In an earlier article
, I proposed a new business model for advertising agencies. As I see it, it is a logical next step for the industry to remain relevant and to thrive. Unless it evolves like this, expect marginalisation of creative industry.
I have been speaking with a few industry leaders. There were some interesting themes of concerns and ideas emerging from these conversations. The biggest is about ‘human creativity’ that most think is a trump card that no one can wrestle away from them. There is a grain of truth in that assertion. However, look at the numbers – it doesn’t take creativity for google and facebook and consultancies to steal creative agency’s lunch. Agency margins have never been this low – which means, the kind of creativity we so dearly hold, has never been valued so lowly. Digital ecosystem has fundamentally shifted the value of our kind of creativity and we seem to persist in denial. Most of my creative and intelligent classmates are not in agency business (from a school that was historically setup to train future agency leaders), but in media, brand management and digital businesses. That should tell you something.
Anyways, here’s some of the broad themes of concerns about my idea of ‘open source ad agencies’ shared by senior leaders in the industry. Weigh in to make the idea better.
Essentially, there were six themes of concerns for the idea –
1. Becoming ROI oriented (SMEs want quick results)
2. Possibility of becoming fragmented unprofitable business
3. Will it upset existing corporate clients?
4. Existing client architecture – many small businesses within larger ones
5. Should the tools be really foolproof.
6. Reputation at stake
Cost of opportunity: Firstly, I will look at these decisions from a broader perspective: if this idea is even remotely possible and say a competitor creates this, would we be able to bounce back to compete in the ‘winner-takes-all’ game of online services in the future?
This idea will need a little longer horizon to payoff and a fair bit of disruption (but not necessarily with existing clients).
1. Businesses want ROI from advertising. Should we fight it or embrace it?
I understand the concern. This is actually true about not only small businesses but also larger corporates. I see companies already looking at big data to cut down on every conceivable inefficient costs even in high growth developing economies like India and Sri Lanka.
This is inevitable. We have to be prepared for it. The digital systems, when used appropriately, helps make better sense of data. One of the minor points in the article was about opening and curating all of agency’s historical campaigns effectiveness data across the globe. Now that would be a herculean task to make that data consistent and usable by a bot, but it is possible. But once we have that data at one place and an algorithm to parse through it and add to the body of knowledge about what works – we will have the single most valuable tool in advertising – an oracle that can guide real time about effectiveness.
The tool and the data remains agency proprietary. Only the results are visible to paying customers. This is where the premium will be charged in the future.
How would the agency like to become the only creative agency that can give effectiveness predictions with decent enough (and improving) confidence levels?
2. Fragmented unprofitable business
That is a real threat. It will be a low margin high volume growth. And as such, in a way it is a second business for the agency. (Perhaps a sub-brand of the agency)
To really evaluate it, we will need to know the cost of its implementation and possible market sizes we can realistically win. I can do that, but that will be a longer exercise. There will be big cost and efforts to create the system, but the fruits of the system, however marginal, will continue for a sufficiently long time.
Also, the way I envision it, this system doesn’t cut down manpower that is currently employed for corporate clients. But the new system that is largely consumer facing, will need smaller human support who will manage bots. So costs would be dramatically less and hence help profit margins.
3. Will it upset existing clients?
I have envisioned it to be an ‘addition’ to existing business, not a disruption to existing structure. So in a way, this new additional service can delight existing clients with the new intelligence that we will have from the community and user, without them being concerned about their data leaking into the Open OS.
I have made a distinction in my article – when decisions are made by committees/ hierarchies, they require people on the other side to work with. So the existing system with all its checks and balances will exist for such clients.
The additional online interface is for clients who usually make decisions individually (personal brands, SMEs). These two segments, who will pay less, will never have the kind of servicing, planning, creative support that the corporate clients have.
So that takes care of the expectations.
The biggest concern is the safety of their data. Again, corporate client data need not go through the open digital system, it can exist off the grid like it does now. What goes in the big data pile that will inform the effectiveness bot, is case studies and older data perhaps. There could be ‘opt-in’ mechanism with clients to ascertain what client data remains forever secret, what comes out eventually.
4. Existing client architecture – Treating smaller brands from big corporates as separate SMEs
That is an important point that I overlooked in my article. I see this as an opportunity to add value to their businesses. This model creates a sliding scale of services. what this allows is, no business, howsoever small, needs to leave the agency or become unprofitable for us just because it is a prestigious client – there will be space for all sizes of businesses without it straining profitability.
5. About creativity and promise of foolproof tools
This is the interesting part. Nowhere in the consumer journey is the creativity itself automated. The community might help them brainstorm or find a smaller shop/ freelancer who could help the client. Or at max, the client will be redirected to agency office if the scope of work is large enough. The creative output is always through a human. So we can continue charging premium for access to agency rockstars.
What the broader algorithms are helping clients with is – strategy, research, competitive mapping, analytics and critically – a confident direction.
The way I see it is, we will need to do two things: set the right expectations and make our existing tools smarter.
First, smarter tools. I fully appreciate the concern about tools being misused. As they sit now, agency briefs or strategic frameworks, are static guidelines. So it leaves even basic question open to interpretations.
In my experience, we often face the problem of receiving ‘bad briefs’ or incomplete briefs from clients. Then it becomes a guess game – what the client might really need/ want?
But let’s look at what BCG does for its interactive cases
. Its a guided online journey to solve a business case. It has a simple interface that forces consumer to seek for the right data and right perspective to inform the strategic challenge.
Something like this could help set the expectation and help learn the tools first.
Then, the user will be guided through a smart algorithm (automated strategy framework) that will ensure that the right business problem is identified.
Often, that is half the creative work – identifying the right single-minded problem to solve.
And the process will help people in doing that.
Next comes the human interface – the actual creative interpretations and campaigns.
There are two possible options for clients – either to pay premium and access agency rockstars. Or find cheaper freelancers (Possibly agency certified? another revenue stream?) who they can find on our community and who can help them. Similar to uber’s rating for its drivers, or amazon’s ratings for its suppliers, we can have ratings for our freelancers. This mechanism has worked so far in most industries – even 99designs.com which is in similar space, but fundamentally different.
Perhaps, to begin with it could be a controlled roll out or with another brand.
Setting the right expectation should help a lot. At the start of consumer journey it should be clear that what they will get is an Agency process, not Agency creative.
The consumer journey could make it very clear owing to its subjective nature, Ogilvy is only responsible for its creative output by its people, not the algorithmic output of a plan/ brief.
1. For free – access to free algorithms, certain datasets and case studies to all. cannot expect creative output or a definite solution, only a direction.
2. Personal brand wizard – wizard will interactively guide in creating a brief with client data. that they can then share with people in the community for ideas. None of which is a creative output or a definite solutions, again only a direction.
3. Small business boosters – Online collaborative tools (like slack, skype, etc) used to provide services with planners/ creatives depending on Scope Of Work (SOW). These could be a single team of 20-30 people (spread globally in 4-5 key agency offices) for the entire globe. They can help create creative solutions with quick turnaround. We will have to take responsibility of their success/ failure.
4. Full service – Corporate clients will see Agency as the most contemporary and innovative agency in the world! Who can deny that if we make this real. Besides, the first three options will create a substantial bank of possible new business leads.
Having said that, I understand, this is not the complete picture and we will have to dig a lot deeper to understand the massive implications of this move.
But can this be our new purpose? To make effective branding possible for everyone in the world.