August 6th, 2007
Publicis/Digitas On All-Digital Advertising, Outsourcing, and Competing with Google Yahoo Microsoft
Kudos to Publicis Groupe and Digitas for imagining an all-digital advertising future, for planning to solve the deep structural problems of advertising 2.0, and for not sitting still while Google, Yahoo, and Microsoft take over the advertising industry.
The most provocative idea to emerge from the New York Times profile of Publicis/Digitas’ digital advertising strategy is a plan for overcoming the massive human resource barrier to realizing the vision of fully personalized and customized advertising — by going offshore:
“There’s a chance to invest right now in China, India, Russia and Brazil, which will pay off big over the next five years,” Mr. Kenny said. “These economies are going to boom, and ads there are going to go directly to mobile and directly to the Internet.”
Beyond the growth potential, Publicis executives see these economies as important sources of low-cost labor for a Digitas subsidiary called Prodigious, a digital production unit that works with all agencies in the Publicis Groupe. Prodigious already uses workers in Costa Rica and Ukraine to produce copious footage for companies like G.M.
Greater production capacity is needed, Mr. Kenny says, to make enough clips to be able to move away from mass advertising to personalized ads. He estimates that in the United States, some companies are already running about 4,000 versions of an ad for a single brand, whereas 10 years ago they might have run three to five versions. And he predicts that the number of iterations will grow as technology improves.
It’s amazing that it’s taken this long for a major advertising player to take this step — and notable that it wasn’t one of the big Internet/tech players. This isn’t strictly an issue of cost savings, as with most offshoring — current ad agency human resources simply aren’t structured to scale to the level necessary to generate the enormous amount of ad creative necessary to deliver the kind of highly customized, ultra-targeted advertising that technology has made possible.
Publicis has already put its money where its mouth is by acquiring Communication Central Group, a digital agency in China.
While most media/advertising players are still trying to prop up the traditional media advertising economy, or like Google, trying to squeeze dollars out of it, Digitas is already planning for the inevitable all-digital advertising future. And David Kenny, the CEO of Digitas, is right that it’s consumer data that will drive all advertising into digital formats, as it becomes more and more difficult to rationalize the inefficiency of non-digital advertising.
You can see what consumer data enables in these variations on a GMC ad — but as with all such targeting, there’s a “creepiness factor” that needs to be overcome. Nonetheless, it’s very likley that the future lies with this type of customization, as relevancy trumps privacy in the long run. Yahoo with its SmartAds platform and AOL with its acquisition of behavioral targeting pioneer TACODA are clearly aiming at that future.
Maurice Lévy, chairman and chief executive of the Publicis Groupe, fires a shot across the bow of the big tech players who are positioning themselves to take over the entire ad industry as it goes digital:
How do we see Google, Yahoo and Microsoft? It’s important to see that our industry is changing and the borders are blurring, so it’s clear the three of those companies will have a huge share of revenues which will come from advertising,” said Maurice Lévy, chairman and chief executive of the Publicis Groupe.
“But they will have to make a choice between being a medium or being an ad agency, and I believe that their interest will be to be a medium,” he added. “We will partner with them as we do partner with CBS, ABC, Time Warner or any other media group.”
While Google, Yahoo, and Microsoft, with their recent advertising platform acquisitions, see are betting they can create vertically integrated media and advertising companies, Publicis is betting — as it must — that advertisers will be wary of the fox selling the hen house. For self-serve search advertising, that horse is already out of the barn (to mix fram metaphors), but the drama is still yet to play out for the big video advertising dollars.
My heart goes out to the CMOs and VPs of Advertising at big brand advertisers who are watching the media and advertising landscape transform right under their feet and are casting about form firm ground to stand on.
Pull up a bowl of popcorn — the transformation of media and advertising is only getting more interesting.
Subscribe to Publishing 2.0 | 
Follow on Twitter
Topics: Digital Media | Google | Microsoft | Online Advertising | Yahoo
Powered by 
Design by 
Publicis and Digitas’
best at: producing and aggregating media or should they develop their own ad networks? And if they do try to integrate media and advertising in the way that Google and Yahoo are doing: how trustworthy will they be? Questions that popped up as I read Scott Karp’s post on the topic today: “Pull up a bowl of popcorn — the transformation of media and advertising is only getting more interesting.” p.s. off-shore digital ad production seems to be good business to get into, if more ad agencies will follow Publicis
the media and advertising landscape transform right under their feet and are casting about form firm ground to stand on. Pull up a bowl of popcorn — the transformation of media and advertising is only getting more interesting. [IMG ] [IMG] (via tmonkey’s starred items in Google Reader)
Important question I guess for any media player is whether or not to vertically integrate. And if you are a traditional media company, is it even possible to expand from let’s say publishing into running an ad network? You carry along a legacy and its hard to step over boundaries and even harder to convince the outside world that you are trustworthy and not like “the fox selling the henhouse” as you put it.
Interesting as always Scott.
I did some thinking around this ‘targeted’ niche advertising - after a Thought Leadership meeting Nokia held not so long ago.
I feel the reason I am uncomfortable with it is that it’s all a little superficial. The admen are trying to find an individualised way to sell a mass produced thing to me. There’s a basic disconnect.
I posted on this subject here: http://fasterfuture.blogspot.com/2007/06/why-targeting-ad-message-cant-be-enough.html
and I welcome all contributions.
[...] Karp on Publishing 2.0 has a set of great posts including one that covers David Kenny’s profile in the New York [...]
[...] advertising agencies realign themselves to themselves with digital advertising platforms that create more value for consumers, it may still be [...]
[...] “Pull up a bowl of popcorn — the transformation of media and advertising is only getting mor… Posted on August 23rd, 2007 [...]
Advertising’s new world order
I read somewhere recently that it’s a battle between Google and Microsoft to determine who will be the next great advertising company in this country. Get serious … who is buying this garbage?
I have been in and around the advertising business for my entire life. In fact, I am a third generation graphic arts designer … only my specialty is digital. My grandfather started making a living in the ad industry in 1918, at the age of 19. His son followed. Both of my brothers and my sister have spent most of their life in advertising as well. My nephew is now attending one of the most prestigious advertising graduate degree programs in the world … and is knocking them dead. Even my 16-year-old daughter has the knack.
The advertising industry demands perfection … and vision. It tries to strike the perfect balance between super creative people, media experts, business people and account executives. While it sometimes stretches the norm and produces an ad like the infamous Apple attack on IBM, or the sexy new GoDaddy models trying to host your web site accounts, it always plays within the rules. If it doesn’t, you, the consumers, will let them know. You don’t see laws being violated every single day by these agencies … whether they relate to smoking prohibitions, pornography, blatant racial prejudice, or generally offensive materials of any sort. You make a mistake like Don Imus and “pow”, you’re taken off the air. Your advertisers dump you. And you certainly don’t steal other people’s work. Words … images … music. The industry has for the most part learned how to protect its own.
Social responsibility, respect for individual creative skills, and copyright protection have become a way of life in this industry. And now targeted advertising can be delivered to us on the device of our choice (mobile or static) and exactly when we might want to see, or hear, it. How exciting!
But it’s not all about the bucks, folks. Advertising requires a degree of class … sophistication … social responsibility … and an understanding of what is visually appealing and what is not. How many over-the-top flashing, hopping, beeping, or honking pop up ads can someone watch before the device ends up in the bottom of the lake in a fit of rage, anyway?
What advertisers in their right mind are looking to recruit Michael Vick or Mike Tyson these days … and we won’t likely hear the end of these dramas for many months to come. Even the slightest hint of cruelty, or lawlessness, can set a concerned advertiser, and its clients, into an uproar. The established rule of socailly acceptable advertising has always been to avoid controversy at all costs. Let the journalists do their job on that front … not the ad agencies.
The technology industry is entirely different. It thrives on controversy. Whether it’s Microsoft stealing its original ideas for Windows from Apple, or Apple stealing its interfaces and designs from HP, they are all roughly the same. It’s always been that way. Try to get away with anything you can until the government authorities threaten to shut you down … or, worst yet, put you behind bars. And if you accumulate enough cash money in the process, you can even fend off the government if you choose.
I know. I went to work for IBM in the mid-70’s. Almost got disinherited by my “advertising” family in the process, but there I went anyway. We weren’t taught creativity much at all in those days. It was more FUD than anything else. For those of you new to the industry, that’s Fear, Uncertainty, and Doubt. “If you don’t pay three times as much for this IBM system you are likely to lose all of your data … and then your wife … and eventually all of your children.” IBM finally met its match in the 80’s and took a dive from grace. They fell asleep at the wheel. I call it “we’re #1 syndrome”.
Then Microsoft took over. Predatory business practices ruled the roost. “Bundle this or we’ll squash you. License us your ideas for pennies or we’ll steal them anyway. Antitrust issues be damned. We are much better pitch men then you folks will ever be.” Never had a company made so much money so quickly. “Hey, this controversy stuff isn’t all that bad, now, is it?”
Then came the 90’s. The decade started off with a strong rumor that a guy named McAfee had invented a cure for the computer virus (Michelangelo) that many thought he invented in the first place. And both the disease and cure spread like wildfire. When I saw him being interviewed by Bryant Gumbel on the Today Show I knew we were in for big trouble. The technology industry has never been the same. These software engineers are sure smart, but should they really be allowed to operate outside the law of the land? I don’t think so.
By the end of the 90’s, the Internet had taken hold. And every two-bit pirate wannabe in the world was now an official “publisher”. You could go public by selling air, but stealing other people’s property, selling polluted air, and then recruiting an audience to your party, or new community as they called it, was much more exciting. Business ethics be damned. The advertising industry was supposed to attend and sponsor the feast as well, but few quality firms participated at this early stage. Something didn’t smell right. Tell me again why “eyeballs” are more important than “profits”?, a few from the old school would quietly whisper their concerns to each other for fear of being heard and considered to be behind the times. No riches were reserved for dinosaurs in this new game.
I found it almost too sad to watch as many of our modern day business “heroes”, like GE Chairman, Jack Welsh, and NBC Chairman and CEO, Bob Wright, got snookered by some of these new Internet visionaries, and convinced their advertisers to tag along. They weren’t about to miss out on this new “zero gravity” wave … whatever the heck that meant anyway.
So now the dust is finally settling and Web 2.0 has brought about a new world order. Advertising 2.0. Power to the people. Controversy brings eyeballs and is sought after now, not avoided. Social networking is hot, buying goods via auctions over the Internet is in vogue, and user supplied content is virtually uncensored … all of our norms are starting to change. And the software engineers and scientists out at Google have finally figured out how to dupe Madison Avenue, not just Wall Street, out of its money … let alone the poor small business out there on Main Street!
Google refuses to follow the standards of objective and straightforward journalism and guess what … journalism has started to die. Google unilaterally decides to digitize every single book they can get their hands on around the world without the copyright owners’ permission … and guess what … the book publishing industry turns into a steep downward cycle … if not a tail spin. Newspapers are all selling out, if not giving up. Google pays $1.65 billion for a start up company called YouTube, that, by and large, uses stolen property to attract its customers. Technology companies agree to censor content in China while the Chinese government applauds the fact that its piracy rate is now only slightly above the 80% level. Kids get thrown out of fraternities, and other socail networks, if they are found actually paying for music or movies they download online … let alone using e-mail. These are no longer socially acceptable practices, you know … or hip. Obnoxious and intrusive advertising smears all of our online lives. Who produces these pop-up and banner ads anyway?
The whole advertising industry has caved into the “science” of it all … and it’s supposed to strike a delicate balance between both “science” and “art”. Always has.
So are we really all going to sit tight and watch the “medium” become the “message”?
Hey, I’m not against progress. I love these search engines and what they can do. Used fairly, they can really enhance our lives. But I don’t want to be exposed to stolen property every time I turn around. Are there really 147,645 companies out there giving away original content that is part of the “public domain” as Google claims? I don’t think so.
I’m aware that I, too, have potential liability even as an innocent user of this digital “stuff” I download online when the property is stolen. I just want to hear the truth. Who owns the content on your website anyway? Never had to worry about this sort of thing before. Responsible advertisers would provide me with a shield. I just like being told when I’m about to get hoodwinked. “Bend over … we realize that there’s no water in the shower, but our engineers are working on that one as well.” Semantic water.
Go ahead, technology companies. Take all of the money. You might as well before another country like Brazil, Russia, India or China (the so-called emerging BRICs) starts to dominate the game.
But please don’t call yourself an advertising company. You’re a delivery medium. Stick to your knitting. We’ve had to solve enough problems over the years … dealing with our own unique blend of greenhairs and greenbacks … on our own!
Long live the power of the honest pitch! Wake up advertising companies … we need you!
George P. Riddick, III
Chairman/CEO
Imageline, Inc.
griddick@imageline2.com