The advertising cockroach

Welcome to June. The Cannes Lions are a couple weeks away. We have several things happening, including three days of programming at the Kerv Cafe, a “cocktails and conversation” event with Dotdash Meredith, and a private dinner for media execs at a restaurant in an olive grove in the unofficial perfume capital of the world. Should be fragrant.

Thanks to Omeda for sponsoring today’s edition and their support. Check out the video of the conversation I had with Time CEO Jessica Sibley at Omeda’s OX6 event last month.

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Always under threat, advertising keeps going

Longtime Publicis ad executive and newsletterer has a go-to line about ad agencies: “They say we’re like dinosaurs. But we’re like cockroaches. We are cockroaches. Everybody hates us. Nobody likes to see us. But cockroaches have outlived everyone. We scurry out of corners.”

Over my 20 years covering this business, I have seen several supposed existential threats to advertising come and go. The TiVo “nightmare” didn’t lead to the “death of the 30-second spot.” Don’t forget how cord cutting was going to do the same. No, wait, Netflix was making TV ad breaks a thing of the past – until it started an ad business. GDPR turned out to be an expensive hassle, not much more, and gave birth to a cadre of “privacy consultants.” And ad blocking – described as a threat to freedom and democracy by the IAB – became a manageable, chronic condition.

Advertising adapts and survives. It just keeps going. AI is the latest in a long line of challenges. The use of large language models to deliver information directly to people through chat and other tools augur a major change to the digital economy. These tools are not explicitly anti-advertising but they emerge from a tech culture that has long abhorred advertising, perhaps some lingering counterculture vibes, even while many made riches off it. The human mind is capable of amazing inconsistencies that give no quarter to AI’s hallucinations.

I was struck by an interview Semafor published with AI search engine Perplexity AI’s CEO, Aravind Srinivas, who was asked about search ads, the most successful digital advertising product of all time and arguably its least disruptive.

“People should just put more effort into having well-documented information about them on the internet and an LLM can parse it on the fly. I feel like this might make the world better in some sense. Why do you need to advertise if an LLM can just go read about you and what you’re saying?”

Oh, never thought of that. Let’s leave aside that just two years ago, Srinivas was a research intern at Google. Ad dollars bought that fancy cafeteria food. Being anti-advertising is like being libertarian: It’s something you should grow out of because life is messier and full of compromises.

Expect to see ad blocking come back as a threat. The Arc browser allows people to customize their internet experience at the foundational level of the browser. Don’t want to see those annoying blue check marks next to thirsty hustle bros on Twitter? Easy. Oh, and this what people get during setup.

This is a pox on all houses situation, since digital advertising has tended to gravitate to an adversarial approach that at its best sees how much mayo it can put on the sandwich before it becomes inedible but at worst is dehumanizing, treating humans as “receptacles of data,” Meghan O’Gieblyn writes in God, Human, Animal, Machine. She cites computer scientist Jaron Lanier decrying an “antihuman approach to computation” in which “bits are presented as if they were alive, while humans are transient fragments.”

The digital advertising ecosystem is in the midst of structural change as the era of rampant (and often wanton) data collection falls away. It is also a matured industry whose days of hypergrowth are likely behind it. People are going to have more control over what data is collected about them. The rough reception of ChatGPT in Europe is a sign that the tenor has changed when it comes to Big Tech. GDPR was obviously flawed, yet it set the regulatory standard for much of the world.

In a few weeks, the media, tech and advertising worlds will mix in the French Riviera for the annual Cannes Lions boondoggle Festival of Creativity. Apple, whose CEO has criticized “surveillance” advertising and a “data industrial complex,” will have a major presence. People who hate advertising tend to just hate a particular type of advertising. I suppose it’s not dissimilar to railing against “tech” or “the media” as monoliths.

I can understand the argument that ad targeting is a harmless tradeoff for broad access to information, entertainment and services like social networks. Subscriptions are growing again, and they will be needed to fund much of the content being produced. There will be messy legal fights ahead as major media companies like News Corp “go regulatory.” But subscriptions alone cannot be the answer. I’m surprised how many people are willing to throw away the open web because of some auto-play video ads. Creative destruction is fine and dandy, but good to have a better alternative lined up.

In the end, advertising will soldier on. WPP has inked a deal with Nvidia to make ads “more efficiently and at scale” and “more tailored and immersive.” The announcement was typically vague, but it was enough to boost WPP’s stock price 2.5%. Expect more of this. Let’s not forget that it was then-WPP CEO Martin Sorrell who remarked in 2006, “How much easier would this business be to run without the creatives?”

There’s a reason marketers call making the ads “non-working” media. Some of the early examples of AI ads are, well, I guess creativity is subjective. That said, these tools always improve. My friend Noah has a fun ad Turing test project going. The reality of advertising, like much of the content industrial complex, is that it is often derivative and mostly versioning. In an upcoming podcast I did with Kerv CEO Gary Mittman, he remarked that AI will end up “fixing” ads that aren’t performing without waiting for the human.

There’s little choice here but to adapt. Advertising will bifurcate even further between the AI-fueled performance end of the spectrum and the more human side, which will itself use AI tools like the apparent attempt by Spotify to use AI-created host-read podcast ads. No matter the fever dreams of the D&D-on-ketamine set, advertising will not go away. It is like Kendall described himself as a cog that fits in only one machine. Advertising’s machine is capitalism; you cannot have one without the other. And like advertising, capitalism has proven itself relentlessly adaptable.

The New Attention Economy

We have nearly finished programming The New Attention Economy, held at the Kerv Cafe in Cannes from June 19-21 from noon to 3pm each day. Some new additions to the agenda:

• I’m speaking with Hearst CRO Lisa Howard about the modern media playbook as many so-called legacy media companies have emerged in better shape than digital upstarts that were supposed to replace them.
• Bloomberg CRO Christine Cook will discuss reasons for optimism amid a lot of doom and gloom
• Group Black’s Bonin Bough will discuss how media needs to adapt to reach younger audiences.

P.S. We’re also having a cocktail party at the Kerv Cafe on Monday, June 19, from 3-5pm.

Noteworthy

Airmail will generate $15 million in revenue this year, according to WWD, yet somehow not be profitable. Then again, it’s not cheap to do events at Hotel du Cap. (WWD)

Slimmer bundles: The slimmed down FT Edit app, featuring select Financial Times stories for a far lower price, has 140,000 downloads. (Press Gazette)

Pay up: News Corp is ready to channel Succession and “go regulatory” to squeeze money from AI models. (INMA)

In praise of soft pants: Casualization is a trend that’s sticking post-pandemic, sorry Boss Class. (NYT)

Decentralized AI: Much of the focus currently is on centralized AI systems like ChatGPT, Bing, Google’s Bard, but AI will also splinter and decentralize, on the country level and with custom models. (FT)

Remember VR and AR? Get ready to have flashbacks with Apple’s new $3,000 “mixed reality” googles finally debuting next week. Queue up your Google Glass jokes.

Thanks for reading. Send me your feedback by hitting reply.

We are planning a series of salons in the fall organized around specific issues. For partnership information, get in touch: brian@therebooting.com.