The Cannes advertising festival, which begins Monday, is known for self-congratulatory back-slapping, talk of creativity and a steady flow of rosé. This year something else will likely be part of the mix as industry honchos party on the French Riviera: worry.
The ad industry is in the midst of wrenching change that’s touching every piece of the business. A long list of marketers such as Procter & Gamble, Coca-Cola and Mondelez International have placed their media buying business up for review as they look to cut costs and find agencies versed in the latest digital techniques. All told, over $26 billion in ad spending for companies is in play, according to Morgan Stanley.
Meanwhile, howls of concern about alleged kick-backs in ad-buying are getting louder, fueling tension in the agency-client relationship. And the dark side of digital ad growth is coming into sharper focus. The Web’s hooligans are creating exotic new flavors of fake traffic, ad blocking software is – well, blocking ads – and marketers and publishers are in pitched battle over how “viewable” ads should be online.
“They are not the pretty issues but these are the issues that need to be addressed in order to help provide advertisers clearer return on their investments,” said Mike Peralta, chief executive officer of Audience Science, an ad tech firm that is hosting a seminar on Wednesday entitled “Digital Ownership & Transparency.”
Those controversial topics are expected to be part of panel discussions and cocktail party chatter at the 62nd Cannes Lions, where roughly 13,500 delegates are expected to attend, 12% more than last year.
Advertising, tech and media heavy-weights including WPP Chief Executive Martin Sorrell, Twitter Chief Executive Dick Costolo and Time Warner CEO Jeff Bewkes are expected to be among the attendees. Bigwigs will be pulling out all the stops to woo ad dollars, enlisting the help of celebrities such as Sting, Ryan Seacrest and model Chrissy Teigen to court deals with marketers such as such as McDonald’s, Heineken and Visa.
Other topics expected to be explored on the Côte d’Azur include how technology and data are increasingly being used in marketing. Panel discussions include one entitled “Cinematic Virtual Reality and the Power of Deep Immersion” and “Scientist Vs Poets: The Art of Connecting Data To Storytelling.”
The conference reflects the massive changes taking place on Madison Avenue. The week-long award show once meant to laud “Mad Men” for creative work has seen a steady invasion of tech giants such as Google, Facebook and ad tech firms such as Rubicon Project. Those companies’ have become power brokers as marketers shift ad budgets from traditional to online media. U.S. ad spending on digital ads is expected to increase 15.5% to $58.6 billion this year while spending on print ads will slide 1% to $31.17 billion, according to eMarketer.
The reviews by big companies of their ad agency business will “likely dominate the conversations,” said Philip Thomas, the festival’s chief executive. The reviews are being fueled by the digital reinvention of all aspects of the marketing ecosystem, as well as the growing concerns about transparency and conflicts-of-interest. Some marketers worry whether ad agencies are morphing into media selling entities that don’t always act as objective agents for their clients.
“Agencies have long clearly been the representative of advertisers, but there is a little bit of a pendulum swing, where you might ask, ‘who is really paying their bills?’” said Jim Nail, principal analyst at Forrester Research.
Mr. Nail said agencies also face a threat from brands that are building out internal divisions designed to handle automated ad buying—which could potentially cut agencies out.
Still, Mr. Nail said that Cannes represented the “perfect time to get drunk and bury the hatchet” for ad executives facing so many questions about their businesses.
There is turmoil in the industry, but people can set it aside for week and celebrate all the great campaigns that are happening,” he said.
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