The Next Great Advertising Blip Is Just Around the Corner
Ad Age
Judy Shapiro , Editor | Sep 9, 2013
Title: CEO
Topic category: Marketing
Forever Neurotic
Illustration by Mario Hugo

The last 50 years of overall prosperity was a one-time only "blip" of good fortune that's unlikely to ever happen again, according to economist Robert Gordon. His prognosis for the future, as described in a recent article in New York Magazine, is a grim economy based on slow to zero growth where any gain comes at someone else's expense. The American Dream depends on a growth economy, of course, and as the great American Dream goes, so goes Madison Avenue.

Juxtapose this macro-economic "death of a blip" moment against the explosion of game-changing technology that challenges every marketing strategy and tactic of the last 50 years, and it looks like agencies may have taken a mortal blow. My experience of the last 30 days alone seems to confirm this notion.

  1. A mega-brand admitted to me in a meeting that it's considering creating its own ad trading desk (you heard me!) because "agencies add no value. In fact, we are sometimes bidding against ourselves."
  2. A big consumer brand explained why it needed its own content management system because one of its agencies didn't understand how to tell stories across media. "They only wanted to create TV commercials."
  3. A consultant colleague of mine pointed out how aggressively traditional consultants like Accenture, McKinsey, and Boston Consulting Group are moving to become marketing and media consultants. These firms always nipped at the heels of agencies, but this is a full frontal attack.
  4. Three tech CEOs bluntly told me that selling to agencies is too often useless because "agencies are obstructionists."
  5. A life-long senior agency exec recently jumped ship to the publisher side because he has "given up on the agency world." He's now working to create a new hybrid agency/ publishing model.

As if that wasn't enough, the Omnicon-Publicis merger registered an 8 on the Richter scale for me. Clearly, the merger is meant to leverage operational efficiencies (like back office support) and large-scale client infrastructure needs (like data management) to deal with the challenges of creating new revenue streams that are as profitable as media commissions used to be. The heartbreaker is that whatever benefits are realized, they are likely to be short-lived, as the weight of a huge, centralized organization invariably stifles innovation, imagination and initiative.

Yet despite all the gloom, I see a new blip emerging, centered on the agency's sweet spot of creating brand/consumer connections. It's about the creative interplay of technology, relevancy and opt-in marketing that can reach broad, mass-media audiences but is executed at a single, intimate and human level. To profit from this blip, agencies will need to:

  1. Own the integrated user experience throughout a customer's path to purchase journey -- from social to traditional and mobile. This requires a sophisticated understanding of how to deploy cross-device campaigns with device-appropriate messaging.
  2. Manage a business function upon which marketing rests. Innovative agencies such as The Concept Farm are beginning to own processes such as customer loyalty. Their innovations are centered on linking technologies like rewards platforms (e.g. Punchtab) and social community hubs into a coordinated system that generates brand affinity and loyalty.
  3. Establish a deep skill set in the creation, use and management of big data. It's dawning on everyone that not all big data are good data. Tech companies have focused on gathering big data without understanding completely how it needs to be used. This is the agency's opening to take back what, traditionally, agencies always owned -- the marketing expression of the data. That means being able to introduce brands appropriately into the emerging personalized web experience. There's still a lot of upside to be had in activating the diversity of big-data technologies like recommendation engines (e.g. Gravity or Nara) or real time predictive modeling (e.g. AdTheorent in the mobile space).
  4. Be the subject-matter experts at efficient content creation and content syndication technologies. My agency friends create glorious video or an interesting white paper, but too often the agency never suggests what a client should do with it. Too often this valuable content languishes on a client's website. Another huge opportunity for agencies is to lead the distribution side of the content-marketing equation, using the diversity of technology like Blinkx for video distribution or Inpwrd as a way to distribute expert content as native advertising within relevant properties.
  5. Migrate to a blended performance-based and/or e-commerce-based services model. Agencies have resisted being performance-based for decades and for good reason. The upramp for any campaign is simply too long for the risk to be reasonably borne by an agency. While true, the shifting reality of ad budgets into digital opens up the Pandora's box of performance based metrics and by extension – compensation questions. This reality requires a fresh look at reasonably constructed blended models where there is shared financial risk/ reward. For example, an agency might get rewarded for a campaign that achieved same business goals as a similar campaign but this new campaign used less budget.
  6. Provide formal tech training and hands-on labs for agency people. At every tech show I go to, the agency world is mostly MIA because of cost. That is incredibly short-sighted, because with better training in understanding how cookies really work or the tech issues with alternate mobile platforms, agency folks can manage these processes more efficiently and more profitably. Let's teach account people to code or a copywriter how to hack an app. Better yet, let's have an agency hacker conference and show the tech world how it's done!

If the old blip was measured on brute tech strength of CPMs and push marketing, the new blip is centered on creating intimate marketing, at scale. If agencies in the past could only react to marketing technology, now, if they are prescient enough, they can own the systems and process upon which all these diverse technologies will ride. With this new blip, agencies can find their way to new revenue streams and ultimately their salvation.

Here's hoping.

Ad Age by Judy Shapiro |Aug 27, 2013
FROM: Ad Age
Tags: ad age, advertising agencies
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