It's never been easy to be in the ad agency business, and it's getting harder by the minute. Accelerated timelines. An always-on media environment. Compliance, procurement and purchasing officers. Legacy systems instituted by corporate parents. Job-snacking talent draining to smaller, more purposeful businesses. And the constant feeling you're a phone call away from being out on the street.
With this in the air, there's a reason digital product development has become a popular aim for agency heads. Sure, it looks fancy as a slide in a capabilities deck, but what product in the abstract represents is a freedom from the work-for hire slog many large corporate agencies find themselves in,
a slight release of the client-work boot on their chest, and the hope of producing and successfully marketing a thing of their own.
Is this hyperbolic? Yes. Is it accurate? Sort of. As much as agencies see the development of products as a move towards autonomy, it's become a demand from savvy marketers, who have seen the same oasis of revenue and ROI on the horizon and are trying to move towards it.
But developing more product-based messaging (essentially selling platforms rather than goods) is bigger than an indication of the changing market. It's a once-and-for-all declaration that the Big Idea, the glamorous slogan under which all ancillary media extensions fall in line, is no longer capable of driving an agency's value proposition. 'Brands: come to us and we'll give you a big idea' is still an implicit proposition at many networks, no matter how it's been gussied up and refreshed. But it's no longer enough to hold all of a company's communications in place. What was once sloganeering has become software development.
Understanding this evolution and how agencies can re-establish value creation is critical for their survival.
The biggest change is that a big idea is no longer a metaphor for a strategy proposition, like Avis' famous 'We Try Harder'. It should be a business-changing opportunity that can be elaborated in many different forms, and never fully detailed in broad terms. Big ideas won't go away, but whether they're communications ideas or not will change.
'I think it's still needed for companies. I've seen it work too well, too often,' says Michael Lee, former ECD at Euro RSCG New York. Lee's new venture is Madam, adding the creative process to search and agency-client matchmaking.
'The "one big thing" that can inspire employees, activate media channels, attract partners, appeal to consumers and propel a share price is still a pretty powerful device,' he says. 'Advertising is a business that has the unique talent to distill down a company's entire work ethic and culture into a simple thought, phrase or image and send it out to the world. When the sweet spot is hit, it's like no other device out there.'
'The notion that people need big powerful ideas is not going to go away at all. It could be Amazon's idea that people that bought this will also buy that,' says Carl Johnson, CEO of Anomaly, which in its eight years has been pushing towards equity-based fee structures, and developing its own IP in makeup tutorials with Lauren Luke, cooking programming with Eric Ripert and its EOS line of skincare products.
'What's gone away is that it's by definition an advertising campaign, that it's a communications idea, it's not a business idea. The type of idea that you can now create can be much more at the heart of a business, and on so many different platforms.'
GET THE LEAD OUT
Another major issue is the fragmentation of relationships between one marketer and one agency, and a shift in ownership of collaboration, or competition, to the marketer. 'There is no lead agency anymore, there's only a lead client,' Razorfish CEO Bob Lord told an audience during this year's Advertising Week in New York. 'Agencies need to be in service to their clients and work together to do the best work possible for them.'
This can be both a boon and an impediment to marketers. Strong brands have a motivated spirit internally that can drive discussions towards innovative partners and foster true collaboration. The weak flounder, and their lack of stability pits potential collaborators against each other to compete for attention, dominate projects, and wrestle control away from each other.
'If we want to do something interesting with technology, where do we start?' Michelle Klein, VP of Smirnoff's global marketing, content & communications at Diageo, asks. 'I'd much rather incubate a brief out to my agencies, of course, because I'm loyal to them, but I'd want to include a Quirky or an IDEO or Techstars. It's not about cutting anyone out of the process. It's about democratising it, so there's no policeman blocking it. You get better deals, and better partnerships. We can do a deal with a tiny tech company, and help them grow and scale and become a partner we can call all the time.'
The large creative agency model, in which people multiplied by time equals a big idea, is one based very much on rigid, formulaic problem solving that eventually results in advertising. Klein's use of 'incubate' is telling. A brief needs time to evolve, and a response from a disparate avenue can bring fresh thinking with it. She continues: 'When you're talking with vendors and getting technology ideas, you're closer to it. And understandably this could cause frustration with agencies, when the clients know as much about this as them. And it's not undermining their value, but my guys [at Smirnoff] need to be coming up with innovation ideas every month. We can't just wait. We want to be first movers.'
Carl Johnson breaks it down: 'Clients can't fuck around. They want ideas that actually work. So if you believe in the creation of value and sorting out the wheat from the chaff, tough economic times favour these kinds of agencies.'
PURPOSE IN PRODUCING
There's growing consensus that some of the places agencies have found efficiencies in the past are coming back to trouble them now, especially in the way of making things. Previously, production was a very static business, both in print and television. Both remained as steady agency profit centres. But not now: margins are down, and any excess is often sopped up by experimental efforts, where ways of working are always changing - not something agencies are adept at doing inside their own walls. For a thought experiment, think about the last ten projects your agency completed, and wonder which your friends or relatives outside the agency business would classify as 'not advertising'. Marketers have been quick to understand the power new types of communication can have, and respond accordingly.
Last month telecoms company O2 made public a commitment to excellence in experience design, which includes a staff of 25 user experience designers tasked with building digital products and services. Part of this, Simon Groves, head of brand strategy and customer experience, told Marketing Week, was about stepping up to fulfil principles of a design-led company, including 'building a strong in-house team that can be the experts [rather than just outsourcing to agencies]', organised around 'having designers empowered around the decision making table, rather than making decisions on marketing or financial or engineering grounds.'
'I believe, if there's been a trend to outsource production, we need to do the opposite,' says McCann Erickson's chairman of global creative leadership Linus Karlsson. 'We need to get what we do into our hands, to make things and build things, because that's where most of the innovation is now, and that's a different creative process, where you make things while it's happening, and you do it all the time, as opposed to making something, and launching it, and going away.'
The central crux, value creation, is close to making, Karlsson contends, and is no longer compatible with a time-based compensation process, or the idea of hours billed against a client.
'We need to move from building brands on behalf of brands to creating value on behalf of brands,' Karlsson says, a much trickier proposition, considering the historical role of the agency. 'What we've done so far is we've been so much about building brands, messaging, consulting, managing, selling and buying services to have a dialogue, but it is really a monologue with the consumers.'
'Creating value' in this case is about more than just selling. It's about building things that create affinity and enhance our existence, in addition to justifying an agency's own.
UNWRAPPING IT ALL
Back to the big idea. 'It's a wrapper, it's a story,' says De-De's Hashem Bajwa. De-De is Droga5's spinoff technology business, which has already launched several projects, including Thunderclap, a tipping-point-triggered Twitter petition system that's been used by companies like People magazine, which is basing its Sexiest Man Alive competition on tweeted votes compiled through the service. 'Agencies are in the business of creating stories about products, and startups are in the business of creating products that have a story. There's something great about the wrapper, the story, but it's not enough.'
Linus Karlsson agrees. 'The big idea just got more layered, and in a good way more complex and sophisticated. It's like when you watch a movie, you never go out and say, "I loved that movie, it was so clear." You talk about the little bits, you pick apart the story because it intrigued you, and it had subplots, and complexity. In the past, a client had the benefit of being able to dominate a category through a big budget and distribution. That's become a little more difficult. You can reach big numbers of people in different ways. But what do you do with them?'
So, the big idea becomes the stretchy tortilla holding the business burrito, or that layer of delicious black beans in a plate of nachos. Whatever your Mexican food metaphor, it's clear agencies are no longer providing the whole enchilada.
So is it a matter of getting used to the change in status, or is there a way to wrest back valuable territory?
It's not bad enough that agencies are undergoing a continual crisis of confidence, they've got a lot of different kinds of companies trying to horn in on their action. Here's a look at a few types of them, and their close agency equivalents
The Makers / Refining the production of an idea into new forms
Who they are / Deeplocal, De-De, M ss ng P eces, Sub Rosa, BreakfastNY
How they're different / Quick-fire prototyping, feedback from people who can rapidly create digital products, or have built them already inside the startup community: this hands-on mentality is crucial to developing influential moving pieces in today's communication culture. But, has much of the network effect that has driven prices of production down at big agencies
also alienated this sort of talent, and driven it to stigmatised vendor status? With a culture that considers VC or crowd interest much more valuable than brand interest,
it's now up to the communications industry to win back this talent.
Why it matters / With many of these companies, their approach is radically different from their forebears. M ss ng P eces, for example, funded a feature for one of their directors via Kickstarter, when only a few years ago companies like it would have had to parade around Sundance to get this kind of funding.
Sub Rosa, which has worked on Levi's Workshops and GE's Garages, had the latter's global executive director of digital, advertising and design Linda Boff singing its praises to Forbes CMO Network editor Jennifer Rooney for its 'translation of the brand into a physical structure that people can interact with. They're all about some type of immersive experience that people have first-hand.'
Agency equivalents / One advantage large networks still enjoy is scale and global reach, with WPP enjoying efficiencies - though not necessarily innovation - brought about by businesses like Tag and Hogarth Worldwide, which are able to make global implementation of ideas cheaper by coordinating production and essentially mass-producing nuanced mass messaging.
The Techies / Speaking to startups, dealing with data
Who they are / West Studios, Eyeka, Techstars, Deloitte Digital
How they're different / The hybrid agency culture born of technology-first companies was never quite tethered to the Big Idea in the way that major agencies have been. They've always had products that were more service-based and less goods-based, making the transition to a distributed-big-idea framework easier. Meanwhile, many already have experience on the 'IT' side of tech, shoring up massive amounts of consumer data and building robust platforms and utilising network effects for efficiencies, all while trying to hitch the wagon to rising companies that may be the next Facebook.
Why it matters / We've seen the rise of the term 'growth hacker', typically used to describe a newwave SEO expert that can goose data with clever manipulations of media and using quirks of social and display ad platforms. Included in this category are the MBAs, like Deloitte Digital and McKinsey, which are able to parse difficult business challenges as well as build up data security protocols and shore up technology providers for large companies. Businesses like West Studios, run by exhead of global marcoms at Apple, Allison Johnson, are designed to bring Silicon Valley savvy to broader brand culture, but with that human flavour agencies do well. '[West] is working with startups to market those startups,' says one agency strategist. 'I think a lot of agencies could do that, and a lot of startups could benefitfrom that. What is the purpose of this product, and how do you communicate this with the people that could benefit from this? Twitter even struggles with this. People all over America don't understand what Twitter does.'
The Publishers / Using audience knowledge to connect in new ways
Who they are / Buzzfeed, Condé Nast, Meredith's MxM, Vice/Virtue
How they're different / The Publishers bring intimate knowledge of consumer activities and insight from years of presenting demographic information to brands in the hope of luring them to advertise, as well as the audiences their brands have built. While in general the publishing business has fallen off a cliff, smart corporations have been able to roll up businesses offering CRM and data services, or creative, or latch onto larger agency networks through strategic partnerships. There's probably no better visual evidence of the strange alliances forged in this area than Vice's co-founder Shane Smith partying with Sir Martin Sorrell, whose WPP has a stake in the company, at the VBS upfront party this year.
Why it matters / Looking forward, as brands seek to make more editorially sound content, who could do that better than a business that's got legacy ties to content production? An agency would traditionally create communications that wrap themselves around the publisher's content: acting like decoration, leeching onto the relationship between the reader and the writer. With publisher-created, brand-funded content, the reader respects the endorsement because they trust the publisher. It's like the publisher has given them permission to think it's cool, culturally or editorially relevant.
Meanwhile, an understanding of just what makes audiences tick is exceptionally useful in building campaign elements that incite participation and engagement.'[Buzzfeed] understood how to help our brand connect with people in a way that we didn't,' said one anonymous digital strategist who'd worked with it on a programme. 'We realised we were like this middleman in between - and then, what do we have?'
Agency equivalents / Companies like iris Worldwide, which has ties to Meredith, the US-based publishing conglomerate which
claims to reach the largest audience of women in America, or Havas-backed Socialistic, which is working on accelerating
brand content, are meeting the idea of brand-as-publisher in the middle, both on the operations and execution fronts.
The Philosophers /
Steering companies towards new, deeper meaning and purpose, and then making things
Who they are / IDEO, Frog Design, Peer Insight
How they're different / With a basis in design, whether it's business design or product design, the Philosophers can help solve C-level business challenges. Where agencies have traditionally fought to get from the marketing silo out into the heart of a company to solve more interesting problems, this group speaks in more general language and avoids ad argot. This enables it to propose the audacious solutions necessary to actually enact meaningful change in large companies, and deliver on huge fees, while negotiating its way through an array of stakeholders and remaining remote from leadership swings. State Farm, for example, worked with IDEO over four years to develop its Next Door community learning centres, where people could gather to hear about everything from investment to yoga.
Why it matters / Much of the Philosophers' success stems from the right to have big conversations. Companies in this field present themselves on a different level than most advertising agencies do, despite the fact that their solutions may not be outside the realm of possibility for many. Surely, many of these big solutions are still a matter of marketing, which is where companies like Co:, which have background strengths in that business, excel. Arriving earlier in the process has been a quest for many in the marketing world for years now, but it's tough to find an agency that can do it all - because they don't partner in the right way. Knowing how to run a collaborative environment is key to remaining at the top of the pile.
Agency equivalents / Naked was the first to take high-level strategy outside the agency 'making' itself, and since then companies like Fahrenheit 212 and Co: have begun to refine this proposition. The industrial design and engineering specification that many other firms possess has typically been outside the remit of communications companies, however.See the article in pdf format hereClick here
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