Heggen Group at Heggen GroupYou hit on several critical aspects. I especially like the emphasis you place on thoughtful engagement and all media is digital. Thank you for sharing.2 months ago
Omar HelfmannSadly, I had to miss this presentation in Chile but the questions raised in these slides provoke so many thoughts about these new dynamics! Will keep a close eye on Tim Williams!2 years ago
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Luis Alberto Ovalle Zalaquett, Digital Strategist at Burson-Marsteller ChileI attended this seminar and must say it is really good, the content itself is very well elaborated and insightful, plus Tim is a great presenter and kindly expalins in simple terms how the agencies must change to add value to themselves and their clients. A must. Lots of thanks.2 years ago
Mauricio Novaes, Planning at RAPP BrasilPoint of view of what is comming next to the agency market. It could be great or not so nice if you are not prepared.2 years ago
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melodymeThank you for sharing this new perspective on how agencies should evolve and shift to the next level of engagement. It is possible for you to send me a copy of your presentation please?
Our business is at an inflection point. An inflection point is a time in the life of a business when its fundamentals are about to change. Strategic inflection points can be caused by technological change but they are more than technological change. They can be caused by competitors but they are more than just competition. They are full-scale changes in the way a company or industry does business. So says Intel founder Andy Grove.
Over three-quarters of media companies say they offer “idea generation” and “creative development.”
Production de-coupling” is about eliminating overhead associated with multiple agencies supporting production capabilities by mandating that they funnel production to one central source.
Results = 34,648 applicants from 201 countries.
*Making actual engagement (not exposure) our primary goal significantly changes the way we approach our work. *300,000 installs, average user spent 7 minutes – enough to try three hairstyles. Half of all users returned to it more than 25 times!
WORKBOOK: Page _____ *Because of this broken social contract …
ASK: 1. What are examples of media that fall into each of these categories? 2. Which ones should you deploy first?
ASK: 1. What are examples of media that fall into each of these categories? 2. Which ones should you deploy first?
ASK: 1. What are examples of media that fall into each of these categories? 2. Which ones should you deploy first?
ASK: 1. What are examples of media that fall into each of these categories? 2. Which ones should you deploy first?
JetBlue has 1.4 million followers on its Twitter feed.
WORKBOOK: Page _____ *This is about going beyond just “storytelling” which most agencies claim as their expertise. *It’s about moving beyond building messages to building utility. *It’s about going beyond the pre-sale to the sale and post-sale.
EXERCISE: Page ____ List all the services you provide in each of these three areas.
*“The best ads we’ve ever done are the Apple Stores”
*Behavior economics is about understanding the gulf between the rational behavior the economic models predicted and the actual observed behavior seen in real life.
Choice architecture is about how people gather information when they choose.
WORKBOOK: Page _____
EXERCISE: What are the implications of this?
QUOTE: “ 1. The implications of this for agencies are monumental, because all this media being created results in virtually unlimited supply against what has historically been relatively stable demand.” “ 2. Mass media thrived on the economics of scarcity. The internet represents an economy of unending abundance.”
One of the most notable recent examples of “consumers as media” is this.
*Last summer, when the payment deadline for shoes a customer ordered cam due, a Zappos rep e-mailed the woman to remind her. The woman told the rep the reason: she had meant to send back the shoes, but she was distracted with a dying mother. *Zappos sent UPS to pick up the shoes, brought flowers with a note. *Customer blogged about her experience, which brought hundreds more great comments about Zappos.
QUOTE: “ You can maximize good impressions for the brand in two different ways: 1) Buy impressions (traditional media model) 2) Earn impressions through a positive brand experience.” “ The media planner of the future needs to think about how investment made against customer service actually begets more favorable impressions.”
WORKBOOK: Page _____ *This is about going beyond just “storytelling” which most agencies claim as their expertise. *It’s about moving beyond building messages to building utility. *It’s about going beyond the pre-sale to the sale and post-sale.
One of the ways to earn good consumer-generated media is to use your advertiser-generated media not to persuade, but to help .
(Best of Show winner in The One Show Interactive competition)
One of the ways to earn good consumer-generated media is to use your advertiser-generated media not to persuade, but to help .
WORKBOOK: Page _____
Jonah Bloom says the agency needed today will marry the behavioral savvy of Omnicom’s Rapp with the pop culture creating abilities of Omnicom’s Goodby Silverstein & Partners.
*One is about knowing how to advertise on ABC. *The other is about knowing how to advertise on Yahoo!
*Media cost of zero (and production costs of only a few thousand. *Views: 65 million
WORKBOOK: Page _____
In 2009, digital is 12% of the advertising spend, but will be 21% by 2014.
*RGA calls this the new Creative Hydra *Agency creative teams will more closely resemble software development teams.
EXERCISE: Page _____
EXERCISE: What could or should be an agency’s social media offering?
WORKBOOK: Page _____
*If we were to draw a line from left to right charting the perceived value to the client of what we do, it would probably look something like this … *Now if we were to chart the actual cost to the agency of delivering these services, it would look something like this. *the problem are in this chart is on the far right – in the area where our costs exceed the perceived client value.
*This means thinking hard about which of these you are – or want to be. *The work of the architect is intellectual and managerial- high value. * “Many of the agencies that used to create buildings are now just selling bricks.” Mike Carlton
ASK: “Project Lifeline” : at some point the agency services delivered on a project become commoditized. Where?
WORKBOOK: Page ____
Agencies are organized classically in a jazz age. Classical = Sections that read music and take direction Jazz = Small ensemble that improvises
Agile = An agile software development team can add features in any order and can release a working version of the product at any iteration.
WORKBOOK: Page _____
As Emerson might say if he were making this presentation today, for every thousand hacking away at the branches of the agency compensation problem, there only a few hacking at the roots. Today I want to talk about the roots. ASK: What would you say is at the root of this problem?
Jeff Hicks puts it this way … When it comes to negotiating agency compensation, that’s really the issue, isn’t it?
Strategic pricers don’t ask, “What prices do we need to cover our costs and earn a profit?” *Rather, they ask “What costs can we afford to incur, given the prices achievable in the market, and still earn a profit?”
Costing is objective. Pricing is subjective. Or more to the point, pricing is psychology. So when we allow ourselves – our agencies and our industry – to get dragged into detailed discussions that only have to do with counting costs – FTEs, hours and overhead – we’ve left the world of pricing behind. Costing is not pricing.
Chiat/Day’s recently appointment of Neal Grossman as Chief Compensation Officer is designed to remedy this.
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, let’s 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 brand’s online properties as media Microsoft.com OfficeLive.com msn.com Xbox.com
The brand’s 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.’ What’s 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 won’t.” 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 else’s 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. We’ll 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 agency’s 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
What’s 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 isn’t pricing. Counting costs isn’t pricing. Setting an “accurate” billable rate isn’t 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 Ignition’s new online resource center www.ignitiongroup.com
Books by Ignition’s 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
Uwe Gutschow
thank you. 2 years ago