Corporate governance is intended to ensure transparency, accountability and fairness in the company's operations and decision-making processes, including oversight of the billions invested in advertising. Corporate governance promotes ethical behavior and responsible business practices to prevent corporate misconduct, fraud and conflicts of interest, while fostering responsible decision-making and value creation. It's bewildering why corporate governance does not appear to include oversight of advertising, despite the best efforts of the Association of National Advertisers (ANA) to call attention to issues that are most egregious.
In an era marked by rapid technological advancements and societal shifts, it's obviously crucial for industries, companies and professionals to adapt and embrace change. Unfortunately, the corporate marketers who underwrite the advertising-supported media industry appear to have their head buried in the sand, willfully ignoring realities that threaten advertising's very existence. There are well-reported systemic issues like the failure to cultivate diversity, critical challenges such as fraud, declining viewership, ad avoidance, commoditization and the erosion of trust. And advertisers' failure to understand the implications to the advertising creative community of the Writers Guild of America (WGA) and SAG/AFTRA is just another example of viewing the future through a prism of the past.
Diversity: A Chronic Blind Spot
One glaring issue that the advertising-supported media industry consistently fails to address is its inability to attract and retain a diverse workforce. Despite lip service paid to the importance of diversity, progress has been sluggish at best. The industry's lack of representation across race, gender and socioeconomic backgrounds not only hampers its ability to understand and connect with diverse audiences but also perpetuates systemic biases that hinder creative innovation. While the Association of National Advertisers has aggressively confronted this issue through its AEF and AIMM organizations, marketers have yet to impose the diversity in supply chain requirements on media companies that they require in other parts of their business.
Industry Fraud: The Invisible Menace
The digital landscape has witnessed an explosion in advertising dollars, but it has also given rise to a pervasive issue: industry fraud. Astonishingly, between 40% and 60% of every dollar invested by advertisers in digital programmatic media is misappropriated. Advertisers, blinded by the allure of digital targeting and efficiency, have turned a blind eye to this monumental problem. By failing to tackle industry fraud head-on, the advertising-supported media industry risks losing the trust and confidence of its clients. Yet fraud and a messy middle don't appear to be motivating action by marketers who prefer to ignore the problem rather than confront it.
The inability of brand marketers to confront reality threatens the long-term viability and relevance of advertising as a valuable driver of business growth. From diversity and fraud to declining viewership and critical concerns like data privacy and attacks on press freedom, brand and marketing executives must emerge from their self-imposed state of denial, take responsibility and listen to the Association of National Advertisers' calls for greater awareness and concern. It is only through self-reflection, proactive measures and a commitment to learning and oversight by marketers that the advertising-supported media industry can regain its footing and secure a sustainable future.
Let's also review how knowledgeable marketers are about the TV industry's reliance on linear TV viewing as its primary revenue source, along with the costly neglect of sports rights fees issues and the continuing neglect of data privacy, fake news and attacks on press freedom.
Declining Viewership and the Rise of Ad-Free Content
As viewers increasingly shift towards ad-free streaming platforms, the advertising-supported media industry faces a looming crisis. Yes, network and studio chiefs are openly confronting their challenges, but find me one CMO, CEO or CFO from a leading national advertiser who seems to care or even understand the business models in which they invest billions that are collapsing around them. Failing to recognize and respond to this trend not only risks the erosion of advertising effectiveness but also highlights a bewildering lack of understanding of evolving consumer preferences.
Neglecting Key Concerns: Data Privacy, Fake News and Attacks on Press Freedom
The advertising-supported media industry must confront pressing concerns regarding data privacy, fake news proliferation and political attacks on a free press. Ignoring these challenges undermines the industry's credibility and raises doubts about its commitment to responsible and ethical advertising practices. By failing to address these concerns head-on, the industry risks exacerbating public distrust and further eroding its own reputation. Do advertisers have a voice in the industry's responses? Shouldn't they?
The Costly Neglect of Sports Rights Fees
The increasing cost of sports rights fees is another area where the advertising-supported media industry has demonstrated a disregard for fiscal responsibility. The willingness to invest exorbitant amounts of money sets a dangerous precedent. The industry is blindly following the siren of live sports as the industry savior, and many companies will inevitably be stranded with no safe passage to profitability. This misplaced spending could be better directed toward addressing systemic issues within the industry, supporting diversity initiatives and combating fraud. I'm interested in learning if there is a long-term profitability assessment that forecasts the cost of sports rights fees to advertisers, and challenge advertisers to make long-term commitments to underwrite these fees. Let's bring advertisers into the negotiations and give them some skin in the game.
Corporate Brand and Marketing Executives: The Need for Change
Ultimately, the responsibility for addressing these systemic failures lies with the corporate brand and marketing executives. They must recognize that their roles extend beyond promotion; they must actively engage with the ANA and step up to become powerful advocates for due diligence and responsible decision-making by advertising-supported media companies.