JOHN McGEE

Agencies, publishers, broadcasters and digital giants are a threat to each other as the quest for new sustainable business models ramps up

Media-advertising ecosystem battle will intensify

AS the curtain falls on 2016, one thing has become abundantly clear during the year: the hairline-cracks in an already fragile media and advertising ecosystem are in danger of becoming wider during 2017. I choose the word ecosystem very carefully. The concept of an ecosystem has been around since the 1930s ever since the British ecologist Arthur Tansley came up with it in a paper he wrote on the importance of transfers of materials between organisms and their environment. Although his idea was subsequently developed by other notable academics, the basic concept of an ecosystem in which the constituent elements are interdependent on each other for their survival is still valid today.

The media and advertising ecosystem, however, is just as complex as anything one might find in a David Attenborough documentary and the disruption and competition for survival is equally fierce.

In the media and advertising ecosystem, the media industry is heavily dependent on advertising — it’s the lifeblood of publications, broadcasters and indeed parvenu platforms such as Facebook. Despite this, most of the debate on the future of media industry has tended to ignore the other forces at work within this ecosystem.

Instead, the narrative has focused largely on the quest for new business models and solutions that will deliver enough revenue to sustain media companies and their ability to create and pay for content and quality journalism.

While these are hugely important issues that have taxed the best brains within the industry for over a decade, one could argue strongly that they should not necessarily be viewed in isolation to what is going on within the rest of the ecosystem, particularly in advertising.

In fact, one could argue very strongly that the biggest threat to the advertising industry comes from the media industry and, in particular, its ability to remain solvent, relevant and provide the necessary reach for advertisers. While this is an age-old challenge, it’s one that has become more urgent — and well documented — in recent years.

Likewise, one of the biggest threats to the media industry comes from the advertising industry and its own ability to deal with some of the many problems that have been piling up on its doorstep over the past few years.

Depending on who you talk to in the industry, the current agency models for both creative and media buying are fundamentally flawed, if not broken and beyond repair.

For the past 12 months or so, the industry has been engaged in a fair degree of soulsearching and issues like trust, transparency and accountability have been debated at great length in various fora, including the annual advertising shindig that is the Cannes Lions festival in France.

For media agencies, some of the main issues have to do with trust and transparency, particularly in the opaque world of media buying. Rather than a race to the boardroom where they should be, it’s become a race to the bottom in terms of rebates and LTAs.

Meanwhile, agencies are facing their own set of unique challenges, many of which are being driven by the changing needs of their clients and the apparent desire by many of them to see a re-bundling of services like creative, digital, media, planning and research.

This time around, however, any re-bundling that takes will almost certainly include must-have services like data, CRM, content, experiential, eCommerce and CX.

But it will also come without the complexities and the silos. As Marc Pritchard, the chief marketing officer of Procter & Gamble, the largest advertiser in the world, said earlier in 2016 “agencies need to make their complexities invisible.”

While creative output will continue to differentiate creative agencies, on its own it won’t be enough. The agency of the future may well be a hybrid of many things, including business consultants and strategists with expertise in a wide range of disciplines from shopper and mobile marketing right through to media planning and buying, UX and product development.

Ultimately, everything will be built around the consumers — as opposed to individual or multiple channels like TV, radio, press or digital.

The only problem with this is that there are companies such as Accenture and Deloitte already offering these services to their clients. And in many cases they have already developed strong relationships with their clients, having effectively embedded themselves further up the value chain than agencies have.

Just how the advertising industry addresses some of these challenges is anybody’s guess. But change will come and it will ultimately be driven by the business challenges that clients face. And what happens in the advertising industry, as the theory of the ecosytem tells us, will have more than a profound impact on what happens in the media industry.