Book Review of “Frenemies: The Epic Disruption of the Ad Business (and Everything Else)”

“Advertising in Times Square”, image by Dirk Knight

Every so often, an ad campaign comes along that is strikingly brilliant for its originality, execution, persuasiveness, longevity, humor and pathos. During the mid-1980’s, one of these bright shining examples was the television ads for Bartles & Jaymes Wine Coolers. They consisted of two fictional characters: Frank Bartles, who owned a winery and did all of the talking, and Ed Jaymes, a farmer who never spoke a word but whose deadpan looks were priceless. They traveled across the US to different locations in pursuit of sales, trying to somehow adapt their approaches to reflect the local surroundings. Bartles was very sincere but often a bit naive in his pitches along the way, best exemplified in this ad and another one when they visited New York.

These commercials succeeded beyond all expectations in simultaneously establishing brand awareness, boosting sales and being laugh-out-loud hilarious because Bartles’s and Jaymes’s were such charming, aw-shucks amateurs. In actuality, these ads were deftly conceived and staged by some smart and savvy creatives from the Hal Riney & Partners agency. For further lasting effect, they always had Bartles express his appreciation to the viewers at the end of each spot with his memorable trademark tagline of “Thanks for your support”. These 30-second video gems are as entertaining today as they were thirty years ago.

But those halcyon days of advertising are long gone. The industry’s primary media back then was limited to print, television and radio. Creativity was its  cornerstone and the words “data analytics” must have sounded like something actuaries did in a darkened room while contemplating the infinite. (Who knows, maybe it still does to some degree.)

Fast forwarding to 2018, advertising is an utterly different and hyper-competitive sector whose work product is largely splayed across countless mobile and stationary screens on Planet Earth. Expertly chronicling and precisely assaying the transformative changes happening to this sector is an informative and engaging new book entitled Frenemies: The Epic Disruption of the Ad Business (and Everything Else) [Penguin Press, 2018], by the renowned business author Ken Auletta. Just as a leading ad agency in its day cleverly and convincingly took TV viewers on an endearing cultural tour of the US as we followed the many ad-ventures of Bartles & Jaymes, so too, this book takes its readers on a far-ranging and immersive tour of the current participants, trends, challenges and technologies affecting the ad industry.

A Frenemy of My Frenemy is My Frenemy

Image from Pixabay

This highly specialized world is under assault from a confluence of competitive, online, economic, social and mathematical forces. Many people who work in it are deeply and rightfully concerned about its future and the tenure of their places in it. Auletta comprehensively reports on and assesses these profound changes from deep within the operations of several key constituencies (the “frenemies”, conflating “friend” and “enemy”). At first this might seem a bit too much of “inside baseball” (although the ad pitch remains alive and well), but he quickly and efficiently establishes who’s who and what’s what in today’s morphing ad markets, making this book valuable and accessible to readers both within and outside of this field.  It can also be viewed as a multi-dimensional case study of an industry right now being, in the truest sense of the word, disrupted.¹ There is likewise much to learned and considered here by other businesses being buffeted by similar winds.

Frenemies, as thoroughly explored throughout this book, are both  business competitors and partners at the same time. They are former and current allies in commerce who concurrently cooperate and compete. Today they are actively infiltrating each other’s markets. The full matrix of frenemies and their threats and relationships to each other includes the interests and perspectives of ad agencies and their clients, social media networks, fierce competition from streamers and original content producers like Netflix², traditional media in transition to digital platforms, consulting companies and, yes, consumers.

Auletta travels several parallel tracks in his reporting. First, he examines the past, present on onrushing future with respect to revenue streams, profits, client bases served, artificial intelligence (AI) driven automation, and the frenemies’ very fluid alliances. Second, he skillfully deploys the investigative journalistic strategy of “following the money” as it ebbs and flows in many directions among the key players. Third, he illuminates the industry’s evolution from Don Draper’s traditional “Mad Men” to 2018’s “math men” who are the data wranglers, analysts and strategists driven by ever more thin-sliced troves of consumer data the agencies and their corporate clients are using to achieve greater accuracy and efficiency in selling their goods and services.

A deep and wide roster of C-level executives from these various groups were interviewed for the book. Chief among them are two ad industry legends who serve as the x and y axes upon which Auletta has plotted a portion of his reporting. One is Martin Sorrell, who was the founder and CEO of WPP, the world’s largest advertising holding company.³ The other is Michael Kassan, the founder and CEO of MediaLink, a multifaceted firm that connects, negotiates and advises on behalf of a multitude of various parties, often competitors in critical matters affecting the ad business. Both of these individuals have significantly shaped modern advertising over many decades and are currently propagating some of the changes spotlighted in the book in trying to keep it vital, relevant and profitable.

Online Privacy v. Online Primacy

“Tug of War”, image by Pixabay

The established tradition of creativity being the primary driver of advertising creation and campaigns has given way to algorithm-driven data analytics. All of the frenemies and a myriad of other sites in many other parsecs of the websphere vacuum up vast amounts of data on users, their online usage patterns, and even go so far as to try to infer their behavioral attributes. This is often combined with additional personal information from third-party sources and data brokers. Armed with all of this data and ever more sophisticated means for sifting and intuiting it, including AI4, the frenemies are devising their campaigns to far more precisely target potential consumers and their cohorts with finely grained customized ads.

The high point of this book is Auletta’s nuanced coverage of the ongoing controversy involving the tension between frenemies using data analytics to increase click-through rates and, hopefully, sales versus respecting the data privacy of people as they traverse the Web. In response to this voracious data collection, millions of users have resisted this intrusiveness by adding free browser extensions such as AdBlock Plus to circumvent online tracking and ad distribution.5 This struggle has produced a slippery slope between the commercial interests of the frenemies and consumers’ natural distaste for advertising, as well as their resentment at having their data co-opted, appropriated and misused without their knowledge or consent. Recently, public and governmental concerns were dramatically displayed in the harsh light of the scandals involving Facebook and Cambridge Analytica.

Furthermore, Google and Facebook dominate the vast majority of online advertising traffic, revenues and, most importantly, the vast quantum of user information which ad agencies believe would be particularly helpful to them in profiling and reaching consumers. Nonetheless, they maintain it is highly proprietary to them alone and much of it has not been shared. Frenemies much?

Additional troubling trends for the ad industry are likewise given a thorough 3-D treatment. Auletta returns to the axiom several times that audiences do not want to be interrupted with ads (particularly on their mobile devices). Look no further than the likes of premium and the major streaming services who offer all of their content uninterrupted in its entirety. The growing ranks of content creators they engage know this and prefer it because they can concentrate on their presentations without commercial breaks slicing and dicing their narrative continuity. The still profitable revenue streams flowing from this are based upon the strengths of the subscription model.

Indeed, in certain cases advertising is being simultaneously disrupted and innovated. Some of the main pillars of the media like The New York Times are now expanding their in-house advertising staff and service offerings. They can offer a diversified array of ads and analyses directly to their advertisers. Likewise, engineering-driven operations like Google and Facebook can deploy their talent benches to better target consumers for their advertisers by extracting and applying insights from their massive databases. Why should their clients continue go to the agencies when their ads can be composed and tracked for them directly?

Adapt or Go Home

“Out with the Old, In with the New”, image by Mark

The author presents a balanced although not entirely sanguine view of the ad industry’s changes to maintain its composure and clients in the midst of this storm. The frenemy camps must be willing to make needed and often difficult adjustments to accommodate emerging technological and strategic survival methods. He examines the results of two contemporary approaches to avoiding adblocking apps and more fully engaging very specific audiences. One is called “native advertising“, which involves advertisers producing commercial content and paying for its placement online or in print to promote their own products. Generally, these are formatted and integrated to appear as though they are integrated with a site’s or publication’s regular editorial content but contain a notice that it is, in fact “Advertising”.

However, Auletta believes that the second adaptive mechanism, the online subscription model, will not be much more sustainable beyond its current successes. Consumers are already spending money on their favorite paywalled sites.  But it would seem logical that users might not be thus willing to pay for Facebook and others that have always been free. As well, cable’s cord-cutters are continuing to exhibit steady growing in their numbers and their migrations towards streaming services such as Amazon Prime.6

Among the media giants, CBS seems to be getting their adaptive strategies right from continuing to grow multiple revenue streams. They now have the legal rights and financial resources to produce and sell original programming. They have also recently launched original web programming such as Star Trek: Discovery on a commercial-free subscription basis on CBS All Access. This can readily be seen as a challenge to Netflix despite the fact that CBS also providing content to Netflix. Will other networks emulate this lucrative and eyeball attracting model?

As Auletta also concludes, for now at least, consumers as frenemies, appear to be the beneficiaries of all this tumult. They have many device agnostic platforms, pricing options and a surfeit of content from which to choose. They can also meaningfully reduce, although not entirely eliminate, ads following them all over the web and those pesky stealth tracking systems. Whether they collectively can maintain their advantage is subject to sudden change in this environment.

Because of the timing of the book’s completion and publication, the author and publisher should consider including in any subsequent edition the follow-up impacts of Sorrell’s departure from WPP and his new venture (S4 Capital), the effects of the May 2018 implementation of EU’s General Data Protection Regulation (GDPR), and the progress of any industry or government regulation following the raft of recent massive data breaches and misuses.

Notwithstanding that, however, “Frenemies” fully delivers on all of its book jacket’s promises and premises. It is a clear and convincing case of truth in, well, advertising.

So, how would Frank Bartles and Ed Jaymes 2.0 perceive their promotional travels throughout today’s world? Would their folksy personas play well enough on YouTube to support a dedicated channel for them? Would their stops along the way be Instagram-able events? What would be their reactions when asked to Google something or download a podcast?

Alternatively, could they possibly have been proto-social media influencers who just showed up decades too soon? Nah, not really. Even in today’s digital everything world, Frank and Ed 1.0 still abide. Frank may have also unknowingly planted a potential meme among today’s frenemies with his persistent proclamations of “Thanks for your support”: The 2018 upgrade might well be “Thanks for your support and all of your data”.

 


For a very enlightening interview with Ken Auletta, check out the June 26, 2018 podcast entitled Game Change: How the Ad Business Got Disrupted, from The Midday Show on WNYC (the local NPR affiliate in New York).


September 4, 2018 Update: Today’s edition of The New York Times contains an highly enlightening article directly on point with many of the key themes of Frenemies entitled Amazon Sets Its Sights on the $88 Billion Online Ad Market, by Julie Creswell. The report details Amazon’s significant move into online advertising supported by its massive economic, data analytics, scaling and strategic resources. It comprehensively analyzes the current status and future prospects of the company’s move into direct competition with Google and Facebook in this immense parsec of e-commerce. I highly recommend a click-through and full read of this if you have an opportunity.


1.   The classic work on the causes and effect of market disruptions, the disruptors and those left behind is The Innovator’s Dilemma, by Clayton Christensen (HarperBusiness, 2011). The first edition of the book was published in 1992.

2.    Netflix Topples HBO in Emmy Nominations, but ‘Game of Thrones’ Still Rules, July 13, 2018, New York Times, by The Associated Press. However, see also Netflix Drops Dud on Wall St. As Subscriber Growth Flops, July 16, 2018, New York Times, by Reuters.

3.   Sorrell is reported in the book as saying he would not leave anytime soon from running WPP. However, following the book’s publication, he was asked to step down in April 2018 following allegations of inappropriate conduct. See Martin Sorrell Resigns as Chief of WPP Advertising Agency, New York Times, by Matt Stevens and Liz Alderman, April 14, 2018. Nonetheless, Sorrell has quickly returned to the industry as reported in Martin Sorrell Beats WPP in Bidding War for Dutch Marketing Firm, New York Times, by Sapna Maheshwari, July 10, 2018.

4.  For a very timely example, see The Ad Agency Giant Omnicom Has Created a New AI Tool That is Poised to Completely Change How Ads Get Made, BusinessInsider.com, by Lauren Johnson,  July 12, 2018.

5.   Two other similar anti-tracking browser extensions in wide usage include, among others Ghostery and Privacy Badger.

6.   See also  Cord-Cutting Keeps Churning: U.S. Pay-TV Cancelers to Hit 33 Million in 2018 (Study), Variety.com, by Todd Spangler, July 24, 2018.

Advertisers Looking for New Opportunities in Virtual and Augmented Spaces

"P1030522.JPG", Image by Xebede

“P1030522.JPG”, Image by Xebede

Are virtual reality (VR) and augmented reality (AR) technologies about to start putting up “Place Your Ad Here” signs in their spaces?

Today’s advertising firms and their clients are constantly searching for new venues and the latest technologies with which to compete in evermore specialized global marketplaces. With so many current and emerging alternatives, investing their resources to reach their optimal audiences and targeted demographics requires highly nimble planning and anticipating risks. Effective strategies for both of these factors were recently explored in-depth in the March 22, 2015 Subway Fold post entitled What’s Succeeding Now in Multi-Level Digital Strategies for Companies.

Just such a new venue to add to the media buying mix might soon become virtual worlds. With VR is the early stages of going more mainstream in the news media (see the May 5, 2015 Subway Fold post entitled The New York Times Introduces Virtual Reality Tech into Their Reporting Operations), and even more so in film (see the March 26, 2015 Subway Fold post entitled Virtual Reality Movies Wow Audiences at 2015’s Sundance and SXSW Festivals), it seems inevitable that VR might turn out to be the next frontier for advertising.

This new marketplace will also include augmented reality, involving the projection of virtual/holographic images within a field of view of the real world. Microsoft recently introduced a very sleek-looking headset for this called the HoloLens, which will be part of their release of Windows 10 expected sometime later this year.

A fascinating report on three new startups in this nascent field entitled Augmented Advertising, by Rachel Metz, appeared in the May/June 2015 edition of MIT Technology Review. (Online, the same article is entitled “Virtual Reality Advertisements Get in Your Face”.) I will sum up, annotate and pose a few additional questions to this. As well, I highly recommend clicking through on the links below to these new companies to fully explore all of the resources on their truly innovative and imaginative sites.

As the VR and AR headsets are set to enter the consumer marketplace later in 2015, manufactured by companies including Oculus, Sony, Microsoft (see the above links), Magic Leap and Samsung, consumers will soon be above to experience video games and movie formatted for these new platforms.

The first company in the article working in this space is called Mediaspike. They develop apps and tools for mobile VR. The demo that the writer Metz viewed with a VR headset placed that her in a blimp flying over a city containing billboards for an amusement ride based on the successful movie franchise that began with Despicable Me. The company is developing product placement implementations within these environments using billboards, videos and other methods.

One of the billboards was showing a trailer for the next movie in this series called Minions. While Metz became a bit queasy during this experience (a still common concern for VR users), she nonetheless found it “a heck of a lot more interesting” than the current types of ads seen on websites and mobile.

The second new firm is called Airvertise. They are developing “virtual 3-D models that are integrated with real world locations”. It uses geographic data to create constructs where, as a virtual visitor, you can readily walk around in them. Their first platform will be smartphone apps followed by augmented reality viewers. At the SXSW Festival last March (please see the link again in the third paragraph above to the post about VR at SXSW), the company demo-ed an iPad app that, using the tablet’s motion sensors, produced and displayed a virtual drone “hovering above the air about 20 feet away” with a banner attached to it. As the user/viewer walks closer to it the relative size and spatial orientation of it correspondingly increases.

The third startup is called Blippar. Their AR-based app permits commercial content to be viewed on smartphones. Examples include seeing football players when the phone is held up to a can of Pepsi, and shades of nail polish from the cosmetics company Maybelline. The company is currently strategizing about how to create ads in this manner that will appropriately consumers engage consumers but not put them off in any way.

My questions are as follows:

  • Will VR and AR advertising agencies and sponsors open up this field to user-generated ads and commercial content which has already been successful in a number of ad campaigns for food and cars? Perhaps by open-sourcing their development platforms, crowdsourcing the ads, and providing assistance with such efforts this new advertising space can gain some additional attention and traction.
  • What is exactly about VR and AR experience that will provide the most leverage to advertising agencies and their clients? Is it only limited to the novelty of it – – that might well wear off after a while – – or is there something unique about these technologies that will inform and entertain consumers about goods and services in ways neither previously conceived of nor achieved? Is a critical must-have app or viral ad campaign going to be needed for this to reach a tipping point?
  • Might countering technologies also appear to block VR and AR advertising? For example, Ad Block Plus is a very popular browser add-on that enables users to filter out today’s banner ads and pop-ups online. How might advertisers positively reaction to such avoidance?
  • Just as the leading social media services such as, among others, Facebook (which now owns Oculus), Twitter and Intagram, where advertisers have major presences, do VR and AR similarly lend themselves to being populated by advertisers on such a web-wide scale?