Post on 11-Aug-2014
description
Agency 2.5How Agencies Are
Transforming for the Future
Presented by Tim Williams
© ignition consulting groupwww.ignitiongroup.com
A selection of key concepts from
Agencies?
Agencies are at an Inflection Point
1. Fragmentation and addressability of media and audiences2. Democratization of creativity3. Inexpensive and instantaneous production4. Online interconnectedness5. Digitization of everything6. Brand advocacy in place of brand management7. Pricing pressures due to oversupply of providers8. And …
“An inflection point is a time in the life of a business when its fundamentals are about to change. Inflection points can be caused by technological change, but are about more than technological change. They can be caused by competitors, but they are about more than just competition.They are full-scale changes in the way a company or industry does business.”
http://www.youtube.com/watch?v=ERGrSQoY5fs
“The Last Advertising Agency on Earth”
Media Production housesClient in-house resourcesCrowdsourcing
Agencies
Management consultanciesBrand consultanciesMarketing research firms
Competition both upstream and downstream
Media companies becoming agencies
Marketers that expect to do more business directly with media companies:
52%
Marketers that expect to do more business with agencies:27%
Becky SaegerChairman, Association of National Advertisers
(ANA)
“If I were an agency, I would be really worried about being disintermediated.
More and more, agencies are almost in the way sometimes.”
Ideation
Execution
Productionde-coupling
Another way agencies are losing leverage in the relationship
Crowdsourcing as competition
Future roles for agencies?
Media brand ownersContent collaboratorsContent curatorsProgram producersNetwork creatorsData providersData aggregatorsRights managersBrand guardians
Source: The Future Foundation
Interrupting
Engaging
Imperatives for transforming the agency
Exposure Engagement
Reach
Frequency
Cost per thousand
Attentiveness
Receptivity
Buzz potential
Efficiency Effectiveness
http://www.youtube.com/watch?v=SI-rsong4xs
“The Best Job in the World”
“Instead of reaching 80 million people, let’s reach a million in your target and spend 10 minutes with them.”
Michael Lazerow, CEO
Implications and opportunities for marketing organizations1. We need to change our language.
2. Engagement requires a new set of metrics.
3. Learn how to engage small audiences for a long time instead of engaging large audiences for a short time.
Mass media as channels
Everything as channels
Imperatives for transforming the agency
PAID
EARNED
OWNED
Three main classes of media
PAID
PAID
Media advertising
PAID
The store as media
PAID
The physical world as media
PAID
EARNED
EARNED
Traditional mass media
EARNED
Blogs as media
EARNED
Viral videos as media
http://www.youtube.com/watch?v=VQ3d3KigPQM
“T-Mobile Dance”
PAID
EARNED
OWNED
Microsoft.comOfficeLive.commsn.comXbox.com
OWNED
The brand’s online properties as media
The brand’s online properties as media
OWNED
The product itself as media
OWNED
PAID
EARNED
OWNED
Instead of this …
… this.
Implications and opportunities for marketing organizations1. Plan touch points and communications channels,
not media.
2. Start with owned, then earned, then paid channels.
3. Better yet, help your clients build the marketing into the product.
Brand perception
Brand experience
Imperatives for transforming the agency
Agencies are missing revenue opportunities by stopping at pre-purchase
Lee ClowTBWA/ChiatDay
“The best ad we ever did for Apple is the Apple Store.”
Parker Stoner, Swanson Russell Associates
Behavioral Economics: A new strategic imperative for agencies
Rory Sutherland, President
Institute of Advertising Practitioners (IPA),Vice Chairman, Ogilvy, London
“Hundreds of agencies have developed models for ‘how advertising works.’ What’s needed now is for agencies to base their business on ‘how people work.’
An advertising campaign to persuade mothers that chicken soup is a good for colds and flu …
Placing chicken soup next to the cold remedies.
-- or --
Behavioral Economics
Agencies should be in the business of
Choice Architecture
Behavioral Economics
Implications and opportunities for marketing organizations
1. Help optimize how customers experience the brand, not just how they perceive it.
2. Help your clients move further up the effectiveness hierarchy.
3. Become expert in brand interactions, not just brand messages.
Consumers as audience
Consumers as media
Imperatives for transforming the agency
Which is your mental map?
What advertisers spend on media
What consumers spend on media
“Today, the average 14-year-old can create a global television network with applications that are built into her laptop.”
Randall RothenbergCEO, Interactive Advertising Bureau
http://www.youtube.com/watch?v=5YGc4zOqozo
“United Breaks Guitars”
Consumers as media
Consumers as media
“Customer service is the new media
department.”
Pete Blackshaw
Implications and opportunities for marketing organizations1. Understand the not just the demographics but the
technographics of your audience.
2. Make it easy to share and distribute your content.
3. Proactively plan for consumers as “media.”
4. Realize that your brand will never have enough money to outspend consumers.
Persuasion
Utility
Imperatives for transforming the agency
Utility instead of persuasion
Utility instead of persuasion
Utility instead of persuasion
http://www.youtube.com/watch?v=qOr5_GaGnPc
Implications and opportunities for marketing organizations
1. Put more effort into helping consumers instead of selling them.
2. Look at “utility” as an opportunity to develop some of your own intellectual property.
One-to-many
One-to-one
Imperatives for transforming the agency
+The ideal agency of the
future?
Mass MessagingHigh volume mass communications with imprecise targeting with little or no segmentation or personalization
Mass CustomizationMessages deployed based on dynamic analysis of real-time behavior across channels
Broadcasting Narrowcasting
Spending a lot of money to produce a little content to reach a lot of people.
Spending a little money to product a lot of
content to reach a few people.
Narrowcasting
“Will It Blend?”
http://www.youtube.com/watch?v=oRr7N7A4Wc0
Implications and opportunities for marketing organizations
1. Soon all media will be both searchable and addressable.
2. The new agency skill set is mass customization in place of mass messaging.
3. Agencies can package and sell data analytics as a service.
4. Precise addressability will allow more niche brands to advertise, creating more opportunities for agencies.
Digital department
Digital competency
Imperatives for transforming the agency
“Digital spending will double in the next five years … … but advertising budgets won’t.”
Digital marketing is the new mainstream
marketing.
THEN NOW
From great in traditional to great in digital
Marketers who use the same agency for both mass and digital are more satisfied
Verbal Designer
Visual Designer
THE NEW CREATIVE HYDRA
Experience Designer
Experience Design (XD)User Experience (UX)Information Architecture (IA)
Implications and opportunities for marketing organizations1. Digital must be at the core of the agency business
model, not an add-on.
2. There will soon be no difference between “traditional” agencies and “digital” agencies.
3. Being digital means technologists must join creative and media teams.
4. An increase in digital work will produce more agency income, not less.
Controlled communications
Open conversations
Imperatives for transforming the agency
Offline Online
Non-Paid
PaidBroadcast advertising
Print advertisingOut of home advertising
PromotionsEvents
Direct mailTrade shows
Product placement
Media relationsCommunity relations
Employee relationsInvestor relations
Crisis communicationsMedia trainingSales training
Search engine marketingOnline display advertisingSponsored online content E-mail marketingInteractive kiosksMobile marketingVideo gamingWebsite development
Search engine optimizationOnline product reviewsOnline endorsementsBlogsMicrobloggingPodcastsOpt-in online contentWebinarsSocial media
ROLE OF THE CHIEF COMMUNITY OFFICER (CCO)
1. Instead of just creating brand advertising, a CCO builds a community around the brand using multiple channels.
2. Instead of just sending messages, the CCO monitors and responds to the community.
3. Instead of focusing on pre-sale activities and seeing areas like service and support as “someone else’s job,” a CCO follows what consumers are telling the brand and each other.Chuck Brymer, CEO DDB Worldwide
“The Nature of Marketing”
Social media as an agency service
Social media auditHelping to develop social media policies and proceduresAmbassador trainingSubmitting to online directoriesBlog creation, seeding and maintenanceBlog monitoring and participationTweeting and retweetingSocial network developmentOnline groups and forumsOnline publicityPosting and seeding videos and other branded contentTracking, analyzing and reporting results
“Advertising in the future will be much more like PR. We’ll be run more like a daily TV show or an interactive newspaper than an advertising factory.”
Richard PinderCOO, Publicis Worldwide
Implications and opportunities for marketing organizations1. Learn to market “consumer-to-consumer” instead of just
“brand-to-consumer.”
2. Shift the agency’s skill set beyond “presentation” to “participation” and package it as a service.
3. Erase the artificial line between “advertising” and “public relations.”
4. Make publicity a central goal of your marketing efforts, not just a hoped-for by-product.
5. Experiment with ways to move what used to be offline, online (like product sampling, etc.)
High Volume/Low Margin
Low Volume/High Margin
Imperatives for transforming the agency
Diagnose Prescribe Create Execute
HIGH
LOW
Relative value of agency servicesValue perceived by client
Cost incurred by agency
Architect
General Contractor
Sub-Contractor
Which are you?
Project Lifeline
Higher Value ServicesConsumer insightsStrategic planningConcept developmentReputation managementProduct developmentMarketing ideationConnection planning
Lower Value ServicesProgramming and codingPre-press workPrint productionBroadcast productionVideo productionRevisions and resizesMedia buying
Implications and opportunities for marketing organizations
1. Realize that the traditional agency cost structure cannot support both high-value/high-cost services and low-value/low-cost services.
2. Understand that either of these two business models (idea business vs. execution business) is viable, but they are different businesses requiring different cost and pricing structures.
Full scale
Agile
Imperatives for transforming the agency
Agencies are organized like a classical orchestra in a jazz age.
Rashid Tobacowala
The Agile Manifesto1. Build projects around motivated individuals. Give them the
environment and support they need, and trust them to get the job done.
2. Simplicity--the art of maximizing the amount of work not done--is essential.
3. At regular intervals, the team reflects on how to become more effective then adjusts its behavior accordingly.
4. The team welcomes changing requirements, even late in development.
5. The team delivers working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.
Direction Teams
1. Business Director2. Planning Director3. Channel Director4.Content Director5.Project Director
Implications and opportunities for marketing organizations1. An always-on marketing program requires agile
teams and an agile approach.
2. The agile approach requires fewer people, fewer layers, and more autonomy.
3. The need for professional project management will only increase due to the complex demands of digital marketing.
Selling time
Selling value
Imperatives for transforming the agency
http://www.youtube.com/watch?v=R2a8TRSgzZY
“The Vendor-Client Relationship”
RFPs that focus extensively on price.Mandates to reduce fees without also reducing
SOW.Demands for extensive disclosure of agency
costs.Clients not forthcoming about marketing
budgetsAgency services “shopped” based on hourly
rates.
The branches of the compensation problem
What is the root? The billable hour
Salaries + Overhead + Desired Profit Expected Hours = Hourly Rate
Hours Worked
Fee Charged=Hours
WorkedValue
Delivered=What’s the right formula for agency
compensation?
Why time-based pricing is the wrong paradigm
1.Looks in the wrong place for value (inside vs. outside)
2.Based on cost to agency rather than value to client3.Assumes client is buying activities rather than
outcomes 4.Puts emphasis on efficiency instead of effectiveness 5.Misaligns the economic interests of agency and
client
“Do you want to haggle over hours, or do you want ideas that build the momentum of your brand?”
Jeff HicksPresident
Crispin Porter & Bogusky
Estimating hours isn’t pricing.Counting costs isn’t pricing.
Setting an “accurate” billable rate isn’t pricing.
Costing is a science.Pricing is an art.
Chief Compensation OfficerNeal Grossman
“This is not the death of marketing and media, but a dramatic rebirth in the way the end of the last Ice Age yielded more advanced species than had every prospered on earth before.”
Bob GarfieldAdvertising Age columnist and author of “The Chaos Scenario”
The complete Agency 2.5 seminar is available on a custom basis to agencies and organizations.
www.ignitiongroup.com
Direct inquiries to Tim Williams at twilliams@ignitiongroup.com
@IgnitionGroup@TimWilliamsICG
An invitation to visit Ignition’s new online resource center
www.ignitiongroup.com
Books by Ignition’s Tim Williams
Take a Stand for Your Brand:Building a Great Agency Brand
From the Inside Out
Positioning for Professionals:How Professional Knowledge Firms Can Differentiate Their Way to Success
www.ignitiongroup.com