The rise of globalisation
An integral part of the commercialised culture of the everyday globalised world are the brand names owned by global advertisers. Some global brands, such as Coca-Cola, have had an international presence for generations. They belong to companies which grew from local to national scale, mainly in the US and Western European countries. In the 1960s and 1970s, such firms would become known âmultinationalâ or âtransnationalâ corporations. However, many others achieved global reach within a decade or so. Notable amongst these has been the sudden rise of communication and information technology corporations. We now find Apple, Google, and Microsoft topping the list in annual surveys, pushing down the likes of Coca-Cola and McDonaldâs (Millward Brown, 2016). Either way, these are the corporate advertising clients we now call âglobalâ.
Looking at the globalisation of the advertising and marketing communication industries in historical perspective, this occurred as the US- and European-based consumer goods and services corporations spread themselves into foreign markets in the 1960s and 1970s. Correspondingly, advertising agencies were also setting up offices abroad, both to serve these existing clients, and to capture new ones. Furthermore, this âtransnationalisationâ of the brand name advertisers, with their advertising agencies in step, created demand for advertising space and time in the media of those countries they entered. National governments were thus pressured to âliberaliseâ their media in the 1980s, meaning privatisation and deregulation. At the same time, new technologies, notably international satellite television, were breaking down the borders of the national media systems. This in turn allowed several media corporations to internationalise themselves, such as Time Warner, Sony, and News Corporation, ushering in an age of global media. With the advent of the Internet, unprecedented new modes of media globalisation and advertising have seen the rise to global dominance of Google and a host of social media platforms, accessible to many more people by mobile communications.
Current global structures
The advertising industry can best be thought of as a set of relations between the advertisers, their agencies, and the media, a âmanufacturing/marketing/media complexâ (Sinclair, 2012). As just suggested above, the globalisation of each of these entities has proceeded in relation to the others: the advertisers being the prime movers; the agencies at their service, but also having their own interests to pursue; and the media developing in pursuit of advertising revenue. Looking now at the advertising agency business in particular, we see how certain key trends were set in train in the 1980s and continue to be formative today: first, the incorporation of international agencies into holding companies at a global level; second, the integration of other marketing services into these same groups; third, the separation or âunbundlingâ of advertisingâs two traditional functions of creating advertising campaigns and placing them strategically in the media; and, finally, the continued influence of âglobal alignmentâ.
For globalisation to occur in a meaningful sense, there needed to be a discourse about globalisation that could facilitate and legitimise the process, and a structural change which would make the world advertising industry truly internationalised (much more than just US agencies serving US clients in foreign markets). These conditions came together in the 1980s, with the discourse from a US management guru, Theodore Levitt, and the structural transformation brought about by the leading British advertising agency of the 1980s, Saatchi & Saatchi. Saatchi & Saatchi built itself into a global corporation by taking up Levittâs doctrine (Mattelart, 1991) and sought to bring about âthe world of a few mega-agencies handling the megaclientsâ (Magnet, 1986, p. 39). By raising huge amounts of capital from the London Stock Exchange, Saatchi & Saatchi made a series of takeovers of companies bigger than themselves, both in the UK and the US. The holding company structure enabled them to integrate a number of independently operating international agencies under a single strategic, management, and financial umbrella. A similar path was followed by another UK agency, WPP, which took over some of the oldest and most revered agencies in the US, such as J. Walter Thompson. As of 2015, WPP was the worldâs largest holding group, and, although Interpublic and another US holding group, Omnicom, maintained a massive global presence, and Saatchi & Saatchi had become part of the French holding group, Publicis, the top five was rounded out by the perennially largest agency in Japan, Dentsu (Advertising Age, 2015).
Under the holding group model, a number of international advertising agencies function independently from each other, but under a common corporate owner at a higher level of management. However, as noted above, these holding groups are not restricted to advertising agencies; they also incorporate companies in related marketing âdisciplinesâ such as public relations, market research, direct mail, and similar marketing services. We thus come to see that the holding groups are engaged in much more than the business of advertising: they embody the rhetoric of âintegrated marketing communicationsâ. The horizontal integration of the advertising agencies is basic to the management of âclient conflictsâ, and this was one of the main factors that led to the formation of the holding groups in the first place. Advertisers will not tolerate having an agency that is also working for a competitor. The holding group solution can be illustrated in the case of WPPâs management of the Colgate and Unilever accounts. Both are competing global clients, but WPP is structured to cater for them both, with Young & Rubicam handling Colgate, while Ogilvy & Mather takes care of competing brands for Unilever.
Vertical integration provides clients with other marketing services under WPPâs same âmega-groupâ structure. If clients need public relations services, they can be referred to different companies in that field too, such as Burson-Marsteller, which often operate on a global basis. Similarly, market research can be provided by Millward Brown, while there are other companies again in the same stable offering non-advertising services in branding and design, direct marketing and promotions, and specialist areas such as healthcare and multicultural marketing.
Also integrated with the holding groups are specialist media-buying and planning, or âmediaâ agencies. Along with the rise of the holding companies, the 1980s saw the âunbundlingâ of advertisingâs traditional functions of placing and making advertisements, formerly handled by one âfull-serviceâ agency. This is the third point listed above: the business of strategically purchasing media space and time became hived off from the âcreativeâ business of devising and executing advertising campaigns, into quite separate agencies. Client conflict can be just as much an issue to be managed in media-buying as in creative campaigns. This is because media-buying is not only a matter of getting media space and time for the best price, but involves the crucial matter of media planning. Like a creative campaign, media planning involves strategies which a client does not want to risk being leaked to competitors. Specialist media-buying and planning agencies are profitable for the holding groups, because a group can funnel the total media-buying requirements of its several creative agencies through its handful of media-buying agencies to obtain considerable buying power with the media.
The final key structural trend to be considered is global alignment. Although long-standing agencyâclient relationships were formed in the early days of agency expansion, once again it was the 1980s, with the global brands discourse introduced by the Saatchis, which was the crucible of change. The Saatchis encouraged their clients, such as British Airways, to consolidate their accounts with the one agency network on a worldwide basis to expedite the running of global campaigns, and also to cut costs. This became a movement towards global alignment that accelerated through the 1990s. Global alignment impacted heavily upon the independence of local agencies, because, in order for them to gain access to global clients, they had to join a global group with which those clients were globally aligned.
Impact of ânewâ media
The relatively comfortable relationship between advertisers, agencies and media throughout the golden age of mass media in decades past (in which the media offered content that could attract audiences so as to sell access to those audiences to advertisers via the agencies) was the standard âbusiness modelâ. However, this model has come under pressure from the Internet, particularly the rise of search advertising. As a fundamental function of Internet usage, searching through âsearch enginesâ has emerged as an integral advertising platform. The search engineâs basic business model rests on its ability to offer and sell advertising, but not on any platform other than on its own. Where traditional media attracted audiences with the offer of information or entertainment content, search engines attract users to the service itself, and match search queries to ads. In both cases, the audiences or users collected are then âsoldâ to advertisers, but in distinct ways. We have seen how traditional media depend on large advertisers, who place their advertising via an advertising agency. Search advertising has in principle diminished the need for any such intermediary. In the process, it has simultaneously enabled the rapid rise to power of Google, by far the most successful search engine in the field. The mega-groups have retaliated, not only by opening up their own âdigital agenciesâ, but by staking out their claims in the new specialised commercio-technical areas which the Internet has opened up: that is, the generation, placement, distribution, measurement and general management of online advertisements. These activities now populate a new digital space, between the agencies and the Internet, and form a third area of commercial service provision for the agencies, the first two being, as has been noted, the placement and the creation of advertisements. Advertising practice has become highly technical in this new age of the algorithm.