Digital Challenges Encourage Agencies, Media To Transform Industry
That was the upshot of a pair of Advertising Week panel sessions that essentially focused on the industry's constant state of change and different approaches to embracing it.
While Silicon Valley is sometimes frustrated by the slow pace of change within the marketing sector, the odds are stacked against high-tech entrepreneurs introducing ideas with real impact on the way the industry conducts business, said Rob Norman, North American CEO at WPP's GroupM.
Norman shared with Advertising Week attendees what he called his "85-10-4-1" rule, pertaining to entrepreneurs with hopes of transforming the industry. "For every 100 companies we see, 85 will never see a return" on their investment, he said. "There are too many ill-formed ideas with marginal utility that lack any real opportunity at scale."
Ten out of every 100 companies might get their investment money back, while another four might make a windfall, usually by selling the operation to a larger entity.
One new company out every one hundred will have any "significant impact on the advertising marketing business," said Norman. "It's a hard game."
But it doesn't stop people from trying, both inside and outside the business. WPP invests in businesses all the time, including ones with new approaches to interactivity, buying time and assessing consumer behavior.
John Adams, CEO of The Martin Agency, said his firm was bankrolling a new search operation designed to help people navigate and find events and activities within cities. To one degree or another, many media and marketing companies have to reinvent themselves for the digital age.
Agencies may have an advantage, he said: "It doesn't take a lot of capital to transform an agency," he said. "It's not like rebuilding a factory."
According to Greg Schaefer, CEO of NCC, the cable ad sales firm, about 70% of TVs in the U.S. will be connected to the Internet within the next two years.
That's going to bring more content choice to the living room, and provide an opportunity for companies like his, noted Schaefer, to provide "consultative services" to agencies and marketers needing help deciding where to place media dollars. "The right environment is critical," Schaefer said.
The almost infinite amount of content coming from digital sources is a challenge for traditional broadcasters, said Cesar Conde, president, Univision Networks. But networks continue to have loyal viewers.
"That trust still means something," he said, and will continue to help networks attract audiences going forward. Univision's strategy includes "making content that is consumable across different platforms," so that viewers can have access when and where they want on their device of choice.
Mike Sheldon, CEO of Deutsch LA, said his shop has already dramatically transformed itself. "40% of our revenue is coming from nontraditional sources," he said. And 20% of it is performance-based, that is, tied to business goals that the client has set for itself.
While traditional media like TV and print face challenges, they're taking steps to adapt. While it's too early to know what the ultimate impact will be, magazines are embracing tablet computer formats in an attempt to retain readers. TV networks are putting more content on the Web, through vehicles such as Hulu and deals with Netflix.
Even with challenges, TV is still an effective reach vehicle that has the ability to "change attitudes and perceptions," said Lee Doyle, North American CEO at WPP's MEC. Going forward, he said, the top task for media is to "leverage technology and data to get the right message in front of consumers."
Platforms across traditional and nontraditional media are merging, observed Christine Freuchte, CEO, Colle + McVoy. "Just look at the millions of viewers who saw last year's Super Bowl ads [online] before they appeared in the game," she said.