The identity crisis of today's ad agencies
Once upon a time, the phrase "advertising agency" conjuredup a very definite image -- one of smoked-filled rooms and mile-long conference tables, across which creative geniuses would rapid-fire pitches at one another in hopes of hitting on that one "big idea." It's the nostalgic scotch-soaked notion of the ad agency famously portrayed on the hit show "Mad Men."
But that's not the modern agency. In fact, most industry participants today would be hard-pressed to define what exactly the phrase "the modern agency" means. However, few would argue that the digital revolution has forever changed the marketing game. And it's little wonder that many of today's advertising agencies are going through an identity crisis.
Large traditional creative shops are rethinking their offerings, expanding into all things digital. Agency holding companies are restructuring to better leverage their digital resources. And all the while, new digitally focused agencies continue to spring onto the scene.
So, during this time when the ad agency model is very much in flux, what is working?
Speaking on a Tuesday panel at ad:tech New York, Nancy Hill, president and CEO of the American Association of Advertising Agencies, outlined three approaches that she's currently seeing marketers take when it comes to their agency relationships. The first model is one in which a client selects one lead entity -- at either the holding company or agency level -- and grants it the power to oversee all marketing efforts and partners. The second model is one in which the client itself assumes that leadership role. And the third model is one in which a client hires a slew of agencies and tells them to go collaborate.
"Two of the models work, and one of them absolutely does not," Hill said. The third model, she said, is destined to fail -- and yet it's the model being used most often. "And that's where the fighting comes in because there is no clear mission," Hill said, noting that it's imperative from a marketer's perspective to have one throat to choke at the end of the day.
Whether it's a specialized digital agency looking to broaden its client base or a traditional agency looking to expand its offerings into the interactive realm, few industry participants dispute that much of the future growth in marketing will come on the interactive side. Thus, panel moderator Suzanne Vranica, an advertising and marketing columnist for The Wall Street Journal, wondered aloud whether the potential growth of advertising agencies would be stifled by the lack of available digital talent in the job pool.
"In spite of the talent issue, everyone I have talked to has an open head count and is hiring," Hill responded. The trick, she added, is making the agency side of the marketing business attractive to candidates with the needed digital expertise.
Sean Finnegan, president and chief digital officer of Starcom MediaVest Group, pointed out that it's not all about recruiting new digital talent to the agency side of marketing. It's also about retraining industry veterans.
"We have people with 15 to 25 years in the business, and they are making a choice to change and adapt into this digital culture," he said. "Smart digital agencies are the ones that are embracing these people, involving them in the process, and training and educating them. They have a lot of intangible assets, and they bring a level of talent that some of the new digital folks just aren't going to pick up on the fly."
To this point, Tom Bedecarre, CEO of AKQA, disagreed with Finnegan. According to Bedecarre, hope for the future of digital marketing lies largely with the youth. "Young people who are coming up in the industry are so naturally cross-platform savvy," he said. "All this digital technology is human nature to young people. So I think we'll have more luck training new people than retraining old people."
Richard Guest, managing director, New York, at Tribal DDB Worldwide, sided with Finnegan on the issue of digital hires. "I think we have to separate technical expertise and knowledge from marketing expertise and knowledge," he said, noting that his agency has opted to retrain many marketers from the traditional agency side.
Beyond staffing for the digital future, Guest also noted that agencies must also find a way to clearly convey their value in an increasingly cluttered marketplace. When it comes to agencies, he said, clients are getting tired of having to listen to so many voices. "In a modern era, where consumers are increasingly skeptical, I think the best voices will rise to the top," he said.
But the shape that those "best voices" will take remains to be seen. To some extent, the continued evolution of the advertising agency is all about money, Bedecarre said.
"Traditional agencies see the handwriting on the wall -- that they're going to be out of business if they don't jump over to digital media and digital technology," he said. Marketers today are less likely to simply hire a traditional agency and a digital agency and then tell them to play nice together. The lines are blurring, and so are agency distinctions.
"It is about money and being relevant and not losing a seat at the table," Bedecarre said.
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