The auction is killing us.
And then - the Internet has destroyed more value than it has created.
These were the suppositions from Microsoft Research's Jaron Lanier that challenged advertising agency executives attending the opening panel of the 4A's annual conference titled "Transformation LA." The third of the "Transformation" series that began in 2010.
Joining Lanier was WPP CEO Martin Sorrell while GroupM's Rob Norman looked on as moderator.
Lanier was the most outspoken about the use of data as he seemed to be concerned - without explicitly saying it - that the advertising industry, and presumably some of the agency people in front of him, thought that data was going to be the "magic" that brings better and more effective ad campaigns. For Lanier, he believed this was a false hope and that progressive "scamminess" supported by the use of data by media and technology players will lead to a progressive and huge downside - not the least of which is the deterioration of effective boundaries around consumer privacy.
Sorrell agreed broadly, but wasn't as bleak. He drilled in a bit and noted the lack of depth and superficiality that is manifest in the new Internet age. He added, for example, that the art of investigative journalism is over.
Perhaps sensing the crowd's unease, Lanier said that ultimately the Internet is good for society. (Phew!)
Sorrell then offered a few thoughts on the competitive landscape. "Google has become a friendlier frienemy and a much more focused company under Larry Page." He saw five legs to the Google juggernaut - Search, Display, Video, Social and what Sorrell says is the most powerful leg - the Mobile leg and Google's Motorola Mobility leg as Google gets clearly into the mobile and device businesses.
Sorrell said that the industry has "reached an inflection point" and referenced a few dollar-driven data point as he opened the book on the 75 billion in ad spend worldwide that WPP Group invests. Ad spend for Google reached $1.6 billion and $200 million in Facebook in 2011 for WPP. This year, Google will be a "little over 2 billion" and Facebook will be 400 million in spend. (Meanwhile, $6 million was spent on Twitter last year.) Noting the shift in media power, he also compared the market capitalization of companies: WPP at $17.5 billion, Facebook $75-100 billion after the IPO finally happens, Google $200 billion, Apple $500 billion.
And given the shift, Sorrell said that clients are starting to question measurement as they increasingly want to know how their ad spend is working across channels as well as its interdependencies. Moreover, Sorrell sees a link between new and old devices as data he's seen shows that post-2008, free-to-air TV viewership has not gone down.
Lanier said data can be of use, but reiterated that there is ocean of scamminess as a theme of "more magic, less logic" crystallized.
Sorrell had the last word as he said about his agency holding company that WPP "is not prepared to sit on the shoulders of technology companies" and "needs to be in an independent position to provide the best advice to our clients."
By John Ebbert