Re­shap­ing Ad­land

Pine all you want for the Mad Men era of ad­ver­tis­ing, when the rise of tele­vi­sion paid for liq­uid lunches and a tagline could still res­onate with the same power as an in­ter­net-break­ing Kardashian selfie. Those days are gone, but new tech­nol­ogy, dig­i­tal di

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Con­sump­tion To­day, the fate of the ad­ver­tis­ing in­dus­try may rest on its abil­ity to con­form to a 5-inch screen. The smart­phone has spurred a cul­tural revo­lu­tion in the way peo­ple con­sume and cre­ate their own me­dia, as well as how they in­ter­act with brands. Mo­bile now ac­counts for more than 50 per­cent of the world’s in­ter­net traf­fic, ac­cord­ing to We Are So­cial’s “Dig­i­tal in 2017 Global Overview.” So­cial me­dia is also a ma­jor con­trib­u­tor to this shift. The Pew Re­search Cen­ter re­ports that 7 in 10 Amer­i­cans are on some form of so­cial me­dia, with ap­prox­i­mately three-quar­ters of users on Face­book and around half on In­sta­gram vis­it­ing th­ese sites at least once a day. “Dig­i­tal broke the paradigm of ad­ver­tis­ing and of agen­cies,” says Barry Wacks­man, EVP, Global Chief Strat­egy Of­fi­cer, R/GA. “If you go back to the early to mid-1990s, all ads lived in tra­di­tional me­dia: TV, ra­dio, or print. The web was the first mul­ti­con­tex­tual me­dia for­mat: read­ing, shop­ping, shar­ing, con­vers­ing, etc. Now, with the smart­phone, the num­ber of things peo­ple can do be­comes al­most in­fi­nite.” All of this is not only pulling peo­ple away from their tele­vi­sion sets, but en­abling them to take con­trol of their con­sump­tion. Ac­cord­ing to a Mckin­sey & Com­pany re­port, mil­len­ni­als in North Amer­ica are 10 per­cent less likely to take out a ca­ble sub­scrip­tion than older con­sumers, and are four to five times as likely to pur­chase goods and ser­vices us­ing their mo­bile phones. The pas­sive con­sumer has be­come the ac­tive par­tic­i­pant. Dig­i­tal tech­nol­ogy, like mu­sic and video stream­ing, has brought with it cer­tain ex­pec­ta­tions—that ev­ery­thing be de­liv­ered in­stan­ta­neously, fric­tion­lessly, and on a highly per­son­al­ized level. Dig­i­tal cul­ture has given way to a new set of con­sumer habits that are caus­ing a de­cline in many of the in­dus­tries that have tra­di­tion­ally kept ad­ver­tis­ing afloat. The hy­per­con­ve­nience of Ama­zon is killing retail, au­to­mo­tive is reel­ing from the pro­lif­er­a­tion of ride shar­ing, and ma­jor soft-drink com­pa­nies and gro­cery chains are get­ting slammed by pri­vate-la­bel, ar­ti­sanal providers for the same rea­son fast food is drown­ing: Con­sumers’ in­creas­ing aware­ness of health and well­ness over the last decade—am­pli­fied by our abil­ity to self-track—has made qual­ity and nu­tri­tion a pri­or­ity. Now that ev­ery­one has a voice, it’s no longer a one-way con­ver­sa­tion be­tween brands and con­sumers. As peo­ple talk back, they are, to a sig­nif­i­cant de­gree, dic­tat­ing how they want to be mar­keted to. Reach­ing this em­pow­ered au­di­ence is no longer as sim­ple as grab­bing that prime­time 30-sec­ond spot. Which is why ev­ery con­scious tra­di­tional agency has been re­think­ing their mar­ket­ing strate­gies and stub­born ones are await­ing ob­so­les­cence. Ad dol­lars tell the whole story, since spend­ing gen­er­ally fol­lows where the au­di­ence di­rects their eye­balls. In late 2016, to­tal dig­i­tal ad spend­ing sur­passed to­tal TV ad spend­ing for the first time, ac­cord­ing to emar­keter. As to­day’s dis­rup­tive prod­ucts and ser­vices con­tinue to stoke con­sumer ex­pec­ta­tions of con­ve­nience, per­son­al­iza­tion, and on-de­mand grat­i­fi­ca­tion, re­turns on tra­di­tional place­ments in tele­vi­sion and print will con­tinue to wane, and ad­ver­tis­ers will have to ex­pand their of­fer­ings to cater to the fast-grow­ing dig­i­tal ecosys­tem and the ris­ing num­ber of peo­ple who par­tic­i­pate in it. Dis­rup­tion So where are th­ese ad dol­lars go­ing? The fo­cus is now on search and so­cial. The num­bers in­di­cate that two tech gi­ants, above all oth­ers, are cap­i­tal­iz­ing on this con­sump­tion shift from tele­vi­sion to mo­bile. As the largest, most cen­tral­ized plat­forms with the most per­son­al­ized ser­vices, Face­book and Google al­ready dom­i­nate up to 85 per­cent of all dig­i­tal ad dol­lars and in the third quar­ter of 2016 cap­tured a stag­ger­ing 99 per­cent of dig­i­tal ad­ver­tis­ing growth, Forbes re­cently re­ported. Ama­zon’s mam­moth pres­ence in tech is hav­ing its own rip­ple ef­fect on ad­ver­tis­ing, al­though not in an ad-buy­ing sense. Its po­si­tion as a dis­tri­bu­tion out­let for brands, com­bined with its growth as a con­tent cre­ator and stream­ing plat­form and its dis­rup­tive Alexa-en­abled de­vices, is cre­at­ing a range of op­por­tu­ni­ties and chal­lenges for ad­ver­tis­ers. Armed with func­tional ecosys­tems, end­less per­son­al­iza­tion, and all the be­hav­ioral data ar­ti­fi­cial in­tel­li­gence could ever sift through, Ama­zon, Ap­ple, Face­book, Google, and Net­flix have be­come op­ti­mal venues upon which to en­gage con­sumers. Th­ese tech in­no­va­tors are lever­ag­ing the hold they have on dig­i­tal to en­croach on the cre­ative space that has been, for so long, strictly agency ter­ri­tory. Through their own home­grown ef­forts, tech gi­ants are at­tempt­ing to dis­rupt the agency model by tak­ing cre­ative work in­house and then es­sen­tially giv­ing it away to clients in ex­change for hefty ad buys. Google’s Zoo and Face­book’s Cre­ative Shop are two well-known ex­am­ples that are lead­ing the charge. To meet th­ese new chal­lengers, agen­cies must of­fer a wider range of ca­pa­bil­i­ties, rather than sim­ply rely on the tra­di­tional cam­paign. R/GA’S model, for in­stance, con­sists of an in­te­grated suite of ser­vices, all con­nected by de­sign: Ven­ture Stu­dios; Con­sult­ing; Prod­ucts and Ser­vices; Com­mu­ni­ca­tions; Con­tent and Pro­to­type stu­dios; Con­nected Spa­ces; and IP. This ecosys­tem of ca­pa­bil­i­ties al­lows R/GA to serve clients in a va­ri­ety of ways and meet their in­no­va­tion needs across their en­tire busi­ness. But even the brands that pay are be­com­ing a threat to the agen­cies. Some such as Sprint, Chipo­tle, and Coca-cola are start­ing their own in-house cre­ative stu­dios. Aided by the rise of dig­i­tal and so­cial plat­forms, th­ese brands are adopt­ing the same DIY men­tal­ity in con­tent cre­ation that their con­sumers dis­play on a daily ba­sis. Red Bull Me­dia House, launched in 2007, serves as the ad­ver­tis­ing arm for the pop­u­lar en­ergy drink, fo­cus­ing on print,

TV, and dig­i­tal me­dia. Ap­ple started its own in-house agency in 2014, from which Ver­i­zon re­cently hired a cre­ative di­rec­tor to run its own. By tak­ing back ma­jor por­tions of work nor­mally han­dled by a ros­ter of agen­cies, brands hope to sig­nif­i­cantly cut costs, boost­ing their bot­tom line while also as­sum­ing greater cre­ative con­trol over the mes­sages and sto­ries they want to de­liver to their cus­tomers. The idea that no one knows a prod­uct or ser­vice bet­ter than the com­pany cre­at­ing it could be a scary one for agen­cies, but the jury is still out on whether brands can truly go it alone.

In­no­va­tion

Con­sul­tan­cies are at­tempt­ing to en­ter the mar­ket­ing-ser­vices space through a strat­egy of ac­qui­si­tion, ab­sorb­ing dig­i­tal agen­cies left and right, but their abil­ity to in­te­grate those ser­vices into their core busi­ness re­mains to be seen. Be­tween late 2014 and mid-2016, Ac­cen­ture ac­quired 40 mar­ket­ing firms, Forbes re­ported, which led Ad­ver­tis­ing Age to name Ac­cen­ture In­ter­ac­tive the largest and fastest-grow­ing dig­i­tal agency net­work world­wide in 2016. That same year, IBM ac­quired three on­line ad agen­cies in the span of a week, and Deloitte also got in on the act, ac­quir­ing the full-ser­vice ad agency Heat. The enor­mous amount of big data avail­able to cor­po­ra­tions is en­abling new tar­get­ing meth­ods for brands to im­ple­ment and pro­vid­ing op­por­tu­ni­ties for tech-savvy con­sul­tan­cies to eat into ad­ver­tis­ers’ rev­enue. Well-versed in on­line mar­ket­ing, app de­vel­op­ment, and e-com­merce, con­sul­tan­cies have proven their abil­ity to meet their clients’ dig­i­tal needs and are now throw­ing their fi­nan­cial weight around to com­pen­sate for their cre­ative short­com­ings. “The chang­ing busi­ness land­scape means mar­keters are de­mand­ing scale and busi­ness part­ners that can pro­vide IT skills across ev­ery­thing from data to an­a­lyt­ics to cus­tomer ser­vice,” Avi Dan, CEO of con­sult­ing firm Avi­dan Strate­gies, wrote in Forbes. Th­ese are the kinds of ser­vices that cor­po­ra­tions typ­i­cally look to big name con­sul­tan­cies to pro­vide. What th­ese con­sul­tan­cies may have lacked in cre­ative cap­i­tal in the past they more than make up for in fi­nan­cial cap­i­tal that lets them not only merge with or ac­quire dig­i­tal shops but also to poach tal­ent from other cre­ative agen­cies. “Just do­ing ideation and act­ing as cre­ative ven­dors is not enough,” Dan wrote. “If you want to have an im­pact, you need to own the high-level busi­ness strat­egy.” The tra­di­tional con­sul­tancy model of­ten ends at rec­om­men­da­tion, in the form of a Pow­erpoint; the abil­ity of con­sul­tan­cies to ex­e­cute is still in ques­tion. Own­ing both ideation and im­ple­men­ta­tion is the ma­jor dif­fer­en­tia­tor. Some agen­cies have al­ready be­gun to fight back. To sur­vive a com­plete takeover and thrive in this evolv­ing dig­i­tal space, some are build­ing out con­sul­tancy prac­tices of their own. Over the past sev­eral years, R/GA has been de­vel­op­ing its con­sult­ing ca­pa­bil­ity with the goal of trans­form­ing busi­nesses and dis­rupt­ing con­ven­tional con­sult­ing along the way, al­ready help­ing com­pa­nies such as Siemens and ESPN en­hance con­sumer ex­pe­ri­ences and de­velop growth strate­gies. Three for­mer ex­ec­u­tives from the agency David&go­liath re­cently formed a new shop, called Wolf­gang Dig­i­tal, to bridge the gap be­tween cre­ative and strate­gic con­sult­ing. “Most chal­lenges with our clients are get­ting to the point where they can’t be solved with ad­ver­tis­ing alone any longer,” says R/GA’S Wacks­man. “Their big­gest chal­lenge is with in­no­va­tion. It’s not which ad to run, but what’s the right prod­uct, ser­vice, or ex­pe­ri­ence for the mar­ket­place as it ex­ists to­day? The big­gest step is form­ing a bridge from con­sult­ing to de­sign and ex­e­cu­tion.” And the ques­tion now be­comes: Can the top cre­ative agen­cies do con­sult­ing bet­ter than the ma­jor con­sul­tan­cies do cre­ative?

Photo: Naim Chidiac

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