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Madison Avenue Meltdown: Marketers, Media Outlets Feud Over Billions of Dollars in Advertising

The last sheriff of New York’s Madison Avenue spends most of his time in the middle of the country.

Rino Scanzoni used to help put together deals for some of the advertising industry’s biggest heavyweights, including Unilever, American Express and Subway. He stepped away from his role as a senior executive at WPP’s massive GroupM media-buying operation in 2016. Now he lives in Park City, Utah, but some might argue his expertise is sorely needed, in the midst of a global pandemic and giant waves of cultural and political upheaval. Advertisers are nervous, says Scanzoni, and second-guessing every move on their board. “Everyone is afraid,” he says. “What price should I pay? If I make a commitment, how do I know I can actually use the inventory? How do I get out of it if I can’t?”

The bonds between advertisers and the media outlets that serve them have begun to fray, with Procter & Gamble, Unilever and MasterCard among those that have taken to public statements to point out how much harder they believe media companies both old and new need to push to do business in an unsettling era. No one seems able to get along. These days, “a word from our sponsor” is likely to be a critical one, and billions of dollars hang in the balance.

Not too long ago, Scanzoni played a central role in making the impossible possible. With advertisers confounded by the ability of TV viewers to skip past commercials with the help of a new gadget known as a DVR, Scanzoni in 2007 rallied TV networks and big marketers to agree to the unthinkable — a change of the bedrock measure of how advertisers pay for the commercials they run on television. For decades, everyone used the Nielsen count of the audience for a TV program. Scanzoni cajoled other industry figures and helped get media outlets, ad agencies and, most importantly, the advertisers to rely instead on the number of people watching the actual ads. The process took months, with Viacom’s MTV Networks delaying use of the methodology until 2008.

For an industry often averse to big change, the move was seismic. Another one just like it is required in 2020.

Propelled by the severe effects of the coronavirus pandemic, advertisers have called for an overhaul of the TV industry’s annual upfront ad sales process in which much of the year’s ad inventory is sold, even suggesting that everyone stop negotiating to buy time later in the year until marketers can assess how their businesses are performing. A portion of the community wants to rework the entire system, so that the networks start selling their commercial time at the start of the year — not in May and June as they have since the 1960s, when the upfront was devised to meet the needs of big automobile advertisers that launched new models in the fall.

“While there are benefits to the upfront, it remains an antiquated business system that needs reform,” Marc Pritchard, P&G’s chief brand officer, said in a June statement. “Other efforts such as cross-platform measurement, brand safety, anti-fraud, data transparency and privacy are also taking way too long and must be accelerated.” Procter & Gamble declined to make Pritchard available
to elaborate.

Digital media has also come under scrutiny. Marketers, typically loath to talk about how they spend their ad dollars, have expressed dissatisfaction with social media. With political and cultural upheaval cresting across the United States, several influential marketers have yanked their commercials off prominent social platforms, worried that lax rules about content mean their ads run alongside polarizing comments, distasteful screeds and social posts aimed at manipulating the masses.

Facebook’s waffling over its responsibility to clamp down on hate speech and misleading information spurred Unilever to make a major pronouncement in June: “The complexities of the current cultural landscape have placed a renewed responsibility on brands to learn, respond and act to drive a trusted and safe digital ecosystem,” the company said in a statement. Citing “the polarized atmosphere,” the maker of such popular products as Hellmann’s mayonnaise and Ben & Jerry’s ice cream said it “will not run brand advertising in social media newsfeed platforms Facebook, Instagram and Twitter in the U.S.” through the end of the year. “Continuing to advertise on these platforms at this time,” the company said, “would not add value to people and society.” Unilever declined to make executives available for further comment.



To be sure, some of the talk may be just that. All the Madison Avenue saber rattling makes media outlets feel like their clients are going public in an effort that is less aimed at prompting change and more geared toward pressuring them to cut rates and prices, something that might be unsustainable in the current economy and as streaming services steal away viewers. Indeed, despite P&G’s complaints in June, the consumer products giant has continued to hold upfront discussions with the networks — and in late July struck some agreements, according to three people familiar with the matter. Pritchard “continues to call for overall media transformation,” the P&G spokeswoman said, and is likely to do so again at an industry conference in September.

TV’s upfront sales typically wrap by mid-July. But late last month some talks had started, and people familiar with the discussions suggest they could finish sometime in September. Volume is expected to be down as some advertisers stay on the sidelines. But an influx of live sports from the NBA, NHL and Major League Baseball has forced a chunk of the industry to get back on the field, quickly.

The on-again, off-again nature of ad sales talks in the midst of a pandemic is unnerving. “It is really hard to be a sales organization and go in every Monday and have all of this inventory to sell and not know where the demand is coming from each week,” says Shari Cohen, a former longtime senior buying executive at GroupM, who retired in 2018.

The advertising sector has plenty of innovative executives who call for change and try to create new deals and packages that keep things moving forward. But Scanzoni in his day had only one seemingly insurmountable task: figuring out how to account for viewers with a yen for fast-forwarding. The current generation has dozens of problems: Audiences are splintering across a dizzying number of video options. Measurement systems can’t keep up. Consumers can scuttle a multimillion-dollar ad campaign with a few heated comments on Twitter.

Scanzoni fears that a lot of the people who spent years building relationships with the media outlets and the advertisers who support them have departed, leaving both sides to scramble. “I do believe the industry is shooting itself in the foot a little bit,” he says. “It has basically let a lot of people go who have a lot of experience in how to manage things like [advertisers’ social media] boycotts, how to manage this kind of marketplace you have got. You have a lot of people now in positions who haven’t had that experience, and they have no one to go to, to get insight. That is a little bit sad, but they will have to work through this.”

Indeed, as technological advances help marketers use algorithms and data to determine where a commercial should be placed to reach a product’s likeliest customer, one Madison Avenue standby appears to be on the verge of extinction: handshakes.

“You have a lot of people now in positions who haven’t had that experience, and they have no one to go to, to get insight.”
Rino Scanzoni, former ad buyer

The business has in recent years seen a parade of top negotiators walk out the door. Joe Abruzzese, a longtime ad sales chief who managed efforts at different periods for both CBS and Discovery, dined out for years on a story about how he had CBS run a commercial from Budweiser a second time during the Super Bowl because a member of the brewer’s then-controlling family believed technical issues had made it look bad on the TV screen in the region where he was viewing the game. Abruzzese stepped down in 2016. The senior roster of AT&T’s WarnerMedia used to include David Levy, a veteran sales executive who rose to become president of the company’s Turner unit, and Donna Speciale, an ad sales chief who had logged many years placing advertising dollars for Procter & Gamble and Coca-Cola. Both left the company in 2019 as AT&T sought to reorganize it after buying Time Warner for $85.4 billion.

It’s easy to pin the current squabbles on the coronavirus. Look more closely, and you’ll see evidence of deeper frustrations at play that marketers and media outlets have known about for years but haven’t done enough to fix. “The seeds have been planted,” says Jeff Hagen, who oversees media planning and buying for Coca-Cola’s sparkling beverages business in the U.S. “We need to be having more conversations and listen to each other more and be more willing to work together. It can’t always be one-sided. If you want to be a transactional partner and all you want to focus on is getting money, then you are no longer a partner. You are a vendor. And there’s a big difference between partner and vendor.”

Working through the problems, however, could take time that no one seems to have in the current national moment.

Advertisers spend months analyzing data, surveying consumers, honing creative approaches and figuring which media outlets reach their most likely customer. In 2020, all that work can be undone in minutes.

In December, Peloton, the upstart physical fitness company, aired a holiday ad that initially seemed harmless. A husband gives his wife a Peloton bike for the holidays. The woman vlogs her workouts and finds she feels in great shape. Good cheer all around.

Some consumers did not smile. They felt the commercial was ludicrously out of touch with societal norms, and that the husband was demeaning his spouse by forcing her to work out. Much social media chatter ensued, as did discussion of the matter on “Today” and “Good Morning America.” Parody videos called for the woman to serve her spouse with divorce papers. Peloton’s stock price tumbled.

Even so, the company stood its ground. “While we’re disappointed in how some have misinterpreted this commercial, we are encouraged by – and grateful for – the outpouring of support we’ve received from those who understand what we were trying to communicate,” Peloton said in a statement at the time. On one broadcast of “CBS This Morning,” co-anchor Gayle King expressed bemusement at the whole controversy. “If I was Peloton, I would not get engaged in this,” she said.  Peloton continues to follow her advice: The company declined to make executives available to comment.

In this era of insta-feedback and viral commentary, any marketer on any given day might become the next Peloton. And the very real possibility that a bad reaction might erode an advertiser’s hard-won image and brand has forced new caution. That fear is playing into the decisions of many advertisers who would rather get off the social grid than spark backlash.

“It has never been easier for like-minded consumers to gather together online to create movements in celebration of ideas they like and to pillory the ones they don’t like. This is not a new development. It is, however, being exacerbated by political divisiveness and social anxiety caused by the pandemic,” says Brian Sheehan, a professor of advertising at Syracuse University. Advertisers “know they have to be very purposeful in what they choose to say, but during the current time, they know that they need to be extra careful not to get it wrong.”

Outrage is not limited to one worldview. In 2014, Coca-Cola ran what seemed to be a celebratory ad during Super Bowl XLVIII depicting children from many cultures singing “America the Beautiful” in seven languages. Conservative critics took the beverage giant to task. In 2017, PepsiCo pulled a big-budget ad for its flagship cola out of media rotation after consumers savaged it. The ad featured Kendall Jenner offering a can of Pepsi to a police officer. Critics felt the commercial trivialized Black Lives Matter protests.

Lazy loaded image
Pablo Delcan for Variety

In a different era, advertisers would yank their ads off the air when a global or national tragedy took place, like a tsunami or a plane crash. But in recent years, marketers have felt the need to pull commercials from Fox News’ “Tucker Carlson Tonight” and “The Ingraham Angle,” as well as TBS’ “Full Frontal With Samantha Bee” over the comedian’s comments about Ivanka Trump. Some ducked out of NBC’s “Sunday Night With Megyn Kelly” when the host interviewed controversial provocateur Alex Jones. Delta Air Lines and Bank of America withdrew their support of a Shakespeare in the Park production of “Julius Caesar” in 2017 after critics pushed back on the fact that the title protagonist, who was made to look like President Trump, was assassinated.

Social media has never quite managed to have the control over content that TV networks do. So marketers worry about their ads turning up next in YouTube videos that contain profanity or racy images. They fear being associated with misinformation spread by political manipulators on Facebook in an all-important election year.

Little wonder that advertisers are devising codes of conduct and hiring privacy officers to button things up. Interpublic Group’s IPG Mediabrands, one of the larger media-buying operations, in June called for outlets to adhere to 10 rules about protecting consumers, keeping children safe and shunning hate speech.

The idea that such a code needs to be issued in 2020 seems, well, bonkers. “Our interests are becoming increasingly aligned,” says Bob Liodice, CEO of the Assn. of National Advertisers, the industry trade group. “But they do represent long-standing frustrations that have taken place.”

If concerns about how consumers might react to ads are at an all-time high, internal worries about advertising have soared off the charts. Figuring out how to measure viewing activity in the age of DVRs may have been the easy part. Since the industry agreed to changes in the way Nielsen measures TV ratings in 2007, viewership patterns have grown exponentially more complex — and everyone, it seems, has a different vision of how to calculate the number of people who watch a favorite comedy or drama; a sports event; and a newscast.

An advertiser with a substantial campaign would no doubt want to consider TV ratings, but then also place commercials on some of the ad-supported streaming services. And then the marketer might try to find ways to place the ads in more precise fashion, using consumer data that show what program or time slot on each venue attracts an expectant mother, a likely moviegoer or a fan of carbonated beverages.

The trouble? There really is no single methodology that can take everything into account across different media companies or even across the array of screens people have at their disposal. In recent years, several media firms have attempted to sell proprietary systems. NBCUniversal, for example, touts One Platform, which lets advertisers buy digital and linear together. Walt Disney this year unveiled an offer that ties Hulu and its various TV and cable networks more closely together. Some players in the media industry belong to OpenAP, a technology consortium that defines audience segments more narrowly, with the use of data on consumer buying habits. Others work with AT&T’s Xandr, an ad tech unit that tries to offer similar breakdowns. Some belong to both.

The result: a hodgepodge of solutions that leave some advertisers scratching their heads or, in other cases, cobbling together deals with individual media outlets that are hard to compare with one another.

“While the media companies have shown good faith in investing in their own solutions, that doesn’t help us define the currency of the business. Our clients need consistency, integrity and neutrality when it comes to measuring the performance of different media behaviors, whether across channels or on a media company’s own platform,” says John Swift, chief operating officer of Omnicom Media Group, a large buying unit that oversees $38 billion in U.S. advertising outlays. He adds: “I don’t think the light is focused on the right part of their business.”

The industry continues to put its hope in Nielsen, the media-measurement company that has moved, some say too slowly, to wrap its various yardsticks around new video behaviors: streaming, pausing, bingeing and more. “Given the amount of money the media companies spend with Nielsen, they certainly have the leverage to demand a better solution than guessing at exposure,” says Swift. “Clients need — and have every right to expect — TV measurement to work like digital, where it’s all about attributing response and proving effectiveness.”

But even Nielsen’s efforts can be fraught. One recent maneuver sparked backlash from the networks, then the ad agencies, and put a hard spotlight on the Tower of Babel atmosphere that’s consuming the business.

As more viewers migrate from live TV viewing to on-demand streaming, the networks had hopes this fall in a Nielsen initiative that would have introduced “out of home” viewing — TV consumption in hotels, offices, bars and the like — into its mainstream ratings. With just weeks to go before the start of this year’s pandemic-weakened fall slate, Nielsen announced it could no longer introduce the measure reliably. Behind the scenes, network executives went ballistic; Nielsen recanted within a day of its announcement and even offered a public apology. But not so fast: The 4As, a trade organization that represents agencies, challenged the decision and asked Nielsen to delay the matter once again.

All businesses have their grandstanding and squabbling, but the intense back-and-forth in the media sphere takes place as ad spending is under intense pressure. Every public proclamation leaves media companies scanning an uncertain horizon. Buyers and analysts believe some of the usual spending on TV may shift permanently to ad-supported video services like Hulu, Pluto and Peacock. “You need them because that’s where viewership will continue to go, and so I would look to make some arrangement with them and see if they are willing to be uniquely flexible and creative,” says Cohen, the former GroupM buyer.

At a time when all the usual systems seem stretched beyond repair, however, threatening to stop spending may just be more effective than letting the money flow. “Your ability to effect change and do a deal is commensurate with your ability to walk away from something,” says Cohen. “If you can stare somebody down, you are going to get significant change.”

Back in Utah, Scanzoni isn’t certain the industry can embrace new models quickly. “This is a good time to write a new chapter,” he says. “But to a certain degree, the business is frozen.” And without a sheriff in place, Madison Avenue is fast becoming the Wild West.