who says the future needs an advertising agency?
February 8th, 2010 • posts i've written
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:
- Joseph Jaffe says the future will be made up of two kinds of agencies: the idea generators and the executors of those ideas.
- Bob Greenberg, who has a considerable interest in his own agency, R/GA, looking like the agency of the future, thinks that the agency of the future will hold court over digital technologies and interactions for the brand.
- Ben Malbon, the nice chap who heads up BBH Labs, a sweet future-y morsel nestled inside BBH, believes that crowdsourcing, or some kind of permeable relationship with creative talent outside the agency, is a necessity for the agency of the future.
- Tim Malbon at Made By Many, who shares some DNA with Ben from BBH Labs, thinks we should be asking what an agile advertising agency looks like.
- Putting some of these ideas to the test – new agency models are already being implemented by IDEO, Agency Nil, and Victor & Spoils just to name a few…
- What about an advertising agency that launches its own brands? Both Coudal Partners in Chicago and Anomaly out of NY and London tinker and toil with this model to varying degrees of success.
- And all of this discussion and activity even has Forrester primed to release a report on the topic soon. It’s sure to be short, expensive, and oft-quoted.
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?
Related posts:
- responding to the agency of the future
- a week dedicated to fans and the future
- fans are the future of digital marketing
103 Responses (add your comment)
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I must agree with the comment about “juggling chainsaws… on fire… blind-folded… on a unicycle… over thin ice” – as a small agency in East London, South Africa – we have been trying our hand at a few of our own brands due to the small size of the market here – and currently we got one that is flying and one that is struggling.
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Bud, good stuff all. You have an ear for what’s what today. But one thing that stopped me dead was your point “agencies don’t care about the brand.” Perhaps I’m personalizing a bit, but good agency thinkers “only care about the brand.” If you have lived and breathed a brand for years, you know that losing the business is like losing a pet (didn’t want to say child). I’m still pissed off about poor brand decisions and missteps made by clients who moved on years ago. Good agencies take their brands personally. They may not like the clients and kvetch a lot, but they do like the brands. The good agencies (trad., dig, other) get close to the product and the consumer — and it is this closeness that creates work that really sells. (Now, let me get back to the rest of your post.)
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Terrific synthesis coupled with some excellent new thinking.
My take on your interpretation of the coming market situation is that agencies are not doing a good enough job at building brands and more and more brands are wising up to their inefficiencies. Meanwhile new brands have a more intuitive understanding of digital communication and so are bypassing the agency completely?
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I am racking my brains for the reference to a paper presented at Davos 2006 It was stimulated by the Chinese motorcycle firm that manages “local modularization” rather than a supply chain. The authors subsequently joined Deloittes. In the 2006 paper, they also came up with 3 types of firm. I would be interested whether you think they are the same, slightly different or another dimension of a matrix.
Here’s a link. Heaps more after this date with his colleague Hagel.
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Thanks for this brilliant thinking!
I totally agree with the “platform builder” thesis.
Understanding consumer’s usages on TV, on radio or on newspaper is quite simple. As soon as we consider the Internet as a conversation platform, it is really harder (because usages are different on each Internet platform, and because agencies can’t get full access to analytics).
That’s a good reason for agencies to create their own platforms, built with two objectives : improve the way brands can interact with people, and get a perfect knowledge of how it works. -
Excellent post. This also dove tails with Jeff Jarvis argument that the web does not like middlemen.
And that one has to either be a platform/ network or be part of one.
We (RAAK) are trying to be an entity of the future and that’s why we call ourselves a ‘plugin’.
We see ourselves as being very much part of our clients. Where will this lead? Perhaps to rev share models, who knows.
As I pointed out in this blog post, most of the media functions of the future would be best done by companies themselves.
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Thanks for an excellent post.
It bugs me how ad agencies, who have always been looked up to as the avant-gardist folk and the game changers, have been eaten up by their very own creation.They are stuck in reverse, stand in bewilderment as the world changes before their eyes. And they can do nothing about it. They have created a very rigid agency system that cannot afford not any small breach in the process of traditional communication creation. It is so inflexible, so blindfolded that it cannot and will not understand the radical changes happening to human interaction, cultural behaviour, integration of offline+online experiences and the powers of real-time content.
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I think the problem can be solved rather easily:
Change your mission statement.
The mission statement of the GM was “We build cars.”
That’s not a mission statement that would have allowed for the innovation that is needed now. Their mission statement should have been “We bring people from A to B.”Remington’s mission statement was “We build typewriters.” Unsurprisingly they didn’t invent the personal computer.
It seems to me the mission statement of a lot of advertising agencies is “We create advertising.” Because that’s what they are staffed to do, because that brings in the awards, or whatever else perverse reason.
Their mission should be “We solve problems.”
When that’s your mission statement the possibilities and the tools at your disposal multiply.
But you still pretty much employ the same people, because it takes smart and creative people to solve problems.
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As a the owner of a small ‘technical’ agency, currently delivering in partnership with several ‘creative’ agencies, I really appreciate this kind of insight.
It really helps me to understand how my thinking about the kind of organisation we have been carefully nuturing may develop in the future.
My money has been on less ownership, more collaboration all round? Hooray! The future sounds great
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My two cents. Having been a creative director for a few of the above incarnations; pure digital hotshop (Dare), brand creator (Anomaly) and ad agency (Saatchi – where I am currently) to be honest there is not a great deal of difference.
Where they have come from, sure – but where they want to end up – I don’t think so, not eventually. There is not one single ‘agency’, organization, whatever, that has cracked it. And my hunch is that this will remain the case for a good five years as we work out things like Facebook, Twitter, Tumblr, Four Square and whatever the kids are doing in 2015. The best you can do is surround yourself with some smart people (and people you like) keep experimenting and see what happens.
I know that’s kind of vague so here’s something a little more solid. Your point about owning data:
“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.”
I couldn’t agree more. I would kill for that. The trouble is that’s really hard work, and *really* boring. And for the most part people got into the business because they like having fun and can get away with being lazy.
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Tim Burley February 8, 2010at 10:22 am
Becoming more vague (“we solve problems”) is not a position that’s going to hold up to much scrutiny. As a CEO, who am I going to place the future of my company in the hands of? An ad agency? No matter how ‘of the future’ they may be, I’d be mad to abdicate that much responsibility to a team of consultants. I may rely on experts to help me develop a way forwards, but their remit will be to foster a culture of innovation within my company, and then identify specialists who can bring their unique talents to bear on whatever we do.
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This post made me realize the importance of systems thinking, or designing for networks instead of just groups of people.
It’s not a new idea to me, but until now it’s something that I only really thought about in the context of designing digital experiences. Now I realize that it should be central to designing entire brands and entire marketing communications plans.
The future belongs to organizations who can help clients design powerful systems that empower existing networks in a way that is mutually beneficial for the brand.
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Bud. Great post – couldn’t agree more.
I think the biggest problem for agencies is that they inherently exist to take advantage of economies of (production) scale. They exist as they do because in the bygone days of limited, expensive media they had the scale to create, produce and buy TV spots or magazine ads better and more efficiently than a client could do those things.
That’s no longer the case. Scale no longer matters. If big agencies didn’t exist they wouldn’t be created.
What companies need now are experienced, strategic creative thinkers who are immersed in the social, cultural and technological aspects of the web – working together to develop customer-centric business and marketing strategies, and incentivized by brand success.
It’s not so much that agencies don’t care about the brand – it’s that they have absolutely no idea what a brand actually means. IKt’s an exciting world for sure!
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I agree with your ideas. But, as Poppe said, there are ad agencies who still care about brands. It’s just they’re more and more scarces…
Anyway, it all reminds me of “L’ozio creativo”, a book from Domenico de Masi. You should read it (in case you haven’t yet).
Excellent stuff, Bud. Cheers. -
Very insightful and thoughtful. While I think the traditional model of the ad agency is outdated, and becoming more so all the time, I also wonder how many companies can afford to create their own “platform-builders.” It’s a natural law that economies create businesses whenever there is a need for expertise. How well the current agency can transform remains to be seen. Meantime, great points that should be taken to heart.
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Nice post – I’d read bits and pieces of the posts you reference, but had not looked at them all together, as a piece.
I agree that Jaffe’s vision is probably the closest to reality. Too many agencies, both digital and traditional, have set themselves up as execution experts: they can pick the exact right shade of blue, hire the funniest director, show off the latest Flash tricks—but clients have come to ignore their strategic recommendations.
Or to put it another way, I’ve worked at shops where there were people with salaries well into the six-figure range whose job seemed to consist of ensuring that the client’s logo was never more than .7546 cm from the last line of copy and never showed up against black. (For real.)
As for strategy – that may be where the PR firms come in and steal the agencies thunder. While it’s changed somewhat, the agency model is still a production model: they get paid for making a “thing” – a website, a TV commercial, a brochure. The thinking they get paid for is the strategy around why and how they’re going to make the “thing” – it’s not pure brand strategy of the sort Jaffe is thinking about.
That means they are not set up to charge purely for strategy like a PR agency (or Undercurrent) is. Their clients aren’t set up to buy pure strategy either—it’s not a line item in their budgets and what’s more, strategy is supposed to be the marketing manager’s job.
As for your idea about platforms: it’s intriguing and certainly a more interesting future than being an executioner. But here’s a question for you and everyone else: Is there a danger of overload with platforms? Will there be a point where we so saturated with platforms that the cost of getting a new one in front of people and getting them to interact with it becomes prohibitive?
Brands liked push media because at some level every brand had an equal shot – the consumer had to choose to ignore them and it was just a one-shot deal- no need for continued interaction.
But with earned media of any sort, the consumer has to find the brand and there has to be an actual relationship.
And if you’re a big brand you can put the money into making sure consumers have a good chance of finding you and that once they do, they’ll want to stick around and interact. But the more cluttered the marketplace becomes (and it’s in its nascency right now and still quite uncluttered) the tougher it becomes to be found and tougher still to get consumers to give up their already scarce time to actually interact, no matter how charming they may find the platform.
Which doesn’t mean that platform-building won’t be the answer – smaller brands may just need to glom on to bigger brands platforms, the latter day equivalent of co-op deals. Or it may mean we’re looking at a marketplace similar to the current TV landscape, where shows become hits for a brief period of time before fading off and being replaced by the new new thing, which everyone accepts as the natural order of things.
Thanks for bringing this up and making me think. Looking forward to you & Mike’s show at SXSW next month.
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Great post and thanks for stimulating conversation! ‘Ads’ are such a small part of a business’ context. Saying it in slightly different words, then…
Business consultants of the future, advertising or otherwise, will be required to show that costs are commensurate with our contribution…like now…we will have to understand math…we will have to collaborate with creative engineers, accountants, and others within the client organization who we have traditionally deemed to ‘not get it’…and mostly, we will have to embrace a customer who is self defined in far more diverse ways than our traditional collectivist media, marketing, and behavioral research has accomodated.
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Bud, great post. I’m actually part of a start-up “agency” with the intent on blowing up the model as we know it. Stay-tuned. In the meantime I have a somewhat related blog post here that you might find intriguing…
http://loafofbreadcontainerofmilk.blogspot.com/2009/10/why-big-ad-agency-models-will-struggle.html
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Good points (though your strings are showing a little bit) that agencies have to change. It seems to me that most, other than the big, fat ones are, however. I am in Minneapolis right now at a small digital shop Hello Viking. They are building platforms, writing software, etc. One thing is that not all clients are here yet. The smart ones, PG, etc are. In fact Facebook has told me that they are getting the idea of conversation strategy way before agencies get it. So you are right about that incredibly important point. One thing I think you miss, however, is the need for that aforementioned conversation strategy. It is important as the platform you refer to. And that means agencies, who have always shat on the PR folks who know how to engage and influence through conversation and interaction, better open their eyes on that front, too. No way a digital developer or a creative team will have either the knowledge or the confidence from a client necessary to do that job.
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Bud,
First off, great summation of where we’re at, and the leading points of view. Personally I see it playing out like this:
1. The majors falter.
2. “Digital” shops that haven’t invested in R&D lose out to those who have, and those who are cheaper (read: overseas).
3. Companies specialising in branded content come to the fore…
4. …and companies who generate genuine value, like the Zappos and Tom’s Shoes examples above won’t need to worry about it.
“Advertising” as we know it will (hopefully) go away, but I think in its place will be some kind of expense that will esoterically be considered a tax for not being innately interesting. The price so far has been the 30 second spot, the price going forward will be the content you’re forced to produce because your product isn’t engaging enough on its own.
For that second mob, I can see a role for strategists being curators of connections for brands, while a content specialist (who may very well be the brand manager themselves) identifies the content to play across those touch points.
All I can say is bring it on; advertising has had it too easy for too long.
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Bud – as ever a great post.
I agree with what you are saying in some sense – that many agencies value execution over strategy and one type of execution above all. Having said that, that is what their mission statement is: to make communication. By focusing on that they have ceded some of the really big thinking to consultancies, and devalued their strategic ability.
The question is whether you should separate execution and strategy. Russell Davies is a big fan of putting out that the two should be innately tied together and I tend to agree – there are little things in execution that a planner can help with – cue the emotional brain will pick up on.
Another point you did not mention is the campaign focus of agencies. Because of their reliance on old marketing models, agencies tend to look for one bog answer which can be replicated across many channels. I would argue that modern, web enabled commerce demands many smaller efforts. This takes a different model in terms of payment and organization.
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Tim Burley February 8, 2010at 2:31 pm
And another thing..
Doing stuff that ‘isn’t advertising’ is hard. Not for agencies, it’s great that you can set your people to work on projects that are probably much more interesting and rewarding than a traditional campaign. But for clients it’s often MUCH harder. It involves closer (constant) management, integration with different facets of the business and all those ongoing dialogues with participants. That’s much harder than simply approving an ad and waiting for the report to show your boss how successful it was.
Ideas are all well and good, but the most valuable service we often provide is the ongoing management of ’stuff’, especially when inhouse teams are not resourced properly to deliver what’s required.
That’s as long as the client hasn’t been scared off by the last agency that sold them something different without understanding what was needed to make it work.
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Last night’s super bowl confirmed a lot of what you say, thanks to it’s (repetitive) mediocrity. When multiple BIG ADS copy each other in real time, then there’s a big problem. I shudder to think of the “creatives” high-fiving each other after their spots aired…
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Mandy Lipka February 8, 2010at 2:38 pm
Stellar afternoon delight. Must also chew on it for a bit as the conversation got Spoon’s “The Underdog” stuck in my mind. Must keep clicking…
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Great stuff, Bud. I agree that the old agency model, built on scarcity, scarce knowledge, scarce tools, scarce relationships, is over. The world of abundance is upon us. We’ll see lots of new models develop. It’s a good time to be small, nimble and focused on change.
I always find it interesting that people fight the inevitable so passionately.
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Very inspiring post.
In order to know what a good agency (for lack of a better word) needs to look like, it’s enough to simply see what’s happening culturally
- Open source
Evolution towards open source, which means more openly sharing of knowledge and process, instead of being secretive- Networked
A more loosely connected network of people, rather than a shop of full-time staff. A modern agency (for lack of a better word) should in that sense work a bit like a widget, that can be embedded into other places and is more fluid and less physically confined than a traditional agency structure (both geographically and in terms of how people are remunerated or kept within the company walls)- Entrepreneurial
Need for entrepreneurs with view on the business, as I believe the real challenge for any brand/advertiser is to stay ahead of the nimble microbrands who are moving so much faster than most of the big boys- Data driven
Agree with your point about data. That’s a key element.Funnily enough, all of the above should apply to clients as well. Which underpins your point that modern brands (such as Zappos or Quirky) are built as communication vehicles themselves. A brand that has its act together should be less reliant on an outside agency to figure everything out
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I’m pimping a friend here, but I’m excited about how http://www.AdHack.com is rethinking the relationship between ad creators, ad publishers and the (fewer and fewer) middlemen.
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Bud, thanks for the great post. And everyone else for the healthy discussion.
I am on the same line as Jaffe’s and the almost natural split between the thinkers and do-ers. Where a powerful idea is as important as the realisation of this. Yet I think that a lot of creative agencies hide behind their ‘idea’ without being bothered to make this work in the real world.
Having said that, I also believe that agencies generally change when clients (tell them to) do. And although the way how the media space is changing, I find that a large bundle of clients are still with their heads in the sand about the possibilities. Almost not wanting to know. Often gratefully swallowing the uninformed ideas of their agencies. Not focused and not showing bravery.
The proof will be in the pudding. The first agency that dares to objectively test their work’s effectiveness will eventually win. But where that might be easier for the executional agencies, how will Jaffe’s ‘idea agency’ do that?
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All you have to do is look at rock and roll bands for the model of future brands.
See Maroon5 and notice the many threads emanating out to their fan base and the use of social enterprise models to make it a two way street. Brand loyalty you have got to earn it not foist it. Name a super bowl spot you loved from yesterday? Maroon5.com -
very interesting post and amazing the response it has sparked…I do feel strongly that the companies(small-large) that fill themselves with smart, hungry people who try and solve problems with creativity, technology and a real emphasis on service will always be ahead of the game.
Not the “sexiest” answer but sometimes I think it is easy to forget we are in a service business.
And to Mandy Lipka’s point having some Underdog in you never hurts..keeps you focused and humble
here ya go Mandy-my fav part below
Cause you don’t talk to the water boy
and there’s so much you could learn but you don’t want to know,
You will not back up an inch ever,
that’s why you will not survive -
Yes, yes and yes.
Only thing I would add is interdiaciplinary creativity. Specifically moving past the compartmentalization of so called disciplines. Every silo of expertise likes to think its way is best at all costs. And the over specialization means ever more complex business problems are now solved by throwing ever larger complex bundles of people out to solve them. Rarely with good solutions. The ghettoification of digital is a great symptom of this.
Systems that solve the complexity that allow greater creativity and relevance seemingly hold durable advantages. Software or crowd source philosophies might enable the holistic and lateral thinking brands of the future.
Then again the big agencies still roll on pretty fat margins and the big clients sure make a lot of earnings themselves, and there sure are some amazing ad creatiors out there if you ignore the superbowl, what if we are living in the future…
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great post man. mostly agree.
the only thing that bothered me was the bit about consumers interacting with brands to a degree that is useful to brands. i’ve heard that one bandied about quite a bit. just because they CAN doesn’t mean they will. i’ve experienced it personally myself but it’s rarer than rocking horse poo. and also, the zappos example. terrible website, great self-promoting founder. -
Fascinating piece (and spot on with many observations). I thought I would share my two cents from the client side. I’ve worked for large CPG brands, in the position of working with outside agency partners of all specialities (i.e., digital, media, traditional, PR, and the ‘full service’) and have to admit that some brands create some of the challenges for agencies that you speak of. Larger brands tend to hire a ‘cast of thousands’ when it comes to agencies — dividing work amongst numerous companies (that are not related)– and most don’t play well. Further, many brand managers are not always knowledgable about how best to work with agencies and get the best work from their partners. I’m often surprised that I rarely hear from an agency their proposed strategy for communications and partnering — process is usually left for tactical. And finally, agency assignments (including AOR) can be a revolving door, with players within the agency teams changing after the work is assigned, then again after large campaign deployments, and sometimes at fiscal year end, so we end up in a very fluid situation, with multiple players, and lack of cohesive communication/partnership strategy. I would love to hear from the agencies as to which clients they think ‘get it’ and whom they work successfully with as true business partners that might be a good model for the evolving role that agencies will may be in for the future.
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Strategy and marketing have such similar DNA. It’s always amazed me that any outsourced “agency” doesn’t realise that strategic understanding of the client must be their cornerstone. I guess the problem is that strategy is hard, strategy is thorough and strategy does not take place on location.
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I agree that “agencies” of the future are not going to look, walk or talk like they used to. Now they must focus on strategic business strategy and not production process. In a small company this means a complete shift in the client services group. Client facing managers need to be good business problem solvers. They need to understand economics and business organization and finance, not just how to get a project through the system. Yes, we’re going to need those process people too, but the “agency” is going to become a business consultancy. The consultant-type AE is going to deliver the solutions to the client’s business problems, and the process-type AE is going to be responsible for getting the work produced.
When you write about the shortcomings of today’s agencies trying to be the stewards of a client’s brand, you’re absolutely right. For many years, we’ve hired good people who can build a relationship and manage the business. They just weren’t ideation types. They were process types. Now the requirements have changed.
What is going to have the greatest impact on agency change is the change in the type of strategic account people we put in front of clients. -
Terrific post, Bud, full of great observations and insights. Thanks for synthesizing so eloquently a topic about which there’s so much chatter.
My .02: with due respect to visionary Joseph Jaffe, isn’t his theory of generator/executer already status quo? Big agencies have always seen themselves as idea (concept) generators who, once client buys in, hire a host of suppliers to execute and extend their idea: production companies, directors, designers, photographers, editing houses, yes, even digital agencies. True, in recent years, agencies have acquired or set up in-house vendors to serve as profit centers, but big budget jobs still go to outside “executors”.
Agree with you that agencies are still dissing digital, what could be clearer proof of this than the parade last night of $3 million URL-less spots?
I do take issue (as others here do) with assertion that agencies don’t care about brand. Many do, in my experience. In fact, it’s sometimes amusing how passionate ad agency types can become about brands they work on day after day. I remember, in particular, a guy art director waxing eloquent on the superior comfort of a certain type of Tampax.
I think your most salient point here, Bud, (among many) is that agencies are missing a goldmine of opportunity in not moving more aggressively to collect data and insights on behalf of a brand. As Ed Boches points out, brands seem quicker to the table of conversational strategy and media monitoring than agencies do. Perhaps this has to do with James Cooper’s point: that metrics are “really hard work, and *really* boring.” Frankly, I couldn’t agree more. But that’s why creatives need to partner with technologists who find numbers stuff the sexiest part of the business.
Which brings me to my own prediction, or idle hope, for an agency of the future: one based not on splintering, but collaboration.
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Awesome post. Agencies evolve with their clients. Just as you are talking about the decline of the current agency models, I see the role of marketing too changing. In recent times I have been to meetings wherein the R&D folks in one instance playing as important a role in evolving the positioning as the Marketing bloke. In that sense, I see marketing increasingly becoming a less of a function and more of ‘important prerequisite’ across critical functions. This means that agencies will perforce move towards the Jaffe model with platform builders embedded within idea generators
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About two years ago, I found myself thinking pretty much what you have written. The trouble was, I was a Creative Director in an agency that was stuck very firmly in a rut they were extremely unwilling to leave.
In the end I decided that the only way for me to work for the kind of agency I wanted to work for was to launch it myself. As luck had it, I got introduced to a woman who was working client side and had very similar thoughts and misgivings.
Together we launched fisheye, designed from day one to not rely on execution to survive as a business, but on strategy. That’s right, we charge our clients for strategy and frequently spin the execution off.
What this allows us to do is to give our clients unbiased advice, advice that actually works for them. We must be doing something right, fisheye – our company – was launched in the depth of the recession and has grown from the two os us sitting on a desk we made from a sheet of plywood to six full time employees working from a building we own.
I have never been happier, simply because I am now in a position to tell my clients the truth without having to worry where we can markup enough to make a living.
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I wrote a response post here at http://www.girlonthestreet.com/whatwomenmake
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Thanks Bud great post!
I couldn’t agree more, our future needs commercial communications. I think there’s room for agencies to be much more integrated with clients’ team. Our role will evolve from being at the end of the process (advertising) to earlier stage of the process (business problem solver).
Hopefully, to make this come true, silos on client’s side we’ll be broken to let insights circulate from sales to marketing to distribution and agencies.
In the idea-havers field, I see two areas where the agency of the future will have to play a new role:
1- Product. Don’t you dream sitting at the drawing table to insufflate future consumers’ interactions directly in the product? Imagine a product that would be ready to promote itself when it hits market?2- Corporate culture. Zappos is a great example you gave of a corporate culture that builds brand equity and reflects in the overall communication tactics. I strongly believe that the future of brand equity should include corporate values. Our future is to interact with a savvy consumer that won’t dissociate a brand from its manufacturer. Agencies will have to understand that piece of communications because it will significantly impact consumers’ purchase behaviors.
The future is made of consumers that will decide to finance (through the act of purchase) a “product-brand-corporation” mix that reflects their own personal values.
Our future as agencies will be to help our clients stand out from the commodity by offering consumers a set of values, actions, opinions, innovations they can identify with.
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What if you don’t need an Ad Agency to do Advertising …in the future – or right now! http://inkstainedmind.blogspot.com/2010/01/whats-wrong-with-advertising-today.html
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Great post. You distilled many of my thoughts here.
I tend to agree with the Jaffe/Wolk school, but don’t see the divide as between idea and execution. The dirty little secret is ideas are cheap, that’s why brands don’t value them.
What brand marketers need is the strategic consultancy. Given the proliferation of consumer touch points and data, brands need marcom leadership on the strategic level. They need an entity that can also wrangle agencies, get them to play nicely together, extract the best ideas, and produce great work. To use a crude analogy, the strategic consultancy is Centcom, and the agencies are the Army, Navy, Air Force, Marines, and Special Forces.
Agencies can’t be trusted to provide marcom strategy because they have a financial bias. They’re compensated for execution and media.
Brand Managers (or any single person) are incapable of developing sophisticated marcom strategy decisions. They don’t have the background or experience, and they have way too many other things on their plate.
A strategy consultancy I envision would be compensated purely on results. They would have no bias other than to provide direction and leadership that gets brands the best ROI.
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Bud
Interesting thoughts. We are currently embroiled in helping a major global comms agency fork out its future stance and role.
A couple of (potentially contentious) points. Whilst I understand your segmentation of agencies that can do and agencies that can create, I’m not sure your “third way” holds water. Yes, some agencies will increasingly veer towards “doing”- executional “make things happen” type outfits. (I think this also includes “marketing optimizers” -agencies and the likes of Google who will be able to crunch behavioral data in order to optimize when and where “marketing will happen”. And other agencies will continue to focus on creating new ideas and behaviors. Increasingly this will involve creating “platforms” on the behalf of brands, rather than just TV commercials, or integrated campaigns. But this will still require as you say focussing on what can attract consumer attention. I can’t help feeling that your thesis underplayed the importance of brand relatedness and relevance in this area. Those platforms and ideas will last longer, be more useful and effective if they are still somehow rooted in helping a consumer gain value from the brand. Merely creating platforms that garner attention but have no real relationship or link to a product or brand are mere borrowed (or actually bought) interest. -
Bud,
You’ve organized my formerly mixed up thoughts perfectly. Thank you!
Like several others who commented, we’re refugees from the old agency world (in our case DDB) who split to come at it differently (www.hey.us.com).
To use your terms, we’re “Idea-havers”, relying on marvelously talented “technicians” who help us develop and build.
We recognize that our ideas are fueled by the skills and imaginations of our “technicians”, so we’ve developed Brilliant Useful Things (www.brilliantuseful.com) to help us keep abreast of new “technicians” that might be just the thing we need for our next assignment.
Thanks for the great post.
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Just about everything loses value over time. From making Goldtoe socks in South Carolina to creating ad in an agency, almost everything loses value as it ages through its lifecycle. The trick is to recognize the loss of value and start preparing to jump to the next thing when the time is right. Aging business models and their consequent loss of value can not be stopped, not should it be. But, all involved should have their noses in the wind getting ready to find that next best thing.
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Steve Harty February 10, 2010at 12:48 pm
On one of your subpoints…
Agree that it was weird more Super Bowl ads didn’t drive to web. Obviously makes sense for Go Daddy to have done it.
If the industry broadly were thinking strategically rather than just making SB executions, this should have been the year characterized as the breakthrough for drive-to-web tactics. There’s been little talk of the Tebow/Focus On The Family ad. The actual spot was less divisive than the advance hoopla promised – in large part because they made the wise and effective decision to make their case on line rather than in the spot.
Whether you agree with them politically/ethically, there were some pretty smart marcom decisions made: get a lot of controversial advance PR, use the spot to drive to web (and avoid fights erupting in living rooms) and tell the full story on the web, reaching mostly people who sympathetic to your position and making them feel part of a larger, more public movement/mission.
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A good piece, thanks for the effort compiling but…
Just about everything you state is the reason we exist and are thriving as an agency. It’s really about having a vision for the way the world is changing and being fleet of foot enough to cope with the mess as it changes.
It feels like you’ve either worked with or have had experience of some really bad and lazy agencies. There are plenty of companies operating now that would see your statements as anathema to what they do.
In terms of whether the future needs agencies: If you mean the sort of leaden-footed, self-protecting agencies you describe, then no, I don’t think it does. If you mean genuine business partners that think creatively, have the detachment and focus internal teams rarely have and are set up to deliver output in all media and none, then I think it definitely does.
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GREAT piece.
You might enjoy this ‘Post-Agency’ series:
http://www.unboundedition.com/tags/post-agency/ -
Random comment from someone far outside the advertising world: The point about adwords shocks me. I am involved with a Harry Potter conference series and we timed our Google ad buy so that we could benefit from the Harry Potter Super Bowl commercial. I’m astonished that this is not a common practice.
(I haven’t got much to say the rest about this – but seriously – really? This seems like such an incredibly basic concept for people to miss.)
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steve jones February 11, 2010at 5:45 am
Thank you for igniting this conversation. To my mind the outcome will revolve around Agencies ability to adapt. I heard Seth Godin chat today about the end of the industrial era “its over!” as he put it. Much of what we are trying to get a handle on at Underground is how to help Client take the courageous step onto a new and evolving landscape – here, we are witnessing our role morph from Agency into Guide. The arguement of 2 types of future agencies “platform builders” and “technicians” is a strong one, but we must not loose sight of the fact that organisations consist of more than just marketing departments; and as we strive to understand/embrace and adapt to a new era – getting our Clients businesses to embrace the changing landscape across all of its departments WILL be the key to future success. The other issue that will be raised is profitability – as the web reduces costs to virtually zero; how to extract income and remain profitable will sort the men out from the boys. Much of what is done now protects the status quo for both Agency and Client…As the landscape changes so too will the revenue models – I believe we will see the death of the “retainer”!
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Just wanted to note that we (RAAK) has – together with the guys from Guided, been developing this
http://guidedcollective.com/process
Is this idea, process & platform / network all in one?
We did a couple of focus groups with creatives and a lot of brainstorming & reading when planning it.
http://guidedcollective.com/guided-by-voices-focus-group-digest-2
We might not have hit on the button quite yet – to early to say – but we hope Guided is a step in the right direction.
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Brad Clarke February 11, 2010at 7:19 am
Hi Guys
It’s great knowing that we are all in for the “time of change”, be it a clear divide between “idea” and “implementation” and the revenue income stream. But for me both Dave Wood & Steve Jones place it beautifully see above.
Does this mean we start to see changes in a “sell your ideas” ad agency only and being the leader in a category of ideas? Or rather agencies specializing in singular product offerings and being the expert. When we talk TTL we talk various projects managed by a single agency, this will change and income channels will be specialized. Clients will start implementing themselves and this is where the transition of “client service” into “client project manager” will evolve.
Agency will have an archive of already crafted ideas and client will use multiple agencies and pull campaigns and dipstick them to measure the ROI, that is the future? -
There’s an absolute deluge of suggestions as to how an agency of the future will operate so I won’t dilute their effectiveness.
What I will say is that the big 4 holding companies are in absolutely no shape to deal with any kind of restructuring, no matter what they shovel to their clients. They’ve built their empires on devolving speciality after speciality and then m&a ‘ing their way into great stock projections. Consolidation would mean biting a big dollar shaped bullet, shareholder revolt and no big money bonuses. And at the top of these organizations, that is what matters. Not clients and def not entertaining / enhancing people’s lives. Their talk now of being ‘full service’ and ‘integrated’ rings hollow given their business practices and indeed the quality of their work.
Thanks for starting this fire.
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Viktor Venson February 13, 2010at 4:27 am
Great stuff.
I do think that there is something else that is contributing to the agency’s and brand’s demise – the chase for the next big thing. Being the technophiliacs that we are, I wonder if we are (agencies+brands) missing out on improving existing sub-par brand experiences (think airlines), too often selling through technology and shiny objects disguised as ideas.
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Fantastic post. Thanks for taking the time to write it. The number and quality of the comments reflect the interest in this topic.
For my 2 bob’s worth I think it’s helpful to re-visit the basics:
1. The purpose of a “for profit” business is to provide a return to shareholders.
2. To make a return a business needs to sell products or services.
3. The sole purpose of advertising is to help businesses sell products or services (as David Ogilvy reminds me)
Advertising agencies could therefore be thought of as business advisors, focused primarily on helping businesses increase sales.
The way businesses make sales has been transformed by technology advances. Agencies therefore also need to transform if they are to add value to a business.
Historically media companies have built and owned the platforms with brands paying for the pleasure of temporarily using them to try and get consumers’ attention.
Technology companies are creating digital marketing communication platforms that will allow brands to by-pass both media platforms and agencies (or use them as outsourced technicians).
A platform is useless without an audience so brands need to embrace technology to help them build these audiences. Then provide the audience with something they value to get their attention.
Innovative creative thinkers within an agency can assist businesses here.
Technology allows for new platforms to be created. It’s taken us 10 years and millions of dollars to create the largest grassroots sports platform in Australia. It still takes smart people in agencies to help brands make the best use of these platforms.
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There are a few — not many — agencies that are ahead of the curve. Mine is one of them — Catalyst in Rochester, NY. We started as a direct agency 20+ years ago and added hardcoare analytics capability and digital expertise a number of years ago when we saw where the world was headed. But just adding capability wasn’t enough. A truly stellar agency has to see beyond the data, whether it’s online or offline, to optimize outcomes across all channels, wherever customers engage.
What’s missing from most digital, direct and traditional agencies is the ability to connect the dots, to deliver a 3D view of the customer that produces actionable insights. Most digital agencies lack a measurement mindset — it’s reporting vs. analytics. Most general agencies can’t link channels and strategies. Direct agencies excel at measurement but often lack digital expertise — or, what they have is sort of bolted on, not integrated into their DNA.
The other thing I see is that most agencies, particularly the larger ones, are too siloed to truly focus on strategy at every level. Analysts know data but they don’t understand business strategy, creative folks don’t know how clients make money. At Catalyst we rebuilt the whole organization from the ground up so that everybody is vested in client outcomes and so ideas can emanate throughout. Our CD reports to the Chief Digital Officer, our data analysts come to client meetings, and there’s a freeflow of ideas that I’ve not experienced at other agencies (and I’ve worked at a bunch of them).
Everybody’s talking about the agency of the future and what it ought to look like. From my perspective, Catalyst is already doing it.
Bud, I really enjoyed your piece, although it felt like the equivalent of a very very cold & sobering shower first thing on a Monday morning (and I was feeling *so* positive . . .).
I’m going to chew through it and respond properly, but I have to take slight issue with the focus on the word ‘agency’.
I think most people preoccupied with change (certainly the people you list at the start of your post) are much less focused on the need to ’save the agency’, and more focused on the need to develop a new approach, set of processes and operating principles through which marketing is developed and implemented. It’s more about the future than the past.
But of course I buy your overall thesis and will read and respond more fully. Cheers. Excellent stuff.