Heavy Friday.

Not too many days ago, I read an essay in The Wall Street Journal that gave an overview of the life and career of Lou Gerstner, "the man who revived IBM." It was the kind of article that everyone should read and no one does. We live in a TL/DR world though the idiocy we fill our brains with is never too long and is always read.

The opening paragraph of the piece was in my mind profound. 

It drew the distinction--an important one--between managers who can build a great organization and those who can do the arguably tougher and more valuable job--revive an organization that has crumbled.

In baseball, for instance, Billy Martin was a great manager of teams that were comprised of starless and scrappy 23-year-old strivers. He was a sucky manager when he managed teams of 34-year-olds who were stars and were in the middle of great careers. He could build. He couldn't maintain.

Just now, I got a text message from a highly-accomplished industry friend.

Thinking about this I realized something. For the last 30 years or so, the ad industry has undergone massive consolidation and compression. It takes a certain talent to buy 200 agencies over ten years, wring costs out of them and make them function well.

Then something else hit me.

For the last 30 years or so, the true customers of the advertising holding companies were not the people who buy mouthwash, or tires, or cars, or airline flights, or phone plans or even pharmaceuticals. The customer of the advertising holding companies were not the people who buy the things we ostensibly advertise.

The true customers of the advertising holding companies were not consumers at all--not people like you and me. The true customers of the advertising holding companies were giant financial institutions who couldn't give a tinker's damn about the power and persuasiveness of advertising. They cared only about the power and acuity of holding companies as financial instruments. 

Agencies and holding companies, for the last 30 years or so, were not in the business of helping companies sell Scope mouthwash. They were in the business of helping improve a financial spreadsheet. Theirs.

Advertising holding companies were no longer, in fact, in the business of selling advertising as a means of selling a company, brand, product or service. Advertising holding companies were in the business of selling, not products, but the very efficacy and efficiencies of themselves.

Their target wasn't people who buy shit. It was their owners, the entities that run giant financial operations.

Here are the largest owners of Omnicom, for instance. And below, the largest owners of WPP. 20% of Omnicom is owned by just four financial companies. 26% of WPP is owned by just four financial companies. 

These owners care nothing about advertising. They care all about ROI--which usually comes from increasing income and lowering expenses. If we were selling burgers, it would mean cheaper beef.

The banality of all this is staggering. Think of the billions or trillions lost by brands who no longer advertise. I can't be the only one who buys store-brand corn flakes for $4 rather than Kellogg's corn flakes for $6. Advertising used to give me $2 of persuasion to buy a name brand. No more. That's brand equity down a very very very large tube. (Need another example? What does DDB mean today, or Ogilvy, or BBDO as opposed to a few years ago? That's brand equity down the drain.)

Back in the 1980s, before the collapse of the amerikan auto industry, I remember reading somewhere that GMAC, the finance arm of General Motors made more money than General Motors. They were no longer a car company. They became a finance company.

Advertising agencies are no longer about ads. They're about optimization, data disintermediation, efficiencies and 'right sizing.' They're not about actual insights or ads. They're about selling the idea that they have a more efficient way to derive insights or create ads.

In short, the current advertising industry, with the exception of GeorgeCo., LLC, a Delaware Company, and a few other independents, is no longer about selling ads or by application the wares of clients. The current industry is about selling the constituent parts of the holding company itself, not the importance of what their clients themselves actually proffer.

I think one of two things will happen to the holding companies over the next five years.

1. They will find, like IBM did above, revivalists like Gerstner who found a culture and a mission for a dying company. Along the way he six-exed IBM's share-price, from about $13 to $80/share and arguably brought the company back.

(Back in 2001, I was working on IBM my first stint, and I read Gerstner's last annual report. I have carried it with me since. I saved it mostly because its opening started this way, transformed being the key word, a rough synonym for reviving.)

I think four of those sixteen decisions are what the holding companies might what to think about. If they are to survive until, say, 2030, as anything other than financial derivatives.

2. The alternative to the above is to continue being managed by managers, not revivalists. That is people who make efficiency, data and optimization their watchwords. To claim that AI can inundate people with messages at such scale that mass, not saliency will make people buy. 

During the roughly 12,000 years of human history that's never really worked and I don't think it will work now. It's not mass that gets through to people, it's truth. 

The Gettysburg Address was just 271 words long but it united a fractured nation to a cause. The same was true of Thomas Paine's Common Sense. It was a small pamphlet, not a mass media event, that galvanized a revolution. In First Kings 19:12, god speaks, not in wind, earthquake and fire. But in "a still small voice." Faulkner, in his Nobel Prize acceptance speech called it humankind's "puny inexhaustible voice, still talking."

If I had to bet though, I'd say the financial manipulators who have strip-mined our industry will choose #2--going away. In that case, this is my prediction: