Cannes Lions 2016: The sun may shine over La Croisette next week, but storm clouds are gathering over advertising agencies
Next week, the great and good of the advertising world will descend on the south of France for the Cannes Lions, the industry’s annual jamboree. Awards will be distributed, backs will be slapped and rosé will be consumed by the case.
While the sun sets over La Croisette, however, the storm clouds are gathering for the advertising industry.
The media business is still reeling from last month’s report by the ANA, the industry body representing the interests of advertisers in the US. The damning report found “numerous non-transparent business practices… to be pervasive in the US media ad buying ecosystem”, and claimed such malpractice was systemic, with “senior executives across the agency ecosystem… aware of and mandating” such activity. Unsurprisingly, the clients whose budgets were being abused are not a happy bunch.
The outlook is equally bleak for media owners.
As budgets continue to follow eyeballs from traditional to digital channels, Google and Facebook are hoovering up an ever-greater share of advertising spend. The tech giants boast an unbeatable combination of massive scale and granular customer data, and can operate without the legacy costs of a 20th century media business.
Here in the UK, the inevitable consolidation facing the newspaper industry is only just starting to play out, with the Independent ending its print edition and Trinity Mirror’s New Day folding just two months after launch. The structural challenges are the same for content producers in TV, radio, outdoor and digital.
Unsurprisingly, talented and ambitious youngsters coming into the workforce can see the writing on the wall. Watford is a long way from the glamour of Cannes, but the course in advertising at West Herts College has traditionally been seen as the gold standard for bright young things plotting a career in advertising. The course used to receive more than 20 applicants for every place. This year there have been just 20 applications for 16 places.
But most tellingly of all, customers are choosing to opt out of advertising altogether. Subscription services such as Netflix or Spotify allow us to enjoy all the content that we want without irritating interruptions every 15 minutes.
And the rise of ad-blocking – free software that stops the adverts on websites being displayed – is yet another headache for media moguls. Research conducted by YouGov in March this year found that 22 per cent of UK adults are actively using the software, with the figure rising to 47 per cent among 18-24 year-olds.
Read more: As Three conducts an ad-blocking trial, is the tech gaining acceptance?
Does this mean the end of advertising? No – in a market economy there will always be a need for brands to invest to acquire customers, to defend market share, and launch new products. But as technology continues to undermine the traditional media model, the gathering storm is only going to intensify.
There will be more than a few hangovers when adland’s finest return to work after their annual week in the sun. It’s going to take more than a strong cup of coffee and an aspirin to shake that slightly nauseous feeling.