WALTER ISAACSON: It’s unlikely many people remember exactly where they were, or what they were doing, on March 27th, 1994. But that day, the online world changed forever.
That was the day “Hotwired” went live, as the internet’s first commercial online magazine. I remember it well. I was running Time Inc.’s new media department, and we were working with “Hotwired” and we went up the same day, with Pathfinder, which had Time.com and all of our magazines. It transformed the internet and designated the world wide web as the place for publishing.
As huge of a moment as this was for online journalism, the content of “Hotwired” and Time.com were not what the world would remember about this debut. We had helped invent something, for better or worse, that would be a funding mechanism for online publishing. It was a small, dark rectangular box that appeared on the top of the page.
On a black background was tie-dyed colored text, reading “have you ever clicked your mouse right here?” An arrow leads to the far right of the box, where two stark white words read “you will.”
Clicking on that ad, as many people did, lead to a spartan landing page, with the AT&T logo. “You did,” read the copy. “Now let’s see what else you can do.”
Supported by a TV campaign, that first ever online banner ad was, by today’s standards, a spectacular success. Due largely to its sheer novelty, the ad’s click through rate was about 44%. That’s about 800 times today’s average.
For advertising, an industry built on technological disruption, it was the beginning of the biggest upheaval in nearly a century. The internet would trash traditional business models and inspire new ones. It would give consumers a powerful new voice and change forever the way that products and brands are communicated.
This is the story of business and media pioneers– of spectacular triumphs and heroic fails, and the story of how digital disruption has caused the entire advertising industry to reinvent itself.
I’m Walter Isaacson, and this is “Trailblazers,” an original podcast from Dell Technologies.
MAN: Ladies and gentleman, this commercial is going to use subliminal advertising.
BOY: Kids, this is a toy you’ve got to have!
MAN: Faster than any other leading cleanser.
MAN: It’s a completely different kind of coffee.
MAN: Look at the fun Debbie and Andy are having, with these realistic ride-on toys.
MAN: Would you recommend Marlboro to your friends? I already have.
WALTER ISAACSON: If you ever doubted the power of advertising, especially in the digital age, consider the cultural impact of the Old Spice campaign, featuring ex-NFL star Isaiah Mustafa.
The ad begins with Mustafa, in a towel, standing outside of a shower. He looks directly at the camera and musters all of his machismo charm and begins to speak. He wants the females in the audience. To know that, sadly, their man will never be as manly as he is. But if their man stopped using quote “lady scented body wash” and starts using Old Spice, he can at least smell like him.
The ad was called “The Man Your Man Could Smell Like,” and it quickly became a massive hit.
MAN: Here’s a fellow who looks and feels like the top of the morning. That’s because he’s starting his day the Old Spice way!
WALTER ISAACSON: Leading up to that launch, Old Spice was known as a 70-year-old “dad brand,” and its body wash was struggling in a highly competitive category. Enter Wieden+Kennedy, a groundbreaking ad agency based in Portland, Oregon.
Just 15 years after that first AT&T banner ad, the new campaign would prompt Old Spice’s sales to spike, including a one month sales increase of 107%.
A key to the campaign’s success was an integration of media, especially social media. “The Man Your Man Could Smell Like” ad launched on television, then went viral on YouTube, where its viewer count would top 54 million.
Seizing its momentum, Wieden+Kennedy launched its “Old Spice Responses” campaign. Over two days, a team created 186 video responses to questions posed by fans and celebrities on social media, including Twitter, Reddit, Facebook, and the brand’s own website.
It was a huge creative lift. But with no media costs, and at a fraction of the cost of shooting a full television ad. On YouTube, it became the most viewed branded channel ever.
For today’s advertising industry, with its worldwide spending of more than $500 billion annually, digital marking success stories like this haven’t come easily. Though advertising, in some shape or form, goes back thousands of years, the modern ad industry began in the 1840s.
Among its pioneers was a Philadelphia newspaper man turned realtor and coal supplier, Volney Palmer. With growth in manufacturing, and with railways taking more goods to more cities, there was a growth in demand for newspaper ads to create consumer awareness of new products.
Palmer saw the opportunity and went into business as an agent for advertisers, buying newspaper space on their behalf in exchange for a commission.
Newspapers immediately embraced the idea. Seth Godin is an entrepreneur, speaker, and bestselling author.
SETH GODIN: They said, to anyone who would take the offer, if you sell ads in our newspaper, we’ll give you 15% of the money. And at the beginning, they were just salesmen. But then they discovered that, in order to sell an ad, they had to offer to write the ad. And they were making enough money that they could do it for free.
So that’s the culture that built ad agencies. That once you could get a good enough client, you got to keep 15% of all the money that they were spending on ads. And then you had to put on enough of a show that the client thought you were doing a good job.
WALTER ISAACSON: The modern advertising agency was born. Under this commission-based model, ad agencies flourished. Until radio.
Though it was invented very early in the 20th century, it wasn’t until after World War I that radio began to catch on in America. Hundreds of amateur hobbyists rushed home from their day jobs to create one or two hour broadcast for neighbors with radio sets.
Churches broadcast sermons, hymns, and Bible readings. Educators plotted ways to use radio to spread learning to American households. But what they all lacked was a sustainable economic model.
It took an opportunity-minded ad executive to hear the future and embrace this disruptive new media.
Albert Lasker, of the Chicago agency Lord & Thomas, was America’s first advertising giant. After decades of newspaper ads chasing after readers, he saw radio as a means of bringing the audience to the advertiser.
On behalf of his clients, Lasker bought air time and assembled production teams to create the programs that would attract a specific audience– the very audience likely to buy his client’s product.
One of Albert Lasker’s most enduring creations was the soap opera.
ANNOUNCER: Today, we bring you another chapter of “Against the, Storm,” presented by the makers of Ivory soap.
WALTER ISAACSON: Which is why, however big the stars were, the sponsors got top billing.
MAN: “The Jell-O Program,” starring Jack Benny.
MAN: The Luxe Radio Theater presents—
MAN: The makers of Campbell Soups present—
MAN: The Johnson Wax program, with Fibber McGee and Molly.
WALTER ISAACSON: Fueled by advertising dollars, commercial broadcast was an instant hit. Even in the dark, early days of the Great Depression, sales of radio sets skyrocketed. Instead of a commission-based system, the ad industry created a new revenue model based on a great unwritten contract with audiences. We’ll give you entertainment, or news, or information. In exchange, you give up your time and attention for our sponsor’s messages.
A crucial part of the formula was infusing the brand as much as possible into the program itself. Cynthia Myers is an associate professor of communications and the author of “A Word From Our Sponsor, Ad Men, Advertising, and the Golden Age of Radio.”
CYNTHIA MEYERS: With magazines, you can just flip by an ad, and you don’t have to read that page. But in radio, you’re listening to it in linear time. You didn’t have that option of skipping the commercial.
So advertisers in the ’30s and ’40s were very careful to try to make the advertising as much a part of the program as possible in order to prevent that kind of annoyance. WALTER ISAACSON: In the ’50s, that same ad-driven model would help television overtake radio as the new “it” medium.
MAN: The makers of Camel Cigarettes bring the world’s latest news events right into your own living room. Sit back, light up a Camel, and be an eyewitness to the happenings that made history in the last 24 hours.
WALTER ISAACSON: By adding a visual element to broadcast, television production was many times more expensive than radio. Bankrolling a TV show was simply too expensive for a single sponsor. So began a shift in broadcasting, from branded content to sponsored content. Cynthia Meyers.
CYNTHIA MEYERS: The television networks realized that they needed to take control over programming decisions, because they were actually realizing that they were in the business of organizing audiences. And when sponsors controlled the programs, the networks then could not organize the audiences.
WALTER ISAACSON: With programming now in control of the broadcasters, one problem remained. In television, as in radio, the effectiveness of an ad was almost impossible to measure. Television ratings systems helped advertisers understand a lot about how many people saw their ads and about their demographic profiles. But it told them very little about how well their ads translated into sales. Seth Godin.
SETH GODIN: The thing about TV ads is you can’t measure them really. You don’t know which ads worked, and which ads don’t really. You know which ones are funny. You know which ones people remember. But you don’t know which ones work.
And so we have the neurotic ad guy. The neurotic ad guy, who drinks three martinis at lunch, is really nervous. Because he’s just making stuff up. He’s putting stuff on TV for millions of dollars, with no clue about whether it’s going to work or not.
And so it became filled with people who were storytellers, and who were showman, and who were nervous.
WALTER ISAACSON: As the department store tycoon John Wanamaker put it, “half the money I spend on advertising is wasted. The trouble is, I don’t know which half.”
That wouldn’t stop television from rising to media dominance, with advertising as the underwriter of programming and the gatekeeper of content. That is, until the early 1990s, when everything changed.
[DIAL UP INTERNET]
The internet would not end television, just as television did not end radio. But it would draw popular attention away from both. And in the new peer to peer online frontier, the old advertising model wasn’t going to translate. Seth Godin.
SETH GODIN: The internet is the first mass medium that wasn’t invented for advertisers. So to be clear, magazines exist to sell magazine ads. TV existed to sell TV ads. That’s what it was for. But the internet existed to allow scientists to survive a nuclear war and still exchange research. That’s what it was for.
And what happened was, it became easier and easier for people like me to start putting content on the internet. And lots of people wanted to look at it. But we had a problem, and the problem was, how are we going to pay for this?
WALTER ISAACSON: Advertisers struggled, both to find a new online business model, and to create new media languages for the internet audience. Database marketers began collecting and curating lists of prospective buyers for online advertisers. Webmasters gathered visitor data to help marketers target their messages. Digital marketers were gravitating to the same rule that had governed their craft for 150 years– find out where your audience is, and jump in front of them.
However successful these first online banners may have been, advertising’s online honeymoon would be short lived. The world wide web was soon littered with gimmicks, poorly targeted ads, email spam, pre-roll commercials, and pop up ads.
Dave Droga is the Founder and CEO of the New York-based agency Droga5.
DAVE DROGA: Well, I’m in advertising. I love advertising, when it’s done well. But, yeah, I get frustrated. You know, particularly when, you know, online, you want to go and watch a video, or some pop up happens. I mean, that is infuriating. Unless, of course, it’s something that is relevant, of interest to you. But unfortunately, that doesn’t happen enough.
WALTER ISAACSON: Advertisers had long played the part of benefactor in broadcast and print. But they quickly became unwelcome guests of the online community. Enough so that, before long, innovative developers were creating and releasing the first ad-blocking software, a direct DNA descendant of the mute button on TV remotes.
For the 150-year-old ad industry, it was a jarring wake up call.
DAVE DROGA: We’re one of the few industries where people have invented technology to avoid what we create. So people are inventing technology to steal what Hollywood creates and what musicians create. People invent technology to avoid– now, if that’s not the biggest wake up call to our industry, to do better, to be more relevant, to not bombard, to not patronize, to not make these assumptions, to not turn what we do into a tax, you know, then I don’t know what is.
WALTER ISAACSON: The push of traditional media gave way to the pull of the internet, where consumers can now choose to go where they want when they want. Not only that, communication no longer worked one way. Advertisers quickly learned that the consumer could now talk back.
In the spring of 2017, Pepsi launched its 2 and 1/2 minute Kendall Jenner video. It drew instant pans across social media for seeming to make light of social cause protests. Pepsi pulled the ad off its YouTube channel, issuing an apology to viewers and to Ms. Jenner, proof that even giants stumble. It wasn’t the first time, and it won’t be the last, that the online community would flex its muscle over a major brand.
A 2003 campaign for KFC met the same fate for positioning its fried chicken as part of a healthy diet. In 2011, the famous “Got Milk” campaign incurred online wrath with a campaign headlined “Got PMS? Get Milk.” The intent was to leverage medical evidence that milk mitigated some symptoms of premenstrual syndrome.
The online community was not amused. The campaign was promptly pulled. And in 2006, Chevy gave online viewers the tools to make their own ad for the Tahoe. What they got was a flood of scathing, anti-SUV parody ads, which poured onto YouTube. The lesson? In the digital age, the audience has a voice, and advertisers ignored it at their peril.
At the same time, a whole new type of digital disruption was rewriting a century and a half of advertising convention. In the fast-growing tech hubs of Silicon Valley, up the coast in Washington, and in the new tech shops popping up worldwide, marketing technology, or MarTech, was growing fast. Put simply, MarTech combines information with digital technology to optimize the buyer seller experience.
Suppose you’re in the market for a bathtub. One function of MarTech would be ways to make an ad for just the right bathtub appear on your screen in a time and manner likeliest to affect your purchase decision. If digital technology is the vehicle MarTech uses, information is the fuel. That means gathering personal data based on your online footprint, your age, where you live, where you shop, what you like and don’t. Thousands of details which, together, paint your consumer portrait.
One means of gathering these details is by following you using such means as tracking cookies. But those can be removed or blocked. Another is to create an entire digital ecosystem that you’ll enter voluntarily. A virtual place so irresistible, even indispensable, that you’ll willingly surrender personal details. Using this approach, a small group of corporate titans has emerged. Scott Galloway is an author, entrepreneur, speaker, and marketing professor at the NYU Stern School of Business. He calls these companies “the four horsemen,” each representing a major facet of the human condition.
SCOTT GALLOWAY: Amazon, Apple, Facebook, and Google. Amazon is consumption, Apple is sex, Facebook is love, and Google is God. And I think all of us are, at the end of the day, a composition, or an amalgam, of these four things. And I think these firms represent not only great companies, but who we are as people. And they’ve tapped into these very basic instincts. And as a result, they’ve scaled faster than any companies in history.
WALTER ISAACSON: In 2017, worldwide ad spending is expected to reach $547 billion. Digital ad spending, which didn’t exist before 1994, is now expected to account for a third of that total. Most of that, says Scott Galloway, is making its way to two of these horsemen.
SCOTT GALLOWAY: Advertising and media is a great business, as long as you’re Facebook or Google. Everybody else is in structural decline. 103% of the growth in digital marketing last year went to either Facebook or Google. Meaning that if you’re a video optimization platform, or you’re in the business of digital marketing, and you’re not Facebook or Google, you join magazines and newspapers, in that you’re in a business that’s in structural decline.
WALTER ISAACSON: Between the so-called traditional ad agencies of Madison Avenue and the tech shops of Silicon Valley and elsewhere, the digital age has prompted the emergence of two distinct advertising philosophies. Let’s call them selling versus branding.
Selling is what marketing technology does best. Its goal is to play matchmaker between a product or service and those most likely to purchase them. Ideally, it unites them at just the right time in what’s called “the buying journey” and minimizes any barriers in the purchase decision. Selling is about logic and reason. Branding, on the other hand, is about emotion. Branding seeks to win a place in your imagination by wrapping a product or service in a feeling or attitude. Even a signature sound, or piece of music. Where selling is transactional, branding is relational. And with the rise of digital disruption, Scott Galloway sees a clear outcome.
SCOTT GALLOWAY: Don Draper is not only dead, he’s been drawn and quartered. It used to be Don Draper’s world. Now it’s been inherited by a guy with a degree from MIT and a pocket pen protector.
WALTER ISAACSON: Dave Droga sees it a little differently.
DAVE DROGA: Yes, the algorithm side of advertising is crucial and important. But it’s not going to replace the more lateral inspired, surprising side of advertising. Because we’re an emotional species. And not every decision we make is rational. And so much of what advertising is is about creating an emotional connection between A and B. And that’s– I’m very content to play in that part, and find a connection, and finding truths, and finding insight, and telling stories. And as long as it’s based in those human insights and truths, then we can be extraordinarily creative with that. WALTER ISAACSON: Before digit al, the strength of an ad campaign was measured by the amount of money backing it. In the era of digital branding, a new currency is emerging– a big, resonant, emotion-based idea spread virally.
In 2004, Unilever’s market research showed that only 4% of women considered themselves beautiful. That’s when it created its Dove “Real Beauty” campaign, challenging longstanding assumptions about women and beauty, and fixing its brand to the idea of confidence and self-esteem. Its video campaign went viral. The idea, and the brand, won worldwide attention.
Sometimes, online branding is an event. In 2012, an Austrian skydiver named Felix Baumgartner set a world record, since bested, for the highest skydive. He fell more than 24 miles and became the first human to break the sound barrier without the benefit of engine power. It was a branded event, backed by Red Bull Media, who have tied their brand to a series of adrenaline-heavy events.
The live webcast generated 52 million views. That’s in addition to television coverage, highlight packages, viral videos on YouTube, and a Netflix documentary. According to Ad Age, in the six months immediately following the jump, Red Bull sales rose 7%, to $1.6 billion.
Creative possibilities abound online for brands who can find newer, better ways to attract an audience. Whether it’s an ice bucket challenge, a branded flash mob, or even a podcast series about digital disruption.
In that sense, we’re seeing a return to early broadcast traditions of branded content. Author and educator, Cynthia Meyers.
CYNTHIA MEYERS: Advertisers now know that audiences are skipping their commercials. Advertisers are very aware that audiences resent the interruptions. And with the rise of services like Netflix, where audiences flock to watching programming without those interruptions, advertisers are more and more aware that their options for reaching audiences without interrupting them have to expand.
WALTER ISAACSON: In the wake of digital disruption, it’s inevitable that the tribes of technology and brand will find ways to merge. Case in point, David Jones, the founder of You and Mr Jones, a pioneer of an entirely new form of marketing– something he calls “Brandtech.”
DAVID JONES: Pretty much all of the brands we were talking to was saying the same thing to me, which was, look, David, the big agency groups are fantastic at brand, but they don’t get technology. The technology companies are amazing at technology, but have nowhere near the same level of interest or expertise in the brand piece. And it would be great if somebody could create a company that combined branding expertise with the power of technology. So that’s basically what we set out to do. We called it “Brandtech.” But in very simple terms, Brandtech is combining the power of technology with branding expertise.
WALTER ISAACSON: Through his Brandtech company, David Jones found himself on the ground floor for what was seen by many as one of the strangest crazes in recent history.
DAVID JONES: We were one of the first investors in Niantic who created Pokemon Go. And, in fact, our reason to invest in Niantic wasn’t driven by Pokemon Go. It was driven by a belief in how big of augmented reality could be.
We sort of felt that this combination of augmented reality and location had amazing potential for brands. For example, in Japan, McDonald’s had done a deal to put Poke stops in place. On the basis of about 10 days of being part of Pokemon Go in Japan, sales for McDonald’s that quarter went up about 30%.
And I think it was a great proof point of what brandtech is and can be, in that at no point did somebody watch an ad to have to see an ad. Yet here you were able to drive traffic and drive sales through the smart use of augmented reality and location, and in a way that nobody found in any way, shape or form annoying.
WALTER ISAACSON: It’s that kind of radical thinking that shows advertising’s ability not only to react and adapt, but also to thrive in a media landscape that’s rapidly changing.
DAVID JONES: Probably the thing that every single brand and company is facing at the moment is it is all moving so fast. I think the old quote is we dramatically overestimate the change we’ll see in a year and massively underestimate what we see in 10 years. I think those time periods have probably changed quite a lot, and you really can now have fairly dramatic change in two or three years.
WALTER ISAACSON: What’s next for digital marketing and advertising? That’s the $500 billion question. Consider that when a new advertising medium comes along, it takes time to create a media language for it.
The first radio ads were little more than print ads, read out loud. The first TV ads were simply radio spots over clumsy pictures. The first online banner ads were little more clickable billboards. In time, radio ads learned to leverage sound. TV ads became cinematic. And today, digital marketing is just learning to spread its wings.
New marketing technologies hone the “what you want, when you want” shopping experience of an Amazon.com. And wildly imaginative branding campaigns are using social media to punch above their weight.
As these two tribes of selling and branding find more ways to collaborate, a whole new digital advertising language is sure to emerge. Meanwhile, let’s not plan Don Draper’s funeral just yet.
I’m Walter Isaacson, and this is “Trailblazers,” an original podcast from Dell Technologies.
If you enjoyed the show and want even more insights from our guests, or some of my recollections about being there when advertising first went online, visit delltechnologies.com/trailblazers7. That’s “trailblazers,” than the number 7.
Next episode, we’ll be looking at the world of music and how the compact disc, the music industry’s technological holy grail, was actually the thing that led to its downfall.
You can subscribe to “Trailblazers” in Apple Podcasts or wherever you get your podcasts. And if you like it, please leave us a rating and review. It helps new listeners discover our show. Thanks for listening.