A walk down the 2024 Croisette: reflections from this year’s Cannes Lions

Some observations from the 2024 Cannes Lion festival, which has just finished. Obviously, I could not be everywhere at once - nor did I get invited to everything :) - but here would be reflections from what went on last week.?

1. Firstly, it felt it was a lot busier than last year both in terms of the crowds walking down the Croisette and in the presentations generally. That seems to be backed up by the numbers released by Cannes Lion owner Ascential, which reported that Cannes Lion had seen “strong, double digit growth” in revenues - which usually means well in excess of 10%? - which was part driven by strong volume growth, which was cited as the first of the key drivers of the growth;?
2. On a more medium-term view, I think the Lions festival will continue to get stronger, not weaker. The zeitgeist is very much towards face to face connection being superior to remote access (look at what has happened to the much hyped-virtual events space, which is rapidly heading towards irrelevance or, at least, being a small part of revenues). Moreover, the trends in the industry should also support this - with AI and Retail Media, to name two, at the start of their growth trajectories and with whole ecosystems likely to expand around them, there is still much room to develop;?
3. When it came to the mood of the Lions, I would say it was more positive than post-pandemic years. That should not be a surprise given the more positive economic data, the continuing momentum in advertising (even if the performance of the main Agency HoldCos has been more mixed) and a general feeling that advertising is becoming more central to companies’ strategic priorities (see below). Certainly at Cannes, the advertising industry feels like one that has regained some of its mojo.?
4. That mood was perhaps helped by the increase in advertising growth forecasts put through by Group M and Magna to coincide with the conference (Zenith has not published their updates yet). These were not small adjustments but major increases - Group M increased its 2024 global advertising growth forecast from 5.3% to 7.8% with the main drivers of the increase coming from the US and China, while Magna is projecting 10% advertising growth although that includes US political spending (this of course being a US Election year). It remains to be seen what will happen with spend this year - while it has been stronger in Q1 than expected, and across the board, the question is whether such momentum will feed into the 2H.?
5. One thing I think Lions could be better at, is perhaps having more of the lessons that can be learned from other parts of the world, particularly in Asia-Pacific. I do not think this is necessarily the fault of the Lions in particular - the Chinese media landscape is its own beast for example, and the presence of western media companies in these markets is limited. Yet it would have been good to get more of a global perspective when it comes to a coverage of topics and participants. There are several trends prevalent in certain Asian markets that have been talked about as potential opportunities in markets such as Europe and North America such as social commerce where it might be argued the Asian perspective could have provided valuable insights.
6. One other noticeable feature was that - both by observation and via anecdote - there were more financiers and bankers on the Croisette this year. Part of this may be down to the view that the AdTech space will be consolidated (although that has been a theme for years), part that advertising may be becoming a growth sector again but I suspect the primary reason is around AI, both given the narrative it could disrupt advertising but also as bankers seek out any AI-related companies that could prove valuable investments. I suspect this interest is likely to be ongoing although the current interest rate environment may act as a possible cap.?
7. When it comes to themes, unsurprisingly, AI was the primary, if not dominant, one. There were plenty of discussions around how AI will impact advertising and the agency model with the recent news from Klarna that they had saved 25% on agency costs through the use of AI focusing minds. However, it was clear the industry is still searching for a clear narrative and that will likely take several years - at least - to develop. Some such as Sir Martin Sorrell have a clear view that it will transform the industry, but my feeling is we will see a repeat of history, namely that so-called transformational technologies in the services space do not drive a significant reduction in numbers of staff or time spent (think emails or Excel spreadsheets).?
8. The elephant in the room of course is whether AI is primarily a cost saving tool or a revenue generator, as well as what the introduction of such tools means for the existing agency business model, which is primarily based on a cost-plus / margin over FTE model, which does not make sense in an AI world. The latter can be resolved by shifting to an output based model although that raises questions around how such outputs are measured (I suspect this is an easier question to solve than many suggest).??
9. Retail Media was naturally on show with all the major US retailers in particular willing to display their offerings. Again, this should not be a surprise given the high margins in Retail Media advertising (50% - 70% according to the ANA) and what it offers to the retailers (who typically have single digit margins). Interestingly though, Amazon - the largest e-commerce platform out there - seemed more interested in displaying its Prime Video capabilities as it seeks to take substantial amounts of money from the broadcast advertising markets (it also had a clever slogan for Cannes with its “A Maison” play on its capabilities).?
10. A definite plus was a resurgence in interest in the creative side and showing how advertising contributes directly to both top and bottom-line growth. The highlight of this was the presentation given by McDonald’s CFO Ian Borden which highlighted the importance of marketing for the group. Stating, “We spend a lot of money on marketing, and it’s one of the most important investments we make as a business to drive growth”. Borden highlighted the work done by global CMO Morgan Flatley on how her team use data and analytics to demonstrate to management and the Board how advertising adds value.?
11. As many of you will know, I think the idea of advertising as investment is crucial both for the future direction of advertising and the financial performance of the agencies. I like to see advertising as an investment and indeed as intangible capex. I think this is the big opportunity for the agencies - if they can truly persuade advertisers that creative is a value added service and an investment, rather than a cost, and that advertisers need to realise they need to spend the right amount of money, not the least, then it has the potential to help both the Agency HoldCos’ profits and share prices.?
12. Finally, another broad topic, I would highlight sports as an area where there was more interest. FIFA had a spot on the beach and Stagwell repeated their sports beach concept of last year while there was also a strong presence at the Women’s Sport House. Again, there is a huge opportunity here. Part of this will be driven by the fight for TV advertising revenues in the United States, in particular - 93 games out of the top 100 most watched live TV programmes in 2023 in the US were NFL games, but it also reflects the growing interest in monetising sports and reaching hard to reach audiences.?
13. What about the companies themselves? It should come as no surprise that the Tech giants were all in force - Meta (Facebook), Alphabet (Google), Amazon, TikTok and Netflix all had a heavy presence here. Again, no surprise, all the above are interested in expanding their advertising revenues and the last four specifically (and, arguably, all five) want to persuade advertisers to shift money away from television. With the exception of Meta, the big theme of the major players was predominately on their video advertising offerings - as we see the categorisation of advertising budgets blur with linear television, CTV, short-form video and related categories all coming from one video budget, the fights are set to intensify.?
14. From the ‘defenders’ side, the US Broadcasters had a presence (no surprise given the Tech giants are trying to use sports rights to erode their dominance) but not so much the European ones, with the exception of pan-European broadcaster RTL and, relatedly, Freewheel. I think that is a mistake - like it or not, Cannes is the advertising conference with many key decision makers and moreover is on their doorstep. As I have argued before, perhaps the biggest problem is the Broadcasters defensive mindset. Engaging with the industry is critical.?
15. The AdTech-industrial complex was also on full display this year and I feel like this is a trend that is only going to increase, especially given there are several trends - the rise of AI and Retail Media, the growing focus on outputs when it comes to deliverables as well as the continuing debate over measurement - that look to be only going one way. I should come away from these discussions feeling as though I have wandered into a conversation spoken in a different language which is often only halfway intelligible and, at times, can descend into the weeds. However, I suspect this will not change either.?
16. Then the agencies. I would say WPP had the most visible presence - they were on the beach, held the most parties as far as I could see and CEO Mark Read interviewed Elon Musk, which was perhaps the highlight of the week from a news perspective. Dentsu, IPG and Omnicom had visible presences. Of the major agency HoldCos, Publicis’ approach was perhaps the most interesting with not much on the surface but a highly senior management presence on the ground. Also, what was interesting was the highly visible presence of The BrandTech Group and particularly Stagwell. I would suggest that says something about their ambitions (certainly for Stagwell whose Sports Beach proved incredibly popular and which reportedly made an approach for WPP). Watch these two groups.?
17. Finally, the parties. Obvious too many to go to - and never mind the dinners at the villas, the boat trips, the parties in St Tropez etc etc - all were good but, if I had to flag one, I would probably say RTL - understated in an European way but with a good vibe, an excellent act from Lily Wood (who does have more than one song) and a great DJ party after.?

As usual, this is not investment advice.