ANA Media Conference takeaways—why media is doing great, marketers aren’t, and agency friction has eased

Media spending is soaring, but marketers aren’t benefiting enough. Media measurement is broken, and people are no longer willing to accept that as a fact of life. But at least the buy-side of the industry—brands and agencies—is getting along better. Those are among key takeaways from the Association of National Advertisers Media Conference held in Orlando, Florida, March 2-4. It drew 285 people who registered for in-person attendance, about double what it drew last June. Another 700 registered to attend virtually. Subscribe to Ad Age now for the latest industry news and analysis. For many attendees, it was the first industry event they’d attended in more than two years. What they found was an ecosystem that’s been permanently altered. The lengthy conflict between marketers and agencies over transparency in media appeared to have at least quieted. Talk of increasing investment in minority-owned media has grown from a nice sentiment to more concrete action. And marketers are finally taking a lead on steps to fix media measurement problems. Here are the key takeaways. Media is doing great, marketers not so much ANA CEO Bob Liodice pointed to eMarketer data showing overall media spending surged 21% in 2021 and is expected to grow another 10% in 2022, with digital of course leading that growth. He compared that to the average annual revenue growth rate of only 3.1% for Fortune 500 companies from 2010 to 2019. “I don’t care how much money we’re spending,” Liodice said. “If it’s not generating growth, we’re not doing what we need to as an advertising ecosystem.” A deeper look by the Ad Age Datacenter suggests he’s on to something. Based on estimates by Publicis Media’s Zenith and U.S. gross domestic product data across the whole economy, media spending has been outpacing nominal (not adjusted for inflation) GDP growth since 2012, and last year rose to its highest share of GDP—1.24%—since 2006, before the Great Recession. Interestingly, while ad spending as a share of GDP dropped fast in the Great Recession in 2008 and 2009 and continued declining the following two years, it actually did better in 2020, the pandemic recession, than the broader economy. That trend continued during a recovery in 2021, when ad spending surged 18.7%, per Zenith, compared to 10.1% growth in nominal GDP. Subscribe to Ad Age's Datacenter for ongoing data and insights on all of the most-advertised brands. How U.S. ad spending growth tracks with GDP growth Ad spending has grown faster than nominal GDP—that is, GDP not adjusted for inflation—every year since 2012, as shown on the orange line. ‹ › × (Click image to enlarge) Credit: Infographic by Ad Age U.S. ad spending as percent of GDP Ad spending came in at 1.24% of GDP in 2021, the highest percentage since 2006. Year U.S. ad spending ($ billion) U.S. GDP ($ billion) U.S. ad spending as percent of GDP 2000 $157 $10,251 1.53% 2001¹ $147 $10,582 1.39% 2002 $150 $10,929 1.37% 2003 $152 $11,457 1.33% 2004 $161 $12,217 1.32% 2005 $166 $13,039 1.27% 2006 $173 $13,816 1.26% 2007 $178 $14,474 1.23% 2008² $172 $14,770 1.16% 2009² $150 14,478 1.04% 2010 $154 $15,049 1.03% 2011 $156 $15,600 1.00% 2012 $164 $16,254 1.01% 2013 $171 $16,843 1.01% 2014 $180 $17,551 1.03% 2015 $187 $18,206 1.03% 2016 $197 $18,695 1.05% 2017 $212 $19,480 1.09% 2018 $230 $20,527 1.12% 2019 $243 $21,373 1.13% 2020³ $240 $20,894 1.15% 2021³ $285 $22,998 1.24% 1. Recession 2. Great Recession 3. PandemicSource: Ad Age Datacenter analysis. GDP from Bureau of Economic Analysis. U.S. ad spending from Publicis Groupe’s Zenith (Advertising Expenditure Forecasts, December 2021). Gross domestic product, or GDP, is the value of goods and services produced in the U.S. ‘Measurement is broken’ Responding to a question about how well minority-owned media is measured, Heather Stewart, General Motors Co.'s general director of global media and marketing services, said, “Measurement is broken in this country, particularly for diverse homes.” It’s a problem she said GM and media agency Dentsu Group’s Carat are trying to solve, but haven’t yet. The sentiment was echoed elsewhere in different ways. Measurement came up in nearly every ANA presentation and in conversations off stage, and usually in the context of complaints. Procter & Gamble Co. Chief Brand Officer Marc Pritchard noted TV network audience forecasts are “always wrong,” leading to an endless chain of make goods. He proposed doing away with audience guarantees altogether through tests of a more real-time inventory-advertiser matching system. Cortex Media CEO Manuel Reyes detailed how audience deficiency units (ADUs), what networks are making good on when their measurement forecasts come up wrong, are often poorly tracked. Often marketers are getting questionable compensation by networks, he said, not in comparable TV audiences, but in hybrid linear connected TV deals, digital placements or other “special opportunity” offerings that are even harder to measure. Reyes also noted that while he’s heard about the promise of Nielsen One, the TV ratings giant’s in-development cross-measurement system based on big data, its panel-based TV ratings still leave a lot to be desired. He noted that he’d just heard Nielsen is restating 50 weeks of data from last year, and he doesn’t know how that will affect the value of existing ADUs. (Nielsen declined to comment, but people familiar with the matter said those restatements are of out-of-home viewership previously criticized by the Video Advertising Bureau.) D.J. Perera, director of Boehringer Ingelheim’s Media Center of Excellence, detailed a labyrinthine set of buying and measurement choices for connected TV. “The problem is there’s not universal measurement,” she said. “There is very little transparency. You don’t know if consumers are on their mobile device or watching on television.” Marketers are trying to fix it Josh Chasin, chief measurability officer of VideoAmp, noted the ANA’s current Cross Media Measurement initiative represents a shift toward marketers taking more leadership in fixing problems with media measurement. But it’s a long, twisting road. ANA executives noted that the first component pilot toward an encompassing solution of measuring video reach and frequency across all platforms will start in the third quarter, but a fully assembled system may not be ready to look at until late 2023 or early 2024. Even then, the goal is simply a reach and frequency foundation upon which measurement of more detailed custom audiences will be built. “I’m glad it is marketer-led,” said Kanishka Das, global eBusiness analytics and insights leader of P&G. “I’m happy to report marketers are very energized in this area.” Fixes don’t necessarily have impact overnight. Among efforts to make it easier for advertisers like P&G to buy minority-owned media, was a move by Nielsen to eliminate or reduce data subscription costs for minority-owned stations. But Chelsey Dorsey-Maddox, CEO of American Urban Radio Networks, said in a panel that the move by Nielsen has yet to make a noticeable difference in the market. Minority-owned media gets attention Even so, minority-owned media got more attention than ever at a general-market ANA conference, with a half day at the opening devoted to it, and attendees of those sessions sticking around to do business later. An executive of one Black-owned media company noted he’d gotten meetings that appear to promise new business with three of the biggest advertisers in the U.S. GM’s Stewart noted the company had beaten its goal of spending 2% on minority-owned media last year, and looks to reach 4% this year. Several people, in audience questions and off stage, said commitment to diverse-owned media appears stronger among many marketers than their agencies. Pritchard, however, said “clients get the advertising they deserve,” and that P&G at least has made its commitment clear to its media shops, which he said are in turn trying to follow through on it. P&G hasn’t given a number, other than Pritchard stating the goal of being the biggest spender on minority-owned media in the U.S. Retail media’s impact grows Retail media also got love from the stage—and not all of it paid for. Kroger Precision Marketing sponsored a dinner and a virtual lunch; Walgreens Advertising Group made a presentation; and Pritchard touted retail media as a focus area for more investment by P&G. And no wonder it’s popular. Luke Kigel, VP of Walgreens Media and head of Walgreens Advertising Group, said spending on his medium delivered $6 in sales for every dollar spent. J.M. Smucker got $8 in sales for every dollar of spending via Kroger digital advertising on a new Meow Mix product for particularly finicky cats, said Kelly Sweeney, director of commerce marketing for Smucker. Get your ticket for the April 5 Ad Age Next: Retail event at AdAge.com/NextRetail. A cynic’s view is if retail media are really delivering sales returns of six to eight times the investment, no wonder inflation is surging. All that demand may be overwhelmed by any reasonable ability to meet it. And (see above) spending as a share of GDP has been growing. Less cynically, Kigel would like retail media to be known not just for closing sales, but also “at the top of the funnel” in building awareness. But that’s a harder sell, in part because of how media using retail sales data for targeting is inherently viewed, and in part because of how marketers are organized. Confusion in org charts Kigel is in the unusual role of leading both the buy-side and sell-side of media for Walgreens, which “definitely changes the conversation with partners” when buying media. The Johnson & Johnson veteran is often asked how he’d restructure a marketer team today in light of the growth of retail media. “I wish I had a great answer,” he said, noting that customer development, shopper and media teams all have a role in buying retail media. “I think it’s really complicated and isn’t a thing that’s going to change overnight.” Among other things, consolidating decision making into a single role is “potentially impacting people’s livelihoods,” he said. “You don’t want to unintentionally end up squeezing someone out.” P&G's spending decision, Pritchard said, primarily rests with brand marketing teams. And even beyond packaged goods—where things are complicated by sales and brand marketing teams each having stakes in retail media—marketing organizations are having trouble keeping up with change. A former executive for one direct-to-consumer marketer noted his company had spent $30 million on consulting to look at how to reconfigure its marketing group only to ultimately not make changes. Transparency talk War, of course, was raging in Ukraine. Outside an acknowledgment of the tragedy by Liodice, marketers didn’t weigh into the war much publicly during the event. In the ad industry, relative peace appeared to reign between marketers and agencies. Consider that seven years ago, former MediaCom CEO Jon Mandel delivered a blistering indictment of hidden rebates and other non-transparent practices. A couple of months later, former GroupM Global Chairman Irwin Gotlieb issued his rebuttal, saying clients weren’t really letting agencies be their agents anymore because of contract terms. Fast forward to 2022 and GroupM U.S. CEO Kirk McDonald was invited to deliver a non-contentious address to the media conference, and his agency group is helping develop the ANA’s Cross Media Measurement framework. Executives at GM, Visa and Charcuterie Artisans presented alongside agency executives, who got equal or better time and credit. And transparency talk was relatively scant. One consultant in the space said underlying transparency problems largely haven’t disappeared, but he believes marketers and agencies have learned to live with and manage around issues with less conflict. Cortex’s Reyes, who in the past focused heavily on audits of media agencies and still does, instead looked at how marketers need to be diligent in getting a fair shake from media companies when they inevitably fall short of their audience guarantees. And ReedSmith attorney Keri Bruce, while she did bring up transparency in her presentation, made it a relatively small part, focused among other things on the many names agencies may give to “non-transparent” practices and how marketers need to be clear on how they’re authorized and by whom. It’s not all rosy Of course, it wasn’t all rosy with clients and agencies. Christopher Lawrence, director of mass media for ADT Security Services, noted that while many marketers have brought programmatic digital buying or search in house, ADT has taken the unusual step of doing so with TV, out of home and audio. It’s doing so with a four-person team that delivers similar CPMs, or the cost to reach 1,000 viewers, to what ADT was previously getting with an agency, but at less cost for ADT, which spends $50 million to $75 million on mass media, he said. That suggests small and mid-size clients don’t benefit much from the supposed scale advantages of going with an agency. Boehringer Ingleheim’s Perera noted the suspicion with which she’s come to view agency involvement in CTV buying, having heard from agencies (not her own) that they will set up their own programmatic buying for a client, only to discover that really just means taking the money and spending it through fraud-prone open exchanges. News sells MMA Chief Operating Officer and former Bank of America media chief Lou Paskalis made a case for marketers to invest in journalism. It’s a case, he noted, made harder by Applebee’s recent placement of an ad with a happy dancing customer alongside footage from the first hours of Russia’s invasion of Ukraine on CNN—one he said owed more to problems with CNN’s curation of the ad than the Applebee’s buy. But Paskalis said marketers, by refusing to buy against such words as Russia, Ukraine or other controversial news topics, are essentially guaranteeing that their ads never support journalism, which is a cornerstone of democracy. Read the latest news on industry responses to the Ukraine war. “News can be a good investment,” he said, citing research commissioned by Interpublic Group of Cos. that consumers find the sources of news brands appear on more important than the content around the ad, and that 90% of consumers have no trouble with ads appearing alongside bad news. He also noted CivicScience survey research showing subscribers to news sites are more upscale, four times more likely to attend sporting events and 55% more likely to follow technology trends.

ANA Media Conference takeaways—why media is doing great, marketers aren’t, and agency friction has eased

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