All advertising isn’t dead. Just bad advertising.
That was the conclusion from Brad Jakeman, president of PepsiCo’s global beverage group, speaking at The Wall Street Journal panel during the annual Cannes Lions advertising festival in the South of France.
“We are here celebrating 0.5% of the work that actually gets made. The other 99.5% of the work is generally crap. And when that happens, consumers don’t want to see it,” Mr. Jakeman said.
Cannes Lions began as a way for the creative ad community to honor the best ads but has more recently shifted into a weeklong rosé-fueled deal-making session. But this year’s gathering comes during a particularly precarious time in the ad industry. More consumers are using tools that block web ads. Marketers are worried about the transparency of how their dollars are spent by ad agencies. And new media pioneers are producing content on behalf of brands, encroaching on the turf of traditional agencies.
The WSJ panel, titled “Advertising is dead; Long live advertising,” also featured WPP PLC CEO Martin Sorrell, Vice Media LLC CEO Shane Smith and Facebook Inc. ’s vice president of Europe, the Middle East and Africa, Nicola Mendelsohn. It was moderated by The Wall Street Journal’s editor in chief, Gerard Baker.
One of the biggest topics at Cannes this week has been how to win consumers’ attention amid a swiftly changing technology landscape and backlash against a perceived overload of advertising.
Mr. Jakeman said that with the rise of digital advertising and the 30-second TV ad feeling more like a relic of a bygone era, brands feel compelled to churn out hundreds of pieces of work. But that is reducing the quality of the marketing and creating a “digital landfill” of “crap content that gets produced quickly and cheaply and doesn’t connect to the brand’s narrative,” he argued.
Mr. Smith’s Vice Media thinks it has the solution. The company has been the poster child of “branded content,” catapulting Vice to an almost $4.5 billion valuation. Vice works with marketers to create custom videos that feel like regular editorial fare, and Mr. Smith said that viewers don’t mind watching sponsored content so long as it is actually compelling.
“The ubiquitous 30-second spot doesn’t work,” he said. If Vice were to come up with a movie about climbing a mountain, it would approach North Face for a branded deal, Mr. Smith said.
Facebook’s Ms. Mendelsohn said consumers respond to advertising that is “targeted” for them, and that the problem is too many ads are irrelevant to the consumers who see them. While Facebook collects a vast amount of consumer data to make its targeting capabilities more robust, “privacy is the No. 1 thing that we think about,” she said.
Mr. Sorrell, who runs the world’s largest ad holding company, took the opportunity to defend traditional media. He said that videos on Facebook, where a “view” is counted after 3 seconds and users mostly watch with the sound off, isn’t equivalent to a TV ad.
“Traditional media, linear TV, [and] newspapers in their old form are more effective from an engagement point of view,” Mr. Sorrell said.
Still, Mr. Sorrell said that 75% of his company “is stuff that Don Draper wouldn’t recognize,” referring to the fictional ad executive from the 1960s-based television show “Mad Men.” Out of the $73 billion that WPP spent for clients last year, about $4 billion went to Google and $1 billion to Facebook, Mr. Sorrell said. This year, WPP will spend about $5 billion to $5.5 billion with Google and $1.7 billion with Facebook.
“Facebook on its current trajectory will be our second-biggest after Google probably next year,” Mr. Sorrell said.
Meanwhile, the dark cloud of “rebates” has hung over sunny Cannes this week. Earlier this month, the Association of National Advertisers released a report detailing pervasive transparency issues across the industry, particularly a practice where media companies return rebates to advertising agencies if they spend a certain amount of client dollars. The clients, in many cases, aren’t aware that their agencies are being incentivized, the report claimed.
“We have to be aware of where the financial transactions are taking place,” Mr. Jakeman said. The advertising industry until now has had an unspoken policy of “don’t ask, don’t tell,” he said.
The panelists also expressed concerns about measurement in the media business. Mr. Jakeman said “billion-dollar decisions” are being made upon things like outmoded surveys, and Mr. Sorrell said the digital world needs to produce agreed-upon metrics made by an independent third party. He highlighted digital measurement specialist comScore, in which WPP has a 16% stake.
“We invested in comScore because we think Nielsen is not a perfect system…and clients believe this, media owners believe this, and agencies believe this,” Mr. Sorrell said, ribbing the company whose industry-standard measurement has long set the currency for ad deals.
As for the future, Mr. Smith predicted a “culling” among media outlets, as brands figure out where to spend their money and media companies scramble for those dollars.
“There’s going to be a consolidation in media,” Mr. Smith said. “Only the strong survive.”