Madison Avenue’s Identity Crisis (And Why Silicon Valley Still Needs To Learn From The Ad Industry)

Last year, Rei Inamoto stirred up debate with his piece, “Why Ad Agencies Should Act More Like Tech Startups.” Since then, Inamoto has found that Madison Avenue hasn’t done enough to evolve and to learn from the tech world. But, Inamoto cautions, that learning shouldn’t be one-way–and he points out some of the contradictions of the startup world and what it can learn from Madison Avenue.

Madison Avenue’s Identity Crisis (And Why Silicon Valley Still Needs To Learn From The Ad Industry)

In the last year or two, more and more of my colleagues in the advertising world have expanded their award show and event repertoire. In addition to the usual award shows, more of them are going to SXSW. Between 2009 and 2011, agency attendance at SXSW shot up tenfold. That trend will undoubtedly continue this year. This definite behavioral shift of deflection and migration isn’t contained to the industry event circuit. It is also evident in the advertising industry at large.


In the past 12 months, a number of advertising professionals have left the agency world and joined or launched their own startups. Startups that, according to these defectors, provide value to consumers because ad agencies really don’t. Startups that make useful things and solve problems because, again, agencies don’t. Startups that don’t try to sell you stuff you don’t need.

So should Cannes be worried? Perhaps so. But it’s not just award shows that should be worried.

It’s Madison Avenue that should be worried.

Mad Men may be the most acclaimed TV show today. But let’s face it: It’s fiction. And it was set in the Old World. Fast-forward 50 years to the New World, the allure of the advertising industry just isn’t what it used to be.

Last year, I wrote an article for Fast Company called “Why Ad Agencies Should Act Like Tech Startups.” And on this note, whenever I meet interesting people either from the startup or agency world, I make a point of asking them: “Should Ad Agencies Act Like Tech Startups?” and vice versa.

The answers are actually not that consistent. Also along the way, I’ve heard interesting takes and strong opinions about the ad industry and what’s causing trouble for it as well as feedback about startups and why the majority of them fail.


When asked what advice she has for young people trying to break into the ad industry, Cindy Gallop, CEO/Founder of IfWeRanTheWorld and former Chairman/President of ad agency BBH US, says, very succinctly and definitively: “Don’t.”

Chris Sacca, Founder of Lowercase Capital and investor and advisor for Twitter, Instagram, and Uber, among other very successful startups (and with 1.3 million Twitter followers), thinks the compensation model that is killing the record labels, movie studios, and even the mortgage industry is also damaging the ad industry. (You can view excerpts from interviews with Sacca, Gallop, Instagram’s Kevin Systrom and others on this AKQA site).

And speaking of other industries, Madison Avenue seems to have this fascination with wanting to be someone else. Or be everything to everyone.

One day, it wants to pretend that it’s Hollywood (Branded Entertainment, anyone?). The next day, it’s trying to be Silicon Valley (just because you use the word “Innovation” in your lexicon or title doesn’t make your shop innovative). And the day after, it’s all three (“Siliwood Madness!” was the name of this infographic in Fast Company).

The advertising industry uses a model that was invented decades ago. Yet, agencies still apply that Old World Order in this New World. Agencies do realize this. They know they need to change. And they like to talk about change. The problem is, though, that they don’t really mean it.

This contradiction, and this identity crisis, however, doesn’t just exist within the ad industry. Gallop points out a core contradiction inherent in the startup space: just about everyone in the tech world hates ad people’s guts. They all believe that advertising is a very bad thing and that ad people are very bad people. Yet, their entire business model in many tech ventures is built around advertising. Take Facebook, for example. The bulk of its $3.7 billion revenue comes from advertising. Google, a company that shunned advertising for many years, built its business around advertising.


As much professed dislike as there might be toward advertising and the industry that creates it, there is a thing or two that techies can learn from Madison Avenue. In advertising, consumer insights are key to great strategy that leads to great work. Chris Sacca admits that Silicon Valley and startups can often get caught in their own echo chamber and fall out of touch with “the Normals.” One of the reasons why so many startups fail is because they build stuff for themselves without thinking through real consumer insights and needs for normal people.

For agencies, bringing in people who understand and build technology is an important step. But without changing the way agencies behave and structure themselves, they are not going to go far. Hiring a digital expert to fix your “digital” problem is like hiring a baseball player for your football team. Without changing the way you play your game fundamentally, you are not going to win.

This week, agencies, startups, brands, and many more will convene to discuss, debate, and discover new platforms and ideas at SXSW. There are things that these respective industries and groups–whether advertising, startups, or brands–can learn from each other.

As I continue to have these conversations about the agency and startup worlds, I hope to find and share insights that might at least help move all of us–Madison Avenue, Silicon Valley, and everywhere in between–into the New World a little more.

Inamoto will be giving a presentation at SXSW Interactive on why ad agencies should–or shouldn’t–act like tech startups, and what startups can learn from agencies.