April 13, 2010

Stuart's IAB Stewardship

Tim: Let's begin with your immediate future. You're about to change lifestyle to some degree. You're .moving on from the IAB after, what, 4 years?

Greg: Actually, I'm not really so sure my lifestyle's going to change. I work from 6 in the morning until 10 at night as it is. I don't know how that's going to be different when I go on and start off. You know, I wouldn't mind going to a big needy company as long as they were really committed to change and they really let me do it.

Tim: Have you decided what you're going to do next?

Greg: I think the likelihood is that I'll end up go running an early stage business.

Tim: That makes sense. I find one difference with being an entrepreneur is that my energy and my ideas drive the work rather than pushing it out.

Greg: Well, as Confucius had said, if you do what you love, you never work a day in your life. Yeah. I mean, I was first born. I was president of the student body. I was captain of the tracks team. For me I have always been in charge. It just is my nature; I have to be in charge. That's the use for me. And in fact, where I've always been the most successful is when the company gives me the room to move the ball forward.

Tim: Is that the reason you wrote "What Sticks?

Greg: So I'll tell you the reason I did the book. I did the book because I love advertising. And I love the business, and I love the people in it. But I think the business is killing itself. And so this is an intervention. It's my role to try to help save the business. But at the end of day the business we are in now doesn't actually recognize it's killing itself. And so I hope What Sticks creates great change in the industry. I hope it's in the beginning of a giant revolution in advertising as important in the creative revolution that happens back in the '60's.

Tim: Sure.

Greg: Because I think that that's really what's needed. We all know that there's little trouble. But, you know, like those in denial, it doesn't mean that necessarily everybody jumps on board with that solution and acts against it. So that's what's going to be interesting to see what happens. And it's meant to be a prescription. Rex and I decided we could have gone in the depths - a bunch of different ways. Originally, we thought the only way to do this was to have to just attack the business. That's the thing. We didn't really want to write that kind of book. So we agreed to try to chart a path. I don't think What Sticks is the final answer. We're hoping that it creates more discussion and debate and that more people will work for the solution. Because at the end of the day, we don't really care how the industry necessarily gets recovery just that it gets it.

Tim:: Well, I think we'll always have a business but I disagree with you to some degree in terms of recovery. I think that's a dramatic way of putting it. At the end of day, I think advertising and marketing is Darwinian.

Greg:: I don't know, Tim. It's pretty bad. Roughly 112 billion $$ are wasted each year. We came to that figure based on 30 studies that we did against the billion dollars in advertising. I don't know of many tests that have the opportunity to closely monitor that amount of cash over 30 brands, all of which are blue chip

Tim: Right.

Greg: So in truth, the waste is significantly higher than 112 billion. I'll tell you Tim it's very clear in talking to marketers. They really don't know how advertising really works.

Tim: Right.

Greg: There are series of miss and misnomers and half truths and poor logic that rule in the business. I mean, it's pretty bad. We analyzed that 47% of the marketers we worked with either did not get their motivation right, did not really understand their consumer's or did not get the message right. In other words the message didn't resonate with consumers. That's the nature of denial.

Tim: Let's switch over to your experience at the IAB. Clearly that view led you to the conclusions you've made in the book. Besides working with so many advertisers you've overseen many different task forces to tackle specific issues. I mean, in 2002 when you and I began working together the IAB had just a handful of committees. How many are there now?

Greg: We have 700 people involved in our committee now today. The last time I counted there were about 18 committees plus or minus.

Tim: I wanted to ask you. With every committee formation, were there a few similar factors in each that prompted you to say, "Okay, let's pull a group together and study this issue."

Greg: You're asking me how do we decide which committee to start?

Tim: Yeah. Exactly.

Greg: It's probably less science and more sort of art. I mean, certainly, the biggest challenge is that in an industry as early stage as the internet ad industry is, there's no shortage of things that need be done.

Tim: Right.

Greg: So, what we try to do is go through a process of, you know, a combination of things where we think there was high value and where we really believe that we could be successful. It's a combination of both those things. "Let's make sure that we're going to solve a real problem here or fix something that we'll have substantial impact on the business." But let's also make sure that if it's going to be painful, let's make sure that we have a reasonable threshold of competence with the right group in place that we can succeed at it.

Tim: Which means creating a ground swell of interest to bring the right companies and people together to do more than just having a standing committee as a political decoration.

Greg: That's true. There have been cases where we walked away from some things. When I didn't sense that there was enough motivation by the participants. If I didn't hear a real commitment from that group in very short order to get together and work on something, then I have abandoned some of those things in the past. If they're not really committed or don't have the resources and the time, it's just not worth it.

Tim: Let me play devil's advocate for a minute. In each committee, you have companies who are in competition with each other. How were you able manage the self interest of a company participating to keep focusing on the enlightened self interest of the industry coming together versus fighting to skew an issue to benefit them versus the other guy.

Greg: That is the magic of my job.

Tim: What do you mean?

Greg: The IAB is managing an industry on hyper speed. That's been a big factor in managing and aligning similar interests.

Tim: Right.

Greg: And so, we very much looked for projects where we could find individual self of interest that was sufficiently motivated to take on a task that was actually also for the greater good.

Tim: Uh-huh.

Greg: That is of course the goal and intent of a trade association. We've always aimed for the greater good. But it's got to also operate it sort of an individual company's self interest. If it doesn't then, you know, "this is not going to work."

Tim: Right. You know, we've talked a lot about fears and predictions of Hollywood taking over Madison Avenue. Creation of content over advertising. To some degree, I've seen them exaggerated. What do you think?

Greg: You know, I'll tell you what makes me nervous about Hollywood getting involved in the business. I'm happy if somebody thinks they can prove me wrong. In my opinion, it's not about creating content, it's about selling. I think if there's another line of message and what sticks, it really is that at the end of the day, we are not focused on selling. I'll give you a perfect example. We had a number of the 30 companies come back to us at some point after we did a post of their campaign tell us that the campaign had been successful because the press has covered it because they got a lot of publicity for the campaign.

Tim: I saw that in your book. That was great.

Greg: And yet I have never in my life, in my 25 years in advertising, ever seen a creative brief state that the goal and objective was publicity for the campaign.

Tim: Right.

Greg: That's retrofitting goals to meet success when we should be really clear of what the goals are and then let's be sure that we're meeting that goal. You Tim, it's a not until you run a business that you get a real sense of clarity around that you think to yourself "Oh, my God. We're got all the resources focused on the long goal."

Tim: Right.

Greg: I've been in a meeting and watched the CEO of one of the domestic auto companies ask his head of marketing the same question five times. And that question was in essence, "What do you mean that we spend hundreds of millions of dollars and we don't know what it does?"

Tim: Really?

Greg: He was asked five times and still couldn't get a clear answer. That's a problem.

Tim: Got it.

Greg: So, to answer your question, Can Hollywood sell? I don't know. I'd loved to see the ad business to get more focused on getting motivations right and getting the message right.

Tim: What you're talking about is the ability to measure the impact of something, the quality of the research, depending on how you measure it.

Greg: Right. And just be clear, you know, I'm not trying to take the art out of the business, the problem is that, you know, right now, it's 95% art and 5% science and that's absurd. That's absurd when you're spending money. I think the CEOs are fed up with it, you know, and I think CFO's are fed up with it as well.

Tim: But isn't the CFO the main driver of many companies today?

Greg: The business has changed. Advertising is just not as important any more. Many companies don't let sales and marketing people run businesses anymore. They're letting finance people go run the business, where everything is "Six Sigmatized." where they figured out how to squeeze every bit of operational efficiency. The thinking is, "Smoking kills and advertising people don't know what they're doing. Those are the facts."

Tim: LOL. I agree with you in those cases where you're in a mature industry which most brands are perceived more as commodities, which has led to so much consolidation. But if you're talking about a start up, if you're talking about a niche, or a brand new category, you see a different management pattern. It's more needs-based than process-based.

Greg: I think that there is a different kind of frustration working in a big company. I know a lot of very smart, very talented people, who have gone from growing small companies get absorbed into a very big corporation and then have their careers totally side-lined. And so, it's funny. It's always funny to me when people say, "Oh, you know, they don't want to do starters because they're risky." I actually think there's more risk in not being a master of my own domain. You know, that's what consolidation doesn't provide. At end of the day, this is people about people, right?

Tim: Uh-huh.

Greg: And so, you know, consolidation never serves people, it serves corporations but it never serves people.

Tim: Uh-huh.

Tim: Which brings us to the next question. The IAB is works with both big and small companies. What's the difference between working with each? Is there a difference between how you deal with the major companies versus those with a small but important niche?

Greg: Well, they have different assets and different needs to bring to the table. The big companies are focused on sort of "uber" issues, you know, grand standards that require significant changes in the way that the business is conducted. That becomes really important to them. Whereas the small companies tend to – and by small I mean companies which think, "Where do I get my next million dollars of revenue?" - They're looking for some innovation and insight in a way that the big companies aren't focused on.

Tim: They say that the biggest inhibitor from a small company growing beyond it's threshold size is the ego of the founder. They can't get out of the way, they can't let go to give it on to somebody who can then take it to a higher level.

Greg: Uh-huh.

Tim: Clearly, you have a lot of entrepreneurs who are members, who are adamant that their way is right, even though either the marketplace or the committee is going into a different area. I'm sure that can sometimes create a fair amount of tension in any committee. Now you're about to become an entrepreneur. This is not the first time, is this?

Greg: No. Before the IAB, I was running the venture back business on San Francisco.

Tim: Right. Okay. So, you have that experience on both sides.

Greg: Yeah, let's talk about that because it's relevant to this issue. I was only asked to do the IAB in an interim basis but I didn't agree to those terms. My thinking was based around a number of things. First, I saw a big opportunity to serve. I've always been kind of oriented that way. I like helping to resolve people's problems. It was clear to everyone ultimately that this is what was needed. From the beginning, the board agreed to let me run the IAB like an early stage business.

Tim: Uh-huh.

Greg: You know, that's why we took on $5.8 million in investment capital. I mean, tell me another nonprofit that ever done that. I've never heard of it. I call this association within an association. And the result is that we used to be 100% dues. We're now 55% dues based in revenue, right? We have four business lines at the IAB that we built out.

Tim: Right.

Greg: And, you know, some of those are now recurring revenue streams that will go on for years that will be evergreen for the IAB. Because at the end of the day, having resources is what was critical to fix with the industry. But that's in my opinion.

Tim: That makes the IAB a case study for reinventing the association. I would imagine a lot of industries would have a real problem with that, especially when 45% that are not coming out of dues. They might be threatened somehow. I don't know.

Greg: Well, you know, change always creates angst. I guess is that's part of what you're saying and change creates, you know, can create a certain amount of uncertainty for sure. But it's a testament to the board that they remained committed to really pushing the envelope very hard. I don't know if I said it before but the IAB is up 500% revenues since I took over.

Tim: I know, it's a tremendous growth.

Greg: In four years, that's a phenomenal shift. Tell me any other business that's going 500% in four years. Right? There's not many, it's a short list. And so, you need to have a certain amount of courage, you need to have a certain amount of commitment to go do that. And you've got to have a board to support that vision.

Tim: Let me ask you this; with regards to government, I assume the IAB has been a driver in getting consensus from the board on particular issues. The biggest issues are tax and privacy based issues. Is that how you see it?

Greg: Washington has become interesting. We're in the process of setting up a public policy of the IAB and trying to identify a leader for that space right now.

Tim: A lobbyist?

Greg: But I wouldn't label this position like that. It'll be head of public policy to bring the membership together to solve common problem and address common issues with a Washington focus.

Tim: I would imagine other media companies which already have representation will be working in concert next to the IAB public policy. I would imagine that a public policy leader would be more of an advocate role rather than someone who is going to be contributing PAC funds.

Greg: I think that we need to kind of set that strategy, to determine what are the elements for success. I think the overwriting theme to all of this is that the IAB have been focused on helping to build the industry. Most of what we have done is focus on growth. The industry will become $17 billion strong this year versus $6 billion when I started. A lot of our efforts in the first three years in Washington will be just around simple education.

Tim: Do I think the government has been hands on?

Greg: Not necessarily hands on but we have had to deal with more pressure, unwarranted and irritating pressure from Washington. I'm incredibly concerned about the whole Washington arena and have been for some time at the board level now for four years. The board is now taking the importance of public policy and government relations much more seriously. You know, when you see issues like net neutrality which I think is terribly misguided. And the before that, the whole cookie debate. Washington blew that way out of proportion and made it really problematic.

Tim: You know, years ago, after Apple, Steve Jobs was able to find a successful career after that, that's the exception than the rule. So, after being CEO of the most exciting and exhausting new industry association, what could possibly capture your interest and get you excited to get out, you know, to get up in the morning that you have - because you've seen so much.

Greg: Right. That's actually a really good question . I love that. You know, I had one of my board members say something to me recently, "Greg, what's your passion in life?"

Tim: Uh-huh.

Greg: Honestly, you know what, it's what I do right now; interactive digital marketing, consumer interfacing. This is really what I love to do. This really is my passion. I do what I love to do. So there isn't anything else other than that. I would say the thing that really gets me going though is similar to the IAB; a transformational opportunity. I've had three or four of those in my life so far. One at Y&R, one when I was a student body president, one at Y&R and now this one at the IAB. These have been transformation roles. I had a real opportunity to play a big role in really changing the world. And so for me if I can find something that also as transformational that would be really exciting to me.

Tim: What do you think that will look like?

Greg: I want to run a business. You know, my next one is I want to run a business of 100 to 200 people.

Tim: Uh-huh.

Greg: And then I hope to grow it to a business of 1000 people and then we'll see where it goes.

Tim: What else can you tell us?

Greg: I'm talking to the VC's right now. I've been asked to join a number of boards at this point. I think I've got like seven companies that have pursued me about board roles.

Tim: Uh-huh.

Greg: And so I'm pursuing that because I'd like to keep my hands in a couple of different sectors. You know, I'd like to be involved in wireless. I'd like to be involved in iTV. I'd like to be involved in user creative content. I'd like to be involved in broadband video, you know, I like those. I like emerging markets like China, you know, so I will take on probably a couple of board roles in addition to finding an operating role.

Tim: Well, my view of just hearing that is your hands on all of the different process of the business is not going to change. You're just not going to be doing it from an association standpoint as much as from, you know, doing it from the private sector.

Greg: Yeah.

Tim: What has been like leading the IAB, what's been your most satisfying experience and at the same time, your most challenging experience?

Greg: I would say that there's a couple of very fundamental things that we did that really helped transform the business.

Tim: Uh-huh.

Greg: Raising the money was incredibly satisfying.

Tim: Uh-huh.

Greg: I would say XMOS - actually getting the XMOS studies done was incredibly satisfying because that is landmark change the world kind of stuff in XMOS.

Tim: Yeah.

Greg: I would say doing the global measurement standards which really gave the Internet industry to take advantage versus all of the media and really settle a whole new high bar for media measurement. It was electrifying. They have the industry set a high bar for themselves. If I can someday tell you all what it really took to accomplish that - you would understand too. You know, those are things that will impact the business for 100 years to come.

Tim: What advice could you give to people getting into the business?

Greg: You'd be crazy not to. You know, I can't imagine a place that's more fun with more excitement and more opportunity. And honestly I've never found a better group of people than what I found in the Interactive Ad Business. Absolutely.

Tim: How about to the next IAB CEO?

Greg: Don't be afraid to do the right thing.

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