I sat down with Alex Bogusky, the Golden Boy of Advertising, to get a sense of what he plans to do with the media industry.
The world of media is changing quickly--faster than many of us can comprehend. Most people have come to understand that how and where the public consumes (and now interacts with) media is changing, but few consider the long-term impact of the subsequent shift in dollars. The economy is an easy scapegoat; most people conveniently blame the recession and are simply awaiting the recovery out of laziness, fear, or a lack of other options.
For the first time in history, the most important entity in the media equation is the advertising agency.
Huh?
Advertising agencies have always controlled where ad dollars are spent. Prior to 18 months ago, that meant controlling what medium to use (TV, print, online, etc) and then with which specific outlet within that medium to place its ads (i.e., making the challenging decision to buy more impressions on Thrillist than on Urban Daddy). The client still set the media budget; the agency simply spent it. While media outlets created content to attract advertisers, they have always maintained control over their own product. Agency work, meanwhile, could be summed up as building a nice ad banner or 30-second spot, then deciding which media outlet to pay to serve that advertisement adjacent to their content.
Times have changed. A guy like Alex Bogusky, a creative director (probably the best in the business), is now playing with the future of the media institutions.
Media budgets now include social media. Agencies currently control how many media dollars are being spent in media as compared to social media, a completely different industry. In most cases, dollars spent within the social media space are dollars not spent with a traditional media outlet--TV networks, newspapers, or gawker-esque blogs. Many media dollars now go towards fees for labor. The media dollars used to pay an agency (whether a social media shop or an international giant) to create, manage, and grow a Twitter profile are media dollars that once funded a banner campaign. The money used to pay an agency to create a brand's own viral site content and then get that content bookmarked on the homepage of Digg once funded a TV campaign.
Marketers may not all completely understand what it is or how to do it, but they want social media, they want engagement with their consumers, they want conversation with their target market. They aren't getting these things on NBC. They aren't getting them on CNN. They aren't even getting them on NYTimes.com.
Alex postponed our first interview because he was at Cannes. Coincidentally, AdAge published an article entitled "Cannes Swept by PR, Integrated, Internet Winners," claiming that the "age of interruption is over." At Cannes this year, PR campaign won the most Grand Prix awards in history; AdAge states, "This is a [winners] list dominated by attempts to engage consumers and deeply involve them in brands."
This development is hugely significant for the world of media. For advertising agencies, it means they need to be creative and learn how to advertise within the social media world. The award is proof that smart marketers are doing a very good job of that. The media world however, can't change that fast--and the marketing executions (ad dollars) themselves are actually being removed from their airwaves, pulled from their pages, and nixed from their sites.
The "interruption" mentioned above refers to interrupting the consumption of traditional media with advertising. That interruption is over not because the media world is changing its branded executions, but because brands are moving on from standard media-based advertisements.
I'm not saying people don't love to turn on their television and watch Lost. I'm saying brands want more than the 30-second spot adjacent to that content. It's a dollars-and-cents issue.
Bogusky continually returns to the consumption of news. Breaking news went from the morning newspaper, to the seven o'clock news, to all-day breaking news with CNN, to breaking online publishing, to interactive personal publishing and the ability to engage with the people publishing the news. Each revolution dramatically shakes the foundation of the previous one. Consumers want more than just consumption; they want interactivity. Brands want more than adjacency; they want interaction as well.
Bogusky says "traditional media" outlets are "freaking out." He sees a significant shift in dollars to the social media space. He says he doesn't understand how television networks continue to increase their prices while delivering less and less. Bogusky controls how consumers interact and engage with brands. This includes controlling where consumers interact and engage with brands: the more it happens on Twitter, Facebook, and Digg, and in various forums and communities, the less it happens on NBC, in The Wall Street Journal, and on PerezHilton.com. Bogusky holds the fate of these media outlets and the production of this media in his hands.
Why is Alex Bogusky so good at what he does? He expects change, he embraces change, and he's prepared for change. He told me it's imperative that he be the one who destroys his own business model -- he won't wait to react and let a change in the industry dictate how he changes the way he works.
TRANSCRIPT:
Jeremy Abelson: So, Alex, you are a true captain of the industry, you're really a legend, and I appreciate the time and the insight.
Alex Bogusky: Now you're being silly.
Jeremy Abelson: So, what do you think are the biggest challenges facing advertising industries today?
Alex Bogusky: Facing agencies today. Oh man, there's a bunch of challenges. One of them that I think a lot of agencies seem to be scared of is the whole outsourcing thing. I've heard a lot of conversations about, you know: is this going to ruin the existing model and what is the new model? And is creativity a commodity? And you know, my attitude is that creativity might be a commodity, I really don't know.
Jeremy Abelson: Well I mean, it's still people doing it, it's just a matter if they're employed somewhere or not.
Alex Bogusky: I think that if it is a commodity, or if there are aspects of it that can be commoditized, then I think the idea is to figure out what can be commoditized and what can't be commoditized, and then to see if you can find the right mixture.
Jeremy Abelson: In your position you are controlling interactive dollars that two to three years ago all went towards ad banners etc, and now a good portion of them are going towards more engaging types of opportunities. Do you see the actual media publications or media outlets needing to change their formats to offer more engagement?
Alex Bogusky: Well this is something that I've just noticed very recently and talked to people about in the business. It seems like--I don't know what traditional media is exactly, but I think if you use the term we all kind of think of a certain thing that's fairly accurate--the traditional media seems to be, I would use the term freaking out.
There is inability to break a story with traditional means. Traditional media has gone into an almost 100% editorial mode. And the idea is that you won't get the story first from us, but we'll tell you what it means and why it's important.
Now I think its gone further than that--not only are they not able to necessarily bring you the news first, they're not even able to tell you what it means as well as other people can.
Jeremy Abelson: Let's look at the media world as a business, and we can even look at traditional media buys as strictly online media buys. What media always tried to do was to provide content and then work with advertising agencies that bought advertising adjacent to that content. There was complete separation of church and state. With the social media space, there is no separation. It's all about engaging and conversing with brands. How is that going to affect these traditional media outlets whether they're blogs or television statements or print publications etc?
Alex Bogusky: The church and state thing I think has existed to some degree, I'm not sure that that feels like something that's at risk.
Jeremy Abelson: I'll put it like this. You guys are controlling dollars, and three years ago you were buying ad banners adjacent to content. Now you guys are getting more creative and your clients want more engagement. The dollars that you once spent supporting these media institutions by buying media against their content are experiencing a tremendous shift to social media. So how are these media institutions going to adapt?
Alex Bogusky: The media institutions--I'm not sure whether they have to adapt. But What's happening is that both paths seem to be moving along at a pretty vigorous pace and if you take a 30 second commercial, I think at one point people talked about how at risk that form was. Now, that form seems to be having a bit of a comeback in that there are more delivery options. So Hulu is one of our accounts and Hulu is a space where you can deliver pretty traditional advertising alongside pretty traditional content, and the content is really good. It's difficult for the social media space to compete for that level of content and that level of viewer engagement.
In other cases, the brands are just going an creating their own content and figuring out how to broadcast that without going through the traditional media...More money will probably be moving into social media, but again, part of the democratization of this space is that it doesn't actually cost a lot of money to do. So how much money is moving? I'm not sure.
Jeremy Abelson: There's a lot of speculation that the economy is turning around. The S&P is up, the decline in lost jobs is starting to flatten, the DOW has had a couple good weeks and there's even been a lot of speculation about the real estate market. I think that the economic downturn has had a pretty significant effect on the advertising industry. I'm wondering what you think will be the permanent effect of this last recession.
Alex Bogusky: I think we'll see some smaller agencies become bigger agencies. We've seen that in the democratization of capabilities, and I'm sure in this revolution of social media, we'll see a lot of longstanding big agencies struggling. Depending on how you access crowd sourcing, potentially the agency can be really driven by that stuff yet keep a layer of editorial and expertise at the top that allows them to still deliver the same kind of work people expect from a larger firm.
Jeremy Abelson: The economy has obviously had a large impact on media spending across the board. What do you think the permanent impact will be?
Alex Bogusky: When we see a recession, and we've been through a few now, and when we see the industry pull back, we always think that's an opportunity, because there are a lot of people that just use that as an excuse to not work that hard. They say, "Ok, everything's bad, we've got nothing going on and we'll call it in for a while."
Jeremy Abelson: What do you think the impact on the media world will be?
Alex Bogusky: Well, I do wonder how television continues to become more and more expensive as it delivers less. You see the up-fronts every year, and I'm not a media person, I'm just a creative person, I don't really understand these things, they're very complex. But I have wondered why rates continue to go up for fewer folks. I think that's gonna break at some point, and that's where you'll see some of these dollars come from and you'll see them flow into other spaces.
Jeremy Abelson: The reason why I think this interview with you is so poignant is because most people when they're asking questions like this will go to a media expert or someone from the account side of an agency, but the fact of the matter is that right now it really is the creatives who are controlling where people are marketing, and I see this tremendous shift from any form of traditional marketing--everything we pitch is all about engagement.
Alex Bogusky: I think the other thing for me that is really part of this whole story is the transparency that comes with social media. So though a lot of creatives are very excited about moving into that space, a lot of clients are nervous about the level of transparency that occurs.
For me, as an advertising guy I'm well known, outside of advertising no one knows who I am, but in advertising, I'm well known enough that people know me who I don't know, and people comment on me and they say things that hurt your feelings, and you're like, "I don't want to be in social media anymore, take me out, I'm gonna live in a cave." And it takes a few months or years or whatever for the person to get used to that. But that open conversation is really powerful. We talk about transparency and we encourage our clients to go there.
Consumers, even when they like you, they play really rough. When we were kids we would be going to Taco Bell but we called it Taco Hell on the way there. Just because we were calling it Taco Hell doesn't mean we hated it; it just meant that we were playing a little rough. That's the way you play with your friends.
So you're talking about the media space and smaller companies replacing bigger, more traditional companies in media and advertising, and large companies have a great advantage, but if they can't learn to be transparent, they're gonna be swept away by more transparent companies which are smaller now but are going to grow very quickly because the ability to grow in this economy with social media is way beyond anything it's ever been.
Jeremy Abelson: Where does that leave traditional media then?
Alex Bogusky: What I'm seeing is that 30-second video unit is actually finding its way into spaces that it couldn't before. So one of the problems was that to buy what would be traditional commercials online, you'd buy the top ten websites. But now the technology is out there where people learn all sorts of recesses and odd spaces on the web. If you're into lawn mower racing you're going to wind up at a very different space than if you're into gardening, and you'll spend a lot of time there. But delivering to those units of one individual on a website--that model is actually starting to work and they're starting to figure out how to do that. So although in some ways I think it's gonna fracture, the modeling of the delivering of the units is going to consolidate, if that makes sense.
Jeremy Abelson: It does and it also proves my point as I'm not looking at the 30 second spot per say, I'm looking at the 30 second spot as it pertains to it being run adjacent to standard television.
Alex Bogusky: And I think we're agreeing. I'm saying that the long tail is going to be those odd spaces, but I still think that there's gonna be the Hulus and things like that, where there's a big enough audience and there's the ability to reach them in fairly traditional ways that advertising will support the content creation. But it's gonna long tail.
Jeremy Abelson: Will broadband ever replace broadcast?
Alex Bogusky: Oh I think it absolutely will.
Jeremy Abelson: Couple quick fun questions: with a company built on Apple products, how are you persuading people to buy Microsoft products?
Alex Bogusky: When we started working on this we swung everyone in the agency over to PC's, and really all of the senior people on the account are working on PCs, and we thought it was really important because we do a thing called method advertising, which is if you don't use it, you don't know how to talk about it. And I think in the past Microsoft's creative had a lot of swirly magical kind of stuff going on, and it might have been because their agencies weren't working on PCs. So once you start working on it and you understand you can do a better job on it, and I think we've done a really good job on it and, you know, one of the key factors is that we use them. I had never worked on a computer other than an Apple, and I thought, "Oh my god! Will I be able to do this?"
Jeremy Abelson: What do you prefer?
Alex Bogusky: Well I prefer the PC, but it's very similar. I have Vista Ultimate, and at a lot of things it's better, and what surprised me was that it was a little more seamless in terms of going from application to application. Anyway, it's good, it's a great machine.
Jeremy Abelson: How tired are you of talking about the subservient chicken?
Alex Bogusky: I haven't talked about it in a while.
Jeremy Abelson: I still see press about it all the time.
Alex Bogusky: I just saw a thing that I hadn't known, but I saw a link on our site because its pulling in all this social media and I saw that we have over a billion hits now on that site, which seemed pretty cool.
Jeremy Abelson: Do you have the suit in the office?
Alex Bogusky: No we don't, know.
Jeremy Abelson: You could eBay that bad boy.
Alex Bogusky: You absolutely could.
Jeremy Abelson: It would go for at least six figures. What's your favorite Crispin campaign to date?
Alex Bogusky: I have never been into favorites. My attitude is hopefully the things you're working on now are the one's you are most excited about and if you don't put anything under glass--if you come to our office, we don't have any work on the walls, we don't have the video display playing things, so we have no way to get stuck in thinking this is what we do or this is what we do best, and I think that's very good and healthy.
Jeremy Abelson: Last question: what attracted you to Daddy as an agency, and how attractive is Sweden as a creative market?
Alex Bogusky: It started in a weird way with Jeff Hicks, who's CEO and has been my partner for a long time, and I was thinking about Jeff and thought how he likes the summer in Sweden and wouldn't it be great if that's where we did our agency thing, and we never want to go where anyone else is which is why we're always in weird places, so it started in that weird area, and that's how we make decisions. We make emotional decisions and then we make rationalizations. And then as I continue to make rationalizations and look at Sweden and Hyper Island and all the digital work coming out of Daddy and the other shops, there's obviously something going on there.
Jeremy Abelson is the Co-Founder of Samson's Barber
You can find Jeremy Abelson on Twitter.
You can also find Jeremy Abelson on Facebook here.