The Problem with the Advertising Model

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by: David Polinchock

I'm not sure where I'm going with this yet, as it's still a work in progress, but I thought I would start it and see where the conversation goes! It's something we've been noodling for a few weeks now, as we look at everything that's happening in the advertising biz, especially with the recent announcements from the holding companies about their new companies (see here, here and here).

The advertising model is simple — take content and place it on things. You used to place the content in print, radio and TV and it was a pretty simple gig. Now, I don't mean to imply there was anything wrong with that model at the time and that there wasn't some excellent work done.

Here are some excerpts from an editorial by Jonah Bloom in the current Ad Age:

SOME THOUGHTS ON OBSOLETE BUSINESS MODELS…And How Big Agencies Have Done Remarkably Little to Reinvent themselves

Despite an overwhelming mass of evidence that their business models are fatally flawed and their service offerings out of step with many marketers’ demands, the biggest agencies have done remarkably little to substantially reinvent themselves. It doesn’t seem to matter how many of their clients shift projects or even full-scale brand assignments to smaller, nimbler, flatter structured, less-30-second centric agencies, the biggest agencies seem reluctant to really blow up their model.

Their product has barely changed (you could count the genuinely big ideas from the last 12 months on one hand), and I’ve heard at least three separate first-hand reports of people within those organizations who’ve had good non-TV ideas for a client being told that they’d have to be turned into TV commercials before they could be pitched.

Most big enterprises that survive a challenge from an upstart do so as shadows of their former selves. Still alive. Still big. But no longer the pathfinders.” 


We hear similar stories from clients every day. They're asking for new ideas and their agencies keep coming back with advertising placement ideas. Now, to be fair, there are still lots of clients out there who simply want advertising placement as well, no matter how much the world around them has changed. We know how to take content and place it on things and the fact that there are new things doesn't change the model. Just look at the current boom in branded entertainment, in-cinema advertising, WOM or advergaming and the hundreds of companies that have sprung up in the last few years around these tactics. Take my product or product message, gussy it up and off we go.

But, there's a big difference between the advertising model and the experience model in terms of making an authentic connection with your audience. I mean, it's relatively simple to get people to talk about you, it's much harder to get them to buy you.

One area that we've written about in the past and, in many cases, is a great example of this is the current boom in digital signage systems at retail. For us, here's where it becomes very clear when it's an advertising model or experience model. If you're currently working on an in-something digital network, ask yourself this question. Where does "create a better experience" fall on your list of reasons to install a digital network? My guess is that the top spots are occupied by something along the lines of "increase revenue" or "create opportunities to promote partners" and somewhere further down the line is create better retail experience. And even when it's on the list, my guess is that few people have actually defined how it will create a better experience for the consumer.

And the advertising model is the reason that the industry is still worried about GRP and reach & frequency. They spend way too much of their time looking for a new networks to exploit, instead of looking for tools to truly engage their audience. Does just capturing eyeballs any more count? It's the key reason that we're exploring experience measurement tools that we believe will be much more valuable in the future.

We’re going to write a great deal more about this topic and we’re interested in your thoughts about this as well. There’s a lot at stake if we’re chasing the wrong model!

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