What's On the Agenda for US Advertising in 2024?

2024 has barely begun and it’s already shaping up to be an interesting year for the US market. AI technology is accelerating, marketers are faced with navigating a complex landscape and with a long run-up to an election in November, there’s a charged political atmosphere that’s unavoidably shaping the marketing context.

That’s why we’ve hosted a roundtable discussion of marketing and advertising industry bodies to find out what’s on the agenda. Steve Pacheco, president/CEO of the AAF (American Advertising Federation), Marla Kaplowitz, president and CEO of the 4A's (American Association of Advertising Agencies), and Bob Liodice, president and CEO of the ANA (Association of National Advertisers) came together to share their perspectives on the biggest challenges and opportunities facing their members.

The AAF is a grassroots network across North America with 160 ad clubs that make up most of their professional membership as well as 5000 young people in their collegiate membership scheme and 55 corporate members. “The commonality here is that we’re all about driving the industry forward about business empowerment,” says Steve, who says that what makes his organisation unique is that it starts at the high school and college level.

The ANA principally represents the client-side marketer community, and its mission is centred on driving growth. “Business and brand growth are critical for marketers, that is what they live for,” says Bob, who breaks the growth into four pillars: growth as an individual marketer, growth through the brand, growth for the industry and growth for society at large, particularly through topics like sustainability and DE&I. “One of the most important things that runs across all of our various practices and areas of focus is how we build a better marketer to make better decisions that drive brand growth. I say it like that in almost a very common, humanistic way because the variety of choices that the client side marketing community has available to them is probably as wide and broad and as complex as they can be.”

The 4A's is focused on agencies specifically. “Our focus is supporting agencies with their business goals as they deal with transformation, talent, whatever their business needs are, and to really be their champion and advocate in any aspect that we need to from an industry perspective,” says Marla.

“The bottom line is, what can we do to empower the success of our members and move that industry forward? But the opportunities and issues are never slowing down.”

It doesn’t take a sophisticated algorithm to predict what is right up at the top of the agenda for 2024. Artificial intelligence is presenting agencies and marketers with opportunities, challenges, and ethical conundrums of which they’re barely scratching the surface, and industry bodies are racing to help create frameworks and guardrails for a technology that’s changing by the day.

Marla says the 4A's views AI as a ‘hub and spoke topic’ that touches every aspect of the industry that they deal with. She says they tend to view two components of AI somewhat separately. AI for automation has been around for some time and is largely about driving efficiencies through different systems and tools. “Then there’s the generative side. We really view this as a tremendous opportunity to fuel creativity and to rethink the model overall, because it really does change the way people are going to be working. It changes how you think about the data, the tasks people have, it’s going to change remuneration - you can’t really pay people in the same way - and you’re going to need to think about tools and technology with a very different approach.”

With its diverse membership, at the AAF, Steve is in the unique position of seeing AI through the lens of both venerated Hall of Fame-ers and college students. ”Being a multi-generational organisation gives us a really unique perspective on technology and innovation. We’ve got those folks that have been seasoned and been in the industry for some time, who have seen lots of technologies come and go, but we’ve also got these young people who are really embracing it in a very unique way,” he says. AI is a key part of its current student competition, and while some of the facilitators have to learn as they go, it’s the younger people who are helping the AAF to adapt faster.

Bob says that it’s a matter of some urgency that the industry moves faster on ethical and best practice frameworks on AI and that it learns the lessons of yesterday’s digital revolutions. “We really do need to accelerate at a faster and faster pace of articulations so that we don’t make the same mistakes that we made back when digital and social media were evolving in the past decade or so, where we got caught into bad behaviours,” he says.

This means not only working with members to help them develop policy but also reaching out to the federal government. “I also believe that we’ve got to find a way to put guardrails and regulations in place that make sure that it’s enacted in a responsible and fruitful way,” says Steve. “I think we’re spending a lot of time on that on the ‘Hill’ in [Washington] DC, where we’re based, worrying about exactly what type of regulations and restrictions that the US government will place on AI.”

Marla says that one tension point she’s seeing is where individual states are taking it upon themselves to act in the face of a slow-moving federal government, resulting in a patchwork landscape. “There’s a set of caution here, because we want to make sure that we’re getting it right and that the ethics are in line - but we also are pushing in Congress to ensure that there’s some sort of legislation. I know all of our teams are very involved in working to help drive education and understanding, but I definitely have concerns about this, because what we’re seeing is that the states are taking far more action and are far more agile in moving forward, whether it’s data privacy or even on ESG and the environment versus our federal government.”

All agree that this is a time for collaboration both within and across associations to create self-regulatory mechanisms so that the industry can establish ethical best practices without falling prey to government regulation.

 

“This is one where no one’s really got a handle on the complete universe of what those specific things are that we can leverage and all of the areas that we could be at risk for. What we’ve found is that when we can bring our members together, consistently, and engage in that dialogue, we all learn together,” says Bob. “I applaud and appreciate the fact that our respective trade associations are making this a core priority.”

But for all of the concerns, whether it’s self-regulatory frameworks or the very real anxiety individuals have for their jobs,  there’s a real eagerness across the organisations to make sure that their members are able to truly harness AI’s potential for positive change.

“It's pretty incredible, and so it really opens up the imagination,” says Marla. “I think this could be a real renaissance for creativity and what it allows people to explore. So is there trepidation? Yes. But is there a lot of excitement and optimism? Absolutely.”

Of course, we can’t talk about 2024 and the US market without touching on that looming black hole bending time and space around it: the election. Even the most apolitical brands will have to navigate the impact of election and the explosion in political advertising, which will shape the media context for their messaging.

As the only one of the three organisations with its headquarters in Washington DC, Steve says that the AAF has a ‘unique vantage point on national politics’. The industry body is solidly bipartisan in its government affairs work too. Steve says members are concerned about how a heated election race might impact the effectiveness of their own advertising. Restrictions on political advertising do, he notes, vary from state to state. He also shares that there are over 160 AAF clubs in local markets across the country that derive revenue from local political advertising.

“On a practical level - an election year typically results in [an] overall loss of perceived trust in advertising in general. It also creates more opportunities to tune out ad messages, add more confusion and noise in general leading to the possibility of permission to ignore ads,” says Steve. “AAF Members are very much concerned about the additional noise and disruption in their home markets and at a national level.”

For the 4A's, it is finding that despite uncertainties wrought by the run-up to the election, the overall health of the US economy means that marketing activity is still high and confidence is high.

“An election year is always filled with questions about a potential change in leadership that shifts policy and impacts the advertising and marketing industry,” says Marla. “Our team in DC supports tax, labour, privacy and sustainability across the federal and state landscape to advocate, educate and ensure our members' perspective is reflected and addressed. At this time of year, members are bullish on ad spend and marketing activity expecting an increase versus last year as the economic factors continue to improve (ie, consumer sentiment, inflation).”

For Bob at the ANA, the rise in misinformation is as concerning for politics as it is for marketing. “Without getting truly political, the industry needs to promote fair and safe elections – ensuring the minimisation of misinformation. This is a great opportunity for ‘sellers’ to ensure fair, principled messaging,” he says. “Beyond that, I try to stay away from political commentary.”

AI and politics intersect with one really important metric that all marketers should care about deeply: trust. 

“We always have to earn that trust, and part of that is ensuring that there’s credibility, that there’s truth - and that truth is clearly under fire right now. That is one major concern as it relates to generative AI, not only in terms of deepfakes, but also the source of content, where it’s coming from and ensuring that it is truly valid. That is an area that has to be explored. But it’s so critical that trust is at the basis of every partnership, of every relationship,” says Marla, who explains that’s why the 4A's has a focus on brand safety and ensuring that platforms are credible and that brands are shown in a healthy context. “A brand exists in the mind of the consumer, and it is fleeting. You can lose it as quickly as you got it. So it’s important to make sure that’s the cornerstone.”

According to Bob, that means that brands must be authentic in everything they do. “You know, many marketers have been viewed as profiteers and just interested in the next sale. One thing that Covid taught us, I think deeply, is that a brand needs to be authentic. It needs to express a set of values that resonate, particularly with younger consumers, as they’re currently on and they’re getting to their own particular purchase patterns. The ability to serve as a trusted brand is a reputation that’s hard to achieve. But once achieved, it has a good long-lasting effect. So, your behaviour as a brand is critical in how you navigate that connection with your respective consumer or customer base. And importantly, you have to best reflect the values of America, or whatever framework that's appropriate out there. So that you do respect and reflect diversity, equity and inclusion, that you do make sustainability a point of view when brand building strategies, you do not act in an unsafe way that could potentially damage consumers.”

Thankfully, the future is in good hands. Steve reflects on his previous role at FedEx, where he worked for over two decades. As ‘one of the most trusted brands around’, every piece of work had to be completely trustworthy before it was allowed out the door. And that’s a value that the AAF is keen to instil. “We have a need to inform our young people at the very start of their careers how important it is to act ethically, to show trust and transparency. We can affect generational behavioural change by doing that right at the start with young people. And so we offer up our classes with Wally Snyder, and the Institute for Advertising Ethics, which we're a signatory to. That work gets down to the college level. We encourage all of our college chapter members to take the course and to be certified advertising ethicists. That's really, really important to us, because they're influencers and they can also share that work with their circle of friends and colleagues.”

One topic that is a top priority for all three organisations is diversity, equity and inclusion. However, 2024 has kicked off with troubling findings from the ANA, that ethnic diversity among marketers has declined by 2% between 2022 and 2023, despite an increase at the CMO level… and representation is not proportional to the US population, particularly for African American/Black and Latinx people. At the same time, with fears around layoffs, as the industry is disrupted, there’s also a concern that people from marginalised communities could be the most vulnerable.

At the AAF, its Mosaic Centre for Diversity, Equity, & Inclusion in Advertising is the largest department within the organisation, having recently added new staff. In July 2023, they also launched the American Advertising Foundation, a charitable arm that will fund a lot of educational and DE&I programmes.

“We do an excellent job of bringing young people into the industry. At that point, we let them go and hope that they’re treated well and treated right. But I’m afraid that some of the attrition is due to just how they’re treated,” says Steve. What’s there in place? We don’t have any control over that, so that’s a troubling concern - that we do all this work to prep and vet and have young people ready to work in an agency or client side, and then they last maybe two years and will look for the next opportunity. And in some cases, they’re actually getting out of advertising altogether, which is a huge concern. It’s not that we’re not developing enough diverse talent, it’s what’s happening to that talent once they get their first job.”

Marla agrees that these companies need to create an inclusive environment to retain that talent and allow it to flourish. “We can't just look at representation. This needs to be a business imperative from the top down that permeates every aspect of a company and the way that they do business. And it really does start with that inclusion piece. And making sure that you have an equitable approach to your talent,” she says. The 4A's has numerous programmes both as part of the 4A's and the 4A's Foundation, and it has just hired a new head of talent equity and learning solutions in former Barbarian Group CEO Cathy Butler.

Bob suspects that 2023’s Supreme Court case around affirmative action in US colleges has put businesses on the back foot. “I think that the wind got taken out of our sails with the Supreme Court decision last year and affirmative action. I think it put everybody in a cautious position. We’re now trying to navigate what that truly means. Whether that was the primary cause for a step back in the data this year, I don’t know, but that is my hypothesis.”

However, there is some heartening news. At the most senior level, CMOs and leaders on the client side, diverse representation has increased to an all-time high of 18% and when it comes to gender, two thirds of marketers are now female, with 58% in the CMO suite. “So we are making progress, we can’t just simply throw the whole movement under the bus. But not everything is a straight line forward either,” says Bob. “This will be forever a priority for the ANA as I’m sure it will be for the AAF and the 4A's. Nobody’s slowing down. In fact, if nothing else, we’re slamming the accelerator even harder.”

Between the disruption of AI and the pressures for growth and efficiencies, the client-agency relationship is facing change too. 

For Steve, we’re still seeing the ripple effect of Covid-19. He says that while, yes, the value of that relationship is tracked by hard numbers, return metrics and performance marketing KPIs, the human foundations of that relationship have not recovered. “The soft measures and the anecdotal feedback and the relationship building and the trust built up over decades really supersedes all of that too. I’m afraid Covid also taught us some bad things. It locked us away from being able to have face-to-face, across-the-table meetings. That puts a real strain on the agency-client relationships in many cases. It is a very people-centred and focused business, and Covid took a lot of wind out of the sails of some relationships that were going well. It made people revisit their relationships coming out of Covid. I think there were more agency reviews in the first six months when lockdown had shut down than there were in the previous six years,” he says. “It's back to business as usual, I would hope in the coming years. And I hope that that results in better, stronger, tighter relationships.”

It creates a perfect platform to revisit the mechanics that underpin that relationship, particularly when it comes to things like remuneration and pitching. The 4A's and the ANA have been working together in a joint task force on alternative compensation models for over a year, and they’ll soon publish a report that lays out eight different approaches. “Are they new [models]? No. But we need to remind people you don’t have to just do FTE or cost plus, there are other ways for remuneration. We want to spark ideas for people to think differently about compensation. This could be an interesting year as generative AI is coming about and we have to think about pricing for technology and the way that we move forward. Because if you have to invest in this technology and some of that technology is able to offload what typically had been human effort, well, does that take away the value of it, if you’re basing it on people cost? There’s going to have to be a reset at some point. I don’t know if this is the year, but the conversations will definitely start,” says Marla, who adds that the two bodies have also been working together on research into the Cost of the Pitch.

Furthermore, it’s not just payment models but timings that the 4A's are keen to raise, with agencies struggling with prolonged payment terms, essentially turning them into banks for clients.

For Bob, the key to finding a way through this is collaboration between agencies and marketers, which is why both organisations have been working closely on this.

“It all starts with a fundamental belief that marketers, in their heart of hearts, want to pay agencies for great work. That’s what builds the brands… if an agency helps make a brand successful, the sky’s the limit. But, nonetheless, not every relationship is going to be that wonderful and that rosy all the time. The vast majority kind of fit in the middle of the bell curve. We have to develop the systems, standards and structure necessary to be fundamentally fair. This is about fairness. There’s no one formula that’s going to make everybody happy… but if it’s fair, that’s got to be the founding principle of what it is we do.”

Bob suggests that it’s in the interests of both agencies and clients that strong, long-lasting relationships are valued and are not dropped simply because of leadership changes in the marketing team or ‘there’s a new sheriff in town’. The work with the 4A's to create ‘a mosaic of business models’, should, he thinks, allow for greater ‘dexterity’ in the agency-client relationship.

“There’s no more important relationship in our industry than the client-agency partnership. Game, set, match, with that. It’s so critical that that’s in place. And, although it’s changed dramatically over the course of many, many years, the fabric of that relationship is pivotal for being able to develop the appropriate foundation for brands to succeed.”

“Agencies need marketers, that’s where the budgets come from, that’s where the work comes from. What I think is exciting, as someone who’s been in this business for over 35 years, is how that has changed over time,” adds Marla. “How it was so narrowly focused in the initial days on advertising and PR within that marketing sphere and it’s so broad now. It really is an open field for agencies to help clients with their most urgent business problems”

All three industry bodies have a lot to work through with their members. But what’s clear is that there’s also a sense of collaboration between them too; as the landscape becomes more complex, multiple perspectives and skill sets become crucial. There’s a lot of water between now and January 2025, and, as the saying goes, if you want to go far, go together.