Notes of the future of the advertising industry
We’ve expended a lot energy exploring the future of advertising but what about the future of the industry that generates the advertising message of the future. What will the advertising agency of the future look like?
To answer that question with any authority we have to ask ourselves so many more questions. Question like…
- Can an industry that thrived in an age of media scarcity survive in an age of media abundance?
- Can an industry that thrived on pitching big ideas to mass audiences change its behaviour so it can play an active role in the conversation?
- Can an industry of storytellers become an industry of story seekers looking for patterns and stories in the mountains of customer data?
- Can a creative industry that excels at building brands be satisfied with just monitoring, measuring and managing reputations?
- Can an industry that craved an audience recover from the shock of discovering that it is now the audience? It is the customer who is now the performer.
- Can an industry that wined and dined it way to the top on fast talk, big ideas and pithy slogans learn to feed itself by applying complex mathematical formulae to the problem of influencing people across ever more complex and fragmented social networks?
One thing we do know for sure is the relationship between advertising and old media is symbiotic. So their futures are intertwined. If old media doesn’t survive the MobCon nor will the advertising industry as we know it today.
We also know that the growing trend towards industry wide fragmentation and the inevitable disintermediation that is central to the economics of the MobCon will surely increase as the old “studio” structure (d)evolves into a network of niche providers.
Plus, as I have said before, the biggest challenge facing advertising agency of the future is they must be able to predict and then manufacture the Kairos moment on demand. (See The new science of advertising)
“The old days of carpet bombing the U.S. with network TV ads and expecting to reach everybody are over.” GM’s John McDonald (See Will the future of advertising be a blend of the old and new?)
Three years ago this month I was in New York, along with 10,000 others, attending Ad:Tech. From memory (ex capite) 3 floors of the New York Hilton were decked out with 300+ exhibitors.
The atmosphere was electric. Full of energy and hope. For four whole days digital media and advertising’s best minds gathered to share in the vision: “The Art of Conversation: Building Great Brands in the Digital Age”
That year Nick Brien, the Worldwide CEO of Universal McCann gave the opening key-note address on The New Media Universe: Forging a Model of Interdependence.
He was out to prove to the audience that, although it had taken almost 2 decades, the Ad Industry now got the “whole online, interactive, new media thing” and how it was rapidly reshaping the media landscape.
I remember him speaking eloquently and energetically about the new strategic dynamic facing the ad industry. The new terms of engagement:
Yesterday advertising was all about the old persuaders. Today it is all about the new influencers.
How timing was now everything. The 80′s had been about content (i.e. Making great ads), the 90′s about contact (i.e. Relationship management) and today it was all about context.
The idea that the customer doesn’t want to be interrupted unless they are ready… and when you do interrupt it better be personal. Today it’s all about me not you!
All good strategic insights but when it came to the punchline the story just didn’t gel.
Why? Simply because he pulled out an award-winning TV Commercial and Billboard campaign from Australia to demonstrate how his Global Agency was leading the industry in interacting with this brave new world of young influencers.
What he was saying was: “Look everybody we finally get it”. What he was showing us was: “We make great TV commercials and now we can post them online too!”
A week earlier I had been in Chicago attending a conference where Professor Erik Brynjolfsson of MIT Sloan School of Digital Business gave a key-note presentation on Digital Organisations. As he closed the show he suggested that the best way to understand the nature of the enormous strategic challenges facing the USA was to simply consider this salient lesson from history.
Britain had invented the Industrial Revolution but it was the USA that had ultimately perfected and profited from it.
History tells us that the US became the world’s industrial powerhouse thanks to practical innovations like the production line. What is not recorded is the idea that the British failed to fully capitalise on the industrial revolution because the very culture that allowed them to invent and give birth to the industrial revolution eventually became the primary barrier to Britain perfecting and profiting from it.
Listening to Nick, and watching his TV campaign, I could not help wondering what the future held for these pioneers of the Information Revolution.
The flagship digital agencies (Think Razorfish and now BigFuel) are what I thought the future of advertising agency was in 1990. Today they look increasingly like relics from the dot-com era. Put simply they are old advertising media dress up as new.
WPP and Omnicom are two of the industry’s largest holding companies. Under their umbrella sits the biggest brands in advertising. (Think: DDB, BBDO, TBWA, JWT, R&Y, O&M, H&K and Grey). Their combined 200,000 staff members generate about $28 Billion in revenues. Google’s self-service model achieves revenues in excess of $23 Billion with 10% of the resources required by traditional advertising.
Putting aside the question of “Is Google already the advertising agency of the future?” then we have to admit that the agency of the future does not exist yet and it certainly isn’t gestating as digital lifeboat ready to be launched from within a mainstream agency. If it is anywhere it is somebody’s bedroom or garage.
“With all the defections of top agency talent over the past year — Alex Bogusky from Crispin, Gerry Graf from Saatchi, Kevin Roddy from BBH — it’s easy to imagine a new advertising ecosystem of pods built around industry stars who have left their lumbering institutions behind. The holding companies will still exist, but around them could emerge a chaotic pattern of startups, independent talent, and connectors who thrive with minimum overhead. That kind of industry would be a fraction of the size of the current one. It would create opportunities for the most talented and hurt everyone else. It would be harder work, with fewer assistants and fewer million-dollar paydays. But this smaller business would be aloft on its new creative potential rather than sinking under the weight of its past.” - Danielle Sacks The Future of Advertising
This then is the shock of the new… as we witness the inevitable fragmentation and disintermediation of the industry production line as the economics of the MobCon changes everything we believe we know and understand about how corporations work and more importantly how they can be (re)configured to make profits.
A decade ago at the height of the eBusiness Revolution the focus was on using technology to do more with less. It was also all about employing smart people, smart processes and smart technology to win and retain market share.
Today we are just catching glimpses of a future where the corporation will fragment into a hundred, if not a thousand or a million entities that can be gathered together on a cost-effective, an ad-hoc, as needs basis. (See Innovation Clouds and Rainbow Brands)
After all who needs to employ an ad agency to manage the campaign when the campaign is a self managed event designed and executed by the very audience the campaign was designed to reach? (see The Wisdom of the Eurovision Crowd) or, at the other extreme, who needs a to pay expensive high-profile creatives when the campaign can be designed and executed by AI software? (See Machine Creative)
You don’t have to look very hard to see just how distant this fragmented MobCon world is from to the production line of the Golden Age of Advertising. And that’s why a new MobCon industry value is emerging that brings together Mobile Devices, Desktop PC’s and the Mass Media into a single cross media advertising platform.
However take a step back from all this excitement of a brave new world and you’ll soon discover that the economic impact of the internet on the Retail and Services sector is insignificant in dollar terms. As we proved earlier in the year the real impact of the internet has been in the manufacturing sector and not the media and information services sector. (see How important is the Internet to the US economy?)
All of which means if you’re in the ad game and you think the internet has changed the way you’re doing business today then think again because (Think: Bachmann Turner Overdrive) “B-B-B-Baby you ain’t seen n-n-n-n-n-nothin’ yet!”
