The Advertising Agency Of The Future – Needs Some Work
My first job in advertising was at Dancer Fitzgerald & Sample. Back in the 1980’s, DFS was New York’s largest advertising agency. We were sweetly based in the iconic Chrysler Building – near martinis. At that time, we did not spend lots of gray matter thinking about the the advertising agency of the future because we were making wowzer money via the 15% commission on media and 16.5% on production. With clients like General Mills, P&G, RJR Nabisco, Sara Lee, Northwest Airlines, HP, and Toyota, we were not too concerned about reinvention. To give you an idea of the economics, Northwest spent $60 million, revenues were $9 million and profits were $6 million.
Today advertising is a radically different business and ad agencies need to be thinking about how to be positioned for a future where multi-year AOR clients; 15% media commissions; three primary media types (TV, print, radio); a positive network effect and loyalty are in the past.
Not to get too down, but today the advertising world is about one-off project work; crazy price consciousness; competition from all sides (large consultancies, in-house agencies and your ex-Creative Director who does just fine as a freelancer) and the rush to automation.
To survive, your agency better be thinking about an evolving future. Like will your agency be an advertising agency of the future? Like, what will you look like in 12 months? Like, is there life for you after advertising? Um, that’s a different post I’ll soon get to.
Just For Laughs… WPP Is Always Good For One
First, really, ya think:
“Our industry is going through a period of structural change, not structural decline, and if we embrace the change we can look ahead to an exciting and successful future.”
Second, this should instill the idea of partnership and cost control in the minds of clients Like Ford which just shifted some WPP business to W+K:
“Colleagues say Mr. Read is exacting. A wine connoisseur, Mr. Read is known for bringing his own bottle to social events in case the wine being served isn’t up to scratch, they say.”
WTF? A bit of history. From 2008 The New York Times:
Nonetheless, secretly reserving a wine for oneself while serving something else to the guests violates numerous rules of etiquette. Not that it’s uncommon. The most famous such anecdote comes from “The Final Days’’ by Bob Woodward and Carl Bernstein, in which Richard Nixon is depicted entertaining Congressmen on the Presidential yacht Sequoia, serving them a modest Bordeaux with their dinner of tenderloin while the stewards poured Nixon Margaux 1966, the bottle wrapped in a napkin to conceal the label. Tricky, Dick!
Look, for many agencies, it is kinda fucked up out there. As the famous Chinese curse says, “May you live in interesting times”. But, but, there are still agencies that grow and make bucks. You can too.
So, in preparation for this blog post – yes, it is ultimately about how to position your agency for the future – I read a bunch of articles on “the advertising agency of the future.” Not too surprising, this is a hot topic. Not too much vision, but a hot topic nonetheless.
Interesting (as in Uh Oh) the first page of Google has articles on the future from traditional-agency killers like Deloitte, Accenture, Adobe, CMO.com (an Adobe site). There is even a conference called The Future Of Advertising.
It isn’t until Google’s page 2 that industry types like AdAge, The Drum, and the ANA get to chime in.
I stopped trying to find an advertising agency perspective delivered via this search term by the time I got to page 4. Do the big guys (even WPP, Publicis, Omnicom, etc.) not want to discuss the future?
Some Findings On The Future on Advertising
Here are some of the highlights from my research. I’m listing these in random order. Much of this is obvious. However, your agency has to keep all of these issues in mind because the pace of change is accelerating. I’ll have my personal thoughts a bit later.
I’ll start with this fun point. During an Adobe ThinkTank discussion at Advertising Week 2017, Phil Gaughran, U.S. chief integration officer at McGarryBowen, made this sad prediction:
By 2022, he said, 80% of the advertising process will be automated, “a threshold that will never be surpassed.” The remaining 20% will comprise such elements as brand value, storytelling, and other more experiential tactics that will always need a human driver.
Programmatic media buying is only going to increase. Clients think it is efficient.
Media platform growth will come from even more social media, more digital, video advertising (yes, this includes some TV), mobile, and… local advertising.
The traditional advertising pool is getting shallower as we binge on hours of subscription media including Netflix, Amazon Prime, YouTube Red and soon Disney.
Huge Facebook, Google, and Amazon audiences can be reached via DIY advertising ads. Just wondering, have you, Ms. agency CEO, ever placed a Google or Facebook ad? You should.
Clients will continue to bring work in-house because they can. Many clients think that they can plan and execute content creation via the same talent an agency has without your overhead and perceived sloth like work ethic (yes, this is a debatable point). That said, why would a savvy youngster work at train-wreck WPP when she can work at Red Bull’s Santa Monica office?
I have to go here: big clients do not dig agency multi-office networks anymore.
ROI rules. You’ll have to work to demonstrate your agency’s value? Have you dug into the expanding world of big and small data? Talking about data, most agency CEO’s have never looked at their agency’s Google Analytics – data they should be looking at every month.
Bye Bye AOR. Agencies are already seeing an uptick in requests for shorter, specialized projects. From Digiday, “according to a survey released in January from development firm RSW/US, 35 percent of 115 agencies surveyed said a majority of their assignments are now project-based, while 16 percent said over 80 percent of their work is now project-based.” What might a project-based agency look like? I see fewer full-time employees; smaller tactical teams; use of a well managed freelance system…
Finally, this quote from Alberto Brea, Executive Director, Strategy & Planning at Ogilvy New York,
The future of ad agencies will be in creating platforms that help brands make a customer’s life easier and even better. At the core, ad agencies are not in the business of creating ads units. They are in the business of changing behavior. The more we can make customers’ lives easier, the more customers are likely to buy the brand.
To pull this off, agencies need to be consultants, and consultants need to be agencies. Helping clients design and manage platforms requires bringing business, brand, design, operation and technology together. Many agencies don’t have the depth to play at this level. No wonder consulting firms are moving aggressively to this space.
Now For My Advice: In Three parts
1. Are You A BIG Advertising Agency Network?
These conglomerates will simply go away. I’d imagine that most of us agree. Their bloated, high overhead business model has not worked since the start of the recession — except for senior management – Omnicom CEO John Wren received $23.6 million in total compensation a couple of years ago.
Does P&G need an agency that has 59 VP’s? My international Saatchi clients never really needed to have fully-staffed agency teams in Seoul, Buenos Aires and Dusseldorf (size might have mattered in the 80’s and 90’s – pre-digital). Some of noticed that their campaign integration was hampered by inter-agency P&L turf-war confusion.
2. Are You A Medium Sized Agency?
For the sake of argument, a definition… you have from 50 to about 250 employees and you are based in a secondary city like Kansa City. You have local accounts. But, you want to grow and win big-name clients. Unfortunately, a Red Bull probably does not need a Kansas City agency.
This is where you need to think about client personas and what they think and need. Ask yourself… why would you hire you?
How can you beat location prejudice? You need to become an expert. Agency specialization, having a narrow brand proposition, that means owning a subcategory, is the only way that you will break out of Kansas City. Red Bull would go to Kansas City to hire the best programmatic agency – if there was such a thing.
I’ve written about advertising agency positionings that stand out. Go here to see my thoughts. But, in the interest of speed, here are a couple of paths to specialization / expertise.
Own BIG Ideas: Somehow, the agency business has lost its single-minded quest for the BIG IDEA. Clients can buy media, clients can write blog posts, clients can hire a freelancer to do almost anything. But, clients, most, cannot develop the BIG strategic to brilliant creative execution. Where’s The Beef?
Own digital expertise: Look at Fetch’s mobile chops or nail PIM (Product Information Management) like Minneapolis’s Aware.
Own eCommerce expertise: Be the best conversion optimization agency like my friends at Portland’s The Good.
Own a demographic: Kansas City’s agency Barkely morphed to be a national agency when they became the millennial expert. Miami’s Viva Partnership concentrates on the growing Hispanic market.
Own a category: Pet products? Of course, health-care. Why not own automotive (think of all of those local dealer ads) and while you are at it, tell everyone what you do for a living… check out L.A., Austin and New York’s The Automotive Advertising Agency. No “we do everything for every possible client under the sun and have a really cool and groovy name” standard agency positioning here.
Own Social: (OK, you might be a bit late to this game – or, is it not too late?) My favorite Social expert agency owns the idea of “Liked”. New York’s Likeable has been a serious “likeable” agency since 2006. Read their very sweet personal story. The Canadian agency Viral Nation leveraged influencer marketing to break out of Vaughn, Ontario to get clients like Bud Lite and Match.com – not that there is anything wrong with Ontario.
Own strategy: Own being radically super smart: sparks & honey delivers fresh cultural insights. Their insights are sooo on-point and deep that the agency um, consultancy, includes DARPA as a client (DARPA invented the Internet). For the story, head over to AdAge’s Ad Lib podcast: How sparks & honey morphed From Agency To Consultancy By Mapping Culture.
Own personality: Man, owning personality seems so Mad Men days (think David Ogilvy, Lee Clow, Maurice Saatchi). Need proof that this still works? Obvious go-to dude: Gary Vaynerchuck. The only reason you have heard of VaynerMedia is because of Gary.
Own being a freaking hard to ignore agency: Two paths come to mind. First is Canada’s John St. They coined the term Unignorable and are. It is mind-blowing to me how few agencies step up to the plate to stop being IGNORABLE. Have you seen John St.’s videos? Another route to being unignorable is to own being Creative (note: this is crushingly impossible for most agencies.) Since being “creative” is so subjective, many creative agencies combine two things: 1) they are in fact creative (as in they think different and deliver the Holy Grail of great ideas) and 2) they go after and win the awards that lend third party “proof” to skittish clients. You know which agencies I am talking about.
One more – how about having a truly kick-ass website that is both highly competitive and irresistible from a design perspective? But, and this is a must, also deliver a hard to resist sales pitch. Check out Twenty Nine NYC. Let me repeat myself, this website sells and… it does not look like it was built on WordPress.
3. Are You Local?
Here’s the good news. Local advertising is huge. Why? There are zillions of clients. Zillions of mostly inexperienced clients that want to grow and need you. Zillions of entrepreneur-led clients that want you to help them and your localness is a major plus – not a negative. There is no reason not to own your local market.
Own it by being a local expert; own it by networking; own it by understanding local business issues; own it by being (LOL) full-service; own it by helping the client down the street to go regional or even national.
Frankly, is there anything wrong with being local? There is money out there (I am not talking about uber small and inefficient clients), & local clients will respect you, & they will not have a new CMO and pitch every year & you will not have to get passed TSA body searches to visit them.
Local can rock, check out New Orleans’s agency Trumpet’s local client list.
Last Point – Its Marketing Stupid
But, you will actually have to market your agency. If you do not know how to leverage inbound marketing to be where your prospective clients search; if you do not know how to position your agency to become an expert; if you do not know what Account Based Marketing is… If you need an advisor that will force you to be unignorable, call me.