The advertising and marketing industry, like the media it subsidizes, is going through a profound phase of change.
He finds himself having to sell products without annoying the customer, trying to reach a new generation accustomed to dodging advertising, and capturing the consumer’s attention. All this in an era in which there is a vast offer, and “mass” audiences are becoming increasingly rare.
The shift from the traditional model to the current one began in the late 1990s, and its impact is evident. In a non-state economy, advertising is the bridge between producer and consumer.
That bridge is shaking, on the one hand consumers, who increasingly demand “free” content, on the other the advertising industry, without which these contents would have no way of existing.
This article tries to take a look inside this industry, understand its mechanisms and destiny, and understand why this is important for all of us.
2015: the year of the “storm” in the advertising industry
On March 4, 2015, Jon Mendel, who has worked in the advertising industry for four decades, takes to the stage of the Media Leadership Conference in Florida, in front of hundreds of industry leaders. He has decided to denounce a behavior that is spreading more and more: that of demanding bribes from the media agencies.
In an already uncertain market, where customers are increasingly wary due to the lack of transparency of advertising agencies, and at a time when new technologies are profoundly changing the way we advertise, these statements cause a jolt of enormous proportions.
The digital revolution and the transformation of advertising
The term Advertising derives from the verb “avert”, or to distract. All advertising agencies compete to attract attention.
The advertising industry was born with the intention of promoting new products, reaching as many potential buyers as possible.
Today marketing has evolved, and includes much more than just advertising: from market research to public relations, from brand identity to social media.
The digital revolution has brought about profound changes, and advertising agency customers are concerned. This inevitably reflects on their choices. Historic agencies are now having to compete with new figures on the market, who have immediately exploited and shaped the new communication methods.
Much online advertising is generated by machines and algorithms, which effectively cut the middleman out. To survive, marketers will have to become friends with machines and adopt these new technologies.
The changes brought by Business Culture in the 1960s
Don Draper is the director of an advertising agency in the Mad Men TV series, set in New York in the 1960s. At that time, the agencies were led by the creative department, and their earnings were a dry 15% commission.
Over the years, due to changes in the American Business Culture, many agencies are acquired by large holding companies, whose main interest is the return on capital. They then begin to drastically reduce costs, increasing short-term gains.
This, however, negatively affects the quality of the product, and customers start to notice it. Their trust in the agencies with which they have collaborated for years begins to falter.
The figure of the advertising broker
Michael Kassan is founder and CEO of MediaLink, a consulting agency for everything related to the world of marketing and digital.
He has several commercial companies behind him, and some trouble (later resolved) with the law. Thanks to his cunning, and – according to him – to his transparency, he has carved out a fundamental role in this constantly evolving world.
MediaLink often represents both sides of a negotiation, which – according to Kassan – guarantees transparency and neutrality.
Customers want more transparency
Partly also because of Jon Mendel’s statements in 2015, more and more customers are starting to turn to Kassan for advice.
Their goal is to understand if they can continue to trust their agencies, and they see MediaLink as the ideal consultant for this type of issue. The tensions between customers and agencies are understandable: new technologies, a wide choice of strategies, and even some scandal in the industry, create insecurity, destabilizing relationships that may even last for decades.
The agencies, for their part, find themselves having to deal with CFO increasingly interested in earnings at any cost, even when this means hiring less competent and qualified people, reducing the quality of the product they offer.
The need for a new generation of advertisers
Another thorny issue in the advertising sector is the clear lack of a new generation. Most executives are over sixty years old. Customers are dwindling, and these agencies will soon go bankrupt.
For MediaLink, this is good news, says Kassan. Of the agencies opposed to this wave of change, the one that makes the voice heard the most is WPP.
WPP is the largest communications holding company in the world, and owns a large number of advertising, communication and research agencies. It was built by Martin Sorrell, who has always had the goal of creating a communication giant.
The transition from TV advertising to Facebook and Google, with Amazon making headway
One of the pivots around which this struggle between the old and the new model revolves is information. The major online advertising platforms to date are Facebook and Google.
Their market share in advertising has surpassed what has been the main platform for decades: TV. Their strong point is the information they have available to their users: interests, habits, preferences, position.
Data that would be very convenient for advertising agencies, but that are well kept. Partly for privacy, part for maintaining a strong position. A third giant is making its way into this market: Amazon, which however does not aim to be an advertising platform, but to become the largest market in the world.
The 90s and the rise of media agencies
In the mid-1990s, the acquisition of advertising agencies by large holding groups began to proliferate in America. Soon, customers begin to lose trust in traditional agencies, and decide to invest in other systems and platforms.