September 25, 2018

How Ad Industry Destroys Brand Value

The advertising industry prides itself on being brand builders. Building successful brands is supposed to be the essence of what we do. But in recent years the ad industry has been guilty of cheapening some of the most important brands it controls -- its own.

I am going to be picking on WPP because it is the biggest offender. But to some degree the same can probably be said about each of the major holding companies.

WPP is the owner of some of the most famous and worthy brands in the history of the ad business: JWT, Ogilvy, Y&R and Grey. It has been systematically dismantling the value in these brands. Today they are splinters of what they were.

The holding companies have undermined their agencies from the top down and from the bottom up.

What a holding company usually does is buy successful brands and manage them at arms length to, presumably, add value to shareholders. Examples of successful holding companies are Berkshire Hathaway and Procter & Gamble. Nobody buys a Berkshire Hathaway or a Procter & Gamble. The buy GEICO insurance or Tide detergent. The value is in the brand, not the bookkeepers who support it.

But WPP and the other agency holding companies, saw things differently. They chose to become brands themselves. They became super-brands. From the top down, they subsumed the brands they owned. So over time, it was no longer Y&R pitching against McCann for an account. It became WPP vs IPG. The holding companies became the stars. The agencies became the bit players.

Then the holding companies started to devalue their brands from the bottom up. They created custom-made agencies for clients. Drawing talent from this agency and that agency. The unspoken message to marketers was clear: we don't have the right talent in any one agency. We need to draw from several agencies to get you what you need. Examples of this are WPP's Team Blue (who seem to be on the way to losing the global Ford account) and Omnicom's We Are United, the agency custom-built to do mediocre work for McDonald's.

Agencies have always had difficulty practicing what they preach, i.e., differentiating themselves. But with the advent of holding company super-brands, differentiation among their constituent agencies has become almost impossible.

Now the holding companies are saying the creative agencies are insufficient contributors to revenues. We have reached the stage of blaming the victims.

I will not be surprised to see WPP's new ceo make further moves to disembowel the agencies. I will not be surprised to see mash-ups among JWT, Ogilvy, Y&R, and Grey that make the brands even weaker and less distinct.

There is not an industry in the world who should understand the importance of protecting the value in a successful brand better than the ad industry. And yet we have done a remarkably good job of vacuuming the value out of some of our best.

August 22, 2018

Tied To The Tracks

In my newsletter Sunday, I republished a blog piece I wrote last week called "The Good In Online Advertising."

It was not (in my opinion) particularly provocative or much different from stuff I have been writing about for years. The thrust of the piece was pretty easy to understand -- online tracking is mostly bad and dangerous and we'd all be a lot better off without it.

My main point was that the issue of personal privacy in a democracy is a far more important matter than the (real or imagined) benefits of online tracking to advertisers.

Prof. Scott Galloway (@profgalloway) who has a huge Twitter following, picked up on a few points from the newsletter and tweeted them out. Suddenly a shitstorm of Twitter (twitstorm?) broke out.

If you have any interest in this matter I suggest you go back and read some of the threads. Here were the parts that were of most interest to me.

Almost without exception, those who disagreed with the post missed the point. Arguments were put forward that...
"targeting without tracking is entirely ineffectual"... "majority of the value in digital is tracking in some form, especially for media sites"... "then we are left with mass media, treating us all the same. No relevance"..."without tracking you can't optimize your targeting. This becomes extremely important when bidding on keywords in Google Ads." if the the great public policy issue of our time is the effectiveness of banner and search ads.

Not one of the "anti's" even bothered to consider the key question: What's more important the privacy rights of individuals or the convenience of marketers?

Tracking (particularly third party tracking) is clearly an intrusion on privacy, most often done without the knowledge or consent of the person being tracked. If you think the benefits of tracking are more important than the benefits of privacy, fine. Come out and say it. But don't hide behind obfuscation and misdirection and platitudes about the interests of online advertisers.

Unsurprisingly, as far as I could tell, virtually all of the tweets in praise of tracking came from people with some sort of ulterior motive -- either a commercial interest or an ideological commitment to defend.

As far as I am concerned, if someone decides they don't mind being tracked, and don't care about  having their personal information shared or sold to third parties, that's fine with me. Or if they are OK with one type of tracking but not another, that's also fine with me. But they should be given a clear and easily understood choice. Why in the world is this controversial?

I can't imagine how any intelligent person can believe that the convenience of marketers outweighs the privacy rights of individuals.

In my opinion there is no benefit to marketers - no matter how thrilling - that is even 1% as important as upholding the long-established principles of privacy in a democracy.

August 14, 2018

The Good In Online Advertising

For over 10 years I've been writing about how shitty, worthless, and dangerous I think most online advertising is. Today I want to talk about the good in online advertising.

The best part of online advertising is that it funds an amazing array of free stuff (let's try to avoid the "it's not really free because you are the product" cliché for a few minutes.)

Sadly, online advertising has been so debased by creeps and crooks, and oversold by hustlers and liars that it is sometimes difficult for us to appreciate the good in it. If we could eliminate the creeps, crooks and hustlers, and allow the web to provide what it is capable of providing...well, that's what this post is about.

A look at the numbers illustrates clearly how much we value what we get online. The average person in America now spends almost four hours a day online. This is not inconsiderable. And we wouldn't be here if we weren't getting some substantial value from it.

The key piece is this: Virtually everything we enjoy about the web is paid for by advertising. Whether you hate advertising or love it, there is one simple truth that must be acknowledged -- advertising provides the money for companies to create the stuff we like and use online. This is why it is important to preserve an ad-supported web.

There is nothing intrinsically wrong with online advertising. But there is something terribly wrong with the flavor of online advertising that we have evolved.

Essentially there are two kinds of online advertising. The good kind supports quality publishers, does not spy on us or track our every move, and respects our privacy by not collecting unnecessary personal, private information (what the marketing industry loves to call "data".) It doesn't share it, sell it, or leak it into the digi-sphere.

The bad kind of online advertising is only superficially advertising. It is mostly tracking-based spyware disguised as advertising distributed primarily by machines ("programmatically.")

The bad kind is the kind that the online media industry has defaulted to. It relentlessly follows us around the web and collects unnecessary personal and private information about us usually without our knowledge and consent. And it shares, sells, and leaks this information promiscuously in all directions.

It supports the shittiest publishers by using software to find the cheapest, crappiest environments to distribute ads to, thereby stealing money from quality publishers and giving birth to self-inflicted brand safety issues.

Because its primary model is data-based direct marketing (what we used to call junk mail) it leads to a style of "click here" advertising that magnifies the most annoying and irritating aspects of advertising.

The politics of online advertising is the part that I find most bewildering. For over a decade, the powerful players in the advertising world have been working relentlessly against their self-interest.

Advertisers would be much better served if they knew where their ads were running; if their budgets were spent influencing consumers rather than enriching adtech middlemen; if their ads were appearing on high quality sites instead being "programmatically" strewn all over trash sites; if tens of billions of dollars weren't being stolen by criminals with fraudulent websites and imaginary viewers; if hundreds of millions of people were not blocking their ads.

All of these problems could be substantially mitigated by doing one simple thing -- ending tracking. And yet the moment there is a suggestion of setting some limitations on the ability of online advertisers, media, and publishers to spy on us, the advertisers rise up through their tainted trade organizations (4A's, ANA) to oppose it.

The same is true of publishers. Quality online publishers are having their audiences and revenue stolen from them through data leakage (in which programmatic systems follow valuable customers to cheaper sites and reach them there); they are victims of criminal activities like fraudulent lookalike websites stealing their audiences and ad revenues; they are losing more than half their potential revenue to the sinkhole of adtech middlemen; they have lost control of their brand identities by allowing automated systems to determine who and what can be advertised on their sites; and they are losing revenue as ad blocking continues unabated.

And yet, once again, the moment the subject of limiting the slimy hand of tracking and adtech comes up, they mostly oppose what is clearly in their own best interest.

Online advertising doesn't have to...

   - be despised by the public
   - subvert democratic institutions
   - enable corruption and fraud
   - place personal and private information about us within the reach of criminals
   - devalue the work of legitimate online publishers
   - waste billions of dollars of advertisers' value on fraud
   - degrade our news media and journalism

Online advertising supports so many good things we enjoy and appreciate about the web. It gives us entertainment and information. It allows us to befriend people we would otherwise never know.

It would take so little for the online ad industry to do so much good -- for itself and for the public. We have decades of evidence that tracking is not a necessity for advertising success. TV never tracked us. Radio never tracked us. Newspapers and magazines never tracked us. And we have more than enough evidence that adtech is in many ways not just non-productive, but counterproductive.

We need to get rid of tracking -- not advertising -- to make the web what it ought to be.