There is a marvelous passage in Nobel laureate Ernest Hemingway’s THE SUN ALSO RISES. A character, Mike Campbell, is asked how he became bankrupt. He answers, “two ways. Gradually and then suddenly”.
As usual, Hemingway says things with great conciseness. The quotation came to mind this week as I watched with amusement and interest three things happening in the advertising world. The three events appear totally independent but there is a common thread among them from my vantage point. They were:
1) P&G Chairman Bob McDonald hinted that the global personal care and household product giant might “moderate” their $10 billion ad budget as his brands get “free” impressions via Facebook and Google. The comment set off a firestorm in some quarters. The comments, often from ad agency principals, were that Facebook was not free. Unquestionably, working with Facebook can be labor intensive if you are to manage, track, and optimize it properly. But, in McDonald’s defense, such items as e-mail forwarding, blogs, Likes, and sharing are ways that things get a life of their own without an agency’s help. And, don’t forget You Tube. If you post a commercial on You Tube it may generate millions of impressions. Good ads tend to go viral and that is indeed free. These are not the easiest times to work in an advertising agency so we all can understand a bit of defensiveness. Over time, however, social media almost has to make ad spending more efficient than it has been historically.
2) Nielsen announced that young people, particularly those 25-34, are still watching video of all forms but less on conventional platforms such as advertiser supported TV and cable. We discussed this some time ago, as it appeared that a number of recent graduates of elite universities were simply using their laptops to cover their video needs. While only a few hundred thousand are going cold turkey on cable or satellite, the trend is growing. And those who do subscribe to cable or satellite are now viewing more Hulu, Netflix or other sources. Advertiser supported TV of all forms has to suffer as commercial avoidance is now gaining steam.
3) Speaking of Netflix, they just released their first made for Netflix series—"Lillehammer". I caught the first episode and loved it. It is about a New York mobster who enters the witness protection program and chooses to move to Lillehammer, Norway considering it safer than any United States hideout. All eight episodes were released the same day. It is great fun and rivals the quality of the very best HBO series.
How do these three events tie together? It is pretty simple—our business is changing and the old models are, to paraphrase Hemingway’s Mike Campbell character, “gradually going bankrupt.” Social media is here to stay and will evolve. And portions of it will provide free or far more efficient delivery than today. Young people are living a lifestyle that allows them to control when they watch video content but commercial avoidance can only soar and will not be limited to DVR playbacks or channel hopping. And, finally, every hour that we spend with a "Lillehammer" or fellow traveler, is an hour away from advertiser supported content.
The pace of change appears to be quickening a bit. The real challenge will be how to reach the affluent young adults a few years from now when millions more will be very hard to capture via conventional means.
If you would like to contact Don Cole directly, you may reach him at email@example.com