Bob Pittman's career has been built around math and magic.
The chairman of iHeartMedia and founder of MTV contends that formula "is always important because sometimes people think research is policymaking. All research really does is answer some fundamental questions, and then we have the responsibility to take the answers to those questions and say, 'Now what are we going to do about it?'"
Research, Bob told me during a video interview on the eve of his induction into the Advertising Hall of Fame, lays out the "fundamental characteristics" of the brand, and then the brand is constructed around what the consumer is looking for. Bob has a knack for explaining what the consumer wants with conviction and enthusiasm, as I discovered during our discussion of his various enterprises.
As disparate as some of the businesses he's been involved with are -- Six Flags amusement parks, Century 21 real estate, AOL, and now radio and outdoor -- "the process is probably the same," he said.
He and his colleagues started MTV by analyzing audiences and saying, "We've got this audience of people who grew up with TV and grew up with music, and the two have never come together. We need to understand why it's never come together and what they're looking for."
At MTV, Bob said, "The math told us, 'O.K., here's the landscape, here's how big [this group is], here's the artists they like, here's how they dress.' So you know analytically who all these people are.
"Well, that tells you nothing. What are you going to do with it? We know that as the base; now we have to do something creative with it. And we created a new look and feel."
Bob said a key strategy was to build an identity for MTV the network, not the programs. "At that time, TV networks were all about, 'I want to watch "The Cosby Show" brought to you on NBC.' NBC had no identity other than that's where I found [the program]. It was a delivery system. We made MTV the thing."
In the same way, when Bob went to AOL, the internet was just coming into its own and AOL execs needed to figure out whether to embrace it or fight it. At the time, there were three proprietary computer networks: AOL, CompuServe and Prodigy. "Two of the three decided they would fight it," he said. "AOL decided we would embrace it. Pretty good outcome."
The AOL people concluded that the internet was basically "convenience in a box," as Bob put it. "In every business I've been in, making anything more convenient is the winning prescription," he said. "And the internet, it turns out, was just a turbocharger of convenience for everything."
Since people tend to gravitate to the "shiny new thing," he tells his people to rely on fact-based decisions, "because it's very easy to go to hypothesis. To hype." When he asks his people what it is they're attracted to, "you realize they have no understanding of it. It's just that everybody's talking about it, so it must be great."
Bob thinks the ad industry "has to worry a little bit because it has always counted on the big reach from TV and it's not necessarily there." In fact, he came out of retirement because the one medium that hasn't fragmented is radio. The listener has a relationship with the radio station and the DJ, who he called the listener's best friend. "There is no show that you can get somewhere else. And I don't really want to record Elvis Duran's show and listen to it at noon. It's the real-time live aspect that is so unique and so important."
Bob doesn't have much sympathy for advertisers who get duped by phony clicks and websites. "Any advertiser today has to actually look at what they're getting. Is somebody really watching a video? Or is it firing below the fold and the noise you're hearing is the video playing somewhere and somebody's counting it? Yeah, but most of my time is looking at real legitimate video."
He compared it to retailing's shrinkage rate -- the percentage of inventory lost or stolen and divided by sales. "In the old store business, what was shrinkage -- 5% to 6%? I don't think you ever get much better than that [rate] in digital or anything else.
"You've got to be careful about what you're buying. And if something sounds too good to be true … and you haven't done the research on it, then you almost deserve to be ripped off. You really have to spend your time understanding what you're getting."
The AOL–Time Warner merger has been pretty universally panned, but Bob, who was chief operating officer of AOL at the time of the merger in 2001, has his own take. He said, for instance, that cross-platform deals were one success story—they went from zero to a couple billion dollars.
"The problem with the merger ultimately was it went right into a recession," he said. "Any merger done in a recession's not going to look very pretty."
He also blamed "a clash of cultures." At AOL, everybody worked on the product. At Time Warner, Bob said, senior management deferred to the heads of each division, and the power was at each one of the divisions. And so when you merged the two operations "you had radically different cultures."
Another problem, Bob admitted, was that the two companies did not have "a unified and consistent strategy." There was no agreement on where they wanted to go with the businesses and what risks they wanted to take as a company.
It was also the problem of a merger of equals, Bob said. When AOL bought companies like CompuServe or Netscape, "they just adopted the AOL way of doing business. They became part of our culture. When you do two big companies, we had meetings about what the new culture should be. So there was nothing left. You didn't have the comfort zone of AOL. Everything was a compromise, and I think it put everybody in a very uncomfortable position."
To make matters worse, the first year of operation was 2001, the year of 9/11. "Business fell off the rails after 9/11," Bob noted. In that year AOL Time Warner saw about a 10% earnings growth, but the stock was down. "At the end of the day, because the stock was down, [the merger] was perceived as a failure, and therefore it became a failure."
Bob wrote an article in Fortune during the Great Recession about the need for an ad stimulus program. "Everybody was talking about all the stimulus for stuff that sounded like we were a manufacturing nation as opposed to understanding what drives the economy is consumer spending. What stimulates consumer spending? Advertising. There's nothing that comes close to creating demand and spending more than advertising."
He added that companies were cutting back on advertising due to earnings pressure. "So if you want companies not to pull back on advertising and continue to create demand and get the people who do have money to spend so that we can create jobs … you should stimulate advertising."
My final question was what gave Bob the most satisfaction in his career, and his answer came quickly: "The people I gave a shot to who reached their potential or exceeded what I thought their potential was."
And, Bob added, the good people take it from there. "They don't need you to do it for them. They just need their chance. And I've taken chances on a lot of people who didn't have the résumé but I thought had the potential. And that to me is the great, great success of my career."