OmnicomPublisaurus - Adland spawns a big new beast

So the big merger has returned to the ad world. The merger of advertising groups Publicis and Omnicom will see the formation of a $35bn new entity that assumes the number one spot from the $30bn incumbent WPP. With so much interbreeding between adland and the tech world over the last 15 or so years, what will be the ramifications for tech?

Firstly let's look at what sort of a beasts we're dealing with. To start with, neither Omnicom or Publicis (nor WPP, Havas, Interpublic, or the handful of other players) are ad agencies as they are sometimes erroneously referred to in the tech world. Instead they are large portfolios groups comprising a full array of subsidiary marketing companies, who individually and collectively provide a range of marketing services to clients. The parent groups are constantly acquiring and divesting portfolio businesses as they seek to fine tune their offering to clients. The enmeshing of tech into their offerings in the last decade or so was part of this development. (It was also one of the drivers behind the development of tech in Silicon Roundabout).

Competition is fierce at every level - amongst the groups, between the portfolio companies and within the portfolio companies. Portfolio groups typically grow organically via acquisition of new clients either at a high level (WPP itself) or at a portfolio company level as the subsidiaries pitch new accounts. Though every so often a group will merge, the current Omnicom-Publicis merger is by far the largest in years.

Since the development of search advertising, tech has become ever more intrinsically combined with adland. Acting initially as a media channel (think search words, banner ads etc), tech has gradually moved backwards up the adland food chain and now comprises an existential threat to many ad companies and possibly ad groups, though as I've written before, I don't believe tech claims that advertising is dead. It is this threat that is one of the justifications (£) behind this mega-merger. But the $35bn question is whether this will work. Certainly "marriages of equals" have a mixed history of success at best (think AOL - Time Warner), and as the Financial Times tells us (£), investors remain unconvinced. Sir Martin Sorrell, CEO of WPP is displaying his usual sangfroid in the face of the merger.

However ultimately it is the tech world that will make or break this deal. This merger is all about using scale to provide efficiency and safety against the new species of competitors. But if recent developments in tech have taught us nothing else, it is that scale is within reach of many businesses today. A agency of just a handful of experts can do the same sort of work that required a global agency network as little as 10 years ago. Moreover, the merging of two big dinosaurs to create an even bigger dinosaur still results in a big slow lumbering animal that will spend the next few years trying to figure out which parts of itself are vital and which are redundant (let alone which side of its brain will come to dominate). A lot will happen in those few years, and with talented staff and dubious clients now eyeing the exits there are many opportunities for the clever and nimble. As Darwin taught us, it is not the strongest that survive, but the ones most adaptable to change.

Advertising is dead; long live advertising

Whilst watching TV last night I saw something pretty special, it was this ad from Southern Comfort. Now I'm a little slow off the mark here - the ad was released last year, but after just one viewing I was hooked. This extremely simple ad displays what advertising does best - in the course of delivering a commercial message it is simultaneously insightful, humorous, soothing, self-fulfilling and above all, highly charismatic. The direction of the ad is a spot on; the deliberate lack of pace, the lingering shots, the rich colour palette, the brilliant casting... it hit the mark on all counts. This is what advertising does when it really does its job. It's also the reason why advertising (and yes, even TV advertising) will remain a vital tool for marketers for a long time to come.

This last statement may come as some surprise to the tech community which is told on a very regular basis that advertising is being disrupted in all sorts of ways and is (figuratively) lying in hospital on life support. Some of these beliefs are almost true - driven by technological development in three key areas and interestingly they have done so by moving backwards along the development process. Firstly, the "distribution" aspect of advertising (what people in the ad industry call "media planning and buying") has been under a sustained assault for more than a decade now as clients look for efficiencies with their media spend. Secondly, as technologies have allowed scale, other "back-end" aspects of the industry - production, printing, image retouching etc - have also come under attack and experienced radical change. Again, these changes were driven by clients seeking cost reductions. The third major area of change has been what ad people refer to as "insight generation", basically getting to know your audience. In recent years the advance of technology and widespread adoption of social media has seen the generation of phenomenal amounts of consumer data - purchase patterns, preferences etc. All those social media interactions generate information that allows marketers to know you just that little bit better. Some of it of course feeds into the media planning and buying process, but as you'd hope, it also feeds into other areas of marketing like product development and for ad folk, the development of genuine insights about audiences that help to make better communications.

The impact of digital has seen a entire new class and discipline in the industry that didn't exist 15 years ago. Large marketing portfolio companies like WPP and Omnicom are acutely aware of this and are constantly merging, divesting, and investing in start-ups that improve their offering to these clients.

However, for all the benefits technology has provided in the the one area that has proven impervious to "disruption"*, it is the bit that requires human input, the bit that asks for humans to communicate with other humans, and which is therefore the most important. In advertising it is referred to as the "creative"; interestingly (and a little depressingly) in tech is prosaically referred to as "content".

The tech industry has always had an ambivalent relationship with marketing and its subset, advertising. When not confusing marketing with sales, and advertising with media planning and buying, or indulging its obsession with trying to disrupt the industry, tech companies are sometimes forced to make faltering attempts at marketing for themselves. The result of these attempts is evident all around us, and almost universally terrible - from betting apps, to cash for gold, to insurance services, to payday lending sites to name but a few. Marketing propositions are generally weak and undifferentiated, execution is poor - an over-reliance on A/B testing means that whilst the better creative (not content, thank you) runs, it is the lesser of two evils rather than something of true quality like the Southern Comfort ad**. Compounding the creative problem, many tech advertisers opt for media strategies that are either based on saturation bombing the mainstream media or the mistaken belief they will produce the next viral hit and won't need media spend at all. The former strategy DOES work, but is highly wasteful; the latter, driven but a misguided unwillingness to spend, is hugely unreliable and largely luck rather than good management. For companies who are using venture funding for these campaigns, it's a dreadful waste of precious funds. For companies who are generating revenue, it's slightly less of an issue because this approach will often increase the volume of sales, but does so at risk of damaging your brand and driving the commodisation of your market; both are bad in the long term.

At this point you may likely point to businesses like Facebook and Google who got where they did without advertising. You would be correct to do so. If you are the next Google or Facebook, please feel free to ignore this article, as I clearly have nothing to teach you. However if you are like pretty much every other business, at some point you will need to market, and eventually that will mean advertising.

So what can be done about this? I believe there are three things that tech companies and investors should start doing. Firstly, understand marketing is not sales, as an old marketing professor of mine used to say, the objective of marketing is to make selling unnecessary. Look no further than Apple for evidence of this, their whole product development cycle is run as a marketing exercise, marketing enables them to develop products so desirable their advertising merely needs to say "here it is". Secondly, we should realise that whilst you do need to spend money on marketing, you don't need to spend beyond your means. Marketing should be based on doing the very best with what you can afford. Some examples of this are worth highlighting:

• The excellent awareness campaign that Hailo have undertaken - realising that their audience is just as much the drivers as the passengers lead them to focus on bus shelter advertising and strongly branded taxis. 
• Wonga, love their TV ads or hate them, they have delivered a strong message ("We give it to you straight") and their execution is differentiated in a crowded market place
• Returning to Apple. To steal a phrase from football, their approach of "Total Marketing" is something to which every tech company should aspire.

Finally, and most practically, as we try and forge a new tech powerhouse in East London (indeed across the UK) we should not forget that the UK is already a world leader in marketing services, and particularly advertising. There are firms across London and the country who are more than capable of supplying the sorts of services that tech companies need to take on each other, and eventually, the world. Most tech start-ups in the UK already have branding that is far superior to that of their contemporaries worldwide - mostly because most tech founders have contacts in the design industry. But services go far beyond that. Tech City co-exists with a hotspot of marketing services firms, global creative powerhouse Mother, sits at the heart, and new hotshops like Fearlessly Frank can be found within a short walk of Hoxton Square. Whilst the announcement of Tech City saw an influx of potential entrepreneurs, the area has long been the home of advertising creatives (particularly). Whilst many creatives are already employed full time or as freelancers, given the chance, many would be interested in doing something unusual that isn't for a multinational pharmaceutical company or manufacturer of pet food (which honestly is pretty dull work). It's just a question of networking and making a deal.

Best of all, this can all happen, now. The resources are already there. All that is needed is an introduction, an exchange of ideas, and (honestly) for tech companies to understand that as awesome as their product is, no one will buy it if they don't know about it.

* Interestingly, Disruption is the title of a very widely read advertising book by Jean-Marie Dru, the founder of the TBWA group. Dru took the management theory of Schumpeter and adapted it to advertising. The book was published in 1996.
** If you're of a more quantitative persuasion, you'd say that most of this advertising sits at the middle of the distribution curve, where as the truly excellent work is off to the right where it doesn't have to fight to stand out.

Listen Facebook, just take my damn money!

When Facebook purchased Instagram last year part of the rationale was that Facebook was lousy with mobile and the acquisition would help. This was no frivolous thing, with mobile uptake and activity on Facebook outstripping browser-based action, and a majority of ad revenue coming from its browser-based activities Facebook could see writing on the wall.

So the question is, how are they going? Unfortunately if recent developments are anything to go by, pretty damn poorly. The challenge of course with mobile, is finding a way to out ads in whilst trying to adhere to that basic principle of advertising - try to avoid excessively irritating your users. There's a fine line between ensuring you get your message across (heck a company has to make money, I get that part), and driving users to the point of homicidal distraction. The Facebook's browser ads fall into the former category.

The contrast with the experience of using mobile couldn't be bigger. Recently, Facebook has started including full page "sponsored posts" on its mobile app. Or should I say in my case, and some others I know "a single sponsored post, repeated over and over again". Mine is for a trading app (see right), a friend of mine is persistently haunted by gambling app whenever he uses FB mobile. That the same ad comes up repeatedly and exclusively, in my case since before Christmas, is intensely irritating.

Now I should repeat at this point I do not have an objection to advertising on Facebook mobile - the company is trying to build revenue, and I'm getting what I believe to be a valuable service. My objections are these: Firstly, don't fill the whole screen, you wouldn't have an automatic pop up that fills a browser's screen, so don't do it on mobile. I'd happy accept if the ad came further down the News Feed. Secondly and more importantly, Facebook knows more about me by now than pretty much any other entity, human or otherwise, it has the capability to target me as a consumer to the point where I should be clicking without a second thought. So why does keep hitting me with the same ad that I've previously ignored? (repeatedly) This is getting back to the basic part of marketing - it turns me against both the advertiser (whoever they are) and the medium (that's Facebook). It makes my experience less enjoyable, it turns me onto other services like Path. If you Facebook really wanted to test the efficacy of the advertising why not include a "Dislike" button... it's certainly controversial, but both Facebook and the advertisers would start getting solid feedback on the quality of content, as opposed to the inferred response now: Click through = good; inactivity = ??

But here's the real kicker. I use Facebook a lot, and for all my gripes I find it a very useful service. In fact I'm getting to the point where I would certainly pay money to use it... because I've realised it's utility. So if Facebook were to offer me to pay a subscription (say £5 a month to be rid of such advertising), I'd seriously consider it... very seriously. There's an opportunity here for Facebook. I'm not suggesting they force people to pay a subscription, but given the choice between this sort of intrusive advertising and £60 a year... at this point I'd likely take the latter. Facebook would have a novel new revenue stream, users, and perhaps since *I* am paying Facebook rather than advertisers, they might start to show me a bit more courtesy.

So, Facebook, do the right thing, just take my damn money!

Do tech companies (and people) misunderstand advertising?

Firstly, let me apologise for writing yet another post that mentions Facebook; I promise, this will not become a Facebook-focused blog. In my defence though, there's an awful lot happening with it as a business and much of it is incredibly interesting for new age marketers - ie. app developers. So on that note...

There's been a lot of ink (both real and virtual) expended in recent weeks analysing the current and future performance of Facebook, and putting aside its rollercoaster IPO, much of that ink has been devoted to the performance of Facebook in the advertising realm. A quick whip around the news sees stories about: declining revenues; inability to get mobile right; the loss of GM's business just prior to the IPO; and of course comparisons with business like Google who did get their advertising model right prior to IPO. Most, if not all the analysis warns that Facebook hasn't got their advertising model right and that with its weakness in mobile it's falling further behind. Firstly, this is fairly obvious, but as the actions of GM show, some marketers, some commentators, and perhaps even Facebook itself, seem to have a misunderstanding about how advertisers can make best use of Facebook's facilities - the key here is considering how users interact with Facebook.

Let's first start with those who get it right - Google and Amazon. Have a think about what is going through your head when you're using these sites; most likely you're in acquisition mode, whether for information, products or services. If it's either of the latter, advertising that promotes a specific product at a specific point in time will be helpful to you. Chances are that you'll be more receptive to the message and you might even click through and purchase. Contrast this with Facebook which is more "recreational"; in this mode you're relaxing, you're spending virtual time with your friends, connecting, playing games, etc. Any advertising that prompts you to buy there and then is either ignored or worse, is an irritant - imagine someone tapping you on the shoulder trying to sell you something whilst you're catching up with friends... not the best approach. As an advertiser your best approach in this circumstance is to brand build, allowing customers to gain a greater insight about your company and what it stands for without trying to sell something on the spot. In time they will hopefully develop a preference for your brand and products and then, next time they're using Google or Amazon they'll click and buy.

Does this then mean that Facebook is the wrong place to advertise? Not at all. What matters is what you (as an advertiser) are hoping to achieve and therefore how you advertise in that environment. GM don't seem to have figured this out - and if Facebook tried to convince GM that they operated like Google, they were probably kidding themselves as well. Fortunately for Facebook, Ford and Chrysler have figured this out and have stuck around.

So what do we take out of this? For Facebook, a couple of pieces of free advice. Firstly, Facebook should stop telling anyone (clients, users, the markets,anyone) that its advertising model is anything similar to that of Google and Amazon, clearly it isn't. With its scale, Facebook has the opportunity to be the most powerful generator of insights into the human condition this side of god. So find a way to commercialise that! Secondly, Facebook's corporate Clients currently get an incredible amount of free branding and consumer engagement via their corporate Facebook pages - actually selling that service (provided the pricing is right) would net Facebook a very handy revenue source.

For app developers, the lessons are useful - if you are developing an app that includes in-app advertising, think very carefully about how people will use your apps, when advertising will be most suitable and what sort of advertising will work most effectively. If you intend to advertise your app to potential customers using a service like Vungle, think about what your customers will be doing when they see your advertisement. What will be the most compelling way to communicate with them without annoying them? Get this right and you'll not only build your brand but you'll increase sales in the longer term.