Frenemies: The Epic Disruption of the Advertising Industry

Reeves’s peer Bill Bernbach had a very different view. He was not a slave to research, relying instead on gut instinct. Research, he told Martin Mayer,4 “can tell you what people want, and you can give it back to them. It’s a nice, safe way to do business.” But it usually produced pedestrian ads. “Advertising isn’t a science, it’s persuasion. And persuasion is an art.” Another legend, David Ogilvy, was both Reeves’s protégé and at one point his brother-in-law, but their philosophical differences grew so intense that they stopped speaking to one another. Ogilvy extolled the value of a consistent brand personality shaped by what he called “trivial product differences.” In many an Ogilvy print ad, the headline and graphics were followed by short essays touting the brand. In one famous ad, after the bold headline—“At 60 miles an hour the loudest noise in this new Rolls-Royce comes from the electric clock”—the text enumerated thirteen reasons to buy the luxurious car. In the consumer’s mind, he believed, the brand stood for something.

Ogilvy broke with Bernbach as well, albeit less vociferously, asserting that Bernbach’s “art” got the better of his content. “What you say in advertising is more important than how you say it,” Ogilvy declared.

Bernbach firmly disagreed. “Execution can become content,” he replied. “It can be just as important as what you say.”5 It was an argument without end.

Whatever differences divided the industry’s titans, however, they were united in the belief that it was the companies doing the buying—the advertisers—that ultimately wielded the power. Fearful of offending white viewers, initially advertisers vetoed the idea of an all-black variety show starring Sammy Davis, Jr. With tobacco ads making up almost 10 percent of their ad revenue, network newscasts rarely reported on smoking’s health risks. Over the years, when program schedules were decided, the head of network sales was always in the room, for no network wanted an ad to appear in what was deemed an unfriendly environment. A medium dependent on advertising for its revenue knows that its primary business obligation is to corral an audience for its ads. Bill O’Reilly seemed to be surviving his sexual harassment scandal at Fox, until a group launched a successful boycott campaign against his show’s advertisers. When advertisers fled The O’Reilly Factor in April 2017, Fox News quickly pulled the plug on cable TV’s top-rated anchor.

Over time, for industry-specific reasons and also due to a larger shift in American business culture, ad agency clients began to bring more and more scrutiny to bear on the whole cost structure. Jon Mandel’s j’accuse moment did not come out of a clear blue sky. After the 2008 economic crisis in particular, CEOs increasingly turned to their chief financial officers or chief procurement officers to more closely monitor marketing spending. Inevitably, the power of CMOs, who hired the agencies, eroded. “In Don Draper’s days there was never a procurement department,” says Wendy Clark, who has been a CMO of Coca-Cola and AT&T and is today the North American CEO of Bill Bernbach’s former agency, DDB Worldwide. “In new business briefs,” she says, in addition to the CMO “we have two procurement officers in meetings.”

Irwin Gotlieb saw this beginning to happen in the early 1990s, when procurement officers would hire auditing firms like Accenture and Ebiquity to monitor agencies. They became the agency’s adversary, he explains. “They got compensated for generating savings,” and they had a built-in “conflict of interest. They ran around saying, ‘The sky is falling!’ And then they sold you umbrellas.” By slicing marketing costs, they boosted short-term company earnings at the expense of the long-term health of companies, he argues, correlating marketing dollars with growth. An inevitable consequence, he says, was a loosening of the bond of trust between client and agency.

“Today clients are not married to an agency. They are only dating,” observes Kassan. Clients who previously conducted agency reviews every ten years now accelerated their review cycles, sometimes dramatically. Keith Reinhard, the chairman emeritus of DDB Worldwide, retained Anheuser-Busch as a client for thirty-three years, and he dealt directly with the family patriarch, August Busch. “We had a top-to-top relationship,” he says. “But when product managers came in under CMOs, that diminished, and in some cases eliminated, top-to-top relationships.” Today, many CMOs are not members of their CEO’s C-suite or top executive team—CEOs, COOs (Chief Operating Officers), CTOs (Chief Technology Officers), and CFOs (Chief Financial Officers)—and their tenure is often just a few years. David Sable, the CEO of Young & Rubicam, laments, “The biggest difference between our day and Don Draper’s is the relationship between agencies and clients. In those days, you had a problem and you called your agency. You were partners.”

Connected to the rise of procurement officers was the end of the 15 percent commission to compensate agencies. “The agency did not have to put forward a proposal for agency compensation, justifying how many people worked on the account or what they did. Compensation was worked out by how much money the client was prepared to spend on media,” Michael Farmer writes in his book, Madison Avenue Manslaughter.6

The first major client to rebel was Shell, which in 1960 decided to abandon its agency, J. Walter Thompson, and replace the commission system with a fee system. The new agency was Ogilvy, whose head, David Ogilvy, claimed credit for the new form of compensation, which would over the next three decades spread almost everywhere. “Experience has taught me that advertisers get the best results when they pay their agency a flat fee,” Ogilvy explained in his memoir. An agency is “expected to give objective advice,” and may not be able to when its compensation is based on how much the client spends on advertising. “I prefer to be in a position to advise my clients to spend more without their suspecting my motive. And I like to be in a position to advise clients to spend less—without incurring the odium of my own stockholders.”7

Ogilvy was correct about aligning the interests of the agency and the advertiser, but he was unmindful of the consequences for agencies. The 15 percent commission system plus a commission on all production costs did undermine trust; but the fee system undermined the creative agencies. “The commission system was an absurd system,” admits Jeremy Bullmore. “But it worked. What it did was make agencies compete on services, not price.” A fee-based system invited CFOs and their procurement officers to drill down on costs, to question why a high-priced copywriter could not be replaced by a junior copywriter. Over time, says Miles Young, it slashed the earnings of agencies “by maybe one third or half.”

Of course, no change was more disruptive to the advertising community than the proliferation of consumer choices brought about by new technologies. “In Don Draper’s days you had probably six media channels to engage with the consumer,” Bill Koenigsberg of Horizon Media says. “You had television. You had print. You had radio. You had newspapers. And you had out-of-home”—outdoor advertising, for example. There was also, he said, “below-the-line direct marketing,” including direct mail. “Today the ability to engage with consumers lives in hundreds of different media channels. That channel explosion is a huge difference.” It lives, as well, in billions of smartphones, personal devices with our own apps that we carry everywhere, sometimes to bed, and that allows advertisers to reach, and often to annoy, consumers. People spend more time on their mobile phone than watching television, says Carolyn Everson, Facebook’s vice president of global marketing solutions. Armed with more data that yields more information about each consumer, instead of spraying the audience with a TV shotgun ad and not being sure who has been hit, digital companies like Facebook say they let advertisers aim a rifle at individual consumers. This innovation is promised by every digital platform. “As opposed to marketing at people, it is marketing for people,” she says. “The biggest difference from Don Draper days is data,” says Keith Weed, a three-decade Unilever veteran who oversees marketing and communications for the world’s second largest advertiser. “Data has always been there. The difference is the ability of the computer to analyze the data.”

But even with the data, the marketers are not in control. “The single biggest difference between today and Don Draper days,” thinks Rishad Tobaccowala of Publicis, “is that consumers are increasingly determining what they want to interact with, and when.” Today, the consumer is the real king. Tobaccowala dates the empowerment of consumers to 2007, the year Apple introduced the iPhone, the first smartphone, the same year Facebook shifted its audience focus from college students to everyone, and the same year Amazon’s Kindle was introduced. In years past, advertising was based on a premise that information was scarce. Advertising informed us of products. We traded our attention for information, industry observer Gord Hotchkiss has written on MediaPost, an online marketing publication. Today we are glutted with information and have “too little attention to allocate to it. … This has allowed participatory information marketplaces such as Uber, Airbnb, and Google to flourish. In these markets, where information flows freely, advertising that attempts to influence feels awkward, forced and disingenuous. Rather than building trust, advertising erodes it.” Evidence of advertising fatigue is found in ad blockers and in Nielsen data that says half of those who watch TV shows they have recorded on their DVR devices skip past the ads.

The anxiety of the advertising community is revealed in the gibberish or verbal smokescreens they now employ. Just before the millennium, advertisers began to refer to themselves as “brand stewards,” as if the brand had a soul. Nike, as an amused Naomi Klein observed, announced that its mission was to “enhance people’s lives through sports and fitness”; Polaroid said it was selling “a social lubricant,” not a camera; IBM was promoting “business solutions, not computers.”

All this begs a fundamental question that comes up often in the advertising and marketing community: Are they sufficiently alarmed about the menace they face? There is a lot of brave talk, but it’s reasonable to wonder to what extent much of the community is simply kidding itself, living, as Robert Louis Stevenson once wrote, not “in the external truth among salts and acids, but in the warm, phantasmagoric chamber of his brain, with the painted windows and storied wall.”

At advertising confabs like Cannes, Unilever’s Keith Weed will often wear ostentatious chartreuse sports jackets. He is less the showman when seated in his London office in jeans and a long-sleeved grey button-down shirt. “There’s been more change in the last five years than in the previous twenty-five,” he says. In his early days, a media plan consisted of a couple of pages. Today it is as thick as a book. “The complexity of choice is brilliant, but equally challenging.”

The challenges of the advertising and marketing world and the erosion of trust between agencies and clients are often the subjects discussed at MediaLink’s weekly staff meetings. President Wenda Millard sits at the head of a long, rectangular, reddish-stained white oak table facing two large wall screens, one of MediaLink employees in Los Angeles and one in Chicago; in New York, MediaLink staffers occupy black leather swivel chairs and stand along every inch of wall space. At sixty-two, Millard is the elder in this room, but her dark, pixieish pageboy and exuberance are that of a much younger person. JC Uva, a MediaLink managing director, thinks of Wenda as Felix to Michael’s Oscar. “Felix was the neat one. That’s Wenda. You can literally tell time by Wenda’s schedule. Michael is a moving target.”

Millard called this February 2016 staff meeting to order at precisely 2:30 P.M. About four dozen MediaLink execs gathered in the glassed conference room. Michael Kassan was to be present via video feed from Los Angeles. After attending the Mobile World Congress in Barcelona, he had slipped away with his wife to a spa in Germany. Not seeing him on the screen, Millard said, “We’ll wait for Michael.”

“The spa did me good because you don’t see me!” Kassan announced. He was smiling from the Los Angeles table, casually attired in a grey crew-neck sweater over a pale blue shirt.

Millard asked him to share his interpretation of the bad blood that Jon Mandel’s 2015 speech had inspired.

“It reminds me of the gallows humor of being at a spa in Germany and of how the world has changed,” Kassan said. “Now Jews are paying Germans to put them in rooms and not feed them!” Kassan’s humor does not bat one thousand, but it is always enthusiastic. He went on to explain the unease MediaLink’s ad clients were feeling about what they believed to be a lack of agency transparency. “More of our clients are saying, ‘I’m getting screwed by my agency. At the end of the day I might want to deal directly with publishers.’” He cited how programmatic ad buying, run by machine algorithms that target desired audiences, “may be able to cut out the agency. The agency/client/marketing model is being challenged now the way it has never been challenged before, based not only on technology potentially disintermediating … but when you break down the trust barrier,” because the client doesn’t know how its money is being spent, the disintermediation accelerates.

So what stance, an executive asked, should we take with clients?

“I harken back to my baseball days: get a cup,” Kassan answered. To protect MediaLink, their task is to serve as “a bridge between the buyer and the seller. We shouldn’t harbor any side here. We’re on all sides. We are also very close to all of the agencies.”

“I get calls every day,” interjected another executive, “from people at agencies saying they want to leave the agency.”

“They’re all running for the exits,” Millard observed. “It’s extraordinary how many people want out. Their margins are all getting squeezed. One of the big issues we have is, if I can make forty thousand dollars at an agency as a media planner but I can make sixty thousand at Facebook, what am I thinking? This is not a happy industry.”

Millard could have cited results of a 2016 survey by Campaign US, a global business magazine focused on the marketing world, that found that 47 percent of those who’ve worked in advertising and marketing more than five years say their morale is low, the primary reasons being “inadequate” leadership, “lack of advancement” opportunities, and “dissatisfaction with work.” A LinkedIn survey the same year, with a vast sample size of three hundred thousand, found that when nine industries were ranked by ten questions, advertising came in last in “work/life balance” and “long-term strategic visions,” and next to last in “comp & benefits,” “strong career path,” “job security,” and “values employee contributions.” Advertising had mediocre rankings in each of the four remaining questions.

Dark clouds may hover over agencies, but Kassan saw only azure sky for MediaLink. “I would hope you all see,” he concluded, “why that continued chaos and disruption is kind of a blessing in disguise for us. Actually, I don’t think it’s in disguise. It’s a blessing.”

What Kassan saw as bright sky, others would describe as the eye of the storm, but that didn’t faze him. The current turbulence was nothing compared to some of the ordeals he’d endured in the past, which on some days seemed like another lifetime and on others, he would admit, seemed like a shadow still chasing him in his rearview mirror.

4.

THE MATCHMAKER

Michael Kassan is advertising’s Dolly Levi, the matchmaking lead character in the musical Hello, Dolly!, whose score he loves to hum.

Wenda Millard likes to say of her partner that he believes that everything is a yes, symbolized by the two-word sign above his desk: ALL GOOD. Millard has more shoes than Imelda Marcos, she says, “but my shoes have dents in the toe from shoving my foot into his shoe because I know he’s going to say yes.” An oft-told MediaLink story illustrates Kassan’s skill at pleasing others. He carries in his black Tumi backpack multiple portable devices—a Samsung Galaxy, two iPhones, a BlackBerry, an iPad, along with phone chargers and connector wires. Several years ago, the brand stamped on the back of his cell phones was either Verizon or AT&T. The latter was a client, and he had flown to Dallas for a dinner meeting with an imposing AT&T senior female executive he barely knew. After dinner, as they stepped outside the restaurant his phone rang. Reaching into his bag, he pulled out the Verizon phone.

“Michael, you didn’t just take a Verizon phone out of your pocket, did you?” she exclaimed.

“I think to myself, ‘You fucking idiot, Michael Kassan!’” Instantly, he flung the Verizon phone to the pavement, smashing it into pieces with his heel. Turning to her, he exclaimed, “Excuse me, was there a question?”

She smiled. He smiled. He explained that he needed a Verizon phone in Los Angeles because AT&T service there was patchy. “It was a bonding moment,” he recalls.

It is also a moment shared by more than one MediaLink executive as emblematic of their boss. “He has this perpetual smile on his face,” says Robert Salter, who was Kassan’s second chief of stuff, as he calls his chief of staff. “When he does something that is so clearly wrong, he does it with a smile and in a way that somehow earns the affection of the person on the other end. He manages to charm them. He’s able to make awkward conversations very easy.”

He gets the charm from his father, Michael’s wife, Ronnie Kassan, observes. “The teller of jokes. His mother was very tough, and had a very shrewd business sense. Michael has that too.” He was raised in a modest two-family home in East Flatbush, Brooklyn, that they shared with his mom’s dad and aunts and uncles. “It was basically a shtetl,” Michael recalls. He had two older sisters, and his mom focused on raising the three children while helping his dad run several dry cleaning stores. “My dad was a stand-up comic in the Catskills. It was a very, very, very sad thing that he did not follow that.” Asked what he sees in himself of his parents, Michael says, “I have a million jokes in the file cabinet of my brain. My dad had an extraordinary quick wit and humor. That’s the strongest gene I have from my father.” When the kids were older, his mother became a successful real estate broker. “My mother refined the use of Jewish guilt to an art form,” Kassan jokes. She played on the insecurities of potential customers.

His dad sold the dry cleaning business and relocated the family to Los Angeles when Michael was three, and started a thriving new chain of dry cleaning stores. Michael was gregarious and a good student, but never terribly tractable; the only bad marks he remembers receiving were in classroom cooperation. “I was a wiseass,” he says. “I would never raise my hand in class if I wanted to speak. I was a showman.”

His sister’s husband told him that the University of Miami had the best parties, so he enrolled there, but at the end of his freshman year he transferred home to USC for a year, then to UCLA, where he graduated as an English major. He stayed in California to get a law degree at Southwestern Law School.

In his second year of law school, Kassan met the Bronx-born Ronnie Klein, who had moved to Los Angeles after receiving a psychology degree from the University of Miami and an MA in counseling from New York University. She took a job as a school counselor in Los Angeles. They met when Michael had to fly to New York for a February wedding but didn’t have a winter coat. He remembered that a friend who lived in San Diego owned a really nice camel hair coat and he asked to borrow it. The friend happened to be coming to Los Angeles and was happy to drop it off. When Michael returned from the wedding, the friend told him that another friend was driving south to San Diego the next weekend; could Michael call her and drop off the coat? That friend was Ronnie Klein.

When Kassan called Ronnie she said she’d be at her apartment in the early afternoon. He didn’t ring the bell until 6 P.M. Annoyed, she took the coat from him and hurriedly shut the door in his face.

“I felt he was a little difficult. I was doing him a favor, and he was a pain in the ass,” Ronnie says.

“She had the most beautiful blue eyes,” he says. “I saw those eyes and went, Whoa!”

Michael phoned and asked her out the next weekend. Ronnie brushed him off by saying she couldn’t plan anything because she might be going to Palm Springs that weekend. She would let him know. “I never heard from her,” Michael says.

On Friday afternoon he was crossing Beverly Drive and Wilshire Boulevard on his way to lunch and they almost collided on the crosswalk. “Well, I guess you didn’t go to Palm Springs,” he said.

She was speechless. “I didn’t have an excuse. I was so embarrassed,” she recalls.

“I guess we’re going out then,” he said, shaming her into saying yes.

In early February 1974 they went to the theater and dinner. “It was a really nice evening, much to my surprise,” she remembers. He kept calling. They started going out twice a week. She’d kiss him good-night, but made excuses why he couldn’t come in. They dated other people, and while not yet lovers they were becoming close friends. He brought her to Passover dinner with his parents in April.

“At dinner in early May, he told me he was in love with me,” she says. “I told him I appreciated it, but I wasn’t there.” By mid-May, “I slept with him for the first time.” In late May, they spent a weekend together and “I realized I had feelings for him.” She had another date the next night but phoned Michael and asked if he could stop by her apartment because “I want to talk to you.”

“I just want to tell you I think I’m in love with you,” she announced.

They kissed and embraced. She mentioned that she was flying to New York in June to be matron of honor at her friend Randi’s wedding. “I should go to New York with you,” he told her.

He wasn’t invited, she said. Besides, Randi didn’t know him or even know she was dating him.

“Tell her you’re bringing someone,” he persisted.

She dialed Randi. Cupping the phone as it rang, she asked him, “Who do I tell her I’m bringing?”

“Tell her you’re bringing your fiancé.”

“Randi,” she blurted, “I have to call you back. I think I just got engaged!”

They married in December 1974 and moved to New York. He enrolled in NYU law school’s Master of Law (LLM) program in tax law; Ronnie supported them by working various jobs. They went back to Los Angeles in 1976. With his mother orchestrating the search, they tried to buy a house, but lacked the money to get what they wanted, so they rented an apartment. The next day “Michael went out and bought a Porsche, which was a little irresponsible,” Ronnie says. Then his mother discovered a great house in Sherman Oaks, which they were able to purchase with a helpful loan from his cousin, major Disney shareholder Stanley Gold, and from their parents.