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08 Feb, 2010 – 120 comments

who says the future needs an advertising agency?


the agency of the future can’t be built by just adding tail fins and Goofy’s nose

A quick disclaimer: the views expressed here are mine alone and do not necessarily reflect the views of my employer.

Apparently there’s a roaring interest in a model for the advertising agency of the future. My aim for this post is to address some of the ideas put forth by others, weigh the usefulness of today’s agency objectively, and make a bit of a prediction myself. There’s little fun in making bold predictions about the future without a debate – so dig in and offer up a point of view in the comments, if you please.

Some smart ideas already presented:

I can’t really argue with any of the points or models above – they’re all insightful and interesting – but they’re pontifications on what agencies should be doing right now. To say these are models for the future is the equivalent of attaching tail fins to a sedan. All of the above examples seem to be creative ways to sidestep current problems with the industry instead of addressing them directly (and to be fair to the authors/creators cited above, I doubt they meant their posts to be that forward looking).

Who says the future needs an agency, anyway?

Advertising agency of the future sounds a bit like horse drawn carriage of the future.

I’m not saying for certain that there won’t be agencies in the future, only that the future doesn’t necessarily need agencies. Just like the future doesn’t need printed news but it needs journalism; the future needs commercial communications, but who creates them, the agency or the brand or someone else, is unwritten.

And though the future of the agency is unwritten, I have real doubts that agencies will survive or should survive:

  • Agencies don’t value strategy. Agencies should quit blaming the brand for not paying for thinking. Your ability to court good clients who value strategic thinking is a measure of your own strategic ability. So when brands won’t pay for strategy, agencies gladly overcharge for the execution – which more often than not nets an expensive bad idea. Good luck getting the brand to pay for that the fifth time around.
  • The big agencies only pay lip service to digital. They hire and knight smart digital thinkers who ultimately have no authority, no real work, and contempt directed at them from the rest of the organization. It’s no surprise why they don’t stick around. The big boys also farm out to small digital shops that undervalue themselves and lose credit for the work. By the by, almost no superbowl ad last night drove to a URL (GoDaddy has been doing this for years and no one else has caught on) and no brand I saw used their Adwords in an interesting way (even though people were sure to hit search).
  • Agencies can’t keep the quality talent they need. See the last bullet point.
  • The digital agencies are full of tacticians. I feel a bit like Bill Bernbach must have when he wrote his letter to Grey – the explosion of digital channels has created a need for people with an almost encyclopedic knowledge of how to implement specific tactics on digital platforms but they rarely have any creative ability or understanding of culture, for that matter. And what does that generate? Well, as Bill put it, “A sameness, a mental weariness, a mediocrity of ideas.” Yup, that’s it.
  • Agencies don’t care about the brand. And there’s no reason why they should. Agencies are connected to brands by CMOs with tenures measured in months, not years, and no one ever holds them accountable for failure. I’ve watched brands be gutted by layoffs and their agencies of record, who bungle everything they touch, continue to walk the halls with smiles.
  • Agencies shouldn’t be trusted to occupy the interaction between brand and customer. When brands turn over the interaction and engagement of their customers to agencies, they’re more often than not, losing an opportunity to collect data and insights. There’s a goldmine waiting to be had for the agency that begins to record everything, measure everything, act objectively, and glean insights from interactions and become the data-hub and consumer insights engine for the brand. Unfortunately, no one is moving in this direction because it’s easier to continue flogging a dead horse, for the time being.

One major epilogue to these points – these are blanket statements, which by definition, do not do justice to the few among us that don’t operate mediocrely and slowly suffocate the brands that hire them. If you’re reading this, there’s a fair chance you’re one of the good guys. Either way, I’m not trying to offend through sensationalism; these are real observations from my short time spent near this industry.

On to the prognostication!

Obviously by now you realize I’m of the opinion that the advertising agency, in its current form, has a rather bleak future ahead. Certainly the automobile industry has taught us that you can’t continue to profit from a mediocre product forever. Wall Street showed us that eventually greed left unchecked is punished. And newspapers have demonstrated that by ignoring the real opportunities provided by technology you absolutely risk extinction in the longterm. And that’s where, I believe, the advertising industry largely finds itself today: mired in mediocrity, greed, and ignorance.

And because of that, I can’t help but hope that the future needs the advertising agency less.

I think Joseph Jaffe probably isn’t too far off – it’s easy to see agencies splinter between the idea-havers and the technicians – but I think the overall footprint of the industry will be emaciated by then.

I think, like any other time of true shift, we’re beginning to see the wheat be separated from the chaff. Brands that are unable to court a consumer that is no longer passive, predictable, or isolated are rapidly losing value or committing themselves to a steep learning curve. Because they feel the pain first, many brands are leap-frogging over their agencies in terms of gaining knowledge and know-how of these interactions. In fact, I’ve already seen examples of brands moving many of these new functions of the agency in-house. Due to this, agencies will continue to have a dwindling pool of customers that require their full services.

Meanwhile, new brands are coming to pass that are built as communication vehicles in themselves – Tom’s Shoes, Zappos, and Quirky to name a few. These brands are also brilliant at using and adapting new technologies to satisfy their needs  – which used to be a job for the agency.

I’ve always been interested in the Coudal/Anomaly model of launching your own products, but I think they’d both admit that juggling clients and your own brands is like juggling chainsaws… on fire… blind-folded… on a unicycle… over thin ice. It can be done, and will continue to be done into the future, but not by a wide swath of the industry. The failures will vastly outnumber the successes.

Do I think brands will bear the entire burden of a shrinking ad industry? Absolutely not. I think customers, also known as people, will step up and directly connect to the brand, creating real value, in incredibly significant ways. Ultimately, this new kind of consumer is an opportunity for the brand and a risk for the agency.

I do want to be clear about one thing – there is value in what the agency offers. And although I think the current services and know-how of the agency are at risk of erosion in the future – agencies do tend to have rather creative people stowed away in their ranks. These people are the key to the agency’s survival because there will always be a need for creativity and innovation. In fact, these people have the opportunity to carve out a third possible future for the agency: the platform builders.

As we approach this potential future and agencies continue to subsist on a diminishing set of resources (the needs of brands) we’ll see mostly what’s left of these organizations fall into Jaffe’s two paths: the idea makers and the technicians. But we’ll also begin to see a new species of agency evolve, the platform builders, that reverse the power dynamic between brand and agency by creating remarkable, attention earning, systems for human interaction. Because of the existing skill-sets at agencies, I’d venture to guess that these systems will either be technologically driven (the next Foursquare, as an example) or entertainment based (the next Lost, or hell, the next Two and a Half Men).  Either, if executed successfully, have the potential to create a need for the brand to sit down again at the table. To that end, I think Big Spaceship in the technology sphere, or Katalyst Media in the entertainment sphere, are both early experiments of the platform builder – but both are still incomplete attempts to evolve a more traditional model.

A bit of advice for existing agencies…

… based solely on my prospection of the future (add salt to taste).

  • Clean yourself up. If you’re committing any of the sins listed above, time won’t be kind to you and neither will your employees. Drop the greed (or find clients that will hold you accountable), fight mediocrity, and spend more time learning about the intersection of new technologies, human behaviors, and cultures.
  • Prepare for a decline. Established brands are proving to be quick studies in satisfying the needs of their customers, new brands are being created that require less of your services, and the introduction of a new kind of consumer – one that isn’t passive, predictable, or isolated – is edging you slowly out of the picture and out of work.
  • Choose a path. The market will inevitably force you into evolving into one of three species of agency: the idea maker, the technician, or the platform builder. None of these models guarantee survival indefinitely and all are, as of now, still nascent. It’s up to you to see them mature and develop.

As I said before, there’s no fun in making predictions about the future without a debate (and honestly, this post took quite some time to write) – if you’ve made it this far, thank you for your attention and now, would you mind sharing your opinion or sharing this post?


120 Comments

  1. Spencer
    Spencer May 19, 2010 at 4:00 pm .

    An agency run by the creative minds inside it? Crazy. Absolutely crazy.

  2. Chris Finlay
    Chris Finlay May 19, 2010 at 5:55 pm .

    Great post.

    You should check out http://www.dmdnetwork.com by @rowlandhobbs & @dasduke They are creating a network of “microangencies”. A very cool concept.

  3. mark sherrington
    mark sherrington July 15, 2010 at 7:28 am .

    Very thoughtful and thought provoking post. Like all of us I ponder the future of the ‘agency’ world’ but focus specifically on the current and very real ‘digital vs conventional agency’ debate. I don’t know how it will all pan out (I’ll come back to this point) but know for certain that right now a) digital and trad advertising agency are oil and water and b) digital has more need/right to be at the top table, since creative use of technology has to be at the top table. However, I agree this will require them to up their game strategically. On what the future will bring I would share two observations based on more than 30 years in the business, frankly based on being old which makes one a little more pragmatic. Firstly, clients outsource what they cannot do themselves, you are spot on about that, and technology is changing the game on this as you identify. Secondly, the world very rarely changes from this to that, it evolves from this to this plus that. We used to just read books, we now read, watch TV, go to cinemas and play on our PC – but we still read (in fact they all work symbiotically). It is a both/and world. The Unilever’s and P&G’s – still the biggest spenders by far – will still have need for agencies that look quite a lot like the ones we have now. But they will – already do- use altogether different agencies as well, and others will only use new types of agencies. That said I like the “think, do, connect’ model you put forward but see it as more of a construct than a clear service segmentation. You will have agencies that do one, two or all three and some that fill important niches in between (what happens to design, PR etc). anyway great post and interesting debate.

  4. Agency of the Future | TibetanTailor
    Agency of the Future | TibetanTailor August 26, 2010 at 7:04 pm .
  5. @mranauro
    @mranauro February 18, 2011 at 5:36 pm .

    Amen.

    Relationships > Messaging

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