14
The Role of Global Advertising

Rapid and extreme changes in global media, particularly in terms of technology, have meant that the advertising industry has been faced with new global challenges. The Times of London reported in 2017 that “Global internet advertising is due this year to overtake television finally to become the world's biggest medium, an industry forecast predicted.”1 The same paper noted in a different article the same year that advertising was changing so fast that “the traditional ad market is in crisis.”2

The shift to web‐based media has profoundly affected all aspects of advertising. The resultant changes include the following:

  1. Online retail sales are facilitated by web‐based search services, both general and specific in nature. The biggest search entity, Google, has in recent years become increasingly oriented toward shopping and advertising.
  2. Enormous online retailers, such as China‐based Alibaba and US‐based Amazon, facilitate e‐commerce and so‐called “e‐tail” sales.
  3. Working hand‐in‐hand with the latter, various electronic payment systems have arisen, largely to support online sales, such as Alibaba's Alipay and Apple's Apple Pay.
  4. Advertising methods have changed radically due to the introduction of global media's shift to new technological options.
  5. The largest traditional advertising agencies have faced new challenges as they have attempted to adapt to increasingly global and web‐oriented media.
  6. Online advertising has dramatically matured. Both media conglomerates and small businesses are still rushing, however, to develop new online advertising methods.

The last two factors have, in particular, left some advertisers in a quandary. Some advertisers have found ways to adapt to new digital media, while others have experienced a marked inability to effectively apply legacy advertising techniques to new digital media. Both native advertising and content marketing have been suggested as methods for effectively advertising within new forms of web‐based media, but both represent unfamiliar territory to many, if not most, advertisers.

Advertisers are still battling with such issues as ad blocker software and the phenomenon known as “banner blindness,” in which users have trained themselves to mentally block out banner ads. Content marketing entails the integration of promotion into content without directly advertising per se, a method which flies in the face of much traditional advertising. Content marketing can be used hand‐in‐hand with influencer marketing, which uses the online influence of a charismatic individual to indirectly promote certain products and brands.

Some advertisers persist, however, at attempting to use legacy advertising methods. Even major global players, such as YouTube, seem uncertain how, exactly, to monetize content without annoying audiences and potentially alienating advertisers. In addition, as global advertising continues its shift toward ever‐greater emphasis on online media, traditional advertising agencies have had to contend with attempts on the part of advertisers to bypass them entirely.

To a large extent, web forces like Instagram, Facebook, and Google have been supplanting the power of traditional ad agencies.3 One observer suggests that, where advertising is concerned, “the dominance of Facebook and Google has reached an absurd proportion.”4 A 2017 headline in the Guardian noted that “Google and Facebook Bring in One‐Fifth of Global Ad Revenue.”5

Another blow to traditional ad agencies comes from a trend toward the creation of native advertising bureaus within web‐based digital media companies. These bureaus or departments might be more familiar with how best to use a particular form of online media, and might offer a lower ad placement cost, without a cut going to the agency. Use of such bureaus instead of a traditional agency could reduce the advertiser’s ad budget substantially.

Even where television continues to captivate audiences, things are rapidly changing. Certainly television still uses the traditional schedule‐based and mass audience model, but to a large extent consumer behavior has been shifting toward (1) a non‐linear (on demand) model; (2) use of mobile media and mobile apps for media access; (3) use of a “second screen” while watching the living room TV; and (4) increasing personalization and niche programming.

All of these developments challenge traditional forms of advertising in terms of advertising methods, audience measurement, and gauging the effectiveness of specific ad campaigns. The unexpected speed at which most of the world has embraced smartphone technology has aided in the global shift to mobile media. While desktop advertising has seen little to no growth, global mobile advertising has exploded.

At the same time, advertising has been confronted with various new issues which are associated with the transition to web‐based media. Those issues include charges of fraud in digital advertising as well as public impatience with online ads. In one study, the majority of respondents expressed annoyance with the practice of attempting to force viewers to watch preroll ads before allowing access to online videos.6

Widely discussed across the advertising industry is the growing importance of such non‐traditional web‐based entities as Google and Facebook in global advertising. In 2017, figures suggested that about a fifth of all global ad spending goes to either Google or Facebook.7 Some advertisers, however, have expressed frustration with online ad metrics. Some of that frustration was aimed at Facebook in particular.

At one point, Facebook was accused of having inflated ad metrics. Because newer technologies make it easier to place ads, but harder to tell if those ads are actually reaching anyone, charges of fraud involving the web in a general sense have arisen at times. Some observers have noted that because of this, some advertisers have been questioning what they are actually receiving for their investment, while observers suggest that billions are spent on digital ads that no one will ever see.8

Not only are American‐based corporations Google and Facebook playing an ever‐increasingly prominent role in global advertising, but relatively new players have arisen in various other parts of the world. These includes the likes of China‐based Baidu, Tencent, and Alibaba, which are similarly competing for the digital ad market.

Despite the challenges and issues inherent in digital media advertising, online sales continue to multiply. Global ecommerce retail sales stood at about $1.3 billion in 2014, but are estimated to reach about $4.9 billion in 2021.9

This chapter will examine and evaluate several of the most significant international entities involved in global media advertising. Those entities include online search services and companies with a hand in global ecommerce and online payment systems, as well as traditional ad agencies (Table 14.1).

Table 14.1 Top five global advertisers, 2017.

Source: http://adage.com/article/cmo‐strategy/world‐s‐largest‐advertisers‐2017/311484/, accessed December 5, 2017.

1 Proctor & Gamble US $10.5 billion
2 Samsung South Korea $9.9 billion
3 Nestlê Switzerland $9.2 billion
4 Unilever UK/Netherlands $8.6 billion
5 L'Orêal France $8.3 billion

The BAT Companies: Alibaba, Baidu, and Tencent

Three tech companies dominate in online Chinese media. These are sometimes referred to as the BAT companies or simply the BAT, short for Baidu, Alibaba, and Tencent. They are discussed here with a caveat: Some are suggesting that the future of online media tech in China will be guided by even newer companies which are being eyed because of their growth potential.

There are three companies viewed as having the potential to dominate future online media in China: Toutiao (online news), Meituan‐Dianping (online purchasing), and Didi Chuxing (online access to transportation). These are newer companies which together are sometimes referred to as TMD, despite the fact that the same abbreviation also serves as a Chinese profanity. All three firms are known for their extensive and sophisticated use of artificial intelligence and social media.

China's role in the overall online global economy is staggering. About a fifth of the world's population lives in China. Predictions suggest that, by 2020, about 60% of the world's ecommerce sales will come from China. At the same time, the US share is expected to drop from about 21% in 2016 to 17% in 2020. China is also expected to outstrip the US in terms of online advertising.10

A unique facet of online advertising in China has been the imposition of government restrictions that are unknown in the West. In 2018, the government cut the number of ads which can appear alongside search results, while increasing the registration requirements for businesses wishing to advertise online.

This was largely in response to a 2018 scandal in which questionable medical advice was said to have been disseminated as the result of ad‐driven online searches. Online advertising in China appears to be continuing to grow despite the restrictions.

Alibaba Group

The Chinese multinational conglomerate Alibaba Group is considered the world's largest online commerce company. Alibaba was formed in 1999 by Jack Ma, a former school teacher who formed the company in his apartment. By 2015, Alibaba had outstripped all US online retailers combined in terms of sales and profits, including Walmart, Amazon, and eBay.11

Alibaba gets over half of its revenue from ads. The company is involved in about 80% of online sales in China. In 2018 Alibaba was described as a $525 billion company,12 and one expected to topple rival Baidu's dominance as the top China‐based digital advertising platform.13

Alibaba is a major world player in such areas as ecommerce, electronic payment, retail sales, entertainment content, and various types of web‐based services, such as cloud data. Alipay, Alibaba's payment platform, competes with WeChat Pay, operated by Baidu. Both platforms have been expanding into the US and Europe.

Alibaba operates in over 200 countries. By 2016, Alibaba was poised to exceed Baidu's digital market in China. One factor which has aided the growth of Alibaba is that various US‐based companies like Google and Facebook are banned in China.

In 2018 Alibaba launched its first global ad campaign, using a theme associated with that year's Winter Olympics in Pyeongchang. The ads were seen on TV in China, Japan, the UK, and the United States, and on billboards in China and Korea. The ads promoted Alibaba's position as official supplier of cloud and ecommerce services for the Olympics. In India, Alibaba operates as UC Web Mobile. There the company competes with such online entities as Google, Facebook, and Twitter through its UC Ads platform.

Alibaba uses three primary sites, Taobao, Tmall, and Alibaba.com. Much of Alibaba's income comes from its consumer‐to‐consumer Taobao website and app, as well as its Tmall shopping platform. Taobao has a reputation for pushing relevant advertising to its users. The app was blacklisted in 2016 by the United States Trade Representative (USTR), however, as a “notorious marketplace.” This was because of charges that the app featured “high levels” of counterfeit products and contained numerous copyright violations.14

Alibaba seeks to eradicate, to the extent possible, the line between online and offline shopping by integrating the phone‐based digital experience into shopping through a process the company calls “new retail.” Even within a brick‐and‐mortar store, customers use their phones to learn more about products, to customize their purchases, and to have other sizes or models delivered to their homes. Shop owners use Alibaba's online services to order stock. The company attempts to create a web‐based ecosystem.

Alibaba pursues a business model which, according to the company's founder and CEO Jack Ma, contrasts markedly with that of Amazon. In his estimation, Amazon is “more like an empire – everything they control themselves, buy and sell.” On the other hand, in Ma's words, “we want to be ecosystem.”15

Baidu

Baidu is responsible for about 80% of online searches in China, a country in which Google is noticeably absent. Due to government regulation, Western companies wishing to advertise via Baidu need to submit company registration and finance documents. In addition, of course, Baidu's users conduct searches in Mandarin, using Mandarin keywords, and expect content in Mandarin.

Baidu has occasionally been called in the West “the Chinese Google,” but there are certainly both similarities and differences. Like Google, Baidu has been developing a self‐driving car and is avidly pursuing the use of artificial intelligence. One difference, however, is in the degree of accountability for ad results.

As an example, Baidu became the subject of a major scandal in 2016 when a government investigation concluded that the search engine's paid search results had misled users to potentially seek out questionable medical treatments. The investigation was prompted by the death of a university student who had paid for a controversial medical treatment as the result of a Baidu search. In response, the company made a commitment to keep its mobile search app free from sponsored results.16

In 2017, Baidu was looking to greatly increase ad revenue through use of its news feed app.17 The app is just one of several Baidu products which makes use of artificial intelligence (AI). Baidu is a heavy user of AI, a field with direct application to advertising, and has been investing heavily in AI research.

Baidu was in talks with Netflix early in 2018 to bring some of its content to Baidu's hugely popular iQiyi video platform in China. In that year, iQiyi boasted around 400 million users.18

Tencent

In 2017, Chinese social media giant Tencent was seeking to increase its share of the global advertising market, while looking to Facebook as a role model.19 At that time, Tencent was deriving only 17% of its income from advertising, compared to 97% for Facebook. In terms of ad revenue, Tencent lagged behind US‐based Google and Facebook, as well as China‐based Alibaba and Baidu, in that order. Gaming accounted for the majority of Tencent's revenue. The company recently acquired Riot Games of Los Angeles, publisher of League of Legends.

Tencent was one of China's major tech companies created by Ma Huateng, commonly known as Pony Ma. He is now being called the richest man in China,20 and was included in Forbes' 2018 list of the world's 10 “most powerful CEOs.” His position as Tencent CEO makes him one of the 15 wealthiest people in the world.

Pony Ma created Tencent with four friends in 1998 at the age of 27. Tencent's mobile app WeChat which, despite the name, is a multi‐purpose app, became phenomenally popular in China. Recent talk has centered around WeChat's potential to include far more advertising. In a country which accounts for about a fifth of the world's population but in which Facebook is banned, the advertising potential of Tencent is enormous. Tencent also operates its own popular electronic payment system, WeChat Pay, which operates in competition with Alibaba's Alipay.

The FANG Companies: Facebook, Apple, Amazon, Netflix, and Google

Several major American tech firms which tend to dominate much of the online experience in the US are collectively referred to as FANG, for Facebook, Amazon, Netflix, and Google (including its parent company, Alphabet, and its subsidiary, YouTube). Sometimes Apple is added, resulting in the expanded FAANG acronym.

Despite phenomenal growth in online advertising, especially in connection with these companies, the digital advertising aspect has not been without issues. Facebook suffered a prominent global scandal in 2018 over mining of personal data.

Some advertisers using Google's subsidiary YouTube have been upset over the nature of ad placement, with ads appearing alongside videos which some advertisers saw as questionable or even repulsive. In addition, ad metrics showing return on advertising investment have, at times, been viewed as sketchy or even inaccurate.21

Facebook

Facebook, the American social media behemoth, is not available in China. Still, Facebook is responsible for about 20% of the world's total $203 billion spent on online advertising.22 This figure has shown a steady increase since ads first began to appear in the Facebook site in 2004, and is a huge chunk of the overall global ad revenue, which is expected to reach $551 billion in 2018.23

All has not been rosy in Facebook's relationship with its advertisers, however, in the wake of a controversy which erupted in 2018. Charges that a British data firm, Cambridge Analytica, mined personal information from as many as 87 million Facebook users led to a Congressional investigation in the US and a major scandal as reported in world news media.

In addition, some indications suggest that Facebook has been hit with dissatisfaction on the part of some advertisers who would like to see greater transparency and more credible data as to the return on ad expenditures. Facebook ad metrics had been reportedly inflated at times.24

As a result, advertisers are concerned about how to come up with alternative personal data in the event that Facebook places serious limits on access to such information. At the same time, Facebook users are concerned that ad agencies have their personal information.

While some major brands have scaled back on Facebook and Google advertising due to various types of concerns, online advertising is still predicted to increase. This is partly because of growth in advertising on the part of local and smaller advertisers. These developments can be compared to the TV advertising market, which in the US, at least, has been described by various sources as “flat.”

Growth in Facebook and Google advertising is not, however, expected to result in the two giants gaining a bigger chunk of the overall US digital ad market. In fact, that share is expected to decline in 2018 as the result of growth in advertising on other platforms, such as Amazon and Snapchat. The share of global ad spending involving both Facebook and Google is also expected to decline. This is in sharp contrast to the situation in 2016, when Facebook and Google were responsible for more than 70% of all digital advertising in the UK.25

Amazon

Advertising has become a major component of online retailer Amazon's business, with ad sales exceeding $2 billion for the first time in the first quarter of 2018. Those sales have been characterized as growing quickly, with the company aiming to increase its involvement in advertising during that year. Some speculation suggested that Amazon might increase the extent of ad load in its pages, introducing customers to products and brands relevant to their individualized searches. In 2018 it was predicted that, by 2020, Amazon would become the third‐largest ad seller in the United States, lagging behind Google and Facebook.26

Amazon has also been selling ad time for commercials inserted into the company's live‐streamed video content offered through Amazon Prime. Additionally, Amazon was expected to partner with tech companies to sell partnered ads for mobile media and TV. Further, ads can be purchased within streaming video apps which are accessed through Amazon's Fire TV device.

Sargi Mann, a spokesman for the Havas Media Group which is discussed separately in a later section, suggested that he had been holding conversations with Amazon regarding how its Amazon Prime video service offers opportunities for non‐traditional advertising, presumably referring to content marketing. Mann asked, “Instead of having superfluous ads, how can a brand have a part of that dialogue that is not advertising in its traditional form?” He added, “I am always open and like to discuss new and innovative ways in media where ads can be more of an organic insertion.”27

The issue of a more “organic insertion” is a factor which appears to be troubling the ad industry in general, as media systems transition to web‐based forms. Cracking this question could place Amazon in a competitive advantage over companies like Google's subsidiary YouTube, which depends on contrived and typically irrelevant preroll ad placement.

In general terms, despite Amazon's size, the company has so far shown only scant profit. Advertising is being looked to as the factor that may allow Amazon to become enormously profitable. While Amazon's cloud business has itself shown profit, the potential exists for advertising on the part of Amazon to become even more profitable.

Amazon seeks to create new ad‐buying platforms which will enable advertisers to buy ad space on Amazon “as easily as filling up an online shopping cart.”28 Some see ad placement in Amazon's website as yielding better return than placement in Google.

Various traditional advertising agencies, including such major firms as WPP and Omnicom, have been developing their own in‐house Amazon bureaus, which are Amazon‐specific ad services designed to handle Amazon's growing range of ad offerings.29 At the same time, ad agencies have been eyeing Amazon as a role model, to some extent, with regard to such innovations as allowing advertisers to bid on web‐based ad space.

Apple

Apple is probably not the first company to come to most people’s minds when they think of online advertising, yet Apple's influence on web‐based advertising is enormous. Once Apple began allowing users to install ad blocker software in mobile devices, a very vocal outcry was heard from some websites which claimed that the use of interstitial (pop‐up) ads and promos, from their perspective, funded the Internet.

In 2017, Apple's Safari browser introduced Intelligent Tracking Prevention (ITP), which limits what is sometimes termed cross‐site tracking. Such tracking allows advertisers to monitor users' navigation from one website to another.

Privacy pundits welcomed the change, but some within the advertising industry saw the move as harming the web while indirectly giving more power to the likes of Google and Facebook, which keep users logged in anyway. Advertising Week's website noted the change with a headline reading “Every Major Advertising Group is Blasting Apple for Blocking Cookies in the Safari Browser.”30

Apple has also introduced its own online payment system, Apple Pay. In addition, the company is in the process of positioning itself as a producer of TV content. Because Apple has, at times, butted heads with the advertising industry, however, it remains to be seen what the implications of such moves would be for TV advertising generally.

Apple's TV programming may continue to follow a Netflix‐type subscription model, but in 2018 it was appearing more likely that it will be offered for free to Apple TV users. That could mean that advertising might possibly be inserted. Apple was widely rumored to be investing as much as a billion dollars into original TV production in 2018, with programming expected to be available on a widespread basis by 2019.

Netflix

Netflix is generally known for its use of a subscription model which eschews advertising, but some wonder whether this will change as demand continues to increase. The company's large share of the video streaming market (40% of all OTT, so‐called “over‐the‐top” household viewing hours in the US in April of 2017) has resulted in various brands wanting to advertise on Netflix.31 OTT viewing is web‐based and bypasses both cable and satellite. For now, at least, Netflix has invested heavily in promoting its own programming to its customers. Netflix is said to have spent over a billion dollars in advertising activities in 2017.32

Google

Together, Facebook and Google are said to account for over 60% of global online ad revenue, and about 25% of global advertising in general.33 Although Google is not, strictly speaking, an advertising company, it has positioned itself as a force of growing importance in global advertising.

Google has exhibited what appears to be an ever‐increasing focus on advertising and mobile media in its search page. The company has been increasingly relying on a system of prioritizing mobile media, culminating in the so‐called “mobilegeddon” phenomenon. This is the name unofficially given to a Google search algorithm update in 2015 which began to prioritize mobile and mobile‐friendly sites.

The idea behind the “mobilegeddon” label (based on a combination of mobile and Armageddon) was that massive disruption to web design would naturally occur, since Google's search changes could be expected to radically affect page rankings. Some reports suggest that concerns were overblown. Nevertheless, countless websites appear to have been redesigned, perhaps as a result, and the widespread concern demonstrates the prominent role played by Google in relationship to global advertising.

This stance has been perceived, whether truly accurate or not, as Google more or less single‐handedly mandating that the nature of much of the Internet be altered, as businesses, institutions, and other entities scrambled to provide mobile‐friendly sites. Advertising has become, in many cases, the primary focus of the Google search experience. At the same time, ad agencies and major advertisers have been battling with Google subsidiary YouTube over ad placement.

Google has experienced various battles with European regulators over a number of issues. One prominent squabble resulted in antitrust charges applied by the European Union against Google's ad business in 2016. The complaint particularly targeted Google's service called AdSense, which assists advertisers in placing ads on third‐party websites.

Advertising Agencies

Four traditional ad agencies are often termed the “Big Four.” These are WPP, Omnicom, Publicis, and Interpublic, closely followed by Dentsu. Other major agencies prominent in global advertising include JCDecaux and Havas, now a part of Vivendi. Y&R, originally Young & Rubicam, is now a part of WPP, as is GroupM.

Table 14.2 Top five global advertising agencies, 2018.

Sources: A large number of news sources; see, for example, https://www.adbrands.net/agencies‐index.htm, and https://www.worldatlas.com/articles/the‐largest‐advertising‐companies‐in‐the‐world.html, accessed September 20, 2018.

1 WPP Group London
2 Omnicom Group New York
3 Publicis Group Paris
4 Interpublic Group New York
5 Dentsu Tokyo

Close on the heels of the top traditional ad agencies are consultancies. Differences between ad agencies and ad consultancies are often somewhat nebulous, but consultants may be focused on larger evaluating and problem‐solving goals, which involve evaluating a brand, identifying that brand's problem, and then suggesting a remedy. That remedy might be carried out by an agency, but in a streaming and mobile media universe some advertisers might skip the agency entirely.

In 2018, four of the major consultancies entered the Ad Age top 10 list of the world's largest ad agencies for the first time. These are Accenture, PwC, IBM, and Deloitte. Some pundits suggest that consultancies might make extensive inroads into the world of traditional ad agencies, primarily because of the switch to new digital media.

Traditional agencies have sometimes been viewed as of decreasing significance, primarily due to changes in media technology; to not mince words, some are saying simply that “the Internet is destroying the ad agency business.”34 So‐called programmatic ad sales, for instance, allow advertisers to access a rich field of data used in order to target consumers. At the same time, ads can be directly purchased online without using an ad agency.

Various agencies, however, have been seeking deals with major digital media which would eliminate tech middlemen. This would return more ad purchasing clout to the agencies. GroupM, Omnicom, and Dentsu, in particular, were said to be in talks with major web entities, seeking to establish direct programmatic ad sales using ad placement at big discounts to agencies. Japan‐based Dentsu is said to be especially concerned with eliminating tech intermediaries.35

The future of generalized ad agencies is not completely clear. Certainly it is not yet completely defined. Digital media platforms have been overtaking TV in terms of ad revenues with a speed that has been astonishing everyone. Ad buys have been increasingly drifting from traditional TV and print to online, at the same time that traditional TV ad rates have been increasing.

Currently, mobile advertising is said to account for 54% of ad sales in general. This has radically changed the business of ad agencies. As one European observer put it,

There has been a massive shift in terms of power and money – essentially to Google and Facebook. Where the big ad agencies used to be, the likes of Facebook and Instagram have taken over.36

Those remarks appeared in connection with the annual Cannes Lions advertising festival in France in 2017. At one time, that festival was dominated by the likes of major ad agencies WPP and Publicis. This time, Snapchat, Google, and Facebook were prominent at the festival, while downturns at the major traditional ad agencies were said to be “alarming.”37 As already noted, the big change seems to be partly because of the growth of programmatic online ad sales, an approach which is both quick and efficient and which can bypass the agencies.

Dentsu

Dentsu Aegis Network (DAN), a major multinational media and digital marketing company, is based in Tokyo. The company stems from an earlier company, Japan Advertising Ltd. and Telegraphic Service Co., which was founded by Hoshiro Mitsunaga in 1901. One of DAN's primary subsidiaries is Merkle, which provides data, analytics, and technology solutions to businesses and nonprofit entities. Merkle is headquartered in Columbia, Maryland.

DAN has been focusing on global expansion, and already operates in 145 countries. As of 2017, Dentsu and China‐based Tencent were collaborating in the area of mobile marketing. US‐based Microsoft is a major client of Dentsu.

Havas

Havas Group, which is one of the world's major ad agencies, stems from a company founded in 1835 by Charles Louis Havas, who established what is regarded as the world's first press agency. Havas, which is based in Paris, operates in 144 countries and employs about 20 000 persons. As of 2018, 509 advertising agencies were in operation as a part of Havas Group.

One of the world's most significant news agencies, Agence France Presse, emerged from the 1835 beginnings of what was then known as Agence Havas. Another major global news agency, Reuters, was formed by Paul von Reuter, who had been an employee of Havas.

In 2017, Vincent Bolloré, president of Vivendi, a French media conglomerate, made waves by spending a little over $3 billion to acquire Havas Group. Vincent Bolloré remained chair of Vivendi until his son Yannick assumed this position in 2018. Vincent Bolloré was investigated in 2018 because of charges that he had used Havas to influence elections in West Africa.

Speculation suggested that Vivendi might allow Havas to become the in‐house ad agency for Canal + and Universal Music Group, both of which are major media entities owned by Vivendi. At any rate, Vivendi was expected to use its media properties to woo Havas advertising clients.

Interpublic

The Interpublic Group of Companies (IPG) is headquartered in New York, but operates in over 100 countries. The prominent McCann agency, once known as McCann Erickson, is a part of Interpublic. The Foote, Cone, and Belding agency has also been absorbed into IPG.

IPG, which was formed in 1930, experienced a series of financial issues in the early 21st century, following an accounting scandal in 2002. In 2018 IPG was collaborating with Nielsen to match Nielsen audience data with relevant consumer demographics.

JCDecaux

JCDecaux, headquartered near Paris, is considered the world's largest outdoor advertising company. As such, the company is focused on what is termed location‐based marketing. JCDecaux is responsible for billboards, bus‐stop advertising, and the like in more than 75 countries, including the United States.

In connection with its outdoor advertising focus, the company also operates public toilets, referred to in some parts of the world as public amenities or public conveniences, as well as self‐service bicycle rental services and kiosks. These sorts of options not only offer advertising potential, but are said to increase the perceived value of advertising, since they involve stationary rather than transitory locations for ads.

JCDecaux was formed in 1955 by Jean‐Claude Decaux. In 1999 the company acquired the outdoor advertising division of another major European media corporation, that being Havas Media Communication.

Omnicom

Omnicom, another of the “Big Four,” has been showing record profits globally while struggling in North America. Omnicom and Publicis tried and failed to merge in 2014. This highly publicized venture was to involve $35 billion and was to revolutionize the advertising industry. Reasons cited include potential clash of clients' brands, as well as an inability to apply economies of scale in all facets of ad agency activity.

Publicis

The multinational advertising and public relations company Publicis Groupe is based in Paris, but operates in 108 countries. Four Publicis divisions emerged after a 2015 restructuring. These are Publicis Communications, Publicis Media, Publicis Sapient (Publicis acquired Sapient Corporation in 2015), and Publicis Healthcare. Its ad network brands include Rosetta, Vivaki, Publicis, Burrell, and Saatchi and Saatchi.

Publicis Groupe revenues have recently been in something of a decline, with its stock value having dwindled by about 24% between 2015 and 2018. More optimistic reports noted that the company has been acquiring major new accounts, however, from the likes of McDonald's and Southwest Airlines.

By 2017, Publicis was being termed “beleaguered,” as was major agency WPP.38 The following year, financial challenges at Publicis were being blamed on such web entities as Google and Facebook. As one pundit phrased it, “If Publicis stands still, Facebook and Google and all the others will eventually kill it.”39

CEO Arthur Sadoun has been quoted as saying, “I've been in this business for 20 years, and it is exactly the same as it was 20 years ago. Everything else has changed…but we haven't. Incremental change won't be enough to save us.”40 He has reportedly been counting on AI, specifically a major Publicis AI project called Marcel, to boost the company's finances.

Marcel was launched in 2018, in collaboration with Microsoft. A major talent of Marcel is its ability to find relevant abilities and expertise across the various agencies of Publicis, allowing them to more efficiently connect and work together. The company appears to be hoping that Marcel will allow Publicis to more effectively compete against consultancies like Deloitte and Accenture.

WPP

WPP, which operates in 112 countries, is considered the world's largest advertising and public relations agency group. WPP appeared to be undergoing massive shakeup in 2017 with mergers taking place within WPP, and more mergers are expected. Headquarters are in London and in Dublin, Ireland.

WPP owns major advertising, PR, and marketing research firms, including Y&R. Y&R is still referred to informally by its original name, Young & Rubicam. As a part of WPP, Y&R is considered one of the world's largest ad agencies, and is one of the most historically significant. WPP also comprises GroupM, headquartered in New York, which is sometimes viewed as the largest ad agency in terms of billings.

Recently, however, WPP has seen its share of challenges. Sir Martin Sorrell, founder of WPP, suddenly stepped down in 2018 in the midst of an investigation and after a major financial slump the previous year. In addition, WPP has been challenged by changing advertising trends and the shift to digital media.

Conclusions

The global advertising industry has changed markedly in the last few years, largely the result of the rising importance of newer digital options which are web‐based and often mobile in nature. While the world's leading ad agencies still perform a vital role and are attempting to adapt to an ever‐evolving digital media environment, they are often bypassed entirely in the shift to new options.

In some respects, core nations still dominate in advertising. The world's leading ad agencies are still based in core nations. Even where global advertising has shifted to localized ad creation and placement in former underdeveloped regions, products and brands developed in core nations, particularly the United States, still play a prominent role. This key fact still fuels world system and electronic colonialism theories.

The landscape has shifted dramatically, however, with the rise of both new web‐based advertising options and new ecommerce stakeholders. Even where US‐based companies have assumed a global role in advertising in that new landscape, those companies often adopt a localized approach in various countries or regions of the world.

Further, even where such American‐based entities as Facebook, Google, and Amazon, for example, have been prominent in other parts of the world, they have tended to largely serve as containers for localized content. Even if Netflix were to eventually bow to pressure from potential advertisers and adopt advertising, its program content varies from one country to another, so advertising would presumably vary as well. Similarly, where US TV networks have spread to other parts of the globe, much if not most program content is typically regionalized, and much of the advertising may represent regional or local brands.

Major American‐based ad agencies have been shaken by the likes of Facebook and Google, but major US‐based online services are not available in all parts of the world. This is particularly true in China, which represents a fifth of the earth's population. China, in particular, provides its own alternatives to American tech giants like Google and Facebook. Some indications suggest a hegemonic shift, with China gradually playing a greater role in the global economy and global advertising. Even where such services as Google and Facebook are available outside of the United States, they do not necessarily dominate, depending on the country.

Mobile and web‐based media are in tremendous flux, with outcomes unclear and with surprisingly quick growth in telecommunications hardware and infrastructure in underdeveloped areas. This could result in surprisingly quick non‐hardware growth in those same areas, with new emerging media corporations, social media forms, entertainment content suppliers, ecommerce entities, and other services.

These sorts of factors would appear to suggest that issues of dominance and hegemony by the US and other core nations in global advertising are not necessarily as simple as they may appear at first glance. As the digital media landscape continues to evolve, we can expect a continuation of shifting hegemonic relationships among nations and a weakening dependence on US content in some respects, although that dependence may perhaps increase in other respects. We can also anticipate continued growth in media content, including advertising, in lesser‐developed countries.

Notes

  1. 1. https://www.thetimes.co.uk/article/online‐ad‐spend‐to‐topple‐tv‐v7tln5379, accessed October 20, 2018.
  2. 2. https://www.thetimes.co.uk/article/clicking‐down‐to‐disaster‐q655r5232, accessed October 20, 2018.
  3. 3. Philip Connolly, “Clicking Down to Disaster,” The Sunday Times (London), June 18, 2017, p. 5.
  4. 4. Darren Davidson, “Branded Content Bridges Gap,” The Australian, August 21, 2017.
  5. 5. Julie Kollewe, “Google and Facebook Bring in One‐Fifth of Global Ad Revenue,” The Guardian (London), May 2, 2017.
  6. 6. https://www.adweek.com/digital/7‐big‐trends‐are‐shaping‐future‐digital‐advertising‐171773/, accessed June 19, 2018.
  7. 7. https://www.statista.com/chart/12179/google‐and‐facebook‐share‐of‐ad‐revenue/, accessed June 19, 2018.
  8. 8. https://www.thetimes.co.uk/article/clicking‐down‐to‐disaster‐q655r5232, accessed September 20, 2018. See also Philip Connolly,”Clicking Down to Disaster,” The Times (London), June 18, 2017; and Darren Davidson,“Dodgy Digital Advertisers Face a ‘Reckoning,'” The Australian, February 11, 2017, Business Section, p. 27.
  9. 9. https://www.statista.com/statistics/379046/worldwide‐retail‐e‐commerce‐sales/, accessed June 17, 2018.
  10. 10. https://www.investors.com/research/industry‐snapshot/move‐over‐fangs‐chinas‐bat‐stocks‐go‐from‐copycats‐to‐fat‐cats/, accessed June 19, 2018.
  11. 11. https://www.institutionalinvestor.com/article/b1505pjf8xsy75/alibaba‐vs‐the‐world, accessed June 14, 2018.
  12. 12. https://www.reuters.com/article/us‐alibaba‐olympics‐advertising/aliba…pics‐campaign‐in‐first‐corporate‐ad‐push‐outside‐china‐idUSKBN1FI1Y4, accessed June 19, 2018.
  13. 13. http://www.asiaone.com/business/baidu‐set‐lose‐leading‐role‐digital‐advertising‐alibaba, accessed June 22, 2018.
  14. 14. https://www.cnbc.com/2016/12/21/us‐puts‐alibaba‐taobao‐website‐back‐in‐its‐list‐of‐notorious‐marketplaces.html, accessed June 19, 2018.
  15. 15. https://www.cnbc.com/2017/01/18/jack‐ma‐difference‐between‐alibaba‐and‐amazon.html, accessed June 19, 2018.
  16. 16. http://www.scmp.com/tech/article/2147971/baidu‐ceo‐pledges‐keep‐offering‐advertising‐free‐search‐engine‐app, accessed June 17, 2018.
  17. 17. http://adage.com/article/digital/baidu‐hits‐reset‐button‐cleaning‐online‐advertising/308081/, accessed June 17, 2018.
  18. 18. https://www.cnbc.com/2018/01/24/baidu‐hints‐at‐further‐deals‐to‐bring‐netflix‐content‐to‐china.html, accessed June 19, 2018.
  19. 19. https://www.bloomberg.com/news/articles/2017‐11‐26/why‐tencent‐wants‐to‐be‐more‐like‐facebook‐in‐advertising, accessed June 17, 2018.
  20. 20. https://www.cnbc.com/2018/05/10/tencent‐ceo‐ma‐huateng‐pony‐ma‐is‐now‐the‐richest‐man‐in‐china.html, accessed June 17, 2018.
  21. 21. Davidson, op cit.
  22. 22. http://www.businessinsider.com/facebook‐advertising‐market‐share‐chart‐2018‐3, accessed June 22, 2018.
  23. 23. https://www.wsj.com/articles/google‐facebook‐propel‐jump‐in‐global‐ad‐spending‐forecast‐1529299801, accessed June 22, 2018.
  24. 24. Davidson, op cit.
  25. 25. https://www.forbes.com/sites/johnkoetsier/2018/03/19/digital‐duopoly‐declining‐facebooks‐googles‐share‐of‐digital‐ad‐dollars‐dropping/#6292cd3c60a8, accessed June 22, 2018.
  26. 26. https://www.cnbc.com/2018/04/26/amazon‐advertising‐is‐now‐a‐multibillion‐dollar‐business.html, accessed June 19, 2018.
  27. 27. https://www.cnbc.com/2017/12/26/amazon‐digital‐advertising‐push‐in‐2018.html, accessed June 19, 2018.
  28. 28. Garett Sloane, “Amazon's Ad Ambition,” Advertising Age, April 30, 2018, p. 26.
  29. 29. Ibid.
  30. 30. https://www.adweek.com/digital/every‐major‐advertising‐group‐is‐blasting‐apple‐for‐blocking‐cookies‐in‐the‐safari‐browser/, accessed June 19, 2018.
  31. 31. http://www.businessinsider.com/advertisers‐want‐in‐on‐netflix‐2017‐10, accessed June 22, 2018.
  32. 32. https://www.statista.com/statistics/688525/netflix‐ad‐expense/, accessed June 22, 2018.
  33. 33. https://www.statista.com/chart/12179/google‐and‐facebook‐share‐of‐ad‐revenue/, accessed June 19, 2018.
  34. 34. http://www.businessinsider.com/arthur‐sadoun‐marcel‐ai‐publicis‐2018‐6, accessed June 22, 2018.
  35. 35. Mike Shields, “Big Ad Agencies Are Trying to Cut Out Ad‐Tech Middlemen ‐ and Justify their Own Existence,” The Business Insider blog, April 25, 2018, via Lexis‐Nexis, accessed June 22, 2018.
  36. 36. Connolly, op cit.
  37. 37. https://www.ft.com/content/9a9ac60a‐575a‐11e7‐9fed‐c19e2700005f, accessed June 22, 2018.
  38. 38. https://www.marketingdive.com/news/analyst‐accenture‐a‐credible‐buyer‐for‐beleaguered‐wpp‐and‐publicis/506242/, accessed June 22, 2018.
  39. 39. http://www.businessinsider.com/arthur‐sadoun‐marcel‐ai‐publicis‐2018‐6, accessed June 22, 2018.
  40. 40. https://www.adweek.com/agencies/publicis‐finally‐answers‐the‐ad‐industrys‐most‐pressing‐question‐what‐is‐marcel/, accessed June 22, 2018.
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