None of the big boys of Madison Avenue made to the top of “Advertising Age’s Top 100 US Agency Brands for 2010” list. Acxiom Corp., an Arkansas-based database marketing company has been topping this list for the last two years. Only eight leading advertising agencies could make it to top 20, with digital and PR agencies filling the rest of the positions.
Tim Williams wowed the audience with this fact as he opened the seminar organized by International Advertising Association in New Delhi that I attended a couple of weeks ago. Tim is a thought leader in the advertising and marketing business, and also the author of the bestselling “Take a Stand for Your Brand.” Here, he was speaking about “How Agencies are Transforming for the Future.”
He explained how the advertising landscape has changed over the years. Many CMOs are shunning “agency of record” relationships. A number of them are bypassing agencies to work directly with media companies, production companies, and even directly with creative talent via crowdsourcing. Tim called this trend of bypassing as “disintermediation” of agencies.
So, what has caused this disintermediation, and the blurring of roles between agencies and media companies? What are marketers’ expectations from their agencies?
The answer lies in declining sense of value agencies offer to marketers. In the digital age when consumers “control” their interaction with media channels, agencies have not built their skills adequately in response. During a recent Cannes event, Diageo’s CMO Andy Fennell also pressed the need for agencies to integrate and build skill-sets organically over time, and pointed that bolt-on acquisitions don’t work.
During the seminar, Tim talked about some effective ways in which agencies can protect their turf. He advised them to:
- Be effective, rather than efficient. The traditional success metrics—reach, frequency, and cost per thousand—highlight an ad’s efficiency only, but do not ascertain its effectiveness. The new parameters of success are attentiveness, receptivity, and buzz potential. Agencies should therefore move beyond interruption to engagement. (MLC Members – check out these effective examples of customer engagement).
- Be more agile. Faced with cost and time pressures from clients, agencies should take cue from software companies for agile development. Rather than delivering something “perfect” later, they can deliver something “good enough” earlier, followed by iterative increments based on client feedbacks.
- Embrace “digital” as a competency, not a department. As Tim puts it, agencies need to adopt a policy of “ISL” – Interactive as a Second Language, where digital is developed as a competency throughout the entire agency, and not housed as a silo-ed department. Goodby, Silverstein & Partners presents an inspiring example of this approach.
- Move to adaptive marketing. In the digital world, results are created in real-time. So, agencies need to measure the effectiveness of their work and optimize it in real-time, that is, play the role of creators as well as curators. This requires a more fluid approach to marketing budgets.
- Get involved higher up in the client’s value chain. Howsoever “unremarkable” the product is, agencies’ only concern is to create a “remarkable” story to sell it. In how many cases do they ask their clients to revamp the product? Marketing is about all the 4 Ps and not just Promotion. Agencies should start with the product and not the advertising, and also explore opportunities to help clients during actual sale and post-sale phases.
So, are your agencies responding to the new environment in all the above ways? If not, you may want to re-think the way you have been engaging with them.