Frenemies Page 25
Strolling along the Croisette across from the Carlton on the way to the Palais, which houses multiple theaters where awards are presented most nights and where a crowded program of daytime speeches and panels occur and ad campaigns are displayed, one passes what Jeff Goodby has described as a strip mall of vendors. The festival calls this part of the Croisette, which overlooks the beach, Cabana Town. Along the way one strolls past the buildings containing the IBM, Oracle, Adobe, Accenture, PricewaterhouseCoopers, McKinsey, and Deloitte cabanas, among others; on the sand below are the private beach spaces—Facebook Beach and Google Beach and YouTube Beach, each featuring exhibits and talks and free-flowing rosé.
Walking past these consulting and tech company cabanas in Cannes is a reminder, if any is needed, that space at the marketing table is getting crowded. These companies have gobbled up ad and marketing agencies. In the two years before Cannes, IBM absorbed thirty-one marketing companies; Accenture bought forty; and Deloitte twenty-six.* Advertising Age has reported that eight of the top ten ad agencies are not traditional ad agencies but consulting and tech companies.
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Looking back at Cannes is also a reminder of another marketing change. No, not Unilever’s Keith Weed’s chartreuse sports jacket, one of two gaudy green jackets he brings to Cannes every year. With the jackets and his thick head of blondish hair that flops over his forehead, he could pass for an aging British rocker. Weed’s Wednesday keynote to an audience packed into the vast Grand Théâtre Lumière was billed as “The Future of Brands.” He made the case that to successfully engage with consumers in the future brands must convey that they are “a purpose-driven business.” Weed and an increasing number of brand managers believe this is what younger generations expect. The way to win their trust is to demonstrate a social purpose. He displayed a number of film clips and Unilever commercials warning of climate dangers like deforestation, spoke of how their Ben & Jerry’s brand promoted gay marriage, and showed a clip from a film Unilever made for a conference of world leaders that ended with their CEO, Paul Polman, declaring, “Help us by adding your voice in the battle for climate change.”
Weed has more power than most CMOs, for not only is Unilever the world’s second largest advertiser, but his reach in the company extends from marketing to communications to the company’s sustainability efforts. He cited a survey Unilever did of a thousand ads, half of which “portray women in a stereotypical way,” and of how his Dove brand has long created campaigns to lift “girls’ self-esteem.” He announced “#unstereotype,” a global effort its four hundred brands would undertake to erode female stereotypes. He concluded by asking, “Do people buy products because they are more socially and environmentally safe?” They did, he said, because “more progressive advertising” produces stronger consumer engagement. He cited a Unilever global survey comparing nonsocial ads in 2014 with social ads for the same brand in 2015. Products with social message ads grew 30 percent faster, he said. “I think you could argue in the last few years with all that’s going on with technology, that consumers have been ahead of marketing. Now marketing must be ahead of consumers. We can build our brands in whole new ways. This is the future of the brand.”
Close your eyes and listen to Keith Weed and you hear Al Gore with a British accent. “We sold our salami brand because it was a product that would never have a positive story,” he said one day in his London office. He spoke of making “marketing noble again.” When he assumed his current position and latched on to the sustainability issue, he said colleagues resisted, asking, “What does sustainability mean?” What it means, he said, is: “We need to produce as much food in the next forty years as we produced in the last eight thousand years to feed everyone. We can do it by managing waste. If we continue to live like Europeans, we will need to produce enough food for three planets—and five planets if we live like the U.S. By 2050, there will be as much plastic in the sea as fish.” He is appalled that, globally, 2.5 billion people have no access to a toilet.
“This motivates me. I tell my marketers they are coming to work to do good.” But don’t be fooled: Keith Weed is a businessman, not a do-gooder. “We tell our marketers, ‘We are going to teach the world to wash their hands better. And if we do that, we’ll sell more soap.’ If we get people to brush their teeth twice a day, it would have a major impact on cavities and their health. And it would sell more toothpaste and toothbrushes.”
What Keith Weed is promoting is not new to marketing. In a weeklong class he volunteers to teach at the festival for about thirty young marketers from around the world, Jim Stengel shared his Pampers story. The young marketers listened raptly as Stengel told of when he was assigned to become brand manager for Pampers diapers in Germany in the 1990s. His mission was to reform what was a dominant but money-losing brand. Pampers simply sold itself as a product that would keep babies dry. “We had no empathy. And we had no purpose.” A winning strategy “was right in front of us: Parents are obsessed with their babies’ healthy development. And they crave information about their stages. Is my baby keeping up? Are they growing? Are they developing mentally? Sociologically? Psychologically? Pampers were in every hospital but they had no purpose.” He hired people passionate about babies. He made sure that in every marketing campaign Pampers became an advocate for parents. He partnered with UNICEF “to help babies with the greatest need, especially with tetanus, which could be prevented.” Pampers expanded, he said, from a $2.5 billion to a $10.5 billion business, with 20 percent profit margins. And soon Stengel was elevated to CMO of P&G.
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When Cannes ended, there was no shortage of complaints. To some, Cannes reeks of Fort Lauderdale during college spring break, with late-night, loud crowds swilling drinks on the beach and spilling onto hotel and restaurant sidewalks. “I think Cannes is a fucking joke,” one senior media agency executive who attends regularly said. “I don’t know why it exists, other than to indulge a group of creatives who treat it like a frat party.” It bothers this executive to see “people out cold on the beach from the night before.” Irwin Gotlieb is upset that the Lions is a for-profit organization, unlike the Oscars, the Tonys, or the Emmys. “It may be a useful networking opportunity; after all, everyone attends. But I am deeply troubled . . .” He believes the almost nightly award ceremonies, the steep cost of applying for an award, and the large number granted cheapens the awards. “As an industry we deserve better.”
Martin Sorrell complained that Cannes has “become a tech fair. It’s a bit like a Bar Mitzvah party. Who can throw the biggest party!” Sorrell’s foremost complaint is simply the cost. “It is too expensive.” He said he was reviewing whether to attend again. Sorrell said this in the fall of 2016, prompting Michael Kassan to observe: “Martin is negotiating with them from a distance. He can’t live without Cannes. The clients are all there, and they’re not going to stop coming because he stops coming.” It is fairly typical of Sorrell to place a public marker down as a negotiating ploy. After the 2009 Cannes festival, Sorrell publicly groused that to enter the awards was too costly, yet he returned each year. And when he hired new worldwide creative director, John O’Keefe, in 2009, Sorrell told him he was tired of coming in second to Omnicom or Publicis in the awards competition.
There is another takeaway from Cannes. Marketing may have great impact, but few of its denizens are celebrities. There are no paparazzi chasing them across the Croisette. Those who come to Cannes don’t just come for the awards and the relationships. They also come out of insecurity. To be seen. To build relationships. To seek new business. To stroke clients. To size up frenemies. To escape and party and bask in the security that comes from the company of other members of what they fear is a dwindling tribe. As influencers often replace celebrities in selling their products, they know their business is losing glamour. They know relationships don’t matter as much as they once did. They are uncertain whether �
��the big creative idea”—the artist—matters more than the scientist and their targeting data. A Lions trophy offers a craved testimonial. So does a helping hand from Michael Kassan.
But the Cannes festival has many more champions than carpers. Keith Weed is a believer. “What I value is creativity, and anything that puts that front and center is fine by me. And that’s why Cannes matters. Creativity is increasingly important to break through the clutter in a fragmenting media world. In addition, it’s a highly efficient way to get the industry together.” The founder and CEO of Flipboard, Scott McCue, said he was “thrilled” with the public platform and meetings with advertisers and agencies MediaLink arranged for him in Cannes. Michael Kassan was also pleased. At a MediaLink Monday staff meeting meant to look back at Cannes 2016, he said the meetings, speeches, and panels they arranged for clients, the dinners, the well-attended hospitality suite at the Carlton that welcomes visitors at cocktail hour, the MediaLink LED screens flashing client messages to most everyone walking to the Palais, left him to enthusiastically conclude that MediaLink’s sway was undeniable: “For some reason, we crossed the river this year.”
What Kassan did not share with his staff or clients was that such successes made MediaLink an attractive acquisition target. After a late Sunday dinner he hosted at the Bacon restaurant in the Hotel du Cap for a couple of dozen guests, including magician David Copperfield and investment banker Aryeh Bourkoff of LionTree, he slipped off to secretly huddle with Bourkoff. After leaving JPMorgan Chase in 2012, Bourkoff founded a boutique investment bank that by 2015 ranked among the top 20 merger and acquisition deal makers in the United States. His foremost client was Liberty Media’s John Malone, and recently he had orchestrated Charter Communication’s acquisition of Time Warner Cable and Verizon’s purchase of AOL. After years of nervously looking in his rearview mirror, of anxiety that his past brush with the law would publicly humiliate him and stain MediaLink, Michael Kassan was ready to expand internationally. In doing his due diligence, Bourkoff had come up with a menu of companies that might want to acquire MediaLink. They included agency holding companies, especially Kassan’s friend Maurice Levy’s Publicis, plus the consulting companies rushing to enter marketing, businesses like Ascential, plus hedge funds.
For a buyer, one condition of any sale was that Kassan would remain at the helm of MediaLink, which was also his wish. But three questions haunted their deliberations. Was MediaLink a company that could thrive when the sixty-five-year-old Michael Kassan retired? When the potential parent company kicked MediaLink’s tires, would they think it was a real business or just the concoction of a charming connector? And would a bidder be scared away when their due diligence uncovered Michael Kassan’s past skirmish with the law?
16.
MAD MEN TO MATH MEN
“The business of trying to measure everything in precise terms is one of the problems with advertising today. This leads to a worship of research. We’re all concerned about the facts we get and not about how provocative we can make those facts to the consumer.”
—Bill Bernbach, 1964*
Michael Kassan has a short, simple handle for how advertising and marketing has evolved over the years. “It used to be Mad Men. Then it became Media Men. Now it’s Math Men,” he says. “There’s a mash-up that has occurred. The Mad Men, which was the creative agency, and the Media Men, which was the media agency, and the Math Men, which is the data and technology person, is now one person. And that’s what clients want.”
The industry has come to rely on the tools of Math Men—machines, algorithms, puréed data, artificial intelligence—and on the skills of engineers. Among the many speakers and presentations at the TechCrunch confab in Brooklyn in May 2016, few were greeted with the same wide-eyed enthusiasm as Dag Kittlaus, who founded Siri in 2007, sold it to Apple in 2010, and left to cofound and serve as CEO of Viv, a next generation AI personal assistant. Standing before an audience of more than a thousand, he said Viv’s AI software builds itself rather than just relying on data, and he said Viv was scheduled to be available commercially in 2017. He demonstrated a series of complex tasks he said the voice-activated personal assistant would answer in ten milliseconds.
He asked Viv: “Will it be warmer than seventy degrees at the Golden Gate Bridge the day after tomorrow?” The affirmative answer came back instantly.
“Send Adam twenty dollars for drinks last night.” Done.
“Send my mom some flowers for her birthday.”
“What kind?” the digital assistant asked.
“Tulips.”
When Martin Sorrell repeatedly warned in early 2017 that Amazon was “the elephant in the room,” the foremost threat to the advertising and marketing industry, he voiced this fear partly because he worried about its digital assistant, Alexa, and the data Amazon amassed. He worried it could make WPP an extraneous middleman. Why should a client consult with WPP when Amazon has evidence about what marketing messages generate sales? And by late 2017 it seemed clear that ever-secretive Amazon planned to capitalize on its rich data and ubiquity to begin selling ads to help subsidize the expensive television programs and movies it acquired and perhaps, Ad Age reported, to offer “a free, ad-supported complement to its Prime Streaming service.” Amazon was expected to offer something Les Moonves and his fellow broadcasters could not. Quoting an executive familiar with the plans, Ad Age reported: “Amazon is talking about giving content creators their own channels and sharing ad revenue in exchange for a set number of hours of content each week.”* In addition, Rishad Tobaccowala warned, “Amazon can damage us by hurting our clients’ business by dictating terms,” or producing competing Amazon products at a lower price. Amazon, like Facebook and Google, has another asset agencies lack: for clients anxious about tomorrow, they offer reassurance. “They can tell the client, ‘We can take you to the future.’”
Fortified by more data and software-enabled smartphones, Tim Armstrong of AOL and his corporate parent, Verizon, aspire to become a digital rival. They have invested heavily in programmatic advertising, hoping to use machines to deliver individualized marketing messages: the software massages the data, targets the desired audience for the advertiser, and the machine automates data-driven decisions. “Technology,” Kassan observes, “allows for a more direct relationship between a buyer and a seller, with less need for intermediaries,” meaning agencies. Today, advertisers pay premium prices for ads on Thursday nights, the eve of the weekend, when viewers are prepared to make weekend movie and shopping decisions. But, Kassan continues, the programmatic machine turns the world upside down. “You’re not watching Friends or Seinfeld on Thursday nights anymore. You may be watching them on Tuesday morning. Or on an airplane.” Because of data, you can know that members of your target audience “watch soap operas at two o’clock, therefore it’s going to be cheaper to reach you than on Thursday night. The sellers would like you to think the only way to reach premium viewers is with premium programming.” The networks fear, understandably, he says, that if “you can reach that same person on reruns of The Dukes of Hazzard,” paying a two-dollar CPM versus a five-dollar CPM, then their revenues will take a hit. They benefit from “the mystery,” just as more information tips the leverage in the negotiation from the seller to the buyer.
Because of network resistance, and because they are not digitized, programmatic advertising has not yet made a big dent in network sales. But it has already begun to make a dent in digital sales. According to a joint study by the ANA and several organizations, of the $178 billion spent globally on digital ads in 2016, $19 billion was done programmatically; in the United States, programmatic sales accounted for $10 billion of the approximately $70 billion spent on digital ads. But GroupM’s Rob Norman says that since “Facebook and Google’s ads are machine driven,” they should be included under programmatic. Since machine buying is thought to be as inevitable as algorithmic computer trading on Wall Street, agencies and Google and Facebook and a
variety of companies, including an estimated one quarter of major brands, vie to build their own programmatic machines.
Martin Sorrell has aggressively sought to expand WPP’s programmatic efforts, combining several companies it acquired into Xaxis and placing it under Irwin Gotlieb’s GroupM. “It is the fastest growing asset of WPP,” Xaxis chairman David Moore says. Programmatic machines transform the way ads are targeted and bought. Humans are no match for what the machine can do. Five steps are involved in serving up machine ads, Brian Lesser, then the global CEO of Xaxis before becoming the North American CEO of GroupM, says: “First, I need to recognize you, or some anonymous version of you. Second, I need to understand what I know about you. Third, I need to match that to an advertiser that’s trying to reach you. Fourth, I need to value [price] that. And fifth, I need the systems to be able to get you the right ad within two hundred milliseconds.” Agencies have to change, he says, and will have to recruit more “software developers and data scientists and analysts. . . . Tech people are going to take over.”
Like colleagues at other agencies, Xaxis executives obsess about Facebook. On any given day, a Xaxis vice president confides, they see 130 billion Internet pages that carry an ad. Facebook and Google see trillions. With its walled garden, he says Facebook tries to “curtail people from understanding what’s happening in their environments. If you look at what Facebook is doing, they’re making it impossible for anybody but themselves to understand what’s happening in their environment . . . The reason we like having an open ecosphere is we get to be the people who grade other people’s homework and insure that the brands’ money is being spent in the most effective manner. That’s kind of our job as an agency.” But Facebook does not share the granular information clients get from other platforms, he says.