30/01/2016 Talking Business

I'm Michelle Fleury here on Madison Avenue,

the street Madison Avenue, the street synonymous

with the Golden age of advertising and once home to its titans.

In the digital world, will the industries' best days over?

That's what we'll be discussing on this week's Talking Business.

Today, we are looking at advertising in the digital age and where

the dollars to get your dollars are getting spent.

Here is one graph that lays it all out.

The advertising market is seeing a shift from TV to digital.

As you can see from this forecast, spending on TV ads

in the United States is expected to continue to grow over

Now, look at the trajectory of digital ad spending.

In the past 12 months, it's jumped 15%, and from 2017,

it's predicted to outpace spending on traditional TV ads.

The TV series that immortalised the heyday of television

To answer that we with me are Brent Smart, the Chief Executive

of Saatchi Saatchi, the advertising agency in New York,

Torrence Boon from global, you are VP For global agency sales

and services in Google and you are responsible for driving

Google's worldwide strategy with marketing and with advertising

agencies, so I don't know if you have met Brent before.

Finally, Sebastien Tomich from the New York Times.

You are senior VP of advertising and innovation and you lead the tea

brand studio, which is the New York Times in-house creative agency.

Now, Brent, or really this is a question for all of you,

but if I could start with you Brent, what does advertising

Well, it's almost unrecognisable in some ways from when I started

I think we spent so much time talking about what's different.

Technology, data, social media, all these things are different,

but there are some things that are absolutely the same

Since we used to sit around fires, human beings have always been drawn

to stories, the brain craves stories and I think great advertising's

always been about great story-telling and still is.

There are so many new ways we can tell the stories and so many ways

we can let people into the stories and be part of them.

That's what is exciting about being in advertising today.

You Torrence represent the new world in a way,

For us, we think of the current situation as, in many ways,

the second renaissance in advertising, and for us,

the fact that you have an explosion of ad formats, you have massive

fragmentation of media channels, you have data which is incredibly

important in terms of being able to target consumers in a really

customised way, these are all pretty significant and seismic shifts.

The other interesting point is that today,

consumers can actually choose and are choosing

What do you think advertising looks like today?

I think that digital, which is really interesting,

is the first medium that doesn't have a defined format.

You think about outdoor advertising, you think bill boards,

broadcasts, 30-second spots, 60-second spots and print,

Digital advertising can come in all shapes and sizes and,

comparing that to what I do, five years ago if I would have told

you the New York Times would have a creative agency

within its own walls, it would be helping advertisers tell

stories as advertising, you would say I was crazy.

So not only has the business shifted completely now, but I think even

five or ten years from now, it's going to look

One of the things we are doing a lot of is experimentation around

what actually works and drives the impact that brands

We had a great campaign in process that we ran with a company

to basically figure out what length of ad and what format would perform

best on mobile and it was really surprising results.

The longer form execution was what actually performed better.

But have people really changed that much?

It sounds like you're saying they want to watch adverts and I'm

I think people don't care about advertising and brands

and I think marketers are kidding themselves if they do.

Quality is the key, there is so much content out there.

The thing we hear from every consumer is, we've got no time,

and yet there's never been so much content.

In a world where there is so much content, so little time,

only the great stuff gets watched and shared,

only the great stuff gets talked about.

That is the challenge because we don't need more content.

But the great stuff will always find an audience, always.

The age of smartphones has left us all with such short attention spans,

even a goldfish can hold a thought for longer,

so how do you come up with an ad, given all of our short attention

That is an important point because quality today I think

is as much about relevance and responsiveness as it is around,

you know, quality of content or B-matic type of things

you would pursue in order to tell a story and we have this notion

Mobile devices have totally transformed the way we interface

with brands and advertising and so ads that actually deliver

utility in the moment when you're on the street looking for retail

establishments nearby when you're in the actual retail establishment

actually looking and researching for information on a specific

product, brands that are there and that are responsive

I think are the ones that are breaking through.

I think where advertising has unrivalled power is,

what about the person that doesn't know what they want who,

six months from now, are going to buy that product

I think maybe we can sort of just embed a feeling,

embed a meaning, move them in some way that suddenly in six months'

time they are in the customer gene to buy that product,

they are more likely to buy it and I still think advertising

is the killer app for that, nothing else works in that way.

If your product is great and people are talking about it,

It tags back to your previous question about mobile.

It's essentially enabled anyone to be your advocate,

so you two, Facebook, Twitter, Linked-in, that's on your phone.

The minute they have The chance to become your own ad agency.

The minute they have an interaction, they have the chance

There are also the new ad formats, so we have the ad format on YouTube

that allows you to skip if the ad isn't compelling so,

to your point, making sure that you grab that consumer,

that you have the right headline and entry point is critical

and because people can actually skip ads now,

brands are coming to us because we are an efficiency

perspective, it makes a lot of sense.

If people are choosing to watch that ad through its entirety,

that means they are engaged with the brand and ready

You are hitting on something that I think is kind of interesting that,

you know, companies like Google have said, we are no longer

an interruption model of advertising, it's an engagement,

yet you spend a lot of time interrupting my YouTube videos.

Again, if you look at the mix, we see much more

of a shift toward opt-in, True view ad format.

of a shift toward opt-in, TrueView ad format.

So I think the days of forced preroles are numbered.

What is YouTube, which is associated necessarily with brands tradition,

I think there's massive innovation on the YouTube platform and the way

we think about it is the asset base represented by our content creators,

so you have these incredibly creative people who have loyal fan

bases, who have an incredibly engaged audience and,

what we see brands doing and their agencies Are critical

what we see brands doing and their agencies are critical

partners in this, is leveraging that fandom against the content creators

to make really meaningful connections with brands.

In my house I have three young boys and the guys they are acting with on

YouTube are way more famous than Nickleodeon. I don't know who the

people are, you know, it's the YouTube stars who they spend time

with and mimic in terms of the way they talk. They're the stars in my

house for my kids. So the whole notion of celebrity has changed and

it's very much grass roots bottom up celebrity now which is really

interesting and we didn't have that 20-30 years ago, you know. The

obituary for the advertising agency's been written many times,

but I think what's interesting, you mentioned the YouTube content

creators, they put their viewers first. You at the Times put your

readers first. They put Facebook users first at Facebook. Advertising

agencies, we put the brand first agencies, we put the brand first

always, we do what is right for the brand. Coming up later in the

programme, we'll delve deeper into the ad agency's changing business

model, but first, comedy consultant Colmer Regan speaks to a famous

brand about viral ads back in the day. Hello. Since this week we are

talking about advertising, I have a short period of time to grab your

attention. That's why I'm standing in front of a fish cycling a bike.

I'm at the Guinness Museum in Dublin. If there's one brand of

advertising that has evolved over the years but still imagined to

capture the public imagination, it's Guinness. This is called fish on a

bicycle, part of an advertising campaign that ran over 20 years ago.

The premise of the ad was that a woman needs a man like a fish needs

a bicycle. Now what has that got to do with creamy pints of Guinness?

Nothing of course but it got us talking. The day after the ad,

people would say, did you see the ad with the fish on the bicycle. What

was it for? Oh I think it was for Guinness. Advertiser's job done.

That was the thing about Guinness ads, they were viral before anyone

knew what viral was. At Guinness we have an ethos of trying to do things

differently from the way other people do them. Now with digital,

again, some of the principles are the same but we have to be able to

sell interesting stories and stories that will make people sit up and pay

attention. But we have so many more different formats to do it. That

story now appears in your Facebook news feed, maybe when you are

searching for beer or rugby on Google our story will pop up.

Of course time waits for no ad man, so how does a global brand like

Guinness make smarty pants ads that grab the attention in the modern

digital advertising era? That moment when you click on a film in you able

to, an ad comes up and you have five seconds to decide whether you want

to watch the rest of that ad or click to go through to the film that

you were choosing. That means we've got to make a Guinness film that in

that first five seconds gives you enough interest and excitement that

you are going to watch the whole thing. But what about the future of

digital advertising? Is it going to become more and more targeted Will

we will able to walk down the street with the ads popping up in our

faces? How are way going to block those? Much more valuable and

satisfying future is where you are walking down the street and the

available ads are targeted only at the current intent that you have. So

rather than seeing a lot of different ads and being intruded

upon, you see a few ads that reflect your current intent. The knowledge

of your intent gleaned from an analysis of say your online activity

is one very strong source of that. Every time we use our smartphone, we

express our current intent, so if those signals can be harnessed in

such a way that advertisers can target their ads at people whose

intents aligned with their products, the future is now. Whatever the

future, advertising needs to be transparent about its intentions and

definitely not full of subliminal messages. I'm determined not to let

that happen in my report. Colmer Regan there. Remember, you

can see more of the short films on our website. Now Brent, if I can ask

you, how much has the traditional advertising model changed in today's

digital world? Oh, hugely. I mean, if you go back to the heyday of

advertising agencies, we used to make one television ad that would

air all year and the media commission would run that ad. It was

incredibly profitable. Now, we need to make incredibly complicated

programmes for Kleins. We have talked about the many different

formats with which we can now advertise, so the idea of making one

thing, blahhing to many and trying to get back the media commission is

gone, so now we have to find a way of making more content because we

have incredibly content-hungry consumers and clients. You also face

a lot more competitors, you are sitting next to two? Or you could

say collaborators. It's how you look at it. We compete in some ways, but

I've seen incredible things happen when we collaborate because these

guys can bring something to one of my ideas that I just can't do

myself. We have got a bit more of an open model where we are happy to

collaborate and we all bring something different to the idea. You

are Google's point person between Google and advertising so you are

going to talk up collaboration. But is it really like that? Surely you

are trying to grab your slice of the pie? Well, we believe the best way

of grabbing our slice of the pie is collaborating to convince brands

that digital at the centre of these campaigns that they are creating

with their advertising agencies is a smart strategy. If you think about

platforms like the Android platform or YouTube, which we talk a lot

about, but also new technology like cardboard an the things that we are

doing with 360 video, these are really complicated products. So

having expertise that we can bring to the table so that agencies'

brands can understand the possibilities associated with the

products, it's a win-win. The Super Bowl is coming up, it's a massive

sporting event, also a huge event in the advertising world, traditionally

for TV ads, what opportunities or how significant is it for Google and

platforms like yours? Incredibly important. So we have a programme

called ad blitz which is actually a platform that we use, it's a voting

platform that enables viewers of the Super Bowl ads to actually vote on

their favourite ad and then that has all sorts of implications in terms

of promotion across the platform to make sure that they get the biggest

bang for that investment. It's like the water cooler on steroids because

everyone's watching the game and the ads and talking about the ads and if

you do something great in that forum, it lights up every other

channel, mobile, Twitter, Facebook, you know, it becomes this incredible

thing for brands where it's not just a spot, but it's a really powerful

sort of entire marketing programme from one spot. We started at the

beginning of the show talking about the era of mad men, is today the era

of thor? ? Era of the geek. Geeks are cooler than nerd. No, I think

it's interesting within you think of mad men, you think of Don Draper and

wining and dining clients after the country club. Martini lunches?

Martini lunches. No matter what transition we do through,

advertising is a relationship business and that's never going to

go away. Even if there are two machines buying advertising from

each other, there are people behind it creating relationships. The

marketers that we work with, they don't need anybody else to take them

to a state lunch, you know. They don't need me to take them to the

Super Bowl, they want to hear about great ideas, sit across the table

from someone who understands their business who can talk about new

technology and come up with creative ideas on the fly, so I think that

that really marks the shift. We are going through a bit of a talent

renaissance. We had a recent experience where a client brought in

Google and Facebook during the exercise, so brain stormving

storming, coming up with an idea and I was thinking, what better creative

strategy than the troves of data that Facebook and Google have, they

know everything about everyone. The one thing that came to mind though

was, we had a power share, a technology company and the client.

There wasn't an agency in the room. Right there, I was thinking, like,

where is the future of advertising heading? No-one in this industry has

a distribution monopoly any more. Like Google and Facebook have the

closest thing to it but really no-one owns that, so the only thing

that separates us, and I mean this for the value of the crative

industry is a great idea -- creative. The idea of technology,

when I go on a website nowadays you pretty much always see a sign that

says cookies used on this website. At some point, as we have seen with

ad blocking, technology comes along to maybe remove that. What replaces

that because it's been very valuable to other firms in terms of gathering

data on people's habits? I don't think we are at a point where we can

necessarily say it will be replaced. Even though ad blocking is a

phenomenon, we are not seeing it have mammoth implications for our

business, but it has raised the point that you're making which is,

and I think we've all been saying in our discussion, is how do you get to

a standard of quality such that people don't feel like they want to

filter advertising or they don't feel like it's advertising at all,

they feel like it's content. Can that point ever be achieved? Yes,

absolutely. I don't. People still have to advertise, let's be clear.

Not all advertising will be story-telling in the future. We are

going to get to a point with everything is good. There are always

going to be a bunch of media average stuff that wastes my time. You can

opt in, you are not forced to watch it. The human brain has an

incredible ability to filter out the thousands of mess annals we keep

throwing at it every single day. How do you make sure the consumers

seeing it are not, or that brands are able to reach the

the actual people that they want to reach? Again, that is a technology

problem and it's a big one, but I think we have a leadership position

in making sure that the ads that we serve are actually reaching the

people that brands want them to reach.

best idea wins. Data can be an enhancement of a great idea. I

believe, at least in our team, we make big decisions based on our gut

and small decisions based on data. centrality of the idea will always

rule the day in terms of that interface with the consumers. I do

think that out of time so I have one more

question for each of you - are we in a post-advertising world? I'm out of

a job if we are so no! Torrence? I think it's how you define

advertising. I think what we've all agreed on is, it's more about

content, more engagement experiences and utility.

The definition of advertising is changing dramatically. No.

Definitely not. I think that at least mostly in my world, people can

confuse dissatisfaction with advertising in general. I think to

old models of broadcast, I think about the vogue September issue and

bill boards, even Google and Facebook actually, there are a lot

of ad models where if I had the choice of ads or no ads, I would

choose it, it's a necessary part of culture. We are going to have to

leave it there. Thanks to all our guests. If I could start with you,

Sebastien, Torrence and Brent, thank you. Next week on Talking Business,

we'll be in