A look at client-agency relationships

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A look at how the business partnership between client and agency has been more shaped by the media and business model, than advertising proposition. Keynote at National eMedia Conference, Helsinki, 2007 Mark Linder, WPP

Transcript of A look at client-agency relationships

  • Can a weaving spider collaborate? Or, A circular story about the evolving client-agency relationship Mark Linder WPP Global Client Leader National eMedia Conference 2008 IIR Finland Helsinki 21 November 2007 Contact [email_address] +44 774 00 7927
  • Advisors
  • JR
  • Topics we will talk about
    • Overall theory is that the seed of tomorrows client-agency relationship are way back in history. We need to look back to look forward
    • Marketing and mass communication starting from the advent of television the nature of the business partnership and media commission USP and the compliance school, and how we slowed ourselves
    • What changed the dynamic of the relationship separation of media, selling out, re-ingineering, etc
    • The Internet / web 2.0 why participation and new media is SO HARD to understand, just as hard as TV was. What the utility concept of marketing is about
    • The new media landscape, and how to why we all need to become involved, not just the media agencies
    • The client of the future, agency of the future
    • Implications for Finland
  • Marketing was invented in an unusual time Mass production Mass communication Mass consumption In the 1960s and 70s, we were GLUED to our TVs
  • A destination model of communication Besides, its easy to blow your own horn Brand marketer Interpreter Decoder The Mass Audience Many receivers Each de-coding Interpreting Encoding Each connected with a group where message re-interpreted Cheap TV Reach and Frequency Repetition Increasing sales Indirect feedback (research, sales, etc) Inputs from social sources Based on Shannon & Weavers 1947 process model
  • Commission business model rewarded mass Agency takes risk Buys blocks of media space Offers to client at a profit Performs value-adding services
  • Remember the long-running campaign? One benefit of a trust-based relationship
  • Clients and agencies co-owned the business problem The word brief did not exist Client-agency partnership was in shared risk/ reward Agency investment Client spend (Agency revenue) Client profit
  • 30 years ago, agencies managed programs
    • Research and insights
    • New product development
    • Branding and packaging
    • Channel management/ retail
    • Communications
    • Media investment
    • Tracking and ROI
    Investment in solutions Insight into the socialization of the new technology A blockbuster business
  • However when marketing = Advertising Advertising = commissions Commissions = exploitation
  • It is hard to overstate the culture of impressions-based marketing Global size of the industry, in $billions 34 Sponsorship 241 Direct marketing 700 7 24 394 Worldwide Total PR Research Advertising
  • A sidebar why the USP hinders true marketing
  • The USP
    • Each advertisement must make a proposition to the customer: "buy this product, and you will get this specific benefit ."
    • The proposition itself must be unique - something that competitors do not, or will not, offer.
    • The proposition must be strong enough to pull new customers to the product.
    • The tension lies in the fact that traditionally, marketing is done TO people, not FOR or WITH them. Messages are developed and broadcast to ostensibly passive and receptive audiences. If they dont respond, then there are compliance issues or problems of communications uptake.
      • --Jill Caldwell, a social researcher
    The USP helped create the Compliance School of communications
  • Agencies became USP concept factories and forgot about socialization of media itself Percept an external event that causes the activation of a certain category in the mind Concept an abstract idea or a mental symbol Concepts are the basic elements of propositions, much the same way a word is the basic element of a sentence "Nobody reads ads. People read what interests them, and sometimes it's an ad. --Howard Gossage
  • Osgood-Schramm (1954) Communication is a two-way process Did we hear? Message Encoder Interpreter Decoder Message Decoder Interpreter Decoder
  • And there were a few other developments
  • Events of the 80s and 90s
    • Re-engineering and Activity-based Costing Procurement moving into services
    • Private agencies selling to public companies, monetizing the relationship
    • High p/e source markets aggravating this
    • Separation of media function
    • Result: damage to the trust between advertiser and agency
  • And at the same time, the emergence of new technologies
  • Acceleration Gary William Flake Microsoft / MSN
  • Democratization
      • Computing
      • Content
      • Commerce
      • Community
  • Over 30% of South Koreans are on high-speed braodband 32MBit download
  • 1966
  • The new media landscape Not how do we reach us, but how is it affecting us? Dual Sync 40 Million Homes DVR 3.5 Million Homes Gaming 80 Million Homes Video On Demand 16 Million Homes Interactive Program Guide 20 Million Homes Virtual Channels 2 Million Homes Ad Targeting 108 Million Homes 65.2% cell phone U.S. penetration Satellite Radio & Internet Radio 1.5 Million Subscribers / 70% Penetration Interactive/Placed Based Out of Home 400M BBs Internet / Broadband 150 Million Users / 57 Million BB Users DVD Player 50 Million Homes Portable Audio 15 Million Units Custom Publishing
  • The socialization of this technology is the real change
  • We are connected, but not connecting Rob Alexander, JWT Fragmentation creates the need for re-integration
  • We are worked over by the media
  • What about non-media Advent of actual UTILITY in marketing!! Why promise to be something, when you can actually DELIVER that thing!
  • Welcome to the brave new world of Branded Utility, where brands look to provide a useful service or a helpful application; to give people something they actually need without demanding an immediate return. Simon Andrews Chief Strategy Officer, Mindshare Interaction "I believe the next stage of brand advertising is going to be in the realm of 'branded utility,"' says Palmer (with Johnny Vulcan)
  • What role does an agency have?
  • Android Software Operators Semiconductors Handset Commercialization Plus $10M in prize money for developers!
  • OHA launch video
  • Google Open Social
    • MySpace
    • Bebo
    • iLike
    • Salesforce.com
    • LinkedIn
    • Hi5
    • Friendster
    • Oracle
    • Flixster
    • RockYou
    • Slide
    • and more
  • Is it any wonder who is on top? Source: Interbrand Corp, Business Week Aug 2007, Brand Channel Readers Choice 2006 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Value Change 2007 vs. 06 -3% +3% +2% +5% -4% +12% +15% +5% +7% +8% Most Valuable Most Impactful in my life 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.
  • Examples
    • Nike Run London
    • Innocents Fruitstock
    • Nokias Royal Artists Club
    • Charmins bathrooms
    • Flickrs Interestingness
  • Crowd-sourcing Gardening Me Squared Interestingness -- Flamingo, for Nokia
  • Jennierose, crowd-sourcing