The Anti-Cannes: advertisers take long hard look in the marketing mirror

“There’s a trillion dollars in this room.” This is how Sir Martin Sorrell described the audience at the World Federation of Advertisers conference we attended in Lisbon this week.

With all that power and money in the room, you might have expected an introspective festival of self-celebration and deal-making — the sort of play dressed up as work that has given the Cannes advertising fiesta its slightly grubby reputation in recent years.

But it wasn’t like that.

There were few if any agencies allowed into the room. It was the world’s biggest brands talking to themselves, and they had some serious questions that they wanted to get answered.

Are we funding extremists and criminals? Are our media partners ripping us off at every turn? Are we helping or hindering progress in social issues like gender diversity, homophobia and racism?

The main themes of the conference were:

  • Responsibility of the ad industry for how it affects culture and society.
  • The responsibility of advertisers for what their digital media ends up funding.
  • Ad fraud and ecosystem (the plumbing of marketing).
  • Need for hybrid in-housing/outsourcing approaches by brands and new agency models to support these.
  • D2C (Direct to Consumer) brands taking market share from incumbents.

Let’s take a closer look at a few of these themes played out on the conference stage, in seminars and in the informal networking conversations in Lisbon.

The breakdown of the holding group hegemony

Advertising won’t die, but it’s losing its importance in how CMOs think about marketing.

A great deal of the pre-conference seminars and informal discussions around Global Marketer Week were about ad-fraud of all kinds. While leaders like Keith Weed, the outgoing CMO of Unilever, still talk about the importance of their holding company partners, the next generation of senior marketers seemed pessimistic about the future of the big brand and giant media company models.

A great deal of energy was devoted to talking about how to fix the current system, but there was a great deal of talk about how to completely change how advertising works. Those handling media buying contracts on the client side seem to be a cat-and-mouse game of finding and shooting down agencies’ ever more arcane ways of finding new ways to make a profit. Sir Martin Sorrell blamed procurement departments for cutting media agency revenues so low that they had to find creative ways to wiggle into profit.

New model agencies that have super-transparent fee structures are becoming more popular but it is hard for large brand groups to lose the reach of the global holding groups like WPP, Omnicom, Publicis et al.

The rise of in-housing and related models

The emerging consensus about the solution to the client-media agency impasse was to look at new models of agency-client relationships. Sir Martin Sorrell, previously the builder of the largest media group in the world has switched his view to a “single agency model”, integrating the “holy trinity” of data, creative content and media in his new venture S4 Capital.

But it isn’t just new types of agencies that clients are looking at – the trend for in-housing of services traditionally provided by agencies is growing. The priority isn’t “the plumbing” of media buying machines, however, it’s data-led planning that will give brands the most effective way to take control of how their content reaches their customers. Brands can’t continue to rely on media agencies as, whatever the question, their answer will always be media.

The long-standing view at Brilliant Noise has been that hybrid in-housing is essential, especially for planning. The hybrid model means in-house teams elevate their capability to understand their customer’s journeys, know how to plan their marketing around customer behaviour and to be able to ask agencies better questions to make sure marketing is always in the best interests of the customer.

Buying media for advertising is where most marketing money has gone in recent decades. Now the machine is broken, too much priority is being given to fixing that machine rather than building a whole new system that will be effective in a world where, to quote one debate participant “30% of web users have taken active measures to avoid advertising” and where the (ad-free) Netflix is becoming marketers greatest competitor for cultural relevance and consumer attention.

Is advertising breaking the web?

Instead of the panel-discussion platitudes, you might usually see at an industry conference, senior marketers squared up in a confrontational debate in an explicit attempt to get to the heart of issues.

Earlier quotes from the biggest names in the industry flashed up on the giant screens at the head of the venue:

“The days of advertising as we know it are numbered. We need to start thinking about a world with no ads.” — Mark Pritchard, P&G

“The future of marketing isn’t advertising. It’s corporate culture.” Claudia Willvonseder, VP, Ikea Switzerland

Jumping off from these cues, senior marketers and industry commentators attacked the discussion with passion.

Media budgets = social power

Although there was a great deal of discussion of purpose in the conference, there was real tangible progress being achieved.

Syl Saller, CMO of Diageo, and Belinda J Smith, Global Head of Media at games giant Electronic Arts (EA) were both exemplars of a purposeful pragmatism among leaders affecting real change.

In a pre-conference debate, Smith won the audience vote from four propositions about how to realise a vision of “better marketing”. What was compelling about her argument was its simplicity – you have power and you should use it with social and moral responsibly. Most people at the conference had power over what ads get made and where they are shown – they need to exercise that power.

For many, the most compelling session of the main conference was an interview with Syl Saller. She admitted she was scared to take on her role, and when she started there was not a single woman on her leadership team. She went on to get a 50:50 gender balance in her team.

Recently she went on to demand her agencies report on their diversity metrics. The results showed they needed to do more to address inequality and are now going on with it. She used her influence over how millions of pounds are spent to nudge an industry in the right direction.

Accusations of “greenwash” and “purposewash” have been levelled at brands by critics in recent years, and you wouldn’t have to be a committed cynic to feel that they had valid points. Get up close with real leaders with real power and you can see that they actually mean business when it comes to these serious issues.

D2C vs big brands

The threat of D2C brands was examined from several angles.

There weren’t many — of any — D2C brands at the conference as speakers or delegates. The WFA mainly comprises the global marketing establishment, as it were, so that isn’t a surprise. They were discussed variously as threats, opportunities (many, like Dollar Shave Club) end up being bought by big groups, and as inspiring innovators to be copied.

The term D2C is used as a kind of synonym for new wave disruptors, especially in the consumer packaged goods (CPG) sector. Once a disruptor, Airbnb is in the establishment club now — its Global Marketing Director, Geoff Seeley, was a keynote speaker, where it would have been a D2C disruptor to travel companies five years ago. Now Airbnb is established as a cultural and commercial player it has started to advertise — and hence it is at the WFA. Its previous CMO and current were both products of the CPG marketing sector, so advertising is in their blood.

Returning to the issue of diversity, Terry Kawaja CEO of LUMA — the investment banker responsible for those anxiety-inducing industry maps — pointed out that 40% of D2C brands’ CEOs are women. Proof perhaps, that if companies can’t transform to what the world needs, others will come along who will do it for them.

Here’s LUMA’s map of the 400 D2C brands his analysts are currently tracking. (Beware, many superstitious marketers believe that if you look into a LUMAscape like this for long enough, it will look back at you and see your soul.)

And there’s more…

For clients of major brands, the WFA as an organisation is one they should get involved in – it is vibrant, focused and taking the toughest issues in the industry head-on. As sponsors, Brilliant Noise’s team was privileged to see a lot of the discussion close-up and we will be writing and sharing more insights inspired by our experience. If you would like to attend one of our briefings on any of these issues or hear more about how we can help with in-house capability building, content operations and digital-first creative content get in touch at hello@brilliantnoise.com

Download our Better Marketing paper here