The world of advertising is facing an extremely challenging future. At present, it is being rocked by changes that threaten its existence — and this change comes in the form of digital marketing and all of the new-fangled tools that have emerged within the last few years – SEO, metrics, and analytics – just to name a few.
The advent of digital marketing is changing the way we see advertising and audience engagement and it is challenging the age-old advertising paradigms – with some saying that digital marketing is not just challenging it but demolishing it altogether.
So what’s the future of advertising agencies?
If we go by the prevailing views, the future of advertising agencies is bleak. Allow me to explain.
Advertising has been completely comfortable with its position. For decades, it has been using the same business model that has made it the successful industry that it is today. The assembly line model that it follows addresses the established paradigm of traditional advertising. In this model, the client pays an agency account executive, who briefs the brand planner about the client’s need, who then briefs the media planner. The creative team (comprised of the copywriter and art director) thinks up of ideas and passes on its approved proposal to the producer, who then forms a team to produce the product. The product – a TV commercial, for example – is aired in identified channels with the help of the media buyer. This model has worked well over the last few decades. In fact, the last great paradigm shift in advertising happened in the 1960s, when Bill Bernbach of DDB realized that the collaboration of the copywriter and the artist can have amazing results in terms of the final product.
Unfortunately, this assembly line model does not work as efficiently in the extremely fast world of digital marketing. As I have mentioned earlier, changes happen quickly and you need to adapt as quickly to be relevant. The present model is just too slow to keep up. The emergence of various technologies has put immediacy at the very forefront of digital marketing with the internet being the biggest game changer. As Andy Nibley, former CEO of Marsteller — who had also served as CEO of Reuters and Universal Music, complained, “First the news business, then the music business, then advertising. Is there any industry I get involved in that doesn’t get destroyed by digital technology?”
Digital has changed the advertising landscape
I feel for Mr. Nibley, but that’s the reality. Digital is a juggernaut and it is inevitable that it will completely change the advertising landscape in just a few years. What are these changes?
Digital is a new medium
For the longest time, advertising agencies only had to deal with TV, print and radio. Agencies used these three media channels to convey their message. But digital has entered the picture and is a new channel to contend with – the new kid on the block. What many agencies have failed to realize is that digital is not just a mere channel. Digital acts as a bridge between the new and old formats of advertising, but it also acts as a catalyst that spawns other types of media – for example, the many iterations of the social media network idea.
The “message” has become a “dialogue”
The traditional channels of advertising are a one-way street — the advertiser sends a message to the consumer. The content of that message is the product of research about what that target consumer is all about. Digital has irrevocably changed this by transforming it into a dialogue. The consumer now has a voice that can challenge that message. The voice of the man who posts a scathing review of a new electronic product he just bought is as valid as any message the electronics company has sent out to the market.
Advertising is now personalized
Digital has offered a tantalizing glimpse into what is the holy grail of advertising – being able to send a customized message to a particular person at a specific moment. Never at any point in advertising history has this been achieved, but digital has the capabilities of doing it – and this is going to forever change the way we view advertising.
The shift is happening
A growing number of companies are slowly realizing the inherent power of digital and the role of the advertising agency is being scrutinized and questioned. For example, many corporations are now eschewing the established arrangement of having an agency on long-term retainers – an arrangement that has made advertising firms millions of pesos. The raison d’etre for moving away from the retainer arrangement is quite logical – corporations want to deal with people who have the expertise they need and not be boxed in by an agency that may be experts in traditional advertising but still couldn’t make heads or tails of digital marketing. For example, Angelique Krembs, the marketing director of the SoBe brand (a brand owned by PepsiCo), has issued a directive that they will only work with companies that specialize in digital, PR or promotions and not engage companies that claim to be “generalists.” Krembs has a very valid explanation for her move. “I didn’t see it as us ditching a creative agency. We were going beyond traditional.” Krembs said that it was highly unlikely that they will find a shop that can offer everything they wanted and be experts at it. That’s a chink in the advertising agency armor and it is just going to grow bigger as time goes by.
The only way for advertising agencies to survive the coming of the “digital age” is to shed off dogmatic models of advertising and acknowledge that, yes, the world has changed and it will never go back to what it once was. By embracing digital and allowing it to organically change the agency – its paradigms, its models, its traditions – then it has a hope to transform itself and remain relevant. But for those who do not want to change and still adhere to the old ways then, sadly, there really is no future for them in the digital space.