Large companies have woken up to the reality that the big tech platforms are coming for their businesses, and are actively moving to defend their interests, according to Rishad Tobaccowala, sometimes dubbed “the guru of Madison Avenue.”
The platforms’ “next trillion dollars" are going to come from disrupting large companies’ businesses, said Tobaccowala, an author and Publicis Groupe senior advisor, in an interview with Wall Street Journal advertising editor Suzanne Vranica during CIMM’s Cross-Platform Video Measurement & Data Summit.
But big companies “are less and less scared of these platforms,” he said. “The platforms always used to find ways to keep everybody quiet, but that is finished.”
In the past, he said, some top management “didn't understand that they were bidding against other people for Google and Facebook’s business, and that they were going to bid away their whole margin. They were still in the mindset of previous decades, "when the media companies bid against each other for [marketer companies’] business,”
“They also didn't realize that with the treasure trove of data these platforms were amassing, they were going to create completely new businesses, and that those businesses would end up representing 40% of the U.S. GDP.”
In addition to the direct financial impacts of the platforms’ massive power, the pandemic, the Black Lives Matter protests and other seminal events of the past year have caused senior management to grasp fully the impacts of social media and search giants on society and seriously reassess their own relationships with them, he said.
“You have to partner with the platforms, but be very careful about thinking that they are doing anything for anybody but themselves,” he said.
“Thinking that data and technology are going to save you is ridiculous,” he added. “It’s like electricity. You can’t do without it, but tell me which company goes around bragging, ‘We’ve got better electricity.’”
Instead, the companies for which he consults are developing one-, three- and five-year strategies for their relationships with the platforms.
Long-term, they want to be significantly less dependent on any one platform. “They won’t stop using them, but they need to be able to say no,” Tobaccowala said. “And that’s going to take them five years.”
Long-term plans also include “lobbying up” to get the platform parent companies broken up.
In the short term, the companies are pressing the platforms for transparency and data sharing. They’re also “moving money from the Googles and Facebooks to the Snaps and TikToks and New York Times digital and other channels,” Tobaccowala said.
Smart three-year plans call for developing direct relationships with customers. That is “very doable,” and any business leaders who haven’t significantly improved their companies’ positioning in this regard over the next two years “should be fired,” he declared.
Companies “have realized they have to get a grip on their future, but now it’s a board-level discussion, not a CMO level discussion,” he stressed.
“I believe every company should have a CMO on the board, or at least presenting to the board after every quarterly meeting on one-, three- and five-year strategies with the platforms. What are our options, our reputational risks? This is starting to happen, because it’s not just about a brand anymore; it’s about the future of companies and society as a whole.”
Internal pressure from employees is also a major dynamic for companies now, Tobaccowala confirmed. Whereas the old “ESG” for corporations was “environment, social and governance,” the new ESG is “employees, society and government.”
Meaning, “How do we look after our employees, what are our implications for society, and what are we doing for good government?,” he said.
Marketers’ single biggest challenge is changing their own mindsets to adapt to the radical changes in the attitudes and behaviors of the people they’re talking/selling to, in their employees, and in technology over the past year, Tobaccowala summed up.
Marketers must be keenly aware that people are more than ever questioning what companies and brands are contributing to their own lives and to society.
Instead of thinking about optimizing for “the consumer” — which only serves to “weaponize social media” — companies must now think about optimizing their relationships with “the citizen,” Tobaccowala emphasized.