It is in all our interests that intermediaries are genuinely independent. And that content, advertising, news and the measurement of audiences are kept separate. If advertising were not run by 2 accountants there might be safe places to start such a discussion but I can’t think of them. Best wishes for the New Year and 2017. Now here’s to the end of the Ice Age!