The future of advertising is unclear. Photo / Getty Images
The future of advertising is unclear. Photo / Getty Images
OPINION:
Pointing to the marked change in era that's upon us and the fact the reign of the traditional model is fast over - much like the decline of the British Empire by the end of 1945, yet the persistence of the myth of Empire - we struggle to admitthat the world has changed around us.
Over the last decade, I've heard a lot of talk about the evolving advertising business model.
It's fair to say that during this time we've seen very little genuine action. Despite spinning out media or integrating digital and data, the model of a creative agency has largely remained the same: local or global ownership, charge for hours, give away strategy, overservice with account management and then make it back on production where there are fatter margins.
Hardly the stuff of innovation and transformation.
Beyond the V-shaped recovery in spend, the pressures of the aftermath of this economic disruption are now multiplying on creative agencies.
A recent dentsu CMO survey indicated that many client companies are reviewing their strategies and partnerships to address the challenges facing their businesses. Clients are turning to a new mix of consultancies, tech and enterprise platforms and design thinking capabilities to solve these challenges, irrespective of protests from the advertising industry.
So where does that leave advertising? In an accelerating digital economy, clients are looking for partners to help create communications, orchestrate experiences, and design products.
Clients across sectors talk to me about the need for their brand to demonstrate the business' actual commitment to purpose through clear, differentiated and value-generating acts.
Modern marketing services need to power a distinctive brand promise and experience that helps retain and grow the value of customers as well as attract the long tail of light and occasional users of a brand so critical for growth. No compelling coherence, no growth.
To win in the new competitive marketplace a new breed of marketing companies must break unhelpful behaviours and orthodoxies.
The solutions marketplace
As the marketing and technology solutions marketplace has become ever more complex, most agencies are still clinging to the arguments of yesterday. Arguments that have been settled thanks to marketing science.
Creativity versus effectiveness? Resolved as causal and proven with countless data points. Digital versus 'traditional' media? Significant evidence indicates the required investment and balance. Long and short-term effects? Analysed and dissected with ever greater precision. The myth of loyalty? Read anything from the Ehrenberg Bass Institute.
These victories seem pyrrhic in their nature. The truth is that by themselves they may well prove insufficient to drive necessary value for clients.
Valuing problem definition
When all you have is a hammer, everything looks like a nail.
Advertising isn't an effective solution for every challenge, and enterprise platforms and digital aren't either.
The trick is really knowing what problem you're trying to solve – and sweating this authentically with greater vulnerability between client and partners.
Flexible practices and specialists
An integrated strategy function and a data and tech team should sit at the heart of any model enabling greater use of intelligence (data) and empathy (insight) to diagnose problems and opportunities, ensuring effectiveness and continuous improvement.
The company should have access to just the right amount of ever more diverse craft skills to assist clients, not all of which need to be fully retained.
Practitioners experienced at design thinking to properly define and identify problems become extremely valuable. As do those with the digital skills to create solutions using enterprise platforms such as Sitecorp and Contentful that enable e-commerce as well as taking advantage of cloud platforms like Adobe and Salesforce.
The combination effects of PR, activation and social are potent when harnessed well. Yet they often remain underexploited due to siloed expertise. Clients need support to effectively run their social media channels and content, given the explosive growth in use of these platforms. Shifting algorithms and dubious measurement make these channels fraught with complexity. Never has sound marketing understanding been more needed.
Modern marketing still demands strong insights, compelling ideas and brilliant execution to change behaviour at scale. So, the modern marketing organization requires teams dedicated to achieving what effective advertising has always done: amplify a brand's acts and experiences through highly distinctive and fame generating ideas, maximising the power of media, technology and creative integration.
Simplification
Diverse craft skills must be structured on a single P&L that enables them to form around client challenges and projects more flexibly than ever before. No internal bickering over budget allocation. No misaligned incentives and agendas. All client-focus.
Pricing for problem-solving
A problem-solving business model values its services in a very different way. The entrenched production-based pricing model based on hours is hard to unwind. The case must be made for value-based pricing and shift the focus away from hours as input to valuable outcomes produced. This calls for different partnership models and remuneration models.
Murray Streets is the managing director of the creative arm of Dentsu NZ. Photo / Supplied
Among other things, we must focus resolutely on effectiveness above all else and build value defence on outcomes: a track record of proven commercial return in the form of insight discovery and problem definition in addition to specific solutions that drive sales and customer value.
Progressive leadership
Such a company will require a new generation of leaders who are more diverse in experiences and backgrounds than ever before yet who possess the genuine ability to lead. Capability and expertise come to nought without leaders who can partner, who are hands-on and all in.
Leaders who can explore and define problems, not just take briefs. Leaders who thrive in matrix-style models that blend skills to solve problems. And leaders who want to build diverse teams that thrive on the intrinsic reward of using creativity and innovation to solve problems.
No easy shortcuts
All change requires an articulation of a future vision. Putting words on a page is the easy part.
These kinds of companies will only emerge and thrive from a concerted effort. Their leaders will make intentional choices to meet the demands of today's marketing solutions marketplace.
In the words of the late Sir Peter Blake: if it's not hard, it's not worth doing. So, I guess it's time to get back to the hard work.
- Murray Streets is the managing director of the creative service line of Dentsu New Zealand.
