| ||||||||||||
PRINT
COMMENT
SUBSCRIBE
RSSIt's 2008. The advertising agency business is definitely going to change this year.
Last week Dave Morgan wrote a great article, here in the Spin, which highlighted some of the problems facing the agency business. He very accurately summarized the issues as a combination of competencies, services, mindset, business model and talent. I'm not here to restate the obvious or rehash those issues, but I am here to inquire about the future.
After reading all the articles and editorials over the last four weeks about various groups touted as the "Agency of the Year" by various publishers, I find myself asking this question: Will 2008 see the first time that the Agency of the Year is not an agency?
Work with me here...
As it stands right now, the agency business is flawed not because agencies were designed incorrectly, but because the world has changed around them and they have not reacted accordingly. I hear about so-called revolutionary change in the agency business and I chuckle, because all it represents is a reorganization of people around the same old issues: talent and service line profitability.
The buying of media and the execution of creative have become commodities, but now the clients are aware of it. This is traditionally where agencies make the majority of their money, but that cannot remain the same. No; I see the Agency of the Year in 2008 as being the group of people that finally takes advantage of the tools that are available in the marketplace for the execution of these commodities and focuses their attention against true business marketing services. I see the Agency of the Year as the people who can combine the efficiencies of the ad exchanges, search bid management, ad-serving and the digital dashboard with traditional buying services and research tools, as well as creative tactical execution, and layer these under the strata of strategic and business-building services typically offered by consultants.
I see the Agency of the Year being something different than the agency of today. The Agency of the Year will not consist of media planners and buyers. It will consist of strategists and project management, and it will spend the majority of its time on intelligent work rather than the grunt work that is traditionally where its efforts are placed. I see that the digital technology companies could become the Agency of the Year. I even see Google could become the Agency of the Year, because the definition of an agency needs to evolve. I see the Agency of the Year not having flash developers but focusing its efforts against design and art direction. I see creative professionals intent on the development of concepts and the distribution of these concepts against vehicles and formats; the translation of concepts to units and content. I submit these ideas to the publishers for their consideration.
The definition of an agency these days is about working hard. It needs to evolve to one of working smart, not just hard. The definition of the agency needs to evolve to a true marketing services firm, not a tactical execution firm; anyone can execute. Anyone can "do," but it takes intelligence to lead. The Agency of the Year should be the best example of a company that is trying a slightly new model and making it work for its clients.
Of course, who am I to comment on this? I've helped build a number of successful interactive agencies and I've seen lots of good ideas and bad ideas. It's time for people to open up and share their ideas, because as the money continues to come into our industry, there needs to be experts to put it to good use. There will need to be intelligent generals leading the execution of tactical, commoditized application.
And if you don't believe me, go back and read Dave's article one more time. He knows what he's saying!
RSS FEEDS
I think clients/brands have felt this way about creative for a long time actually. To many of them, creative is still something the agency throws in for free after they make the media buy. The agency/client relationship is a two-way street, and brands have a responsibility to educate themselves as much as agencies do.
Clearly the effect of social networking and UGC presents new challenges for marketers. In the professional social (ProSocial) networking world, everyone has a voice and that means every one, including the marketer, can be called to task. The most successful marketers will emphasize creative - in the broad sense.
Yes, marketers demand analytics and measurements, but savvy marketers will take a step back from the data and look at the business from their customer’s point of view. Is my message (creative) and the means by which I deliver it (creativity) interesting enough to engage my audience? Too many advertisers and agencies are quick to blame the medium if the desired results are not achieved. I say take another look at what you placed, not just where you placed it.
Kudos on your creativity. You’ve built successful businesses, so you know better than most that NOT ‘anyone can execute’. But that was a great example of creative marketing as a means to encourage participation (and grab a few extra PVs) by igniting some controversy!
Linda Kuehn - Professional Social Networks, Inc.
Focusing on what tactics really make sense--and being able to explain why as part of an overall marketing and PR strategy--makes agencies (like KC Associates) a strategic partner for clients rather than just a body shop.
Conversations based on driving the business further will get you conversations with the right level - I see many creative and marketing firms pushed further and further down the organization (mostly because they are viewed as tactical/vendor/commodity). What CEO wouldn't want to talk about much greater results? You have to really "park" the tactical side of your business and thru the early part of the sales process keep it focused on greater results.
It is not about deminishing the value of the core skills but understanding them and finding the tools and business processes which can span agency disciplines and local, regional and global business units and assist them with the management information which meets the needs of both the internal business leaders and also their clients.
The challenge with the existing agency business model is that the local P&L model restricts agency wide projects, also the mindset of charging everything back to the client means that there is limited scope for business and technology initiatives which may serve multiple customers and support mutliple business units and disciplines.
Agencies just need to look at their clients and they will see that their clients have been through this -
Software companies - they used to design and write software, publish to disk, tape, CD, print a set of manuals, head of to the client do some training and move ot the next project, - now customers download from the internet, use customer support forums and online training videos for self learning. Their core value has not changed they have just adapted their model to take advantage of the new technolgy and business processes.
Airlines - they sell us a seat to get from a to b quickly, we used to get a printed ticket, stand in long queues to checkin - now we check in online or thorugh a kiosk at the airport and drop off our bags - there are still queues but the technology has changed the interaction with the customer, reduced priting costs etc. Their focus is much more on the airport and in-flight experience, which are the differentiators.
Lawyers - they used to bill on retainers. They now use technology to support the lawyers in the creation and management of the documents they produce for their clients and they use other technologies to manage their practices more efficiently. They can measure profitability per discipline, local office, department, partner, fee earner, client, client matter/project.
In my experience agencies can give you top line revenue, profitability and year on year growth. From an internal business management perspecitve, what about profitability per local office, per discipline, per client, per campaign, per project, per media job, per studio. Why does one office take 3 times as long to adapt and produce an ad from a global template than another - these inefficiencies need to be identified and imporved upon.
The agencies need to embrace individuals with complimentary skill sets from other industries and collaborate with them to move the industry forward.
As for agencies only "striving for awareness", that in my opinion is an incomplete thought - different campaigns have different goals - some awareness, some trial, some increased sales. Integration of different methods to reach the customer is a smart idea for today, especially with all the tools available to ad agencies. Now let's also remember that the creative thinking that drives these methods is still as imperative as ever - whether that be in the creative department, the media department, the digital media department, PR, etc.
"Ad agency" is an old term. At our company we call it "DHA CustomerConnect."
Great article Cory. Mike Dektas, DHA CustomerConnect mdektas@dhacustomerconnect.com
While I agree that leadership in strategy and tactics is the best way for the modern agency to function, I hate to break it to you, but not anyone can "do."
If this is your idea of the "new agency" model, then you've have a huge lapse of knowledge about tactics. This is not to say that agencies should be involved in all the grunt work anymore. But the importance of the grunt work cannot be minimized, as you have done with "anyone can do."
I am very strong in media buying. It's my tactical grunt work area of excellence. I defy anyone not familiar with the subtleties and technical knowledge of media buying to do a better job than I can do. Even if I showed an "anyone can do" media buyer how to do it, they couldn't get it right. I know this from years of experience with so-called media buyers all over the country. Even when they are experienced at media buying, they must have other abilities, such as marketing, or they cannot do it in competitive and large scale markets. They don't know enough. Not anyone or everyone has this knowledge. It's learned through formal education and a very hard process called experience.
Unfortunately, it has, as you say, become a commodity. That is as unfortunate for the client as having copywriting or visual creative become commodities, too. The reason media buying and even copywriting have come to be thought of as commodities is because the media has portrayed them as such; unimportant. As you have done, also.
This is a sad reflection on the media for perpetrating such a self-serving idea. and on clients who are so uninformed as to operate solely on cost, not results.
You see, if one really knows media, then he may know that certain media are wrong or not worth their costs. So what does a media sales person do? Discredit the media buyer. What else. Make him or her a grunt work person; a commodity. That solves the medias' problem of their own lack of qualification and ability to reach the market.
Professionalism and craftsmanship in the grunt work is all about the proper execution of the tactics that make the strategy work and show results. Others outside of the agency environment can create and implement the tactics, the grunt work, but they must be every bit as smart and well informed as the strategists and planners--the leaders you speak of as being the "agency model." Or the project will fail just as big as if the strategists failed to properly research and translate to action the issue they must market for.
Your opinion of "grunt work" and the tactical implementation shows a big void in the knowledge and experience that you say you have. It you don't really understand the situation, please don't comment on it.
Advocating commoditization of tactical abilities, calling it grunt work and saying anyone can "do" is downright thoughtless. And it is a disservice to us, your readers, not to mention the medium for which you write .
But that doesn't mean the business is getting less creative. Au contraire. Clients now demand creativity on every level, from concept to execution to metrics and beyond. Complete message integration across every possible outlet, regardless of discipline or core philosophy (advertising or PR).
For those of us who understand that we are, indeed, in the "business marketing services," business, the transition, while challenging, is not insurmountable. The rest may want to re-read their copy of "Who Moved My Cheese?"
The gap between the behavioral goals agencies strive for and clients' goals can be bridged by a customer-centric metric that measures customer attititudes in a consistent, reliable, benchmark-able way. A metric that can link perceptions to their influence on behavior.
Customer satisfaction, measured with the same degree of scientific integrity, precision, accuracy and consistency as web analytics, can be linked to behavior through established methdologies, such as the American Customer Satisfaction Index. Using customer satisfaction as the key performance metric for both clients and agencies can bring both groups together around a common goal: the clients' financial success. Which is the best insurance policy for agencies who want to maintain their client relationships.
In August 2000, I helped found Qorvis Communications on a totally different premise, not out of synch with much of what you suggest. Our clients do not care how busy we are. They care how much value we provide. So, why do people in the ad business, PR business, etc. measure and bill their clients on the basis of how busy they are? We thought that was kind of dumb. So we have never had a time sheet. So we never measure a person or a client by the amount of time they spend or they take. More importantly, we can't measure a "practice group." Which means that people don't get remunerated by how well their practice group did. And that means there are no silos. And that leads to great collegiality. Then, if you over-populate your enterprise with senior people who can add great value because of their experience and contacts, and you maximize their assets by totally obliterating the question "who do I bill my time to?" when they want to chat about an idea ... then you can produce really great work, which, in turn, will elevate your fees if you bill for value instead of time. And then guess what happens? Everyone is focused on one thing: doing great work. And nobody gives a damn about time. And then you discover another great turnon: great work performed for clients who truly value what you do, done quickly because you don't care about time, yields great margins that can be shared in the form of great bonuses, allowing you to recruit great people ... and the beat goes on.
But when that firm exists and starts offering advertising services, those in the advertising business will say: "Hey they aren't even an ad agency; they are a PR firm." Which is exactly what ad agencies are saying about Qorvis now. Which sounds very familiar to what we heard when we started offering interactive services. Which is trumped by others in the public relations business who insist that a firm likes ours, where people work without bosses, must be pure chaos and can't possibly exist for very long.
As long as people consider the question of what characterizes the agency of the year, they are still thinking about being an agency in the first place. Blow up the whole idea of "agency." Start by blowing up the time sheet. Eliminate the questions: Is this person profitable? Is this client profitable? Is this practice group profitable? And start asking only one question: Did we do great work? Answer that question with a lot of "yeses" and you won't worry about profitability.
Sapient as a company is all of the things right now you've outlined as what the agency of the future must be.
Forrester recently got it right when they spoke of the exact same thing you have and named Sapient as the "Triple threat" to achieve all of them. I think you're right but the future of the agency business is already here in the form of Sapient Corp.