Review: 'Frenemies' by Ken Auletta is a tour through the circles of industry hell

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Credit: Taylor Hill/Getty, Penguin Random House

Every turbulent era needs its Dante Alighieri, and Ken Auletta, bestselling author and veteran New Yorker columnist has taken on the Italian bard's mantle to descend into the hell that the marketing and advertising industry has become since the advent of digital and social media.

Abandon all hope, ye who enter here.

Auletta decides to "follow the money" right through the concentric circles of hell, reasoning that the best way to understand advertising's current condition is to trace the shrinking advertising revenue of traditional players – revenue that is now fueling Google, Facebook, and a "myriad of other new digital enterprises." Auletta's concern is that interruptive advertising, which has underwritten entertainment, news and product marketing is disappearing, and with it go the economic and commercial benefits that we and the industry's players have so long enjoyed.

The author's research for the book is extensive – approximately 450 recorded interviews (including one with this reviewer). The interviews are both a source of strength and weakness of the book, since many of Auletta's key sources – Martin Sorrell, Irwin Gottlieb, Richard Tobaccowala, Randall Rothenberg, Caroline Everson, Les Moonves, Beth Comstock, Anne Finucane, Bob Greenberg, Keith Weed and Gary Vaynerchuk – are affected by the industry's disruptions, and each source's observations contain elements of disbelief, anger, fear, denial and hope. The advertising industry today has the intellectual and emotional clarity of a mental institution, and one cannot expect to find the truth about the future of mental health by relying on the thoughts of the inmates.

This might explain why Auletta, with a nearly audible sigh of relief, settles on Michael Kassan, founder and CEO of MediaLink, to be his Virgil and guide through the industry's changes. Auletta centers his book on Kassan in his business role as matchmaking impresario, search consultant, and "man-with-a-tortured past." (Kassan's law license in California was suspended in the 1990s in connection with poor financial decision-making and a brush with the law before being reinstated. He has been a member of the California Bar since 1976.) Auletta devotes a long chapter to Kassan, and then some, to position him as an omni-present spokesman, guide and interpreter of the broader changes in the industry, elevating him to "expert among experts." "Frenemies" ends with Kassan successfully selling MediaLink to another company – the emotional high point of the book despite being a somewhat unsatisfying conclusion for this ambitious tome.

"Frenemies" refers to the industry players who used to have arm's-length relationships with one another but who now invade each other's turf in often ambiguous, almost always financial ways. Advertisers, who used to get "content" from ad agencies, now create some of their own content through in-house studios. Media agencies, who used to act as "pure agents" for their clients, planning and buying media for them, have become media speculators, buying media at one price and selling to their clients at another. Trust has broken down. Players are both friends and enemies with one another. The formerly rich are becoming poor; the new entrants are becoming rich. Creative agencies are being cut out of the picture. Where is this all headed?

Auletta reports what industry executives think and believe about the future, but this does not illuminate the truth. The shift to in-house agencies is a case in point. The book asserts that since speed is of the essence for digital and social advertising, "of course" it makes sense for advertisers to do some of this work in-house. The truth is not about speed, though – it's about economics. An in-house agency can hire salaried people costing no more than $100,000 per head to crank out digital and social posts on a 9-5 basis. If this work is done by an agency, it costs $100,000 for an agency person, plus $100,000 to cover agency overhead, plus $22,222 for a 10 percent agency profit, so the total cost to the client is at least $222,222. Agency executives are reluctant to conclude that they are high-cost for digital and social content, so in their interviews, they talk about "speed," and readers of "Frenemies" are none the wiser. They're left with the myths rather than the realities of this important shift.

The same holds true when the holding company problems are discussed. Sorrell, in his interviews (undertaken before his April 2018 resignation from WPP), blames "short-sighted" cutbacks in client spend for WPP's lack of growth and share price decline. The truth is that WPP's agencies have downsized for many years, under pressure from Sorrell, to generate WPP's growing profits. If clients are now cutting spend, it may be because they are getting inadequate strategic and marketing advice from their enfeebled and downsized agencies. You won't hear this from any holding company CEO, though.

Auletta never pretends that "Frenemies" reveals the "truth" about how the industry will turn out. He is less an industry analyst than a skilled and engaging travel writer, taking us on an extensive armchair journey that illuminates today's industry confusion. Clearly, there will be a few industry winners and many losers in the coming years, but "Frenemies" does not sort them out. Auletta leaves them roasting in the Circles of Hell -- all except Michael Kassan, whose soul is finally liberated.

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CORRECTION: An earlier version of this article stated that Michael Kassan lost his law license in California. His license was suspended but reinstated.

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