As Mark Twain famously quipped, "History does not repeat itself, but it does rhyme." And as I'm reading all this monumental, breathless coverage of the Publicis/Omnicom merger and what it will mean about the future of data in marketing...well, I'm getting this funny feeling that I've seen this movie before. And the movie had lots of airplanes in it.The advertising business used to be all about writing ads and selling stuff. And the airline business used to be all about flying planes and getting people from place to place. Then back in the 1980s, the major airlines - United, American and Delta, primarily - started to sense that the world was changing: the industry was deregulated, ending a lot of the big guys' inherent protection and spurring the creation of dozens of smaller, more nimble competitors. (Ad business, you feelin' me on this?) New price competition cut margins to the bone and left the airlines looking for a way out. That way out ended up being a new business: the transaction business.
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If we can't make enough money putting butts in our airplane seats, let's try getting a micropayment every time anybody puts a butt in any airplane seat. Hence the birth of divisions called Galileo, Sabre, Amadeus and WorldSpan - airline reservation systems. For a while they were a license to print money; a new, defensible high ground of profitability and control. Ultimately there was consolidation and (inevitably) legal squabbles; divisions became freestanding companies...there was divestiture...yada yada. Eventually the internet came along and what used to be available to only professionals - airline operators, gate agents, travel agents - now got into the hands of Joe Traveler.
The comparison isn't perfect....but it does rhyme. The ad business was once marked by long, loyal customer relationships (some of them at least) and by certain institutional barriers to entry; you needed big, impressive offices, talented artists and writers on staff, the concentrated buying clout to get the best rates. How much of that is true anymore? So the big holding companies - Omnicom, Publicis (soon to merge), IPG and WPP - have decided to get into the transaction business. Their trading desk business units --Accuen, Audience-on-Demand, Cadreon and Xaxis - are starting to look a lot like 21st Century versions of the airline reservation systems; they're an acknowledgement that the financial high ground won't be won through creative brilliance and superior service, but rather by dominating the world of transactions and distribution.
Here's the kicker: It's 30 years later and the world moves so much faster now. What took a couple of decades to play out for the travel industry may play out for the ad business in just 4 or 5 years - if that. We're just seeing the first major consolidation. What's next?
