The advertising agency community is being forced to rethink its very existence when faced by evolving consumers and new competitors, but to enable the agencies of the future, marketers will have to become the clients of the future, say industry insiders.
Any evolution in the marketing and advertising environment is going require partnerships, said the speakers at 4A’s Accelerate, the annual meeting of the American Association of Advertising Agencies. The speed of change is challenging ad agencies on all fronts; the demands of data-driven, real-time consumer engagement driven by experience design will require more skills and creativity that any single shop can produce, said speakers.
“To say we live in a time of accelerated change is an understatement,” said Greg Stern, CEO of Butler, Shine, Stern & Partners.
“A lot of agencies are going through that existential crisis,” said Laura Rowan, Group Strategy Director at Anomaly. “Long gone are the simple needs of yesteryear. “
Agencies are faced with an army of new competitors, from publishers’ brand studios to management consultancies expanding their marketing practices to include creative work and larger in-house agencies “all competing for the CMO’s heart,” said Marla Kaplowitz, the 4A’s president.
“We’ve got slings and arrows coming at agencies,” said Marc Pritchard chief brand officer of Procter & Gamble. The CPG company last year kicked off a top-down review of its media spending after its online ads were found running as pre-roll on questionable YouTube content and has been realigning its agency relationships.
The digitally empowered consumer and all the implications of that trend are continually challenging the agencies, and the agency-client relationship will have to evolve to accommodate that, said speakers.
“Today, every product is high consideration, regardless of how low-consideration it used to be,” said Allan Thygesen, President, Americas, Google. Consumers have high expectations for every experience and every brand; they’re more curious, more demanding and impatient than ever before.
That is only going to become more complicated as the Gen Z cohort rises, said Jeff Fromm, President of FutureCast, a marketing consultancy that specializes in Millennial trends.
Gen Z consumers are “prosumers” who choose brands that reflect their values and personality, said Fromm; for them, “storyliving” is more important than storytelling. When dealing with this new consume, marketers will have to embrace a culture of content and a portfolio approach to innovation, because this consumer craves information and expects innovation, he said.
“There’s a desire to be quick and you don’t know if that’s the right thing, but you have to move,” said Anomaly’s Rowan. Change creates more demand for the “agency of the future,” structured to deal with it, she said.
“Over the last few years, we’ve had some very frank conversations” with agencies, said Pritchard. P&G has focused on a smaller core of agency partners to work more closely with in a more disciplined matter and trim excess while bringing some work in-house, particularly functions where it can create value by using technology, such as digital media planning, said Pritchard.
“When it comes to relationships, we’re not married anymore, but we haven’t done a good job defining what’s next,” said Debby Reiner, CEO of Grey NY. The agency, one of P&G’s shops, has focused on creating a new culture that is based in collaboration and cuts much of the excess effort in traditional ad work.
“We need to end the archaic Mad Men model,” said Arthur Sadoun, CEO of Publicis, a core P&G agency. Agencies will have to continue to reduce fees and costs, since their clients are also under pressure to reduce costs, he said.
Agencies have to use their resources more effectively and find creativity and insights everywhere, not just by forming a large team to brainstorm dozens of ideas in search of one that the client will sign off on, said speakers. Sadoun noted that Publicis sent a brief to 50 teams worldwide to come up with Wal-mart’s Academy Awards ad campaign and the winning idea came from a two-man team in Spain.
Agencies need to end brainstorming scrums and “everybody bringing a plus one to the meeting,” said Reiner. “I never saw an idea that got better because it had more people working on it.”
But clients will have to work differently, too, said speakers. Even marketers that are moving work in-house recognized a need for a closer relationship with the agencies remaining in their roster.
“The whole client-agency relationship used to be a relationship and I think that’s what it needs to get back to,” said Julie Rieger, president, chief data strategist and head of media at 20th Century Fox Film.
“The financials are still broken,” said Rieger. “Payless is not an advertising agency.”
“The last thing we have to do is go to an agency and say ‘I want to pay you less for doing a harder job,’” she said. “How many times you have to say ‘You get what you pay for?’”
Advertising is “in an industry riven by anxiety,” said New Yorker writer Ken Auletta. While researching his new book Frenemies: The Epic Disruption of the Ad Business (and Everything Else), he concluded marketing is facing an existential crisis and a competitive crisis, but most players are still struggling to respond.
“Do you recognize that threat and do you lean forward or lean back? If you lean back and say ‘woe is me,’ you’re not being proactive,” said Auletta.
Some marketers are being proactive, said P&G’s Pritchard: “The question we ask ourselves is: Are we going to get disrupted, or are we going to take control?” he asked. “The answer is clear, we’re going to lead it.”