Hey, Advertisers, TiVo Is Your Friend
It's a warm September day in Manhattan, and Rishad Tobaccowala is standing in front of about 40 top advertising agency consultants in one of Starcom MediaVest Group's small auditoriums. The consultants, who steer advertisers to the right agencies, are cranky. They have been feted all week by more than a dozen leading agencies in New York -- every one, that is, except Tobaccowala's SMG. Instead of lavish trays of food, the ad agency brings in deli fare. SMG is short on chairs, too, so a half-dozen high-powered consultants lean against the walls. As Tobaccowala finishes his riff on how the agency's clients are abandoning consumer demographics in favor of targeting buyers' passions, be they ballet or hunting, he introduces a "real hunter," John Muszynski, one of the top execs at SMG, which is owned by France's Publicis Groupe. "Seriously," Tobaccowala says. "He goes out and kills things." The banter draws nervous titters.
Tobaccowala can get away with this because he's one of the industry's leading media strategists, and that makes him one of the new oracles of Madison Avenue. Media strategists are the people who decide where to spend advertising dollars -- across Yahoo's (YHOO ) sites, on ABC's (DIS ) Desperate Housewives, or in The New York Times Sunday Styles section. They used to rank just above accountants as the kind of people advertisers wanted to meet in the industry. In recent years, however, disdain has been replaced with adulation as the attention spans of consumers have shrunk. With the Internet, ad-skipping digital video recorders (DVRs), video cell phones, and portable music and video players all vying for their attention, consumers are getting harder and harder to track. And that's putting media strategists on the speed dials of advertisers befuddled by the changing landscape.
With a sterling track record, Tobaccowala is first among the new stars of ad agencies. What the 47-year-old, India-born chief innovation officer may sometimes lack in tact, he makes up for with a proven compass. He's a pioneer of online advertising, insisting back in 1993 that his ad agency, Leo Burnett Worldwide Inc., spin off an interactive ad unit that he would head. He persuaded big-name clients, including General Motors Corp. (GM ) and Procter & Gamble Co. (PG ), to stay committed to the Web during the downturn. In 2002 he pressed SMG to form a video-gaming unit, getting a jump on rivals in figuring out how to place brands in games. A year later he drove the first up-front buying season for marketers to purchase broadband ad space from Yahoo (YHOO ) and America Online Inc. (TWX ), just as they buy buckets of TV time from broadcast networks six months before the new programming season.
MORE SCIENCE, LESS ART
This futurist doesn't dwell on successes of the past, though. Tobaccowala's message to clients now is that they must get used to being in a permanent state of discomfort. The forces unleashed by tech on the ad world are gaining momentum and leading to ever more unexpected developments. "Blogs and podcasting have gone from 'What are those?' to mainstream in less than two years. Rupert Murdoch paid $580 million to acquire a social-networking business [MySpace.com], and Google's (GOOG ) market cap is higher than Viacom's (VIA )," he says. "So where is the steady state?"
He's less than impressed with some of the supposed solutions offered by others on Madison Avenue. One example: product placements in movies and TV, a common tactic advertisers are using to combat the popularity of DVRs. Tobaccowala dismisses most of them as "lazy" and then adds an expletive that can't be printed in a family magazine. "The spine of our business has collapsed, and what we are looking at are the organs, blood, and connective tissue on the floor in a pile of goo," he says. "We have to imagine what the new structure is going to look like."
His advice? Adapt to consumers' changing behavior rather than try to cling to the status quo. People's preference for consuming content when they want it will only grow, he says. He predicts 30% of U.S. homes will have DVRs in less than two years. Pair this preference for on-demand content with the ability to search for video on Google or Yahoo, download it over speedy broadband links, and zip it to the living room TV, and traditional TV schedules will be rendered meaningless.
Tobaccowala sees loads of opportunity in this new world. Think of how people get lost for hours surfing the Net now, he says. In the near future they'll start doing that with flat-panel TVs in their living rooms. And advertisers will have much more information they can use to target particular viewers. Rather than knowing simply what percentage of 18- to 25-year-olds watch Desperate Housewives, they'll be able to figure out which people watch, how frequently, and what they've been searching for recently on the Net. Advertising can become more science and less art. "[Tobaccowala] talks like a truck driver, but his mind works differently than most people's, and that's what makes him valuable," says Linda Fidelman, president of Advice & Advisors, a consultant for agency searches.
Traditional media, from television to newspapers, will continue to be plenty important, he says. But he thinks they need to change their ways, too. They have to provide news and entertainment in a greater variety of forms and help advertisers target consumers in the various media. "We are hungry for information and will value those who do a superior job of editing the ocean of material there is," he says.
Several big advertisers are embracing his vision. Over the past 2 1/2 years, Tobaccowala has urged clients, including BMW and Coca-Cola, to cut deals with TiVo and cable companies to create more compelling and targeted messages. GM tried experimental ads on Comcast Corp.'s video-on-demand ser-vice in Philadelphia last year. Each month 10,000 people chose to view GM's one- to two-minute ads featuring test-driving segments and in-depth vehicle profiles. Next year, GM plans to roll out slicker ads for most of its vehicles on three more cable systems. "On-demand is going to explode, and we need to be ready for that," says Jack Bowen, GM's general manager for customer relationship marketing.
Other advertisers are experimenting with the most cutting-edge technologies like social networking and podcasting. Earlier this year, Kellogg Co. saw disappointing results from trials of its breakfast cereal Smorz. SMG was able to boost samplings by 500,000 through social networking. Kellogg sent samples and DVDs about the making of cereal and the casting of TV ads to 10,000 influential adolescents.
His ideas may rattle some, but clients and peers pay attention because of Tobaccowala's experience. He has held just about every job at his agency except art director. Before forming Leo Burnett's interactive unit in 1993, he was an account manager, media buyer, and researcher. He joined Leo Burnett in 1982 immediately after earning an MBA from the University of Chicago's Graduate School of Business and an undergraduate degree in mathematics in India.
To stay on top of trends, Tobaccowala reads four daily newspapers: The Wall Street Journal, Financial Times, The New York Times, and the local paper of whatever city he wakes up in. A movie hound, he is addicted to online film trailers. He's also an avid user of RSS, a technology that lets him subscribe to podcasts, blogs, and news sites. He carries an iPod (AAPL ) and a Palm (PLMO ) Treo.
Tobaccowala does whatever he has to to make sure clients don't miss out, either. SMG CEO Jack Klues says he sometimes sends his chief innovation officer specifically to scare a client. "If they are too resistant to try some things we believe in, that's a good spot for Rishad," he says. It usually works. SMG has enjoyed the best run of account wins in the business in the past two years, jumping from handling about $9 billion in media budgets to about $14 billion, including taking over the media planning and buying for Coke and GM.
Now Klues has assigned Tobaccowala one of his most challenging tasks to date -- restructuring SMG. Despite the performance that has made SMG sought after and Tobaccowala a guru, the futurist says SMG is organized badly and must operate more like a social network than a vertically integrated hierarchy. He wants to infuse SMG with more creative flair, pushing it beyond its media-planning and buying roots. If he does that, the media people may be in charge for good.
By David Kiley in New York