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.
It becomes increasingly obvious that advertising is becoming “personal”, and that large mass campaigns are becoming ineffective. The new model provides targeted advertising, which identifies the target based on a profile created using personal information.
One of the most delicate aspects of the “data” issue is obviously privacy. The way in which this information is collected, cataloged and sold is a topic of great debate, also in the international legislative context.
The time bomb of privacy
A big difference between the United States and Europe are privacy laws. In the USA, in fact, there is no obligation to give users the “opt-in” option, ie the possibility of explicitly consenting to the collection of data.
In this way, marketers can get to know the consumer in depth, understand their preferences, habits, and determine which advertisements to offer them. If on the one hand the consumer is happy to receive content in line with his tastes and advertising products that might interest him, on the other hand, he worries that the companies begin to have too much personal information.
2016 sees the consumer become an enemy / friend
If Jon Mendel’s speech in 2015 brought a jolt, in 2016 signs of a new revolution begin to appear: that of the consumer against advertising. The spread of mobile devices has brought advertising closer to the consumer, but it has also provided it with tools to block it.
The use of ad-blockers, software and systems that filter and hide online advertising is spreading. Advertising companies are faced with this new phenomenon. Some choose the legal path, suing the manufacturers of these software, while others receive the message: “advertisements are annoying”. The consumer is therefore both the target and the antagonist.
One of the techniques created to adapt to this new world is the use of “native ads”, or advertisements created to look like content and news, which integrate into the browsing experience without becoming disturbing elements.
Can old media be new?
One company that seems not to suffer from this change, against all expectations, is CBS, the historical name of American TV.
Thanks to the foresight of its CEO Les Moonves, he has been able to better fit into this new world, to the point of doubling his turnover in a decade.
What has undoubtedly taken shape in recent years is a war on two fronts: on the one hand there are the traditional media, which do not want to surrender to the idea that their world is about to disappear, and on the other the greats of the web , who march more and more convinced, riding the revolution.
New figures to replace the agency
Many content platforms are starting to hire publishers who deal with marketing internally, thus eliminating the role of the agency. In this way they can go directly to the customer with their proposal.
The “creative” and the “strategist” present themselves together, offering both a more modern and functional platform and a product more suitable for the modern panorama.
Many tech companies are also venturing into the world of marketing, from Adobe to Oracle. This means that there is a wide range of proposals on the market, and that the traditional model is finding it increasingly difficult to stay afloat.
In 2016 the first tensions among advertisers
At the beginning of each year, the whole world of marketing finds itself in Las Vegas for CES, considered the world stage of innovation.
The aim of the fair is to generate excitement and word of mouth on new technologies. The 2016 edition sees major exhibitions and events organized by Kassan and other industry representatives. A couple of months later, at the “American Association of Advertising Agencies Conference” in Miami, you can breathe a different air.
The tensions between the various protagonists are felt, and old stories of sexism, harassment, and questionable behaviors begin to emerge.
The investigation into the 2015 declarations and the benefits that the mediation agencies derive from them
In 2016 an investigation was opened into the allegations made by Jon Mendel the previous year. This creates a profound detachment between customers and agencies, accused of not honoring the trust placed in them.
The practices adopted by the agencies not only betray the relationship with the client, but often break the law. The main consequence of this is clear: more customers and more money for Michael Kassan and his MediaLink.
The Medialink brokerage agency expands
The most anticipated event in the industry is the Cannes Lions Festival. Here too, Michael Kassan is the absolute protagonist. The event generates millions of sponsorships, participations and registrations.
In industry there is no yardstick for creativity, so a Cannes Lions award can be a validation of one’s worth.
After the 2016 event, Michael Kassan decides to share a very important news: the time has come to expand: MediaLink would have been acquired.
The birth of the Math Men
Michael Kassan has an easy way of looking at things: once upon a time there were the Mad Men, or the creatives, then the Media Men, who dealt with the media, and finally the Math Men, that is, those who deal with numbers. Today these three figures are covered by a single individual. And that’s what customers want. Today everything revolves around numbers, data, algorithms, artificial intelligence.
An example of the centrality of technology is provided by Amazon with Alexa, his digital assistant. But the technology is still far from perfect, and giants like Facebook and Google are also making missteps. The road is still long, and the direction is uncertain.
Accept the challenge of technology to stay on the market
Technology is the driving force behind change in the advertising sector.
The old model of agency is outdated, and anyone who insists on following it will suffer the consequences. Those who have accepted the technology, changing the way they operate, are certain to overcome this umpteenth sector crisis, emerging victorious from the rubble.
New advertising models
One of the accepted truths of the sector is that one cannot know regardless of how effective an advertisement will be. With all the new techniques that are emerging, one thing is certain: targeted advertising, based on data and algorithms, will be central.
Another model that is rapidly spreading is that of the subscription service: for a fee, the platform offers access to content without advertising interruptions.
The winner from the 2015/2016 riots
Few have emerged unscathed from the turmoil of 2015/2016. Michael Kassan is certainly one of them. At the beginning of 2017, it officially announces the sale of MediaLink to Ascential, a holding that already owned the Cannes Lions Festival. Kassan and Sorrell, eternal friends / enemies, continue to interact in an industry that seems anything but out of the storm.