The future of advertising agencies: learnings from Forrester
Leo Burnett, David Ogilvy, James Walter Thompson: ad agencies have been around a long time
It remains the topic du jour. We talk about it from every conceivable angle: the future of advertising; the future of advertising agencies; the impact of digital on advertising; the new consumer-control; even the death of MadMen.
But when Forrester talks about it people listen.
A few months ago I participated in Sean Corcoran’s research on where it’s all going. The Forrester analyst interviewed more than 60 agency leaders, clients and media in pursuit of the answer.
Well last night, at a MITX-sponosored event here in Boston, he debuted some of this findings, all of which Forrester will eventually turn into advice for both agencies and marketers as they continue to navigate the turbulence brought on by digital technology, the social web and changing consumer behavior.
Here are some of the findings from Sean’s presentation, due out in final form in a couple of weeks. Anything in italics is my take or conclusion. In the next week or so I’ll develop additional thoughts and share examples of what people are doing and or struggling with in light of his observations.
It is a new world defined by technology and consumer control
- Consumers today have a complex relationship with media: it poses challenges as to how and where to engage with them
- Despite Edelman’s recent findings, Forrester insists that consumers trust consumers more than they trust brands: it means we need to mobilize fans and followers to evangelize on our behalf
- The Groundswell has gone mainstream: the consumer is now a creator/sharer/distributor; learn to harness and inspire that
- WOM reigns again: your content and the experiences you create must stimulate it
- 3.5 billion brand conversations happen every day, all of them in public: time to master the art of listening
Consumers hate most advertising
- Only 5 % agree with advertising claims: start being honest and authentic
- 50 % say brands don’t live up to advertising promises: really, start being honest and authentic
- 67 % complain there is too much advertising: forget messages, create experiences and conversation
Adaptive marketing is the new model
- Everything is powered by digital: hire digital, think digital, learn digital or die
- Real time response, as in political advertising, is the future of marketing: monitor social media regularly and get everyone a Flipcam
- It’s all about pull not push: the formula is SEO plus value equal traffic
- Addressability is here: you should be thinking versioning, customization, options
- Intelligence and analytics will drive everything: make it part of your strategy before and after creative development
Media needs to combine paid, owned and earned
- Paid: for scale and reach and speed: social can’t do everything, reach, scale and speed come from paid
- Owned: for content, relationships, listening and co-creation: open source opportunities are everywhere so create great content, utility and apps
- Earned: social, WOM, PR, bloggers, influencers: paid can’t do everything; you need a social and conversation strategy, not simply a presence on Facebook
Successful agencies will move well beyond campaigns
- Build campaigns PLUS platforms: you need both, Nike-plus without a brand behind has no plus
- Stop thinking in terms of audience and think about a community of participants: a brand’s consumers may be your best creative resource, or at least your best medium
- Undo unbundling: unbundled won’t work anymore: agencies need to find ways to integrate; become curators; and learn co-creation, curation, and crowdsourcing
- Embrace and master new technologies quickly: you are working on the re-invention of print ads on the iPad, right?
Clients will look for three things
- Ideas: note this does not mean messages or ads
- Interaction: engagement, connection, community, media
- Intelligence, as in you need to collect, report, analyze and predict: if you don’t have robust analytics, you’re in big trouble
Sean has other findings and conclusions, but I’ll leave it to him to package, reveal and explain. Suffice it to say, this is what’s been released as of last night.
Finally, the photo above (stole the idea from Sean who talked about the history of agencies as well) is a reminder that this is an old business. Agencies have been around for a long time. They have adapted from being agents who sold, to owners of the brand, to creators of the big idea, to specialists in advertising, DR, CRM, PR, design and digital. It’s time to adapt again. And quickly.
Comments
I am a keen advocate of the philosophies and vision laid out here. To use the outworn analogy of left and right brains; I kind of see that this approach to adaptive communications as being fueled and supported by the more creative and expansive side of our thinking. The next check is how well does this perform in terms of pure analytics. It is this comprehensive study that will prove its effectiveness. Like most things, it is a balancing act. To explain what I mean - if an Advertiser is still trying to 'buy awareness' through its advertising and if that kind of effort is indicated for the product or service they are trying to sell...then 'old ways' of doing communications still works. In terms of channels that work best in generating brand awareness and message recall - the old paradigm has not changed much. Further down the analytical highway, Regression analysis still shows that tried and trues like TV remain the most successful in doing the heavy-lifting towards media and marketing attributed sales. BUT and this is a big one, they are doing so at an increasing cost:revenue ratio. Digital and the expansion of Owned & Earned are contributing, at lower rates overall, but at significant cost advantage. Meaning: In most cases it is a balancing act between old thinking and new. It is the careful consideration of what a brand is trying to achieve and then the investment in a self learning strategy that is continuously improving and adapting. So yes - I agree with everything said on this blog, I am finding that our next logical step is proving it to our client-partners and making it possible for us to act with informed unison. Thanks for the indulgence.
Mike Power
SVP, Strategy & Innovation
Mediacom Canada
Quite valuable and valid findings, thanks for sharing Edward!
As a new generation marketer veteran myself, I find it very soothing to be validated by these findings since I have been defending the digital impact on advertising, the consumer + content control over advertising and even the death of advertising as we know it for some time now.
I would like to kindly ask you to join our discussions in a LinkedIn Group called New Generation Agency Network where we discuss the Future of Advertising & Agencies with around 500 marketing professionals around the world: http://bit.ly/czHDnT
Please also visit my blog adnews at http://koksala.wordpress.com/ and my take on the subject (SlideShare presentation) and let me know what you think: http://bit.ly/adNEHB
Keep up the great work of keeping the pulse of advertising...
Greetings from Istanbul,
Köksal Abdurrahmanoglu
---------------------------------
adinteractive president & ceo
istanbul.com founder
koksal@istanbul.com@koksal
.-= Köksal Abdurrahmanoglu´s last blog ..Let’s Play Advertising the “Kingdom” Analogy Game… =-.
I think people do look for honesty in advertising. Dishonest companies hurt the ones that work hard to satisfy their clients.
Edward,
Great post. Excellent suggestions on translating the foundations of the research into actions for agencies to take. Completely agree with the points regarding moving beyond campaigns and WOM reigns again.
I agree with your point about mastering new technologies quickly, but think that the advice to work on the re-invention of print ads on the iPad goes against the entire thrust of the Forrester report. We should not be looking to reinvent "print ads" on the iPad. That is a prescription to use the latest digital tool for more of the old push marketing. Instead we should be looking to create new, powerful customized consumer experiences on the iPad and other tools.
Edward,
Very interesting. In particular, "adaptive marketing" as the new model with everything powered by digital right on target. Ad agencies "creativity" will lead their future.
Thanks,
Mark
Great post Edward. Reading your blog regularly has made me really dig in to what's happening in our business with more rigor.
Thanks,
Keith
Discover, observe, dissect what works, experiment. Those are the cornerstones of direct marketing.
Too bad most DM agencies missed the boat on shifting to and owning the space in the digital world -- which is also what made them irrelevant. Great findings and summary... thanks for sharing.
Quite valuable and valid findings, thanks for sharing Edward!
As a new generation marketer veteran myself, I find it very soothing to be validated by these findings since I have been defending the digital impact on advertising, the consumer + content control over advertising and even the death of advertising as we know it for some time now.
I would like to kindly ask you to join our discussions in a LinkedIn Group called New Generation Agency Network where we discuss the Future of Advertising & Agencies with around 500 marketing professionals around the world: http://bit.ly/czHDnT
Please also visit my blog adnews at http://koksala.wordpress.com/ and my take on the subject (SlideShare presentation) and let me know what you think: http://bit.ly/adNEHB
Keep up the great work of keeping the pulse of advertising...
Greetings from Istanbul,
Ku00c3u00b6ksal Abdurrahmanoglu
---------------------------------
adinteractive president & ceo
istanbul.com founder
koksal@istanbul.com
@koksal
.-= Ku00c3u00b6ksal Abdurrahmanogluu00c2u00b4s last blog ..Letu00e2u0080u0099s Play Advertising the u00e2u0080u009cKingdomu00e2u0080u009d Analogy Gameu00e2u0080u00a6 =-.
Great summary Edward.
Something you didn't touch upon was the slide that broke down the lag between digital budgets compared to usage.
Surprisingly enough this point was something the panel and audience did not latch on to at the time, but it's a clear representation of how much further consumers are ahead of marketers. What is doubly concerning is if you compound this lag with the industries inability to compensate for Moore's Law then we will only see this lag widen as technology and in turn creativity becomes even more complicated.
We hear frequently about how marketing dollars are shifting to digital, but that slide illustrated that what some consider a rapid rate of industry change isn't even close to keeping up with the audience that is interacting with the brands we are all responsible for.
Since we (agencies) can only work from what we are given there has to be a very urgent focus between agencies and clients to address the digital budget crisis. Most clients have no idea about the labor issue that is being created by digital. This crisis is becoming a huge problem for agencies as they come to grips with the fact that two guys in a room is not going to get you an app, site or platform and their traditional staffing model can't sustain the creation of digital work. We have to communicate that the model is changing. We are going from a low labor and high media cost model to high labor and low media cost model.
Moore's Law keeps rolling on and it's becoming more and more costly and complicated to produce quality digital platforms/ecosystems.
Ed,
Have heard that fact from others, too. IPG's Emerging Media Lab in LA has issued retail reports that show to what degree retailers still count on circulars when consumers don't read newspapers.
A number of people have complained to me that this piece (and therefore the preso) doesn't offer anything new at all. I think by the time Sean is done and issues his real report (for some serious $$$) there will be more meat in it. After all, he can't give it all away for free. Also, one of his objectives will be to advise marketers on how to use agencies.
Finally, there was one other fact we both left out: the fact that there won't be digital agencies of record anymore because everything will be digital. Either digital shops will learn to do branding, branding shops will finally master digital, or simply smaller shops/product companies will live in a niche space. He may or may not be right, but we'll all have fun figuring it out.
If this helps agencies that don't "get it" I think it's great but I think I've read more useful information by reading this blog for the last few months - my humble opinion. Skip the overblown research.
1) Branding is what happens when you do everything else right.
2) It's about culture. Understand it. Embed your product in it. Be an authentic partner with it.
3) Learn how to think like a designer in every segment of the chain as well as the design of the whole chain.
4) Marketing no longer follows product; the product follows marketing.
.-= Bruce DeBoeru00c2u00b4s last blog ..Food for Thought u00e2u0080u0093 James Gearyu00e2u0080u0099s Metaphor =-.
Bruce,
Thanks. Will take that as a compliment. Was simply reporting. But it's important when Forrester says it because brands and marketers listen to them. And therefore agencies may want to know what their clients are about to hear. Think of it as validity for what many of us know and believe has changed. I'll get back to sharing my thinking rather than Forrester's soon. Thanks.
Agreed, and it is a compliment. Part of my point is that if agencies need the research to tell them, they'll read it but never internalize it and fail.
The scheme has cleared up for me some in the last few weeks with partial credit going to your writing and links. Another piece goes to Bogusky and his actions and the third goes to me and my seeking out information I need to make ideas work.
I would NOT have made the leap by reading someone else's research. It's like getting your fingernails dirty; reading talking, visiting, seeing, experiencing and witnessing success of others.
If I have time tomorrow I'm going to write a short post about the Pepsi Refresh Campaign and what why I feel they missed it. I'll follow with an idea they can steal.
.-= Bruce DeBoeru00c2u00b4s last blog ..Food for Thought u00e2u0080u0093 James Gearyu00e2u0080u0099s Metaphor =-.
Can't wait to read. Send me a link or reminder via Twitter. You summed up the approach though. Discover, observe, dissect what works, experiment. Thanks, Bruce.
Interesting findings. To me, though, the elephant in the room is the agency holding company model and I wonder if Forrester will have the guts to challenge it.
I have seen zero value in agency holding companies. Sure, if you're a principle in an agency that gets bought, well, great, you've made money. Otherwise, it's a one way street. All I see time and time again is held companies paying their masters and getting nothing in return. In fact, they lose. They've lost the ability to offer profit sharing, spot bonuses, 401K matching, maternity breaks and on and on and on. I swear I can't look at picture of Martin Sorrel without feeling my blood boil.
To my mind, the agency holding model greatly reduced the ability of agencies to innovate and grow. It also killed their brands. What is Ogilvy today, what is Y&R, what is McCann? They are all faceless sames.
I'll close by saying I was STUNNED to learn that Mullen is owned by IPG. How have you done it? How have you been an innovation powerhouse under the yolk of bankers? Granted, IPG grew out of McCann, and so has ad roots, whereas WPP grew out of Wire Paper Plastic (and as such, is by far the worst of the holding companies in terms of the way it treats is human stock), but still... I am mystified! Any thoughts? And if you can't comment publicly, trust me, I get it.
Jeff
.-= Jeff Shattucku00c2u00b4s last blog ..How do the worldu00e2u0080u0099s great songwriters write songs? =-.
Jeff:
Agree with you in some cases. For us it has been good in many ways. We sold to Lowe, thinking it was a creative shop. Turned out to be IPG in reality. But if we perform, they allow us to run our agency our way. In fact, we have had a pretty good partnership. They admire our leadership and our integration and our performance. Last year sucked, but they know we are a good agency and will make the decisions and choices, changes and investments, we need to prosper, grow and do great work. Interestingly, the only thing they really push us to do is to hire and develop A+ talent.
Our mantra is independence earned through performance. Yes we had even more autonomy in the past, but I feel as if I've had best of both worlds. Made a few bucks and can still lead the shop that I love.
Keep in mind that IPG owns RG/A, Martin, Carmichael Lynch, all are creative shops and run pretty independently. I think IPG is smart that way. They push for performance and responsible financial performance, but they have total respect for the independent brands that are in their stable.
Edward, thank you for your sober, encouraging reply. This holding company thing really gets to me!
You make a great point about IPG. Unlike WPP, which bought mainly global players, IPG pursued a regional strategy and now has it its center a global beast in McCann surrounded by potent, smaller DIFFERENTIATED players. WPP, on the other hand, has a crowded center, where global players all feed on each other. The result, carcasses.
Jeff
.-= jeffshattuck´s last blog ..How do the world’s great songwriters write songs? =-.
Edward, thank you for your sober, encouraging reply. This holding company thing really gets to me!
You make a great point about IPG. Unlike WPP, which bought mainly global players, IPG pursued a regional strategy and now has it its center a global beast in McCann surrounded by potent, smaller DIFFERENTIATED players. WPP, on the other hand, has a crowded center, where global players all feed on each other. The result, carcasses.
Jeff
.-= jeffshattucku00c2u00b4s last blog ..How do the worldu00e2u0080u0099s great songwriters write songs? =-.
Edward:
I haven't been around as long as the guys at the top of the page, but sometimes I feel I have more in common with them than what ad agencies are today. This is definitely a transition period and your ideas are spot on. I am not sure agencies are the ones (with Mullen an exception) to answer the call. The original model was bundled, but they seem to have lost the knack of thinking holistically about the consumer, the strategy, the program and the execution. Smaller, more nimble groups are quickly catching on to what clients need. Thanks for a thought provoking summary.
Carol Phillips
@carol_phillips
Brand Amplitude, LLC
.-= Carol Phillipsu00c2u00b4s last blog ..Have We Finally Reached The u00e2u0080u0098Tipping Pointu00e2u0080u0099 on Millennial Marketing? =-.
Carol:
Agree. Interestingly, having been around a while gives you a perspective on past failures and a frame of reference for where change came from. There are many models working, though all with some shortcomings. RG/A has the platform figured out but not branding. Goody is brilliant, though may not be in the conversation business really. (Unlike RG/A they produce most digital out of house and source capabilities like that.)Crispin is close to getting it right; though RG/A will say they don't do platforms, just one shots. Big Spaceship does great digital experiences. BBH is agency of the year on multiple continents. All these names were not around when the ancestors up there built their shops. We're trying our own approach which is a modern form of integration with an emphasis on digital, branding, creative (that can be apps, utility rather than messages) and social, all informed by analytics. We shall see. We're not all the way there yet. But nobody is.
amazing summary @edwardboches. as always, you're right on point!
smart agencies will realize that they aren't ADVERTISING agencies but CREATIVE agencies.
advertising is becoming increasingly irrelevant (what was the last time anyone heard of anything first through advertising?) but creative is always necessary and great creative is critical. it just cant be ad-centric anymore...
david knies
dk@launchcontrolgroup.com
www.launchcontrolgroup.com
That's basically it. If I were to sum up even more.
--content lives everywhere, there are no walls
--experiences more than messages
--consumers aren't audience but participants
--agility is essential
--measure, predict, act
Thanks,
Edward
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[...] In February, Forrester Research released a study about the future of advertising. Edward Boches, Chief Creative Officer at Mullen, blogged about the report. According to Forrester, consumers trust consumers more than they trust brands, and 50 percent say that brands don’t live up to their promises. (The future of advertising agencies) [...]
[...] NewBusinessHawk Leave a Comment Over at Edward Boches blog Creativity Unbound is some interesting research on the future of advertising from Forrester. I encourage everyone to read the whole thing. Pay close attention to his addtional thoughts added [...]