How To Future-Proof Your Advertising Agency
The advertising agency of the future needs some serious planning and agility. No surprise here. But, what is surprising to me is the wide range of attention, or lack thereof, to the future I see in the advertising world.
Just for the hell of it. I’ll start with the good old days.
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. At that time, we did not spend lots of gray matter on thinking about the future of the advertising agency business because we were making a 15% commission on media and 16.5% on production. We had a sweet client list that included General Mills, P&G, RJR Nabisco, Sara Lee, Northwest Airlines (I ran the account and our annual profits were $6 million on $9 million in revenues), HP and Toyota. As you might expect, we were not too concerned about reinvention. All this client and revenue firepower helped Saatchi & Saatchi love and buy Dancer in 1986.
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 global network effect and loyalty are attributes of the past.
Not to get too down, but today the advertising world is about 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).
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.
Interesting (as in ‘Uh Oh’) the first page of Google has articles on your future from traditional agency killers like Deloitte, Accenture, Adobe, CMO.com (an Adobe site).
The agency industry perspective is not on Google’s page one. It isn’t until page two that Inc., AdAge, The Drum and the ANA get to chime in.
I stopped trying to find an actual advertising agency perspective delivered via this search term by the time I got to page four. 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. I’ll have my personal thoughts a bit later.
My highlights might be obvious. However, your agency has to keep all of these issues top of mind because the pace of change is accelerating.
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 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.
And, then there is the trust factor. From Media Post:
It has been over two years since the Association of National Advertisers issued its transparancy report, which outlined numerous problems plaguing the relationship between media agencies and clients.
And trust levels are even worse now than they were then, according to a new study by media and marketing consultant ID Comms.
The ID Comms 2018 Global Media Transparency Survey has found that just 10% of advertisers rate levels of trust with their agency partners as high or very high. By contrast, the number who believe that trust is low has shifted from 29% to 40%, while the number who believe it is average has fallen by 12%.
ID Comms described its latest findings as “troubling.” Since the initial report, conducted by K2 Intelligence on behalf of the ANA, ID Comms writes that advertisers have worked hard to improve their media knowledge and take greater control over how their ad budgets are invested. Many have adjusted contracts with existing suppliers or held pitches that demand greater transparency as a condition of participation.
Media / $$$ growth will come from even more platforms that clients can run themselves. That means more social media, more digital, video advertising (yes, this includes TV) and mobile.
Huge Facebook, Google and Amazon audiences can be reached via DIY advertising platforms. Have you, agency CEO, ever placed a Google or Facebook ad? I bet not. You should, considering DIY Facebook advertising just might be your largest competitor.
The traditional advertising pool is getting smaller as we sit in front of subscription media including Netflix, Amazon Prime (now running NFL games), YouTube Red and soon Disney.
Clients will 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 the overhead (yes, this is a debatable point). That said, why work a youngster work at WPP when she can work at Red Bull Santa Monica office?
I have to go here: big clients do not dig agency networks anymore. Watch Ford move even more business out of WPP. VMLY&R anyone? Is this an agency brand for the future? Six syllables.
ROI rules. Can you prove your value? Have you dug into the expanding world of big and small data? Can you discuss the Google Marketing Platform?
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
These conglomerates will sooner or later simply go away. I’d imagine that most of us agree. Their bloated, high overhead business model has not worked since the recession. Did it ever? Except for senior management – Omnicom CEO John Wren received $23.6 million in total compensation for 2015?
Does P&G need an agency to have 83 VP’s? My international clients never really needed to have a fully staffed agency group in Seoul and Dusseldorf and beyond (size might have mattered in the 80’s and 90’s – pre-digital). My clients did not need to notice that campaign integration was hampered by inter-agency P&L turf-war confusion.
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 Kansas City. You have local accounts. But, you want to grow and win big-name clients. Unfortunately, a Red Bull probably does not need a full-service 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 – but not that full-service agency.
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 digital expertise: Think 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 actually became a national agency when they became the millennial expert. Miami’s Viva Partnership concentrates on the growing Hispanic market.
Own a category: 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 too late?) My favorite Social expert agency owns the idea of “Liked”. Likeable has been a serious likeable agency since 2006. Read their personal story. 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 deep that the agency um, consultancy, includes DARPA as a client. 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.
Own being a freaking hard to ignore agency: Two come to mind. First 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.
Own one more – how about having a truly kick-ass website that is both kick ass from a design perspective but, and this is a must, also delivers a hard to resist sales pitch? Check out Twenty Nine NYC. Let me repeat myself, it sells. http://www.xxix.co/
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. Zillions of entrepreneur-led clients that need you to help them plus 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 guys down the street go regional or even national.
Frankly, is there anything wrong with being local? There is money out there (I am not talking about the super small client), local clients will respect you, they will not have a new CMO and pitch every year and you will not have to get passed TSA to visit them.
Check out New Orleans’s Trumpet’s local client list.
Own small. As an agency owner with a Saatchi-related “big is beautiful” past, I had my sights on growth including more smart people, more penthouse office space and a McDonald’s sized playroom. You know what I am talking about.
However, in my final owner days, I recognized that being smaller might be better – and might be my own advertising agency of the future. I closely examined how to reduce staff to a few core people (top creative talent, strategist, media genius, senior production manager and just enough account staff.) We’d really hammer how to use and love the freelance talent in our Pacific Northwest backyard. I’d have a smaller payroll and more FTE utilization.
As stimulus, watch this video on how the Rock & Roll Hall Of Fame band Steely Dan kicked ass with just two leaders / song writers and a wide range of brilliant, often famous, yet interchangeable, studio musicians. Looks to me like a good template for the agency of the future.