The New Yorker 28-03-2005
In the introduction to his 1963 best-seller, "Confessions of an Advertising Man," David Ogilvy apologized for writing "in the old-fashioned first person singular." In the intervening decades-the years of, among others, Madonna and Donald Trump-that modest impulse has faded. The inclination now is more toward emphatic self-promotion. Linda Kaplan Thaler, who today enjoys an Ogilvy-like reputation as one of advertising's creative talents, co-wrote a book on marketing in 2003, and advised her peers, "Don't worry about whether the news is good or bad. Just get covered. . . . PR breeds PR."
I thought of Thaler when I began to look into whether advertising, which plays such a large role in the American economy, might be ailing, and how it was being affected by new media and by new technologies. (Last year, more than five hundred billion dollars was spent on advertising and marketing in the United States-half the worldwide total.) Thaler still believes that the old-fashioned advertising model works; and it seems to work for her. Although the industry's growth has slowed in recent years and profit margins have shrivelled, the Kaplan Thaler Group, which she founded in 1997, has flourished.
Thaler, who is fifty-four, has been around long enough to have seen the business change. In Ogilvy's day, within a single mile of Madison Avenue one could find America's-and therefore the world's-most celebrated ad agencies: Ogilvy Benson & Mather, Young & Rubicam, McCann-Erickson, Grey Advertising, Ted Bates & Company, J. Walter Thompson, Benton & Bowles. Agency people saw one another while dining or drinking at Pavillon, "21," and other establishments. The business was romanticized and mocked in popular culture, sometimes as a trade where failed poets became embittered copywriters and had too many Martinis along the way. It was portrayed as manipulative, in books like "The Hidden Persuaders"; as ruthless, in movies like "The Hucksters"; and as innocent (or sinister) fun, in the memoirs of some of its practitioners.
The path to profits was once fairly straightforward: clients paid agencies fifteen per cent of each advertising dollar, and most of those dollars went to the three television networks. In 1965, advertisers could reach eighty per cent of their most coveted viewers-those between the ages of eighteen and forty-nine-just by buying time on CBS, NBC, or ABC. "You could put together a media plan in an hour," Roy Bostock, the former chairman and C.E.O. of the MacManus Group, recalls. "When we introduced Scope, in the mid-sixties, we were able with television advertising in the first four weeks of the ad campaign to reach more than ninety per cent of U.S. television households ten times."
By the late nineties, some clients began to rebel against paying a flat commission, preferring fees, usually billed by the hour. (Linda Kaplan Thaler says, "I sometimes worry that clients are paying us for the hours we spend working on projects rather than the worth of the ideas.") And the agencies have long since left Madison Avenue-a street now frequented mostly for its luxury stores-for other parts of Manhattan and the rest of the world. But the name remains a synonym for an industry that bears little resemblance to what it once was.
Many of the old agencies have long since been absorbed by larger firms, which themselves have been absorbed. Ogilvy's firm was acquired in a hostile takeover, in 1989, by England's WPP Group. Sixteen years later, five companies claim nearly two-thirds of all advertising and marketing dollars, and own the most storied names of the mid-twentieth century. These firms, which call themselves marketing companies, are the WPP Group, whose initials stand for Wire & Plastic Products, a former manufacturer of wire baskets; the Omnicom Group and the Interpublic Group, in the United States; France's Havas; and the Publicis Groupe, also French, which acquired the Kaplan Thaler Group in 2002. They provide more services than the traditional ad agencies used to, including public relations, design, and event planning, which now account for about half of their revenues. These days, many functions of the old agencies are, in effect, subcontracted. For instance, buying advertising time might fall to a specialized company like MediaVest. (MediaVest, which is owned by the Publicis Groupe, buys advertising in bulk the way Wal-Mart buys merchandise in bulk.) MediaVest's C.E.O., Laura Desmond, points out that firms like hers decide where to target the dollars, a role once performed by the ad agency's account executives; a buyer's fee is typically two to four per cent, which leaves that much less for an agency.
Not everyone in the industry thinks that size is a prerequisite for success. Rob Shepardson, a founding partner in Shepardson Stern + Kaminsky, a downtown Manhattan agency that employs seventy people, believes that the giant holding companies subvert creativity, and that companies like WPP are no more capable of getting their varied divisions to work together than Vivendi and Universal were.
SS+K is independent, but a number of other midsized agencies, such as the Kaplan Thaler Group and Crispin Porter + Bogusky, have managed to keep their identities and creative reputations intact after a takeover. Thaler, who has helped produce such successful campaigns as the Kodak moments, starting in the late eighties, and the Aflac duck, in 1999, believes that advertising has faltered because it produces "a sea of sameness"; she says that her aim is to "make a brand explode onto the marketplace"-to create what she calls the Big Bang. Her book, written with Robin Koval, her general manager and chief marketing officer, is titled "Bang! Getting Your Message Heard in a Noisy World."
In one sense, Thaler's Big Bang differs little from the idea that has animated advertising since the birth of the first advertising agencies, at the end of the nineteenth century: to create awareness for a product. However, it is much harder to produce a Big Bang when prime-time television can no longer command the mass audiences of forty years ago-and when consumers are distracted by so many sales pitches and have the tools, among them personal video recorders, to bypass TV ads entirely. Randall Rothenberg, who was the advertising columnist for the Times in the late eighties, and who wrote one of the best books on the industry, "Where the Suckers Moon: The Life and Death of an Advertising Campaign," says, "The advertising business was built on top of network television. Advertising was a software business. It was all about creating a product and stamping it out over and over again." But a typical American household today has a choice of more than a hundred TV channels, and the broadcast networks-there are now six of them-attract only about thirty per cent of viewers. Today, it would take a hundred and twenty-five CBS, NBC, or ABC ads to reach the percentage of viewers that three network ads once reached. Rothenberg, who is now a director of Booz Allen Hamilton, the consulting firm, also says, "It's easier for Toyota to figure out a new way of producing cars than it is for McCann-Erickson to figure out a new way of persuasion."
Advertising, which subsidizes "free" broadcast television and Internet search engines, still sells goods by manipulating public attitudes about beauty and status. It encourages people to buy all sorts of products, from shampoo to automobiles, for reasons that do not always make sense. (Why do city-dwellers drive Hummers?) Keith Reinhard, who recently stepped down as C.E.O. of DDB Worldwide but remains chairman, wrote the "You deserve a break today" campaign for McDonald's in 1971, a classic of manipulation which Advertising Age named the No. 1 jingle of the twentieth century. "The consumer was not looking for a better hamburger," Reinhard explains. "They were looking for a break."
Jim Stengel, the global-marketing officer for Procter & Gamble, speaking at last year's meeting of the American Association of Advertising Agencies, said, "I believe today's marketing model is broken. We're applying antiquated thinking and work systems to a new world of possibilities." Agencies, he said, needed to produce advertising that consumers "want to stop and watch," but also to collect better information about consumer behavior. Stengel got attention because P. & G. is the world's largest advertiser; last year, it spent $2.9 billion.
Linda Kaplan Thaler, who has several Procter & Gamble accounts, and who also has a good relationship with Stengel, worries most about self-indulgent or risk-averse advertising. "I just think sometimes people are creating messages and talking to themselves," she says. "They're creating art films. There are about three hundred million people out there, and they've got to get it." When last measured by Advertising Age, for 2003, the Kaplan Thaler Group was the second-fastest-growing advertising agency in America and No. 1 in New York. (Last week, it took the Revlon account from the midsized company Deutsch, Inc.) In eight years, the agency has expanded to about a hundred and forty employees and more than six hundred million dollars in billings-relatively slight numbers in advertising worldwide but enormous for an agency of its size.
Ad agencies like to proclaim that the cure for what ails them is a jolt of creativity-that's why Omnicom Group's BBDO lured David Lubars from Publicis's Fallon agency, in Minneapolis, to become its new creative head (Lubars oversaw the clever ads for Citibank's identity-protection program). Randall Rothenberg suspects that Thaler's Big Bang notion, and creative campaigns like the Aflac duck, represents not the future but the last gasp of the past. In the future, he says, "there will be hundreds of tools to reach consumers and customers, and a quacking duck will be just one of these. . . . The bulk of marketing spending that we think is being used for advertising is in fact spent on promotion"-in-store displays, public relations, direct mail, trade promotions, stunts aimed at drawing attention. "Is that Aflac duck proof that the old verities work, or that it's the last quack?"
Thaler could be seen as something of a bridge between the Madison Avenue of David Ogilvy and the new multinational order. She is the rare C.E.O. who doubles as creative director. Her corner office on the thirty-fourth floor of One Worldwide Plaza, a block-long building on Eighth Avenue between Forty-ninth and Fiftieth Streets, is her stage. The agency revolves around Thaler. When she is pitching business to a prospective client or being interviewed, she is very much an actress. Eight O'Clock coffee, the name for the old A. & P. brand, is not just a client but a "wonderful" cup of coffee; Herbal Essences shampoo "is really fun to use." Once, when pitching the Panasonic electric-shaver account, she burst into song with a jingle that began, "Shaving sucks!"
Thaler is five feet four. She frets about the hair dryer in her hotel room, about a cold, about the pills she must take. These become communal concerns: My hair looks awful, doesn't it? Thaler's office contains a Yamaha PSR 520 synthesizer, on which she composes ad jingles. (She wrote the original Toys "R" Us jingle: "I don't want to grow up. I'm a Toys 'R' Us kid.") Her career has the aura of "Wonderful Town": a young woman comes to Manhattan, gets a big break, and is launched.
Thaler grew up in the Bronx, and once wanted to be a math teacher. (Her father was an electrical engineer who worked for Ideal Toy.) Then, because she played the piano and wrote music and performed in school plays, she wanted to be an actress. (Her mother yearned to be a comedy writer.) At City College, where she aspired to be a clinical psychologist, she was active in the Musical Comedy Society, which she thinks "better prepared me for advertising than anything. You had to write, and you had to perform." By the time she graduated, in 1972, she had decided to become a music teacher, and she went on to get an M.A. in musicology from City College. She joined a touring company of "Stop the World, I Want to Get Off" and performed standup comedy at such clubs as the Improv and Catch a Rising Star.
Laurie Garnier, a close friend and an executive at the Kaplan Thaler Group, remembers that they met when both were twenty-seven; they lived in the same building and went on double dates. During the day, Linda was a music teacher and gave piano lessons. One of her students was Stuart Pittman, who had an ad agency. Pittman asked if she'd like to write jingles for him, and her jingles helped to get her a job as a junior copywriter at J. Walter Thompson. A sign on the door of the firm's C.E.O. for North America, James Patterson, said, "What's the big idea?" Among Thaler's projects at J. Walter Thompson were an ad for French's mustard in which the sandwich gets angry because it is not topped by French's, and the Kodak moments. Patterson, who left advertising and became a best-selling fiction writer, says of Thaler, "She has an ability to find things that stick to the wall."
Thaler stayed at J. Walter Thompson for seventeen years, leaving when Wells, Rich, Greene offered her its top creative job. One client she brought in was Stephen Sadove, who, as president of Worldwide Clairol, oversaw the Herbal Essences account. Three years later, when Procter & Gamble, which owned Pantene shampoo, asked Wells, Rich, Greene to drop Clairol, Thaler decided to leave the company. "I knew that Clairol would at least give me consultant work," she says. She soon decided to start her own firm; the office opened in September, 1997, with one twenty-seven-million-dollar account: Herbal Essences.
The Aflac campaign apparently was born in the tradition of all memorable advertising lines, from "Ring around the collar" to "We'll leave the light on for ya." The American Family Life Assurance Company, a Fortune 500 company, was one of the largest suppliers of supplemental insurance policies (plugging the gaps in traditional insurance policies, usually for life-threatening illnesses or injuries), and had what to a small agency like Thaler's seemed like a robust advertising budget of forty million dollars. (By contrast, a major drug company like AstraZeneca spends hundreds of millions annually to promote a single drug, Nexium.) When Thaler travelled to Columbus, Georgia, to meet with Aflac's C.E.O., Dan Amos, he told her that what he wanted was for people to remember the name.
Thaler's company was competing against another agency and had six weeks to devise a campaign. The creative team of Eric David and Tom Amico, who led the effort, were becoming frustrated. Walking to lunch one day, David silently repeated "Aflac, Aflac." He started to say the word out loud. The more he said it, the more he realized he sounded like a duck. He ran back to the office and stood over Amico's desk and, with a nasal effect, quacked, "Aflac! Aflac!" In five minutes, they wrote the first Aflac commercial, featuring two businessmen on a park bench. One mentions the value of supplemental insurance, and the other says, "What's that?"
"Aflac," quacks a duck.
Thaler loved it, she said, but when she sent five different mockups to be tested by a focus group the duck came in fifth. And while Thaler trusted her instincts, in advertising, as in Hollywood, every venture is scrutinized by market research. The worldwide firm of Ipsos-ASI administers many of these tests, and a key measurement is the percentage of viewers who remember what they've seen. Gerry Lukeman, the chairman emeritus of the research firm, says that the insurance category "is a tough business for advertising. It arouses anxiety in people, fears. So the average ad-recall measurement is low"-around twelve per cent. The duck did about three times as well.
The Aflac duck, which débuted on December 31, 1999, became an advertising icon, alongside Charlie the Tuna and the California Raisins. In a clever P.R. campaign, the Thaler agency and Aflac came up with toy ducks that quacked. And Thaler and her director of corporate communication, Tricia Kenney, tried to get the actor Ben Affleck to do an ad, but it didn't work out. Thaler said, though, "We planted a seed": Affleck made a joke about the ad-and his name-on the "Tonight Show," telling Jay Leno, "Everywhere I go, no matter what I do, there is always some drunk lady screaming, 'Aflac!' " Thaler said, "When these things happen, it's a very happy surprise for us."
Rob Shepardson, of SS+K, is skeptical of such campaigns, meant to create awareness for a product, and calls the Aflac duck spots "fart advertising." Awareness is only "the first step of success," he says. "I still don't know what Aflac is." He says that the ads don't leave a viewer remembering a single attribute of the company. "My point is that, if you're spending all that money to get awareness, build a relationship," he adds. "There has to be a core idea, like 'What's in it for me?' " But Aflac sales more than doubled in the first four years. "We went from an unknown insurance company in the U.S. to a well-established brand," Dan Amos says. "Now two of the three largest corporations-U.P.S. and Wal-Mart-offer Aflac."
The Aflac campaign was a reminder that network television, even in its dotage, still has considerable power. Last May, fifty-three million viewers watched the final episode of "Friends," and this year's Super Bowl drew eighty-six million viewers. Advertisers certainly realize that there are other means of reaching consumers, and that different media reach different audiences; people between the ages of thirteen and twenty-four, for instance, spend more time on the Internet than they do watching television, according to Mediamark Research, Inc., an audience-measurement firm. A thirty-second ad on a top-rated network program can cost about a half million dollars-and up to two million four hundred thousand dollars for a Super Bowl spot. But, however extravagant such expenditures may seem if measured in terms of cost per viewer, advertisers have not found a better way to create wide awareness of a product.
When Apple's iPod was introduced, in October of 2001, it promised "A thousand songs in your pocket!" According to the advertising-tracking firm of TNS Media Intelligence, Apple spent twenty-four and a half million dollars to launch the device, and forty-five and a half million dollars between January and September of 2004. (By contrast, Roy Bostock says that to reach the same number of consumers as Scope did when it was introduced would cost at least two hundred million dollars in the first year.) Apple's expenditures were relatively modest, and surprisingly traditional: only two hundred and six thousand dollars went for Web ads, and ninety per cent of last year's total went for television, with the broadcast networks receiving twenty-five million dollars and cable just under eighteen million. Yet the real reason that the iPod has more or less cornered the digital music-player market is far simpler: the product was brilliantly conceived and executed. Word-of-mouth and promotion did the rest.
Advertisers are becoming more skillful at using indirect sales pitches, such as product placement-a tactic that probably dates to the birth of cinema. This past October, Ford introduced its redesigned Mustang, which showed up in NBC's drama "American Dreams" and will make numerous appearances throughout 2005, along with ads evoking the Mustang that Steve McQueen drove in the 1968 film "Bullitt." In January, an episode of ABC's hit show "Desperate Housewives" had a scene in which one character agrees to promote a Buick LaCrosse in a shopping mall, giving much the same pitch that viewers saw minutes later in a "real" Buick commercial.
Today, there are product-placement specialists, such as Frank Zazza, the C.E.O. of iTVX, a Westchester-based firm. The studios and television networks employ people to negotiate placement deals. There are no set fees, but the size and demographics of the audience matter; a quick shot of a company's logo in a movie can fetch from ten thousand to ninety thousand dollars. Placements are negotiated individually, with payment going not only to a network or a studio but to the producers who integrate a product into their script. A thirty-second commercial on "Desperate Housewives" would cost up to four hundred thousand dollars, Zazza says, while a product placement on the same show-if it lasted about twenty seconds and was part of a script-could cost advertisers the same amount. Product placement may also consist of giving away cars on "Oprah." Last year, General Motors' Pontiac division gave away two hundred and seventy-six cars on the show. A single thirty-second ad on "Oprah" costs about seventy thousand dollars; Zazza estimates that the publicity value to Pontiac was worth at least seventy million dollars.
This year, Zazza told me, a billion dollars will be spent on product placement in the United States, up from half a billion last year. Next year, he guessed, the figure will double again, coming to represent a fifth of what is spent on all network television advertising. The challenge for agencies is to figure out how to replace the fees they once earned on thirty-second spots. One method is for advertisers to invest aggressively in programs where they have some control over the scripts. On behalf of Sears and Unilever, for instance, MindShare, WPP's media-buying arm, has joined with ABC to develop comedies and dramas and share in the profits.
Broadcasters continue to take steps to accommodate advertisers. ESPN has been experimenting with using a split screen for commercial breaks: ads play on one side while sports action continues, silently, on the other. Network dramas and situation comedies have more sex, more action, more urban appeal. Susan Lyne, the former president of ABC Entertainment, says, "Anything that is complex narrative storytelling-one-hour dramas, narrative miniseries, character-driven movies for television-advertisers don't believe there is an audience under fifty for these kinds of shows."
In many ways, the advertising business in the early twenty-first century would be unrecognizable to the generation that once thrived on Madison Avenue. The traditional assumption, as Keith Reinhard says, was that advertisers chose the time and place of a "one-way show-and-tell" ad. The consumer was a captive audience. Today, advertisers chase consumers with a certain air of desperation. "It's not just about looking pretty anymore," Linda Kaplan Thaler says. "There are all these beautiful products out there. You need a lot more personality to get the date."
Because the audience is increasingly fragmented, advertisers have found other media-from the Internet to "guerrilla marketing" tactics, such as using the foreheads of college students (Dunkin' Donuts paid for that privilege). Ads are increasingly showing up in movie theatres; last year, the Cinema Advertising Council generated three hundred and fifty-six million dollars for theatre owners-thirty-eight per cent more than the year before. Jack Fuller, who, until the end of 2004, oversaw twelve daily newspapers as the president of Tribune Publishing Company, says that his company was among the first to print newspapers zoned by neighborhood. "The answer to fragmentation is, quite simply, to adapt to changing circumstances and compete hard against all comers," he says.
Brett Shevack, a vice-chairman at BBDO New York, embraces "brand initiatives," in which agencies become "business partners with their clients, not just advertising agents to their clients." Ogilvy & Mather's C.E.O., Shelly Lazarus, recounts how her firm spurred Hershey to enter the retail business. When her marketers were looking for a billboard site for the client, they noticed an empty space at Forty-eighth and Broadway. Better than a billboard, they said, would be a Hershey store. The last time she looked, she says, that store was "the highest-grossing-per-square-foot retail space in the country." She adds, "Twenty-five years ago, we would just have done a billboard."
On the Web, consumers can comparison-shop and get reviews-sometimes scathing-from people who have tried a product. Internet advertising fell after the dot-com collapse of 2000, but it jumped twenty-one per cent in 2004, and advertisers now spend more than seven billion dollars on the Web. In the old days, it was often said that half of advertising was wasted but no one knew which half-"spray and pray" is how Yahoo's chief of sales, Wenda Harris Millard, sums up the situation. Millard, who was once the publisher of Family Circle, recalls that in 1992 a full-page ad in her magazine sold for a hundred and sixteen thousand dollars. Yet if Bufferin had asked what impact its ad had on sales, Millard says, the magazine wouldn't have had a clue. Today, she says, because consumers leave a digital fingerprint with each click, companies like Yahoo have many clues about buying habits-albeit perhaps not as many as Internet research companies claim.
Today, the technologies that permit advertisers to track consumers also give consumers a way to hide from advertisers. Internet users can block pop-up ads and spam, and can refuse to give out more information than a mailing address and credit-card number. Millard and others have thought about trading free cable or other services for the right to track a consumer's buying habits. For privacy advocates, that would invite Big Brother into the home. Others would say that Big Brother has been there for some time.
When I stopped by Thaler's office one day this fall, she was being visited, as she often is, by prospective clients looking to be noticed in an increasingly crowded media world. "Most clients come to us and want the Aflac duck," Thaler told me. Thaler has considerable charm and enthusiasm, and she talked excitedly about the digital cable box that had just been installed in her apartment, capable of performing remarkable feats: allowing her to record programs, fast-forward and rewind, and skip the commercials (this she did not mention). Despite her professed optimism about the business-if advertising didn't work, she said, "the generic brands of every category would be selling out"-she knows that her agency must become less reliant on traditional advertising. (Similarly, talent agencies in Los Angeles are becoming less reliant on the movie industry by taking advertising accounts away from the agencies.) Thaler wants to produce more entertainment programs, as she did several years ago for CBS with a variety show for a client, the American Red Cross. "I put on my business cards 'advertising and entertainment,' " she said. "I'm interested in entertainment." In January, she opened a new division, KTG Buzz, to expand her agency's public relations and promotional abilities. "Advertising is in trouble only if you think of the narrow box advertising has traditionally been in, which is getting on TV or in print," she said.
Thaler believes that personal publicity helps build an aura of success. To promote herself and her agency, she agreed to host a gentler version of Donald Trump's "The Apprentice" for Oxygen, called "Making It Big," to début in May. She said that it would be great publicity for the agency-"like doing a new business pitch." Thaler's impulse is shared by, among others, Donny Deutsch, of Deutsch, Inc., who is the host of a daily interview show on CNBC called "The Big Idea." In an age of megacorporations with names like Omnicom, the business may have become smaller and less glamorous, but it is still about persuasion: people thinking up new ways to sell-themselves, the wares of their clients, or both.