Imagine a new advertising model led by human intelligence

Opinion

There is a risk that the automated, AI-led black-box systems touted by holding companies and platforms would be no more successful than their predecessors. I propose an alternative.

Once upon a time, some people who had a lot of media inventory to sell decided to rewrite the rules of advertising for the whole world.

They decided that brands and businesses should now mostly be built by talking to people one at a time, because we live in an age when everyone spends a lot of time on personal devices.

To reach people these days, advertisers must fish with a rod rather than a net. You get fewer but better fish and are better off overall, according to the brochure.

A bit like direct mail for the masses, with rich seams of data delivering the right people at the right time with the right message. Mass personalisation at scale was a few mouse clicks away.

A stormy, polluted ocean

What could possibly go wrong?

Well, plenty. There are indeed lots of fish in the water, but it turned out to be a stormy and polluted ocean, not a limpid, placid river, and it requires expensive heavy-duty rods to replace those old-fashioned trawler nets.

Lots of rods have been bought to do the job, but it costs a lot more to catch plenty of fish and the fish find it easy to ignore the bait; the more of it they see, the more they find ways to avoid it.

The bait itself is poor and cheap, and doesn’t catch much, so the anglers keep adding costly rods and mountains of poor-quality bait.

No-one knows how many rods are out there or how much bait there is, or whether they’ve caught anything. But the sprats are celebrated at fishing championships as a sign of some success — never mind the eye-watering cost of landing them.

Carrying on as before

The rod and bait manufacturers have floated their companies and bought flashy homes and cars despite the lack of fish. It doesn’t seem to bother them that the anglers have little to show for their efforts and still carry on dipping their rods for reasons no-one will ever be able to explain.

Nets are still available, but everyone seems to think that thousands of rods do a better job, mostly because the rod sellers say so but also because the nets are seen as old hat and anyway don’t catch as many fish as before.

The anglers carry on fishing away, sometimes catching plastic without knowing it and chasing the merest hint of a bob of the float, like a latter-day Benny Hill in pursuit of half-a-nano-smidge improvement in their click-through rate.

All of this proves the axiom that if you carry on doing what you’ve always done, you’ll get what you always got.

Here endeth (at last) the first analogy. Sometimes the mania of the last 15 years has to be spelled out differently and jargon can cause our industry to disappear up its own ROAS.

The madness of Wonderland

The analogy is actually not as crazy as the reality of modern-day advertising, where advertisers pay top dollar in fees (often hidden) to use the channels that take the most money but produce the least effect, especially in isolation.

Sometimes we seem to be in the world of Alice’s Adventures in Wonderland. Read this Digiday piece and weep.

Switching to media speak, the crypto-currency of CPM was adopted by online advertising sellers without any real cross-industry consultation and the Media Rating Council standards were set at a “blink and you will miss it” level, seemingly to the benefit of the people who stood to gain from such a low bar.

Supposedly “valid” impressions are plentiful, cheap, often invisible or fake, and they flood the market. Made-for-advertising sites are not the only dodgy inventory, just the best-known.

Artificial traffic was going to be filtered out by great technology that supposedly stopped advertisers funding criminal enterprises and their brands wouldn’t end up in nefarious places. We all know how that went.

The low, low cost of buying the media obscures the high cost of processing it and acquiring customers at scale, and no-one is accountable for the results because they just get paid for carrying the water, not how much there is to drink.

Meanwhile, the poor old public (including us) gets bombarded by lots of poor, badly targeted ads, and websites and apps resemble the clothes rails at TK Maxx. There may be something nice there, but it’s hard to see it among the viscose.

Advertisers are eating cheap soup with a fork and wondering why it’s so thin and tasteless, tending to blame the soup.

The curse of one-to-one advertising

Our industry is an optimistic one that likes to tell itself the dramatic growth in advertising spend in one-to-one channels is evidence of their success, when the reverse is almost certainly true.

Thousands of advertisers are pouring money into these channels because they are the natural place to go when you do actually want to advertise to one person at a time, like the cheap shoe guys.

Any business that relies on a one-to-one marketing strategy is hard sledding daily — assuming you can even get noticed by anyone as they scroll, surf, search, shop and skip.

Many big brands followed the cheap shoe sellers into low-rent sales tactics such as carpet-bombing and the famously popular retargeting, because first-party data is “the new oil”, don’t you know?

Even big brands seem to think there’s no business like shoe business, when really there’s just no business.

It is no coincidence that topline revenue growth of the big advertisers stalled at the point they doubled down on one-to-one marketing, as Michael Farmer has repeatedly pointed out.

It is also no coincidence that this happened when the supply side started extracting egregious fees to deliver ads digitally, compounded by further huge loss of effectiveness through ad exposure failures, shredding budgets.

Everyone oohed and aahed at the Lumascape, forgetting that a lot of that revenue came from only one source, without much evidence that the tech actually made much difference.

Why are we surprised by any of this?

Unhappy partners

So we now have pissed-off consumers, disappointed advertisers, disheartened media owners that weren’t passengers on the gravy train, but happy platforms and adtech executives who made tons of money and/or got their IPOs or trade sales away in time.

In the middle are the direct response advertisers that trundle on, thanks to search, social and other “performance” channels.

Then there is the unhappy big agency sector, over-reliant on their media agencies that in turn are over-reliant on media trading benefits, now including the mega profits from proprietary media.

And, to cap it all, we have media channels that make first-rate content having to cut back because the money has gone to those that don’t, while the latter struggle with user and brand safety.

Now all of this is coming to a TV screen near you. Let’s hope the iniquities that have bedevilled one-to-one media up to now don’t infect the world’s most influential “collective experience” medium.

The early results aren’t encouraging, because the wrong kind of people learned their trade years ago.

We now find that the media model of the last 15 years is about to be amped up with many more thousands of sexy rods, automated to find those elusive fish. The people who brought you the first model are promising the next generation of AI-generated sliced bread.

No doubt the fish will get even harder to catch as AI enters their daily lives, too, but we can expect the rod sellers to make another killing as manufacture gets cheaper. We can’t expect the anglers to be any better off, though, can we?

The track record of automation in advertising doesn’t breed confidence.

Online advertising grows up

Now, at last, for the good news.

There is finally a growing sense that brand advertisers have been over-investing in one-to-onw marketing and are starting to think about using nets and rods together in smarter ways.

The other bit of good news is that some well-intentioned people are aiming to make the process of fishing with a rod a whole lot better and at lower cost.

We’ve waited a long time for this, but now there are signs that online advertising might be growing up.

The most interesting new research from entities such as EssenceMediacom, Warc, VCCP, Amplified Intelligence, Thinkbox and the “solicitors” of marketing effectiveness (Byron Sharp, Les Binet, Peter Field and Adam Morgan) all address the need to use nets and rods in the right ratio.

But not in a 60/40 kind of way. Media don’t just do one job; they don’t work in isolation and they work long and short, just as the men said.

So the answer is a balance of collective and one-to-one channels that deliver the best combined business results, by advertising task and by time period, according to need and success.

Further evidence from the Saïd Business School at the University of Oxford adds a lot of extra rigour to this debate. Yes, we’ve been talking about this for years, but the lack of growth for advertisers must surely generate action after all this time, starting with the research.

Big risk

But, hang on — isn’t it all about first-party data now, not some fancy-dan “re-search” from wannabe (or even real) academics?

And isn’t AI going to revolutionise the world and fix all the issues you talk about (that we neither recognise nor accept)?

Also, how can you expect our holding company to grow unless we automate the entire advertising process (to resemble a worse version of the one you describe that we don’t acknowledge) before the big platforms do?

And, anyway, it’s all about principal-based media now, with lower-cost, precisely targeted media, data, tech, analytics, talent, extended payment terms and a strawberry on top. And no fee, because we extract it from the media vendors.

Well, the risk is that we’ll get better at talking about hyper-personalisation and fantastic identity-led purchase intention data and the fish will carry on avoiding us, finding us even more intrusive and irritating the more we know about them.

Are we still going to chase the chimera of mass personalisation at scale?

And what about the “top of funnel” demand generation that embeds favourability in people’s minds for the next motor insurance renewal or trip to Sainsbury’s?

Is the future really just about a Bloomberg-style trading system that treats advertising like a commodity, with revenues from arbitrage, and data and tech fees replacing income from clients?

There is a risk that the automated all-singing, all-dancing, AI-led black-box systems being touted by the holding companies and platforms are a snazzier version of the old model. Except they are likely to be no more successful than their programmatic predecessors, just with fewer people and much higher margins for the holding companies and the rod-and-bait guys.

Here’s the alternative

There is a better way if advertisers want there to be. They don’t have to simply follow the automated, principal media-led route that promises a lower-cost version of today’s model.

The key is human intelligence that lets AI do what it is best at. Let us do the thinking, apply the judgements and then tell the machines what to do.

We’ll supply the IA and use it to drive the AI.

Information architecture is key to success, bringing in fused research and data from multiple sources to devise the best integrated pan-channel communications planning that makes advertising work harder at delivering business success.

Some of this will be tech-enabled, but there is still no substitute for the human mind, expertise and experience.

Let’s also invert the current financial model where the big money is made from activation and trading, slicing off big chunks of budget in increasingly surreal ways to feed too many unaccountable mouths.

Here’s an alternative three-stage programme and how to fund and staff it.

1. Commercial communications planning

For many brands and other advertisers, great planning optimises the right combination of “collective” and one-to-one media in a mutually reinforcing connected programme that takes into account the factors that affect performance, including the messaging, price, distribution and so on.

“Brand” media don’t just embed messaging in people’s memories; they multiply the effect of all other media and behaviour online and in store. We’ve been talking about this for decades and it’s still true, as Warc has recently reminded us.

The most successful planning uses the best research and data to achieve the optimised mix of channels, taking into account the varying permutations of screen size, attention factors and memory functions, as well as the data signals streaming in continuously.

There is a place for sharply defined one-to-one media, of course, but as part of a balanced diet. Why limit your options to trying to catch people individually based on loads of data if this just retreads the original problem of not having enough fish to catch and then not catching enough fish, only cheaper?

As part of the new comms planning approach, there is the opportunity to rewrite some rules for online advertising, too, and support the “new wave” of people trying to clean up, such as Scope3 and its new ‘agentic’ advertising platform and Swym.ai (in which I have invested because it is trying to improve online advertising).

Highly effective comms planning is not cheap and requires superior levels of seniority, expertise and experience, with significant investment in technology. But all of this is worth paying for and a good measurement framework is worth its weight in gold.

An optimised effectiveness comms planning approach maximises the likelihood of success and minimises risk, with optimisation via smart analytics a given.

Advertisers say they are prepared to pay more for agency services if business success warrants it, so advertisers should expect to pay the majority of fees (circa 65%) for upstream effectiveness-led channel strategy, which is where the money gets made.

2. Integrated activation and trading

Now let’s talk about where the money gets spent.

It isn’t unusual these days for media planning and its subsequent buying to be at odds. Increasingly, the plans reflect the deals, especially where principal-based trading plays a role.

Having gone to the supermarket to buy peaches, it seems pretty daft to buy lemons instead because they’re cheap. That lemon Melba doesn’t taste so good and it encourages the supermarket to only stock lemons.

The activation and trading systems should be integrated into the comms strategy with the same obsessive focus on optimisation and effectiveness, making it all work harder.

This can’t be done without full transparency of money and data as the modelling has to have accurate inputs. For example, if the open web supply path only delivers 40 cents in the dollar of true ad exposure, which number goes in the model each time?

Effectiveness-based activation cuts out the wasteful supply-path leakage of data and money and maximises “true” impressions and CPMs, using viewability and invalid traffic thresholds that are realistic and not designed to maximise the vendors’ take.

New solutions should be sought to filter for bad traffic to avoid rewarding platforms that are not user- or brand-safe, while cutting emissions.

This means favouring a new generation of adtech partners, not just the ones on the “preferred supplier lists” because they offer hefty rebates. There are some great tools out there that can unlock value for advertisers.

And, needless to say (almost), all of this should be automated to the extent possible to improve data quality and integrity, and suck cost out of low-grade work.

Activation and trading should account for around 30% of fees.

3. Contract and governance

All of the above can only happen if the right business and relationship frameworks exist and are stuck to.

At some point, our industry might finally enter the world of professional services and act in a grown-up way when it comes to financial, legal and contractual matters.

Any decent communications programme, especially if it involves a fusion of creative, production and distribution elements fuelled by data and technology, should be subject to the kind of commercial rigour that befits an industry spending $1tn of someone else’s money and where public interest is at stake.

It seems only fair that if advertisers are going to entrust their commercial partners with their information, data and money, they are due a better process than one where they have to count their fingers after they’ve shaken hands.

Contract compliance should be full, continuous and voluntary, with the onus on the agencies and other parties to confirm that they have kept to their end of the bargain.

Advertisers should pay around 5% of their total fee to their partners that consistently and accurately report on their contractual compliance, not just their service delivery.

The all-important talent

So a three-part programme that in-builds optimised effectiveness throughout. Does this mean that “outcomes-based” fees aren’t needed?

They should form a variable part of the total rewards package on the basis that success breeds success, and they can be applied with confidence if all three parts of the programme are executed according to the agreed measurement protocols.

Finally, who should do all of this and how?

All of this is achievable with the right skills at client end and with the right “pilots” at the controls managing all three stages of the programme, usually within agencies but not necessarily, as long as there is a “one ship, one captain” approach and unquestionable accountability.

The necessary expertise and experience are rare and expensive, but worth the investment; our industry has gone backwards in its employment of senior specialists to everyone’s detriment. The talent is available.

The consistent cri de cœur from advertisers is that they need more help from their external partners in a world that is messy and laborious. For too long, agencies have been preoccupied by their revenue needs more than their clients’ and have lost sight of their core purpose of delivering growth.

Leading with optimised effectiveness puts the money back where it makes money, so all should be self-funding when executed well.

The AI era represents a fork in the road. Agencies can continue down the path of hyper-personalisation that provides the illusory promise of better jam tomorrow while improving their profits and multiples at the expense of their clients’ interests.

Alternatively, they can restore much-needed equilibrium to the industry by restoring effectiveness through better creative thinking, communications planning, activation and trading, and contractual and governance rigour. This takes the right people to control the machines and the right payment and incentive structures.

The better alternative route will probably only happen if advertisers require it. It is probably too much to expect the agency sector to undergo a Damascene conversion.

The alternative way is longer and tougher, but better for the public, advertisers, ad industry people, the media owners that make great content (and don’t jeopardise public health and safety), the planet and business in general.

Let’s hope the right choices get made as AI takes us into a new era. I’m sure the fish would appreciate it and so would the anglers.

Nick Manning is the co-founder of Manning Gottlieb Media (now MG OMD) and was chief strategy officer at Ebiquity for over a decade. He now owns a mentoring business, Encyclomedia, offering strategic advice to companies in the media and advertising industry, and is non-executive chair of Media Marketing Compliance. He writes for The Media Leader each month.