By Suzanne Vranica
At this year's Advertising Week gathering in New York, attendees
will get a heavy dose of discussion about the future of marketing
and how new technologies such as artificial intelligence and voice
assistants may transform marketing.
But beneath the promises of an exciting tomorrow, attendees at
the schmoozefest will also be confronting the enormous pressures
facing the agencies at the heart of the business of
advertising.
The world's biggest advertising companies, such as WPP PLC and
Interpublic Group of Cos., are dealing with the slowest revenue
growth since the recession and tumbling stock prices. Lackluster
growth has brought broader concerns about the health of the agency
business into sharp relief, with pressures coming from the pullback
in spending from belt-tightening industries such as consumer
package goods, the dramatic evolution of technology, and the
emergence of new competitors.
As Google and Facebook continue to dominate digital advertising,
the technology behemoths aren't escaping criticism themselves, as
marketers look for more assurances about the effectiveness and
quality of online ads.
On top of that, the very idea of convincing someone to buy a
product using advertising is also being called into question, as
consumers increasingly block disruptive ads and turn to the
plethora of new commercial-free entertainment options.
"As an advertiser, I must tell you ads are dead," read a recent
tweet from Lou Paskalis, senior vice president of media and
investment for Bank of America. "The future is about things people
want, not things they have to endure."
Mr. Paskalis says that marketing now must be "engineered to be
relevant in order to engage an audience."
The festival is expected to tackle many of these thorny issues,
as thousands of advertising, marketing, technology and media
executives descend on Manhattan for the 14th annual Advertising
Week conference, which will include 2 40 seminars, 52 workshops and
countless parties.
One panel, entitled " Advertising Needs a Rebrand," is expected
to discuss how agencies can shed the perception that they are "big,
slow, expensive and only know television." Another will explore the
hypothesis that agencies will cease to exist and try to explain
what the future of the agency business looks like.
These are likely to be must-attend events for agency executives.
Why? Collectively, WPP, Omnicom Group Inc., Interpublic, Publicis
Groupe SA and Havas SA had organic global revenue growth of 0.7% in
the second quarter, the worst performance since 2009, according to
Brian Wieser, a senior research analyst at Pivotal Research
Group.
Beside softening financial outlooks, marketers are continuing to
push to reduce the fees they pay for agency services and some are
pressing the firms for structural changes that can help foster
better collaboration between sister agencies within the same
sprawling ad empires.
Executives from Facebook and Google will also be in attendance,
and the shadow of the "duopoly" will hang heavy over many
discussions and strategy sessions. Last year, the two companies
sucked up 77 cents of each new dollar spent on U.S. digital
marketing thanks to the power of their ad targeting, and their
dominance isn't slowing down. Last week, eMarketer raised its
forecast for this year, estimating Facebook and Google will account
for 63% of total U.S. digital ad spending.
On Monday, Facebook's vice president of global marketing
solutions, Carolyn Everson, is expected to talk about how video is
changing marketing, while Google's head of advertising and
commerce, Sridhar Ramaswamy, will speak on Wednesday about the
future of commerce.
On Wednesday, a panel dubbed " Minding the Machines" will
discuss solving the tech industry's transparency issues from brand
safety and the problems with measurement. The discussion is
expected to include executives from ad buyer GroupM, Oath and
Verizon Communications.
Although Facebook and Google have taken steps to improve their
ad measuring processes and have put more safeguards in place to
make sure ads don't appear near controversial content, marketers
still have concerns.
A new study of marketing chiefs, expected to be released
publicly on Tuesday, found that 72% of CMOs have concerns about
safety and controls with their digital ad placements and are facing
pressure internally to fix the issue. Roughly half of the 316
marketers who participated in the online survey said they are
developing new guidelines to ensure ads are placed on appropriate
sites, according to the study, which was commissioned by the CMO
Council, a marketing trade group, and Dow Jones, parent of The Wall
Street Journal. It was conducted late this summer.
On Tuesday, Mastercard's CMO, Raja Rajamannar will tackle the
broader topic of how brands can reach consumers when there are over
600 million devices running ad-blocking software during a panel
entitled: "Storytelling Is Dead."
It may be much-needed advice for companies that are struggling
to figure out their next move as anti-advertising sentiment
spreads. For example, several advertising trade groups united
earlier this month to protest Apple's move to block advertisers
from collecting certain data that helps them target ads to Apple
device users.
Despite the litany of issues facing Madison Avenue, Mr. Wieser
says don't write off storied agencies just yet. He believes they
will find ways to evolve and reinvent.
"They are more like cockroaches than dinosaurs," he said.
Write to Suzanne Vranica at suzanne.vranica@wsj.com
(END) Dow Jones Newswires
September 25, 2017 05:14 ET (09:14 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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