I wrote this article for WARC’s ‘Future of Strategy report – 2020′.
Survival is a delicate affair of balance and luck. Consider a monarch butterfly for instance. The place where they breed should have temperatures between 86°f to 95°f. Too high, eggs go dry. Too low, the monarch can’t fly. The climate change, loss of milkweed (their food & shelter), loss of overwintering habitat, are among other variables pushing the monarchs out of existence.
We might not be as beautiful and blameless as the monarchs. But we are just as much under threat. Digital disruptions, Covid-19, lack of organising culture among industry workers, lack of vision among leaders…we are crashing out of the goldilocks zone hard.
As advertising agencies refuse to evolve quickly enough, strategy departments (cost centre with an increasingly uncertain payoff) will be the among the first sacrificial lambs at the altar of P&L statements sinking towards red. Covid-19 is merely accelerating this trend.
Here’s my thesis on the industry’s growing fragility.
1. Advertising is no longer as important for brand growth as it was in 20th century.
In 20th century, a memorable jingle ‘scaled’ quickly in the collective consciousness translating to years of brand success.
But in 21st century, commercials simply can’t make that kind of imprint on the collective consciousness.
What scales instead?
Supply chains with tech-based innovations;
Predicting consumers’ needs and desires with big data analytics;
Targeted nudges to consumer desire with cookies & notifications;
Product personalisation with material innovation, delivery experience or social engagement;
Memes that resonate with the zeitgeist…. The list is endless.
Digital technologies have given brand owners so many new tools to creatively find new ways to grow brands. Digital transformation is simply more deserving of the ‘growth’ budget. Consequently, advertising budgets are under pressure. Consequently, advertising agency business models are under pressure.
What can help?
As dimensions of brand growth grow, so must strategist’s capabilities even if agency’s offerings don’t. Strategist must develop appreciation of the broader context and not be focused merely on communications strategy. This can help build agency’s capability, but also strategist’s prospects beyond agency roles.
2. Agency leadership so far, have shown a deep incapability to respond to this shift.
- The advertising industry’s choices to grow are clear –
- Improve its capabilities in view of the changing world and offer new services or
- Increase the premium of its offerings to earn more from the shrinking set of clients for whom advertising remains critical or
- Leverage digital tech to scale – serve more brands with fewer people
Even after loud ‘Relaunchings’ and ‘transformations’, most agencies still are fundamentally unchanged.
The business model is still unchanged. (I don’t know of a single major agency that has substantially invested in either its capabilities, its delivery or its systems. Most changes are cosmetic.)
There are no path-breaking offerings/ new products being created by agencies. Mass media communications remains the major source of revenue for most agencies.
There is no serious attempt at improving capabilities of their people. (The deluge of webinars doesn’t count. What is needed is a culture of positive feedback and experimentation.)
As agency margins come under pressure, agency leadership look to prune the costs rather than spending capital on building capabilities. This lack of vision is detrimental to strategy department’s relevance.
Ideally, strategists should play a major role in helping agencies navigate the transformation agenda. This hasn’t happened so far to the best of my knowledge.People leading the transformation agendas in top agencies are usually business folks who are invested in the status-quo.
What can help?
Strategists should actively participate in the agenda of agency transformation. Strategists must appreciate reality of agency business and be capable of leading organisational improvements.
3. The role of communications in brand building is increasingly relevant in shorter time frame of here and now and not long-term brand legacies.
Many brands these days don’t find the need for long term campaigns or big TVCs, altogether. Since their product/ service is evolving daily, they are more aligned to keep their communications just as alive with daily/ weekly refreshes. They are often more attuned to the changing market dynamics and want to respond at the speed of thought.
The new client expectation is for agency leadership and strategy team to be just as immersed in the brand world as they are. They want agencies to proactively respond to emerging trends, events, sentiment etc.
But often agencies expect the linear flow of directive – client brief -> creative brief -> idea. Repeat.
Agency leadership needs to step in here to set right expectations and enable a working environment where client-talent collaboration is fruitful and not marred by mismatched expectations. It’s not a difficult problem to solve. We just need a will to adapt and partner in new ways, work in new ways.
What can help?
Strategists need to be more vocal in re-engineering the work-flows and creative processes. Strategists need to lead the effort in guiding clients and agency leadership in collaborating more fruitfully in the new fluid brand world.
4. Covid’s impact
Covid has accelerated the shift of advertising dollars towards digital media. This has meant agencies have lost majority of revenues very suddenly. Agencies that had not worked on their transformation so far, are bleeding now. It’s time for tough choices in such agencies.
What can help?
Covid has precipitated economic hardships. Many of us will lose our jobs in this crisis. The industry bodies must take steps in safeguarding livelihoods, augmenting capabilities and creating opportunities to collaborate.
WFH hasn’t affected the effectiveness or efficiency of work. However, WFH has radically alienated people from each other’s journeys. Some teams are exploiting the full potential of productivity tools while some aren’t. Webinars have helped some gain perspective while many have gotten tired with their frequency. Some of us will accelerate in their skill improvement while some will languish. The lack of visibility over each other’s work/ conversations will only increase the disparity.
What can help?
Leadership needs to be more active in communicating with its team members during this time of crisis-lived-from-home. Efficiency and effectiveness are not everything. Community is being ruptured and we are not doing enough to heal it.