• by Cory Treffiletti , Featured Contributor, August 8, 2007

A change is gonna come, or it might even be here already! It would appear, based on all the news articles and stories of the last two weeks that the agency business is changing and finally responding to the shift towards automation and a digital-centric focus for planning.

Those of us who've been in this part of the industry since the beginning have foretold these changes for many years, and now it seems our predictions are beginning to come true! Last week, Carat announced it would be merging its digital and traditional business, with the digital team taking the reins of leadership and becoming the center-piece for planning and buying practices. This was a big announcement in and of itself, but this week we saw Publicis running a statement that it is shifting its business towards automation and centralization of its planning and buying systems, with creative rotations being handled cross-platform to respond to consumer behavior. As Publicis foretells, "it is only a matter of time before all advertising is digital."

These announcements are the beginning of a full-scale shift as more and more of the large agency conglomerates and holding companies are beginning to recognize they need to restructure their businesses to respond to the challenges facing them.

As the world of media is shifting ever closer towards digital, a shift in planning needs to take place as well. Since the agencies are having trouble hiring and retaining talent, they need to find ways to automate much of the business, and there are tools being developed in the marketplace to do exactly that.

The agency business has been threatened substantially ever since the Internet began to become a consumer medium, but the last five years have been especially important in this shift. The consumer has adopted to the new technology faster than ever before, while the larger media shops have had difficulty in keeping up. This difficulty is to be expected when you've run a business so dependent on television, with companies hesitant -- or at least they were hesitant until the last few weeks -- to change. The margins on the digital business are lower because the volume of work is greater and automation, though not sexy in the least bit, is necessary.

The landscape of the agency business will look dramatically different in the next five years as more of the large shops make changes like what Carat and Publicis are doing. I see that the medium to large agencies will shift towards digital-centric strategy and automation of execution as well as consolidation of their digital and traditional assets. I feel that the smaller- to medium-sized agency business will continue to have a best-of-breed -model, where outsourced roles will still be available and partnerships for servicing business will be commonplace. Local agency business will also function in this manner, where there is a void of talent with this specific expertise, so not every agency will be able to hire for the role. Utilizing partnerships will be a great way to service this business, along with continuing to draft and train younger talent that will understand the business.

As the shift continues to take place, it will be interesting to see how the other agencies compensate. When will WPP and Omnicom come out with their announcements? When will players pop up who will look at the industry from the top down and provide an unbiased view of the strategic landscape?

I guess time will answer that question.