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COPYRIGHT 2005 All rights reserved. Reproduced by permission of The Condé Nast Publications Inc.
In the introduction to his 1963 best-seller, "Confessions of an Advertising Man," David Ogilvy apologized for writing "in the old-fashioned first person singular." In the intervening decades--the years of, among others, Madonna and Donald Trump--that modest impulse has faded. The inclination now is more toward emphatic self-promotion. Linda Kaplan Thaler, who today enjoys an Ogilvy-like reputation as one of advertising's creative talents, co-wrote a book on marketing in 2003, and advised her peers, "Don't worry about whether the news is good or bad. Just get covered. . . . PR breeds PR."
I thought of Thaler when I began to look into whether advertising, which plays such a large role in the American economy, might be ailing, and how it was being affected by new media and by new technologies. (Last year, more than five hundred billion dollars was spent on advertising and marketing in the United States--half the worldwide total.) Thaler still believes that the old-fashioned advertising model works; and it seems to work for her. Although the industry's growth has slowed in recent years and profit margins have shrivelled, the Kaplan Thaler Group, which she founded in 1997, has flourished.
Thaler, who is fifty-four, has been around long enough to have seen the business change. In Ogilvy's day, within a single mile of Madison Avenue one could find America's--and therefore the world's--most celebrated ad agencies: Ogilvy Benson & Mather, Young & Rubicam, McCann-Erickson, Grey Advertising, Ted Bates & Company, J. Walter Thompson, Benton & Bowles. Agency people saw one another while dining or drinking at Pavillon, "21," and other establishments. The business was romanticized and mocked in popular culture, sometimes as a trade where failed poets became embittered copywriters and had too many Martinis along the way. It was portrayed as manipulative, in books like "The Hidden Persuaders"; as ruthless, in movies like "The Hucksters"; and as innocent (or sinister) fun, in the memoirs of some of its practitioners.
The path to profits was once fairly straightforward: clients paid agencies fifteen per cent of each advertising dollar, and most of those dollars went to the three television networks. In 1965, advertisers could reach eighty per cent of their most coveted viewers--those between the ages of eighteen and forty-nine--just by buying time on CBS, NBC, or ABC. "You could put together a media plan in an hour," Roy Bostock, the former chairman and C.E.O. of the MacManus Group, recalls. "When we introduced Scope, in the mid-sixties, we were able with television advertising in the first four weeks of the ad campaign to reach more than ninety per cent of U.S. television households ten times."
By the late nineties, some clients began to rebel against paying a flat commission, preferring fees, usually billed by the hour. (Linda Kaplan Thaler says, "I sometimes worry that clients are paying us for the hours we spend working on projects rather than the worth of the ideas.") And the agencies have long since left Madison Avenue--a street now frequented mostly for its luxury stores--for other parts of Manhattan and the rest of the world. But the name remains a synonym for an industry that bears little resemblance to what it once was.
Many of the old agencies have long since been absorbed by larger firms, which themselves have been absorbed. Ogilvy's firm was acquired in a hostile takeover, in 1989, by England's WPP Group. Sixteen years later, five companies claim nearly two-thirds of all advertising and marketing dollars, and own the most storied names of the mid-twentieth century. These firms, which call themselves marketing companies, are the WPP Group, whose initials stand for Wire & Plastic Products, a former manufacturer of wire baskets; the Omnicom Group and the Interpublic Group, in the United States; France's Havas; and the Publicis Groupe, also French, which acquired the Kaplan Thaler Group in 2002. They provide more services than the traditional ad agencies used to, including public relations, design, and event planning, which now account for about half of their revenues. These days, many functions of the old agencies are, in effect, subcontracted. For instance, buying advertising time might fall to a...
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