What is the future for ad agencies?

 

 

The above link was an insightful presentation on the future of the ad agency and its relationships with the client and the world, it was presented by Scott Goodson, who was the chair of the Global Marketing Summit in 2007 and is the founder and CEO of Strawberry Frog.

 

 

Some of the main points included:

 

 

Ad agencies should focus on their main strength, which is idea generation.  Often the agency is very preoccupied with the execution of an idea, and due to time constraints, it potentially stymies creativity.

 

 

As discussed in an earlier posting, there is a trend to outsource different departments in ad agencies.  Many traditional functions such as the creative department, media buying, and executing ideas now have outlets to which these services can be outsourced.

 

 

By bidding some processes to suppliers, Strawberry Frog’s lead time for innovations has diminished, and the quality of the new ideas has increased as a result of focusing on its core strength – idea generation.  Consequently, the agency is reinvigorated and rids itself of clutter.

 

 

The traditional model for monetary compensation is based on billable hours.  This structure encourages billing based on execution versus idea generation.  A revised model would include compensation that includes profit sharing (for the agency) as well as billable hours.  This encourages the agency to be cognizant of innovative money generating ideas

 

 

From a client perspective, also discussed in an earlier posting; booking, planning, and buying media is now available to bidding in an open auction on services such as Google.   This type of service is analogous to cherry-picking the preferred talent to work on an ad campaign.  Creative and Executing teams can also be found through a bidding process in an open auction.  This gives the client the power to select from a variety of sources. 

 

 

So, with this open style auction of media agencies, do they have a role in the future?  I do think that media agencies have a role, but it has diminished greatly due to Google’s business model, which can reap the benefits of the long tail.  Smaller customers and individuals now have unfettered access to purchase media through an auction-style portal to bid on multiple types of media, and most importantly, have pertinent metrics to measure their ROI.  Media agencies will continue to occupy the important advisory role, as their access to research and trends will enable them to do so.  Due to economies of scale, larger customers and institutions may still find it advantageous to buy their media through these agencies.  I think the Media agencies need to adapt their business model to cope with this.   

 

 

Also, the market is becoming culture-centric.  This can be broken down to three areas: User-generated content, ideas and products that are all subject to peer reviews.  As discussed in earlier post, the prevalence of social media enables the collaboration from various users.  Clients and agencies must adapt to center their approaches to incorporate these business behaviors.

 

 

Finally, the presentation also looked at how both the client and the agency is now becoming more socially conscious.  As noted in an earlier post about Transformational Design, the movement towards green marketing is an excellent example.

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2 responses to “What is the future for ad agencies?

  1. Pingback: Emerging technological trends for businesses « Ideas make the world go round

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