Книга - Frenemies: The Epic Disruption of the Advertising Industry

Frenemies: The Epic Disruption of the Advertising Industry
Ken Auletta


An intimate and profound reckoning with the changes buffeting the $2 trillion global advertising and marketing business from the perspective of its most powerful players, by the bestselling author of GoogledAdvertising and marketing touches on every corner of our lives, and is the invisible fuel powering almost all media. Complain about it though we might, without it the world would be a darker place. And of all the industries wracked by change in the digital age, few have been turned on its head as dramatically as this one has. We are a long way from the days of Don Draper; as Mad Men is turned into Math Men (and women–though too few), as an instinctual art is transformed into a science, the old lions and their kingdoms are feeling real fear, however bravely they might roar.Frenemies is Ken Auletta's reckoning with an industry under existential assault. He enters the rooms of the ad world's most important players, some of them business partners, some adversaries, many "frenemies," a term whose ubiquitous use in this industry reveals the level of anxiety, as former allies become competitors, and accusations of kickbacks and corruption swirl. We meet the old guard, including Sir Martin Sorrell, the legendary head of WPP, the world's largest ad agency holding company; while others play nice with Facebook and Google, he rants, some say Lear-like, out on the heath. There is Irwin Gotlieb, maestro of the media agency GroupM, the most powerful media agency, but like all media agencies it is staring into the headlights as ad buying is more and more done by machine in the age of Oracle and IBM. We see the world from the vantage of its new powers, like Carolyn Everson, Facebook's head of Sales, and other brash and scrappy creatives who are driving change, as millennials and others who disdain ads as an interruption employ technology to zap them. We also peer into the future, looking at what is replacing traditional advertising. And throughout we follow the industry's peerless matchmaker, Michael Kassan, whose company, MediaLink, connects all these players together, serving as the industry's foremost power broker, a position which feasts on times of fear and change.Frenemies is essential reading, not simply because of what it says about this world, but because of the potential consequences: the survival of media as we know it depends on the money generated by advertising and marketing–revenue that is in peril in the face of technological changes and the fraying trust between the industry's key players.















COPYRIGHT (#ulink_9afdbd94-49bb-53ee-923a-02915b6fbb4f)


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First published in the US by Penguin Press 2018

This UK edition published by HarperCollinsPublishers 2018

FIRST EDITION

Text © Ken Auletta 2018

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Cover photograph © Johnny Ring

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Source ISBN: 9780008296988

Ebook Edition © June 2018 ISBN: 9780008297015

Version 2018-05-16




DEDICATION (#ulink_005520d5-75e8-5feb-9d8c-9353863e2e58)


For Matt and Sam




CONTENTS


Cover (#u014a36fc-921e-56fd-addd-a436dae6b4c4)

Title Page (#ua53ea582-0e46-51e5-af3f-37beef6df259)

Copyright (#ulink_57746583-df7e-560a-b425-53b20a622c62)

Dedication (#ulink_3cb01c7a-1144-5492-bcf5-2d98038a271d)

Introduction (#ulink_6ac03591-c3c9-5c81-928b-4564f124565a)

1. The “Perfect Storm” (#ulink_1c136cd7-583a-5dc1-b24b-aca87b97b342)

2. “Change Sucks” (#ulink_64992c40-f3db-5bb4-be54-4ded1ff524b2)

3. Good-bye, Don Draper (#ulink_20ed3d84-5cb8-516c-8c9e-7b6774d7b4c9)

4. The Matchmaker (#ulink_51e565e8-735a-54c9-be67-bc8d2f3826a0)

5. Anxious Clients (#ulink_fcade072-9b98-5768-a590-eaf323310e49)

6. “Same Height as Napoleon” (#litres_trial_promo)

7. Frenemies (#litres_trial_promo)

8. The Rise of Media Agencies (#litres_trial_promo)

9. The Privacy Time Bomb (#litres_trial_promo)

10. The Consumer as Frenemy (#litres_trial_promo)

11. Can Old Media Be New? (#litres_trial_promo)

12. More Frenemies (#litres_trial_promo)

13. Marketing Yak-Yaks and Mounting Fear (#litres_trial_promo)

14. The Client Jury Reaches Its Verdict (#litres_trial_promo)

15. Cannes Takes Center Stage (#litres_trial_promo)

16. Mad Men to Math Men (#litres_trial_promo)

17. Dinosaurs or Cockroaches? (#litres_trial_promo)

18. Good-bye Old Advertising Axioms (#litres_trial_promo)

19. “No Rearview Mirror” (#litres_trial_promo)

Acknowledgments (#litres_trial_promo)

Endnotes (#litres_trial_promo)

Bibliography (#litres_trial_promo)

List of Searchable Terms (#litres_trial_promo)

Also by Ken Auletta (#litres_trial_promo)

About the Publisher (#litres_trial_promo)




INTRODUCTION (#ulink_9259e374-eee3-5056-ad94-9ce00e80c484)


In a 1970 TV commercial, a group of child actors portraying Louis Armstrong, Fiorello La Guardia, and Barney Pressman as kids are sitting on a New York City stoop and asking each other what they hope to be one day. Armstrong says he wants to be a musician. La Guardia says he wants to be mayor of New York. The bespectacled Barney Pressman is quiet, so they prod him: “Whaddaya gonna be when you grow up, Barney?” Pausing to adjust his glasses, the future founder of Barneys clothing store says, “I don’t know. But you’ll all need clothing.”

For more than three decades, in books and in my Annals of Communications pieces and profiles for The New Yorker, I have reported on the digital hurricane that has swept across the media industry. I have tried to “follow the money,” to understand the source of the economic harm that has struck newspapers, magazines, television, and radio, all reeling from shrinking advertising revenue—revenue now fueling Google, Facebook, and a myriad of other new digital enterprises. You can almost hear the young Barney Pressman trilling the world, “You’ll all need advertising and marketing.”

Worldwide, advertising and marketing is variously said to be a $1 trillion to $2 trillion industry. Of that astronomical sum, roughly three quarters is categorized as marketing dollars. Often, rather than joining together the words advertising and marketing, we employ the shorthand, advertising. We do so because advertising is a more familiar term, and to utter both terms together is a mouthful. In fact, advertising and marketing are interchangeable. They take different forms, but each involves a sales pitch. A thirty-second TV ad or a full-page ad in a newspaper seeks to sell something, which is also a marketing pitch. A direct mail or newly designed brand name or email solicitation or giveaway coupon is listed as a marketing expenditure, but it’s also an advertising sales pitch. So the two categories are really one.

Yet advertising and marketing, like the media industry it has long subsidized, is convulsed by change, struggling itself to figure out how to sell products on mobile devices without harassing consumers, how to reach a younger generation accustomed to dodging ads, how to capture consumer attention in an age where choices proliferate and a mass audience is rare.

In the course of my work as a journalist, I have tended to shift back and forth between the disrupters and the disrupted. My first book, The Streets Were Paved with Gold, published in 1978, chronicled how New York City had been hit by a Category 5 economic and social storm that shattered its manufacturing base and spurred the flight of its middle class. My focus on the people on the wrong end of change continued in 1981, in a three-part series in The New Yorker that grew into a book, The Underclass. A reporting sojourn to Wall Street in the mid-1980s resulted in Greed and Glory on Wall Street, a battlefield account of the corrosive greed that brought low Lehman Brothers, the oldest partnership on Wall Street, and signaled the Wall Street gluttony that produced insider trading scandals and would bear such disastrous fruit in 2008.

It’s fair to say that at this point I was a naïf about the advertising industry’s true economic power. That began to change in 1985, when I embarked on a nearly six-year odyssey through the world of network television while reporting my book Three Blind Mice, a report on how the three dominant television networks—CBS, NBC, and ABC—were being disrupted by a new technology, cable. Advertising was central to that story, for unlike cable, the networks were 100 percent reliant on advertising. And so when the estimable Tina Brown, the new editor of The New Yorker, offered a regular platform in the magazine, which she called the Annals of Entertainment, I demurred. I told her that in reporting Three Blind Mice I glimpsed how the world of media was being transformed, and so we needed a broader rubric—the Annals of Communications—because studios and publishers and television and digital companies were increasingly invading each other’s turf.

Over the next quarter century, unsettling change was the subject of much of my work for the magazine and for my books, and the advertising industry was often a backdrop for the stories, and usually an underexplored one. I witnessed the flight of advertisers from old to new media with my reporting for The New Yorker about Google, which led to the book Googled: The End of the World as We Know It. The flight of advertisers from old to new media started in the late 1990s and accelerated in the new century, and its impact was hard to miss. Less obvious was the impact on the ad industry itself. In the public imagination, we were still in the age of Don Draper, but I began to see more and more clearly how this industry that had been intrinsic to the disruption of old media was itself facing fundamental challenges to its existence.

Trying to understand the media without understanding advertising and marketing, its fuel supply, is like trying to understand the auto industry without regard to fuel costs. A war correspondent would be derelict not to try to calculate whether General Patton had enough gas in his Third Army tanks to race across France in 1944 (he did not). But it’s not merely that a reporter covering the communications business would be remiss not to follow the up to $2 trillion advertising and marketing sector; anyone who takes a moment to ponder this pool of money can’t avoid the inescapable truth that capitalism could not exist without marketing. True, the force of marketing is often malign, seeking to manipulate the emotions of consumers. Readers of this book will, hopefully, share my rage at the many tricks marketers practice. But marketing has a purpose in a free society, and intellectual honesty compels us to recognize that those who sell products need a way to share information about them with consumers. In a non-state-dominated economy, advertising is the bridge between seller and buyer. It would seem an obvious statement, but I’ve found it bears repeating. And that bridge is teetering, jolted by consumers annoyed by intrusive ads yet dependent on them for “free” or subsidized media. In this sense, consumers are frenemies.

To dig deeper into this world is to realize that more is being disrupted here than the flow of marketing dollars. The agency edifice itself is being assaulted, as new rivals surface—tech and consulting and public relations and media platform companies—many of whom have long been allied with the agencies and claim still to be. A once comfortable agency business is now assailed by frenemies, companies that both compete and cooperate with them.

For many years, I examined advertising as an aspect of some other story I was telling. It crept up on me that there was much to be learned by turning that around and looking deeply into the advertising industry itself, and through it out onto the wider world—a world of artificial intelligence (AI) and algorithms and big data that raises fundamental issues, including issues of privacy, issues of whether the science of advertising can replace the art, whether relationships still matter, and where—and whether—citizens get their news.

This book is populated by characters who represent the points of tension within this world. You will meet artists like Bob Greenberg, founder of the R/GA agency, who rail at consummate executives like Martin Sorrell, CEO of WPP, the world’s largest advertising and marketing holding company; the scientists, including the engineers at Facebook and IBM, who fervently believe in their machines; the clients, like Unilever’s Keith Weed and GE’s Beth Comstock and Linda Boff, who must wrestle with trust issues between clients and their agencies; and you will meet Michael Kassan, a charming man who relies on relationships to link the artists and managers and clients and scientists.

This book attempts to peer deeply into this world. I sought to step into the shoes of many important actors and frenemies in the marketing world, old and new, disrupters and disrupted alike. It is a world stocked with passionate and creative people, but it is also a world roiled by anxiety. Ultimately, this is a story of a world whose fate is imperiled, and why that fate matters to us all.




1. (#ulink_639baee1-41bc-5428-abe8-b9cad081ce7e)

THE “PERFECT STORM” (#ulink_639baee1-41bc-5428-abe8-b9cad081ce7e)


Characterizing the rebates as “criminal extortion,” he said of the giant advertising holding companies, “At least four of them, maybe five, are doing this.”

—Jon Mandel, March 2015 speech to the Association of National Advertisers

Former advertising colleagues were shocked when Jon Mandel morphed into a whistle-blower. Mandel had been a member in good standing of the advertising establishment for nearly four decades, a former chief executive officer of media agency powerhouse MediaCom, a reasonably popular joke-cracking executive with a chubby, beardless face and a full head of dark hair. But he seemed a different person on March 4, 2015, when he stepped onstage before his former clients, the Association of National Advertisers, or ANA, at their annual Media Leadership Conference in Florida. He looked different to old colleagues. He was rail thin and almost completely bald, with a trim grey beard that gave him a severe, almost Mephistophelian look. Before the very advertisers that fund his former agency, Mandel trembled, knowing that former coworkers would “try to kill me professionally” when he accused them of corruption. Agencies, he declared, engaged in a “pervasive” practice of demanding “kickbacks” from media companies and platforms like magazines, newspapers, TV, radio, and Web sites in exchange for their ad dollars. “There are cases where there are rebates that should be going to clients that are instead going to agencies.”

The assertion was atomic to this audience: the ANA represents about seven hundred companies, including Coca-Cola and Procter & Gamble, which spend more than $250 billion annually in the United States to advertise over ten thousand brands. Moreover, Mandel was placing a cloud over the many billions spent worldwide on marketing as well as advertising. Coupled with the ongoing disruption of the industry by Facebook and Google and the Internet, the controversy threatened to upend the flow of monies that finance the public’s news and entertainment.






Wearing a dark suit and open-necked grey shirt, with tiny eyeglasses perched on his bald dome, Mandel spoke out against what he depicted as the rot in the agency world, the world in which he’d spent his entire career. Now, he and his marketing consulting firm, Dogsled Enterprises, were paid by the ANA to prosecute the case against agencies. Most of Mandel’s career had been spent at Grey Advertising, and when WPP, the giant marketing holding company, acquired Grey in 2004 they retained MediaCom and he had served as CEO of this media-buying unit, reporting to GroupM global CEO Irwin Gotlieb.

The practice Mandel accused agencies of is common, and legal, in countries like Brazil and China. It once was common in France and Western Europe, before being declared illegal. Speaking in a high-pitched nasal voice, Mandel claimed that the practice had spread to the United States. The “kickbacks” or rebates, he said, come in several forms: in cash; in a gift of additional ad space that giant advertising holding companies hold on to and resell to other clients; in the form of promises of a larger future media buy in exchange for an ownership stake in the vendor by the agency; or “in the worst case,” the agency resells the purchased ad time to the client and makes money on it. “Have you ever wondered why fees to agencies have gone down and yet the declared profits to these agencies are up?” Mandel asked the audience. He estimated that media and digital companies kick back 18 to 20 percent of the media buy to the agencies, and that the agencies hide kickbacks that total “well into nine figures across agencies.”

Mandel’s blast helped stoke “a perfect storm,” in the words of Andrew Robertson, the CEO of the BBDO agency. Advertising clients were already uneasy with their advertising agencies. They had long complained about steep agency costs and a lack of transparency about how agencies made money. Clients were pleased that the agencies that dominated media buying had leverage over media platforms and could demand better terms, but they worried that agencies kept secrets from them. The trust issue was even more acute because advertising clients were under greater pressure to curb costs and were insecure about the digital disruption that shook the very foundations of their business—from smartphones that turned their banner and pop-up ads into annoyances; to ad-blocking software consumers were embracing to repel ads; to a younger generation grown accustomed to ad-free YouTube and Netflix, and to ad-skipping digital video recorders (DVRs). Mandel’s allegations reinforced these anxieties.

His assertions were damning, but Mandel did not cite a single agency by name. In a presentation sweeping in its condemnation of agencies for their lack of transparency, he was hardly transparent himself. Not about the 18 to 20 percent kickbacks. Not about the figure of at least $100 million in kickbacks he said were collected by agencies. His clear implication was that most agencies were guilty.

When Mandel concluded his remarks, ANA CEO Bob Liodice came onstage and energetically shook his hand. “That was fascinating and frightening,” he said, and was “very courageous.” So, Liodice asked, “What should clients do to gain greater transparency?”

“You’ve got to go in somewhat doubtful.”

“You’re saying a prenup is not enough!” Liodice said.

“Yes, and beware: you’ve got to audit not just the agency but the holding company,” Mandel declared.

The stakes are huge, for advertising and marketing dollars subsidize most media and Internet companies. Today, the amount of money spent on advertising and marketing is up to $2 trillion worldwide, says Pivotal Research Group senior analyst Brian Wieser, perhaps the industry’s most widely respected marketing analyst. Based on a Publicis Groupe study, this estimate was backed by Maurice Levy, the CEO of Publicis, and separately by Adam Smith, GroupM’s futures director, who says the estimate “is in the ballpark.” WPP CEO Martin Sorrell insists the true number is close to $1 trillion. Irwin Gotlieb cautions that the figure could be higher, or lower, because these were “soft numbers,” guestimates. For example, Sorrell’s guess does not include marketing awards programs, free coupons, or marketing messages in McDonald’s food tray liners; Wieser’s guess does.

Over lunch some months later, Mandel sipped from a glass of Pellegrino and calmly described the changes in the business that had led to what he considers kickbacks. Agencies, he said, were once “a trusted adviser, just like your lawyer,” and were paid a handsome 15 percent commission. But agencies became part of today’s dominant advertising holding companies—UK-based WPP, U.S.-based Omnicom Group and the Interpublic Group (IPG), France-based Publicis and Havas, and Japan-based Dentsu. Two thirds of global ad expenditures flow through these six companies and through privately held Horizon Media. “What has happened is there is a certain need to grow to show increased profit year to year. At some point the agency business model changed because of the financial pressures. It wasn’t just no more commissions. It was, ‘I don’t care how you make your money. You just better show me ten percent year to year.’ They were incented financially to worry more about themselves.” Over time, clients began to ask, “Is what you’re recommending to me good because it will be great for my business? Or is it because you will be making more money?”

He characterized the rebates as “criminal extortion,” and said of the major holding companies, “At least four of them, maybe five, are doing this.” At lunch Mandel changed his estimate of the unit of money involved from millions to “billions,” which did not inspire confidence. The one company he identified by name as guilty was WPP, for whom he worked before moving in 2006 to take a new job at Nielsen. WPP, he continued, “wanted me to actually set up the thing, ironically, that years later I’m now known for condemning: all those kickbacks. I said to Irwin [Gotlieb], who’s a personal friend—though since March ‘personal friend’ is on the back burner … He wanted me to set this up, to basically take what was going on in Europe and bring it to the U.S. I said, ‘That’s not right.’ He said, ‘We need it to compete.’” His accusations, he admits, are “hard to prove. It’s like sex crimes: ‘He says, she says.’” Gotlieb flatly denies that he had ever encouraged Mandel to set up a rebate system at GroupM’s MediaCom: “Not true. Find one person or one company who would support that statement!”






Michael Kassan was not in the audience when Mandel delivered his broadside, but when he saw the March 6 headline in Advertising Age—FORMER MEDIACOM CEO ALLEGES WIDESPREAD U.S. AGENCY “KICKBACKS”—he knew it would ignite a wildfire. Kassan was troubled. “I felt like the ANA had endorsed his position without evidence,” he says. But Kassan knew Mandel’s assertions would “light a fuse,” and the resulting blaze would produce new business firefighting opportunities for his company, MediaLink, for which he was grateful.

As the CEO of MediaLink, the company he founded in 2003, Kassan is arguably the supreme power broker in the advertising and marketing industry. With a staff of 120, MediaLink serves as a hub, linking clients like publishers who seek ad dollars with the agencies and brands that dispense them, and linking brand advertisers to new agencies. MediaLink’s blue-chip client list includes Unilever, AT&T, L’Oréal, Bank of America, Colgate-Palmolive, American Express, NBCUniversal, the New York Times, the Walt Disney Company, Viacom, 21st Century Fox, Verizon, Condé Nast, Hearst, the newspapers of News Corp., including the Wall Street Journal and the New York Post, the Washington Post, Gannett, iHeartMedia, Turner Broadcasting, Bloomberg, Flipboard, and Vox Media, among others.

Anything that provokes clients to seek a new agency is good for Michael Kassan’s business, for MediaLink conducts agency reviews, orchestrating the entire process from helping choose the competing agencies, defining what the client seeks, helping judge the agency’s creative and strategic pitches, to participating as the client reaches a decision. MediaLink also performs a headhunter role, linking executives to vacant agency and client positions. It also introduces start-ups to investor capital, performing as an investment banker. It serves as a sherpa, making introductions between agencies and Silicon Valley and Hollywood, taking clients on tours of Google, Facebook, Twitter, and Microsoft, all companies it has represented. MediaLink also represents agencies, arranging speakers for various advertising conferences, where Kassan induces them to cosponsor MediaLink parties and arranges for their executives to appear on panels. Agency and client executives are regularly invited to record one of Kassan’s one-minute daily radio interviews syndicated on iHeartMedia, which he tapes in bulk once or twice a month.

The ever-affable Kassan, then sixty-four, is a pear-shaped teddy bear of a man with a soft, round, tanned face, the sunny smile of a practiced politician, and the jokey shtick of a stand-up comedian. In an increasingly insecure business assaulted by change and rife with mistrust, “they are a bridge company,” Charlotte Beers, former CEO of Ogilvy & Mather, says of Kassan and MediaLink. “The way we used to talk to each other now needs an interpreter, and that’s MediaLink.” Baffled by the digital revolution, clients seek guidance from what they think of as “a neutral corner.”

If one thought of concentric circles of power within the marketing and advertising world, Michael Kassan belongs in the center, alongside a few others like Martin Sorrell, CEO of WPP, the world’s largest advertising and marketing holding company. Kassan’s influence would place him ahead of most of the CEOs of the other five major holding companies and ahead of their clients. Yet outside of advertising and media industry enclaves, Kassan is virtually unknown. Create a Google Alert for WPP’s Martin Sorrell and up to a dozen stories appear daily; a Google Alert for stories about Kassan generates maybe one mention per month.

After Mandel’s ANA speech, MediaLink’s neutral corner became a destination for the world’s biggest brand advertisers. It was nothing short of a stampede. Starting in the spring of 2015 and running through 2016, advertising clients announced they were putting up for review a total of $50 billion of advertising business, and clients knocked on Kassan’s door asking him to organize agency reviews. In all, MediaLink was hired to orchestrate two thirds of these reviews. Unilever, Procter & Gamble, Coca-Cola, L’Oréal, Kraft Foods, Mondelēz International, Bank of America, General Mills, Sony, 21st Century Fox, Johnson & Johnson, and CVS were just some of the advertisers who put their agency business up for review.

Mandel’s kickbacks speech was a spur for the reviews, but it was hardly the only one. Indeed, its timing was exquisitely awful because advertisers were already being buffeted by change, facing disruptive forces in practically every sector of their business. As Alvin Toffler wrote in Future Shock, any industry bombarded by menacing changes endures “the dizzying disorientation brought on by the premature arrival of the future.”

MediaLink brands itself as a neutral Switzerland, positioned comfortably in the middle, which is an odd definition of neutrality since MediaLink often represents all sides at a negotiating table. Kassan has been strategically shrewd. “He doesn’t do agency reviews because they are wildly profitable,” his friend Irwin Gotlieb says. “He does reviews to gain information and because it gives him influence in the business. He has a small headhunting operation. That makes money. But it also gives him influence because key people in the business know that if they’re going to make a career move they should talk to him. The reason he is able to galvanize people in the industry is that everybody knows he is going to be conducting a review, so they don’t want to piss him off.”






The agencies were indeed pissed off about Mandel’s speech and agonized about the subsequent tsunami of reviews, which were akin to an audition to keep your job, knowing that your competition would be auditioning to take it from you. Clients putting individual agencies up for review was common; the torrent of reviews was not. The “pitchapapalooza” reviews meant a cruel summer of long hours and canceled vacations in order to create new pitches to clients. Top agency executives frantically tried to reassure and soothe clients. Laura Desmond, then the global CEO of Starcom MediaVest, the media agency arm of Publicis, estimated that over the summer of 2015 the reviews consumed eighteen thousand hours of her agency employees’ time. Agencies had to prepare creative and strategic presentations for current as well as prospective clients. Presentations are time consuming and expensive—about $1.5 million for each, Bob Greenberg, the founder and CEO of R/GA says—and the expense is shouldered by the agencies, not the clients.

The advertising agency community reacted angrily to Mandel’s speech, no one more so than Irwin Gotlieb. He had had a paternal relationship with Mandel, once recommending him as his successor as chairman of a prestigious industry committee. He denied Mandel’s assertions, saying that he had removed Mandel from a trading role at the firm because they had a trading head and “you can only have one head of trading.” So, he continued, “Why would I have a conversation about rebates with someone not involved in trading?”

The day after Mandel’s speech, Gotlieb had GroupM’s lawyers deliver a letter to Mandel accusing him of violating his separation agreement and the “significant compensation” received in return for agreeing not to disparage GroupM. The law firm warned that it was “considering its options,” and urged him to keep his mouth shut. Martin Sorrell suggests that when Mandel left WPP’s employ he did not do so voluntarily; instead of saying he was terminated, Sorrell said, “He was exited.”

The near universal complaint from agencies was that in his speech Mandel named not a single transgressor, and thus was making a blanket condemnation of all agencies. It was not uncommon to hear agency executives accuse Mandel of McCarthyism. “It was irresponsible,” charged Bill Koenigsberg, founder and CEO of Horizon Media, the largest privately held advertising and marketing agency, and the chairman of the American Association of Advertising Agencies (the 4A’s). “It should not have been allowed in a public forum to paint an entire industry with a broad brush without any evidence.”

Yet there is certainly smoke here, if not fire. Rebates are common outside the United States, and media buying is an increasingly global process. And as more and more advertising is being done by machines (called programmatic advertising) across a large number of media platforms, the opportunities to conduct speculative price arbitrage to bank lower prices for ads for later use arguably becomes reasonable business practice. The clients want to share the rewards. The agencies say clients are unwilling to share the risks, so why shouldn’t agencies be rewarded for taking risks?

Of course, the issues raised by this controversy were broader than just rebates. Is advertising a relationship business, where accounts are won and lost on the golf course and over three-martini lunches, as had been caricatured for decades? Or is it a creative business, where consumers’ hearts and minds are captured by big, original ideas articulated with aesthetic brilliance, as the doyens of the Creative Revolution claimed? Or is it, increasingly, a science, in which leadership will gravitate to those who can capture and analyze the most data, as Silicon Valley and its digital gurus claim?

Did Gotlieb’s WPP, which is headquartered in the UK, hide U.S. rebates?

“We don’t do rebates in the U.S.,” Gotlieb firmly answered, leaving no doubt that it was not a practice with which he or WPP were involved. But he left a clear impression that maybe others partook in the United States. Dave Morgan, the CEO of Simulmedia, a marketing technology company that uses data to target TV ad buys, believes most do it. “Mandel is telling the absolute truth,” he says. “Kickbacks are massive in the U.S. I’ve been shaken down constantly. They tell us that if I get fifty million dollars, I have to pay them five million.”

In a public conversation with Liodice weeks after Mandel’s speech, Gotlieb made a larger point, one that illustrates how the relationship between agencies and clients has changed. He challenged the ancient assumption that agencies had an obligation to “put your clients’ interests before your own.” The client is under increased pressure to produce profits, and so are the agency’s public holding companies, he said. Clients insist that the agency be paid based on the clients’ sales performance. “I don’t control the result, so I’m taking a business risk. It renders the term ‘agent’ redundant. You cease to be an ‘agent’ the moment someone puts a gun to your head and says, ‘These are the CPMs [cost per thousand viewers] you need to deliver over X period of time.” If GroupM’s contracts with clients specify that its costs or the amount of rebates received overseas are to be disclosed, GroupM complies. But if the contract is silent, so is GroupM.






On whichever side of the argument one falls, it is inarguable that Mandel’s assault came at a fraught moment and struck a raw nerve. Taken aback by the irate agency reactions, the ANA quickly did damage control, issuing this statement: “We regret any impression that agencies in general are engaged in questionable activities and apologize to those who were offended.” A few days later it appointed a joint task force with the 4A’s to study the issue.

The ANA issued an open, competitive RFP (request for proposal) to locate a firm to conduct the study, ultimately choosing K2 Intelligence, an investigative cyber defense and compliance firm owned by Jules B. Kroll and his son, Jeremy, which employs former prosecutors and law enforcement professionals like former New York City police commissioner Ray Kelly. The ANA also chose Ebiquity, an auditing firm that has a history of challenging agency spending practices on behalf of brand clients. Seething that the ANA made this decision on its own and chose a prosecutorial firm and, in Ebiquity, what he perceived as a business adversary, Martin Sorrell declared, “They went unilateral.” Koenigsberg was equally livid, saying of K2 Intelligence and cofounder Jules Kroll, who helped build his estimable reputation by tracking down the illicit activities of dictators: “Bringing in a spy agency didn’t send the right message. It kind of sounds like a witch hunt.” The rupture between the ANA and the 4A’s ended their joint task force. By the winter of 2016, K2 and Ebiquity were deep into interviews and jittery agencies feared the worst.






Michael Kassan was not nervous; he comfortably settled into his friend-of-all-sides stance. On the one hand, he said, Mandel “painted the industry with too broad a brush. … I’m a firm believer that this industry is made up of good people.” The ANA wrongly “staked out a position” they should not have by embracing Mandel, Kassan says he told Bob Liodice. On the other hand, “If you’re a CMO and your CEO sees an allegation in the press that agencies are getting rebates and undisclosed kickbacks, you’re going to insist on knowing whether your agencies are doing this.” He encouraged clients to do so. Agencies, he agreed, were not sufficiently transparent, particularly about digital ad purchases. “Media agencies began to create trading desks for online purchases of media. And they were doing it without fully disclosing the amount of online media they bought. They did this because they were buying in bulk and reselling and taking a principal position. They were not wrong. If I’m an agency and I say to you, ‘This particular inventory is being bought on a nondisclosed basis, meaning I am not going to tell you what I paid but I am telling you I will get you a really good price, and I’m telling you I will make money on the spread but I’m not going to tell you how much’”—as long as this was stipulated in the agency contract, he thought it was OK. It would fail the transparency test, he says, if it was not part of the contract.

To conduct MediaLink’s agency reviews, Kassan leaned on Bernhard Glock, who for twenty-five years as a senior executive at Procter & Gamble orchestrated more than one hundred agency reviews, and fellow senior vice president Lesley Klein. The process they shaped began with an in-depth discussion with the client as to what was expected of an agency, after which MediaLink would help narrow the choices of prospective agencies to a handful, who were invited to meet with the client for what MediaLink vice chairman Wenda Millard calls “a chemistry meeting. It’s like a first date. If I don’t like you, no second date.”

MediaLink then prepared a dozen-or-so-page single-spaced RFP to send to the contending agencies. The RFP took time to answer, for it sketched a timeline for the review process and imposed upon the agencies a number of key requirements: specify who would staff the account; specify the fee structure the agency would employ and the methodology to be followed to arrive at a fee; delineate the proposed marketing strategy; sketch the agency’s digital, technology, and e-commerce prowess; share the agency’s media-buying capabilities and data strategy; specify the transparency guidelines to be followed to assure, for instance, that the client shares in any rebates; give a detailed account of the agency’s work on other accounts and its approach to innovation; and it stipulates the return on investment, or ROI, targets the agency expects in return for a bonus and, if the target was not met, the size of the agency penalty. After the client digested these answers, agencies were then invited to offer their proposed creative presentations and marketing plans. The RFP always specified that the agency alone is totally responsible for any costs they incurred during this process.

The process MediaLink followed was explored in the fall of 2015 during the weekly Monday afternoon staff meeting at their 1155 Avenue of the Americas office, with employees from the Los Angeles and Chicago offices joining via videoconference. On this Monday, Wenda Millard devoted the meeting to a presentation by Bernhard Glock of the agency reviews MediaLink was coordinating. Standing in the middle of an eighth-floor conference room crowded with staffers, Glock spoke of what the process taught about the changing dynamics between client and agencies. “There are six key components we hear every time from advertisers,” he said. “The first question the advertiser asks is, What are the cost savings the agency promises? Increasingly, they ask a fresh question: Will the agency agree to peg its pay to how the marketing campaign performs? More and more I see performance sneak in as part of the compensation.” Why? “Because there are more and more procurement people in the reviews.” The difference between the chief marketing officer and the procurement people, he said, is that the CMO tends to focus on building the brand and the procurement officer on cost savings.

The agency’s marketing strategy is a second key component; increasingly, he observed, the client is mistrustful of agencies, and he no doubt exaggerated when he added, “They rely on us” to help shape the strategy.

Operations and efficiencies are a third client concern. Clients ask: How fast can we move? How do we communicate with each other? How do we integrate the planning and buying and creative realms?

Partly because of the Mandel speech and the ANA inquiry, transparency became a fourth component, he said. Our clients “want to know: Can I still trust my agency? Do I get to know of kickbacks or rebates?” Are these shared with the client? Inevitably, the increased wariness of clients “leads to tighter contracts.”

The fifth component is the agency’s use of data and analytics and how it measures performance. Clients commonly ask, “Who owns my data?” They want to know the competence of the agency in new machine tools like programmatic advertising. And they want to know if they are paying for fraudulent clicks.

Finally, and as central to the client as are costs, they want to know about what talent will be assigned to their account. “What I see happening more and more is advertisers want guarantees on key people,” Glock said. They worry whether the agency has enough scale to service the client. And the client defines talent more broadly. “It used to be a given that only the creative agency sat at the table. Now that has changed. Public relations agencies sit at the table. Media agencies sit at the table. Digital agencies sit at the table.”

“The problem agencies have,” Millard interjected, is that cost pressures from clients “is causing agencies to pay less to their employees. Because of that, they’re not as attractive. Why would I go to an agency that looks like a dinosauric entity rather than go to Google, or Facebook, or LinkedIn? Why would I do that, and be paid what I would be paid to work in a sweatshop around lots of unhappy people?” Contradicting Mandel’s thesis that agency margins swell, Millard said, “It’s a real problem for agencies because they can’t make any money. Their margins are getting squeezed. This is a very bad scenario for everyone, including the clients who are not getting the best work out of agencies because they are not getting the best talent.”

“I remember,” she explained over a cup of tea in her office after the meeting concluded, “when I was growing up in this business the pride General Foods and Young and Rubicam would have when they’d say, ‘We’ve been in business twenty-five years with Jell-O. We built this business together. This is a partnership, a great cause for celebration.’ That’s gone. Agencies live in great fear that they’re going to go into review at any moment. Agencies are now treated as vendors.”

Millard described a meeting she had that morning with one of her clients, Time Inc. Executives there complained of not being able to “have a strategic discussion with an agency. It’s all about pricing.” She says the same is true of MediaLink’s other media clients who want to sell space to media-buying agencies. She offered this example: “If Time devises an elaborate $3.5 million sale of space for its multiple magazines, the agency says, ‘I need $1 million.’ You’re having a price conversation before you even finish telling them what the idea is. All they know is that they have to skinny you down because they’re being skinnied down. They’re being judged by how well they’re doing on pricing.”

Little wonder clients turn to MediaLink, Millard said. “We don’t have a dog in this race because we love each agency equally. And we’re going to help the brands through some of this decision making because we don’t care if they choose Omnicom or Publicis. But they can’t go to Omnicom and ask, ‘Am I in the right place?’ They are more likely to come to us and ask, ‘Should we be working differently with our agency? Or should we put our account up for review?’”






The tidal wave of accounts up for review swept through the agency business. Agencies lost part or all of the business of longtime clients. Publicis, for instance, lost Procter & Gamble and General Mills, as well as Coca-Cola, Mondelēz, and Delta; it gained Visa, Bank of America, and Taco Bell. Omnicom lost Johnson & Johnson, Bud Light, and Adidas; it gained Procter & Gamble, Delta, and Subway. WPP lost AT&T, as well as Bank of America and Coors; it gained General Mills and Coca-Cola. IPG lost American Airlines and Kmart; it gained Johnson & Johnson, Bank of America, and Chrysler; Havas and Dentsu gained slightly more client dollars than they lost.

Publicis lost more accounts than its rivals, but the loss that especially rankled Maurice Levy of Publicis was an Omnicom win. The company he had embraced as an equal merger partner in 2013, only to watch the merger collapse the following year, took what a senior Publicis executive described as “a $100 million haircut” to snatch the P&G business away from Publicis. On the other hand, Levy was overjoyed to best the man he regularly trades public insults with, WPP’s Martin Sorrell, by winning part of the Bank of America account.

More was at stake, of course, than relations between advertisers and agencies. “Advertising works as a value exchange,” Andrew Robertson of BBDO, says. “In exchange for advertising, consumers get free or reduced content costs.” Or needed information. It is easy to be cynical or dismissive about the role of advertising in a consumer economy, but its role can hardly be overstated. Commerce and most forms of communication would shrivel without it. Many retail stores would shutter, the number of new products would dwindle, financial service companies would sputter, consumers would complain they are shopping blindfolded. Google, with 87 percent of its $79.4 billion in 2016 revenues supported by advertising, Facebook with over 95 percent ($26.9 billion out of $27.6 billion) in 2016, and Snapchat with 96 percent from advertising, would—like the TV networks and most radio—cease to be “free.” A prime reason U.S. newspaper employment plunged from 412,000 in 2001 to 174,000 in 2016 is that advertising dollars—which account for more than half of all newspaper revenues—dropped from $63.5 billion in 2000 to $23.6 billion in 2014, the last year the Newspaper Association of America released newspaper revenues. Facebook’s advertising revenues alone exceeded the combined ad dollars of all U.S. newspapers. Overseas, in that same span, newspaper ad revenues sank from $80 billion to $52.6 billion.

Advertising and marketing “provides the oil for the economy’s energy,” Martin Sorrell says. Princeton professor Paul Starr, whose authoritative history of the media, The Creation of the Media, credited advertising with assuring journalism’s independence: “American journalism became more of an independent and innovative source of information just as it became more of a means of advertising and publicity.”

A 2015 study on the impact of advertising by IHS Markit, a London-based financial services company, concluded that in the United States each dollar spent on advertising alone spawned nineteen dollars in sales and supported sixty-seven jobs across many industries; they predicted that by 2019 advertising would kindle 16 percent of all economic output. A 2016 study of Western Europe for the World Federation of Advertisers, based in Brussels, concluded that each euro spent on advertising equates to seven euros of economic value. Predicting the exact impact of advertising on consumer behavior is not an exact science—though this book will demonstrate that going forward data will yield better evidence—but by anyone’s measure, advertising and marketing packs a mighty economic wallop.

Naomi Klein chose to measure the impact of advertising in a very different way. In her book No Logo,


first published in 2000, she portrayed advertising “as the most public face of a deeply faulty economic system” that promoted sweatshops to produce their often unhealthy products, and that propped up global companies that held sway over politicians to advance globalism, which exported jobs. Her harsh critique of advertising as addictively manipulative was echoed sixteen years later by Tim Wu, whose book The Attention Merchants


argues that by demanding their content be “free” and refusing to pay subscriptions or micropayments, consumers invite intrusive ads and receive inferior journalism and content.

No question: without advertising many citizens would feel liberated from annoying and often misleading interruptions. But what’s indisputable is that advertising and marketing dollars serve as an underlying subsidy for much of the media and the Internet—in other words, for our information ecosystem and, often, for the architecture of our everyday lives. Without this free ATM machine, many companies would be doomed. But as any good advertiser knows, asking someone to sit through all the ads in the TV show they’ve recorded because those ads fund the channel the show is on is just about as thankless as asking people to pay more for a product because it’s good for the environment. Some percentage of consumers may make that choice for the greater good; many more will not. Today, the consumer is in control, and increasingly the challenge for advertisers is to create experiences that people will want to have because they will no longer have to have them. That is a tectonic shift for a once comfortable industry, and it is worth a look back at how this economically essential industry got here.




2. (#ulink_2790daee-4ffa-51a5-b268-03ea64c4863e)

“CHANGE SUCKS” (#ulink_2790daee-4ffa-51a5-b268-03ea64c4863e)


“I’m prepared to eat our children, because if I don’t somebody else will!”

—Martin Sorrell, WPP CEO

The word advertising derives from the verb advert, which means “to give attention to.” All markets or competitive economies rely on advertising. Thousands of years ago, advertising consisted of Egyptian, Greek, and Roman wall paintings or rock scrawls. Five centuries ago, farmers selling produce relied on word of mouth; villagers selling a service put up signs like TAILOR or BLACKSMITH. With villages transformed into cities as the Industrial Revolution swept across the nineteenth century, sellers of products turned to a better means of communicating with potential buyers. Thus advertising agencies were born.

The first full-service modern advertising agency, N. W. Ayer & Son, emerged just after the Civil War. What would become the primary means of compensating agencies, the 15 percent commission on all advertising, was also introduced in 1905 by N. W. Ayer & Son. The introduction of the automobile early in the twentieth century became an advertising catalyst. As auto companies proliferated, their reliance on ads to distinguish themselves grew, as did the use of billboards to catch the attention of drivers. Radio in the 1920s and television after World War II became inflection points for new waves of advertising. The burgeoning Internet at the dawn of the twenty-first century became another inflection point.

As population and products mushroomed, advertising made it possible for consumers to discover things they needed, or thought they needed. Advertising seduced consumers and created familiar brands. Initially, the ads for those brands were informational, often dull and dutiful. Nineteenth-century newspapers were festooned with dense rows of classified ads, occupying the entire front page of many papers. Increasingly, ads began to flirt with consumers’ emotions. In the 1920s, Edward Bernays, nephew of Sigmund Freud, became the father of the public relations industry. A hundred years after Shelley declared poets the unacknowledged legislators of the world, Bernays announced in his 1928 book Propaganda—a word he used with none of the pejorative connotations it would later acquire—that now this was true of marketers: “The conscious and intelligent manipulation of the organized habits and opinions of the masses is an important element in democratic society. Those who manipulate this unseen mechanism of society constitute an invisible government which is the true ruling power of our country.” As one might expect of one of Freud’s kin, Bernays’s mission was to discover the hidden motives for human behavior and learn how to tickle them. “Men are rarely aware of the real reasons which motivate their actions,” he wrote. “A man may believe that he buys a motor car because, after careful study of the technical features of all makes on the market, he has concluded that this is the best. He is almost certainly fooling himself.”

Today the definition of marketing extends from the damage control of public relations firms summoned when a company like Volkswagen is embroiled in scandal; to survey research before a new product is introduced; to the targeting that data companies like Oracle sell to agencies and brands; to designing corporate logos or rebranding companies, as was done when Time Warner Cable was renamed Spectrum; to corporate positioning advice McKinsey & Company offers CEOs; to direct mail, blogs, podcasts, coupons, sponsorships, naming rights, purchased shelf space, corporate Web sites, in-store promotions, membership rewards programs, exhibitions, and young influencers like the Betches, who are paid to extol products on sites like YouTube.

The tentacles of this industry reach wide and deep. It employs an estimated one million people worldwide. One hundred thousand are said to congregate in New York each September alone for the annual Advertising Week in the Times Square area. Then there are the one hundred seventy thousand or so who attend the Consumer Electronics Show, or CES, in Las Vegas in January, the hundred thousand who attend the Mobile World Congress in Barcelona in February, the armies who attend the Association of National Advertisers in different locales, the South by Southwest (SXSW) in Austin in March, the American Association of Advertising Agencies Transformation in Miami or Los Angeles in April, the Cannes Lions International Festival of Creativity in June, and the conferences that Advertising Week’s impresario Matt Scheckner has introduced to London, Tokyo, Mexico City, Shanghai, and Sydney.

It is an industry that has never lacked the capacity to take itself seriously. Jeremy Bullmore, the former J. Walter Thompson chairman, whose company was acquired by Martin Sorrell’s WPP in 1987, today sits in a small, cluttered office at WPP’s London headquarters on Farm Street, where Sorrell relies on him to write sparkling essays about the industry and to help produce a robust annual company report. “Of all the models for successful economies,” Bullmore says, looking out from under bushy white eyebrows that give him an almost cherubic appearance, “nothing yet has been able to compete with a liberal, open market. Which is not to say it’s without flaws. If you go back five hundred years to a village, there were people who have milk and carrots and there were other people in the village who want them.” Only some form of communication can close the distance between “those who want and those who have.” He thinks most of the gap is filled by advertising. “Edison didn’t actually say, ‘Who makes the best mousetrap, the world will beat a path to his door.’ If he had said it, it would have been absurd. If you build a better mousetrap and you’re in the woods, until somebody knows you’ve got the better mousetrap, there’s no point in building it.” He cites the former Soviet Union and its satellites: “Look at Communist countries. No advertising. None of the consumer goods companies thought it necessary or worthwhile to innovate because if you do something that’s quite interesting but you can’t tell anyone about it, and your competition are not doing it, why bother?”

As First Lady, Michelle Obama championed learning how to “use the power of advertising to our favor” by promoting exercise and eating healthy foods like fruits and vegetables. “We all know that advertising works, so we figured why shouldn’t fruits and vegetables get in on the action?” she said. Advertising also works in negative ways, witness the Camel ads that once successfully touted cigarettes as a health product, proclaiming, “More doctors smoke Camels than any other cigarette.” Or mentholated cigarettes were pitched as assuring improved health.

But neither advertising nor the industry that produces it works the way it once did. The industry is being disrupted by frenemies advancing from the north, south, east, and west. Martin Sorrell impersonates an alarmed Paul Revere, seeking to rally the traditional ad industry, summoning his WPP troops to meet the “continuous disruption threat” from various competitors. While pacing his all-white, bare-walled London townhouse office, he says, “You’ve got layers. You’ve got our direct competitors, like Omnicom. You’ve got the frenemies, let’s call them Facebook and Google principally. You’ve got the consulting companies, like Deloitte, McKinsey, et cetera. And then you’ve got the software companies, like Salesforce.com (http://Salesforce.com) and Oracle and Infosys, and Indian software companies.” He combats new threats by aggressively investing in digital upstarts and jettisoning companies whose economic performance lags. “We’ve invested in Vice. We’ve invested in Fullscreen. We’ve invested in Refinery29,” each a digital company. And, he adds, “I’m prepared to eat our children, because if I don’t somebody else will!”






It does not please Sorrell that one clear beneficiary of this tumult and fear—and the client backlash triggered by Jon Mandel’s speech—is Michael Kassan’s MediaLink. Publically, Sorrell may mute his criticism of Kassan, but he dislikes third parties getting between his agencies and his clients. It annoys him that Kassan’s varied clients flock to MediaLink—not WPP—because they seek a reassuring neutral voice and are distressed by the speed and enormity of change. Sorrell has a broader range of knowledge and business acumen than Kassan—and most contemporaries, for that matter. But Kassan is comforting, providing for his clients what he describes as a cushion, a “membrane between” the cartilage and the bone. Martin Sorrell would never describe himself as a cushion.

Like a doctor with a good bedside manner, Kassan knows his clients have reason to be insecure, and he seeks to address their fears. His clients discuss the accelerated spread of mobile phones, whose approximately six billion global users have replaced the desktop and the television as the dominant platform. They marvel at its awesome power: today’s iPhone 8 has more computing power, says Rishad Tobaccowala of Publicis, than was used for the first space shuttle. They enthuse that a smartphone platform and its embedded GPS open opportunities to track and engage personally with users. They are awed by China’s Tencent, a corporate giant focused on mobile services that connect people, providing access to WeChat. In mid-2016, Tencent had almost 800 million users, 80 percent of whom spend more than an hour a day on one of its sites, especially WeChat, to communicate with family and friends and strangers. They use simple bar codes to partake in 500 million daily transactions, employing 300 million credit cards that link to 300,000 stores, all without switching to another app. If the client does not know, Kassan can explain that WeChat is a one-stop service that combines the varied functions of PayPal, Facebook, Uber, Amazon, Netflix, banks, Expedia, and countless apps. It is clear to Kassan: the mobile future is being shaped in China, not Silicon Valley.

But this frightens his clients, because they know China is a hard market to crack, and they know the U.S. companies that control mobile will drive hard bargains with agencies and advertisers. They also know the limitations of mobile. Ads on mobile phones soak up battery life, are constricted by small screens, and are so intrusive and irksome to consumers that about one quarter of Americans and one third of Western Europeans sign up for ad blockers to prevent the interruptions. How, clients anxiously want to know, do they reach the mass audience so essential to introducing new products and to building brand identity when ads on mobile phones are not as effective and consumers are dispersed among many new channel choices and social networks? And what the hell do they do to reach the next generation—including the digitally savvy millennials age twenty-one to thirty-four, and the even younger Generation Z born after 1997, who detest being hawked to? A reason people might be annoyed by ads is because, on average, citizens are bombarded daily by an astonishing five thousand marketing messages.

Kassan’s clients and agencies do marvel at new data mining tools that offer advertising and marketing companies more weapons to target consumers. But they’re also frightened by some of Kassan’s digital clients—Facebook and Google in particular—who cooperate with advertisers but also compete by collecting massive amounts of data, which they do not fully share. These digital frenemies use this data and the marketing services they’ve acquired—like Google’s DoubleClick and Facebook’s Atlas—to become agency and platform rivals. More and more of his clients are terrified of Amazon, for Amazon has even better data than Facebook or Google, because it tells when a consumer made an actual purchase decision, and like Facebook and Google it walls off its data. Particularly worrisome to brand clients, Amazon promotes its own products, as Google is accused by the European Union of using search to steer users to its own products. For example, if you ask Alexa, Amazon’s digital assistant, to choose a battery, it will choose an Amazon battery, the reason Amazon batteries dominate battery sales on Amazon.

Kassan’s clients and agencies also worry about something else: the data that will yield rich targeting information could trigger a backlash if citizens come to believe their privacy is violated and clamor for government protection. While more data fortifies agencies with better tools to target consumers, it also unnerves them because it arms clients with information about which of their ads sell and which don’t. And technology does something else: it democratizes information, giving citizens more choices, more ability to skip ads, to voice their opinions, to vote with their fingers and flee traditional media platforms.

Everyone in the advertising and marketing business marvels at the platform choices technology enables. Consumers can be reached via an ever-expanding number of TV channels, social networks, apps, blogs, podcasts, and e-mail alerts. But they fear the miniaturization of the mass audience and wonder how to introduce a new product so that it captures people’s attention in this new world.

The advertising industry collectively worries that what they think of as their art—big creative ideas—will be replaced by machines weaponized with data and algorithms and artificial intelligence. The primary machine we increasingly rely on is the smartphone, and many in the industry would not be comforted to listen to Tim Armstrong, the CEO of AOL and before that Google’s senior vice president of advertising for the United States and Latin America. In 2015, Armstrong sketched a future in which marketers will have to talk to a consumer via their mobile machine: “And the machine is going to highly disrupt what kind of advantage and what kind of messaging and what kind of interaction you have with a consumer.” Within five years, he continued, six billion people will be connected to the Internet, meaning marketers “are going to have to interact with their machine, which we refer to around here as ‘the second brain.’ You’re going to have an advertising model that works fluidly for the consumer but also works fluidly for what that machine is.” He illustrates the machine’s power by telling of a visit he made that week to a Mastercard board reception where they displayed future products. One was a gas station pump that recognized your Mastercard and regulated the price at the pump based on whether you were a regular customer or not. “In the future, the pump pricing may change based on what type of customer you are and whether you’re in a points program. But also, the company will have a lot more information on you.” And the smartphone will “keep track of all your relationships with all the companies you deal with. The exponential power of using that data will change consumer behavior. It will shift more power into the consumers’ hands. And it will shift more power to companies that move faster into this world.”

Marketers will have to befriend the machine, he continued. “The phone or machine will be as powerful as a second you, with a lot more ability to use software to simplify things for you. Today, the consumer does all the work. You have to get in your car and drive to the store. You have to go online to Amazon and figure out what you want to buy. But in the future if you have this machine that has a deep understanding of what you do, when and how you do it, the things that may be helpful for you, it’s likely that the onus on the consumer to do all the shopping will shift to the corporation.” Information for the consumer will be screened and presented by your smartphone’s digital assistant, which will be more sophisticated versions of Amazon’s Alexa, Apple’s Siri and its HomePod speaker, Google Home, and Microsoft’s Cortana. “It may watch how you behave over the course of a year and say, ‘Here are all the things you’re doing and here are three or four products that may help you live a longer life, may help you save twenty percent of your income.’” The digital assistant becomes your agent, potentially supplanting the middleman, including the agency middleman.

Agency employers stewed over all this. And as they also stewed over Jon Mandel’s claims in 2015, Michael Kassan heard a new drumbeat from various clients: trust. Or mistrust. Kassan was all too aware of the views of a frequent client, Beth Comstock, who was promoted to vice chair of General Electric after the innovations she instigated as their CMO. “You hear this time and time again, a lot of people are frustrated that there’s a disconnect between their agency and what they want,” she says. “I think we want more media properties to come to us,” to bypass the agency and collaborate directly on creating an ad campaign, as the New York Times did in creating an award-winning virtual reality campaign for GE. Over the years, she says, the mistrust between client and agency intensified because the media-buying agencies came to see themselves as the customer. “They gathered all the clients together. They negotiated the sales.” They, not the client, directly paid for the ads. They didn’t always assign their best people to a client’s account. They were sometimes opaque about rebates or why they placed bets on different media platforms. To Comstock the trust issue boils down to this: “Are you working for me or for the media company? I’m paying you!”

Agencies are naturally anxious not to become superfluous middlemen, supplanted by clients who seek lower costs by building their own in-house marketing departments, or by turning to advertising platforms that retain MediaLink—like the New York Times, the Wall Street Journal, or Vox, which double as ad agencies, going directly to brands and offering to craft their ads. Agencies worry that as consumers shift to the convenience of online buying and do it on their iPhones, reliable advertising clients like department stores and retail outlets will do more than contract—they will perish. Big agency holding companies “are dinosaurs,” thinks Bob Greenberg of R/GA, a thriving digital agency, because they grow by buying companies and become hobbled by an inability to harmonize disparate cultures, while at the same time being challenged by formidable consulting companies with deeper pockets and intimate relationships with the CEOs of major brands. They are collapsing, he says, because “everything is run by accountants and bean counters.” Greenberg obviously makes an exception for IPG, the holding company which acquired his R/GA.

“Change sucks,” sighs Rishad Tobaccowala, the resident futurist for Publicis. “I hate change. I work for the same company I joined thirty-four years ago. I live in the same area of Chicago for thirty-six years. I met my wife in India when I was twelve. I hate change. The reason why change sucks is if you do something different, you don’t know what you’re doing. Therefore you make mistakes. You make a fool of yourself.” Senior executives don’t want to look foolish, or admit they don’t have answers. “So what people do is they put out press releases pretending they know what they’re doing. And they hope this will go away before they retire. But it is happening faster.”

In human terms, what marketing execs like Tobaccowala, Sorrell, and Kassan know all too well is that many of the jobs held by their employees are threatened by technology. They know that new technologies like programmatic or computerized buying of advertising eliminate jobs. They know personalized ads dispatched by Instant Messages (IMs) or e-mails can be created by machines. They know algorithms and machines powered by AI increasingly decide what we see or read. They know, as Kassan says, “Technology is the number one threat to agencies. Technology allows for a more direct relationship between a buyer and a seller, with less need for an intermediary.”

Deep down, Kassan, like most media executives he advises, fears that marketing dollars will not just be redirected, they will actually shrivel. Their fear calls to mind this brief exchange between two friends in Hemingway’s The Sun Also Rises:

Bill Gorton: “How did you go bankrupt?”

Mike Campbell: “Two ways. Gradually and then suddenly.”




3. (#ulink_44702e30-dcb8-55f2-a6fb-dc3a185e7ab8)

GOOD-BYE, DON DRAPER (#ulink_44702e30-dcb8-55f2-a6fb-dc3a185e7ab8)


“Today clients are not married to an agency. They are only dating.”

—Michael Kassan

Mad Men’s Don Draper was a fictional stand-in for midcentury advertising executives like David Ogilvy, Bill Bernbach, and George Lois, who reigned at a time when the creative departments ruled agencies, when a single street—Madison Avenue—was synonymous with advertising. In those days, there was no need for a company like Michael Kassan’s MediaLink. In fact, Kassan and MediaLink would have been treated as an interloper, for the ad agency, as Jon Mandel and clients like GE’s Beth Comstock claimed, was the agent of the client.

Newspapers starting in the late nineteenth century began to compensate agencies with a fixed 15 percent commission on all advertising placed in their pages. Magazines followed, then radio and television. It was an unusual compensation system—the ad was paid for by the advertiser, but it was the seller of the advertising, not the buyer, that paid a percentage of the fee to the agency. In addition, agencies were paid a 17.65 percent commission on all ads created, and were separately reimbursed for production costs. The arrangement “was pretty lush,” concedes Miles Young, the CEO of Ogilvy & Mather until 2016.

Randall Rothenberg has been immersed in the industry for more than a quarter century. He wrote one of the most instructive and entertaining books about advertising, Where the Suckers Moon: An Advertising Story,


and today serves as the spokesman for digital companies as president and CEO of the Interactive Advertising Bureau. He believes the commission system fortified the agency business, boosting their profit margins. “There was collusion between the agencies and the publishers to keep prices high. The myth was that the client was the marketer. In fact, the client was the publisher. The ad agency acted as a broker for the publisher.” Ad agencies did not often haggle with publishers on price. The more ad dollars publishers received, the more the agency got paid.

Doyle Dane Bernbach’s Bill Bernbach—the creative decision-maker behind such iconic ad campaigns as Volkswagen’s “Think Small,” and “You Don’t Have to Be Jewish to Love Levy’s”—reigned at a time when ad agency execs and their place in the world was secure. When the CEO of fledging Avis offered his account to Bernbach, he qualified his acceptance by telling him, “But you must do exactly what we recommend.”


The campaign Bernbach crafted—“When You’re Only No. 2, You Try Harder. Or Else”—changed Avis’s fortunes. George Lois, like Bernbach a Bronx-born maverick, had won a basketball scholarship to Syracuse, and his hulking physicality and booming voice could be menacing. More than once, Jerry Della Femina, a creative colleague, recalls Lois screaming at clients, “I’ll jump out this window if you don’t approve this ad!”

“In the old days, creative guys were the only ones in the room to pitch clients,” recalls Michael Kassan, whose advertising career started in media buying. “They never met Harry”—Harry Crane, media buyer and head of Sterling Cooper’s TV department—“who was treated as a nerd in Mad Men. But in the late 1970s, independent media buyers spun off as companies, and in the ’90s they gained respect. The suede-shoes guys challenged the power of the white-shoes guys.”

A recurring debate within agencies in the Mad Men era was over what constituted a great ad campaign. In the 1950s, Rosser Reeves, the chairman and creative head of Ted Bates & Co., argued that advertising was a quasi science. He promoted what he called a “Unique Selling Proposition,” claiming that one idea that consumers could latch on to foretold whether an ad campaign would succeed. It had to be unique, but it also had to win the approval of survey research predicting it would sell. Colgate ads for toothpaste that “comes out like a ribbon and lies flat on your brush” was unique, but it wouldn’t sell, he said. Colgate ads for toothpaste that “cleans your breath while it cleans your teeth” was both unique and successful. Recruited to pioneer thirty-second TV ads for Dwight Eisenhower’s 1952 presidential campaign, Reeves ordered a Gallup poll that identified three issues on which the Democrats were vulnerable: corruption, the economy, and the Korean War. Reeves coined the phrase “Eisenhower, Man of Peace,” and portrayed Ike as a war hero returned to America to bring about domestic and international peace. His opponent, Adlai Stevenson, who didn’t own a television and thought TV ads talked to citizens as if they were second graders, countered by spending 95 percent of his TV ad budget on a half-hour telecast of his speeches. He reached a minuscule audience.




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,


“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.”


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.









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.”




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. (#ulink_0ccf18fa-518a-58b8-b8ef-0d2545c25f12)

THE MATCHMAKER (#ulink_0ccf18fa-518a-58b8-b8ef-0d2545c25f12)


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.

Ronnie might have been exasperated by the Porsche, but by now she understood her husband. “Michael feels that everything will work out all the time,” she says. There is a reason the epigram at the end of each e-mail he sends reads ALL GOOD.

Michael was doing tax law for a firm; Ronnie was pregnant with the first of their three children. His salary was $1,500 per month, plus a percentage of any new business he brought in. He recruited twelve new clients the first month. “Being a rainmaker was easy for me,” he says. In 1977 he joined another firm, and a year later he and some friends opened their own law offices. Michael was restless. “He always wanted to be in business,” Ronnie says. “I think he felt that through some client somewhere something would happen. And it did.”

He became counsel to his law firm in 1986 when one of his clients, International Video Entertainment, at the time the largest independent home video company, distributor of such popular fare as G.I. Joe and The Transformers, enticed him to become president and COO. The company was run by Jose Menendez, one of the few individuals Kassan will not volunteer a kind word about. “He was very tough,” he says. “He had a chip on his shoulder the size of Cuba. And he used it always. ‘Good morning’ to him was adversarial.” Kassan helped engineer the sale of the company and left in 1987, two years before Menendez and his wife were famously murdered by their two aggrieved sons. He returned to his law firm, but still yearned to be a businessman.

Some years before, while attending a children’s birthday party at Harry’s Open Pit, the owner asked if he knew anything about franchise law because he wanted to franchise his rib restaurant. Michael said he did, and told him a first step with a franchise was to hire an accountant to prepare an audited financial statement for the state Division of Corporations. He put him in touch with an accountant, and some months later the accountant called Michael and said he was working with the owner of a Mexican chicken restaurant, El Pollo Loco, who wanted to franchise. Michael became both their lawyer and a believer. “I tasted the chicken in the guy’s garage and said, ‘This is unbelievable.’ It was healthy, nonfried fast food.” He recruited some of his law partners as fellow investors. He went to the American Heart Association and persuaded them, he says, “to put the heart-healthy logo on a fast-food restaurant. It had never been done.” The healthful and delicious Mexican chicken franchise would take off. Over the next fifteen years El Pollo Loco opened forty franchises, and Michael branched out by investing in Rally’s Hamburgers. He also continued as a law partner at his firm.

But he made a classic business mistake. The chicken franchise expanded too rapidly. “We took the concept to Las Vegas and we got our clock cleaned,” he says. They poured money into Vegas, and soon the business plunged from profit to loss. In California, the vast Hispanic population might eat at El Pollo Loco three times per week; in Vegas, with a relatively minuscule Hispanic population, one visit per month was more common. To shore up the franchises in Vegas and prevent its bankruptcy, Kassan became more engaged. They borrowed more money from the banks, and without seeking board approval transferred monies from El Pollo Loco franchises in California, weakening them. He had shifted monies from healthy California chicken franchises, albeit not to enrich himself, but to fortify cash-starved Las Vegas franchises. On the books, Kassan did not camouflage this act, recording these as loans. Soon the business could not meet the bank loan payments. Kassan drained $150,000 from his own pocket to help make the payments. In January 1994, investor Joel Ladin, one of the four partners in the law firm and the best man at Michael and Ronnie’s wedding, confronted Kassan with evidence of the unauthorized withdrawals. After Kassan admitted that he withdrew the funds, he was terminated. The next month Ladin filed a formal complaint against Kassan to the police, charging him with embezzlement. Kassan quickly repaid the entire $240,000 he had borrowed from the healthy El Pollo Locos, plus interest. “There were nights,” Kassan says, “Ronnie would say to me, ‘I just want to keep the house.’ It was Armageddon.”

In June 1995, a Superior Court judge found him guilty of “grand theft by embezzlement,” but ruled that his motive in taking the money was not personal greed but a desire to keep El Pollo Loco alive. Kassan won a measure of leniency when he reached an agreement with prosecutors to withdraw a planned not guilty plea. He says he did not know that a guilty plea resulted in automatic legal suspension in California, and he would not have pled guilty if he knew this. He received a suspended sentence, was placed on probation for three years, and ordered to perform five hundred hours of community service. He knew that if he successfully completed the terms of his probation, California law allowed him to change his plea to not guilty, and his felony conviction was reduced to a misdemeanor and eventually expunged. The State Bar of California, however, offered no leniency; he was formally suspended. In June 1996, after completing a year of probation, Kassan’s felony conviction was reduced to a misdemeanor and erased from his record. But the shame continued to haunt him.

Kassan was despondent. He poured out his hurt to a psychiatrist—four times each week, he says. He was determined to appeal the State Bar ruling, not because he cared to practice law again—he says he did not want to—but because he couldn’t bear the thought of his Jewish mother knowing her son could not practice law. “My mother always said, ‘You need something to fall back on.’” He appealed to the Supreme Court of California, challenging his suspension from the State Bar. “The one and only chance to tell my story was by challenging the California State Bar,” he says. After hearing the case, in April 1999 the state’s highest court ruled in his favor, finding:

In the matter before us the record is clear that respondent’s primary motivation was to save the various El Pollo Loco operations. … In respondent’s case there was no attempt to hide this conduct, and when confronted he immediately acknowledged his actions and made immediate arrangements to make good his theft. … We make no effort to minimize the seriousness of respondent’s criminal misconduct. He fraudulently converted a large amount of money to his own use in violation of a most fundamental rule of honesty. Nevertheless, considering the circumstances surrounding the criminal conduct, twenty years of blemish-free practice prior to the misconduct, respondent’s immediate restitution, recognition of wrongdoing and genuine remorse we believe the record demonstrates that disbarment is not required to achieve the goals of attorney discipline.

A Google search for Michael Kassan finds mention of his felony conviction and near disbarment only if one is willing to scroll through many pages; his Wikipedia profile is silent about it. Understandably, it is something he would prefer not to dwell on, and yet it’s never entirely gone from his thoughts. For much of his adult life since, he says, he has glanced up at the rearview mirror, fearing that he was being chased. His shame has remained dormant, but ever since there have been two Michael Kassans—the cheerful charmer and the sinner. Most see Michael Kassan the successful optimist; few see the self-conscious man fearful that his humiliating past could somehow come back to haunt him.

Dennis Holt, who had been a law client of Kassan’s, knew of his legal tribulations and in 1994 offered him an outstretched hand. Holt had founded Western International Media in 1970. At a time when agencies sold themselves as one-stop shopping places, offering clients a full range of creative, strategic, and media-buying services, Western successfully unbundled media buying. With thirty-seven offices and a thousand employees, Western became the world’s foremost buyer of local TV, radio, and out-of-home advertising like billboards or supermarket promotions. “He was the equivalent of what Irwin Gotlieb is today,” standing atop the most powerful media agency, Kassan says. “He was the largest independent media agency in the world.” Holt says he chose to ignore Kassan’s prior felony conviction. “I was the one who restored him,” Holt says. The business had outgrown Holt’s managerial style, which was to personally sign every check. “We had gotten so big and did so many different things that I wasn’t having fun anymore,” Holt says. He was determined to hire Kassan. At Nate’n Al’s in Beverly Hills, Holt looked him in the eye and said, “I’m not offering you a job. I’m offering you a life.” He was offering a way to regain his self-confidence, his swagger. Kassan’s prime mission would be to sell Western. Within six months, Kassan succeeded, consummating a sale to the Interpublic Group, then the world’s largest advertising holding company.

Kassan remained as president of the company for five years. By 1999, he was clashing with Holt, who had stayed on as chairman, as well as with senior executives at the parent company. Asked if Kassan did a good job, Holt did not answer for several seconds, then said “No,” adding, “he did a good job with the process of selling the company.” The clash with IPG became ugly. In August 1999, the firm locked Kassan out of his office and Kassan filed a $63.5 million lawsuit against them, alleging that IPG defamed him by claiming financial misconduct, and also breached his five-year employment contract. Days later the company announced that Kassan was “terminated.” IPG executives won’t discuss the matter. Kassan will only say, “What I am allowed to say is we amicably resolved our differences.” Dennis Holt, who remained with the company until 2000, says, “IPG wanted to fire him many times, but I defended him,” a claim that causes Ronnie Kassan to roll her eyes. IPG was offended by Kassan’s steep expenses, Holt says, including massages and charges on the New York City suite he maintained at the St. Regis hotel. Baloney, says Kassan’s friend Irwin Gotlieb, who first got to know him as a Western competitor. Because Michael was paid a handsome annual bonus from IPG as part of his five-year payout from the sale of Western, his jealous IPG boss “wasn’t the kind of guy who could watch someone else make a lot of money.”

The lawsuit was settled out of court, with IPG stating that it had conducted an audit and was satisfied there were no irregularities. But for the second time in less than a decade, it wasn’t “ALL GOOD” for Michael Kassan. “He was depressed,” Ronnie Kassan remembers. “We have a very close friend”—now Cerberus Capital Management vice chair, Lenard B. Tessler—“who called Michael every day and said, ‘I’m calling you because I don’t want you to think no one calls you.’ Michael didn’t want to go back to law. He just didn’t know what he wanted to do.”

Another close friend, prominent attorney Howard Weitzman, who is known in Los Angeles as an attorney for Hollywood celebrities, had participated in the launch of a software digital rights business, Massive Media, and in late 1999 Kassan was recruited. Kassan was enthused about the media and marketing business and intrigued because he saw Massive Media as a vehicle to broaden his expertise. “It gave me exposure to what was happening in the digital sphere,” Kassan says. His task, Weitzman says, was to boost sales and help shape business strategy.

One of the other partners in the company, former Viacom CEO Frank Biondi, who had never met Kassan before, was impressed by him; Kassan struck him as “a huge personality.” Biondi was shaken when a lawyer friend phoned to say he was representing a potential investor that Kassan had approached, and when the lawyer did his due diligence he discovered that Kassan had been convicted of fraud and almost disbarred. Weitzman assured Biondi that Kassan was of good character. And Biondi says that for the first year Kassan did a good job. “But the firm needed to raise more money, and Michael volunteered to lead the raise. The Internet bubble had begun to burst.” The money dried up. “In the end, Michael was totally unsuccessful in raising funds. In fairness to him, I’m not sure God could have raised money at that point.”

“He was home a lot,” Ronnie Kassan says, and people would call seeking his advice. “Michael, why don’t you charge them?” she asked him.






He listened to her. Over the next three years he performed a variety of consulting jobs for companies in the U.S. and Europe, mostly smaller companies asking him to help them strategize and to connect them to other companies.

Kassan saw a void he could fill. The advertising and marketing world was in turmoil, soon to be disrupted by the Internet and digital upstarts like Google and Yahoo. Clients who paid for and media platforms that sold advertising sought guidance, but couldn’t turn to agencies for neutral advice. Sellers wanted to be introduced to buyers, digital companies to brands. His experience with brands and media companies at Western and with digital companies at Massive Media—plus the insecurities of an industry seeking a life raft, plus his charm and connections and the three years he spent as a consultant—convinced Kassan he could build a unique service company. He and MediaLink would serve as both a connector and a hand-holder.

He set out to recruit a financial partner to help him quickly scale the business, and thought the Hollywood talent agencies would be a natural fit. “I walked up Wilshire where the talent agencies were located with my hat in my hand,” he recalls. “I didn’t need a job. My consulting business was doing well. But I wanted to do it with a team. The agencies gave me a lot of ‘Ya, ya. No, no.’”

Undaunted, he launched MediaLink himself in 2003, expanding over time to perform an array of related functions. MediaLink’s purpose, Kassan said, “was to provide adult supervision in the midst of chaos.” His friend Irwin Gotlieb sees a perfect match between a warm, capable personality and a frightened industry. “He knows everybody. My special talent is, you show me a number and I’ll remember it forever. Introduce me to three people, and I will have forgotten their names in five seconds. Michael will remember their names forever. He would be a natural politician.”

This time, Kassan monitored his appetite, growing MediaLink slowly. The fifth employee, Karl Spangenberg, was not hired until 2007. An experienced ad sales executive with a wide range of media and digital companies, Spangenberg says that when he was a senior marketing executive at AT&T he “hired Kassan and MediaLink to open doors for me.”

A New York office with a creaky freight elevator and little furniture was opened in 2008. Kassan gained a measure of fame when he was hired by Microsoft in 2008 to galvanize the digital community in opposition to Google making a search deal with Yahoo, and succeeded.

“When Wenda joined in 2009, the business exploded,” Spangenberg says. Wenda Millard’s résumé displays the laurels of thirty-five years of traditional publishing and digital media jobs, including publisher of Family Circle and group publisher of Adweek, Mediaweek, and Brandweek magazines; chief sales officer for six years at Yahoo when that company was an Internet darling; and chief Internet officer at Ziff Davis Media and executive vice president of DoubleClick. She had also chaired the Interactive Advertising Bureau and was former president of the Advertising Club of New York. Millard and Kassan had known each other for years. When he approached her she was president and co-CEO of Martha Stewart Living Omnimedia, a company whose mercurial owner could be unsettling. Like Kassan, Millard knew most people in the business. Unlike him, she was fastidiously well organized. She mentioned that she was about to leave as co-CEO of Martha Stewart and was thinking of setting up her own marketing consultancy.

“Don’t do that,” he exclaimed. “We might end up as competitors. Let’s do this together and have some fun.” He then owned 100 percent of MediaLink, and offered her one-third ownership and the title of president and COO. He gave her the pitch: “MediaLink lives where Madison Avenue meets Silicon Valley, meets Hollywood, meets Wall Street. We live at that nexus.” She was intrigued, though some of her friends were not. One close friend says she told Millard she thought his slickness didn’t mesh with her sincerity, and mentioned a vague recollection of a rumor that some people in the industry whispered: Wasn’t he once convicted of something?

Millard signed on. Their sail has not always been smooth—they are indeed opposites in many ways, but measured by growth and reach, their partnership has been a success. Together, by the spring of 2017 they supervised 120 or so employees; most work with assigned clients in several divisions. Data & Technology Solutions under managing director Matt Spiegel, a digital entrepreneur who was Omnicom Media Group’s global digital CEO, advises companies on a range of technological solutions they might pursue, from programmatic advertising to AI to cybersecurity. If clients want to meet key people at Google, Kassan will help introduce them. When Unilever, one of MediaLink’s initial clients, was their first client to ask, seven years ago, for a tour of Silicon Valley, Kassan arranged it, including visits with Google, Facebook, and Twitter. “We were keen to understand what was going on,” Unilever’s Keith Weed says. “I’m a great believer in what Woody Allen once said: ‘Eighty percent of success is just showing up.’” Unilever, the world’s second largest advertiser, is today one of Google and Facebook’s biggest advertisers.

Marketing Optimization under managing director Lesley Klein, a former account director at Deutsch, offers consultation to companies on an ongoing basis; it is an influential part of MediaLink’s business, for it provides a client base. Potential start-up clients usually are courted by Kassan. Once signed on, they pay a monthly retainer that can range from $35,000 to several hundred thousand dollars per month; more established companies spend more time with Kassan and pay per project or place MediaLink on an ongoing retainer. The ninety-one clients serviced at the Cannes Lions Festival in 2016, for example, may already have been on retainer, or may have been billed just for this service. The Marketing Optimization division offers strategic or organizational advice, introduces them to people or ideas that might transform their business, and helps negotiate agency contracts. Lesley Klein and senior vice president Bernhard Glock also orchestrate the agency reviews for brand companies. The initial sales pitch is usually made by Kassan.

Business Acceleration, which each division has a hand in, services a bevy of traditional media clients like Hearst, the New York Times, the Wall Street Journal, Condé Nast, Time Inc., Comcast, and NBCUniversal. They turn to MediaLink to help devise a corporate growth strategy and to make them more visible by arranging meetings, or to consult by coming in and doing what a McKinsey would and help devise a corporate reorganization, as MediaLink did for Condé Nast. “We advise these companies on chaos,” Kassan says. Like many traditional print companies, “they need to reimagine themselves as a media and not a print company. We try to help them reimagine their business.” Meredith Levien, executive vice president and chief revenue officer of the New York Times Company, says, “The landscape is complicated, and MediaLink helps us get in front of the right people.” Senior vice president Howard Homonoff, a former PricewaterhouseCoopers and NBCU executive who is part of this division, says their work can get pretty granular. Clients naturally fret about the speed of change and say to him, “‘Help me look at the next three to five years and help me define what it will look like and what are the best ways for me to succeed and grow in new areas. What are the new forms of advertising? And help me think through who my acquisition targets or partners might be.’”

A similar function is performed for digital publishing companies grouped in the Emerging Media division, which advises clients like Twitter or Refinery29 on strategic and marketing issues. This division is overseen by managing director Sunil Kapadia, a former Silicon Valley software engineer and Boston Consulting Group executive. Philippe von Borries, the cofounder of Refinery29, described what Kassan does for a smaller company like his that hopes to bust out: “Michael is the great connector. We think of Michael as an adviser, someone who has the ear of everyone in this space, connecting us to brands, media companies, platforms.”

A fifth division, the Investor Strategy group, is supervised by managing director JC Uva, a former investment banker. It serves clients who want to explore an acquisition or investment, including corporations, private equity firms, hedge funds, and venture capitalists, as Disney asked MediaLink how it would affect their family-friendly brand if they invested in Vice Media. Without identifying Disney, MediaLink called twenty-five of their clients and asked if an established media company partnered with “an edgy” company like Vice, would it help or harm the established brand? MediaLink is often asked by clients whether to buy a company outright; whether MediaLink should act like a venture capital firm and invest its own money in emerging companies; or whether MediaLink should accept stock in a start-up in exchange for its services. In performing these roles, JC Uva says MediaLink competes with consultants like McKinsey, and sometimes investment bankers or venture capitalists. Because of their breadth of experience and contacts in advertising, marketing, and the tech space, “our advantage is that we have more detailed information.”

Sometimes MediaLink, or just Kassan and Millard, have invested their own money and made a financial killing. Kassan as a personal investor and MediaLink in its role as strategic adviser were paid a bounty for steering the sale of two longtime clients—Maker Studios, a producer of digital video content, to Disney for $700 million, and Buddy Media, a company that creates an advertising infrastructure across social media platforms, to Salesforce.com (http://Salesforce.com) for $850 million. “Our role in that space,” Kassan explains, “has been enhanced because we are, fortunately, a very credible resource for people who have businesses that are premised on advertising as one of the primary revenue sources. It is good to have someone who is not just a banker but who can validate the business opportunities.”

A sixth division, the Talent@MediaLink group, performs a headhunting function for clients looking to fill positions, be they brands, publishing platforms, digital and traditional companies, or agencies. “We started seven years ago for GE,” Kassan recalls. They had advised the company on how to reorganize its global branding and marketing division, and the CMO, Beth Comstock, deputized MediaLink to lead the search to fill two new jobs. The next year, he says, “They wanted to build a Digital Centers of Excellence. What would it look like? Who would they hire? They wanted to ask Spencer Stuart. We said, ‘No, we’ll do it.’ Now executive search is almost fifteen percent of our business.” MediaLink has several advantages, he says. One, because his company is enmeshed in the industry, they offer “a scouting report from someone who has played shortstop while the other guy was at second base. We’ve done double plays together.” Two, because they often do strategic work for the same company, MediaLink has a leg up on their strategy and what best fits their corporate culture. And third, they earn gratitude. “It gives us an unfair advantage because often we’re placing someone who becomes our client.”

By early 2017, managing director Laurie Rosenfield, an experienced recruiter who has held executive positions at CBS, TiVo, and 20th Century Fox and who reported to Wenda Millard, says that she and her ten-member team were engaged in fifty executive searches. When the 4A’s on behalf of ad agencies in late 2016 sought a replacement for President and CEO Nancy Hill, who chose to retire from her $700,000-a-year job, they retained MediaLink. Jack Haber, longtime Colgate marketing chief who retired in 2016, was startled that MediaLink’s intelligence network provided an early warning system that reached into his organization. “One day,” he says, “my global VP of Marketing resigned. MediaLink already knew. They said, ‘We have a list.’”

Another division, Market Visibility, is overseen by managing directors Brett Kassan Smith, Michael’s daughter, an experienced marketing and public relations executive, and Lena Petersen, who hails from the advertising agency world. Many of these divisions overlap at various points, but this one takes the lead in the promotional or connector role, including getting iHeartMedia or GroupM to invest in MediaLink events at Cannes or the CES, recruiting speakers for ad agency panels at conferences, making sure that the clients who come to Cannes or CES have scheduled meetings with agencies and brands. When Michael Kassan got Universal Music to gift Lady Gaga to perform at MediaLink’s CES party in 2016, it was Brett Kassan who had to intervene to halt her father from violating the fire code by inviting more guests. Her group, more than the others, performs the convener function.






Kassan himself is, of course, the ultimate convener at MediaLink.

Michael Roth, CEO of IPG, starts laughing when he describes Kassan as a “matchmaker,” and offers this example: “We hire him on a consulting basis. Or sometimes he wants us to sponsor one of his events, and he’ll call me up and tell me, ‘John [Wren, CEO of Omnicom] and Martin [Sorrell] are going to do it. Are you going to?’ Then he calls John and Martin and says ‘Roth is going to do it.’ Then we’ll all meet at the event and say, ‘Why the fuck are we doing this?’”

One gets a sense of Michael Kassan, connector, watching him confer with his chief of stuff, Martin Rothman, on the leased six-seat NetJet as it leaves Miami after a 4A’s conference in April 2016. They review a draft presentation he had dictated and the staff honed, which he’s to present to a client the next day, suggesting how the client should market itself and what new media efforts it should undertake. “One of the questions the client asked,” Kassan says, “is how do we benchmark against what our competitors are doing?” He smiles. Of course, he doesn’t say that “some of the competitors are also our clients.” Nor, he adds, do they share information with any of them. They review a list of potential speakers he will recruit to attend client Alan Patricof’s Greycroft Partners annual June conference in Montauk. They review a staff-drafted memo to a bevy of clients for his signature. They review and he prioritizes from a long list of phone calls he needs to make, and breakfast, lunch, cocktails, and dinners he needs to schedule. Although Rothman lives in New York, when Kassan is in Los Angeles or traveling elsewhere, he is usually at his side, taking notes at his meetings, briefing Kassan before his hundred or so daily phone calls, listening in on them and taking notes, and being copied on what he describes as up to five hundred “actionable e-mails” Kassan receives daily.

Kassan’s day is usually broken up into somewhere between five- and twenty-minute increments, and it begins around 7:40 A.M. and ends every day before or after dinner. Every meeting has a purpose, an action. “The only thing Michael has is his time,” says Grant Gittlin, his first chief of stuff and today MediaLink’s chief execution officer. Kassan is overwhelmed by a torrent of e-mails, calls, meetings, he says. “You get to a point where you’re so busy it’s hard to actually delegate. Having someone who can listen in lets him play jazz” while the chief of stuff takes notes and follows up. “My job was to be the steady rhythm man.” Of course, playing jazz is instinctual, improvisational. Kassan often drives his coworkers mad as he flits from meeting to meeting, subject to subject, unable to sit down for a meeting or to allow them to pry a definitive answer from him. “Michael invented ADD,” Millard says. “It is very difficult for him to focus on any one issue”—until he has to, she adds. Even his beloved Ronnie remembers how angry she was with him in August 2015, when they rented a home in the Hamptons. “The first two weeks in August he left me in the Hamptons and worked in New York.” When they rented a house in the Hamptons the following summer, she issued an ultimatum: “I made a deal with him. If he went to New York City I would fly back to LA.”

Kassan’s network of relationships grants him immense power. He is advertising’s Dolly Levi, the matchmaking lead character in the musical Hello, Dolly!, whose score he loves to hum. When Wendy Clark was being wooed by Omnicom to leave Coca-Cola and become North American CEO of DDB, she says he negotiated her contract, serving as “my attorney, my counsel,” and would take not a penny. “I have only paid MediaLink one time, when I was at Coca-Cola and he arranged an executive tour at CES,” she says. Facebook’s Carolyn Everson says of him, “He’s kind of like the Godfather of this industry. When Michael likes you and respects you, you become part of his family. He treats me like his niece. He invited me to his first grandson’s bris.” Dana Anderson, former senior vice president and CMO of Mondelēz, who joined MediaLink as its CMO in mid-2017, still marvels how with just two days’ notice he was able to deliver Kim Kardashian to a Mondelēz gathering.

While few fail to mention Kassan’s charm and intelligence as reasons for his success, Rishad Tobaccowala of Publicis has known Kassan for many years and offers this explanation of his power: “What he has managed to do is to play on all sides of the party. I don’t know how he did it, but hats off. I would feel somewhat squirrelly because I wouldn’t know whether I could trust you. But what he has basically done is become a sort of synapse of the industry. And so now people are very scared that if they don’t pay him they will lose something. No one opposes him, and the reason no one opposes him is because he runs pitches like the Bank of America agency pitch.” This feeds into Tobaccowala’s underlying explanation for Kassan and MediaLink’s power: “This industry is full of deeply insecure people who don’t know what is happening and are buying hedges.” Over the years, when agencies discussed with Kassan the possibility of acquiring MediaLink and mentioned that under them it would be a conflict for MediaLink to conduct agency reviews, Kassan knew that would neuter MediaLink, because agencies would no longer fear what he whispered in the ear of advertisers. Often, he is retained by agencies as well as advertisers and platforms that sell ad space. Tim Andree, executive chairman and executive vice president of Dentsu’s operations outside Japan, said his agency retained MediaLink for certain projects. So too, chimes Havas CEO Yannick Bolloré, does his agency.

Veteran advertising observer Jack Myers, chairman of MyersBizNet, which provides a steady stream of marketing and other data to companies, says of Kassan, “Michael is a maestro at convincing people they can’t do business without him. He is the most powerful of the power brokers in that business. No one comes close.” Bob Pittman, chairman and CEO of iHeartMedia, the largest radio company in the U.S., likens him to nineteenth-century Chinese compradors, who built trading bridges to the West. Les Moonves, chairman and CEO of CBS, describes him as “a wheeler-dealer” who “represents everybody. He was always a player, but in the last six, seven, eight years he’s definitely become a power broker.” Kassan regularly solicits CBS executives under Moonves, suggesting they meet one of his clients. “He’s a little slick. But he gets stuff done,” Moonves says.

What surprises people is how little muscular competition MediaLink confronts. Beth Comstock of GE says, “I am shocked that MediaLink doesn’t have more competition.” Yes, there are individuals like Shelly Palmer, whose Strategic Advisors serves advertising clients, distributes a regular and smart blog post, and arranges tours and meetings at confabs like CES. But he lacks size. “No one else has scaled it,” Irwin Gotlieb says. “You can’t scale if you’re just an individual. What Michael did most successfully was he expanded from a one-man operation.” There are consultancies that headhunt or advise on management, but these are siloed efforts. After operating largely uncontested since 2003, MediaLink benefits from network effects.

Michael Kassan has his critics, though the fiercest criticism is usually volunteered only after the critic is guaranteed anonymity. “MediaLink is like the Mafia. You pay them for protection,” the CEO of one tech firm who retained them says. “I used to pay them twenty thousand dollars per month during year one. Year two went up to twenty-five thousand per month. At first I’d meet with Michael and Wenda. Then you’re dealing with a kid. … You pay them money so you can go to their CES party. I no longer pay so I’m no longer invited.” Kassan counters, “Only clients are invited.” Aghast at what he sees as the contradiction between where advertising is heading and the P. T. Barnum character that Michael Kassan represents, one digital executive fumes, “We have an industry that says we are moving from art to science, away from the hucksterism and legerdemain of the last two centuries and into the era of definable return on investment that can identify who watched an ad and whether it registered a sale. And who is the character that is the connective tissue for the entire industry? It’s a guy who is all legerdemain and hucksterism.”

This harsh critique dovetails with another criticism sometimes lodged against Kassan: that he blows smoke at people, too eager to be everybody’s friend. When he conducts interviews onstage, as he does at confabs like Advertising Week, CES, and Cannes, he asks knowledgeable questions but only after unashamedly lacquering his guests with praise, telling the audience that Bob Pittman’s rebranding of iHeartMedia, which, he fails to mention, has to pay down huge debts and through the end of 2016 lost money over twenty-seven consecutive quarters, is “a great story.” He usually spares his real or potential clients uncomfortable but essential questions, as when he interviewed Les Moonves in Cannes and did not ask if he would support a merger of CBS and Viacom and whether he yearned to become CEO of the new entity, as the controlling shareholder, the Redstone family, desired.

There are several ways to look at Kassan’s ingratiating manner. One, as the critic who compared him to P. T. Barnum does, is to label him a bullshit artist. Two, as his friend Howard Weitzman does, who when told that Kassan reached out and recently invited to dinner his nemesis, Dennis Holt, said, “I’m not sure I would have done that. Michael sees the good in people, and sometimes ignores the bad. He’s a generous person.” Like Weitzman, Ronnie Kassan would not have gone to dinner with Dennis Holt. She agrees that her husband is a generous soul. But she adds this twist, which she means as a loving observation that others may interpret differently: “Michael has got some insecurities. He really wants to be liked.”

The other criticism aimed at Kassan centers on MediaLink’s perceived conflicts of interest. How, critics wonder, can Kassan represent companies that are rivals—Facebook, Google, and Microsoft, or Disney, 21st Century Fox, and NBCU, or both buyer and seller—and wall off information from each side? How can Kassan personally invest in companies—Maker Studios, or marketing companies like Buddy Media—without being tempted to urge his brand clients to divert ad dollars to them? How can he represent all sides in a negotiation—the buyer of ads (the client and the agency) and the seller (the publisher or platform)?

Those who deal with Michael Kassan acknowledge his charm. Armies of friends attest to his capacity for friendship and loyalty. And as to his alleged conflicts of interest, Kassan likes to say, “No conflict, no interest.” Even when he represents clients on opposite sides of the same table, he says, “our special sauce” is that they trust MediaLink not to betray them or their information. Although his is an unusual definition of neutrality, he insists he is “transparent” because everyone at the table knows he represents both parties. “We really do represent everyone. We’re so conflicted that we’re not conflicted anymore. There’s an old joke about the lawyer who used to say, ‘Two clients in a category is a conflict, three is a specialty.’” He laughs, charmingly.




5. (#ulink_35a7405a-41f6-5683-be2a-4f53052f8b74)

ANXIOUS CLIENTS (#ulink_35a7405a-41f6-5683-be2a-4f53052f8b74)


“If you want a good kisser, we’re your date!”

—Michael Kassan

At dinner at one of Michael Kassan’s favorite Italian restaurants, Scalinatella on East Sixty-first Street, a darkened, downstairs cave where waiters greet him by name and he hugs Johnnie, the majordomo, and everyone knows he prefers his vodka martinis dry without olives and straight up, Kassan ordered a tomato-and-onion salad followed by a generous veal chop with a side of broccoli rabe. Tucking into his meal, attired casually in the California style he prefers of a sweater over an open-necked shirt, dark khakis, and soft, black shoes, he recounted a pitch he’d made to the CEO of a major advertiser. “You talk to all my competitors,” the worried CEO told him. “How can I feel comfortable opening my kimono to you?”

“Look at it this way: we’re fortunate that we get to kiss lots of girls,” Kassan told him. “We never kiss and tell. It just informs our ability as kissers. So if you want a good kisser, we’re your date!” Kassan likened his mix of powerful clients to the Hollywood law firm of Ziffren Brittenham or New York entertainment lawyer Allen Grubman: “You go to them because they represent everybody and know everything.”

Spurred, in part, by Jon Mandel’s assault on agency holding companies, throughout 2015 and into 2016, brand clients reviewing whether to kiss their agencies good-bye—Unilever, Bank of America, 21st Century Fox, among others—turned to Kassan for guidance. The trust issue went far deeper than a matter of hidden kickbacks, as Bank of America’s longtime CMO and now vice chair, Anne Finucane, would explain. Finucane believes that financial transparency can be codified in agency contracts, and she has done so, but a larger issue is that the agencies are now parts of bigger marketing Goliaths offering a range of services, which pull agencies away from “thinking like a client.” It bugs her when agencies bombard her with “hard sell” proposals for new services from their sister divisions.

Jack Haber of Colgate makes a similar point about how agencies sabotage trust by constantly peddling a variety of services. Once, the relationship between client and agency was simple, he says. Instead of a lucrative 15 percent commission, agencies now negotiate a fee. And they are part of giant holding companies seeking more and more fees. “When I worked at an agency, I wanted to sell ads. Now our agency, WPP, wants to sell other services. Their strategy is to get more money out of clients.” In earlier days, “the focus was on the work. Now the conversation has shifted.” Agencies talk more about data, and spending more money to target audiences, and bringing in public relations and social network experts. He says he keeps asking, “Where are the creative people?” The biggest change in his own behavior as CMO, he says, was that “we had to be more demanding.”

There are, of course, other logical reasons for tensions between clients and agencies. Step into the shoes of the client: new technologies and a multiplicity of digital platforms offer baffling and expensive choices.

No secret drawer contains a checklist of the correct answers to the dizzying array of new choices clients face. No agency or McKinsey adviser who is not insufferably arrogant would declare they know the answers. The CEOs of the brands badger their team about company profit margins, as if marketing costs were an extravagance. The agencies complain they are being choked by low fees, but the CEO knows that agency holding company profit margins are still a relatively robust 15 or so percent. So the company CEO demands to know the return on investment of what is spent on marketing, and the honest answer is at best a guess. Corporate raiders are circling, pressing companies to manufacture short-term gains. The average CMO holds office for only about two years before being replaced by a new CMO. The new CMO is probably inclined to bring in a new agency and to insist that the agency reduce its costs.

What does the CMO do about the digital fraud issue? A 2015 study by Distil Networks concluded that one of every three digital ad dollars is wasted by ad fraud, meaning ads are clicked and paid for but are not viewed by desired consumers. Often, the culprits are computer programs or bots. The CMOs’ official spokesman, Bob Liodice of the ANA, said in late 2015, “Roughly at least twelve percent of digital ads are going to nonhumans, and twenty-three percent of digital ads are going to criminals.” He pegged the cost to his advertiser constituents at $6.5 billion, and bluntly blamed clients for being “negligent. We spend nothing on cybersecurity.” The Distil study totaled the loss to clients in 2015 at a much higher $18.5 billion. Liodice’s global counterpart, the World Federation of Advertisers, estimated that if fraud continued unpoliced, by 2025 global marketers would be robbed of $50 billion annually.

The CMOs feel trapped. Their CFO or procurement officer demands that the company stop wasting money on false clicks and ads that were paid for but never delivered to an audience. But how? Can the CMO fully trust social networks like Facebook, given that the more reported viewers of an ad, the more Facebook gets paid? The CMO doesn’t completely trust the ad agency, for they are compensated for placing the digital ads. The CMO is wary of Nielsen or other measurement agencies, for they still have a primitive way to gauge the size of the digital audience and whether an ad was actually viewed.

Not all clients are dissatisfied with their agencies. Keith Weed of Unilever, for example, has four hundred brands served by multiple agencies, foremost among them the agencies of WPP. Weed flatly says, “I don’t trust my agencies less.” And as for the cost cutters, he says, “Procurement works for me at Unilever.” It would have pleased advertising agency executives to attend a crowded panel discussion among CMOs on the beach at the 2016 Cannes festival. Marc Pritchard, the chief brand officer of Procter & Gamble, the world’s largest advertiser, surprised members of the audience by expressing sympathy for agencies and criticism of many clients: “When we treat our agencies as partners, we get great work. When we treat them as suppliers, we get crap work.” He heaped blame on procurement officers: “The single biggest complaint agencies have is that this relationship is managed by procurement. The problem is we are thinking of marketing as a cost rather than a value.”

Brad Jakeman, then president of the Global Beverage Group at PepsiCo, jumped in, noting that his company eliminated the procurement function earlier that year in order “to focus on marketing.” By moving procurement “out of a control function,” Michael Kassan would later say, PepsiCo had boldly relegated them “from first string violin to the orchestra.” Jakeman went on to express sympathy for beleaguered agencies: “They knew we respected that they had to make money. They’re a public company, like we are. They have margin commitments to hit, just like we do. They have revenue targets to hit, just like we do. And the only variable they have to play with to hit these margins is the quality of the people they put on your business. So if we pay them less, they’re going to put more junior people on the business. Probably not as talented people. And that’s going to show up in the quality of the work.”






The agency reviews of 2015 engendered some bitter feelings. Maurice Levy of Publicis, as we’ve seen, was angry that Omnicom bested Publicis to snatch the P&G account from them, and he was ecstatic to pluck the Bank of America strategic planning business from WPP’s Martin Sorrell. Levy was on his game for that pitch, exuding Gallic charm, and in control of the message from the broad strokes down to a granular level. He promised that his respected chief strategist, Rishad Tobaccowala, would be directly involved with BofA in planning and executing its annual $2 billion marketing spend. By contrast, BofA executives grumble that they were offended by WPP’s performance: Martin Sorrell brought in a truckload of different CEOs, many of whom did not seem to know one another, and their presentation was disjointed. Bank executives felt Sorrell and Irwin Gotlieb lectured them. “Martin spoke for a half hour,” a senior executive says, “and Irwin for one hour. That only left a half hour for discussion.”

There was nothing new about nailing a pitch in an agency review, or blowing it, for that matter, but the wave of agency reviews that started post-Mandel’s 2015 speech felt different. For the first time ever to this degree, efforts were intensifying to discard the middleman. Increasingly, clients were taking work away from agencies to do it in-house. Procter & Gamble has created its own proprietary programmatic ad buying system, taking some—not all—of programmatic buying away from its agencies. The ANA reported in 2016 that 31 percent of advertisers responding to one of their surveys said they had brought elements of programmatic ad buying in-house. Obstacles remain, particularly for smaller companies, because programmatic buying rewards scale, but for agencies the trends are ominous.

Even more worrisome, clients are also doing more creative work in-house. Unilever outsourced Unilever Studio to a company to perform tasks once outsourced to agencies. Airbnb CMO Jonathan Mildenhall, who left a top marketing job at Coca-Cola to join this digital upstart in 2014, says half his marketing department “are creative. They’re writers and art directors and photographers and videographers.” A major reason, he says, is that agencies don’t move fast enough. A client performing more of its own creative work was a practice he followed when he was at Coca-Cola, and it’s practiced at companies like Apple. It’s true as well in the world of fashion, where the designers’ vision is central, and where internal marketing departments are usually entrusted to create marketing campaigns.

More nimble public relations firms now commonly supplant ad agencies to tweet, blog, and podcast for advertisers. Edelman is the largest privately owned public relations firm in the world. For clients like Samsung or Taco Bell they engage in online discussions with consumers on social networks or on the client’s Web site, or recruit influencers to engage consumers on various digital platforms. For the Dove Hair team, for example, CEO Richard Edelman says they created a variety of colorful, curly-haired Love Your Curls emojis, generating 414 million impressions on sites like Fashionista.com (http://Fashionista.com), HypeHair.com (http://HypeHair.com), MarieClaire.com (http://MarieClaire.com), and SheSpeaks.com (http://SheSpeaks.com). With newspapers contracting or closing, he says, “We’re trying to find other channels because we can’t pitch to reporters anymore. We’re now dealing with Buzzfeed and Vice and Business Insider. They want sponsored or branded content. They want something funny, clever” to sneak past the defenses of millennials on guard against interruptive ads. To millennials, he is selling advertising, not news.

But even with more work migrating to PR agencies or in-house for the creation and execution of big brand ideas, clients are still usually reliant on their agencies. While Mildenhall says “eighty percent of my content needs I do in-house,” he also says that his agency, TBWA\Chiat\Day, “gets eighty percent of my media budget.” His in-house creative revolves mostly around promotional materials and activities like designing corporate Web sites. Because speed counts, clients increasingly take in-house their blogging and tweeting and social network posts. What retards a client’s ability to do more of its own creative work is that creative executives don’t clamor to work for a single brand, as ad agency executives proclaim, because abundantly talented creatives don’t want to devote themselves to only one client. “The best people want to feel free to work for many clients and across many sectors,” Sorrell’s éminence grise Jeremy Bullmore says. Nevertheless, clients moving more work in-house poses an ongoing challenge to agencies.

Another assault on agencies comes from publishing platforms performing the creative functions of ad agencies. This effort is fueled by native ads which can take the form of stories about a brand that appear in newspapers, magazines, or online and look like news stories; or compelling human interest stories in which the brand is barely mentioned. An impetus for these native ads came from the introduction of ad blockers, which imposed a nearly impregnable wall to block clearly labeled ads. Because they don’t appear to be ads, native tricks the ad-blocking software and, often, the consumer. Vice was a native pioneer when it went to Intel in 2013 and created an online Intel art exhibition that encouraged residents of certain areas to communicate with each other by joining, say, the Brooklyn Art Project. Publishing platforms sell the storytelling ability of the journalists they hire to craft native ads, and bypass the agency to pitch clients directly. The New York Times may be shedding older journalists, but it had hired 110 copywriters and art directors (almost one third of its ad sales department) to create native ads for brands. Agencies desperate not to offend clients have little leverage to counter this new threat.

To discuss the various threats to his agencies, Martin Sorrell leans forward on the wooden chair facing the small conference table cluttered with papers in his second-floor London office. He is not blind to these threats, and often speaks of the competition from digital and consulting and PR and publishing platforms. If anything, his constant travels and attendance at conferences and meetings with an array of frenemies make him unusually aware of potential threats to his business. Of the threat posed by platforms serving as agencies, he notes that WPP has partial ownership stakes in some of these potential competitors, including Vice. “Just think about our strategy: It’s to get the Don Draper companies—the traditional companies—to move quickly into digital. It’s to get the digital companies to go even faster,” and he cites the aggressive move to beef up the digital operations of such WPP companies as Wunderman, Ogilvy, and AKQA. He dismisses the notion that the New York Times poses an advertising threat. “I don’t worry about them. The Times should be worried, because 110 people creating native content are not going to put off the evil day, the continued decline of print.”






Bill Bernbach and David Ogilvy would be horrified by the behavior of today’s restive advertising clients. Those, of course, were simpler times. Ad agencies were once mom and pop businesses that oversaw everything, from devising the strategy to creating the ads to buying ad space. But when the founders of these agencies sold to emerging holding companies, these giants consolidated strategy and media buying under separate media agencies whose size granted leverage over the TV and media platforms who were selling ads. And as the profitability of creative agencies contracted and marketing functions expanded, holding companies purchased direct mail and public relations and polling and design and other marketing agencies. In place of a single 15 percent agency fee, each agency charged a separate fee for their services.

The media landscape changed just as fundamentally. “Back in Don Draper’s day you had three major networks,” says GE’s Beth Comstock. “You had people’s attention. People had fewer choices.” Today, she continued, “digital changes the definition of what advertising is. A well-done thirty-second spot in the right form is really very good. But luckily it’s not my only option anymore.”

Comstock’s early career did not herald that she would be an innovator. She joined NBC as publicity coordinator for NBC News in 1986, worked in publicity for CNN and CBS News, returned to NBC in 1994, and became chief of all NBC communications in 1996. GE was the parent company of NBC, and when its top communications job opened in 1998, CEO Jack Welch plucked her for the job. She made it her business to become expert on an array of subjects, from the digital upheaval to social networks and new ways of marketing. After CEO Jeff Immelt elevated her to CMO, she took it upon herself to become GE’s digital point person, constantly exploring how digital would change not just marketing but all of GE. Then as vice chair heading Business Innovations, Comstock became the company’s chief futurist, attending digital confabs, planting herself in Silicon Valley, scouting and making it her business to know cutting-edge agencies and entrepreneurs, seeking out partners for unusual ways to market. A marketing challenge for GE, enunciated at every monthly marketing meeting chaired by CMO Linda Boff, with their agencies in attendance, is to shift the brand ID of GE from an old industrial to a cool digital company. Cool digital companies are more attractive to Wall Street because they are perceived as growth stocks, and are seen as welcoming to the young engineers that shape digital companies.

A way to advance this goal was for GE to establish under the auspices of the CMO a four-person office, the Disruption Lab, directed by Sam Olstein, thirty-three, who comes to work with his hair spiked and wearing jeans and sneakers. His foremost task, he says, is to “have a good perspective of trends and technology; of where we see activity of new start-ups forming around, say, messaging, around content creation.” He says they search “for what people think is cool and interesting and primed for growth.” He scans Apple’s App Store to check on new apps that break into the top 100. Encouraged by Comstock and Boff, he pushed, he says, to make GE “a publisher, a content creator. What our brand represents is science and technology and the awe around science and technology, and that’s a very focused perspective. It’s the same focused perspective that HBO has, that Discovery channels have, that the Walt Disney Company has. We want to build a platform with the reach of any other media and entertainment platform out there.” It need not be branded like Disney, but he believes GE can create content and distribute it over its own Web site, over Facebook, Instagram, Twitter, Snapchat, National Geographic channels, or online publications like Slate.

As a content creator, GE formed a partnership with the National Geographic Channel “to bring to life great stories” for a six-part series called Breakthrough. It was directed by Ron Howard and shaped by Howard and his Imagine Entertainment partner, Brian Grazer. (WPP owns 10 percent of Imagine.) Each one-hour segment covered scientific topics like robotics, the brain, and energy. GE did not suffocate the drama with advertising. Instead, each hour opened by saying it was codeveloped by GE, and Boff says the episodes featured “our scientists or technologies or customers, but in an organic way.”

GE has worked hard to create an image as a “cool” company, a company welcoming to young engineers. One of their notable marketing campaigns was “What’s the Matter with Owen?” A college graduate, Owen decides to go to work for GE, to the disappointment of his friends and family, who grouse that 138-year-old GE is not an innovative company. Owen is a bit of a nerd, but he has a sense of humor. We follow his journey over the course of the marketing campaign, as he—and thus GE—becomes cool. The Owen campaign brings to mind Apple’s funny but potent “I’m a Mac” campaign a decade earlier, in which the cool Mac guy in a T-shirt makes fun of the uncool Microsoft “I’m a PC” guy in a suit and tie. GE boasts that its Owen videos were viewed fifty million times on WeChat in China.

A more offbeat marketing campaign materialized when GE stretched to try to make, in Boff’s words, “GE more relatable” to young people, especially aspiring engineers. The idea they settled on was to produce a trendy hot sauce that would be packaged in a ceramic container composed of such advanced materials as silicone carbide and a nickel-based superalloy used in making GE’s jet engines. These materials are able to withstand temperatures of 2,400 degrees Fahrenheit. Using two of the world’s hottest peppers, GE manufactured a limited supply of the hot sauce and sold and promoted it on Thrillist, a popular men’s shopping site. When it sold out, the news went viral. Message: GE is cool. GE’s Podcast Theater produced ten- to fifteen-minute science fiction stories that over eight weeks, according to Andy Goldberg, Boff’s deputy and chief creative officer, were the most downloaded “podcast on iTunes seventeen straight days, generating four million downloads.” The only advertisement was “Brought to you by GE” at the start of the podcast. At the end of the podcast, Goldberg says, “The consumer says, ‘GE gave me a great piece of content.’ They don’t say, ‘GE makes great engines.’”

For almost a century, GE has relied on the same lead ad agency, BBDO. Reflecting another change in the agency business, GE now farms their work out to a half dozen agencies and to many outside project partners, like the New York Times. Once a month, Boff chairs a meeting of all the agencies. “The belief is that you have to have different points of view in the room,” says Goldberg. “Not every agency is good at everything.” VaynerMedia, for instance, is expert at social media marketing, a reason they’re invited along with a couple dozen attendees. “I don’t know who half these people are,” Alan Cohen, a cofounder of Giant Spoon, said after one meeting. But, he adds, “The GE model is to pick people they like. So we feel like we’re employees of the company.” David Lubars, the creative director of BBDO, says he welcomes “other partners” and that “healthy paranoia” drives all agencies to better performance. Linda Boff insists that the agencies are not competitive with each other, that they collaborate because they want “to be their best selves.” Perhaps. It’s a noble sentiment. But the Buddha is not often among us, particularly in times of wrenching change, when much of what is solid melts.

But there is no question that GE’s marketing efforts are widely and justly admired. For a relatively puny annual marketing budget of $100 million, because GE has been innovative its footprint is much larger. Lou Paskalis, an experienced marketing executive who today is a senior vice president of marketing at Bank of America, praises the team culture GE and Linda Boff have forged among agencies to deliver amazing work. “Linda is so far ahead in what she is doing in content marketing. She is the gold standard of turning jet engines and trains into iconography that people love and that speaks volumes about the commitment to the environment, as well as trains and jet engines! Actually, they’re performing alchemy over there. I envy that.” The alchemy, however, has not impacted GE’s stock price, which fell 27 percent between September 7, 2001, when Jeff Immelt was anointed CEO, and June 13, 2017, when it was announced that he was stepping down.






The marketing team effort can fall short of Boff’s teamwork ideal because talented people do not easily restrain the ambition that accompanies talent. Take Gary Vaynerchuk, who admires how GE “tries different things,” yet makes it clear that the agency he founded, VaynerMedia, is competitive and will not be content just doing social network marketing. “I know we’ll get a bigger piece and one day take over the TV ads that BBDO does,” he says. More than once, Vaynerchuk, who bristles with ideas, has phoned Boff with creative ideas for TV spots.

VaynerMedia is emblematic of the type of digital-first independent agency that aims to disrupt both advertising and its big agencies. Presided over by forty-one-year-old Vaynerchuk, the eight-year-old company had revenue of $100 million, the bulk of it from Facebook marketing campaigns. He delights in sticking his fingers in the eyes of the advertising establishment. “You’re going to die,” he declared when invited to address the ANA’s Masters of Marketing Conference in October 2016. “It’s an amazing time to be in this industry if you’re on the offense. It’s the worst time if you’re on the defense, and ninety-five percent of you are on the defense.”





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