Undeniably there is a whiff of history-repeated in the headlines that have the business buzzing. Sumner Redstone (2), old guard, vanguard and, as much as anyone, the architect of today's media conglomerate, just decided his Viacom empire is yesterday's media conglomerate. He plans to split it into two (3). If he succeeds in unlocking value by slicing apart what he spent years putting together, he could put consolidation in reverse.
Already we were watching to see how Disney's Miramax will fare after Bob and Harvey Weinstein go their own way (4), and wondering whether Mouse House leader-in-waiting Bob Iger (5), can prevent the departure of Steve Jobs' Pixar (6). Now, if unconsolidation (7) is the name of the game, we must ponder the possibility of Time Warner untying the AOL knot (8), or Sony's first non-Japanese CEO, Howard Stringer (9), severing Sony's film, TV and music arms from the electronics business (10).
If it proves that breaking up is fun to do, it will certainly seem as if this is nothing more than a cyclical process: The slow inhale, exhale of the media giants.
sir martin sorting it out
Will the waxing agency holding companies go through the same waning? Unlikely: Sir Martin Sorrell (11) is still working through the issues created by adding Y&R (12) and Grey to his empire, and observers suspect that Publicis Groupe isn't finished with its own acquisition streak (13). Admittedly Havas' stock is heading north partly because some believe it could be broken up and sold (14), and Interpublic is being watched to see if it can survive another round of restatements (15) and major reviews (16). But any break-up here would likely be accompanied by an acquisition by one of their holding company rivals.
Still, these companies echo the past as they increasingly operate like the integrated agencies of yesteryear. The holding company review (17) has become a fixture on the marketing landscape, with major clients selecting what becomes, in effect, a giant full-service shop. Whole Egg anyone?
Everything old is new again is a theme in the vogue world of branded entertainment (18)-in fact it's a chapter heading in Ad Age Editor Scott Donaton's book on the subject, `Madison & Vine.' More than half a century ago radio and TV fare were created for and produced by brands such as General Motors Corp. (19), Texaco and Procter & Gamble Co. (20). There were few middlemen like Madison Road (21), no uber-producers like Mark Burnett (22), no reality shows-how empty TV must have seemed without "American Idol" (23) or "Apprentice" (24)-and nothing to rival the current war between producers and TV networks over rights to brand integration deals (25). Still, there they were, 50 years ago, brands integrated into entertainment properties.
Nor has the essence of great entertainment-or great ad messaging-changed. Mark Burnett gets that. While his success is built on the relatively new reality TV genre (26), he knows that great storytelling (27) never goes out of fashion. "The Contender" (28)-which, admittedly, is fixing to flop-is pure rags to riches stuff, while the producer is banking on America's insatiable appetite for redemption stories as he works on "The Apprentice: Martha Stewart" (29). The celebrity-obsessed media jury (30) is yet to deliver the final verdict on the domestic diva's renaissance.
All this plays out against a starkly polarized cultural background (31). In one corner, the FCC, under new leader Kevin Martin (32), which is leading a charge against obscenity in the media, buoyed by a supposed public-outcry over the appearance of Janet Jackson's pasties during the 2004 Super Bowl halftime show. Mr. Martin's cornermen? Religious groups and advocacy organizations such as Don Wildmon's American Family Association (33), that surf the EPG looking for indecency against which to rail.
In the other corner: The sizable parts of the population that tune in for shows with racy storylines, sex-obsessed characters and what most everyone-except, perhaps the above groups-would describe as humor. Think "Desperate Housewives" (34) (a big part of ABC's own redemption story) (35), "Rescue Me," "Will & Grace" or "The O.C." Think, if you can endure it, the burgeoning fame (she already had the fortune) of Paris Hilton (36), an heiress catapulted to celebrity by an apparently amateur video of her performing sex acts that did the rounds on the Internet. Oh, the wonders of a nation where 52% of households have broadband access! (37)
history students, take note
Yet even this strange cultural paradox is uncannily reminiscent of other periods in U.S. history. Take the prohibition era, for example, when the metropolitan populations with their liberal, and sometimes decadent, ways-were pitted against the more overtly religious, conservative `family'-Americans of the suburban and rural areas.
So in essence there's nothing new under the sun, right? Wrong. Very wrong, because some major marketing forces have only ever headed in one direction: Fragmentation (38), for example, or commercial clutter (39). Time Inc., which has demonstrated a refreshing ruthlessness in the last year or so, might consider pulling the plug on the recently re-born Life magazine (40), and Clear Channel can take the initiative in reducing commercial inventory on its radio stations (41), but with every unadulterated surface today seen as tomorrow's ad medium, it's going to take a miracle to make a cyclical business of these particular trends.
There are other strictly 21st century forces, too, such as consumer control of the media environment (42). Just over 5% of households now have a digital video recorder (43) that allows them to watch what they want when they want, and, if they want, without the ads. Forrester Research estimates that will rise to 41% within 5 years. Comcast, the biggest cable operator in the country, has acquired TiVo (44), which pioneered DVRs and will surely make the technology a feature of all its set top boxes. Then there's video-on-demand or VOD (45). Comcast estimates its customers alone will view 1 billion VOD programs in 2005.
Consumer control has also been extended to the world of music and radio. File-sharing (46) continues to threaten the music companies' old business model; Apple has sold more than 20 million of its MP3-playing iPods (47); podcasting (48) and digital radio (49) are being increasingly hailed as the future. Current estimates suggest that by 2007, 19 million digital radio units will ship every year.
(All of which is to say nothing of the potential changes wrought by addressable TV (50), which is threatening to make the transition from theory to practice in the next decade, or the convergence of the PC and the TV (51), which, again, has been talked about for years, but is now a reality in tech geeks' homes.)
The majority of marketers recognize that resistance or denial of this new reality is futile. Accepting that the channel they choose to connect with an ever more elusive consumer has become as important as their marketing messages, some, such as P&G, are paying more attention to media planning (52). Marketers still feel beholden to the 30-second spot on which they've depended, but with the efficiency of those spots declining (53), many are broadening the mix of media and marketing tools they employ. We wait to see whether their necessarily broadened horizons will affect this year's TV upfront (54).
The TV networks are less bullish than normal, and not just because they fear a marketer reaction to fragmentation and consumer control. Megamergers (especially among the big-spending wireless telecoms (55)) have concentrated the big bucks in the hands of fewer players; food marketers and fast-feeders are being vilified by politicos and advocacy groups for pushing their products to an allegedly obese public (56), and DTC ads are once again under government scrutiny (57), particularly when it comes to selling male erections to the nation's gentlefolk. All of which could conspire to take the edge off an embattled TV marketplace.
If TV budgets are trimmed the likely beneficiary will be the Internet, where almost every marketer claims to be spending more. Internet advertising grew around 30% last year, and is skyrocketing again this year, and while the doyens of the medium are too circumspect to make big pronouncements, we watch to see when (it is no longer `if') the Net will overtake magazines as the second biggest ad medium (58). Even blogs (59), are snapping up their share as they gain meaning, while trust in their traditional media brethren slips to an all time low (60) following scandal after scandal and, now, the attention to the commercial and government practice of running pre-packaged video news releases during news broadcasts (61).
Alongside the Internet, wireless media is a marketer obsession. From the potential for employing SMS (62) as an opt-in medium, to the notion of the cell phone as the third video-enabled screen (63), mobility is a topic at every conference right now-usually complete with an audience of folks focused on their BlackBerrys (64). The battle to create the ultimate mobile platform is hotting up too: There's talk of an iPod that's also a phone (65); a Motorola phone that's an iPod (66); and now Sony is weighing in with its hot-to-trot PSP wireless gaming device (67).
These are hot spots, but the truth is the maxim for companies is that everything is marketing now (68): from the direction in which their store door opens (Burger King); to the cleanliness of restrooms (McDonald's); to the sounds or smells of products (Kellogg's is tinkering with the sounds of its cereals, automakers are creating the new car smell in a can!).
In such an environment the business model of the traditional spot-centric ad agency looks increasingly flawed. While Crispin Porter & Bogusky (69) with its offbeat ideas and media-neutral approach enjoys continued `hottest shop' status, and a new generation of independents emerge (70), reinvention is the name of the game for many of the large ad networks. BBDO under Andrew Robertson and Dave Lubars (71), and JWT under Bob Jeffrey and Ty Montague (72), have made the most public strides, but Leo Burnett and DDB are taking steps, too.
If by mass marketing you envisage the ability to foist a message upon tens of millions of sofa-seated consumers, then mass marketing is moribund. What is emerging in its place is a more targeted (73) melange of tactics designed to reach a splintering audience that expects a customized (74) message and rejects content that neither informs nor entertains (75).
What is old is new, and what is new is revolutionary. Welcome to marketing in 2005.