By Frank Ahrens
Washington Post Staff Writer
Saturday, June 16, 2007
As they have for more than half a century, thousands of advertising executives, art directors, writers and moviemakers converge tomorrow in Cannes, France, for the industry's annual Oscars week -- the Lions festival, which honors the year's best ads. The superstars of the show are the 30-second TV commercials submitted by ad agencies.
But as the creative types gather to honor one another, the 30-second TV spot is imperiled as never before. Its competition: A dizzying array of digital and Internet options, many of which produce instant results and valuable consumer data, something that TV ads cannot.
Once upon a time, ad firms dreamed up campaigns on sketchbooks and typewriters, and bought television network time in 30-second chunks. Now, if agencies do not know how to use Internet search algorithms and data analysis, how to build turnkey e-commerce sites with Flash video, how to shoot viral video and plant the results on YouTube, they are increasingly useless to clients.
The pop-culture idea of a Madison Avenue adman -- "The Man in the Gray Flannel Suit" or Darrin Stephens from "Bewitched" -- is becoming a fading afterimage in today's ad industry.
"My Darrin Stephens is a piece of software," said Benjamin Palmer, president of the Barbarian Group, which has produced more than 300 Web sites for clients but not one 30-second spot for television.
Still, the world's major advertising firms are not yet hemorrhaging dollars or clients. Of the world's four major advertising holding companies, massive conglomerates that own dozens of ad agencies much like separate record labels in a big music company, only Interpublic Group lost money in 2006.
The status quo has its defenders. In a January Advertising Week essay, DDB Worldwide Communications Group Chairman Bob Scarpelli argued that the Super Bowl, the unrivaled showplace of 30-second TV commercials, is still a good buy for some advertisers. "At a time when we know it is getting increasingly difficult to reach our fractionated, time-deprived, attention-deficit-suffering customers, the Super Bowl is still the one place where their interest and our interest as marketers line up perfectly and collide," Scarpelli wrote.
But parts are starting to fall off of the decades-old industry machine.
Consumers are spending more time online and less watching network television. When they do watch, more viewers have the ability to use TiVo to bypass ads. Consumers demand more from their advertising -- they want product information, consumer reviews and purchase options, not just a glib message pitched by a celebrity. And they want information tailored for them, not a mass audience.
"I don't have children, so I don't need to see [ads] for diapers," said Darin Brown, chief strategy officer for Avenue A/Razorfish, owned by digital ad company aQuantive. "I get that the diaper is going to be effective, and the ad entertained me, but it's not going to cause me to buy because it's not relevant to my situation."
Microsoft agreed to buy aQuantive for $6 billion last month because it specializes in using sophisticated data-crunching tools to monitor how consumers use digital advertising. The process allows advertisers to reallocate their spending for optimum effect.
"I believe that search[-based] and other online advertising is taking away from the off-line [or traditional] budgets of marketers, and one reason is it's more accountable," said Karl Siebrecht, president of Atlas Enterprise Solutions, which aQuantive also owns. "You can send your message out there and understand if people click on it downstream, and if they click, do they purchase? If you're selling Toyotas, you can see if they asked for a specific dealer location."
In other words, the art of advertising is turning into the science of advertising. Agencies now need math guys.
The signs of change are seen in dollars. In 2006, network television advertising revenue increased 2 percent while Internet ad spending rose 35 percent, the Interactive Advertising Bureau said.
It is clear that ad money is moving to the Internet from traditional advertising. This year, TNS Media Intelligence predicts that all ad spending will grow 1.7 percent compared with last year. TNS also said Internet ad spending would rise 16 percent and network TV revenue would rise 1.3 percent.
"We're seeing [money] coming from TV and print," said Sheryl Draizen, IAB's general manager. Among digital spending, search-based advertising gets the biggest piece of the pie, 40 percent, IAB said.
The change is seen in agency acquisitions. On Thursday, the ad company Publicis Groupe of Paris said it was buying France's largest digital ad shop, the latest attempt by a traditional agency to buy what it does not have.
The change also is seen in the migration of clients, who now demand the quantifiable results that digital advertising can provide.
In April, Nike pulled its running-shoe campaign from longtime ad agency Wieden+Kennedy, which had developed the iconic "Just Do It" tagline and many memorable television commercials. Wieden+Kennedy lost the account because Nike did not believe the agency had the necessary digital expertise to promote Nike shoes online.
Nike caught a whiff of the future from its Nike+ interactive online campaign, dreamed up last year by the leading-edge agency R/GA Associates of New York. The Web site, meant to sell Nike running shoes that interface with an iPod to record a runner's mileage, claims a community of thousands of runners who share workout music available for purchase on Apple's iTunes. The site is more than traditional advertising -- it attempts to be a utility for Nike runners.
"Technologists are pretty foreign to the traditional agency model, but they're an important part of the future," said Bob Greenberg, chairman and chief executive of R/GA, which began life 30 years ago as a Hollywood animation house. "Traditional creative is becoming less and less important."
Even the TV networks sense the demise of the 30-second spot. Every network is reallocating resources to expand its programming to the Web to follow viewers and advertisers. A report by Forrester Research last year found that about half of the more than 100 advertisers surveyed said their ad agencies were "ill-equipped" to deal with the upheaval in the TV industry.
Advertisers now ask themselves: What is advertising anymore? The answer may not include an agency.
Treonauts.com was launched in 2004 by Andrew Carton, a London gadget-head and entrepreneur. It began as an online love letter to his favorite toy, the Treo 600 smartphone. Now, three years later, Treonauts.com has grown far beyond a fan site to include product reviews, blogs and a store that produces revenue for Carton along with what he gets from national advertisers like AT&T that buy space on his site. The site gets 250,000 visitors per month, Carton said, and is profitable enough to be his day job. He declined to give revenue figures.
Treonauts.com became a success by doing an end around the advertising-marketing machine. Yet the Treo devices get untold millions of dollars worth of free advertising and positive publicity from the site. All without the help of a Darrin Stephens.
"A company, particularly a consumer electronics company like Palm, should ensure that it is able to manage not only the 'one-to-many' big-marketing messages, but more importantly today also the 'one-to-one' communication" found among groups such as Treonauts, Carton wrote via e-mail.
Charlie Simpson, director of Palm's Web and retail-direct sales, said his company "has toyed with" the idea of paying Treonauts for marketing help, but worries that such a deal would compromise the site's independence in the mind of consumers.
Palmer, Greenberg, the aQuantive executives and more than 40,000 others are expected to make the trip to Cannes this weekend. But the ad festival and what it represents has a decidedly last-generation feel to some in the industry.
"Cannes is a tire fire made of ego, and it will burn or at least smolder forever," said Advertising Age columnist Bob Garfield. "But it's becoming increasingly irrelevant." Garfield predicts a "chaos scenario" for media and advertising -- a future in which traditional firms could become extinct. "There's a lot of talent there. If it could be harnessed to be help marketers instead of in the service of making the most hilarious 30-second spot ever, everybody could prosper."
To hear Frank Ahrens narrate an example of an interactive advertisement, go to washingtonpost.com/technology