Agency 2.5

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    11-Aug-2014

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Some of the key concepts from Ignition's workshop "Agency 2.5: How Agencies Are Transforming for the Future." The complete workshop is available by contacting Tim Williams at twilliams@ignitiongroup.com

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  • Agency 2.5 How Agencies Are Transforming for the Future Presented by Tim Williams ignition consulting group www.ignitiongroup.com A selection of key concepts from
  • Agencies? Agencies are at an Inflection Point
    • Fragmentation and addressability of media and audiences
    • Democratization of creativity
    • Inexpensive and instantaneous production
    • Online interconnectedness
    • Digitization of everything
    • Brand advocacy in place of brand management
    • Pricing pressures due to oversupply of providers
    • And
  • An inflection point is a time in the life of a business when its fundamentals are about to change. Inflection points can be caused by technological change, but are about more than technological change. They can be caused by competitors, but they are about more than just competition. They are full-scale changes in the way a company or industry does business.
  • http://www.youtube.com/watch?v=ERGrSQoY5fs The Last Advertising Agency on Earth
  • Media Production houses Client in-house resources Crowdsourcing Agencies Management consultancies Brand consultancies Marketing research firms Competition both upstream and downstream
  • Media companies becoming agencies
  • Marketers that expect to do more business directly with media companies: 52% Marketers that expect to do more business with agencies: 27%
  • Becky Saeger Chairman, Association of National Advertisers (ANA) If I were an agency, I would be really worried about being disintermediated. More and more, agencies are almost in the way sometimes.
  • Ideation Execution Production de-coupling Another way agencies are losing leverage in the relationship
  • Crowdsourcing as competition
  • Future roles for agencies? Media brand owners Content collaborators Content curators Program producers Network creators Data providers Data aggregators Rights managers Brand guardians Source: The Future Foundation
  • Interrupting Imperatives for transforming the agency Engaging
  • Exposure Engagement Reach Frequency Cost per thousand Attentiveness Receptivity Buzz potential Efficiency Effectiveness
  • http://www.youtube.com/watch?v=SI-rsong4xs The Best Job in the World
  • Instead of reaching 80 million people, lets reach a million in your target and spend 10 minutes with them. Michael Lazerow, CEO
  • Implications and opportunities for marketing organizations
    • We need to change our language.
    • Engagement requires a new set of metrics.
    • Learn how to engage small audiences for a long time instead of engaging large audiences for a short time.
  • Mass media as channels Imperatives for transforming the agency Everything as channels
  • PAID EARNED OWNED Three main classes of media
  • PAID
  • PAID Media advertising
  • PAID The store as media
  • PAID The physical world as media
  • PAID EARNED
  • EARNED Traditional mass media
  • EARNED Blogs as media
  • EARNED Viral videos as media http://www.youtube.com/watch?v=VQ3d3KigPQM T-Mobile Dance
  • PAID EARNED OWNED
  • OWNED The brands online properties as media Microsoft.com OfficeLive.com msn.com Xbox.com
  • The brands online properties as media OWNED
  • The product itself as media OWNED
  • PAID EARNED OWNED Instead of this this.
  • Implications and opportunities for marketing organizations
    • Plan touch points and communications channels, not media.
    • Start with owned, then earned, then paid channels.
    • Better yet, help your clients build the marketing into the product.
  • Brand perception Imperatives for transforming the agency Brand experience
  • Agencies are missing revenue opportunities by stopping at pre-purchase
  • Lee Clow TBWA/ChiatDay The best ad we ever did for Apple is the Apple Store.
  • Parker Stoner, Swanson Russell Associates
  • Behavioral Economics: A new strategic imperative for agencies Rory Sutherland, President Institute of Advertising Practitioners (IPA), Vice Chairman, Ogilvy, London Hundreds of agencies have developed models for how advertising works. Whats needed now is for agencies to base their business on how people work.
  • An advertising campaign to persuade mothers that chicken soup is a good for colds and flu Behavioral Economics Placing chicken soup next to the cold remedies. -- or --
  • Agencies should be in the business of Choice Architecture Behavioral Economics
  • Implications and opportunities for marketing organizations
    • Help optimize how customers experience the brand, not just how they perceive it.
    • Help your clients move further up the effectiveness hierarchy.
    • Become expert in brand interactions, not just brand messages.
  • Consumers as audience Imperatives for transforming the agency Consumers as media
  • Which is your mental map?
  • What advertisers spend on media What consumers spend on media
  • Today, the average 14-year-old can create a global television network with applications that are built into her laptop. Randall Rothenberg CEO, Interactive Advertising Bureau
  • http://www.youtube.com/watch?v=5YGc4zOqozo United Breaks Guitars Consumers as media
  • Consumers as media
  • Customer service is the new media department. Pete Blackshaw
  • Implications and opportunities for marketing organizations
    • Understand the not just the demographics but the technographics of your audience.
    • Make it easy to share and distribute your content.
    • Proactively plan for consumers as media.
    • Realize that your brand will never have enough money to outspend consumers.
  • Persuasion Imperatives for transforming the agency Utility
  • Utility instead of persuasion
  • Utility instead of persuasion
  • Utility instead of persuasion http://www.youtube.com/watch?v=qOr5_GaGnPc
  • Implications and opportunities for marketing organizations
    • Put more effort into helping consumers instead of selling them.
    • Look at utility as an opportunity to develop some of your own intellectual property.
  • One-to-many Imperatives for transforming the agency One-to-one
  • The ideal agency of the future? +
  • Mass Messaging High volume mass communications with imprecise targeting with little or no segmentation or personalization Mass Customization Messages deployed based on dynamic analysis of real-time behavior across channels
  • Broadcasting Narrowcasting Spending a lot of money to produce a little content to reach a lot of people. Spending a little money to product a lot of content to reach a few people.
  • Narrowcasting Will It Blend? http:// www.youtube.com/watch?v=oRr7N7A4Wc0
  • Implications and opportunities for marketing organizations
    • Soon all media will be both searchable and addressable.
    • The new agency skill set is mass customization in place of mass messaging.
    • Agencies can package and sell data analytics as a service.
    • Precise addressability will allow more niche brands to advertise, creating more opportunities for agencies.
  • Digital department Imperatives for transforming the agency Digital competency
  • Digital spending will double in the next five years but advertising budgets wont. Digital marketing is the new mainstream marketing.
  • THEN NOW
  • From great in traditional to great in digital
  • Marketers who use the same agency for both mass and digital are more satisfied
  • Verbal Designer Visual Designer THE NEW CREATIVE HYDRA Experience Designer Experience Design (XD) User Experience (UX) Information Architecture (IA)
  • Implications and opportunities for marketing organizations
    • Digital must be at the core of the agency business model, not an add-on.
    • There will soon be no difference between traditional agencies and digital agencies.
    • Being digital means technologists must join creative and media teams.
    • An increase in digital work will produce more agency income, not less.
  • Controlled communications Imperatives for transforming the agency Open conversations
  • Broadcast advertising Print advertising Out of home advertising Promotions Events Direct mail Trade shows Product placement Media relations Community relations Employee relations Investor relations Crisis communications Media training Sales training Search engine marketing Online display advertising Sponsored online content E-mail marketing Interactive kiosks Mobile marketing Video gaming Website development Search engine optimization Online product reviews Online endorsements Blogs Microblogging Podcasts Opt-in online content Webinars Social media Offline Online Non-Paid Paid
  • ROLE OF THE CHIEF COMMUNITY OFFICER (CCO)
    • Instead of just creating brand advertising, a CCO builds a community around the brand using multiple channels.
    • Instead of just sending messages, the CCO monitors and responds to the community.
    • Instead of focusing on pre-sale activities and seeing areas like service and support as someone elses job, a CCO follows what consumers are telling the brand and each other.
    Chuck Brymer, CEO DDB Worldwide The Nature of Marketing
  • Social media as an agency service
    • Social media audit
    • Helping to develop social media policies and procedures
    • Ambassador training
    • Submitting to online directories
    • Blog creation, seeding and maintenance
    • Blog monitoring and participation
    • Tweeting and retweeting
    • Social network development
    • Online groups and forums
    • Online publicity
    • Posting and seeding videos and other branded content
    • Tracking, analyzing and reporting results
  • Advertising in the future will be much more like PR. Well be run more like a daily TV show or an interactive newspaper than an advertising factory. Richard Pinder COO, Publicis Worldwide
  • Implications and opportunities for marketing organizations
    • Learn to market consumer-to-consumer instead of just brand-to-consumer.
    • Shift the agencys skill set beyond presentation to participation and package it as a service.
    • Erase the artificial line between advertising and public relations.
    • Make publicity a central goal of your marketing efforts, not just a hoped-for by-product.
    • Experiment with ways to move what used to be offline, online (like product sampling, etc.)
  • High Volume/Low Margin Imperatives for transforming the agency Low Volume/High Margin
  • HIGH LOW Relative value of agency services Value perceived by client Cost incurred by agency Diagnose Prescribe Create Execute
  • Architect Which are you? General Contractor Sub-Contractor
  • Project Lifeline Higher Value Services Consumer insights Strategic planning Concept development Reputation management Product development Marketing ideation Connection planning Lower Value Services Programming and coding Pre-press work Print production Broadcast production Video production Revisions and resizes Media buying
  • Implications and opportunities for marketing organizations
    • Realize that the traditional agency cost structure cannot support both high-value/high-cost services and low-value/low-cost services.
    • Understand that either of these two business models (idea business vs. execution business) is viable, but they are different businesses requiring different cost and pricing structures.
  • Full scale Imperatives for transforming the agency Agile
  • Agencies are organized like a classical orchestra in a jazz age. Rashid Tobacowala
  • The Agile Manifesto
    • Build projects around motivated individuals. Give them the environment and support they need, and trust them to get the job done.
    • Simplicity--the art of maximizing the amount of work not done--is essential.
    • At regular intervals, the team reflects on how to become more effective then adjusts its behavior accordingly.
    • The team welcomes changing requirements, even late in development.
    • The team delivers working software frequently, from a couple of weeks to a couple of months, with a preference to the shorter timescale.
  • Direction Teams
    • 1. Business Director
    • 2. Planning Director
    • 3. Channel Director
    • Content Director
    • Project Director
  • Implications and opportunities for marketing organizations
    • An always-on marketing program requires agile teams and an agile approach.
    • The agile approach requires fewer people, fewer layers, and more autonomy.
    • The need for professional project management will only increase due to the complex demands of digital marketing.
  • Selling time Imperatives for transforming the agency Selling value
  • http://www.youtube.com/watch?v=R2a8TRSgzZY The Vendor-Client Relationship
  • RFPs that focus extensively on price. Mandates to reduce fees without also reducing SOW. Demands for extensive disclosure of agency costs. Clients not forthcoming about marketing budgets Agency services shopped based on hourly rates. The branches of the compensation problem What is the root? The billable hour
    • Salaries + Overhead + Desired Profit
    • Expected Hours
    Whats the right formula for agency compensation? = Hourly Rate Hours Worked Fee Charged = Hours Worked Value Delivered =
  • Why time-based pricing is the wrong paradigm
    • Looks in the wrong place for value (inside vs. outside)
    • Based on cost to agency rather than value to client
    • Assumes client is buying activities rather than outcomes
    • Puts emphasis on efficiency instead of effectiveness
    • Misaligns the economic interests of agency and client
  • Do you want to haggle over hours, or do you want ideas that build the momentum of your brand? Jeff Hicks President Crispin Porter & Bogusky
  • Cost-Led Pricing Price-Led Costing Customer Value Price Cost Product Product Cost Price Value Customer
  • Estimating hours isnt pricing. Counting costs isnt pricing. Setting an accurate billable rate isnt pricing. Costing is a science. Pricing is an art.
  • Chief Compensation Officer Neal Grossman
  • This is not the death of marketing and media, but a dramatic rebirth in the way the end of the last Ice Age yielded more advanced species than had every prospered on earth before. Bob Garfield Advertising Age columnist and author of The Chaos Scenario
  • The complete Agency 2.5 seminar is available on a custom basis to agencies and organizations. www.ignitiongroup.com Direct inquiries to Tim Williams at [email_address] @IgnitionGroup @TimWilliamsICG
  • An invitation to visit Ignitions new online resource center www.ignitiongroup.com
  • Books by Ignitions Tim Williams Take a Stand for Your Brand: Building a Great Agency Brand From the Inside Out Positioning for Professionals: How Professional Knowledge Firms Can Differentiate Their Way to Success
  • www.ignitiongroup.com