The sudoku problem and the delusion of conservative ad men

This is in response to Mr. Rory sutherland’s article about targeting in advertising. Read that article before reading this one.
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“By deluding everyone that the whole of advertising is reducible to “the efficient and inexpensive delivery of targeted messages” through the extensive use of data and algorithms, two companies have gained a multi-billion-dollar rent-seeking monopoly over the majority of advertising activity.”

– The extraordinarily persuasive Mr. Rory Sutherland in his campaignlive article.

Bang on. But right after identifying the problem correctly, he then completely misses the big picture.

1. Platforms are relevant beyond advertising. Agencies aren’t.
Yes, facebook and google create the illusion of measurable effectiveness of comms through targeting, even as it turns out, it is just as much a gamble as traditional media was. But Mr. Rory doesn’t comprehend the broader utility of these technological giants. They aren’t simply channels of communications. They are default platform of commerce, knowledge & social connections. They inform not just marketing but supply chain strategies, go-to-market strategies and even new product development. These platforms are fundamentally shaping the new era of business growth. The ‘sudoku’ like big picture consciousness needs to take this into account. It needs to take into account the fact that these platforms are fundamentally changing the way we work, we behave, we interact and we live.
So, my first moment of ‘wtf’ came when Mr. Rory thought that the multi-billion dollar rent-seeking was just about ‘advertising activity’. Either he needs to appreciate the far broader footprint of that ‘activity’ where creative agencies don’t compete or he should look for reasons within the creative industry for why we aren’t getting a share of any of that activity.
I don’t particularly like the tech giants myself. But advertising industry is no innocent minnow either. It has always been a morally grey industry. So for its statesman to target the tech industry while absolving itself of its failing fortunes, felt a bit weak. The sense one gets is “we don’t need to change, you should. we are not muddled in our heads, you are.”  Which is horseshit ofcourse.

2. False duality of Targeting/ Creativity:
I wholehearted agree that obsessing about targeting is problematic, not just strategically but even morally and hopefully eventually legally.  But with metaphors of sudoku and door man, he ends up creating a false sense  of comprehensiveness with targeting & creativity. Indeed he talks about sudoku – the big picture consciousness needed to solve the problem, but doesn’t take into account the big picture of advertising operations. We are way too busy advising businesses about their transformation to notice the need for our own transformation.

He essentially creates a false duality about targeting & Creativity. Advertising comprises of far more acts than that of creative messaging and targeting. As a matter of fact, technology’s relevance for advertising is precisely outside of these two acts – servicing, client feedback, HR, research, basic analysis even creative inspiration … all these tasks that support creativity can be improved with technology. And they can improve only by ‘breaking-down-to-manageable-parts’ approach. The sudoku metaphor, though very enticing feels wrong. The sudoku metaphor is relevant for big picture strategy or pure acts of creativity. But no other process beyond it. and there are far too many processes beyond these two processes in advertising.

3. The untold story about the doorman: So in Rory Sutherland’s piece, tech company automates the door and boom – end of the hotel. But in reality, there is a story after that. Unlike our industry, tech industry is notoriously good at improving with feedback. They are famously ‘forever in beta’. They would recognise the error, and plan ahead. perhaps by creating  gadget for the doorman to greet different patrons in different language. Perhaps, by creating a entry chamber that is even more secure and pleasurable to enter into. The possible improvements are endless with creative thinking.
What I am trying to get at is… tech will improve the processes that it can improve until no improvements are needed. And unless agencies get on with the ‘arms race of feedback led improvements’, we are doomed to get thrown out by the doorman like he would a bum.

4. Tech’s role in advertising:
Do clients want us to be more nimble, more responsive? how can it happen without tech?
Digital media is creating a Just-in-time and plug and play mentality for solutions. can we deliver solutions JIT and PnP without tech?
Agencies service just the largest corporates in the world. we can’t profitably service SMEs. Is that the world we want to be in where the biggest get unfair advantages of our talent? Can technology help agencies in servicing at scale?
Most of our time goes in idiotic tasks such as filling time sheets, arranging meetings, reworking forever due to bad feedback… Each of these tasks can be improved with tech.
We are using tech to reduce productivity actually – Take for instance the process of installing a font currently – raise a ticket, wait for technician, who installs it. the first two steps are completely unnecessary. but we do it, because we don’t take tech led improvement in processes seriously, even as we idolize Apple.
Most importantly, effectiveness of campaigns is still akin to picking a lottery ticket. There is no scientific algorithm to achieve right effectiveness. Similar to the problem faced by stock-brokers. But people like Mandlebrot have been suggesting scientific and a different approach to that problem. Maybe, there is much to learn for us from that approach. (Stochastic and as such programmable to an extent. but not anytime soon.

5. ‘Creativity’ has been agencies’ excuse for long to get away with their privileged complacency. Advertising agencies are too expensive,  unreliable and inaccessible. Tech will disrupt advertising agencies soon enough, because industry leaders echo Rory’s myopia.

And here’s the blueprint for that disruption – Agency as a platform.

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The triad of Consultancies, FB and Google will neuter creative agencies globally, unless…

First: The digital disruption.

Globally, Facebook and Google now dominate advertising dollars, not WPP or Publicis or other agency companies. (For comparison about the market muscle – Combined market cap of FB and G was $812Bn as of June 2016. How did WPP, Omnicom, IPG, Publicis stack up? The four combined were at $70 Bn. And the less said about the growth, the better.) So there’s that.

And now consultancies are entering the fray to steal the lunch from agencies. And agencies have largely been too busy in denial to notice their impending irrelevance and gutting of their margins.

Second: The value of ideas.

Adweek recently wrote about the trend of Global consultancy goliaths buying up small agencies to make inroads into the branding industry. And similarly, creative agencies have also been trying to make inroads into consultancy businesses.

Who is more likely to succeed? Which industry will prevail, which will shake-up?

To me the answer is obvious. Why? Here’s why –

  1. Relative Value: Consultancy’s service is typically valued at higher valuations than creative agencies. In another world, where creative agencies didn’t get too complacent early on and put more emphasis on effectiveness beyond awards, perhaps, creatives would have earned more, grew bigger by creatively solving newer and varied problems and given bigger business growth for brands. But we don’t live in that world. Consultancies are good at convincing with numbers how they affect businesses positively.
    P.S. – There should be a research done in success rate of consultancies versus agencies in actually delivering growth.
  2. Positioning: Consulting is positioned as a house of experts. Consultancies typically house ‘domain experts’ that the CXO knows he can access. So, it is not a big stretch to imagine that consultancies house creative experts too. It is a stretch to imagine the chaotic agency to house a supply chain expert though.
    So even if a CXO trusts a creative mind’s judgement in his/her field, I doubt he/she would extend the assumption of competency to other matters of business growth.  As against a typical consultant – no matter how dumb/ smart he/she might be, the CXO trusts him/her to create access to competent people for most business needs.
  3. Ear of CXOs – Both agencies and consultants get to interact and influence CXOs. But, agencies only cater to propaganda need, while consultancies can affect change in almost all facets of a business – supply chain, production, legal etc. So consultancies have a better view of the business and what it needs, and hence better opportunity to offer more services.
  4. Plurality of ‘closed thinking’ projects – Pardon the generalization, but while consultants are masters of ‘closed’ thinking, creatives are masters of ‘open’ thinking. I estimate that there are more ‘closed thinking’ services that a company typically needs help with, than ‘open thinking’ services.
  5. When you can’t innovate, advertise!: Growth in 21st century is about innovations – consolidative tech innovations (FB and G consolidating the ad and comm tech market) or fragmenting tech innovations (innovations in CPG that is creating new breed of many niche players – online or offline.) There is no substitute for actual, real innovation to grow in 21st century.
    While agencies are known for their ‘big ideas’, they are not known for path-breaking ideas that inform a business model or product development. Most of the time, the idea comes from within the company for it to be truly adopted with conviction. And to execute these ideas, they go to the consultancies for help, not to advertisers.
    Can advertising agencies create new business ideas? sure they can. But the evidence is lacking as of now.
    Advertising agencies instead are now becoming home to companies that fail to innovate and then want the advertising to push the ship stuck in the muck.

There have been attempts by agencies to get into consultancy shoes – most recently by R/GA. I wish them best of luck. I really hope someone cracks it and in the process, ‘pivots’ to a higher value service. But so far the trend has not been encouraging.

Here’s an idea for a better future for the industry – start putting your money where your ideas are.

UPDATE:

Two strategies to improve agency prospects –

  1. Agency as a platform
  2. Pivot to go after biggest opportunities