Advertising’s epitaph is in the workshop, waiting only for the weekend to entomb the relic of a simpler time. It’s only a moment — we’re told — before brands no longer pay to be in put in front of people but rather generate their own apps and content so intrinsically fascinating that exactly the right (target) prospects will feel compelled to become evangelists free of charge, transforming themselves into high-value lifetime customers almost as an act of gratitude.
“Advertising is dead,” says Amil Husain in the Huffington Post. “The creative gods are dying.”
“Traditional marketing — including advertising, public relations, branding and corporate communications — is dead,” says Bill Lee in the Harvard Business Review blog.
Well, let me set your mind at ease. Advertising is alive. It’s never been more alive.
- US ad spend is growing 4.4% in 2014, double 2012’s growth, according to GroupM and ZenithOptimedia
- Global spend is growing almost 7%
- Digital ad spending is skyrocketing, growing almost 20% per year
- Even network TV grew 10% last year, cable grew 4%, according to Kantar (which is shocking, if you see what’s on there)
- US ad industry employment added 70,000 jobs in recent years, according to Ad Age and US agencies grew over 6%
This seems odd. What about social? Wasn’t that supposed to ignite a firestorm of earned impressions that were better than paid because more authentic. Well, it seems we were victims of a temporary economic illusion.
Social networks need scale in order to have value; in fact, their value increases exponentially as they scale. Therefore, in the beginning, social networks do anything they can to increase their value: i.e., give things away. Even to brands. There was a golden moment, some 3-4 years ago, when what amounted to free advertising was a tangible reality on Facebook, as unpromoted brand posts appeared in newsfeeds with some regularity (approximately 1 in 16 posts, by one estimate). Teams were spun up to support this happy situation.
Well, it’s over. Facebook has about as much scale as it’s possible to have, and it needs revenue for its shareholders. It’s an economic fact that anything of value in an open market will, eventually, be valued. Facebook has got our attention. If you want a piece of it — you brands — you are going to have to pay. And indeed, Facebook admitted earlier this year that they “expect organic distribution of an individual page’s posts to gradually decline over time.” Expect the same from Twitter, Instagram, Pinterest, LinkedIn . . . and with those five, you’ve got 95% of social network traffic in the US.
At this point, we need these networks more than they need us. The same is true for brands, who I expect will shortly see Facebook realize its stated goal to have CPM’s more in the broadcast range. Even the FBX programmatic ad exchange isn’t “cheap” anymore.
What about content? Wasn’t that supposed to pick up where this organic social anemia left off, providing a valuable free currency for brand exposure. Well, high-value content certainly has value, and it can generate leads in a B2B context. Content marketing is here for the duration. However, as my colleague Jake Sorofman has pointed out, there may be a “content correction” under way, and Gartner’s recent digital marketing spend survey indicated a sharp decline in spending on content creation and management. This may be a belated realization that it’s not only difficult to do content marketing right — it’s also expensive.
Which brings us back to advertising. The economic truth is that attention has value, and the attention of people who may be receptive to whatever you’re selling has significant value to you (and your competitors). It’s not unreasonable that the holders of that attention — the media networks and social networks and even games — are going to ask you to pay for your share. And if you’re paying for something, no matter what you call it, it’s advertising.
All this week, my colleague Andrew Frank (@acfrank) and I (@martykihn) will be posting and tweeting from Adweek in NYC. If you’re there, drop us a line; we’d love to hear what you think.