People constantly declare that advertising’s dead. Fast Company recently claimed David Droga wants to kill it. Elon Musk said Tesla doesn’t do it. Jeff Bezos said only unremarkable brands need it.
Why do so many people do advertising down, even from within the industry? It’s a thriving global business that’s never made a bigger global economic impact.
The idea that advertising’s dead or dying is bizarrely persistent, given it can be countered with just three words: Alphabet, Meta, Amazon. Their combined revenue from advertising was around $240bn in 2021.
If Netflix also joins the party, and with Apple also having a fast-growing ad business, the FAANG flush will be complete (substituting the F of Facebook and G of Google for their respective owners). For the first time ever, a handful of the world’s very largest, most powerful companies are, or at least include, significant advertising businesses.
So, if your metric is commercial success, advertising has never been more alive. Which means anyone claiming advertising’s dead, dying or needs to be killed is firing blanks.
Why the idea’s so persistent
The ‘advertising is dead’ trope actually appeals to a pretty broad church, which probably goes some way to explaining its longevity.
Many are nostalgics with a rose-tinted view of the past, lamenting a perceived decline in the creative quality and emotional impact of the industry’s output. They tend to be creative agency veterans disappointed with the changes they’ve seen in the industry since the 90s. For them, the current commercial success of the industry has come at too high a cost to the industry’s creative soul. They perceive their industry as having been under attack from outside forces and having been changed beyond all recognition. Far from being evidence of its vitality, for them, the three corporations mentioned above are partly to blame for its demise.
But the ‘advertising is dead’ line is probably more commonly deployed by people hyping up the dawn of a new era and new technologies. What unites both groups, whether they’re mourning advertising’s loss or dancing on its grave, is a belief that technology is responsible.
Much of it is really just lazy headline writing. The standard headline in the genre is actually ‘Advertising as we know it is dead’ or the classic QTWTAIN (question to which the answer is no) ‘Is advertising dead?’. Often what these articles actually go on to say is ‘TV advertising has a smaller share than it used to and other advertising channels like X are growing’. So it’s often just clickbait from people who are signalling they’re modern, innovative and disruptive…with some newer, shinier kind of advertising to sell you.
You could argue it’s just a harmless sales trick. But it’s a sales trick that’s been repeated so frequently that the word ‘advertising’ has collected a ton of baggage. Baggage that’s shaped perceptions that it’s old-fashioned, on its way out, wasteful, inefficient and ineffective. So not harmless at all.
The new platforms had new forms of advertising to sell. New types of agencies and consultancies emerged to help brands take advantage. Existing agencies wanted to show they were keeping up without looking out of date. Individuals had careers to protect and couldn’t risk looking like dinosaurs. We’ve all in some way been complicit in depositioning our core product. I know I’ve been guilty of it.
The people with new kinds of advertising to sell created an imaginary world called ‘traditional’ advertising. An old-fashioned and inefficient method of producing and distributing advertising, made by old-fashioned ‘legacy’ companies, used by old-fashioned brands, bought by old-fashioned marketing people.
We all bought into a related narrative about a golden age of advertising in the 20th century, led by the glamorous, cool, creative geniuses of the ‘Madmen’ era, and the idea that this has now been replaced in the 21st by the left-brained, data-driven types of the ‘Mathmen’ era. Leaving aside the stereotyping, the problematic terminology and that any talk of a golden age in any field should always be treated with scepticism, it’s a compelling narrative with a kernel of truth, but it’s ultimately a false dichotomy. Has the proportion of ‘creative’ people in our industry really shrunk? Possibly. But have we all gone from being Madmen to Mathmen? Of course not.
Social media was initially framed as a way to help brands reduce their dependence on costly and wasteful advertising, by allowing brands to tap into communities of followers and reach more people for free. This essentially anti-advertising stance of course had to evolve as the platforms developed their ad products and adapted their algorithms. Social media became less ‘social’ and more ‘media’.
With ‘Don’t make ads. Make TikToks’, TikTok is playing a similar game – using a disruptive anti-advertising stance to advertise its ad products to ad agencies and advertisers.
From this alone you can see how tainted the word ‘advertising’ and all its derivations have become. It would seem bizarre to anyone outside the industry, but even using the word advertising can sometimes feel like it sends out the wrong signals. We so often substitute it for alternatives like comms, campaigns, film, video, content, copy and of course the now ubiquitous asset. Anything but ‘ad’. Maybe we need to try to use that simple, useful, truthful little word a little more often?
Musk and Bezos on advertising
So far I’ve mostly been describing the collateral damage the industry has managed to inflict on itself from the inside. But just as damaging is how similar themes have been picked up beyond adland.
In the world of tech startups, word of mouth and virality are so highly prized that a reliance on advertising for growth has come to be seen as a weakness, a sign that a company hasn’t quite got the X factor, a tax on a poor product. In this environment, proclaiming you’re fundamentally opposed to advertising has become a way to promote your genius and the brilliance of your product to investors. A way of saying “we’re so smart that our innovation will earn us an outsized share of attention in the marketplace – we don’t need to do something as dumb as paying for ads”.
This is what Musk and Bezos were both doing when they made their famous anti-advertising declarations. Musk’s 2019 tweet, “Tesla does not advertise or pay for endorsements”, and Bezos’s still much-quoted line from 2009 “advertising is the price you pay for unremarkable thinking” both come from a similar place.
Tesla does not advertise or pay for endorsements. Instead, we use that money to make the product great. https://t.co/SsrfOq1Xyc
— Elon Musk (@elonmusk) May 19, 2019
Debates about whether Tesla does actually pay for advertising or not usually come down to how you define ‘paying for advertising’, whether very narrowly (eg paying for TV spots or search ads), or very broadly (paying tens of millions of dollars to fire a product into space, place it in front of the camera and livestream the results to the entire planet).
If you define it broadly, as something like ‘the monetisation of attention’, Musk, already the world’s richest person and perhaps its greatest showman, is ironically a far more archetypal ad person than his CEO counterparts Jeff Bezos, Mark Zuckerberg, Sunder Pichai and Tim Cook – all in the ad business but not exactly ad people. Only time will tell if he can continue to support his position on paid advertising as Tesla’s strong grip on the EV market slips.
Whether Musk pays for advertising may be arguable, but Bezos’s U-turn is unarguably one of the greatest stories we have for the continued value and vitality of advertising:
- Bezos makes a famous and influential denunciation of advertising.
- He learns the value of advertising from Amazon’s own data and changes his mind.
- Amazon becomes one of the largest (and best) global advertisers.
- Amazon builds one of the world’s largest ad businesses.
Musk and Bezos are outliers. And yet, many brands continue to take inspiration from them by making overt rejections of advertising, often as a way to get attention and proclaim their genius in their early days. Similar claims from brands including Monzo and Brewdog were both later reversed when they grew and advertising was needed to help take growth to the next level. In fact it seems like there’s an immutable law of modern marketing that every vociferous rejection of advertising is later met with an equal and opposite endorsement of it.
Musk may not ‘pay’ for ad space, but he certainly has a deep understanding of one of its most valuable potential outcomes, fame. Many advertisers understand advertising but very few really understand fame. And unless you’ve got the same nose for fame as Musk, paying for attention is likely what you’re going to need to do to achieve it.
So it’s not just social media that’s guilty of deploying a kind of ‘bait and switch’ – claiming to be anti-advertising but then reversing their position when they need to make the commercials work – it’s a pattern that’s constantly being repeated by platforms, agencies and advertisers as they mature.
Let’s not do advertising down, let’s stand up for it and celebrate it
The ‘advertising is dead’ myth is especially bizarre because advertising has never been more alive. We have never had a wider, more varied array of options and opportunities available to us. But as an industry we often seem a bit embarrassed, even ashamed of what we do.
How the advertising industry uses the power of human imagination for commercial impact should be something we’re all in awe of. We’ve created commercially viable processes to harness human creativity, craft and design skills. We’ve developed the technology to distribute the output across billions of screens. When done right, our product can attract and keep people’s attention, entertain and move people, communicate powerful ideas, create indelible memories, and influence consumer behaviour both now and in the future.
Paid advertising in its huge variety of forms continues to provide a consistent, regular, controllable way of getting a company’s core message in front of new audiences that no other marketing communication can match.
Companies have many options open to them to help reduce costs and do things more efficiently, but few growth levers. Advertising is one and it’s proven. In fact there’s arguably no more researched, picked-over and proven discipline amongst all the different kinds of commercial activity most companies do.
The excellent work of Grace Kite and others in building the ARC database, a meta-analysis of hundreds of real-world case studies from companies of all sizes, categories and using all channels, shows advertising today returns an average £3.80 revenue for every £1 spent. IPA Effectiveness award winners return more, £13 revenue for every £1 spent, but they’re outliers, the very best of the best.
Advertising’s naysayers invariably have ulterior commercial motives for undermining perceptions of what it can do. It’s rare that they’re making any significant or serious point that’s in any way testable or backed up by data as robust as this.
Global advertising spend in 2021 was around $689bn and is forecast to reach $850bn by the end of 2024. Deloitte’s calculation of the overall economic contribution of advertising suggests that every $1 spent on ads generates $6 in broader economic impact. Which means advertising’s economic impact could be around $4tn annually. Roughly equivalent to the GDP of Japan or Germany. The role we play in driving the economy, and therefore society, forward is something we should be proud of. We often highlight advertising’s societal impact when talking about social purpose, but advertising’s economic impact alone should be a sufficient source of pride.
That $689bn would have been spent on trillions of ad impressions. Never have more ads been served to more people, more often. It probably doesn’t help advertising’s ‘brand image’ that they’ve also never been shorter, viewed on smaller screens, and attended to for shorter amounts of time. The shop window for our wares has definitely got smaller, less distinctive and less enticing (although with Netflix potentially joining the party, this direction of travel could be about to change). But that’s a technical issue that our ingenuity and creativity as an industry will overcome.
Could advertising be ‘better’ today? Of course. But everything can always be better. Are there big problems that need to be fixed in today’s advertising ecosystem? Of course. But are advertising’s problems existential? Of course not.
Advertising will be with us forever
When you take a much broader historical view of advertising, it reveals that – despite the peaks and troughs, the new channels emerging and existing ones evolving – advertising as a percentage of GDP always tends to stay remarkably constant over time. For decades ad spend has hovered around 1% of GDP in the US. Its growth mirrors the growth in the economy. It’s basically a historical constant. Wherever there are eyeballs, there will be advertising.