“Trying to do business without advertising is like winking at a pretty girl through a pair of green goggles. You may know what you are doing, but nobody else does.” - Cyrus McCormick.
“Trying to do business without advertising is like winking at a pretty girl through a pair of green goggles. You may know what you are doing, but nobody else does.”
– Cyrus McCormick.
Investing in media businesses is difficult, and investing in digital media perhaps more difficult still. Just working there isn’t necessarily easy. Nearly 30 years ago this correspondent aspired to work in advertising – specifically copywriting – having been attracted by the published work of David Ogilvy, founder of Ogilvy and Mather, and the author of a number of very readable books on advertising, including Confessions of an Advertising Man and Ogilvy on Advertising. As a highly successful copywriter and businessman, Ogilvy has been variously described as “the father of advertising”, “the Pope of advertising” and “a Mount Rushmore of the advertising industry”. Ogilvy’s favourite headline (of his own) is said to be for his client Rolls-Royce:
At 60 miles an hour the loudest noise in the New Rolls-Royce comes from the electric clock.
It is plausible that books like Confessions of an Advertising Man did for a generation of arts students what Liar’s Poker did for a generation of graduates full stop, roughly a decade later, namely act as a recruiting sergeant – in Ogilvy’s case for working in advertising, in Michael Lewis’ case, for working in investment banking. But nearly 30 years ago this correspondent failed to secure a position in an ad agency, and – somewhat bizarrely – ended up as a bond salesman instead. So for us, the die was cast, and we didn’t look back. David Ogilvy died in July 1999. The agency he founded was gobbled up by Sir Martin Sorrell’s conglomerate WPP. (Ogilvy is said to have initially referred to Sorrell as “an odious little s**t”, although by all accounts they would become reconciled later on. Many in the advertising industry regarded Sorrell with suspicion, not being a ‘creative’, but rather a financier and ‘a suit’, having read Economics at Cambridge.) And now Sir Martin Sorrell has left that firm, which may or may not end up being broken back up into its constituent parts, having been left somewhat rudderless in a world in which so much of the ad spend pie has been scarfed down by Facebook and Google.
Ad agencies still create ads, of course, but it looks as if the lion’s share of the pickings will go for the foreseeable future to the platforms that distribute them, which leaves arguably thin gruel for ‘traditional’ media buying agencies assiduously built up over previous decades, since the likes of Facebook and Google are now busily occupied in devouring their lunch. But since this is digital media, there is always the risk that someone with a better, faster, cheaper, cooler or less obviously conflicted mousetrap may yet displace them. Before Facebook, for example, there was MySpace.
A strong first quarter showing in earnings and revenues by Facebook was met with predictably breathless coverage in the financial media, despite the fact that the period in question was almost over before the Cambridge Analytica revelations were reported. Facebook stock gained 7 percent in after-hours trading following the earnings release, so sceptics will have to wait until the shares conclusively meet with the Waterloo that any objective observer might regard as overdue. As Antonio García Martínez writes in his account of his time as a product manager at Facebook, Chaos Monkeys,
The reality is that Facebook has been so successful, it’s actually running out of humans on the planet. Ponder the numbers.. there are about three billion people on the Internet.. Of these people, six hundred million are Chinese, and therefore effectively unreachable by Facebook.. That leaves about 2.35 billion people ripe for the Facebook plucking..
As of the fourth quarter 2017, Facebook claimed 2.2 billion active monthly users (we won’t quibble over definitions of ‘active’). If García Martínez is right, Facebook is close to bumping up against natural growth limits, assuming that it suffers no meaningful decline in user numbers in the wake of the Cambridge Analytica furore, which may be optimistic. In any event, a cursory analysis of its share price chart suggests that Facebook stock peaked – in the short term, at least – at the start of February 2018.
An obliquely related question. Why does it seem to be so difficult to create memorable advertising for financial services firms ? It could be that for most of them, the ‘product’, as such, namely money itself, is utterly fungible. It could be that there is widespread (and warranted) consumer scepticism about the industry, as TSB is now going to great pains to prove. (High Street banking and IT make for terrible bedfellows.) It could be broad resentment at the painful regularity with which inordinately well-paid banking executives crash the economy, only to get bailed out by long-suffering taxpayers. This is not to say that good financial services advertising does not exist. This ad for the South African asset manager Allan
Gray is, we think, rather wonderful. As is this ad, for a Thai insurer. And even the print ad below, for Commerzbank’s Ukrainian arm, Bank Forum:
It’s interesting to note that some of the best financial services advertising seems, from this admittedly limited anecdotal survey, to be coming from emerging markets territories. Why ? We also note, with a nod to corporate longevity, that the Bank Forum ad happens to have been made by Ogilvy and Mather Kiev.
‘Conventional’ advertising in any case doesn’t necessarily suit everybody, and as an asset management boutique, it certainly has no appeal for us. We would rather spend our time on more personalised, ‘below the line’ communications to our clients and prospective clients, like the one you happen to be reading now. We would rather take a leaf out of Albert Jay Nock’s book, from his excellent essay, Isaiah’s Job, from which the following extract is taken:
..In the year of Uzziah’s death, the Lord commissioned the prophet to go out and warn the people of the wrath to come. “Tell them what a worthless lot they are.” He said, “Tell them what is wrong, and why and what is going to happen unless they have a change of heart and straighten up. Don’t mince matters. Make it clear that they are positively down to their last chance. Give it to them good and strong and keep on giving it to them. I suppose perhaps I ought to tell you,” He added, “that it won’t do any good. The official class and their intelligentsia will turn up their noses at you and the masses will not even listen. They will all keep on in their own ways until they carry
everything down to destruction, and you will probably be lucky if you get out with your life.”
Isaiah had been very willing to take on the job — in fact, he had asked for it — but the prospect put a new face on the situation. It raised the obvious question: Why, if all that were so — if the enterprise were to be a failure from the start — was there any sense in starting it? “Ah,” the Lord said, “you do not get the point. There is a Remnant there that you know nothing about. They are obscure, unorganized, inarticulate, each one rubbing along as best he can. They need to be encouraged and braced up because when everything has gone completely to the dogs, they are the ones who will come back and build up a new society; and meanwhile, your preaching will reassure them and keep them hanging on. Your job is to take care of the Remnant, so be off now and set about it.”
We are not trying to appeal to everybody, not least because what we think we offer, by way of a mixture of explicitly defensive ‘value’ investments, and an investment approach where the objective is capital preservation in real terms, will not necessarily appeal to everybody. But we hope that there may be some ‘Remnant’ of investors out there who will share our belief in the merit of the approach, at a time of unusual geopolitical and financial challenges.
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