Failure to Build Brands Is Hurting the Economy, GroupM's Irwin Gotlieb Says

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A "massive deficit" of brand building is dragging down the economy, according to Irwin Gotlieb, global chairman of GroupM.

When the history books get written on the last 15 years, Irwin told me in a video interview for his induction into the Advertising Hall of Fame, "I think they will say that the lack of brand building, the lack of effort on long-term marketing, destroyed and damaged more brand value than anyone can add up."

Every client, Irwin said, is suffering from what his boss, WPP's Martin Sorrell, coined as "short-termism." Every client has to make the next quarterly report. "When you become more focused on the short term than the long term, you need to narrow your marketing funnel because that's where long-term effect happens. You focus on short-term ROI, and brand building doesn't give you short-term return, it gives you long-term return."

Irwin is an endless supply of provocative opinions and observations about the state of today's ad business, and like others I've interviewed lately, he has decidedly mixed feelings about what lies ahead. Irwin was born in China, migrated to Israel, spent his formative years in Japan and arrived in the U.S. as a 15-year-old in 1965 "at a time when the United States fundamentally thought like an island."

We covered a lot of territory: from agency- client transparency to digital disruption, even cyber espionage. We talked about his early days in the business, where he "probably worked harder back then than I have since. But in many ways it was simpler."

What he really misses about those days, he said a little wistfully, is the "deep client relationships that we had, that evolved over decades of working together. Today, that's more the exception than the rule, and I think the work suffers as a consequence."

Irwin explained why WPP originally put all its media holdings in one nest. He said the elements of media, data and technology all benefit significantly from scale, and the creative function really doesn't. "To be specific, the greater dollar volume, the more leverage you have in the trading context."

Somebody has to do it
WPP invests its own money in technology because that is the price of leadership, Irwin asserted. When the agency holding company buys into the "only independent, non-media-vendor-owned, supply-side platform, AppNexus, we do that to create some integrity in the digital marketplace. Because there are fundamental issues with having all of the technology stack owned by media owners. If anybody has to do that, it's us."

Irwin said he understands that "from time to time our motives are misrepresented, and I think that's very, very unfortunate." But he asked what law firm or investment bank doesn't use "the benefits that accrue to them from handling their client's money, don't use the knowledge that they gain for their own benefit in some form?"

GroupM, Irwin said, has encountered some corporate procurement groups that are willing to make comparisons between apples and oranges, "and sometimes one of the fruits isn't so fresh."

He maintained that "it's really easy to save money by downgrading the quality of the media that you acquire. The CPMs go down, the GRPs remain the same and the client saves money. But it doesn't always have the same effectiveness, and it doesn't always have the same outcomes. We believe that our role is to help guide a client to optimize their profits, not to save money on media expenditures."

Concerning digital fraud and brand safety, Irwin pointed out that technology "is only as good as it takes for the other guy to leapfrog you. The bad guys are incredibly profitable at what they do, and they put substantial resources into improving their technologies, and it is a space race." In the case of brand safety, Irwin said his agencies have to rely to some extent on the vendor's classification of that content. "We don't get to preview it all. It's not humanly possible to do so."

It's not the role of GroupM to "throw knives at a media owner who has run into issues like this. It is our mandate to work with them to make it better," he said. "We're all in this together."

Legacy media's failures
Irwin is very concerned about hacking and cyber espionage. "My fear is that many of the devices that are coming on the market today will allow a hacker easy access to troves of private data that should not be out there. I think our vulnerability increases every single day."

And Irwin added that you can't stop hacking any more than you can ensure 100% brand safety in terms of a client's commercial being adjacent to appropriate content all the time.

Irwin doesn't think the legacy media are doing a very good job competing on the digital front. "If you look at the technology investments that Google and Facebook have made over the last decade-plus, you have a very, very clear answer as to why they have the market share that they do. I have to look at legacy media owners and question them as to why they didn't step up to the plate." He said legacy media owners too often look at each other as competitors.

If you're not the one doing the disrupting, as the big digital players are, "you better put your nose to the grindstone. You've got to figure out where the buck is going. You've got to figure out what you need to do. The only question is, will you do it or will it be done to you? Legacy companies can do it, but they have to think very, very big."

Disrupters, Irwin said, "can lay waste to a whole sector, and not have something that's as successful to replace it. That's just destruction of value, shareholder value and everything else. Except that there are those who profit from it."

He added, "that's a social dilemma that I'm not sure I'm the best person in the world to deal with, but it's something that has to be contemplated."

Watch more of Rance Crain's interviews with Advertising Hall of Fame honorees including Lee Clow, Kay Koplovitz and Spike Lee, right here in our video hub.

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