One would be hard pressed to find an industry that appears to revel so enthusiastically and exhaustively in the possibility of its own demise as the advertising industry. A case in point is a short video called ‘The Last Advertising Agency on Earth’ produced by Saatchi & Saatchi Canada for the FITC Design & Technology Festival 2010. In this short pseudo-documentary the viewer is guided through the empty offices of a fictitious advertising agency that has been abandoned after a ‘catastrophe’ put it out of business. The ‘catastrophe’ the video’s narrator is referring to is the rise of the active consumer, which caught advertisers off guard. Instead of adapting to the new realities, this agency (like so many others, we are led to assume) stuck to its routine of producing traditional mass media advertising and adhered to its stereotypical ‘creative’ workplace culture characterised by ‘playing foosball’, the consumption of speciality coffees and the overriding impulse to care more about winning advertising awards than solving the clients’ business problems. In the end, the narrator explains, all agencies disappeared, owing to ‘arrogance, ignorance, and because they chose to ignore the changes that were going on all around them’.
The widely shared and discussed (see, Burrowes 2010; Garfield 2010; Hoffman 2010) video is—like many of the industry’s pronouncements of its impending demise or the death of particular media formats and advertising tactics—as much a reflection of real concerns as it is part of advertising agencies self-promotional discourse. The expected ‘death’ of the TV spot is a particular popular topic within the industry (Hoffman 2011). On the one hand, with videos like these, agencies attempt to position themselves as cutting edge and, most importantly, nurture the impression that only they possess privileged insights into the changing nature of the media and communication landscape. On the other hand, though, videos like these are an expression of the industry’s increasing insecurity regarding its purpose and standing in the field of marketing and promotional communication.
An instructive example of this struggle to arrive at a common understanding of the function and role of advertising and the advertising industry in the 21st century was the MIXX conference held by the Interactive Advertising Bureau (IAB) in New York in September 2013. The conference theme asked industry thought leaders to redefine what the term ‘advertising’ stands for. According to IAB President and CEO Randall Rothenberg this ‘very simple question’ was now ‘at the centre of an ideological war in our industry’ (IAB 2013a). He then summarised the key themes over which this war was fought. Depending on who you asked, advertising was and had to be predominantly ‘social’, ‘mobile’, ‘a utility’, a ‘liquid cross-media’ experience, or something else altogether (IAB 2013a). The collection of answers provided by the high-profile conference attendees reflected and reinforced the rupture within the industry’s self-identity that has characterised it almost from the very beginning—the battle between proponents of the view that advertising is ‘art’ and supporters of the view that advertising is ‘science’. For example, for Brian King, Global Brand Officer of Marriott International, advertising was ‘art that drives commerce’, and for Colleen DeCourcy, Global Co-Executive Creative Director of the agency network Wieden + Kennedy, it was ‘magic’ (IAB 2013b). In contrast, Martin Sorrell, CEO of the world’s largest advertising holding company WPP, responded to the conference theme by saying
I hear you use the word advertising and that I don’t like. […] It’s not advertising. It’s not an art anymore. It’s a science, and it’s much broader than advertising. (Kapko 2013)
As Randall Rothenberg, president and CEO of the IAB writes in an article for Adweek, ‘digital technologies have put the very definition of advertising and marketing up for grabs’, so that ‘the definition of advertising has never been more unclear’ (Rothenberg 2013).
Leading advertising practitioners admit that the industry is undergoing fundamental change. For example, Martin Sorrell argues ‘the web has changed our industry just as fundamentally as it has changed society at large’ (Sorrell 2014a). John Gutteridge, CEO of JWT Australia & New Zealand agrees: ‘The digital revolution has disrupted the Ad industry over the last decade at a speed few would have predicted’ (Rietbroek 2014). And Jeff Goodby from the iconic agency Goodby, Silverstein and Partners is nostalgic for a time when advertisers still did things that were ‘big and famous’ instead of having to adapt to digital ‘content delivery systems’ (Marshall and Vranica 2015). To him, the 2015 instalment of the Cannes Lions International Festival of Creativity (the advertising industry’s most prestigious awards ceremony) appeared more like an ‘industrial roofing convention’ than the world’s leading award show for advertising creativity (Marshall and Vranica 2015).
Media industries form a complex, interrelated ecosystem that is responsive to environmental changes. Like all the other actors in this ecosystem, advertising agencies need to adapt to changing socioeconomic circumstances, new regulatory regimes, cultural shifts and—most importantly—new media technologies (Noll 2006; Napoli 2011). When Randall Rothenberg writes that advertisers were never more uncertain about their profession, this implies not only that the industry is currently undergoing a considerable restructuring, but also that there was a time when the advertising industry was more assured about its purpose and position in the media environment. It is no coincidence that the critically acclaimed US TV show Mad Men tells the story of the fictitious advertising agency Sterling Cooper from the 1950s up to the early 1970s. Within the contemporary advertising industry, theses two decades are commonly regarded—even mythologised—as the ‘Golden Era’ of advertising. The reasons for this are twofold. First, at the end of the 1960s the media environment had achieved a state of mutual accommodation between the ‘triumvirate’ of corporate marketers, media companies and advertising agencies. Secondly, at around the same time the advertising industry underwent the so-called ‘creative revolution’—a pivotal reconceptualisation of the way advertising was imagined to work on consumers. Thus, during these years the advertising industry developed a stable professional ideology and raison d’être. This stability is a thing of the past. The advertising industry is indeed undergoing a significant restructuring, which impacts on existing industry formations, the professional ideology of advertising practitioners, the conceptualisation of the nature and purpose of advertising as a marketing tool and, ultimately, on the practice of advertising itself.
The purpose of the first two chapters of this book is to outline these disruptions and the advertising industry’s response to the disintermediating processes of an increasingly algorithmically driven media system. We do this by situating contemporary developments in advertising practice within the trajectory of the integrated relationship between corporate marketers, media companies and advertising agencies. In this chapter we begin our discussion by locating the current reconceptualisation of advertising in the context of the shifting economic logic of the ‘audience marketplace’ in the digital media environment and the related move to redefine marketing as ‘value co-creation’ between marketers and consumers. Both these processes require ‘engaged’ consumers. But contrary to all the hype surrounding the notion of ‘consumer engagement’, the participating and (supposedly) ‘empowered’ consumer is neither a new phenomenon, nor does it constitute a problem for the advertising industry. We argue that the trope of the ‘empowered consumer’ is rather a discursive effect that tends to be promulgated most intensively at critical junctures: when advertisers are developing new means for managing the open-ended meaning-making processes of consumer culture. Algorithms play a key role in this process. As we will highlight in this chapter and throughout the book, advertisers are becoming skilful in deploying algorithms and bespoke devices as part of the broader project of producing brands that operate as ‘brand machines’ and, ultimately, for future proofing advertising as a business.
Reconfiguring Media Audiences
In the 1950s a fundamental shift took place in the way the business of broadcasting was conducted. Until then marketers had bought airtime by the hour and advertising agencies had produced the sponsored programme. But after a rigged quiz show and a subsequent investigation by the US Federal Communications Commission had brought the sponsorship model into disrepute, the broadcast networks began to supply the programmes themselves and started selling TV or radio-spots to advertisers (Sinclair 1987, 2012). By 1970, schedule and spot advertising had almost completely replaced the sponsorship model. This reorientation of the broadcast business model fundamentally changed the relationship between corporate marketers, media companies and advertising agencies (Sinclair 2012). The switch to selling short advertising spots required a much more sophisticated approach to audience measurement, since marketers needed to be ensured that their ads were reaching a sufficient size and segment of the audience. At the same time it increased the importance of strategically sound media planning and buying. And, last but not least, it put additional emphasis on the creative execution of the TV and radio advertisements.
In response, advertising agencies transformed themselves into so-called ‘full-service’ agencies, acting as the intermediary between media companies, marketers and consumers. The advertising agency’s role as intermediary had several dimensions. First, agencies acted as intermediaries between marketers and media companies in that they offered marketers the most cost-efficient way of securing and buying the limited media time available in traditional broadcast media. Secondly, advertising agencies regarded themselves as intermediaries between advertisers and consumers by providing marketers with intelligence about audiences that went beyond the market research conducted by publishers and marketers themselves. And, thirdly, they provided what agencies always promoted as their core competency: translating marketing objectives into creative ideas for promotional communication. Thus, these traditional ‘full-service agencies’ featured an account management team responsible for managing client relationships and the day-to-day business of the agency, account- and brand planners for conducting and interpreting market and consumer research, media planners and buyers, and the creative department, mainly comprising designers and copywriters.
An additional important consequence of the move away from the sponsorship model was the way it stabilised the advertising industry’s business model by preserving agencies’ revenue basis. Since the early days of their existence, advertising agencies were in a peculiar position: they were working for marketers, but used to be paid by the media. The first advertising agencies were solely in the business of buying media space from publishers in bulk and selling it to marketers, for which they received a commission from the newspapers (which ranged between 10 % and 15 %). The shift towards spot advertising preserved this revenue model despite the fact that it had put advertising agencies in the ambiguous position of being the ‘agent’ for the marketers but being paid by the media. This also meant that agencies had no incentive to introduce remuneration models that would make marketers pay for the consumer research, strategic planning and the creative work agencies produced. In other words, agencies refraine...