November 2009 Archives

When Sir Martin Sorrell, Executive Chairman of the WPP Group and for two decades arguably the most powerful individual in advertising, appeared on The Charlie Rose Show last May, the conversation was more remarkable for what he didn’t say than for what he did say.

He spoke of the “significant shift to digital” spending among his clients, noting that 25% of the global marketing services group’s revenues now derive from interactivities. He said “the importance of technology in our business has mushroomed,” and spoke at length about Google, and about his own acquisition of the “remarkably successful” online advertising network 24/7 Real Media, and of TNS Millward Brown, his data, measurement, and analytics unit.

But not once did he mention his ownership of two of the greatest brand names in advertising, companies whose hostile acquisitions 20+ years ago put Sir Martin on the world map: Ogilvy and J. Walter Thompson. Although he nodded in the direction of “the great idea” – ad agencies’ value proposition for the better part of 60 years -- he also gave it the back of his hand. “People in the advertising business, in the traditional media advertising business, would say the message determines the medium,” Mr. Sorrell said. “I would say that has totally changed.”

But of course, it has not totally changed. Rather, it’s the ground on which one of the greatest battles in both business history and social history is being fought. The question at the heart of it, although never purely articulated, is likely to determine the fortunes of every company that sells goods or services to consumers or customers.

The issue is this: Is marketing a strategic resource or a procured commodity?

If you listen closely, you’ll discern that this question is tearing apart the entire marketing-media ecosystem, with combatants staking out positions on either side of an increasingly great divide. On one side, people are speaking the language of efficiency: of online networks, demand-side exchanges, real-time bidding, inventory and impressions, buying agencies and procurement offices, of driving the marginal cost of production and distribution of billions of commodity products called banners, spots, and pages as close to zero as they can. On the other side of this gap are people speaking the language of growth: of brand affinity, premium price realization, consumer intimacy, dialogue, social media and the social graph, and of the insights that can generate consumer satisfaction and new revenue streams.

At times, the fissure seems akin to a civil war, with brother fighting brother over unconsidered ideologies. Holding company owners are battling their own agencies. Brand makers’ Chief Marketing Officers are fighting their companies’ Chief Financial Officers. Measurement companies are measuring the wrong things, incurring the ire of marketers and media alike. Advertising pricing systems in place for generations are coming under fire. Publishers’ sales forces are trying to keep up with the mixed messages.

Meanwhile, the people who really matter – the Chief Executive Officers at consumer marketers – are just beginning to wake from their inattention to render a verdict on where their funds will flow. I’m hoping this analysis – admittedly quite long, and reeking of history – will help.