‘This industry is broken’: Gary Vaynerchuk on advertising’s biggest problems
Last week, The Drum Network spent an evening with the bombastic Gary Vaynerchuk. Here’s what he had to say about independence, adland’s priorities, and ambitions to build the world’s biggest indie.
The ad industry according to Gary Vaynerchuk: creative as key, production too costly, and a space for major independents / The Drum
It’s not quite a Jekyll/Hyde situation, but marketing exec Gary Vaynerchuk has his own alter ego: Gary Vee. The former, Vaynerchuk, is the 47-year-old founder and chief exec of creative and media agency VaynerMedia, chairman of its parent company VaynerX, and serial investor with the likes of Twitter, Snapchat and Uber. The latter, Vee, is a bombastic internet personality with 10 million followers on Instagram and a personal media operation (“a 25-person full-time team on production”) that would make most Hollywood stars blush.
At a recent fireside chat between Vaynerchuk and The Drum’s editor-in-chief Gordon Young, an audience of marketing leaders spent an hour with Vaynerchuk, (mostly) away from “the Gary Vee of it all”.
On fame, effectiveness, and creative
Thanks both to that social star alter-ego and partly to the success of Vaynermedia and other ventures (VaynerX now boasts close to 2,000 staff), Vaynerchuk has become a rare thing in modern marketing: a celebrity adman. Of The Drum’s recent big-ticket interviewees, few can boast recognition among adults outside of the industry; fewer still commands respect among those adults’ teenage kids.
Speaking of fame, Vaynerchuk argues that it’s not apportioned quite how ad execs would like to imagine it. “Creative officers around the world think they're famous,” he says. “No bullshit: people definitely don't know who they are. Even scarier, people don't know their work.”
This isn’t just a pissing contest, he says. Combining concern for his industry with unshakeable confidence that his company will succeed where others are failing, Vaynerchuk argues that there’s a good reason why even award-winning work isn’t better known: it’s just not good where it counts. “The industry is very vulnerable. The proof is in the pudding. You have companies like mine that come out of nowhere, doing hundreds of millions of dollars in revenue; you have in-housing at super-scale. There’s a reason this happens. Shit’s too expensive. And it’s not effective enough.”
He goes on: “The principles stay the same: creative is the variable of success; ideas and creativity are the punchline. The process of how we get to those ideas is the problem with our industry. It should not take us nine months to come up with a 30-second video that costs hundreds of thousands or millions of dollars to then be distributed for millions of dollars through a fucking television commercial. It is 2023. Enough… This industry is broken.”
On the costs of production
Vaynerchuk insists that this is not simply an insistence that social is underplayed in media budgets. “I have no emotion towards social,” he says. “Social just happens to be the distribution platform right now where there’s under-priced attention and opportunity. If I was sitting here 20 years ago, I’d be yelling about Google AdWords and email.”
But media and creative alike, he says, remain too expensive from most big shops. “30-second videos are too expensive, especially when I know what people are paying for 30-second videos in startup land and outside of our world,” says Vaynerchuk. “The industry is built on having high-salary individuals, and billing them out to clients on a multiple against that high salary… every agency is built like an upside-down triangle, with as many senior people in the business as possible, so you can sell a multiple against it.”
Eva Nosidam (that’s ‘Madison Ave’ spelled backward), VaynerX’s production company, is built to correct this inefficiency. “We build like a Christmas tree: put very capable people in the trenches, with senior people that can lead an incredible team that will cost you less. Then you can produce more.”
With this slimmer production structure, he says, “We lose so many triple bids because we’re so much less cost that procurement doesn’t think that we’re doing the same thing.”
Handling media and production, he says, exposes two secrets of creative-only above-the-line work: first, the ideas are just too expensive – “the dirty secret of this industry is that creative agencies are consultants... Every creative AOR sells decks.”
And, second, media priorities are upside-down. “The ‘lower-funnel’, social, is actually the upper-funnel: brand is now being built in social in a significant way, for real, but this industry will hold on to that not being true as long as humanly possible… People are going to start losing market share to companies that have better pricing models and can produce creative in a much more thoughtful way.”
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On holding company dominance
Vaynerchuk has two clear goals: to “build the largest global independent agency in the world” and to use the profits from that to buy the New York Jets, an NFL team.
The agency’s key competitors are the major holding companies – against whom, he says, “we have an enormous advantage: when you are independent, you can do what I did in 2016, 2017 and 2018: make no profit. If we were a publicly traded company, part of a holding company network, I would have been fired for delivering no profits.”
Being freed from the yearly shareholder value imperative, he says, offers a major advantage for both his company and himself as its boss. “This industry desperately needs many more independent agencies at scale. It would make the industry so much happier and healthier. That’s not a dig at the holding companies; I think the holding companies have done a remarkable business job over the last 40 years. But I think it’s out of balance.”
To the inevitable question of whether he’d sell: “if someone’s got the talent, you stay independent forever. The buyout deals are not good if you’re good.” Besides, “I don’t think I’m capable of being a publicly traded CEO. I just don’t want to be accountable to anybody, I’d rather lose out on my dream of buying the Jets than go IPO.”
And his own exit plan? “Mine’s death”.
The full recording of this interview, originally conducted by Gordon Young, is available to members of The Drum Network. For everyone else, read on for a few extra takes from Vaynerchuk.
On the best media buys in 2023: “I think the Superbowl ad is the best buy in advertising. That is an $8m media buy on a 30-second video: best buy in advertising because it’s actually consumed. Outdoor billboards are great when you can buy them remnant in between two big buys and you don’t have to pay $40,000 a month instead of $2,000. Drivetime radio, with some of its pricing today, is a very interesting place to buy. Spotify’s read-only ad is remarkable.”
On sleep: “I’m incredibly misbranded on this… it’s about being effective when you’re awake. I don’t think people should work hard if they don’t like what they do. To me this is about ‘work hard when you like it’.”
On competition: “I would much rather have six or seven real VaynerMedia competitors. I’d be thrilled. We’re going to get ours; we’re good enough. I just think a lot of people in our industry would be happier.”
On meetings: “One thing that kills agencies, mine included, is meetings. Meetings are a fucking disaster. There’s 12 people in a room when you only needed five; it’s an hour and a half long and it could have been done in 20 minutes.”
On banning TikTok: “Fine, ban it. I don’t give a shit. To me, that means that a lot of attention is going to go somewhere else, and I’ll be ready for that attention. You can ban all social media; that would be great for me because that’s a lot of attention that will have to recalibrate somewhere.”
…and on blaming TikTok for dwindling attention spans: “China’s not going to manipulate me with the feed. People are not being held accountable for their bad behavior, and they’d like to blame social media for it.”
On awards: “The majority of the winners last year: business was down. That’s a problem. Isn’t this the advertising business? People winning the biggest awards, on businesses that are declining? That’s bad.”
On two ways to improve culture: “One: make less money; value the humans over the P&L. When we lose a client, we don’t fire people because they were on it; we take less profit that year.
“Two, fire people. Let me explain. The thing that we’ve done very well, that has really gained a lot of trust over the years, is to fire people that are great at their job and make us lots of money, but they’re not nice. Do you want to build company culture? Fire the asshole that’s bringing in revenue and watch how fast people start to trust you.”
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