What a year. Books will be written, films will be made, annals will be opened, history chapters will be turned. But, for now, we humbly offer Campaign’s take on what feels like a decade’s worth of years in one.
There’s really only one place to begin: Brump. Or should that be Trexit? Two votes that tilted our world on its axis and changed the course of geopolitics forever. Two votes that represent arguably the most catastrophic bankruptcy of communication and devastating failureto understand the hopes and fears of consumers in living history.
When Moray MacLennan, worldwide chief executive of M&C Saatchi, shared rejected work from the Remain camp with Campaign, declaring "it might help to air some of these ideas", readers would be forgiven for believing it was too little too late. If there was ever an example of the inherent shortcomings of the filter bubble and the abject deficiency of so-called expert insight into consumers’ innermost concerns, the ruinous Remain campaign was it.
Devoid of a compelling idea or an overarching positive narrative, the "soft power" of communications that an independent Britain now so desperately needs was nowhere to be seen. The fact that it will be the young generations who pay the ultimate price for the decision makes this an even more bitter pill to swallow. For industries built on the talent of their individuals, the ability to "move fast and break things" will be inevitably slowed by lengthy visa application processes, while the exchange rate has wiped out the economic advantage UK salaries offered. Meanwhile, consumer trust – a vital element to a healthy democracy and a vibrant civic life – has been tested to its very limits.
"The ‘soft power’ of communications that Britain now so desperately needs was nowhere to be seen in the EU referendum"
The economic impact of Brexit – and a taster of what might be to come – was thrown into sharp relief in October when fans of Marmite and Colman’s mustard noticed their favourite products were no longer available on the Tesco website. It emerged that Unilever had stopped supplying the supermarket as it waited for Tesco to agree to price increases – apparently to counteract rising costs caused by the weak pound. The spat was soon resolved behind closed doors but other top grocery brands, including Walkers and Birds Eye, made clear that price rises were inevitable. Mondelez International’s Toblerone, meanwhile, angered chocolate fans by deciding to alter the distinctive shape of its bar to cut costs rather than put up prices.
If only the Remain campaign had managed to capture some of these likely outcomes, our chocolate- and Marmite-loving nation might have made a different decision.
After the result of the European Union referendum, perhaps the decision by US voters to elect Donald Trump as their leader should not have come as such a thunderbolt. But it did. Once again, public sentiment confounded the establishment.
"Lies masquerading as news and then shared on social media is a pernicious modern phenomenon"
While agency leaders struggled to digest and interpret the rise of Trump, academics described his victory as a by-product of the distraction economy of our age. When it is easier to express an emotion than an idea in 140 characters, the impact of social media on our political discourse is difficult to underestimate.
Yet trust in social media took a significant knock this year. With social media playing such a key role in momentous public decisions such as the EU referendum and the US election, the veracity of the content being shared came into sharp focus. Fake news emerged as a worrying influence. It’s hardly a new phenomenon, of course, but it’s one amplified to dangerous levels by the speed and ubiquity of social media. True, it was an ad campaign on the side of buses that peddled the fallacy that Britain is paying £350m every week to Europe. But lies masquerading as news and then shared peer-to-peer on social media is a pernicious modern phenomenon.
Perpetuating the notion that social media platforms are failing to take responsibility for their influence, there were also concerns this year that the metrics on which Facebook trades its advertising were grossly inaccurate. Yes, Facebook had a stellar year, with revenues up more than 50%. But so much else went wrong. In September, news broke that Facebook had over-inflated its video view metrics. Then the social giant confessed in November that it had over-reported time spent viewing Instant Articles and overstated the amount of time people view a Facebook page each month.
Facebook made another admission in December about measurement discrepancies involving counts for the "like" and "share" buttons.
Advertiser patience is being tested, particularly when there is such limited third-party verification about how Facebook marks its own homework.
But Facebook’s misreporting was hardly the only furore to hit the media trading world in 2016. Relations between media agencies and clients reached crisis point when advertisers went to war with agencies over transparency. ISBA, the trade body for UK advertisers, launched a new framework contract for members and enraged agencies by suggesting they might "no longer have clients’ best interests at heart" in March. But that was just the opening skirmish, as the Association of National Advertisers in the US published a damning report in June that claimed rebates and other "non-transparent" practices were endemic at the big holding groups.
Agencies cried foul because the ANA, aided by K2 Intelligence and Ebiquity, didn’t name names. But the large number of clients tightening up their agency contracts since then has told its own story. Scott Moorhead, a recently departed ex-agency head of digital trading, wrote in Campaign in November that big agency groups are making "mountains of undisclosed income" and warned the business model is "broken". This is not a problem that can be wished away.
The rows reflect marketers’ unremitting focus on cost and efficiency. 2016 was the year when zero-based budgeting – with budgets being set afresh each year depending on shifts in the business and the market rather than tagged to any previous marketing spend – became entrenched for many companies. For their agency suppliers, though, zero-based budgeting creates fresh uncertainty that makes investing in the right resource to handle a marketer’s communications activities more challenging.
But even as zero-based budgeting took hold, marketers were looking for additional ways to drive financial efficiencies. McDonald’s led the way when it reviewed its US advertising account and awarded it to Omnicom, which created a dedicated agency for the business called We are Unlimited. Dubbed the "agency of the future", it is actually a fairly established integrated model. But what was really interesting was McDonald’s requirement that the agency works for zero margin: McDonald’s will pay all of Omnicom’s variable cost but nothing more. Any profit the agency makes will come from performance-related pay.
But if agencies were being squeezed hard this year, the pain is clearly being passed on to some media owners. The death of national newspapers has been predicted for years but the death knell seemed finally to sound in 2016, with The Independent shutting its print edition in March. The website lives on and spin-off newspaper i was sold to Johnston Press for £24m – proof that it is still possible to innovate in print. What a shame, then, that Trinity Mirror’s attempt to experiment with The New Day, a 50p lite read for older women, was so feeble and closed after just two months in May.
Perhaps it was inevitable, then, that the main newspaper groups opened talks this year about creating a unified sales offering. It has been a bloody year for newspaper advertising, with retailers such as Tesco abandoning the medium, so it made sense for publishers to put their rivalries aside and discuss a joint sales initiative in the face of double-digit falls. However, the talks, dubbed Project Juno, have been slow and, at the time of writing, it was touch and go whether News UK, DMGT and the rest would stick with it.
Over in TV, the opacity in trading that has fuelled the ANA and ISBA’s concerns – propelled by the rise of video-on-demand, sponsorship and programme finance – lay behind a clash between ITV and Dentsu Aegis Network. In January, Britain’s biggest commercial broadcaster looked into whether the media buyer had met the terms of its share deal. A lot of money was potentially at stake as Dentsu Aegis spends about £300m a year with ITV, and it took several months to agree a truce in the spring.
Yet the spats between marketers, agencies and media owners over ad deals seemed to rather miss a much more important – and potentially fatal – point. Consumers themselves are increasingly dodging advertising altogether, with two-thirds of millennials reportedly using ad-blocking software. Ads simply aren’t deemed interesting, useful or entertaining enough to warrant precious attention.
By September, the industry hand-wringing reached the "something must be done" stage. At this year’s Dmexco conference, the Coalition for Better Ads initiative was unveiled with the aim of developing standards and technology to tackle annoying digital ads. Old rivalries were set aside as participants include Google, Facebook, Procter & Gamble, Unilever, Group M, the World Federation of Advertisers and the US Interactive Advertising Bureau. We all need this to work.
One great British institution undaunted by ad-blocking caused a national meltdown when it moved into the commercial space by joining an ad-funded platform. The Great British Bake Off ditched the BBC for Channel 4 and the news hit many fans like a soggy bottom as it emerged that Mary Berry and presenters Sue Perkins and Mel Giedroyc would not be following the programme to its new home, spelling a recipe for disaster. Yet, despite some critics saying Channel 4 had paid £75m for an empty tent, the broadcaster is banking on the powerful appeal and loyal fan base of 2016’s most-watched TV show to preserve its commercial success.
Whether that cultural phenomenon will survive the shift is moot, but another cultural phenomenon certainly took a beating this year as the #AskHerMore campaign to challenge sexism in media gained momentum. A sporting crescendo was provided by the Olympics, which saw an all-time high of 45% female athletes. Overall, Team GB chalked up a record-breaking haul of medals and marketers also hit top form with standout sponsorship activity from Samsung, The National Lottery and Channel 4. But the women shone bright in Rio.
In fact, the year provided an array of achievements for women’s sport – not least the epic triumph of teamwork that saw Team GB scoop gold in the hockey. And the continued success of Sport England’s "This girl can" campaign underlined the commercial opportunities for brands willing to break convention by actually showing women sweating.
Yet the "investment gap" between men’s and women’s sport remains frustratingly static. Women’s sport accounts for just 5.4% of the value of all sponsorship deals, and a movement towards equal pay and equal prize money remains far from complete. Consumers’ attitudes have shifted but many brands are standing still.
Perhaps that’s not entirely surprising when old-fashioned and damaging attitudes still reside in dark corners of the advertising and marketing industries. Thankfully, Kevin Roberts – the inadvertent poster boy for powerful white men perpetuating inequality – was met with a swift and decisively damning verdict from the marketing community following his assertion that the gender equality debate in the industry is "over".
"The ‘investment gap’ between men’s and women’s sport remains frustratingly static"
Jonathan Mildenhall, chief marketing officer at Airbnb, said if he held the same role at Procter & Gamble, a Saatchi & Saatchi client, "I would be questioning your understanding of my core consumer". Wendy Clark summed it up in a single brilliant tweet: "25 yrs ago I was an ad agency receptionist. Today I’m CEO. I’m much happier in the C-suite, thanks all the same." While the fallout has been hugely damaging for the industry (the world’s best-known agency brand became synonymous with sexism), many marketers champion the diversity agenda. This year saw HP marketing chief Antonio Lucio instruct his agencies to propose how they would boost female representation in their creative departments, and Unilever underlined its commitment in the summer by vowing to drop sexist stereotypes from its ads.
Over at J Walter Thompson, though, the stench of outdated attitudes persisted as one of the most sordid stories of the advertising year lingered on. In March, JWT’s global chief executive, Gustavo Martinez, was accused of making sexist and racist remarks in a discrimination lawsuit filed by the network’s communications chief, Erin Johnson. Martinez stepped down and was succeeded by Tamara Ingram, who vowed to put diversity and inclusion at the top of her agenda. Unfortunately, Martinez was only one example this year of admen behaving badly, and the ongoing lawsuit is a reminder of just how far the industry has yet to go on the diversity front.
We were sorry to see the end of some adland traditions, though. Divorce tore through two of advertising’s most enduring and fulfilling relationships. In August, Marks & Spencer moved its £60m creative account from Rainey Kelly Campbell Roalfe/Y&R to Grey in a closed WPP pitch, ending a 16-year relationship that began when M&S first started advertising in earnest. Together, client and agency consistently created award-winning work that has redefined retail advertising and transformed the grocery market, particularly with the iconic "food porn" ads.
But even that split wasn’t as dramatic as the one that rocked the industry just days later. In late August, Sainsbury’s ended its 35-year relationship with Abbott Mead Vickers BBDO and moved its creative business to Wieden & Kennedy. From its tie-up with Jamie Oliver to the epic Christmas truce campaign of 2014, from "Try something new" to "Live well for less", this was one of marketing’s most enduring and successful partnerships and its end marks a sea change not just in supermarket advertising but in long-term client/agency relationships.
In truth, though, 2016 was a year of retail ad reviews. Aldi reappointed McCann after a pitch, while Co-op held a beauty parade of agencies before deciding to stay put at Leo Burnett. Morrisons hired Publicis, and Asda moved back to Saatchi & Saatchi after three years at VCCP. The shifts were reflective of the eye-wateringly brutal competition in the sector – a brutality reflected in the completion of Sainsbury’s acquisition of Home Retail Group, owner of Argos and Habitat, for a cool £1.4bn in September, marking the end of a lengthy takeover tussle and hopefully securing a stronger future for the combined group.
There was no such lifeline for BHS, another icon of the high street that went the way of Woolworths in August after a frantic scramble to find a buyer failed to rescue the chain from administration. Chief marketing officer Tony Holdway may not have kept the business afloat but his highly visible #SaveBHS guerrilla campaign, which saw London landmarks illuminated with the Union Jack, caught the eye of Domino’s, where he is now marketing director. The battle to hold former owners Sir Philip Green and Dominic Chappell to account for their part in BHS’s downfall, meanwhile, rolls on.
"This year has seen Amazon deliver an ever-increasing array of solutions to first-world problems"
Against this fiercely competitive retail backdrop, Amazon continued to extend its tentacles into every corner of consumers’ lives in 2016. As the original architect of "extreme convenience", this year has seen Amazon deliver an ever-increasing array of solutions to first-world problems. From Amazon Dash, which enables consumers to order branded products at the touch of a button, to experiments with drone delivery, to Echo (the best voice-powered home assistant on the market right now), to the nascent Amazon Go checkout-free, bricks-and-mortar shopping concept.
Amazon’s frictionless approach obviously relies on a smooth exchange of data and payment, but 2016 threw a spotlight on privacy. In February, Apple and the FBI squared up in the courts after the tech giant refused to crack the iPhone of one of the San Bernardino shooters. Apple argued that to do so would compromise its privacy and data policies. The row pitted Silicon Valley against politicians, with Trump leading the call for a boycott of Apple products. The legal fight came to an abrupt end a month later when the US law enforcement agency managed to access the phone’s data, raising questions about the security of Apple’s systems and whether the real motive was to set a legal precedent.
But when it comes to consumer tech, 2016 was the year that augmented reality went mainstream with the arrival of Pokémon Go in July. Cue lots of annoying millennials wandering the streets, staring into their phones. The mobile game, which involves players chasing Pokémons in the real-world environment, also thrust the Nintendo name back into the public conscious after years in the wilderness. Like every good craze, brands soon jumped on the bandwagon, with McDonald’s signing up as the game’s first sponsor.
Back in the more traditional world of sports sponsorship, though, all was not well. After finally revolting against Fifa in 2015, brands turned their ire on the International Association of Athletics Federations after the body was rocked by the doping crisis and corruption allegations. In January, Adidas terminated its multimillion-pound contract three years early. The deal, worth £23m a year, had covered everything from product creation to grass-roots development and retail distribution. Then, a month later, there was more bad news for Lord Coe’s outfit as Nestlé, admittedly a much smaller player in the world of athletics, pulled the plug on its link with the IAAF Kids’ Athletics programme.
This was also the year we mourned the loss of far too many creative heroes. Beginning with the shocking death of David Bowie in January, just days after the release of his 25th album, 2016 was further dampened by the demise of creatively inspiring stars. Alan Rickman. Ronnie Corbett. Victoria Wood. Prince. Muhammad Ali. Gene Wilder. Leonard Cohen. Caroline Aherne. The deaths of these icons within the span of months were tragic markers in a turbulent year, as well as bittersweet reminders to many in the industry of what first inspired them to jump into creative pursuits.
Yet 2016 ended with the advertising industry poised for some exciting new shifts. The arrival, finally, of the management consultants bang in the middle of agencies’ playing field came when Accenture made an estimated £50m swoop on Karmarama right at the end of the year. More such deals are sure to follow in 2017. Next year will also see the launch of at least one agency, as the Grey break-away led by former chairman and creative chief Nils Leonard opens for business.
For new and existing players in the advertising and marketing space, 2017 is sure to be a dramatic year as 2016’s tumultuous events play out. Hold on tight.