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.

Summary of the Media and Tech Preview 2016 Discussion Panel Held at Frankfurt Kurnit in NYC on December 2, 2015

"dtv svttest", Image by Karl Baron

“dtv svttest”, Image by Karl Baron

GPS everywhere notwithstanding, there are still maps on the walls in most buildings that have a red circle somewhere on them accompanied by the words “You are here”. This is to reassure and reorient visitors by giving them some navigational bearings. Thus you can locate where you are at the moment and then find your way forward.

I had the pleasure of attending an expert panel discussion last week, all of whose participants did an outstanding job of analogously mapping where the media and technology are at the end of 2015 and where their trends are heading going into the New Year. It was entitled Digital Breakfast: Media and Tech Preview 2016, was held at the law firm of Frankfurt Kurnit Klein & Selz in midtown Manhattan. It was organized and presented by Gotham Media, a New York based firm engaged in “Digital Strategy, Marketing and Events” as per their website.

This hour and a half presentation was a top-flight and highly enlightening event from start to finish. My gratitude and admiration for everyone involved in making this happen. Bravo! to all of you.

The panelists’ enthusiasm and perspectives fully engaged and transported the entire audience. I believe that everyone there appreciated and learned much from all of them. The participants included:

The following is a summary based on my notes.

Part 1:  Assessments of Key Media Trends and Events in 2015

The event began on an unintentionally entertaining note when one of the speakers, Jesse Redniss, accidentally slipped out his chair. Someone in the audience called out “Do you need a lawyer?”, and considering the location of the conference, the room erupted into laughter.¹

Once the ensuing hilarity subsided, Mr. Goldblatt began by asking the panel for their media highlights for 2015.

  • Ms. Bond said it was the rise of streaming TV, citing Netflix and Amazon, among other industry leaders. For her, this is a time of interesting competition as consumers have increasing control over what they view. She also believes that this is a “fascinating time” for projects and investments in this market sector. Nonetheless, she does not think that cable will disappear.
  • Mr. Kurnit said that Verizon’s purchase of AOL was one of the critical events of 2015, as Verizon “wants to be 360” and this type of move might portend the future of TV. The second key development was the emergence of self-driving cars, which he expects to see implemented within the next 5 to 15 years.
  • Mr. Redniss concurred on Verizon’s acquisition of AOL. He sees other activity such as the combination of Comcast and Universal as indicative of an ongoing “massive media play” versus Google and Facebook. He also mentioned the significance of Nielsen’s Total Audience Measure service.²
  • Mr. Sreenivasan stated that social media is challenging, as indicated by the recent appearance of “Facebook fatigue” affecting its massive user base. Nonetheless, he said “the empire strikes back” as evidenced in their strong financial performance and the recent launch of Chan Zuckerberg LLC to eventually distribute the couple’s $45B fortune to charity. He also sees that current market looking “like 2006 again” insofar as podcasts, email and blogs making it easy to create and distribute content.

Part 2: Today’s Golden Age of TV

Mr. Goldblatt asked the panel for their POVs on what he termed the current “Golden Age of TV” because of the increasing diversity of new platforms, expanding number of content providers and the abundance of original programming. He started off by asking them for their market assessments.

  • Ms. Bond said that the definition of “television” is now “any video content on any screen”. As a ubiquitous example she cited content on mobile platforms. She also noted proliferation of payment methods as driving this market.
  • Mr. Kurnit said that the industry would remain a bit of a “mess” for the next three or four years because of the tremendous volume of original programming, businesses that operate as content aggregators, and pricing differentials. Sometime thereafter, these markets will “rationalize”. Nonetheless, the quality of today’s content is “terrific”, pointing to examples by such media companies as the programs on AMC and HBO‘s Game of Thrones. He also said that an “unbundled model” of content offerings would enable consumers to watch anywhere.
  • Mr. Redniss believes that “mobile transforms TV” insofar as smartphones have become the “new remote control” providing both access to content and “disoverability” of new offerings. He predicted that content would become “monetized across all screens”.
  • Mr. Sreenivasan mentioned the growing popularity of binge-watching as being an important phenomenon. He believes that the “zeitgeist changes daily” and that other changes are being “led by the audience”.

The panel moved to group discussion mode concerning:

  • Consumer Content Options: Ms. Bond asked how will the audience pay for either bundled or unbundled programming options. She believes that having this choice will provide consumers with “more control and options”. Mr. Redniss then asked how many apps or services will consumers be willing to pay for? He predicted that “everyone will have their own channel”. Mr. Kurnit added that he thought there are currently too many options and that “skinny bundles” of programming will be aggregated. Mr. Sreenivasan pointed towards the “Amazon model” where much content is now available but it is also available elsewhere and then Netflix’s offering of 30 original shows. He also wanted to know “Who will watch all of this good TV?”
  • New Content Creation and Aggregation: Mr. Goldblatt asked the panelists whether a media company can be both a content aggregator and a content creator. Mr. Kurnit said yes and Mr. Redniss immediately followed by citing the long-tail effect (statistical distributions in business analytics where there are higher numbers of data points away from the initial top or central parts of the distribution)³. Therefore, online content providers were not bound by the same rules as the TV networks. Still, he could foresee some of Amazon’s and Netflix’s original content ending up being broadcast on them. He also gave the example of Amazon’s House of Cards original programming as being indicative of the “changing market for more specific audiences”. Ultimately, he believes that meeting such audiences’ needs was part of “playing the long game” in this marketplace. 
  • Binge-Watching: Mr. Kurnit followed up by predicting that binge-watching and the “binge-watching bucket” will go away. Mr. Redniss agreed with him and, moreover, talked about the “need for human interaction” to build up audiences. This now takes the form of “superfans” discussing each episode in online venues. For example, he pointed to the current massive marketing campaign build upon finding out the fate of Jon Snow on Games of Thrones.
  • Cord-Cutting: Mr. Sreenivasan believes that we will still have cable in the future. Ms. Bond said that service offerings like Apple TV will become more prevalent. Mr. Kunit said he currently has 21 cable boxes. Mr. Redniss identified himself as more of a cord-shaver who, through the addition of Netflix and Hulu, has reduced his monthly cable bill.

Part 3: Virtual Reality (VR) and Augmented Reality (AR)

Moving on to two of the hottest media topics of the day, virtual reality and augmented reality, the panelist gave their views.

  • Mr. Sreenivasan expressed his optimism about the prospects of VR and AR, citing the pending market launches of the Oculus Rift headset and Facebook 360 immersive videos. The emergence of these technologies is creating a “new set of contexts”. He also spoke proudly of the Metropolitan Museum Media Lab using Oculus for an implementation called Diving Into Pollack (see the 10th project down on this page), that enables users to “walk into a Jackson Pollack painting”.
  • Mr. Kurnit raised the possibility of using Oculus to view Jurassic Park. In terms of movie production and immersion, he said “This changes everything”.
  • Mr. Redniss said that professional sports were a whole new growth area for VR and AR, where you will need “goggles, not a screen”. Mr. Kurnit followed up mentioning a startup that is placing 33 cameras at Major League Baseball stadiums in order to provide 360 degree video coverage of games. (Although he did not mention the company by name, my own Googling indicates that he was probably referring to the “FreeD” system developed by Replay Technologies.)
  • Ms. Bond posed the question “What does this do for storytelling?”4

(See also these 12 Subway Fold posts) for extensive coverage of VR and AR technologies and applications.)

Part 4: Ad-Blocking Software

Mr. Goldblatt next asked the panels for their thoughts about the impacts and economics of ad-blocking software.

  • Mr. Redniss said that ad-blocking apps will affect how advertisers get their online audience’s attention. He thinks a workable alternative is to use technology to “stitch their ads into content” more effectively.
  • Mr. Sreenivasan believes that “ads must get better” in order to engage their audience rather than have viewers looking for means to avoid them. He noted another alternative used on the show Fargo where network programming does not permit them to use fast-forward to avoid ads.
  • Mr. Kurnit expects that ads will be blocked based on the popularity and extensibility of ad-blocking apps. Thus, he also believes that ads need to improve but he is not confident of the ad industry’s ability to do so. Furthermore, when advertisers are more highly motivated because of cost and audience size, they produce far more creative work for events like the NFL Super Bowl.

Someone from the audience asked the panel how ads will become integrated into VR and AR environments. Mr. Redniss said this will happen in cases where this technology can reproduce “real world experiences” for consumers. An example of this is the Cruise Ship Virtual Tours available on Carnival Cruise’s website.

(See also this August 13, 2015 Subway Fold post entitled New Report Finds Ad Blockers are Quickly Spreading and Costing $Billions in Lost Revenue.)

Part 5: Expectations for Media and Technology in 2016

  • Mr. Sreenivasan thinks that geolocation technology will continue to find new applications in “real-life experiences”. He gave as an example the use of web beacons by the Metropolitan Museum.
  • Ms. Bond foresees more “one-to-one” and “one-to-few” messaging capabilities, branded emjois, and a further examination of the “role of the marketer” in today’s media.
  • Mr. Kurnit believes that drones will continue their momentum into the mainstream. He sees the sky filling up with them as they are “productive tools” for a variety of commercial applications.
  • Mr. Redniss expressed another long-term prospect of “advertisers picking up broadband costs for consumers”. This might take the form of ads being streamed to smart phones during NFL games. In the shorter term, he can foresee Facebook becoming a significant simulcaster of professional sporting events.

 


1.  This immediately reminded of a similar incident years ago when I was attending a presentation at the local bar association on the topic of litigating cases involving brain injuries. The first speaker was a neurologist who opened by telling the audience all about his brand new laptop and how it was the latest state-of-the-art-model. Unfortunately, he could not get it to boot up no matter what he tried. Someone from the back of audience then yelled out “Hey doc, it’s not brain surgery”. The place went into an uproar.

2.  See also these other four Subway Fold posts mentioning other services by Nielsen.

3.  For a fascinating and highly original book on this phenomenon, I very highly recommend reading
The Long Tail: Why the Future of Business Is Selling Less of More (Hyperion, 2005), by Chris Anderson. It was also mentioned in the December 10, 2014 Subway Fold post entitled Is Big Data Calling and Calculating the Tune in Today’s Global Music Market?.

4.  See also the November 4, 2014 Subway Fold post entitled Say, Did You Hear the Story About the Science and Benefits of Being an Effective Storyteller?