What this FT article nails (and what it completely misses)
Ian Leslie wrote an excellent article in the Financial Times a couple of weeks ago that absolutely nailed a lot of the shifting sentiment the ad world is feeling right now. It’s a long article, but one that you should definitely read if you have any personal or professional interest in the media or advertising.
In case you haven’t read it, my summary would be:
- After an early history as an adjunct to sales, Advertising enjoyed a golden age from the 1970s to the 1990s. Anyone who remembers the Levi’s, CocaCola or Apple ads from this era will remember what this looked like. Emotive, brand-building stuff that was deployed primarily on TV.
- But advertising has always suffered from bean-counters saying ‘sure it works, but I can’t measure it or understand which bits work and why’ and so, when digital advertising with its targeting, measurement and attribution came along it seemed like a real panacea to the ad agencies perennial problem of self-justification
- As a result, advertisers jumped onto this bandwagon and, from clients (like Pepsi and Diageo) to agencies, moved budgets towards digital.
- But, in the last 12 to 18 months, serious questions have started to come to light. Controversies around viewability (that have, in the interest of transparency, hugely affected the company I founded and the market it operates in), the ad-blocker wars, and the fact that the results aren’t always there (the article quotes Pepsi who moved its TV budget entirely online one year and suffered a near-catastrophic 5% market share loss) have all added to this.
- And the theory backs this too. The article points to research that shows brand ‘fans’ don’t move the needle on sales – the guy who buys Coke every day is not the one who makes that company so profitable; it’s the rest of us who buy the drink a couple of times a year. In other words, targeting and re-targeting, those mainstays of online advertising, have limited value. On the other hand, brand advertising on TV – passive, mass-market and emotive – gets those of us who are occasional buyers to subliminally pick Coke over the supermarket brand next time we need to choose and, on aggregate, push the needle for the company.
- The article concludes with a sense of a growing backlash. The doubters who were previously castigated as luddites are coming home to roost. The numbers in TV aren’t actually all that bad – most people still watch it, live, without skipping ads. As a result, it suggests that creative brand advertising of old is making a comeback and TV is going to be the media of choice for it.
I agree with about 90% of this. Rather than re-state the things I agree with in less-eloquent and relatively data-poor prose, let me focus on the two things that I think are missing:
- Demand Satisfaction Matters Too: A lot of successful advertising online today is actually Demand Satisfaction. As the article says (only too briefly), when people want a plumber, they know they want a plumber. They also know they want one in their town, who is available in the next 4 hours, is based within three miles of their place, and who is loved by 90% of her recent clients. No offline media can deliver this. Online can. This market is huge and is never going back to newspapers, direct-mail, telephone directories, local TV and the rest. Even if this is all digital advertising is, it’s here to stay and there are still plenty of massive companies to be built delivering on it.
- Demand Generation Will Be Online Too: If Demand Satisfaction is what online advertising has already taken from its offline siblings; Demand Generation is what the article focuses on. It is true that today TV is still the biggest and best medium for this. However, TV has always only been one part of the equation. I would argue that print and outdoor advertising have also always been key players. All those iconic branding campaigns of the 80s that the article lauds were on billboards and in glossy magazines as well as on TV. In the future, some portion of this will also occur online. Why? Simply because of attention. Forget targeting, forget measurement, forget attribution. What you simply cannot get away from is that more and more of us are spending more and more of our time online and, as a result, less time in front of traditional television. If we are younger, we are only more likely to do this. This means that at some point, passive, mass-market, perhaps (ironaically!) not that well-targeted brand advertising will also have to come online, if only to be seen by the people who need to see it. Again this means there’s everything to play for – billions and billions of dollars of budget will shift over time, and some of the winners will be companies that have yet to be founded.
Are there massive challenges in building successful companies in my two categories above? Abso-fucking-lutely.
Group 1) This group of companies will need to battle against the huge negativity that has been created around their activity. They will also need to navigate the escalating war of words and actions between Apple and Google (perhaps best summed up as Privacy vs Free: you choose, you lose). And, of course, they are in a more mature market: more often than not they will have to kill as well as create.
Group 2) This group are in an early space. Early players are rarely winners. But somewhere, in some nexus of local, native and video, there’s an advertising form factor and a medium or setting that will allow us to create the kind of advertising that TV, Outdoor and Print Brand do so well today. This is a huge challenge, but a fascinatingly creative one that’ll require people from both sides of the divide to be conquered fully.
And this is where I fundamentally disagree with the article. It basically heralds a return to the past as the solution. As though online was a ten year experiment that turned out to be entirely wrong and that will be shuttered off for history. I disagree, there’s plenty left out there, plenty of mountains to climb, and companies to build; whether you’re an older company struggling with the recent market events or a start-up just setting out: it’s time to play ball.