Commentary
The ANA Is Adding Insult To Injury
- by Paolo Gaudiano , Op-Ed Contributor, June 15, 2016
Those who follow my writings here may have noticed that I have strong opinions about two issues: ad blocking and agency transparency. And it would be fair to say that my viewpoint is, let’s say, different from those espoused by most industry bodies, the ANA being no exception.
During that session, Liodice managed to rankle me -- not once but twice. Going in reverse chronological order, at the every end of the session, Liodice summarized the recent study the ANA commissioned to explore agency transparency. Having said enough about that recently, let me just point out that the ANA’s requests are going to do nothing more than foster animosity between advertisers and agencies.
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But what really raised my hackles was a series of comments about ad blocking, aimed at consumers. Liodice began with a seemingly hopeful and conciliatory tone, by stating that the current ad-blocking crisis is a reflection of consumers “voting to say they don’t want irrelevant advertising.” The tone took a more accusatory turn when he said that consumers “don’t understand the value exchange,” “don’t care about our business model” and “grew up with the middle name ‘free.’”
For a few moments I was encouraged when he pointed out that advertisers must “put the consumer user experience at the front lines” and uttered a few mea culpas like “we’re jamming everything on the page” and “we have to rethink the way we do business.” And my enthusiasm grew when he said that “we need to give consumers far more choice.”
Alas, my growing bubble of enthusiasm was burst when he described his idea of giving consumer more choices, to create three different platforms from which consumers can select to: (1) gain free access to content, in exchange for accepting to be subjected to all the advertising; (2) agree to pay a little bit and accept some amount of advertising; or (3) pay a lot in return for not getting any advertising.
What I heard in Liodice’s proposal is that consumers should be willing to pay for the benefit of not being annoyed while they are trying to consume content. Is this what advertising has come to? Is this the kind of relationship that advertisers want to establish with consumers? Is this their view of the value of publishers?
These comments, and the subsequent comments about agency transparency, left a terrible taste in my mouth. Fortunately for me, the session ran up to its time limit, so there was no time for audience questions -- or I might have embarrassed myself with some scathing, unprepared remarks.
Instead, having taken a couple of days to reflect on the totality of his remarks, I have come to realize that, rather than anger, I should feel pity for Liodice, and for the hole into which the ANA has dug itself.
Put simply, the behavior of the ANA reflects the chaotic mess into which advertising is finding itself, and the continued detachment that many advertisers are creating from consumers, especially in the digital domain.
In its frustration, the ANA is now also threatening to ruin the relationship between advertisers and agencies -- who should be credited for having driven phenomenal advances that are highly beneficial to advertisers. At the same time, advertisers are ruining their relationship with publishers, by placing increasing performance demands and driving prices down through commoditization, and essentially contributing to the decline of the online publishing model.
In the future, Liodice and his colleagues would be well-advised to stop at the sentence “let’s give consumers more choices,” and try to use their collective wisdom and intellect to come up with some real choices.
And perhaps, before further criticizing advertisers for practices that are no different from the practices of most companies represented by the ANA, they should think about ways to change their own behavior so that agencies are encouraged to provide increasing value, and that publishers can thrive without compromising their standards and annoying consumers.
Paolo, it seeme to me that Lodice was describing was what we have now but in reverse---sort of. Take TV, You pay a lot and get a lot of ads. And for digital---you pay little and still get lots of ads.
His middle ground ---pay some and get some ads---is the one that is most interesting. How does that work? If a cable channel reduces its hourly ad load from 14-15 minutes to,l say 12-13---is that what he means by going from too much advertising to "some" advertising? Or is cutting the ads down by 50% what he really means? If so, are advertisers willing to increase their CPMs by 50% so the cable channel continues to be a profitable operation?
I wonder sometimes whether the ANA really has a welll thought out position on such important questions or is it merely reacting to the flow of headlines. Certainly the posibility of agency "kickbacks" from the media was worth a serious and balanced review---but is that what we got?
Regarding your statement, "let me just point out that the ANA’s requests are going to do nothing more than foster animosity between advertisers and agencies", please read Investopedia's definition of how the relationship between the 2 parties should be.
The principal-agent relationship is an arrangement in which one entity legally appoints another to act on its behalf. In a principal-agent relationship, the agent acts on behalf of the principal and should not have a conflict of interest in carrying out the act.
@Paula - good job making your point clear without ad-speak :-). Yes, the cost of fixing this is going to surpass by far what it would have cost to think about it ahead of time...
@Ed - Bob's comments were squarely aimed at digital advertising, not TV. But regardless of the relative merit of specific tradeoffs, do you not see how unimaginative it is? Why not think of something truly different. Like doing a study to find out what types of ads and at what points of the experience people really hate, and getting rid of those? Or exploring micropayment options? Or creating a consortium of publishers that allow individuals to pay a modest fee and have access to some number of items across all publications in the consortium? Why is it that today, even though I PAY for NYT subscription I still get ads when I go to their site? And AdAge bombards me with an interstitial asking to subscribe to their newsletters, even when I got to their site by clicking a link in their newsletter to which I subscribe?
What made me sick was his opening remark about having to pay attention to the consumer and give them choices. What attention??? What choices???
@Philip - sorry, but this is totally irrelevant. A principal-agent relationship in financial services is a completely different beast, heavily regulated, with specific legal language. No such language or oversight exists in the advertising world, because the situation is totally different. And oh, by the way - ever heard of high-frequency trading? And do you know that asset managers are paid a fee proportional to the money invested? Agencies used to do that, but then advertisers complained and shut that model down. Asset managers do not get scrutinized by their clients at the micro-level, or are they asked to justify their fees. It is a value-based transaction, and if an asset manager gets poor returns, the clients will take their money elsewhere. Why shouldn't advertisers focus on that? How about: pay me $X, I will generate ROI Y. If I fail, take your business elsewhere.
Now advertisers they complain about "kickbacks" and "conflicts of interest.' I am SURE there are a few cases of that. But asking for preferential treatment from the sell side, or leveraging aggregation to get discounts and rebates are NOT counter to the interest of the client, unless you want to claim that every penny of profit should go to the client. Why? Which single member of these task forces can claim to have transparency in their offering? Which of them never takes advantage of their size to get favorable deals from their suppliers?
Advertisers need to grow up. They are ruining the online experience, and they are focusing on the wrong things. What the ANA is doing is just going to alienate yet another group of people. Maybe someday they can screw the consumers, screw the agencies, screw the publishers, and just sell stuff directly to one another.
Paolo, there are all sorts of advertisers out there for all sorts of products and services---many of which are boring, uneeded, redundant, and irrelevant for many people. It is a dream to think that, somehow, all of these advertisers can be made to create more acceptable ads--whether it be for digital media or TV--by virtue of some all encompassing study of what directions ads should take to make them more appealing to consumers. It's also a dream to believe that all ads can be made more acceptable to audiences if they are targeted better. Some ads, perhaps, but not the majority of them let alone all of them.
In short, the world doesn't march to a single drummer. What's interesting and acceptable ad-wise to a housekeeper about detergents, scouring pads or paper towels is quite different to what's interesting and acceptable to the same person when the subject turns to blockbuster movies or new cars or health issues. Sometimes consumers, who don't really care about chores like doing the laundry, must have detergent ads pushed out to them; other times, the same consumers who really enjoy the prospect of buying a new car and are actively looking at brands to consider, welcome ads that inform them about cars and will eagerly "opt in". All---or most---ads simply can't be fun or welcome. And we can't ban hundreds of product categories from advertising because we would rather not hear what they have to say.
Just read a great, relevant article that clearly points out why the advertisers should take a good part of the blame for driving agencies into a financially untenable situation. Highly recommended: http://bit.ly/263Rv85