Welcome To The Post-Agency Era
We once used agents to purchase auto insurance. No more, thanks to Progressive. Long gone, too, are the days of booking trips through travel agents. They have been replaced by Travelocity's roaming gnome. Real estate agents seem a quaint remnant of a different financial time; commissions paid on top of falling prices add insult to injury. Public relations agents once were required to reach the media. Now, we are the iReporters on CNN, as well as the executive producers, hosts and broadcasters on YouTube. Every "comment" box makes each of us an op-ed contributor.
Surely the next agency to go -- and the one holding on tightest -- is the ad agency.
The current global financial crisis and the downstream fallout of historically low consumer confidence and spending will reshape the advertising industry dramatically. But it will only speed what was already underway. Major marketers continue to express growing frustration with agencies' inabilities to navigate the new consumer and media landscapes. They are finding the agency business model less compelling than ever.
Indeed, we must remember that the term "agency," at its core, signals a very particular type of business structure, one that may well have run its course. Yes, there are shops known for creative brilliance. Yes, there are practical and technical areas of expertise that corporations should not take on internally. And, yes, some agencies do understand the difference between wild inspiration and strategic counsel. None of this, however, changes the fundamentals of an industry that was long-ago built upon an assumption that an intermediary is a required -- and good -- thing.
The recent launch of Google's Ad Planner is a step toward the future, thought it's seen as controversial and limited by some. Ad Planner is positioned to be in the service of ad agencies. In fact, Ad Planner is revolutionary; it goes well beyond a direct challenge to agencies. Ad Planner obliterates the agency model by quietly introducing the concept of advertising brokerage. Google claims it has created Ad Planner to "help media planners...connect advertisers and publishers." In truth, it connects publishers to advertisers, a subtle and key difference, with no agency required. The Ad Planner service is free; care to guess how the money flows to Google? The advertising industry has held on to the agency model for far too long. It was slow to adapt to a changing media environment. And, it continued to value creative sizzle over consultative substance. With advertising brokerage let loose, there are few arguments left to justify the agency structure. The industry left itself open to be leapfrogged in this way. Google may be the world's first post-agency ad firm.
What Google cannot do yet is provide clear, strategic advice. It can simply provide valuable data and persuasive quantitative insight. Agencies would be well-advised to learn the fine art of consulting now. Doing so, though, requires a different mind-set, a different skills set, a different employee base and a different business model. These are no easy tasks; they are a counter-revolution.
Agency leaders would be well-served by challenging themselves to ask what their businesses would look like if they never produced or placed another ad. Is there a sustainable future without the core product?
What would the advertising business look like if it produced advice on consumer-to-consumer marketing strategies or the nuances of developing content ready for the coming semantic Web? Many industries have crossed this type of chasm before, and it is time for the ad world to do so.
Usually, though, there is real genius -- an Edison, a Ford -- who leads the way to a future that seems impossible. The advertising industry does not need creative genius right now. It needs business genius, someone who can imagine and execute success in the post-agency future. Someone who can see an adless agency, as Ford foresaw a horseless carriage.