Advertising industry’s new ‘Pivot’

No planet for old businesses

Exhibit 1:

On 16 June 2017, Amazon.com Inc. announced that it is acquiring Whole Foods Market Inc., for $13.7 billion in an all-cash transaction.
By the end of that day, Walmart, Kroger, Target & Costco had lost their market caps by 5.8%, 7.1%, 9.1% and 15.7% respectively.
On the eighth day of the announcement, Amazon’s market cap had increased by $18.9 billion.

In a sense, not only did investors reward Amazon by funding the acquisition, they also punished the competitors of Whole Foods for not being acquired by Amazon.
The situation is such that as soon as Amazon enters any category, leaders in that category lose market valuations almost instantaneously. That is the promise/ threat of platforms like Amazon.

Exhibit 2:

“In 2017, almost 80% of every incremental ad dollar spent globally will accrue to digital. In their domestic market of the US, Google and Facebook are capturing more than 100% of this growth, up from 85% in 2015.” So read the 2017 Redburn Report titled, ‘Ad Agencies Marginalised.’
“More than 100%…”

If someone captures a share of more than a 100%, it means that that share came at someone else’s expense. Certainly, many digital advertising companies and ad exchanges saw decline in share of digital ad spends. Advertising agency holding companies too bore the brunt of Google and Facebook’s growth. 2017 perhaps has been the worst performing year for WPP since the recession of 2008-09. For the latest quarter Q3, the firm reported a 2% drop in organic growth.

Essentially, growth is almost a zero sum game now in which platforms are winning. This is in stark contrast to the nature of growth in the last century, where globalization created avenues for many to grow: It was not a zero sum game then. The monopolistic ‘Platforms’ are stealing lunch of legacy businesses – ours too.

Platforms are winning in today’s zero-sum game of growth. The monopolistic Platforms are stealing our lunch.

What are platforms?

A platform is essentially an enabling infrastructure/ environment that,

  1. Gives freedom to connect with others
  2. Enables valuable exchanges which were not possible outside of the platform
  3. Enables external applications/services to be built on top of it, (APIs)

Platforms like Amazon, Facebook, Google and Uber are enjoying unprecedented growth and consequently unprecedented investor interest, because they allow that egalitarian access to valuable exchanges that were not possible otherwise. By their very nature, the exchanges become more useful, more valuable with expansion of user base. Amazon is able to fine-tune its suggestion because it has access to purchase history data of billions of its customers across the globe. People use Facebook because all their friends use Facebook. This phenomenon, of increase in usefulness and consequently the value of a service with increase in the number of users, is called ‘network effect’.

The sinister consequence of the network effect is the potential of monopolies. The logic of Platform growth inevitably leads to hollowing out of existing market structures. The logical conclusion of Platform economy is a world of monopolies rising upon the ashes of old businesses.

Shift in client priorities

From ad spends to spends for innovations in product, supply chain or marketing.

As if the threat/ opportunity of ‘Platforms’ was not enough, companies these days also have to wrap their heads around 3D printing, Blockchain technology, CRISPR/Cas9 and so on. These are amazing technologies promising revolutionary changes. These technologies present new opportunities that we never knew existed before.  However, many legacy businesses are ill equipped to respond to them.

Thankfully, a whole industry has sprung up to cater to these needs – needs of business transformation in the face of existential threats posed by new technologies. Traditional consultancies have adapted to offer new expertise to clients. Specialist big data analysis agencies are helping companies make sense of their consumers. There is even an AI (Artificial Intelligence) agency now, that helps create ‘intelligent agents’ for brands. Market is demanding newer mutations of agencies like these, mutations that help them navigate the brave new world of the new economy.

Market is demanding newer mutations of agencies; mutations that help them navigate the brave new world of the new economy.

The question that we must ask ourselves is – do advertising agencies matter as much in these testing times? On one hand, the budget allocated by clients for marketing is under pressure. On the other, technological investments, specialist hires and consultancies are claiming an increasing share of the budget. Will this twin phenomenon erode the value of our services? Will the share apportioned to advertising shrink further?

Advertising agencies, if they remain what they are, will secede their privileged partnership status to digital transformation agencies, to business consultants and to platforms like Google, Facebook and Amazon.

One obvious yet terribly difficult-to-pull-off implication of this is – to become an advertising platform. I have discussed this in detail earlier. The reality though is, not everyone can win in that race to become a platform. For the majority of marketing services agencies to survive and thrive, we need a ‘specialist’ strategy, not a generalist one. Here is why.

Age of specialists

Creative agencies are made up of a unique set of people: People who can think laterally, think big, think informally. Apart from a few top tech companies, not many companies have the asset of free thinkers who are not stifled by hierarchies and suppositions. As such, creative agencies are uniquely positioned to create new solutions for brand growth, beyond branding ideas.

For marketers trying to make sense of a fast changing world, agencies need to adapt to remain the priority partners they turn to for help. Can the planner’s customer centricity help companies improve their business plans? Can the creative talent’s mastery over conceptualization propel a client brand’s product and service design?

Why not to be a generalist?

Advertising agencies help clients ‘position’ their products as distinctly relevant. But we forget to apply those lessons to ourselves.

Google and Amazon is fundamentally rewiring our brains – even our clients. The ‘search’ and ‘suggested’ result mentality means that for every emerging need, the client searches for services he/she needs with sharper definition. She is more likely to send out a specific query out in the world – either digitally or among peers – ‘Who is the best at product design in our category?’, ‘Who can help me assess Blockchain’s potential to disrupt our category?’

What results she might get? Would people respond with a generalist agency’s name even if they have the capabilities? Will a generalist be on ‘Top-Of-Mind’ for such queries?

Well, many private agencies can choose to continue doing what they do, with likeminded clients catering to traditional consumer segments. But that set of marketers is shrinking, the addressable opportunity is getting smaller. That means making peace with low growth.

However, for publicly traded advertising holding companies, coming years could be the years of transformation – either willingly or engineered by activist investors who demand growth.

Hence, it is increasingly likely for large advertising players to ‘Pivot’ to go for the biggest emerging opportunities.

What is ‘Pivot’?

The purpose of a pivot is typically to go after a bigger & sustainable growth opportunity in the market that can ensure companies’ prospects for near future. You do so by changing the direction of your enterprise if the need be, while staying grounded in your core competency.
Firstly, it requires reassessment of your old business in the context of emerging opportunities/ threats. The reassessment should ideally throw up useful insights about your clients, your product/ service relevance or the way you work. Consequently, you quickly test possible improvements to your service. When you hit on something that works, you scale it up and go to town with it.
You might end up changing something about the way you do your business, while keeping some aspect of the business constant. For example, it might entail shifting to new markets/ consumer segments/ new clients. It might entail prioritizing a different sales channel or to gain new capabilities. It might even mean reinterpreting a consumer need and creating a completely new offering.

At its core, it is about changing with an ear to ground. An ear to the ground tells us of seismic shifts in advertising industry with issues of trust (Pritchard, 2017), profitability, and marginalization (Bianca Dallal, 2017) posing threat to advertising industry’s prospects. Common sense tells us that something needs to give – something must change.

It is about time advertising agency business models change for the better.

The pivots of advertising agencies

At its most fundamental level, advertising agencies exist to help marketers grow (Purpose). They do so NOT by helping make the product/ service better, nor by helping reach more consumers. They do so by helping create consumer demand with distinctly persuasive communications. (Competency) The perspective to understand here is that of two variables: Core competency and Purpose of existence. Hence, to evolve, agencies can either look at radically reassessing their competencies or their purpose.

To evolve, agencies can either look at radically reassessing their competencies or their purpose.

Pivot 1. Core competency:

a.      Marketing services agencies:

Typically, creative agencies’ core competency is in their access to creative & strategy talent. W+K, Droga5 or Ogilvy are well known for their creative rock stars. Yet another agency might be built on the strength of decades old client-agency relationships. A media agency might boast about the scale of media spends that it controls and can influence. A research agency might have proprietary methods of inquiry or access to qualitative data.

The logic of pivot tells us that – for advertising agencies, there is an opportunity to pivot with their creative talent. What is the biggest business growth opportunity for the kind of talent they have? Beyond ‘advertising’ what high-value products/ services can this talent create?
Similarly, a research agency might look at its proprietary tool and reevaluate its potential. How can they augment the value of their intelligence the most? Would tabulation of existing qualitative studies help build an intelligent map of consumer behaviors? Who might be interested in such products? If ‘Big Data’ is the new oil, why are research agencies not making their big data usable at scale?

Here is an example of Pivot thinking applied to creative agency business.

The “If You Build it, They Will Come” agency:

This pivot is about keeping company’s people and their abilities at its heart and purpose. It seeks not to build radically new capabilities or hire radically disruptive talent. Instead, it seeks to find the biggest opportunities that the existing teams can deliver on, with greatest amount of satisfaction for the team.
For a creative agency, that means identifying the distinct talents of its teams and then finding the biggest possible commercial opportunities for them, may it be in advertising or beyond.
Creative talent remains the biggest asset of any creative agency. Yet, there is a growing sense of being overworked and underappreciated among the creative teams. There is a sense of ‘missed opportunity’ among people who see others creative people garnering fame and fortune with digital content. YouTube stars, Vice, Refinery29 and so on, have shown that there are bigger avenues for creative expression that could be financially rewarding too. There is a market for every conceivable creative style, expression, idea, app, activity or content. The creative team’s dilemma is – whether they will be better off with a career in advertising or in new age digital companies or by going solo with content creation, curation or aggregation?
Each creative person grapples with these choices. It would be in the agency’s interest to see the potential of its people before the people themselves do. If their team is passionate about a certain kind of creativity, find the biggest market for that creativity. This logic perhaps would not have been very sound 20 years ago. The surest way to make money with creative expressions and ideas was with advertising alone. However, today, a creative person can do much more with his/ her ideas.

If one looks at an idea objectively beyond the context of its birth, it looks much grander. Here is a thought experiment to prove my point.
Think of the last idea you had for a client’s campaign (or if you do not work in advertising, consider ‘what were they thinking?’ for any of your favorite commercial). Now think a logical conclusion to that idea divorced from the brand. Put that idea onto another stage/ context/ medium – see how it expands. If it is a good idea, it will always fill up the volume of your imagination – more than any brand can do justice to the idea.
For example, divorced from Dove, imagine the biggest expressions for the idea of ‘real beauty’. Can it be a movement? Who would like to contribute to it? Which brands would like to associate with it? Would the idea find place in the women’s marches? Would it lobby against skin whitening creams among policy makers? Would it run community centers? What would be the business plan, revenue model for the fullest expression of this idea?

If it is a good idea, it will always fill up the volume of your imagination – more than any brand can do justice to the idea.

Imagine an agency that has a set of issues/ themes/ ideas that it works on instead of set of clients. Will it be more interesting for the creative talent? Could it be more profitable? I believe it can be.

Ideas can translate to bigger things if you let them run free. The digital world has brought down the cost of realizing ideas drastically. It has given us the tools to translate and mutate ideas in infinite ways. Creative shops must make it part of their credo, to not let any good idea go to waste and to bring to life only the biggest expression of it.

The tragedy for many creative people is to see their magnificent ideas not reaching their full potential, being rendered impotent for a smaller cause, smaller venue. Instead, this new agency would recognize the bigness of ideas and put their efforts and capital in realizing those big ideas. The belief being – If You Build it, They Will Come.

b. Holding companies:

Unlike consultancies whose competency is in housing domain experts, holding companies do not have palpably distinct competency any more. A holding company is as good as the companies it has in its portfolio. The value of a holding company used to be in its ability to help portfolio companies to scale. However, it seems to have exhausted its scaling potential, evidenced by lack of organic growth.
Holding companies are trying a few things to improve their value. WPP is hedging its bets on ‘Horizontality’; Publicis is attempting to create an AI enabled personal assistant for its employees called ‘Marcel’. However, unfortunately, both attempts lack vision and conviction.
In an interview for ‘Strategy + Business’ in 2016, PwC Principal Deborah Bothun asks Sir Martin Sorrell, “How far can you take that?”, referring to Horizontality – the effort to get people from different WPP companies to work together for certain clients. Sir Marin Sorrell responds, “Not far enough.”
If the idea cannot be scaled across the company, is it even strategically relevant? At best, it seems to be a tactic to keep key clients happy.
Marcel too seems to be born of a narrow vision; it simply is an internal talent-sourcing tool. Wit AI, and the data that Publicis already has, it can be much more – but there simply is no evident will to create something groundbreaking.
Currently, the business incentives for a holding company are structured in such a way that they cannot radically change their course. However, many of their operating companies can.

Pivot 2. The purpose

In this pivot, we remain true to our purpose of helping client businesses grow. What changes is the ways in which we help them grow. The competencies become variable here. This means for this pivot to work, we must be radically adept at bringing in expertise for most growth needs of the client. If the client requires blockchain expertise, the agency must be capable and willing to provide that expertise. The key focus here is to become the de-facto growth partner of your client.

The “specialized business growth drivers” agency:

This pivot keeps the client base, the market, as constant and re-evaluates its options to seize the biggest opportunities in that market. Therefore, if your client base still feels that their biggest priorities are advertising/ branding to fuel their growth, continue doing the same. However, if your client base feels that their biggest priorities for growth are about leveraging emerging digital platforms or managing reputation in the age of instant outrage, adapt and train your teams to fulfil these needs well. The days for generalist agencies that could do everything for a client moderately well are numbered. Today, marketers need sharper, targeted expertise, which they can get most efficiently by looking at smaller, more specialized ‘vendors’. There is good money to be made servicing these myriad business growth needs. Specialize in driving growth for a certain kind of clientele with a set of competency they prioritize.

New age, new agencies

It is about time that agencies wake up to the reality of working in the digital world. It is not the time to be afraid and to be defensive. It is time to make bold new steps, to ‘fail fast’ and to ‘pivot’. It is time to start new adventures. The technological and societal revolutions are not threats, but opportunities for growth. It is time to grow magnificently with these new opportunities. Grow by either sharply adapting to emerging client needs or by investing in ideas you believe in. It is a brave new world, ready for the best of our ideas.

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Stop feeding the parasites

I received a curious mail today from Campaign magazine. It was soliciting content. so far so good. I skimmed through it and was delighted. They wanted content and towards the end they had mentioned a huge sum of money, almost half a year’s salary for me. I assumed it must be honorarium for the ones whose content is selected. I was thinking, man, these guys are amazing – can they really afford to give away that kind of money to contributors? Didn’t make sense. Perhaps it is a way of cultivating the best talent?

so I read the whole thing – turns out, they are not giving honorarium, they are ASKING for the sum. In exchange, the contributor gets their photo published in the magazine.

This is some weird shit. All this while I thought their business is in getting free content and distributing it at profit.  (which I find problematic anyways. Why should any labor be free?) But it turns out, their business is about validating the poor insecure idiots in the narcissist industry of advertising, who seek validation for their expertise.

I understand, for many small agencies perhaps, this is a way of getting noticed by the right people. For a down and out senior person, this is a way of getting back in the game. For a low esteem somebody, it is way of feeling secure about their expertise. and I am sure it is of positive utility to somebody somewhere, the use-case for which I can’t think of now. Nevertheless, what a scam!

The mice needs security and the vulture is selling helmets.

Advertising industry is plagued with this insecure-narcissistic game that drains its people of their money, their time and their esteem. The countless awards, the countless publications, the countless events – what good comes of all that masturbation?

Awards

Cannes, One show, Effies – what a fucking waste of money and efforts. It does curate some amazing work, but it is not available freely for all industry folks to learn from, now is it? It is available at a price and not readily usable. The learning, the cases, they are not turned into usable insights, usable learning tools for the young in the industry to learn from, freely. If it is behind paywalls,  it is useless. It is unethical to first charge for entries and then again charge for accessing the end product. Its the most dick move ever. In the age of AI, why can’t knowledge gathering digital dust behind paywalls, be turned into an Open advisory for a world where businesses grow more efficiently and people don’t have to weather terrible ads?
I can see the parallel here with the pharma industry – companies that have recipes of wonder drugs that can cure TB, malaria – but won’t give it out to needy people. Well, the comparison is wrong – atleast pharma companies own their own IP, all that award shows do is massage a few egos. Its the most expensive ‘curatorial’ service ever.

Awards might help build agency credentials. But why does a company need new credentials every year? I mean, I don’t see volkswagen or Mahindra spending as large a proportion of their revenue towards awards, as agencies do. No other industry spends as much money on validation as percentage of its revenue as we do.

Look at Publicis. With a year’s worth of spends on awards, they are planning to build a AI assistant for their employees! (Shitty idea, but one must commend on trying to be relevant) I mean they could start new businesses every year with that kind of money, put it to far better uses than advertising awards.

With Unilever, P&G cutting down their ad spends, agencies will have to further tighten their belts. They better start with the awards, instead of employee raises.

Publications

Which other industry has so many ‘thought leaders’, so many publications and yet doesn’t move an inch ahead in the game of innovating it’s own value proposition?
What do adage, campaign, afaqs, thedrum etc add to the universe’s knowledge? Not much. These publications regurgitate same points of views over and over again. They keep discussing similar trends over and over again without critical analysis (programmatic is the future, maybe it is not. Native is the future, maybe not. Context is king. maybe not. where is the data to support the hypothesis anyways?) Never have I read an actual original point of view about media/ business/ culture/ consumer in these rags. They are mere propaganda vehicles for ad agencies and its career climbers.
Its quite possible that half the ‘views’ and engagement of ‘famous’ campaigns are generated by people in marketing only – readers of these publications. I suspect, the feedback effect is detrimentally strong in advertising. Shiny, smart ideas get propped up even if it might not be effective.

Lastly, I feel the publications normalise the alienating bubble of advertising. By repeating trends that are not actually trending, by idolising campaigns that are not effective, by giving trophies to agency folks…  they are holding back the industry.

Agencies often have fairly smart people. People with ideas. People who can start their own businesses, create things of great value. Instead they get too comfortable by publication powered validations and publication powered point of views. They hold them back in the industry.

Events

Well, I think, advertising people would gain far more if they went to art galleries, tech expos, civic issue seminars, political rallies, academic seminars even etc. There’s marginal utility in going to advertising industry events where you will bump into people exactly like you. (unless you want to network).

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Essentially, stop becoming fodder for these parasitic industries that are growing bigger and bigger as the host industry diminishes. Get a grip on yourself, advertising industry.

If agencies remain married to ‘ads’, agencies are doomed.

Traditional advertising agencies were essentially amoral tongues on rent.  In the pre-digital age, where there was no other way of knowing the truth (or rumours) about products and brands, advertisements was the only major source of opinion/ information (after WOM) about the product’s usefulness/ efficacy/ likeability.
There was a role for advertising in the lives of people. It was global village’s emissary of good times. It was the window to a new lifestyle. It was the helpful aunt who knows solutions to all our problems. And it was all in good cheery humour. Oh, golly-gee. What a wonderful world advertising was building for people. In a media-starved world, people lapped up the shiny world painted by advertising. The modernist utopia was painted by advertising.

Internet broke that world. It made the world transparent. People could verify claims, could complain, could rally fellow consumes into shaming advertisers who were dishonest. Advertising just didn’t ring true any more. At best they were entertaining distractions. At worst they were insidious worry-mongers who amplified the worst aspects of humanity – misogyny, racism, greed…Mostly they were an annoyance best muted or ignored.

From a brand point of view, ads were not efficient anymore in telling consumers anything they didn’t already know or wanted to know. Advertising simply had lost the plot.

Then came Amazon, facebook and google. And boy did they take the life out of advertising. Many agencies are dead, they just don’t know it yet. They see pitches, dwindling margins as symptoms of economy, politics etc. They don’t see the picture. The disease is different. The disease is ‘death of brands’. And with it, traditional agencies.

People do not need ads anymore to inform/ educate/ convince them about anything. thank you very much. They have google, facebook for that. They stream their brand experience (mostly if it is bad) live on facebook. They pummel the brand social media handlers when brands do a faux pas. They’ve got the power and they know it.

People buy ‘products’ on amazon and flipkart now. They don’t care for brands anymore.
With Amazon’s Alexa and Prime, amazon will ‘seamlessly’ relieve the burden of choices and chore shopping for wealthiest of consumers. That means hello private labels and small players, bye bye big CPG brands.

Sure, some people might continue to believe that they must drink redbull and eat tacos and drive audis and exhibit iphones… but the vast majority of non-lifestyle CPG brands, daily use brands – brand on which we spend most frequently. They will see erosion in their ‘brand value’.

Go niche or go big. There is no middle ground anymore for most brands.

What that means for agencies? Forget the age of ‘lines’ and brand ethos. ‘brand with a purpose’ and ‘lifestyle defining brands’ can only be a handful. Most of agency clients are not these brands.

Agencies of the future need to help most brands become more ‘uniquely useful’ to the consumer. Agencies need to be able to create opportunities and harness unexpected opportunities for brands. Here are some interesting brief to work for.

‘How can we ensure that the consumer searches for my brand name and not the category name when buying on amazon?’

“How can we change the amazon prime habit and get the consumer to buy stuff at my store on his way home?”

How can my brand reach consumer better, quicker, more delightfully than amazon/ google can?

and so on.

The point it, days of ‘lines’ and ‘scripts’ are gone. We must be able to solve real business growth problems and be ready to leverage any medium/ expertise/ experience. If agencies remain married to ‘ads’, agencies are doomed.

“That is the creative challenge”

If clients, planners, management folks and even creative directors make a habit of envisioning their idea before talking about it, we would be spared of a lot of bullshit.

So recently we presented an elegant campaign that was not ‘exciting enough’ to the client. They thrashed it mercilessly.

“Its a 20 seconder, we don’t have the time for a story.”
“Print needs to say ‘this’ and ‘that’ and ‘that’ and ‘this’. Make it all big. How will consumer know this. He needs to know that too……”

Essentially, they wanted to talk about five different things in an exciting manner in a twenty seconder ad that should also be clutter breaking since they had low budgets compared to competition.

I told them that the ad might work better if we concentrate on the most important thing – one thing to talk about. We might then have a chance of making memorable successful campaign. But nop. They wanted to say it all and apparently that is the creative challenge‘.

‘That is the creative challenge‘ is a phrase I have heard often enough. Its the lazy way out of having to make decisions. It is the lazy way out having to work as a team to arrive at better ideas.

It is precisely at this moment that one knows – the campaign is going to be  a dud. At a strategic level, the client has already made a mess and does not want to own up to it, to make sense of it. And no amount of creativity now is going to salvage it. And even if by the stroke of dumb luck, creatives come up with something workable, the idea will get ‘dialed up, dialed down‘ as the client tries to retroactively make sense of his / her strategy.

The antidote – Make people think along

If by some means you could inculcate a habit, inculcate this. For every meeting – briefing, brainstorming, client presentation etc., – make it a habit of visualizing the idea being presented. What could the idea mean actually? What are the best/ worst ads you can think of in that direction?

So if the planner gives you shitty brief with big words – ask him to give him an example of a ‘bad ad’. Give it a go. The planner has not thought through his brief if he doesn’t already have a few ideas himself.

So if the servicing guy comes back with client feedback that seems to worsen the creative work – ask him/ her to think along – how do they visualise it? how has the client visualised it?

so if the client asks to ‘dial up/ dial down’ or add this/ that – ask them to think along. ask them,

What should the ad say?”,
“What would the people remember from this ad?”

If no one has confident answers for these questions – there is no point in starting to work on a script/ idea. Get clarity about ‘what the ad needs to say/do’ first – not in abstract bullshit terms but words that anyone can visualise, actions that anyone can relate to.

Specific diseconomy

Win awards with scam
Fight competitors with self-destructively cheap pitches
Create walled gardens for petty rent seeking
Delude yourself by thinking that creativity is the sole preserve of your kind
Do not grow your people, nurse a few egos
Advocate brave disruption to clients, but do not attempt it yourself
And when someone does try innovating, fight them for petty egotistical causes
instead of thinking along for better ideas

This is advertising industry working against its own interest. This is the “Specific Diseconomy”* of  advertising industry.

Instead of communicating, we are fabricating hollow “purposes”.
Instead of inspiring certainty, the cumulative effect of advertising is that of overwhelming doubt.
The industry has set loose to ‘attention-and-trust-deficit’ monster that devours humanity’s time and resources, leaving everyone poorer emotionally and physically.

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*It is a “measure of the degree of institutional counterproductivity that is occurring —referring to the exact degree to which, for example, the medical industry induces illness, educational institutions induce ignorance, the judicial system perpetuates injustice…”

 

 

 

Agencies as platforms – setting up for failure

Publicis is trying to become a platform with ‘Marcel’.

PHD has ‘Source’ – another platform idea.

Ogilvy also has its OS – more or less a similar idea.

Every global agency wants to become an Operating system/ platform where it could efficiently put to use the thousands of creative minds, departments for its thousand clients across the globe. The idea theoretically is  pretty awesome. Now that the agencies have grown to global proportion, how do yo make sense of the scale? How do you break the silos? How do you partner global brand’s global operations? A digitally enabled global platform sounds about right.

But will it actually work? There are two things that make an idea work. One is clarity of purpose. Second is people – Who is supposed to make it work and does he/ she gain anything from it?

And I think the agencies have lost the game on both fronts.
I think Publicis has potential but they have underestimated the power of AI or are shy of actually using its potential. The examples shown in the video are pedestrian. The queries showcased do not require ambitious AI. They can pivot to a bigger opportunity with a bit more of imagination and conviction.

Secondly, the people.
The value of a platform or a network is really in its ‘network effect’. Facebook is valuable because all my friends are on facebook and so are their likes and their suggestions. It is worthless if my friends were not there. So a platform is as good as the number of active people on it.
And I doubt there is strong enough an incentive for agency workforce to go digital – use that digital add-on of a ‘platform’.
Let me elaborate. Starting with vision.

  1. The AI’s story

    Professional assistant sounds like an exciting idea. But the examples shown in the demo video for Marcel makes me think that they really haven’t thought it through yet. The potential of a professional assistant in my pocket is huge and I doubt they have the conviction, the drive and the ability to truly create a product that could help me with my work. The video showed examples of fairly simple queries (for reports, for teams, for projects… simple keyword searches) – something that a simple google search would yield an answer. If that is the ambition, then the product is worthless.
    I imagine a professional assistant for a strategist to know up-to-date information of my client’s business performance, brand matrices, social listening etc. I will need it to analyse that social, market data for me.
    For a creative professional, an AI enabled professional assistant could help fetch examples of a certain emotion being portrayed in movies, novels etc, or find the right cultural conversation to target, find right examples of older/ competitive ad that conveys something. From a coding perspective, it requires technology that can scan videos for emotions, scan novels for metaphors, suggest content that might be useful for my current project, scan global market indices, scan social conversations for expressions, not just sentiments.
    That is a sophisticated product that I can use. And also, a sophisticated product that is technically very difficult to create. There is a reason it doesn’t exist yet.

    It would be economically more viable for Publicis to sell these products in open marketplace with high margins, instead of restricting it to their employees and clients.

    Euromonitor and their ilk have not yet shown a willingness to improve their delivery with AI. Understandably so, because of the economics of it and the coding prowess it requires to create an intuitive and powerful AI that will actually be useful. If Publicis or Ogilvy, has that kind of coding prowess, they would be better placed to monetise it for strategy projects rather than as  value-adds, to advertising!

    Why would you give away something more valuable for free with something whose value is depreciating. Would you sell a bicycle by giving away gold bars free with it?

  2. Conviction: It is a platform if it is the primary interface for a defined purpose. Otherwise, it is simply an onerous add-on.

    The nature of advertising business demands close co-ordination, casual comfort in conversations, intellectual proximity… None of which will exist if digital becomes the primary interface for inter-agency/ or agency-client relationships. People like to meet, talk and see if they find others as being agreeable. Even within an agency, if a CD doesn’t like my (planner’s) attitude, he would simply not bother even reading my brief. In the ego chamber that is an agency, relationships determine  if people even attempt at listening to other people. I have a hard time getting creatives excited about most of my briefs. I am sure they won’t get excited over anonymous briefs gathering digital dust on the ‘platform’ – a brief that doesn’t get an appointment, doesn’t challenge them intellectually, doesn’t provide them a startling new insight, doesn’t smile encouragingly, doesn’t empathize with their issues, doesn’t complement on their excellent creativity… is a dead brief.

    Indeed, many business relationships are based solely on the merit of nothing more than strength of actual people to people relationships. What happens to those if digital platforms become the primary interfaces?
    And if that is not the case and real world remains the primary interface with digital being an add-on, why would anyone want to invest extra time and effort on a platform that has diminishing returns for the primary purpose of fruitful relationships.

  3. Relationships vs projects: Should our industry incentivize the philandering behavior of clients?

    There are two kinds of clients – those that build a trust based relationship with an agency and works closely enough to grow their brands. Increasingly, however, trust is giving way for power tactics – clients who get agencies to pitch for every little project.
    The ‘platform’ idea is more suitable for the latter kind of clients. It is in the nature of ‘open relationships’ to put out briefs that hide more than they reveal. The lack of transparency means that the planner has to work harder in ‘guessing’ the brand challenge and strategy, in absence of hard numbers and concrete objectives from clients. Which means, more possible ‘routes’ to work on. which means more work.
    Do we really need to do more work that might not see the light of day, or less of it?

  4. Best creative brains do not want briefs from elsewhere.

    Consider a over-worked Creative Director with 5-6 projects (with at least one ongoing pitch) on his plate with deadlines of yesterday? That practically is every other CD in increasingly poor agencies (Look at retainers going down and businesses asking to pitch for every little project). Would a busy CD from China want to work on that superbowl commercial for a US client? I doubt it. Maybe interns and junior copywriters would like that opportunity. But typically the best creative brains with enough experience wouldn’t be going out to search for extra projects. They might do so, if they already have an idea/ script and need now a client to sell it to.
    So perhaps, the platform will become a Craigslist for ‘idea in need of clients’.

  5. Every brief a pitch

    This system, in a manner of speaking, is further fragmenting the whole pitch business. In a sense, every Publicis brief then becomes a pitch. Which planner/ creative director wants that?
    Pitches essentially are blackholes for good ideas. ideas that titillate clients, but that have much smaller chance of seeing the light of day.

  6. The knowledge bank – why quora works but internal Q&A does not

    I have worked in multiple global agencies. All of them had strong internal ‘knowledge bank’ networks. I even oversaw making of one of those, long time back.
    None of them worked. No one ever contributed answers, knowledge to the supposed bank.
    Or rather, the same person who might spend hours writing a thorough answer to a question on Quora, would never write (or even read a question posed by someone else) in the internal network.
    The reason – While both public and company networks can give you validation – only company networks might be unforgiving for your faux pas/ ignorance. You don’t want to be seen as an ignorant buffoon to all your global colleagues, do you? But if it happens on facebook or quora, your post just might get buried and no one has to point fingers at you for more than a few days at worst.
    A stupid answer would brand you stupid among your peers. A career suicide.

    Secondly, I have seen differences in the nature of questions. A Quora question may be fairly open-ended, it might seek opinions, experiences, expertise. As against, most of the questions on internal networks of agencies are boring specific asks for a certain requirement. Nobody wants to do the homework for you.
    So while I maybe willing to answer your question, “What is positioning?”, I am absolutely not interested in answering your question, “How should I position xyz car brand in China which is dominated by abc?”
    Do your work, don’t ask me to work for you! I don’t have time for that.

  7. How then is a freelance networking company different from WPP/ Publicis?

    Lastly, I feel a freelance networking company has better incentive to create a platform like this. If it is going to be open, why not completely open? Anyways, senior creative rock stars are not going to search for briefs themselves. They want client and servicing team to come to them for briefs. So it is marketplace for junior talent. And if it is junior level talent we are talking about, might as well keep it open for junior level talent across the world.
    So essentially, it might make your existing junior-middle level creative talent insecure. I doubt you want that to happen.

A better way to go about this process is with a different perspective – one not about technology as a stop-gap solution, but technology that solves a real problem. And the real problem is not ‘access to best talent’, or ‘access to reports’ – the problem is decline in value of our creative ideas, the decline in our growth. The answer is open source. Read about it here.

Update: I have since written about a better way of creating an agency platform.

The Advertising Agencies of future will be Open Sourced

The alternative ‘new normal’

Sir Martin Sorrell, perhaps the most powerful person in the advertising industry, recently said that the “new normal” for the global advertising industry is that of “low growth.” I think that is not necessarily true—if we examine the underlying assumptions about the source of growth for the industry.

The advertising industry currently works on a pre-digital era assumption: Individuals and small businesses cannot be a sustainable source of business. Most agencies work almost exclusively for big corporate brands (apart from the token CSR/ NGO work that can help them win creative awards at Cannes). This strategy worked for the industry in the 20th century, since much growth was yet to come from globalising markets, increasing consumptive lifestyles, proliferating capitalist economies, etc. So agencies didn’t need other sources to grow.

But now, as the world stands (almost) completely globalised, consumptive lifestyles have maxed out and capitalist economies are struggling from one bailout to next, the advertising industry is finding that growing with only big-spending corporate brands is much more difficult than it used to be. Creative agencies are being squeezed by competitive pressures and demanding clients, who prefer to work on project basis rather than on retainer basis. Agency business was never as uncertain as it is now.

But what if advertising agencies actually embrace this uncertainty? What if we expand our horizons to embrace a wider set of branding efforts?

An open approach would be key to this.

In this article, I’ll discuss why “open source” is the answer for higher growth (and how we’ve so far gotten it wrong). And then I will articulate exactly what it means for agencies to go “open source,” and what will that entail.

The advertising business’ long tail

Let’s begin by examining two potential sources of growth for the advertising industry.

First, consider that 95% of enterprises across the world are small or medium enterprises (SMEs). If advertising is about helping businesses grow, then why don’t we help this 95% do that?

Yes, this would require a fundamental shift in the business model of advertising agencies, but would it not be worth it? Let’s look at the possible worth we can tap into.

There is no existing body of theoretical or practical work that explores the potential of open values in advertising. But I have a few ideas.

SMEs contribution to GDP varies from 16% in low income countries to 51% in high-income countries. Let us assume they spend 10% of their revenues in marketing, out of which, say, 2% goes in creative/ strategy services. That is the 2% not coming to organised advertising industry right now. That is the 2% spent on work by either amateurs, freelancers, or in-house part-timers—often inefficiently, unprofessionally, and with hit-and-miss results.

Second, note the rise of “personal brands.” To help them grow in their careers, people want to build brands for themselves. At present, this expanding pool of potential customers can only look at self-help books, blogs, and other “gurus” for help. They don’t have access to professional services that can help them grow their personal brands.

Combine these two long tails and you’ll see the potential source of growth for global advertising agencies. The potential is huge, but no one has yet attempted to create an integrated offering for the three broad segments of customers: individuals, small enterprises, large corporate brands.

Change is difficult and scary for everyone, especially (it seems) for advertising leadership. Advertising professionals spend a lot of time bemoaning the death of the agency of record, shrinking margins, and frequent pitches. One gets the sense that everyone sees what the problem is and wishes to turn back time—return to the good old days.

But such nostalgia is a form of denial. And it doesn’t bode well when many in the industry fall back on nostalgia to make sense of their present.

In order to adapt the advertising industry to new challenges and new opportunities, we need to embrace a new idea. It’s not a new idea—just a rather a poorly understood one. The idea is called “openness.”

Misunderstanding ‘open’

‘Open’ marketplaces

We’ve seen several attempts to create an “open” marketplace of creative ideas. For example, places like Adhack hoped to be a “marketplace for ad creatives.”

It no longer exists.

The “marketplace metaphor” gives the impression that “open” simply means “a venue for frictionless exchange.” But that’s actually problematic in the case of advertising, because it treats ideas and creative people as commodities. When one exchanges a physical item for a certain sum of money, the exchange is complete—expectations met. Exchanging ideas, however, is more complicated.

An advertising client does not simply want any idea; she wants an idea that she thinks will help her business grow. Many variables are at play here: a client’s expectations, the client-agency relationship, an understanding of current market dynamics, shared creative sensibilities, an understanding of consumer’s emotional needs, cultural mores, etc. The final expression of an idea is almost always a result of a series of discussions, where the objective gets sharpened and creative work undergoes various iterations as it courses through several feedback loops. It’s nothing like a single transaction.

This mode of working is inevitable in creative businesses; any creative work eventually requires this kind engagement with feedback loops. A “marketplace” of either ideas or people can unfortunately never quite capture this kind of interaction, which is necessary for creative businesses. Advertising must embrace a different, broader, and more effective sense of openness.

Crowdsourcing talent

Some companies have adapted crowdsourcing (which is not an open source approach) to varying degrees of success.

For example, 99designs.com solicits designs from hundreds of designers for a client. Unfortunately, this model is exploitative in the sense that a designer is not paid for her time; she’s only paid if her design is selected. In this way, the system is only useful for budding artists who are testing their skills, building their confidence and portfolios. It cannot sustainably scale to win bigger businesses or attract established creative talent.

Curated and crowdsourced ideas

A third example of crowdsourcing advertising agencies is Victor and Spoils (V&S). V&S is essentially a “normal” advertising agency with a “plug-in” for crowdsourced ideas. They open up some client projects to a set of strategists, creative directors spread across the world who have registered with them.

This idea has obvious limitations for sharing strategically important projects, speed of delivery, feedback mechanisms, and more. As such, V&S cannot sustainably scale because not many clients typically have the kind of patience that is required for the crowdsourcing process. Neither do they have the willingness to experiment. They want effective solutions quickly; they don’t care if those solutions come from within the agency or from consumers.

A better approach to ‘open advertising’

Small businesses know that advertising can help grow their businesses but are unsure about its effectiveness. They don’t have enough money for “experiments.” Before committing money for an ad campaign, they need some amount of assurance that their campaign will indeed deliver business results.

This assurance is possible now with big data analytics. Look at how Google shares some data about user behavior and campaign effectiveness. What if that was available for integrated campaigns—TV, print, digital, outdoor, everything. If a global advertising agency puts together data about the campaigns it has conducted across the globe over the last few decades, big data analysis can provide confidence level “thumb rules” that clients can use to make decisions real time. That is an important development waiting to happen. However, even this is only a part, even if an important part, of the bigger “open” possibility.

Surprisingly, there is no existing body of theoretical or practical work that explores the potential of open values in advertising. But I have a few ideas—and in the spirit of openness, I will explain them now.

 

Open source advertising agency

Open source:

‘Open’ = universally accessible and open to contributions.

‘Source’ = the proprietary logic that solves a problem uniquely.

Understanding a basic perspective on open source is critical. When people talk about “open source” and its relevance to the advertising industry, they might think only about using open source material to create advertising. Or they might talk about projects where users and a brand team co-create something. Some may use the term to describe collaborative cultures, and others might use the term to talk about crowd-sourced plugins to traditional business models.

All of these ideas are united by the smallness of their perspectives.

I’m talking about applying “open source” in a way that could fundamentally inform the advertising business model. So what is it, in this context?

The ‘Source code’ for advertising agencies is the unique method of approaching a business problem that guides them in finding, what they believe to be, the most effective and creative solution. As contexts and type of business problem changes, so do the methods.  Typically, this ‘source code’ is a logical set of questions or framework that guides application of common sense to the work of solving business problems. They do so by enhancing clarity regarding strategic choices that the marketer has but might be blind to. Identifying the right branding opportunity/ problem is half the battle in effective communications.

These tools are very useful because it is quite easy to stray away from basic common sense when confronted with too much data. These tools also help in building conviction towards taking the right direction, when the easier (but possibly ineffective) direction seems more attractive.

These are some of the ‘source codes’: Ogilvy has its “Big Ideal“, “Fusion” and “Do brief.” Publicis has “Lead the change.” DDB had its “Springboards.” Saatchi & Saatchi has its “Lovemarks.” And so on.

And I believe this very decision-making process can be subjected to open source thinking.

Open strategy, open creativity

For example, suppose a firm wants to become an open advertising agency. It designs its own “interface” for creative problem-solving, such that people would be encouraged to use, adapt, and improve upon its planning and creative tools. Next, it will externalizes the wisdom its employees and its campaigns have acquired through the years, making it available to people who can learn from it and use it to inform their decisions.

For this to work, our firm will have to be cognizant of various requirements, and hence different consumer journeys for three broad bucket of clients. Again, these are:

  1. Individuals seeking help with personal branding at a flat fee.
  2. SMEs who need help in growing business with limited budgets and where individuals/ small group of stakeholders take decisions.
  3. Corporate owned consumer/ enterprise brands with high media spends, where decisions are made by committee/ hierarchies.

To be able to cater to these three different segment at the same time, the agency will require a new business model, new practices, and new expectations of revenue growth. To get a glimpse of that interface, we can learn from pricing strategies of online services and adapt them to the advertising business (see Figure 1).

offerings

For example, our firm could curate and code tools that make its interface easier to use (not merely accessible)—to all, for free (think of the difference between Google’s search interface now and a Yahoo! search and directory from 1996).

For individual users looking to either build a personal brand or test new business ideas, our firm could provide algorithm-based assistance in formulating strategy (programs that take in key data points to choose the right tools/ perspective). Thereafter the focused “brief” at hand can help the person in finding the right ideas with the help of fellow idea seekers and creators in an open forum (look at the interface of Coursera classrooms, for example).

Say a small restauranteur seeks help making her business grow. She can either access free tools and figure out strategy for herself, or pay a flat fee and access the community of people who might help her. Perhaps she can even find a budding creative artist in the community who could help her in designing art works informed with the “brief” she formulated with the help of an algorithm earlier.

If she is ambitious and is seeking rapid growth—and doesn’t mind paying the fees for access to our agency’s team—then she can do that too.

With millions of people using its free tools, the firm stands to create the “default” language and logic of branding strategy for the industry. The first mover in the “open advertising” game stands to set the rules of that game for 21st Century.

Changing the model

Shifting to open models would help the advertising industry shift:

  • From servicing a few hundred clients at max a year, to catering to potentially a million clients a year.
  • From being critically dependent on a few large clients for survival, to a hedged bet with the long tail.
  • From an enterprise-oriented orientation to more nimble orientation (something adaptable to serve anybody, from an individual to a fortune 100 company).
  • From intimidating jargon to simplified tools that most people can use (simple and obvious always trumps complicated and laborious in advertising—may it be in ads, pitches or everyday work).
  • From resource allocation per brand, to additional resources for Skype services and transition teams who would facilitate the transition of a project from online open source to inside the agency (and therefore confidential).

But it would not change:

  • The creativity that human insight and human-articulated vision can provide.
  • The business dynamic with corporate brands (apart from improvements in universal availability of data and tools).

First-mover advantage

The first firm to attempt this kind of open approach would see the following benefits.

New repository of consumer insights. The agency will have access to big data stores and metadata about users’ businesses, their preferences, and their possible growth trajectories. These data will be useful in building agency intelligence, its effectiveness, and its new business efforts.

Mindshare leadership. The agency will set the language and logic of business growth for a million business leaders of tomorrow.

Virtuous cycle of new business growth. Small businesses and startups would grow with the agency and might stay on as they grow big. Communities of thousands of enthusiasts and free tools users will help establish agency brand credentials. Word of mouth generated by the agency’s tools will position it favorably among business leaders.

Attracting good talent. The community would become a channel for budding talent to get noticed. The transparency in helping businesses grow will excite creative talent and attract the best creative talent to the industry again. The widened pool of visible talent and the plurality of projects will help the agency find, train, and mentor the right talent.

Increased marketing literacy among clients and agency personnel. To be frank, many of us in marketing and advertising industry could do with a basic marketing course. Even in 2017, many among us are unsure about digital marketing. Many advertisers could increase efficiency and improve quality of their efforts if they knew about concepts such as “insights,” “emotional needs,” and “strategic choices” in creative ideas and so on. By “opening up” the culture of advertising thinking, we will help increase marketing literacy and consequently increase confidence in marketing efforts. After all, if clients understand marketing better, they will be more confident about spending money on it.

I am eager to work on this idea and bring it to reality. If anyone finds it interesting, please get in touch. We might be able to do something together. 🙂

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Update: 

1. Here’s a quick FAQ about the idea basis discussion with senior guys in the industry.
2. Here’s a quicker snapshot of the idea in presentation format, with an appreciation of platform fundamentals.
3. In interest of comprehensiveness, read this idea about pivoting.
The platform idea is a monopolistic pursuit. Everyone cannot aim for such goals. Hence the pivot idea gives two distinct strategies of sourcing growth for agencies.
4. This article won me a 2017 WPP Atticus award.