Agency of the Future (revisited)

When I initially wrote my essay for our book, I was in the midst of running a digital marketing agency and there is no doubt that this influenced the content. I may have left Profero when I first revisited the essay but I had still not had the fortune of being able to look at the industry fresh which I have now been able to do for the last 15 months through consulting as well as my work with Hyper Island. Thankfully I think that most of my conclusions around the characteristics of the agency of the future still hold true but I would add a few other bits to the story. In particular I think the agency of the future will need to be:

Agile and not be too constrained to a singular process so it is able to adapt to the rapidly changing landscape

Intelligent enough to realise when new talent is needed at the top of the organisation. There is no point in bringing new skillsets below senior management but rather it needs to be brought in at the most senior level. I think it is no coincidence the agency that won Agency of the Year across the board last year in the US, was the one that hired our good friend Iain Tait (who will make it to a Social one day) at the most senior level:

Underpinned by a strong culture – And this means having strong values which are driven from the people at the top of the organisation, and ones that reflect those individuals – values simply cannot be faked

Brave enough not to go after every piece of business that shows up (I can’t tell you how many Socials are on pitches on any one time. It is mad how much the industry time the industry spends giving ideas away for free) but recognises that if you took that time and focused it on adding value to existing clients, you are likely to get a much better return for the agency. In addition I would love to see more agencies delivering clients what they need rather than what they want

An Investor in People – and recognises that its talent is the heart blood of the agency. And this means that you constantly need to invest in your talent and give them the time and space to be inspired. This is certainly what we are trying to do with Creative Social and my hats off to all the agency bosses who continue to give their teams time off to come along.

Anyway here is my original essay:

In the advertising industry, there have been four significant periods of change. On the back of technological change – nationally networked television on the one hand and full-colour printing of photography in print media on the other – the sixties saw the birth of a new advertising model, led by DDB (Doyle Dane Bernbach) in the US and CDP (Collett Dickenson Pearce) in the UK. In this new model, it was believed that great creativity led to greater impact, which led to more effective communication. Then, in the eighties, we saw the emergence of media independents such as CIA and Ray Morgan and Associates, which led to the later split of media and creative. The nineties marked the emergence of the planning agencies, such as Naked and PHD, while the noughties will be remembered for the emergence of the digital agencies.

But despite all these changes, the underlying business model has remained pretty much the same. Not any longer.

Massive changes in the wider media world, driven by the internet, have altered our world forever. Brands can no longer rely on shouting at consumers with TV commercials to guarantee success. If the product is not differentiated or the customer services fall down, you can shout all you want: no one will buy. Conversely, some of the biggest new brands, such as Google, have been built without recourse to traditional mass marketing at all.

It’s not as if we weren’t warned. In 500 BC, inadvertently Confucius predicted the future of marketing communications when he said, “Tell me and I’ll forget / show me and I’ll remember / involve me and I’ll understand.” This is the basis for the future of our industry.

From now on, advertisers need to concentrate on delivering a minimum of one of four things to consumers (the four Es):
Education
Entertainment
Engagement
Exchanging Value (which incorporates utility)

I believe that this is going to require a fundamental shift for most agencies, and unless they adapt, they are soon going to find themselves extinct as margins continue to erode and their product becomes far less relevant in this new connected world. To do this, they are going to need to be able to think beyond just single disciplines and instead focus on delivering ideas that generate demand for their client’s products and services through one of the four Es. As Bill Bernbach famously said, “Properly practiced, creativity must result in greater sales more economically achieved.”

Obviously, it would be impossible to know exactly what this agency of the future will look like. If I knew, I would be spending the next few years building it. The reality is that those agencies that truly succeed and define the next decade will all look slightly different and will adopt their own personal product. However, I do believe that many of these agencies will share some, if not all, of the following ten characteristics.

1. Digital at its core
Okay, so you might expect this in a book written by digital peeps. However, it is fundamental: the internet has driven changes in consumer behaviour. Online’s place in the overall consumption mix is only going to get more marked as the current crop of digital natives (anyone under twenty-five who has grown up with digital technologies) grows older. Digital natives see no barriers between the real and the virtual worlds. A friend can be someone in the same street or someone in the same network. So, for many new consumers, digital is not a channel or even media; it’s a part of life. How, and where, marketers engage with consumers is more important than ever because they have never been more adept at avoiding the advertisers they dislike or mistrust.

What this means is that agencies need to have people who live and breathe digital. In addition, the skill sets needed to meet this challenge in the digital world are far more complex. You can no longer rely on a creative team to come up with an idea, write a script and then simply pull in a production company to deliver it. There is not such a clear gap between the idea and implementation. Now, it’s highly likely that a digital advertising campaign will involve a planner, an art director, a copywriter, an action scripter, a designer, and a creative director – all equally responsible for bringing the ad to life. There is no doubt that the best campaigns in the marketplace are now totally integrated, and this is simply going to bring more people into the mix.

Are Art Director/Copywriter teams dead? from Creative Social on Vimeo.

2. Return to full service
We will see a return to full service but not as we know it. It will be made up of three core elements: creative, creative media, and creative tech. Creative departments will no longer be the preserve of the art director–copywriter team but will rather consist of people who simply have great ideas, whatever their background. Yes, there will still be room for skill-specific arts (such as copywriting, scriptwriting, typography, and so on), but they will not be the heart of the team.

Media will not be about mass media buys; that can be left to the big media-buying beasts. What we will see is far more creative media – the type of planning that is currently being done by the likes of Naked, as well as the full-service digital agencies. In addition, the agency will be tasked with distributing content in nontraditional ways, such as via peer-to-peer networks. Media solutions will become far more about engaging communities than mass reach campaigns, and agencies will bring in conversational specialists to manage these conversations.

Lastly, creative technology departments will build applications and widgets that will provide value to people, both in the physical world (Nike+) and the digital world (Uniqlock or MySkyStatus). Providing this will require a different mix of people, as agencies such as Anomaly are already demonstrating.

Profero MySkyStatus Campaign from Profero on Vimeo.

3. Connection back to customers
I have had comments from a number of marketers saying that agencies seem to have lost touch with the people they are meant to be connecting with in their advertising. For example, digital media became central to people’s lives long before traditional advertising agencies woke up to its importance. Creatives need to get much better at really understanding the relevant target audiences, walking in their shoes and thinking the way they do. At my old agency, we would always try and bring people into brainstorms who represented the target audience. When we did we invariably got better, more relevant ideas that really connected.

It is also worth noting that in this context I have avoided the use of the word consumer. I believe that the word consumer is the most overused and misleading word in communications today. How often are we speaking to our client’s target audience when they are consuming? And how impersonal is the word consumer? I wonder how much truth there is the quip from a senior creative who recently said to me, “We call them consumers to make us feel less guilty about selling to human beings.” I would love to see the industry referring to customers or people.

4. More strategic suits
I am not, however, suggesting that the agency of the future is overrun by planners who spend all their time understanding the audience. Rather I think the agency of the future will have far more strategic account people who can not only “manage” the client but will also have a complete understanding of the client’s business and audience. They will undoubtedly get support from some specialist planners who are able to bring some key insights into a brief, but ultimately the suits will become the owners of the brief at a strategic level, as well as being the client liaison.

5. Independent spirit
Independence breeds creativity; it is no coincidence that independent agencies are so successful at awards time. This does not mean that the agency of the future is not part of a network. But those networks must ensure that their agencies retain an independent state of mind. The signs are that this is already happening: when, for example, WPP bought Clemmow Hornby Inge, the management of CHI retained 51 per cent of the ownership, replicating a model that has clearly worked well with BBH and Omincom. Expect to see far more deals of this nature in the future, as the networks realise that the buy-out model is ceasing to work (with the unfortunate demise of Farfar being a perfect example).

6. A global view
We can learn a lot from one another, and there is no doubt that the internet is enabling this at a greater rate than ever before. We saw the phenomena of a website in Korea called Cyworld (founded in 1999) way before the emergence of sites such as Bebo, Facebook, and MySpace. In China there are currently over 50 million people who have a pet within QQ pet (an online version of Tamagotchi mixed with social networking), while over 100 million people are playing the online dancing game 9you. Japan historically has led the world of mobile, and innovations like QR codes, two dimensional bar codes which can be read by mobiles using their cameras, were implemented way before they arrived in the West.

However, one of the biggest change factors is going to be the fact that for once US global marketers (which represent nearly half of total global marketers) are suddenly aware that the US is no longer their dominant market as a result of the growth of the BRICs (Brazil, Russia, India, China). Consequently, their marketing solutions need to be far more locally culturally relevant, and they will need to use an agency that can tap into these cultures. This will require a different sort of global agency – one that has access to global talent without the barriers that exist in a network agency.

7. Egolessness
In this case, I am referring to ego in relation to notion of self-importance or self-image rather than in the context of the “I.” It is this concept of egolessness that is probably the biggest difference I have seen in the digital sector as compared to the traditional world. Moreover, it’s one of the reasons that Creative Social has been such a success. It really hit home only when a traditional creative director spent two weeks in my old agency and gave me his first impressions: “I am astounded by the egolessness in the agency. I could not tell you who the bosses are. More importantly, I can see in the brainstorms that there is a complete openness to listen to ideas irrespective of their department or seniority.” In fact, egolessness is one of the pillars of creativity, along with perspiration, abstraction, emotional skill, and social environment.

Although it is hard to define the best possible physical manifestation of this, in my experience, an open plan office tends to be a good indicator of a culture with few egos.

Open Plan Socials: Work Club, Anomaly New York and Profero London

8. Being good
I am not going to cover this in detail in this chapter, as Johnny Vulkan has covered it so eloquently in his own essay. However, there is no doubt that it’s going to become far more important for agencies to ensure that we’re being good. This goes beyond simple pro-bono campaigns (which we all know have been done for less altruistic reasons: i.e., pro bono = award-winning potential) but will need to be part of an agency’s core values, which will be driven from those at the top of the organisation. It will also determine which type of clients those agencies work for as well as the type of work that they do.

9. Collaboration
I think the way agencies will work together will change significantly. Clients need to be demanding that their agencies work together in a far more integrated fashion. This may mean bringing in the best people from each of their respective agencies and asking them to work together in a far more collaborative way. It was interesting to hear how closely Crispin Porter + Bogusky works with Burger King’s other agencies and that the actual idea for BK Games originated from Burger King’s PR agency. The fact that Crispin Porter embraced it and made it such a success is tantamount to a new level of collaboration.

It was interesting to see a brand like MINI in the UK appointing two digital agencies on their account despite a relatively modest budget – the result being one gold and two silvers at Cannes in 2007. I would also not be surprised if we see examples of direct competitors working far more closely together. If we truly want to provide our clients with the best solution, why not call a competitor to see whether we can utilise one of their teams that we know includes the best comedy writers in the industry?

10. A new financial model
Finally, I noted at the beginning of this chapter that the most significant change in the advertising industry was the move from commissions to a fee-based model. Now the next step needs to be for us to be paid based on value delivered, as opposed to one based on time.

The agency of the future will have some of the most creative and intelligent people in the world. We need be looking to allow these people to deliver ideas that can be used either for advertisers (existing clients or new clients) as well as in other stand-alone ventures. As well as delivering on existing briefs, the agency should be thinking up ideas and taking these to clients and charging them on a royalties basis – whereby the more successful it is, the more the agency receives in the form of fees. This can equally be in the form of content, product design, or extension to the existing brand. Additionally, I would expect agencies to come up with their own ideas that they can execute and grow themselves. In other words, agencies may well become media owners, looking to engage with clients as partners in new ventures. Interestingly, some agencies have already launched their own IP divisions.

Undoubtedly, new models of payment will evolve that should allow the agency of the future to retain far more control of how much margin it retains in that it will be far more the master of its own destiny. Fortunately, this has already started to happen. Anomaly has already set up as a different type of agency that is not scared to become a record company, and it often takes equity in the venture rather than fees. BBH has set up Zag, Naked has created Naked Ventures, and Great Works has created Great Works Innovation. It is going to be interesting to see what products/businesses come out of these businesses in the future.

Whatever happens over the next few years, I have no doubt that the industry is going to have to evolve significantly and it is going to be fun to be part of that process. I do look forward to seeing who makes that leap to becoming the agency of the future, although as architect Nicholas Negroponte once said, “Any agency which describes itself as an ‘agency’ does not have a future.” So maybe that agency of the future will not be called an agency at all…?

Extract from Digital Advertising: Past, Present, and Future

Hey, like this post? Why not share it with someone?