Ad Man Redux

Jul 10 1998

Kyle Shannon, one of the founders of the Internet-focused ad firm Agency.com, stood on a stage in Providence, R.I., before a group of newspaper executives, and began casting little helicopter-like propeller novelties out into the audience. "Now that I've got your attention ..." he began.

My father, an ad man from the '50s and '60s, used to take his watch off and throw it out into his audiences. He would make a joke about time flying, and then he, too, would begin: "Now that I've got your attention ..."

There was a reason my father got out of uniform and into the ad game. Advertising was about to become the undisputed motor of American commerce, culture and media. It would be wildly, unimaginably profitable. Such profits created television and television programming, television stars and television glamour. Advertising threw off the cash that financed modern culture. Between 1949 and 1960, TV's share of total U.S. ad dollars went from zero percent to slightly more than 20 percent. That's why my father went into advertising - that was where the action and the money were.

That does not, however, explain why Kyle Shannon joined the ad game at the dawn of the Internet era, nor why countless Internet sites chose to support their content and ambitions with advertising.

Among the clearest marketing trends over the last two decades is that the advertising business has steadily become more difficult, more competitive and less profitable than it was in the early days of TV. TV's moment - its golden age - in the '50s and '60s turns out to have been anomalous. While the three networks quickly swept up 20-something percent of U.S. ad dollars, TV's share of the market never grew much beyond that. Today, that same 20-or-so percent is divided among hundreds of outlets - from ABC to TBS to ZDTV.

As the media business grew more competitive in the post-golden age, the science of marketing developed: the calibrations of targeting, the nuances of one-on-one. What this really meant was that it was more and more difficult, and more and more costly, to move the public. We no longer talked about changing behavior, let alone changing the culture; we talked about the difference between a .006 and .0067 response.

When the mass market began to fracture, and advertising became less effective and less profitable, ever-increasing pressure was exerted on content. This pressure resulted in the rise of special-interest publications, increased emphasis on ratings and - one of the most interesting developments - the realization that advertisers didn't need "real" content. On a dollar-for-dollar basis, advertorials, infomercials and direct mail made more sense. Put your money into the pitch, forget about the context.

This trend represents not the triumph of marketing but its marginalization - marketing needs more space, attention and resources because it is less effective.

Overnight, the Internet became a tool to further this marginalization, increasing clutter, decreasing effectiveness, lowering rates for reaching the same number of people - and reducing tolerance for and interest in independent content.

So why are we here? Why did we make advertising the Web's primary business model? Why did Kyle Shannon and so many Internet entrepreneurs go into the ad game?

Inexperience is part of the answer. The Internet industry, after all, wasn't started by people in the media or advertising business; it was started by recent college grads and technologists who had never sold an ad before. Wishful thinking is also a factor. We wanted to be like TV was and do what TV did. We wanted to be that big, and that important. Finally, there is the Ponzi element: It's not that hard to sell an ad the first time. It's after the first time that it gets harder. After the results are in, a record is established. Then the client starts looking for better positioning, further control and lower CPMs - his pound of flesh.

By the 1980s, as media fragmented, margins dwindled and client demands increased, I entered this media life myself. My father, jaunty in his Hickey Freeman suits, would allow as how the ad game must be the shittiest of all businesses. Meanwhile, of course, to all the world he was still smiling and selling, casting his watch out upon the audience.

Kyle Shannon and I flew back into New York from the conference in Providence on a 10-seater plane against turbulent currents. In not so many words, I tried to ask Shannon, a friendly and energetic young man, why, given every alternative, he went into the ad business? But he didn't seem to think the question was a serious one. He just smiled and kept selling me.

E-mail Wolff at mwolff@burnrate.com.