Where is the traditional agency going?
The last few years have seen a great deal of discussion around the terminology that should follow that of an ‘advertising’ agency – there have been many terms bandied around ranging from brand to communications to idea to creative, but they all highlight one thing: The move of the business away from what has been tradtionally known as ‘advertising’. Rather than redefine what we mean by advertising, the business is attempting to reposition its offering.
To understand the issue, it is probably worthwhile defining exactly what we mean by advertising, and also how the original agency itself has changed and developped over the years. The American Heritage Dictionary online gives us the following:
ad·ver·tis·ing(ad-ver-tahy-zing) Show IPA–noun1. the act or practice of calling public attention to one’s product, service, need, etc., esp. by paid announcements in newspapers and magazines, over radio or television, on billboards, etc.: to get more customers by advertising.2. paid announcements; advertisements.3. the profession of planning, designing, and writing advertisements.
And here we can see the traditional definition of the term, relating specifically to paid media via offline channels. But if we move to the font of all crowdsourced knowledge, wikipedia, we begin to see a slightly more evolved view of the term:
Advertising is a form of communication intended to persuade an audience (viewers, readers or listeners) to purchase or take some action upon products, ideals, or services. It includes the name of a product or service and how that product or service could benefit the consumer, to persuade a target market to purchase or to consume that particular brand. These brands are usually paid for or identified through sponsors and viewed via various media. Advertising can also serve to communicate an idea to a large number of people in an attempt to convince them to take a certain action.
The first sentence very clearly defines what we mean by advertising, both in the heyday of Mad Men and Madison Avenue and in today’s more fragmented media-diverse market. The second touches on the financing of the operation either through sponsorship or paid media and finally, the last sentence gives us clarity in the fact that this is a one-to-many communication vehicle to convince them to take a certain action. When we compare this to for example the guiding maxim of Leo Burnett – creativity has the power to transform human behavior – we see a very close resemblance, in fact on only reading this we could be convinced that adveritising is in fact completely relevant.
Beyond the definitions of the term itself, it is also helpful to understand the different players in the game, who have evolved from advertising to media and direct marketing, event, activation, digital and interactive. From the full-service agency days of the 70s and 80s, the market has fragmented itself into an ever increasing number of specialised units. The first of these was in media, as organisations chased after greater and greater economies of scale, this was followed by what we refer to as ‘marketing services’ which is the combination of many different activites that individually had such low margins that they were grouped together to create what was commonly referred to as ‘below the line (BTL)’. Finally in the last ten years we have seen web and digital agencies rise to the top of their game as the specialisation and technicity of the internet has changed the rules of communication and the skillset required – from pure strategy and creativity we now need a solid does of science and technology to make a website run and for facebook to really know who you are.
So where does this leave the advertising agency? And why this desire to reposition and redefine?
It is hard not to see the irony of a business whose core it is to analyse competetitive situations, define strategies and positioning and finally communicate them clearly to a target audience is struggling so hard to understand it’s own future. The problem lies not really in the fact that communication has changed, after all the introduction of the television completely changed a business that was based mainly on print media (both magazines and outdoor) and the agency business carefully.
It would seem to me that the problem lies solely in the fact that advertising as an industry was too set in it’s ways (and too comfortable with the revenue) to adapt as the digital era arrived, and is now in a desperate struggle to catch up with an industry that is already a few lengths ahead in the race. How long before we see a digital agency swallow up a traditional one, in much the same way as Aol purchase Time Warner in 2000; and what lessons should we learn from that merger which 10 years later spun-off Aol admitting to the fact that it had never been a success and was probably ‘one of the worst business decisions it had made’.
So what is the solution? What options are open to agencies today, and tomorrow?
- It might well be worth trying to evolve, but the direction that many agencies are taking of ‘integration’ seems like a step back into the past, and it does not appear that all the players, particularly media, are willing to go back to full-service.
- Transformation is also another option that is heavily driven at management meetings, but when we look closely at the poster child of traditional to digital transformation that is CP&B, it becomes clear that the agency was forced to replace almost 70% of it’s workforce to acheive the desired results.
- What about sitting still? There is clearly still a strong market for advertising (in any sense of the term) and maybe agencies should stick to what they know best.
- The creation of new entities also seems like a very interesting approach, the book ‘Space Race: An Inside View of the Future of Communications Planning‘ by Jim Taylor gives strong arguments for the creation of an agency higher up the value chain to define strategy, and this is proven in reality by the likes of anomaly and the newly formed Co: by Rosemarie and Ty (ex C/D of JWT)
The problem really lies in the the ego and the fact that traditional agencies must accept that they are no longer the leaders in their field and let the new kids on the block take up the challenge.