A presentation I delivered to Northwestern University IMC class in December 2014. Many of the trends continue to play out.

1. Pondering The Agency of The Future

2. [Experience] Writing, Sales, Marketing, Customer Experience
[Client side] Startups, Apple, USRobotics, 3Com
[Agency] Critical Mass / Omnicom
[Advisory] Mobile, eCommerce, Analytics, SaaS
[Verticals] Technology, Financial Services, Retail, CPG, Automotive
Luxury, Healthcare, Telecom, Professional Services
[Passions] Strategy / Technology / Consumer Behavior / Developing Talent
About Me
@neilclemmons

3. The Marketing Landscape
The Agency Landscape
The Opportunity Ahead
Implications for IMC Students
Agenda

4. The Marketing Landscape
The Agency Landscape
The Opportunity Ahead
Implications for IMC Students
Agenda

5. • Marketing is increasingly about customer experience and engagement augmented by context.
• Context comes from data. Data feeds both the impression and the experience.
• Context is derived from many activities & sources - Transactions, Participation, Information,
Conversation, Applications, Location, and others.
• Interactive media will reach 24% of spend in 2014. and surpass TV by 2017. Digital CPM’s have
declined but are stabilizing with strongest growth in mobile and video over typical paid search and
banner ads.
• Increasingly, brands and retailers are integrating services to deepen digital interactions and
augment a product experience - compelling content, commerce, community, and connectivity tools.
• More and more, marketers are embracing pull efforts over the typical push efforts of the past.
These include social media and hosted communities.
• Many marketers are wrestling with mobile as a key opportunity (and it’s the fastest area of
investment right now). Yet most marketers have yet to establish a compelling mobile strategy.
• In time, we will see platforms and ecosystems of engagement and customer value that define
marketing and value exchange to sustain relationships and encourage loyalty.
What’s Happening?

6. What’s Happening?
Accountability Increasing
Channel Choices Exploding
Speed Increasing
Budgets Shifting
Consumers Even More in Control

7. Fast Forward to 2020
By 2020, 80% of the world’s adults will have a smartphone
Source: World Bank, GSMA, Andressen Horowitz
Population Adults TV Audience
Literate
adults
Mobile
Online
population
Smart
phones
PCs
Consumer
PCs
8
7
6
5
4
3
2
1
0
Global Population (bn)
2014 2020

8. Mobile Provides Huge Potential for Leverage
Increased sophistication from mobile is as important as the increase in scale
2-3x more
smartphones
than PCs by
2020
• Personal
• Taken everywhere
• Frictionless access
• Sensors, cameras
• Location
• Payment
• Social platform
• Much easier to use
10x the
opportunityX =
Scale Sophistication
Source: Andressen Horowitz

9. Yet Most Marketers are Not Yet Ready for Mobile
Source: Forrester, Mobile Commerce Daily, 2014
• Marketers tend to focus on the latest shiny mobile technologies and don’t make the most of the
mobile services their customers are using.
• Early branded mobile apps offered little in the way of back-end integration to systems or loyalty
programs, thus offering little value for consumer use.
• Only 55% of marketers know their customer’s mobile needs, attitudes and behaviors.
• Only 35% of marketers have the budget they need for mobile.
• About half of marketers have a validated mobile business case for key initiatives.
• Only 38% of marketers have analytics in place to measure the impact of mobile.
• Some marketers are seeing great success with mobile. Notable examples are Starbucks which
is now driving over 15% of their sales with mobile payments. And Domino’s is doing over 40% of
their revenue via mobile sales.
• And mobile payments are expected to drive connected commerce online and in-store.

10. The Client Challenge
The Average Tenure of a CMO is 45 Months. '04
'05
'06
'07
'08
'09
'10
'11
'12
'13
$ 25 B $ 50 B
45
45
43
42
34.7
28.4
26.8
23.2
23.5
23.6
AVERAGE
CMO
TENURE
Months
Source: Spencer Stuart
The CEO has a tenure of 84 Months.
Can the Agency help?

11. This Isn’t the Future of Marketing

12. Customer
The Future is About Connected Experiences and Platforms
Journey
Clarity
Realtime
Feedback
Valuable
Platforms
Customer
Context
Needs &
Behaviors
Communications
Community
Content
Commerce
Competitive Landscape

13. The Future is About Connected Experiences and Platforms
Customer
Clarity
Realtime
Feedback
Valuable
Platforms

14. The New Reality for a Real Time Age
Strategic Plans Matter Less Than Strategic Thinking
and Opportunistic Decision Making

15. A Huge Strategic Shift
Idea Driven
Advertising & Promotion Led
Planned Quarterly
A Few Channels
Integrated in Look, Feel, Tone
Reported Data
Brand-out
Half-life Measured in Years
Insights Led
Customer Experience Focused
Executed Real-time
Hundreds of Channels
Integrated in Experience & Relevance
Algorithmically Generated
Customer-in
Half-life Measured in Weeks
What Was… What Must Be…

16. The Marketing Landscape
The Agency Landscape
The Opportunity Ahead
Implications for IMC Students
Agenda

17. Agencies in the News…
Apple shifts away from TBWA/ Media Arts Lab to in-house team, April, 2014
Capital One acquires Adaptive Path as captive in-house agency. Oct, 2014
Publicis to acquire Sapient for $3.5B in cash, Nov. 2014
Smart Design SF shutting down. Cannot compete with startups for talent, Oct, 2014
The Rise of the In-house Agency, ANA, Sept. 2013
Razorfish & Peets Ink Deal for Profit Sharing on eCommerce, March, 2014
Agencies Paying Top Dollar for Data Analysts, Oct, 2014
Kraft Cuts More than Ten Agencies, Consolidates on Fewer AOR’s, Nov. 2014

18. What do Clients Look for Most in an Agency?
• Strategic Thinking
• Creativity
• Responsiveness
• Low Cost
• Process / Approach
• Results
Source: Ignition, AAAA

19. What do Clients Look for Most in an Agency?
• Strategic Thinking
• Creativity
• Responsiveness
• Low Cost
• Process / Approach
• Results
Source: Ignition, AAAA

20. But Clients Want More Than Just The Category Benefit!
No Brand can Survive Delivering Only the Category Benefit!!
• Strategic Thinking
• Creativity
• Responsiveness
• Low Cost
• Process / Approach
• Results
Neither Can Agencies!

21. My Experience with Clients
• Relationship
• Leadership
• Creativity / Ideas
• Strategic Thinking
• Talk Value / Advancement
• Responsiveness
• Results
• Process / Approach (Compliance)
• Cost Competitiveness
Senior Client
Mid-level Client
Procurement
Expectations vary by role

22. AOR (Roster, Jump Ball)
Talent (Freelancers, Contract, Insourcing)
Idea (Crowdsourcing)
Execution (Production Shops)
Media Firm (In-house, Self-service, Programmatic)
Publishers (Custom Integration)
Retailer (Commerce)
Retainer (Projects, Pay for Performance)
Unbundling and Disintermediation of the Value Chain
Client
Consumer
Why?
• Increase Control
• Decrease Costs
• Improve Margins
• Speed up Responsiveness
• Deepen Direct Relationship
AOR
Talent
Idea
Execution
Media Firm
Publishers
Retailer
Retainer
Looks like elements of disruption to me!

23. What Forces are Driving Agency Change?
Today’s
Agency
Client Realities
Competitive Pressure
Roster vs. AOR
In-Sourcing
Platforms vs Campaigns
Contract & Rate Pressure
Marketing Realities
Myriad Channels
Programmatic Buying
Data Overload
Consumer Attention
Increasing Specialization
Globalization
Lack of Role Clarity
Operational Realities
Fresh Creative / Ideas
Realtime Needs
Agile Methods
Push to Automate
Decoupling
Talent Realities
Turnover @ 30%
Increasing Costs
Startup Growth
Growing Freelance Base
Minimal Barriers to Entry

24. Media Spend Has Lagged Media Consumption for Years!
Percent of media time
2009 2010 2014
Watching TV 34% 31% 32%
Internet time
(home / work)
45% 49% 52%
Reading
newspapers
6% 6% 5%
Listening to the
radio
15% 14% 11%
Source: Forrester, Nov. 2014
Percent of media spend
2009 2010 2014
Watching TV 31% 34% 43%
Internet time
(home / work)
12% 14% 24%
Reading
newspapers
14% 12% 11%
Listening to the
radio
7% 8% 9%
Over
Over
Under
Index
Under
Base: 4,611 — 58,725 US online adults (18+)

25. Source: Forrester, Nov. 2014
US$Millions
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
$110.00
$120.00
2014 2015 2016 2017 2018 2019
Television Interactive
Digital Finally Projected to Beat TV
32% of Total
2% CAGR
35% of Total
12% CAGR
Crossover

26. The Marketing Landscape
The Agency Landscape
The Opportunity Ahead
Implications for IMC Students
Agenda

27. It’s a Crowded Services Field Surrounding Marketers Today
CMO, CDO
& Teams
Customer
Experience
Agencies
Creative
Agencies
Ad &
Marketing
Technology
Firms
Startups &
Product
Development
Shops
Media
Agencies
Innovation
Consultancies
Brand
Agencies
Management
Consultancies
PR & Social
Media
Firms
Mobile
Development
& Marketing
Firms
Event
Marketing
Agencies
Shopper
& Location-
Based
Marketing
eCommerce
Consultancies
Analytics
& Data
Management
Consultancies
Systems
Integrators
Direct
Marketing
Agencies
Sponsorship
Agencies
Market
Research
Firms
Aggregators
(FB, Google,
etc)
Publishers
(Digital, TV,
Print)
Data Providers
Loyalty
Program
Consultancies

28. And They Are Focused On…
A Seat at the Table
(Access to Budgets)

29. The Next Act for Agencies
Type of agency
Marketing-led initiatives Innovation Integration Implementation
Create campaigns to drive awareness X
Automate internal marketing processes X
Establish a customer experience strategy X X X
Bring digital concepts to in-store experiences X
Build digital products or services X X
Automate media buying X
Produce video content for digital & broadcast X
Develop mobile-first brand experience deployment X
Revisit the brand / business strategy X X
Develop a process and support for marketing innovation X
Source: Forrester, 2013
Forrester believes ‘digital agencies’ will fall into one of three buckets.

30. What’s Holding Progress Back?
CMOs are feeling pressure to tie marketing efforts to financial impact
• Leapfrog / Medill IMC Study
• Reported October, 2014
CMO’s Struggling with Data, Digital, Mobile
Barriers to Success:
• Limited Internal Expertise
• Siloed Organizations
• Resistance to Change

31. Where do Marketers Need Help?
• Develop breakthrough ideas - creative, yet strategic, based on market or customer
insight. Execution may not happen by the same firm, however.
• Harness & optimize data - data cleansing, system setup, analytics, customer
analysis, loyalty program optimization, customer experience optimization.
• Offer channel expertise & leadership - from social to mobile to shopper marketing or
native advertising, clients are looking for channel-specific depth.
• Content development - original content, story telling, social content, online content;
most marketer’s second highest spending area behind paid media.
• Real-time agility - Operations, tools and talent to respond to the real time demands of
their target audience interacting across channels. Automate, simplify and empower
them to drive smart engagement at scale.
• Get shit done - Ability to scale, execute and deliver under tight timelines.
Operationally execute the campaigns, social efforts and myriad tactics. Get stuff off
the clients plate and take care of it to drive impact.

32. Connected Thinking for the Connected Age
• Customer behavior observed in context
• Smart ideas derived from insights
• Platforms differentiated with value to the customer
• Initiatives supported by experience mapping
• Relevance defined in real time
• Results reinforced with data
• Touch points integrated across the lifecycle
• All designed for dissemination and adaptive access
• With approaches and process based on agile methods
• Continuous improvement to reinforce accountability
• And smart collaboration across client and partners

33. People
Needs
Behaviors
Attitudes
Jobs
to
be
done
Journeys
Digital
Products
Feature
/
Function
Context
Content
Commerce
Communications
Elevated
Brands
Equity
Engagement
Loyalty
Expanded
Services
Extensions
Business
Growth
Barriers
to
Entry
Reduced
Churn
Increased
Revenues
New
Adjacencies
Differentiation
Sustaining
Platforms
Sustaining
Value
Feedback
Loop
Differentiated
Channel
Go-­‐to
Resource
Smart
&
Adaptive
The Path to Becoming Customer Obsessed…

34. The Marketing Landscape
The Agency Landscape
The Opportunity Ahead
Implications for IMC Students
Agenda

35. Group Total Revenue Non-Ad % Non-Ad Rev
$14.584 51.70% $7.540
$17.457 58.00% $10.125
$7.122 42.00% $2.991
$6.953 70.00% $4.867
Total $ 46.116 B 55.35% $ 25.523 B
Follow the Money…
The Major Holding Companies
Now Derive the
Majority of Revenues
from Non-Advertising Efforts

36. Where’s the Play for Agencies?
Drive Scale
DriveSpecialization
Regional Global
GeneralistSpecialist
• Challenge to Build & Scale
• Strong Demand
• Higher Multiple
• > $50MM to Play
• Most Competitive
• Tough to Differentiate
• Higher Client Turnover
• Smaller Clients / Engagements
• Easier to Scale / Differentiate
• Stronger Demand
• Rely on Systems & Tools
• Acquisition Target
• < 25 Firms / Networks
• Holding Company Plays
• Slower Growth
• Harder to Displace
Acquisition
Service Expansion / Client Opportunity

37. What Can We Learn from Startups?
Software is Eating The World - Embrace it.
Recurring Revenue Drives Growth / Value.
Extreme Focus. Minimum Viable / Desirable Product.
Full Stack - Talent with Multiple Dimensions.

38. Seven Skills Marketers Will Need

39. People
First:
Design
for
Use

40. Agility:
Speed
&
Nimbleness

41. Perspective:
Global
+
Local
GLOCAL

42. Viewpoint:
Outside
in,
not
Inside
out
OUTSIDE
IN

43. Problem
Solver:
Remove
the
Friction

44. Opportunity:
Moments
of
Truth

45. Measure:
Usage
&
Delight
Customer
Obsession

46. Questions?