Prabhakar Mundkur
Guest Article

Is advertising really dead?

When I joined advertising in 1977, advertising was considered an art form. Like most art, there was an air of gay abandon about it that went well with its brand of creativity. The word ‘advertising’ conjured up images of advertising folk having long lunches with pink gins and bloody marys while they partied at nights with models and other celebrities. Nothing could be further from the whole truth.

Ad agencies worked the ‘996’ schedule long before Jack Ma made it a mantra, or code coolies started complaining about overwork. Often, client service and creative people sacrificed their personal and family time to work on their clients' brands to bring their clients fame. But yes, it had a lot more freedom than working in a bank or some other industry. Jerry Della Femina described the advertising profession very aptly in his book ‘From those Wonderful Folks Who Gave You Pearl Harbour’ published in 1970, - “I honestly think advertising is the best fun with your clothes on.”

The Traditional Advertising Business Model

How did we earn? That wonderful God given commission of 15 per cent on a client’s media spends kept the advertising business running like a well-oiled machine. No one questioned it, because there are some things that you never question. Somehow the reason why it seemed unshakeable was because the 15 per cent came from the media rather than from the clients. That made us feel that the clients were actually getting the advertising for free. It’s not that the ad industry made excessive profits. In fact, they made just enough to keep their heart and soul together. Which actually made the industry vulnerable and open to acquisition in the late 80s. In 1987, WPP swooped down on J Walter Thompson which was ripe for an attack. Ogilvy was acquired two years later.

Prabhakar Mundkur
Prabhakar Mundkur

I call this the first Big Bang in the advertising industry. The culture of ad agencies was to start to change forever. They would become so bottom line oriented that all other lines in the agencies including strategy planning and creativity would start to become affected. You can imagine the shock - a math man running a bunch of mad men.

The second Big Bang was the painful extraction of the media business from the main agency to create stand-up independent media agencies. The 15 per cent media commission which was beginning to break down any way suddenly became the norm rather than the exception. The net effect of this Big Bang was that the media plus creative function was being paid much less than ever before. This resulted in less training, lower salaries, less interest from business school graduates to join advertising, less travel, and less talented people finally willing to join advertising. In a way, it was the beginning of the slow downfall of advertising.

Enter the New Millennium

The new millennium brought with it some profound changes. The internet was beginning to change the way people live, read, do business, buy, and connect with other people. In 2004, Mark Zuckerberg launched Facebook. We learnt a new term called ‘social media’ with its advent. LinkedIn was launched earlier in 2003 and Twitter later in 2006. A host of other social media would completely change the way we live. So would advertising unfortunately. Because people were spending much less time watching television and reading the newspapers and listening to radio. In 2019, people spent more time with digital media than with traditional media in the US.

Source: statistica.com
Source: statistica.com

Time spent with digital media vs traditional media in the US in minutes

Source: eMarketer, Feb 2019
Source: eMarketer, Feb 2019

Much more money will be spent on digital media compared to traditional media in the US especially in the future. While India is well behind the curve, there is no doubt that we will follow the global pattern at some point of time in the future, it is difficult to say exactly when.

So now ads now had to be made for Facebook, LinkedIn and other social media because people were spending more time there, rather than with their television sets or their daily newspapers. Or ads had to be served to people browsing the internet, and just a click could take them to more detailed information about a product which could induce those consumers to finally buy the product online.

The wonderful thing about the internet was that everything could be measured. People’s behaviour could be tracked real time. For the first time, we could build profiles of people and their preferences. This is exactly what happens when you are on Amazon, which through your past browsing and purchases is able to predict with a fair degree of accuracy what you might want next. It knows your favourite authors, your favourite music, which detergent you buy, and what clothes you like to wear.

This gave rise to new techniques in communicating. It meant that the skill needed to produce the famous Volkswagen Beetle ad by Bill Bernbach that made it a cultural icon that sold millions of cars were no longer needed.

A 1959 Volkswagen ad
A 1959 Volkswagen ad
A social media post from Volkswagen in 2019
A social media post from Volkswagen in 2019

All these changes inevitably gave rise to a new avatar called the digital advertising agency. Filled with young people who themselves were voracious consumers of the internet and social media, they formed the core of the digital advertising agency.

From Mad Men to Math Men

Image courtesy : Mad Men by Lionsgate Television
Image courtesy : Mad Men by Lionsgate Television

It does seem like more and money will be spent on digital advertising rather than traditional media in the future. A rather ominous sign for traditional advertising. I think advertising won’t die right away, but it will keep fading. It might well be time to start writing a worthy epitaph.

“75 per cent of our business is stuff that Don Draper would be uncomfortable with”, said Sir Martin Sorrell in 2015. I can’t help feeling that Don wouldn’t think he is missing anything!

(Prabhakar Mundkur is an ad veteran now retired, who observes the ad industry from a distance).