Ad Agencies' New Game

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by: Idris Mootee

I had
numerous dinner conversations two weeks ago in NYC with agency friends about
the future of advertising and its future role. In the last 24 months the shift
to digital has accelerated. We talked about how the consumer has adapted to new
technology faster than we can imagine and ad agencies have had big difficulty
in keeping up. Here’s briefly the key questions that started the dialogue:

The first
question we need to answer is “Can advertising stop interrupting people’s
lives with totally irrelevant messages?” When does true
“personalization” finally happen in advertising? Will the coming
advanced technology means that messaging should finally become more targeted
and thus more relevant? There are great brands that are not being relevant by
interrupting people. Starbucks is a great example.

The other
question is “Does the 30/60sec ad have any future? My answer was
“yes”, but not the sort of 30 or 60 sec TV ads as in its current
shape or form. The creative direction will be set by the agency and they will
outsource the idea generation to an open creative circle or specialist creative
production shops. The community will be like independent film makers but will
focus on mini ads (or we shouldn’t call them ads anymore). These min-ads will
have a variety of styles from mini-product demonstration to crazy or cool
personal story that carry a strong brand narrative. These creative assets do
not reflect the core of the brand and its propositions but it reflects that
mini-brand stories are much broader and more relevant. Agencies
will create new roles such as brand stewards, brand stories planner and
trans-media brand coordinator
. The team’s responsibility is to help
brands to stake out their territories including credible and authentic 
brand stories.

As a result
of that, we will see a market place for creative ideas and creative content
that are not tied into a medium—large screen, mid-sized or mini-screen. This
is the fundamental structural shift inherent in advertising 2.0. “Digital
is the future for all ad agencies” according to  Mark Read, CEO WPP
Digital, “the boundaries between digital and
everything else will be irrelevant within the next five years
.” I
think he totally gets it.

So how are
the holding companies dealing with this shift? For Omnicom, WPP, Publicis and
IPG, each has invested in digital companies to strengthen its offerings in both
creative and media, yet the amounts of dollars spent and deal structures vary
widely. I am not going into the details of those deals here. But generally
everyone is buying into the game in small scale with the exception of Publicis
who is shelling out billions. Publicis is making a bold statement that it is
shifting its business towards automation and centralization of media 
planning and buying systems, with creative rotations being handled
cross-platform to respond to customer behavior. As Publicis foretells, “it is only a matter of time before all advertising is
.” I think this is a likely scenario and that’s the reason
why they are willing to put up with that kind of money.

Yes this is
an expensive game. Martin Sorrell CEO of WPP is pretty outspoken about
valuations of digital companies being rich — too rich, for the most part, for
his liking. But they understand how a few dollars well spent with a startup can
open up dialogue. These minority investments help to cement future
relationships and that’s their strategy. When Google announced its plans to buy
DoubleClick back in April, Mr. Sorrell described the move as “game
changing” and said the announcement forced them to accelerate their
thinking on the company’s digital strategy. I am sure WPP now has a new plan to
play this digital game including some acquisition plays in the making. I think WPP’s agencies (O&M, JWT) are now sigificantly
disadvantaged in their digital capabilties
, they will have to make some
moves soon.

I think the
mid-sized agency business will also thrive based on a best-of-breed model,
where outsourced specific roles will be common and partnerships for servicing
business will be commonplace–from strategy to digital content creation. The
void of talent in the marketplace will get worse and I expect to see a lot of
new specialist shops popping up and prospering over the next 2-3 years. I see a
big gap in the market for Digital Strategy
to help clients navigate these new media landscapes and
that’s beyond the capabilities of the typical agency planners. Strategists that
truly understand the digital landscape are rare commodities these days.

Original Post: playground/2007/08/ad-agency-new-g.html