“If you want a good kisser, we’re your date!”
—Michael Kassan
At dinner at one of Michael Kassan’s favorite Italian restaurants, Scalinatella on East Sixty-first Street, a darkened, downstairs cave where waiters greet him by name and he hugs Johnnie, the majordomo, and everyone knows he prefers his vodka martinis dry without olives and straight up, Kassan ordered a tomato-and-onion salad followed by a generous veal chop with a side of broccoli rabe. Tucking into his meal, attired casually in the California style he prefers of a sweater over an open-necked shirt, dark khakis, and soft, black shoes, he recounted a pitch he’d made to the CEO of a major advertiser. “You talk to all my competitors,” the worried CEO told him. “How can I feel comfortable opening my kimono to you?”
“Look at it this way: we’re fortunate that we get to kiss lots of girls,” Kassan told him. “We never kiss and tell. It just informs our ability as kissers. So if you want a good kisser, we’re your date!” Kassan likened his mix of powerful clients to the Hollywood law firm of Ziffren Brittenham or New York entertainment lawyer Allen Grubman: “You go to them because they represent everybody and know everything.”
Spurred, in part, by Jon Mandel’s assault on agency holding companies, throughout 2015 and into 2016, brand clients reviewing whether to kiss their agencies good-bye—Unilever, Bank of America, 21st Century Fox, among others—turned to Kassan for guidance. The trust issue went far deeper than a matter of hidden kickbacks, as Bank of America’s longtime CMO and now vice chair, Anne Finucane, would explain. Finucane believes that financial transparency can be codified in agency contracts, and she has done so, but a larger issue is that the agencies are now parts of bigger marketing Goliaths offering a range of services, which pull agencies away from “thinking like a client.” It bugs her when agencies bombard her with “hard sell” proposals for new services from their sister divisions.
Jack Haber of Colgate makes a similar point about how agencies sabotage trust by constantly peddling a variety of services. Once, the relationship between client and agency was simple, he says. Instead of a lucrative 15 percent commission, agencies now negotiate a fee. And they are part of giant holding companies seeking more and more fees. “When I worked at an agency, I wanted to sell ads. Now our agency, WPP, wants to sell other services. Their strategy is to get more money out of clients.” In earlier days, “the focus was on the work. Now the conversation has shifted.” Agencies talk more about data, and spending more money to target audiences, and bringing in public relations and social network experts. He says he keeps asking, “Where are the creative people?” The biggest change in his own behavior as CMO, he says, was that “we had to be more demanding.”
There are, of course, other logical reasons for tensions between clients and agencies. Step into the shoes of the client: new technologies and a multiplicity of digital platforms offer baffling and expensive choices.
No secret drawer contains a checklist of the correct answers to the dizzying array of new choices clients face. No agency or McKinsey adviser who is not insufferably arrogant would declare they know the answers. The CEOs of the brands badger their team about company profit margins, as if marketing costs were an extravagance. The agencies complain they are being choked by low fees, but the CEO knows that agency holding company profit margins are still a relatively robust 15 or so percent. So the company CEO demands to know the return on investment of what is spent on marketing, and the honest answer is at best a guess. Corporate raiders are circling, pressing companies to manufacture short-term gains. The average CMO holds office for only about two years before being replaced by a new CMO. The new CMO is probably inclined to bring in a new agency and to insist that the agency reduce its costs.
What does the CMO do about the digital fraud issue? A 2015 study by Distil Networks concluded that one of every three digital ad dollars is wasted by ad fraud, meaning ads are clicked and paid for but are not viewed by desired consumers. Often, the culprits are computer programs or bots. The CMOs’ official spokesman, Bob Liodice of the ANA, said in late 2015, “Roughly at least twelve percent of digital ads are going to nonhumans, and twenty-three percent of digital ads are going to criminals.” He pegged the cost to his advertiser constituents at $6.5 billion, and bluntly blamed clients for being “negligent. We spend nothing on cybersecurity.” The Distil study totaled the loss to clients in 2015 at a much higher $18.5 billion. Liodice’s global counterpart, the World Federation of Advertisers, estimated that if fraud continued unpoliced, by 2025 global marketers would be robbed of $50 billion annually.
The CMOs feel trapped. Their CFO or procurement officer demands that the company stop wasting money on false clicks and ads that were paid for but never delivered to an audience. But how? Can the CMO fully trust social networks like Facebook, given that the more reported viewers of an ad, the more Facebook gets paid? The CMO doesn’t completely trust the ad agency, for they are compensated for placing the digital ads. The CMO is wary of Nielsen or other measurement agencies, for they still have a primitive way to gauge the size of the digital audience and whether an ad was actually viewed.
Not all clients are dissatisfied with their agencies. Keith Weed of Unilever, for example, has four hundred brands served by multiple agencies, foremost among them the agencies of WPP. Weed flatly says, “I don’t trust my agencies less.” And as for the cost cutters, he says, “Procurement works for me at Unilever.” It would have pleased advertising agency executives to attend a crowded panel discussion among CMOs on the beach at the 2016 Cannes festival. Marc Pritchard, the chief brand officer of Procter & Gamble, the world’s largest advertiser, surprised members of the audience by expressing sympathy for agencies and criticism of many clients: “When we treat our agencies as partners, we get great work. When we treat them as suppliers, we get crap work.” He heaped blame on procurement officers: “The single biggest complaint agencies have is that this relationship is managed by procurement. The problem is we are thinking of marketing as a cost rather than a value.”
Brad Jakeman, then president of the Global Beverage Group at PepsiCo, jumped in, noting that his company eliminated the procurement function earlier that year in order “to focus on marketing.” By moving procurement “out of a control function,” Michael Kassan would later say, PepsiCo had boldly relegated them “from first string violin to the orchestra.” Jakeman went on to express sympathy for beleaguered agencies: “They knew we respected that they had to make money. They’re a public company, like we are. They have margin commitments to hit, just like we do. They have revenue targets to hit, just like we do. And the only variable they have to play with to hit these margins is the quality of the people they put on your business. So if we pay them less, they’re going to put more junior people on the business. Probably not as talented people. And that’s going to show up in the quality of the work.”
The agency reviews of 2015 engendered some bitter feelings. Maurice Levy of Publicis, as we’ve seen, was angry that Omnicom bested Publicis to snatch the P&G account from them, and he was ecstatic to pluck the Bank of America strategic planning business from WPP’s Martin Sorrell. Levy was on his game for that pitch, exuding Gallic charm, and in control of the message from the broad strokes down to a granular level. He promised that his respected chief strategist, Rishad Tobaccowala, would be directly involved with BofA in planning and executing its annual $2 billion marketing spend. By contrast, BofA executives grumble that they were offended by WPP’s performance: Martin Sorrell brought in a truckload of different CEOs, many of whom did not seem to know one another, and their presentation was disjointed. Bank executives felt Sorrell and Irwin Gotlieb lectured them. “Martin spoke for a half hour,” a senior executive says, “and Irwin for one hour. That only left a half hour for discussion.”
There was nothing new about nailing a pitch in an agency review, or blowing it, for that matter, but the wave of agency reviews that started post-Mandel’s 2015 speech felt different. For the first time ever to this degree, efforts were intensifying to discard the middleman. Increasingly, clients were taking work away from agencies to do it in-house. Procter & Gamble has created its own proprietary programmatic ad buying system, taking some—not all—of programmatic buying away from its agencies. The ANA reported in 2016 that 31 percent of advertisers responding to one of their surveys said they had brought elements of programmatic ad buying in-house. Obstacles remain, particularly for smaller companies, because programmatic buying rewards scale, but for agencies the trends are ominous.
Even more worrisome, clients are also doing more creative work in-house. Unilever outsourced Unilever Studio to a company to perform tasks once outsourced to agencies. Airbnb CMO Jonathan Mildenhall, who left a top marketing job at Coca-Cola to join this digital upstart in 2014, says half his marketing department “are creative. They’re writers and art directors and photographers and videographers.” A major reason, he says, is that agencies don’t move fast enough. A client performing more of its own creative work was a practice he followed when he was at Coca-Cola, and it’s practiced at companies like Apple. It’s true as well in the world of fashion, where the designers’ vision is central, and where internal marketing departments are usually entrusted to create marketing campaigns.
More nimble public relations firms now commonly supplant ad agencies to tweet, blog, and podcast for advertisers. Edelman is the largest privately owned public relations firm in the world. For clients like Samsung or Taco Bell they engage in online discussions with consumers on social networks or on the client’s Web site, or recruit influencers to engage consumers on various digital platforms. For the Dove Hair team, for example, CEO Richard Edelman says they created a variety of colorful, curly-haired Love Your Curls emojis, generating 414 million impressions on sites like Fashionista.com, HypeHair.com, MarieClaire.com, and SheSpeaks.com. With newspapers contracting or closing, he says, “We’re trying to find other channels because we can’t pitch to reporters anymore. We’re now dealing with Buzzfeed and Vice and Business Insider. They want sponsored or branded content. They want something funny, clever” to sneak past the defenses of millennials on guard against interruptive ads. To millennials, he is selling advertising, not news.
But even with more work migrating to PR agencies or in-house for the creation and execution of big brand ideas, clients are still usually reliant on their agencies. While Mildenhall says “eighty percent of my content needs I do in-house,” he also says that his agency, TBWA\Chiat\Day, “gets eighty percent of my media budget.” His in-house creative revolves mostly around promotional materials and activities like designing corporate Web sites. Because speed counts, clients increasingly take in-house their blogging and tweeting and social network posts. What retards a client’s ability to do more of its own creative work is that creative executives don’t clamor to work for a single brand, as ad agency executives proclaim, because abundantly talented creatives don’t want to devote themselves to only one client. “The best people want to feel free to work for many clients and across many sectors,” Sorrell’s éminence grise Jeremy Bullmore says. Nevertheless, clients moving more work in-house poses an ongoing challenge to agencies.
Another assault on agencies comes from publishing platforms performing the creative functions of ad agencies. This effort is fueled by native ads which can take the form of stories about a brand that appear in newspapers, magazines, or online and look like news stories; or compelling human interest stories in which the brand is barely mentioned. An impetus for these native ads came from the introduction of ad blockers, which imposed a nearly impregnable wall to block clearly labeled ads. Because they don’t appear to be ads, native tricks the ad-blocking software and, often, the consumer. Vice was a native pioneer when it went to Intel in 2013 and created an online Intel art exhibition that encouraged residents of certain areas to communicate with each other by joining, say, the Brooklyn Art Project. Publishing platforms sell the storytelling ability of the journalists they hire to craft native ads, and bypass the agency to pitch clients directly. The New York Times may be shedding older journalists, but it had hired 110 copywriters and art directors (almost one third of its ad sales department) to create native ads for brands. Agencies desperate not to offend clients have little leverage to counter this new threat.
To discuss the various threats to his agencies, Martin Sorrell leans forward on the wooden chair facing the small conference table cluttered with papers in his second-floor London office. He is not blind to these threats, and often speaks of the competition from digital and consulting and PR and publishing platforms. If anything, his constant travels and attendance at conferences and meetings with an array of frenemies make him unusually aware of potential threats to his business. Of the threat posed by platforms serving as agencies, he notes that WPP has partial ownership stakes in some of these potential competitors, including Vice. “Just think about our strategy: It’s to get the Don Draper companies—the traditional companies—to move quickly into digital. It’s to get the digital companies to go even faster,” and he cites the aggressive move to beef up the digital operations of such WPP companies as Wunderman, Ogilvy, and AKQA. He dismisses the notion that the New York Times poses an advertising threat. “I don’t worry about them. The Times should be worried, because 110 people creating native content are not going to put off the evil day, the continued decline of print.”
Bill Bernbach and David Ogilvy would be horrified by the behavior of today’s restive advertising clients. Those, of course, were simpler times. Ad agencies were once mom and pop businesses that oversaw everything, from devising the strategy to creating the ads to buying ad space. But when the founders of these agencies sold to emerging holding companies, these giants consolidated strategy and media buying under separate media agencies whose size granted leverage over the TV and media platforms who were selling ads. And as the profitability of creative agencies contracted and marketing functions expanded, holding companies purchased direct mail and public relations and polling and design and other marketing agencies. In place of a single 15 percent agency fee, each agency charged a separate fee for their services.
The media landscape changed just as fundamentally. “Back in Don Draper’s day you had three major networks,” says GE’s Beth Comstock. “You had people’s attention. People had fewer choices.” Today, she continued, “digital changes the definition of what advertising is. A well-done thirty-second spot in the right form is really very good. But luckily it’s not my only option anymore.”
Comstock’s early career did not herald that she would be an innovator. She joined NBC as publicity coordinator for NBC News in 1986, worked in publicity for CNN and CBS News, returned to NBC in 1994, and became chief of all NBC communications in 1996. GE was the parent company of NBC, and when its top communications job opened in 1998, CEO Jack Welch plucked her for the job. She made it her business to become expert on an array of subjects, from the digital upheaval to social networks and new ways of marketing. After CEO Jeff Immelt elevated her to CMO, she took it upon herself to become GE’s digital point person, constantly exploring how digital would change not just marketing but all of GE. Then as vice chair heading Business Innovations, Comstock became the company’s chief futurist, attending digital confabs, planting herself in Silicon Valley, scouting and making it her business to know cutting-edge agencies and entrepreneurs, seeking out partners for unusual ways to market. A marketing challenge for GE, enunciated at every monthly marketing meeting chaired by CMO Linda Boff, with their agencies in attendance, is to shift the brand ID of GE from an old industrial to a cool digital company. Cool digital companies are more attractive to Wall Street because they are perceived as growth stocks, and are seen as welcoming to the young engineers that shape digital companies.
A way to advance this goal was for GE to establish under the auspices of the CMO a four-person office, the Disruption Lab, directed by Sam Olstein, thirty-three, who comes to work with his hair spiked and wearing jeans and sneakers. His foremost task, he says, is to “have a good perspective of trends and technology; of where we see activity of new start-ups forming around, say, messaging, around content creation.” He says they search “for what people think is cool and interesting and primed for growth.” He scans Apple’s App Store to check on new apps that break into the top 100. Encouraged by Comstock and Boff, he pushed, he says, to make GE “a publisher, a content creator. What our brand represents is science and technology and the awe around science and technology, and that’s a very focused perspective. It’s the same focused perspective that HBO has, that Discovery channels have, that the Walt Disney Company has. We want to build a platform with the reach of any other media and entertainment platform out there.” It need not be branded like Disney, but he believes GE can create content and distribute it over its own Web site, over Facebook, Instagram, Twitter, Snapchat, National Geographic channels, or online publications like Slate.
As a content creator, GE formed a partnership with the National Geographic Channel “to bring to life great stories” for a six-part series called Breakthrough. It was directed by Ron Howard and shaped by Howard and his Imagine Entertainment partner, Brian Grazer. (WPP owns 10 percent of Imagine.) Each one-hour segment covered scientific topics like robotics, the brain, and energy. GE did not suffocate the drama with advertising. Instead, each hour opened by saying it was codeveloped by GE, and Boff says the episodes featured “our scientists or technologies or customers, but in an organic way.”
GE has worked hard to create an image as a “cool” company, a company welcoming to young engineers. One of their notable marketing campaigns was “What’s the Matter with Owen?” A college graduate, Owen decides to go to work for GE, to the disappointment of his friends and family, who grouse that 138-year-old GE is not an innovative company. Owen is a bit of a nerd, but he has a sense of humor. We follow his journey over the course of the marketing campaign, as he—and thus GE—becomes cool. The Owen campaign brings to mind Apple’s funny but potent “I’m a Mac” campaign a decade earlier, in which the cool Mac guy in a T-shirt makes fun of the uncool Microsoft “I’m a PC” guy in a suit and tie. GE boasts that its Owen videos were viewed fifty million times on WeChat in China.
A more offbeat marketing campaign materialized when GE stretched to try to make, in Boff’s words, “GE more relatable” to young people, especially aspiring engineers. The idea they settled on was to produce a trendy hot sauce that would be packaged in a ceramic container composed of such advanced materials as silicone carbide and a nickel-based superalloy used in making GE’s jet engines. These materials are able to withstand temperatures of 2,400 degrees Fahrenheit. Using two of the world’s hottest peppers, GE manufactured a limited supply of the hot sauce and sold and promoted it on Thrillist, a popular men’s shopping site. When it sold out, the news went viral. Message: GE is cool. GE’s Podcast Theater produced ten- to fifteen-minute science fiction stories that over eight weeks, according to Andy Goldberg, Boff’s deputy and chief creative officer, were the most downloaded “podcast on iTunes seventeen straight days, generating four million downloads.” The only advertisement was “Brought to you by GE” at the start of the podcast. At the end of the podcast, Goldberg says, “The consumer says, ‘GE gave me a great piece of content.’ They don’t say, ‘GE makes great engines.’”
For almost a century, GE has relied on the same lead ad agency, BBDO. Reflecting another change in the agency business, GE now farms their work out to a half dozen agencies and to many outside project partners, like the New York Times. Once a month, Boff chairs a meeting of all the agencies. “The belief is that you have to have different points of view in the room,” says Goldberg. “Not every agency is good at everything.” VaynerMedia, for instance, is expert at social media marketing, a reason they’re invited along with a couple dozen attendees. “I don’t know who half these people are,” Alan Cohen, a cofounder of Giant Spoon, said after one meeting. But, he adds, “The GE model is to pick people they like. So we feel like we’re employees of the company.” David Lubars, the creative director of BBDO, says he welcomes “other partners” and that “healthy paranoia” drives all agencies to better performance. Linda Boff insists that the agencies are not competitive with each other, that they collaborate because they want “to be their best selves.” Perhaps. It’s a noble sentiment. But the Buddha is not often among us, particularly in times of wrenching change, when much of what is solid melts.
But there is no question that GE’s marketing efforts are widely and justly admired. For a relatively puny annual marketing budget of $100 million, because GE has been innovative its footprint is much larger. Lou Paskalis, an experienced marketing executive who today is a senior vice president of marketing at Bank of America, praises the team culture GE and Linda Boff have forged among agencies to deliver amazing work. “Linda is so far ahead in what she is doing in content marketing. She is the gold standard of turning jet engines and trains into iconography that people love and that speaks volumes about the commitment to the environment, as well as trains and jet engines! Actually, they’re performing alchemy over there. I envy that.” The alchemy, however, has not impacted GE’s stock price, which fell 27 percent between September 7, 2001, when Jeff Immelt was anointed CEO, and June 13, 2017, when it was announced that he was stepping down.
The marketing team effort can fall short of Boff’s teamwork ideal because talented people do not easily restrain the ambition that accompanies talent. Take Gary Vaynerchuk, who admires how GE “tries different things,” yet makes it clear that the agency he founded, VaynerMedia, is competitive and will not be content just doing social network marketing. “I know we’ll get a bigger piece and one day take over the TV ads that BBDO does,” he says. More than once, Vaynerchuk, who bristles with ideas, has phoned Boff with creative ideas for TV spots.
VaynerMedia is emblematic of the type of digital-first independent agency that aims to disrupt both advertising and its big agencies. Presided over by forty-one-year-old Vaynerchuk, the eight-year-old company had revenue of $100 million, the bulk of it from Facebook marketing campaigns. He delights in sticking his fingers in the eyes of the advertising establishment. “You’re going to die,” he declared when invited to address the ANA’s Masters of Marketing Conference in October 2016. “It’s an amazing time to be in this industry if you’re on the offense. It’s the worst time if you’re on the defense, and ninety-five percent of you are on the defense.”
In a pitch to a prospective client, Chase Bank, that wanted to hire an additional agency to do their social media and digital marketing, Vaynerchuk took a seat in the middle of a crowded white Formica conference table wearing jeans and a crew-neck sweater. After his business affairs executive described how VaynerMedia had grown, Vaynerchuk shared a partial account of his own life.
Born in the Soviet Union, he immigrated to the United States with his family in 1978, when he was three. They moved from a studio apartment in Queens to Edison, New Jersey, where his father would eventually open two liquor stores. Cursed with dyslexia, Gary was a poor student who didn’t play sports or date girls. His dream was to be an entrepreneur, and starting in elementary school he sold baseball cards and comic books, opened a lemonade stand, and arranged garage sales. After graduating from Mount Ida College in Massachusetts, Gary took over his father’s Springfield, New Jersey, store in 1999. He learned everything he could about wine, became known as an expert, and launched a transformative online sales Web site and a daily wine Webcast. A year after YouTube surfaced, he inaugurated his own YouTube wine show channel. Soon after Google’s AdWords advertising platform went up in late 2001, he invested the wine store’s ad dollars. When new digital companies appeared—Twitter, Pinterest, Snapchat—he was an early adapter, posting wine news. His WineLibrary.com became the country’s largest online retailer of wine, outselling such familiar names as Sherry-Lehmann and Zachys.
He and a younger brother started VaynerMedia in 2009. A couple of years later, with the wine business having expanded from $3 million to $65 million, Gary stepped aside to work full time at VaynerMedia. Convinced that the big ad agencies were ignoring social media, he shaped his agency’s identity around social media marketing. His first client was the New York Jets football team, and eventually other clients—PepsiCo, Anheuser-Busch, Mondelēz, Unilever, Toyota, and GE—followed. With money he and his parents made in the wine business, he invested in start-ups like Facebook, Twitter, Uber, and Tumblr. Appearing regularly on YouTube, his fast-talking, clever rants went viral, leading to a multibook contract. The first of these, a Web marketing book, Crush IT!: Why Now Is the Time to Cash In on Your Passion, became a national best seller.
By 2016 he had produced four best sellers, had a YouTube channel, served as a Miss America pageant judge, and became a regular panelist, along with Gwyneth Paltrow and will.i.am, on Apple’s Planet of the Apps, a reality TV series that evaluates pitches by app developers seeking funding. Today he will announce to strangers that he has watched every play of every Jets game since he was in sixth grade, when he says he told a friend, “I am going to own the Jets one day.” He is neither modest nor demure. “If you’ve never seen me onstage,” he writes in his fourth book,* “I model my performance after the comedians I idolized in my youth, like Eddie Murphy, Chris Rock, and Richard Pryor.”
“Our religion is attention,” he told the Chase marketing executives, explaining that what he loved about constructing marketing campaigns on social media is that they were “underpriced.” There was little “ad waste” because he could try out so many alternative messages, and because in the digital realm results were often measurable. And unlike agency holding companies, which peddle expensive and unmeasurable broadcast television ads, he assured them that Vayner “sold on depth, not width.” He showed several Vayner online campaigns. Soon after the pitch meeting ended, Vayner won the Chase account, including its new upscale Sapphire Reserve credit card.
In a creative brainstorming meeting about Chase’s new travel credit card with six members of his team some weeks later, Vaynerchuk stabbed with his fingers at pieces of sushi from a take-out order and tried to frame Vayner’s purpose and the business opening that yawned: “VaynerMedia was built on ‘We’re going to do a deal with apps and start-ups that nobody else is doing because we come from that world.’ We did. It helped us grow.” But now they’ve grown and proven they can craft video and TV pitches. They no longer have to sell themselves as just a digital agency. Vayner can siphon business from traditional agencies. “We’ve established traditional chops as believers in storytelling,” he continued. “Now we can walk in and say, ‘We can make video for you. We can make TV.’”
Imagine, he said, rapidly throwing out an idea that just came to him and was unrelated to the banks’ credit card business but was related to the way he approached social media: “What if the retweet button on Twitter was brought to you by Xerox, because it’s a copy!” On second thought, he added, “Twitter will never do that.” On third thought, “People don’t aim high enough. They say no. I just said no.”
Members of his staff gently steer the discussion back to the subject of the meeting. One of the challenges with travel, a member of his team interjects, is that people don’t want to cart heavy luggage. They can pack lighter by shipping their clothes ahead. We have to think of the customer and what they can afford, Vaynerchuk said. “Are you guys familiar with a start-up called Affirm? It’s a financial company that makes consumer credit more accessible. It was started by Max Levchin, a cofounder of PayPal.” And, he adds, if you go online to the Casper mattress company to buy a mattress, “when you go to the shopping cart and put the credit card in you’ll see the confirm button. You know what this is? It’s making three equal payments. It’s allowing you not to pay at once.”
What would be “amazing,” he says, is if Vayner could lock up customers for their credit card client by signing exclusive deals with retail companies to use a button on their Web site for the Sapphire Reserve credit card. “We could find out if the ability to create a Sapphire card button that triples the points can be integrated into their Web site.” Customers could pay in installments without being hit by steep interest charges. “If we quietly made deals with fifteen companies” we thought would be major businesses in the future, he said, we could “do what Walt Disney did with Orlando. Nobody knew he was buying all the property” that would turn into Disney World. “If you bet on companies early enough,” Vaynerchuk later says, no doubt thinking of his early relationships with Twitter and Facebook, “you create a disproportionate emotional relationship.” With this front-row seat, Vayner would be serving their Chase client. They would also be serving Vayner by building relationships with, and collecting data on, these consumers. “We would lock in a new generation of shoppers,” he said.
If Gary Vaynerchuk is one day to own the New York Jets, which remains an obsession, he knows he needs to branch out and be more than a digital ad agency; in fact, more than just an agency.
One gets a sense of the changed dynamics between client and agency by attending the marketing meetings of Bank of America, a Michael Kassan client. They are presided over by Anne Finucane. Her pedigree is not that of a typical banking executive. One of six children, she was raised in Boston by a mother who was a distant cousin of Democratic House Speaker Tip O’Neill, and a father who was a prominent lawyer whose clients included the New England Patriots, back when they were known as the Boston Patriots. Soon after college graduation, she joined the staff of Boston mayor Kevin White, where she would meet and later marry prominent Boston Globe columnist Mike Barnicle. They were close to the Kennedys and other Massachusetts Democrats. She became a senior executive at Hill Holliday, a Boston advertising agency, and in 1995 was appointed vice president of marketing and corporate affairs for Fleet Financial, a troubled bank that in 1993 paid $100 million to settle claims that it was guilty of predatory lending practices. Her main task over the next several years was to dig Fleet out of this mess by making acquisitions and assuaging elected officials and local regulators intent on protecting consumers and jobs. She became a confidante of two Fleet CEOs. By 2004, Fleet was itself an attractive acquisition target, and Bank of America bought it. With her deft political and interpersonal skills, she became a confidante of CEO Kenneth D. Lewis, and then of his successor, Brian T. Moynihan.
The secret to her relationship with four different bank CEOs? “I think it’s because I am not a banker. My expertise is in the world of marketing, communications, public policy, data analytics, research. If you have somebody who has neither the interest nor background to want your job, and you believe the individual is good at their job, then you’re set up to be a trusted adviser.”
No bank came out of the financial crisis of 2008 in more parlous shape than BofA. That year they further burdened themselves with the acquisition of the collapsing Countrywide Financial for $4.1 billion, and troubled Merrill Lynch for $50 billion. Like most of the nation’s largest banks, BofA was on federal life support. Unlike most banks, its stock price and profits took longer to rebound, not regaining profitability and stock price growth until 2015. When Finucane put up for review the varied agencies who serviced BofA in 2015, she turned to Michael Kassan. “He knows how other pitches go,” she explained. “He knows who’s hot and who isn’t. He knows who won business and who didn’t. He knows who lost creative people or account people. He knows what’s happening in the media and what the freshest pitches are.”
With 50 million banking and brokerage customers, 4,689 financial centers, 16,000 automated teller machines, 13 percent of all U.S. banking deposits, and a political climate in which big banks make for an inviting piñata, marketing BofA is not simple. Bank of America operates a retail bank, an investment and corporate bank and trading company, and an investment services wing. For their quarterly marketing meetings chaired by Finucane, two dozen or more agency and BofA executives congregate on the Fifty-first floor of the Bank of America building that looms over Bryant Park on West Forty-second Street. For the June 2016 meeting, in addition to senior BofA communications, marketing, consumer, government, data, and enterprise executives, in attendance were two WPP executives, Donald Baer, chairman and CEO of Burson-Marsteller and former communications director for President Clinton, and Joel Benenson, CEO of the Benenson Strategy Group, who served as President Obama’s and in 2016 as Hillary Clinton’s principal pollster; Rishad Tobaccowala from the Publicis Group; several executives from the primary creative agency, Hill Holliday, an IPG agency; Stephanie Cutter, partner in Precision Strategies, who was Obama’s deputy campaign manager in 2012; and John Marshall, senior partner and chief strategy and innovation officer of the corporate identity firm of Lippincott. Each had assigned seats around a vast table formed into a square and draped with a white cloth.
This June meeting demonstrated how dependent the bank was on forces it could not control, and how advertising often takes a backseat at a marketing meeting and why more money is spent on marketing—media strategy, public relations, polling, lobbying, consulting, research, design, direct mail—than on advertising. This meeting commenced with a report on BofA’s finances. Bank profits rose from $4 billion in 2014 to $16 billion; the bank’s liquidity was four times as large as in 2008. But this good news was drowned out by the background noise of an angry presidential campaign where expected Democratic nominee Hillary Clinton and her challenger, Bernie Sanders, and likely Republican nominee Donald Trump, vied to criticize big banks.
Surveys reveal that support for banks dropped five points, Finucane said. “My concern is Bank of America should not be a focus of the conversation when the talk is about Dodd-Frank.”
Pollster Joel Benenson said Sanders enjoyed broad support when he declared, “We have a rigged economic system.” That issue won’t disappear after the election, in part because “corporate profits are at record highs and yet wages are largely frozen.”
Repeating her caution, Finucane said, “We don’t want to be the tip of the spear.” How does BofA mitigate the issue?
Despite the strides BofA has made by improving mobile banking and home mortgages, global corporate communications and public policy executive Jim Mahoney answered, “Candidates screaming makes it difficult to communicate effectively.”
They discussed the positive steps BofA has taken to demonstrate its good citizenship, including the support the bank provides for reducing carbon emissions and for what’s known as “sustainable growth”—BofA is the number one underwriter for green bonds. “Right now we’re better than the rest of the financial service industry, but what kind of a goal is that?” Finucane asked.
The conversation veered to how the bank could better engage with its customers by serving as a “curator,” or helper. Already, their user-friendly mobile banking app has more than 22 million customers. The bank is aided by the data it collects on its customers. A potential consumer who downloads their Zillow app offers “a clear indication” of whether they seek a new home loan. BofA doesn’t have access to the names, nor do they share or sell customer data with anyone outside the bank. But in addition to the information gathered by their apps, the bank often knows of other online customer behavior and can tailor their messages accordingly. “We don’t just need to run ads” at them, Lou Paskalis, who oversees their marketing investments, says. “We need to engage with them. We don’t say, ‘Click here to get that loan.’” They take it slow, banking the consumers’ cookies so they can track them on ad-supported sites. Maybe, the BofA document that was distributed before the meeting says, they “insert a Home Ownership thought leadership content piece” when the consumer is reading the New York Times online. Or serve them a “Best Rates” message when they’re on their ESPN mobile app.
This, Paskalis said, is “one-to-one marketing”—what he identifies as “the deterministic model.” It occurs when Amazon offers recommendations to customers: people who purchased this book or music also purchased these. Increasingly, it is invading television advertising, especially OTT (Over The Top) or television streamed over the Internet. One to one marketing where advertisers can tailor different individual messages to each household in an anonymized way, sheltering their privacy, will be a game-changer, he believes.
As is often the case in these meetings, Finucane is eager to hear the thoughts of soft-spoken Rishad Tobaccowala, their principal outside strategist, who she privately describes as “the smartest guy in the room.” They appear to have very different personalities. She wears oversized eyeglasses and is capable of bulldozing a conversation. He wears round, frameless eyeglasses and his slight frame conveys an almost professorial air, which is enhanced because he sits, Buddha-like, and does not rush to speak. In a voice so soft people craned forward or sideways, as if it would help them hear, he cautioned: “We are at the beginning of this journey.” When the bank talks about its environmental deeds, for example, it is not “a targeted, one-on-one message. It is a narrative, and it relies on emotion. Lou is right: We will know, increasingly, what people want because of their behavior. But the struggle is what does the consumer want from Bank of America. Successful companies realize we outsource the work to the customer. We do the listening and the responding. The reason Amazon in its deterministic form—or Facebook—can tell you everything is because you are creating your own bundle of what you want.” But don’t confuse a single product or purchase with what consumers want from a brand. “What Americans are asking for is, ‘Who is on my side?’ Sanders and Trump built surprising support because the message sent is: ‘They are on my side.’ If you think about a bank’s purposes, no one is as close to aligning with them as you are.”
In concluding, he tried to bring the discussion back to how the bank tried to rebrand itself in 2013 by adopting this slogan: “We know we’re not the center of your life, but we’ll do our best to help you connect to what is.” BofA can help them achieve a better financial life, Tobaccowala said, evoking the one word—empathy—he believed was essential. “If they know they can trust a company, then when they see a particular offer it is no longer a creepy offer. The big word, which I haven’t heard, is empathy.”
Clients like Bank of America know they must fashion marketing messages in a very different way, a way often labeled branded content. These paid messages can arouse empathy, and don’t beat the consumer over the head with a sales pitch; they often tell a story about something noble the brand is associated with, arouse emotion, and are most successful when the consumer doesn’t realize the advertisement is an ad because it tells a compelling story or provides valuable information. This is why BofA partnered with the nonprofit online education Khan Academy in 2013, offering videos that explain complicated financial topics—like their series “Better Money Habits,” elucidating compound interest—on sites like Pinterest.
The ideal for a subtle ad pitch is the two-minute television narrative that BBDO’s Indian agency created for Procter & Gamble’s local detergent, Ariel. It opens with the young wife racing about to calm her children, make tea for her oblivious husband, who is watching television, answer the phone, cook dinner, lay out the dishes, and load the laundry in the washing machine. While she services everyone’s needs, her father is in the apartment and viewers hear his voice describing what he is seeing, seemingly for the first time. In a sorrowful voice, he says, “Sorry for every dad who set a wrong example,” sorry that his daughter is just doing what he compelled her mother to do, that “your husband must have learned this from his dad.” He leaves a note for his daughter, gets up, hugs her, and you hear him say as he leaves the apartment, “Sorry on behalf of every dad.” He then appears at home with his wife, whom he hugs and startles by stopping her from doing the laundry. He takes the laundry basket, stuffs the garments into the washing machine, and pours from a box of Ariel as these bold white letters fill the screen: “Why is laundry only a mother’s job?”
Ariel launched a national “Share the Load” campaign, blanketing India with promotional messages and labels asking, “Is laundry only a woman’s job?” Doing social good was good for Ariel’s business; they claimed sales jumped by 60 percent.
Can a marketing campaign, any marketing campaign, warm the cockles of a consumer’s heart toward a bank in the same way? Anne Finucane, like new CMO Meredith Verdone, understands the nature of the challenge. She closed BofA’s monthly marketing meeting by stressing her biggest single takeaway: it is mission critical for the bank to gain the trust of more consumers. Their surveys tell them that only 28 percent of the American public trusts the banking industry. Over eight years out from the global financial crisis, banks were still climbing out of the wreckage of their reputations. “We can’t lose our ability to sell our strategic message,” she told her marketing team. But for Finucane and BofA, broad brand and product advertising is a relatively small piece of their marketing pie—a $100 million slice out of $2 billion. Even if it were much bigger, no one thinks there’s a single magic spell that can be cast to win back all of the trust that has been lost.