A Third Option?

Do marketers need a third option when it comes to agencies?  Are “traditional” (as they’ve come to be known) agencies able to continue leading in the new digital world?  Are digital agencies able to build on their experience and expertise in the digital world to become the leaders that marketers need today?  Or, is there an opportunity for a new model to emerge that builds on the strengths of both models in order to pave the way for marketers to take full advantage of the opportunities ahead?

For a while now in the digital space, we’ve been dealing with the cycle of “what we know today changes tomorrow.”  We catch up only to fall behind – which leads many to ask if we can ever catch up?  Fundamentally, I’d suggest that if we’re constantly trying to find new ways of making the old models work, the answer is no.  We truly live in a brave new marketing world.  The last five years of digital provide only a glimpse of the change required.  Witness the social revolution, gaming revolution, the continued evolution of retail (in-store and ecommerce) as well as the ongoing mobile revolution, and you quickly realize that we are only beginning to unlock the potential of digital for the next ten years.  When you also consider that these enormous advances are all integrated (or soon will become so), you start to scratch your head at the vastness and pace of change – if not beat it against the wall.

Recently, I was a little bit frightened and a lot intrigued by the picture painted by Carnegie Mellon Assistant Professor of entertainment and technology, Jesse Schell, of a future where behavioral tracking devices and gaming have taken over our lives (Post by Stephen Totilo).  Frightened because after the explosion of change within this space lately, his rather disturbing future doesn’t seem that far away or entirely unrealistic.  But also intrigued because I believe his commentary further reinforces the fact that digital is at the center of everything we do today and that the pace of change, adaptation and innovation cries out for someone to lead us forward.  The interesting question is who?

Sidenote: For the purposes of this post, I’m using “digital” in its broadest meaning to marketing including all of its permutations that connect people wherever and whenever they may be to other people, companies, information, utilities and marketing content and messages… and vice versa.

Keen observers know that a leadership debate has been raging within this increasingly digital world for a few years now – which type of agency should lead: traditional or digital?  The pace of technological change and digital marketing innovation is such that the answer seems to change as quickly as the question can be asked.  But one thing is increasingly clear: both sides need to adapt their structures to deliver what marketers truly need in this perpetually new landscape.

There have been many excellent opinions voiced on this topic from the agency and analyst community recently.  Edward Boches, Chief Creative Officer for Mullen, wrote a great post on his blog (creativity_unbound) combining the views of Forrester analyst, Sean Corcoran, with his own excellent commentary about the future of advertising agencies.  As Mr. Boches points out, adaptation is required quickly.  The key question again, can we adapt enough and in the time required based on the current traditional or digital agency model?  One of the comments Mr. Boches received to his post reveals one of the primary pressures today’s agencies are facing due to the digital revolution: Ed Flynn, “We are going from a low labor and high media cost model to high labor and low media cost model.”

Over the past 75 years marketing budgets along with what agencies do and how they are structured has directly followed consumer behavior albeit with more lag time than the data may dictate: Print to TV to Digital today (an oversimplification leaving out direct mail, OOH, radio, etc). While I’m sure there are some stragglers, I believe many have accepted the fact that the primary communication vehicle or connection point for marketers is or soon will become digital. Digital will be the driver and command the bulk of marketing budgets in the not too distant future.

To be clear, I am not suggesting that all other media (TV, print, OOH, direct mail, etc) other than those considered to be digital are irrelevant today; although, they are all becoming digital. Only reinforcing that today’s consumers (that’s you and me) spend more time consuming digital communication than any other.  More supporting data emerges everyday like this piece of research by the Pew Internet & Life Project reported by Cecillia Kang, Washington Post (Washington Post Article), showing the “internet surpasses newspaper, radio for news.”

So, where do we go from here?

If the debate focuses on the ensuing struggle between digital and traditional agencies for leadership, then I think we’ve missed an opportunity.  We are in the midst of more technologically driven revolution.  Social and mobile separately, but certainly more powerfully together, are changing the game for digital agencies let alone traditional.  I believe these two elements added to the previous revolution of the past five or so years challenge all of our preconceived ideas about control, brand strategy, communication planning and agency structure.  It is this latest revolution that may force real, dramatic innovation that turns the current agency paradigm on its head.

There are a lot of great traditional and digital agencies out there.  With a lot of smart, talented, creative people, they are working to position and plan to be the leaders marketers will require.  Both sides have inherent strengths and the best of the best agencies (traditional or digital) produce amazing work and results.

With strength and experience in brand planning, “owning the big idea,” holistic marketing planning and deep pockets in addition to acquired, homegrown or outsourced digital expertise traditional agencies are formidable.  Can they reorganize while accounting for the new financial realities and marketing needs created by the digital revolution?  Perhaps, but it seems like a long, uphill struggle.  It is possible that the talent migration from traditional to digital is having a profound effect that will make adaptation for traditional agencies even harder.  It may also be possible that traditional agencies have lost the firm grasp they once commanded on the brand and product marketing basics making it easier for digital agencies and other new agency breeds to assume the leadership position.

Digital marketers need to pick up this ball and take control of the conversation as they forge a path for the future.  Brands do have meaning and value.  Uncovering and discovering consumer truths and insights must be at the core of what we do.  Providing consumers with reasons to believe a product or service has unique value and benefit can’t be overlooked.  All of these things contribute to building a relevant, differentiated brand. Plus, there are a lot of great ideas out there about the new era of brands and brand building.  Forrester presented an interesting thesis around Adaptive Branding that everyone should consider.  However, I don’t believe all of the fundamental marketing and brand building blocks will or should change.

Additionally, digital agencies need to become holistic business partners with their clients understanding all elements that are a part of a marketer’s day: sales, distribution, ROI, sales channels, sales support, supply chain, merchandising, portfolio management, research, pricing, category management, promotions, packaging, etc.  And traditional agencies need to truly understand digital is already leading with consumers before recommending the next muliti-million dollar broadcast media buy and production.

Can traditional agencies adapt to the extent and with the speed required to be the leaders that marketers will need and demand?  Are digital agencies able to emerge from their unfortunate, predominantly subjugated role as the second in command or digital production shop?  Or, is there a third option?

— I originally posted this on 3/10/10.  I believe this is still true today and founded Gravity Federation to address this Third Option need for marketers.

Chad Ciesil

Founder & CEO
Gravity Federation

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