Roll up, roll up for the great advertising sideshow.
Amuse yourself with the litany of LinkedIn ‘hot takes’ about WPP calling in McKinsey.
Gasp at the spectacle of Richard Foster filing a lawsuit against former employer WPP for allegedly failing to rebate rebates to their clients (more of this below).
Cringe at Paramount/Skydance president’s admission that they secured higher ad revenue commitments from pitching media agencies when tendering their account — and imagine what this means if principal-based trading is part of the deal.
Test your powers of prediction by guessing whether Havas will actually do some kind of tie-up with WPP.
Tremble at the reverberations of the mooted ITV/Sky merger, hot on the heels of ITV’s declaration of a 9% fall in its Q4 ad revenues.
And, last but by no means least, unleash your schadenfreude on the newspaper that forgot to remove the helpful paragraph at the end of ChatGPT prompts.
All these things were reported last week.
The advertising industry has always been something of a circus. After all, we’re supposed to entertain. Except we’re supposed to entertain other people, not ourselves. Unfortunately we’ve become obsessed with our own sideshows.
This is good for trade titles (including this one), LinkedIn addicts (including this writer) and the self-promotion industry (LinkedIn), but it serves to distract the advertising industry from what truly matters. It’s the ultimate sideshow.
The really big issues that get occluded by these internal ad industry distractions are the ones that we should be addressing, and ones you won’t see discussed at conferences, where it’s better to say nothing significant than piss off sponsors.
The issues are these, with the last the key to the others:
- The extreme dominance of the big platforms in the world’s advertising market
- The potential loss of large swathes of the non-platform publishing industry
- The toxic effects of non-transparent media trading in all its forms
- The dysfunctionality of the advertiser-marketing model
First, let’s look at the dominance of the big platforms. Yes, I know that this is much-discussed, but the numbers are now off-the-scale.
Warc has forecast that Alphabet, Amazon and Meta will take 55.8% of the total ad market (outside of China) this year and 70% of all growth.
Other forecasters estimate they’ll take around 70% of ‘pure-play digital’ spend, including all other online players.
The combined revenue increase this year across these three players plus TikTok is in the realm of 14% and reports suggest that Q4 will be even stronger.
TikTok Shop is skyrocketing as off-the-screen commerce booms, adding to the platforms’ hegemony.
The market share dominance of these media channels is growing in intensity as their AI offering bites, leading to an ever-increasing bombardment of the public with indifferent ads alongside indifferent content. This won’t matter to the bots, who will carry on regardless.
Although it was as long ago as the week before last, we shouldn’t forget the revelation that Meta takes some $16 billion in fake and scam ad revenue every year, and actually makes more revenue by amping up auction rates for ads they think are suspect. This also ups the rate for everyone else.
It is no surprise that ITV’s revenue is in decline as first-party closed loop systems sweep all before them, and ITV’s valiant attempts to join that party take time.
We could dwell here on how advertising is funding the epidemic of societal issues caused by social media, and this is a much more important matter than any, but this isn’t going to get resolved by the advertising industry. Only trans-national regulation can do this, and we’re further away from that than ever before, now that the US platforms have become politicised and used as pawns in trade negotiations to further American interests.
Instead we should recognise that the advertising industry cannot now rectify these problems, given that the platforms are taking more revenue from outside the traditional agency business, and the ad industry is locked in a suicidal embrace with the platforms, not least because they’re clients (see Paramount/Skydance).
It is no secret that the platforms intend to accelerate this trend, take even more money directly from advertisers of all kinds, and effectively sideline agencies.
We are seeing a wholesale change in advertising as self-serve, data-driven one-to-one activation and independent creation replace collective reach and agency-produced content. The agency world is on the run.
Second, let’s examine the fact that we could lose a lot of our independent publishers, including some big names. The content produced expensively by professional publishers is being raided by Large Language Models while page traffic is being devastated (not decimated) by zero-click search. It’s a pincer movement.
Publishers who hadn’t already transformed their business models towards diversified revenues are in trouble as open web programmatic revenues decline still further, leading to lay-offs, dilution of content, use of AI to generate material and the vicious circle of lesser content and worse audience numbers.
The decline in the open web exacerbates the problem of platform dominance and sends advertisers off to the walled gardens, where there is a less extreme loss of value in the ad tech daisy-chain and the appearance of ‘outcomes’ led by data.
We lose independent media publishers at our peril, as it leaves us even more exposed to the iniquities of the platforms’ algorithms for content and advertising. Fact-based reporting is going to get harder — and certainly more expensive — behind paywalls, leading to a division between people who can afford facts and those who can’t.
Third, the Foster allegation against WPP brings out into the open the festering sores of non-transparent trading that have been largely ignored by an industry in denial, despite industry studies.
There is a strong sense of chickens coming home to roost, especially as certain network agency groups have tried in the past (notably in 2012) to restrict the ability of both performance and compliance auditors to do their job to the fullest extent.
While agency groups will always aim to comply with the terms of their contracts and have compliance teams to do so, it’s always been a war of attrition between auditors and the agencies, with the client caught in the middle.
Network agencies struggle to enforce discipline across so many far-flung territories where they lack control, as we have seen with WPP in China.
WPP had to pay $19 million in fines last year for lax practices dating back years in some territories.
When rebates were chased out in the wake of advertiser trade association reports, the network media agencies amped up principal-based trading that is semi-transparent but masks the bigger bit of the iceberg that isn’t.
The bottom line is that the media agency groups have sailed too close to the wind over many years in the pursuit of easy revenues from client budget extraction, with the exploitation of grey areas in contracts. No wonder advertisers retaliated.
We can only hope that this latest drip of revelations leads to a wholesale re-evaluation of the ethics of media trading and the eventual restoration of agencies as valued commercial partners who aren’t working the smoke and mirror machines.
However, none of the above provides definitive solutions to the core problem facing advertising.
The plain truth is that advertising is declining in its key functions just as it becomes the primary funding mechanism for the world’s largest corporations. This is a downward spiral.
In fact, it’s in decline because it’s the main source of platform revenues.
Advertising works best when creative minds produce ads that people react positively to, capturing their hearts as well as minds.
It works best when addressing future needs, not just the need for a quick sale to the 5% of people who are in-market at any given moment — assuming they even see or hear the ads.
Advertising works best when it engages the public in a meaningful way, embeds itself into memory and adds to the existing store of knowledge in well-produced, brightly-lit, curated environments, and when it doesn’t intrude, interrupt and irritate.
It also works best in symbiosis with the media channels it funds, and when it reaches a collective audience with a shared public experience.
The trouble now is that the vast majority of the world’s advertising doesn’t do any of this because it tries to capture people one-by-one in low-attention places, and tries to grab people’s attention in ways that trade on the wrong kind of heightened sensibility.
The solution to this crucial issue is one that very few people in the advertising industry are talking about.
Change will only happen when advertisers want it to. They need to see the commercial advantage of producing better advertising, the kind of net incremental uplift in business results at scale (not ‘outcomes’) that we know advertising can deliver because it has delivered them before.
We need to link advertising’s effect to business valuations, not just brand value. We won’t get the right kind of attention until we do.
We need a new generation of advisors and agencies who can show advertisers how to reorganise themselves, change the way they operate and take a holistic view of marketing, advertising and media, paid and organic.
This will require new, unified internal structures that embrace all the influences on performance, including distribution channels, price, product and promotions, and a new full-fat data framework that provides a single source of truth for everyone concerned, as well as a basis for performance measurement and incentivisation. Agencies can and should play a key role in creating these conditions, as long as they are strategically, creatively, technologically and personally attuned to the advertisers’ markets and needs.
Sound hard?
Of course, but if we spend all of our time talking about, for example, how the AdContext Protocol is going to make a small contribution to online advertising performance on the open web, then we can’t expect to solve the large, underlying, tectonic challenges we face.
Meanwhile, the ad industry’s preoccupation with itself puts a smile on the faces of Silicon Valley billionaires, and therefore, populist authoritarians around the world.
Main image by Becky Phan on Unsplash
Correction 17.11.25: This article was briefly published with the inclusion of a reference to an event that the author subsequently asked to be removed. There is no suggestion that the reference was untrue.