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The Digital Cartel

  |  September 4, 2001   |  Comments

Though the macroeconomic environment, in defiance of physical possibilities, continues to both suck and blow, it looks like some of the digital powerhouses are standing atop a pile of bodies, pike in hand, with the head of the vanquished enemy on its end.

What some of the largest online media companies have been up to over the course of the last few weeks has been of great interest to agencies still fighting on the digital-marketing campaign field.

This week, Toyota announced that it is going to launch a large cross-media ad campaign to support its 2002 Camry; a good deal of the effort will go toward the use of Web channels, specifically AOL and the traditional Time Warner properties and Microsoft's MSN.

The campaign is reported to be worth $160 million, 10 percent of which is rumored to be for the online effort. Toyota has said it considers the online medium an important part of the mix that will help reach "a new generation of Camry buyers."

Though the macroeconomic environment, in defiance of physical possibilities, continues to both suck and blow, it looks like some of the digital powerhouses are standing atop a pile of bodies, pike in hand, with the head of the vanquished enemy stuck at its end.

This image should serve as a harbinger for things to come -- an end to war and the beginning of a reconstruction era that will lead to renewed prosperity under a Pax Acronymana.

Or so you'd think.

But this news comes just three weeks after the Jupiter Media Metrix conference in New York, where MSN announced its new sales organization, which includes the formation of two sales groups. MSN announced that it has now structured itself strikingly similar to AOL and Yahoo, and it did so with much fanfare. The group for agencies is called the MSN Agency Alliance Program, and the one for marketers is called the MSN Premier Partners Program.

Now, I don't know about the rest of you, but I have never much enjoyed doing business with AOL, Yahoo, or MSN. I mean, back in the day, when Softbank was still repping Yahoo, it wasn't so bad. But these companies have boundless arrogance and monomaniacal commitment to sacrificing potential longstanding agency relationships for a sackful of silver coaxed from an advertiser whose only knowledge of online media came from the PowerPoint presentation the AOL rep just gave them. It has made these companies infamous in advertising agency circles as companies you DON'T want to deal with.

These entities have made it their mission to do end-runs around agencies and go straight to the source. They know that by doing so they disintermediate traditional gatekeepers who have been specifically trained or have developed specific expertise in a discipline and could generate a learned answer -- "no" -- to a proposal one of these entities wants to get a client to buy. And since more and more agencies have this experience, these monsters of the Web are continually forced to go to clients directly to keep the money flowing, because they've successfully alienated a community that continues to guide between 70 and 80 percent of marketing dollars.

But what is it about these companies that makes them think that they can serve as the agency for advertisers?

Just because you know how to make something doesn't mean you know how to market something. I don't know how to program video games, but my years in advertising working on game accounts has given me a particular expertise in using media to market them. The disintermediation argument is disingenuous in this context. I certainly agree that agencies have sat on their laurels for a very long time and have grown bloated with complacency within the status quo, particularly regarding the digital marketing space. The AAAAs (American Association of Advertising Agencies) and the ANAs (Association of National Advertisers) of this world are still debating whether or not the Earth is round and whether cable is a viable medium. But the fact of the matter is, the AOL, Yahoo, and MSN sales organizations can't know very much about media.

Advertising may not be rocket science, but it isn't as simple as putting a picture of a product on any ol' TV program or in any ol' magazine and thinking it will sell. There is a reason media as a discipline developed, and it wasn't ONLY mumbo jumbo. Clients NEEDED for media to develop as a unique discipline. If it were all just making ads that referenced German expressionism or had a lot of funny jokes, there wouldn't be media departments. Media is a science to the same degree that psychology is a science and the application of mathematical and statistical analysis to human behavior is a science.

I've met a lot of media vendors in my day, and though I've come across some smart folks who really get it, I am in no way confident that channel vendors can plan media as well as they can sell it. I do not know who might be reading this, but if you have been exposed to media in an agency environment, you'll know that it is hard, it is a formal discipline, and it requires skills that are not shared by all. I can certainly attest to the fact that the MSN, Yahoo, and AOL sales staffs are not qualified to replace a media department of an ad agency.

There is no doubt that the advertising landscape is changing -- and I do think for the better, ultimately. But, as we've seen, just because I now have access to financial information to conduct my own investments doesn't mean that I am as good at investing as someone with 20 years' experience watching a particular industry.

Ad agencies emerged from rep-firm sales organizations. Are sales organizations going to become agencies?

Certainly, the proof will be in the pudding, and advertisers will have to decide for themselves how they are going to spend their money. But let's remember that the ONLY reason they spend that money on advertising is to sell products and services. If turning over one's digital marketing efforts to a media vendor does not result in the sale of those products and services, advertisers will either go back to their agencies or walk away from the medium altogether. In which case, the infiltration by AOL, MSN, and Yahoo will have merely accomplished the killing of the industry that they sought to dominate.

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ABOUT THE AUTHOR

Jim Meskauskas Jim Meskauskas has had a long career in both traditional and interactive media. He was most recently the Chief Internet Strategist at Mediasmith Inc., where he worked with a range of clients -- from BabyCenter and CBS MarketWatch to Eidos Interactive, Roxio, and LuckySurf. He has also been in media at Hawk Media, Left Field, and USWeb/CKS. He is a founding board member of the Society for Internet Advancement San Francisco, where he oversaw communications. Jim is now developing an independent media consultancy called Media Darwin.

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