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Sparking Conversation: Agency 2020

This-Will-Make-Advertising-History

Conversation is introducing a new approach to producing content, called “Sparking Conversation.” Launching our theme on the 15th of each month, the focus will be centered on a new topic. Some topics will be directly related to the agency, our industry, or business in general. Others might be a little more abstract. Our goal during these month-long timeframes is to challenge ourselves to generate material that showcases our agency position, culture, and the views of our team members. On the first day of the following month, we will release a white paper that features a portion of the previous month’s content, putting it into greater perspective and providing actionable takeaways.

This month’s “Sparking Conversation” is “Agency 2020″ which hits particularly close to home. We will be exploring agency vision, looking back and looking forward while making our best attempt to “see the forest from the trees.” This will involve exploring where advertising agencies came from, where they are now, and where they’re going. We’ll offer perspective on categories, brands, and experiences as marketers and as consumers. What will agencies look like in the year 2020? What will we think of today’s agencies when we look back on them? We’re about to find out.

First, it is important to know what makes us tick, where we came from and the various influences at hand. In each initial post, this will be addressed. Following posts will explore individual topics and interests within the related theme.

Let’s first discuss one model which is at the core of most marketing textbooks: the marketing mix. The easiest way to explain “the marketing mix” is with two examples known as “The Four’s.” In 1960, E. Jerome McCarthy, noted expert and professor at several respected institutions – including Michigan State and Notre Dame – authored the textbook Basic Marketing: A Managerial Approach. This text introduced “The Four P’s” – Product, Price, Promotion, and Place. These four P’s served as a blueprint for marketers approaching consumers with goods and services. Their purpose was to increase brand building, favorability, and sales. However, as is usually the case, humans adapted. Over time, this blueprint became less effective as consumers became privy to marketing messages and their intent. A new model, called “The Four C’s,” was introduced in 1993 by Robert F. Lauterborn, who is currently a notable professor at the University of North Carolina. Lauterborn modified “The Four P’s” to a consumer behavior centric model focused on Consumer, Cost, Communication, and Convenience. This shift is as much a nod towards the need for us to explore Agency 2020, from both the marketer’s perspective and the consumer, as anything else. It shows that history is more than just cyclical. It evolves. And evolution is paramount to our existence not just as human beings, but as an industry.

Our agency position is that many facets of the industry have and will most certainly continue to change. Those facets are the tactics and channels we use to communicate a message. That message, however, will continue to be crafted by skilled artisans in the communications – not the advertising, marketing, or public relations – profession. Those communications professionals guide that message through the traditional backbone of research, planning, strategy, and additional refinement processes that result in a well-informed creative treatment. As our world continues to become fragmented, our creative treatment has exponential touch points – from traditional TV, print, and radio to emerging digital, social, mobile, and unknown. Yet, the basic premise of marketing communication remains the same. The execution is just evolving.

History has shown that the Client/Agency relationship has changed over time. The first acknowledged advertising agency’s started in London in the late-1700s and early-1800s. These agencies, not surprisingly, were focused on the media of the day – newspapers. As media evolved with the advent of radio and television, so did agencies. At the beginning of each new form of media, specialized agencies popped up, vying to meet a client’s new need expeditiously. Over time, consolidation took place, and integrated communications agencies took shape. As proficiency in each channel became necessary, new agencies formed, offering expertise in each channel from one source. This led to efficiency, singular control over client tone and voice, and cohesive strategy (not to mention, fewer meetings and agencies to wrangle!). As with all industries, consolidation and earnings expectations can lead to monopolies, which is never far from the agency world in the form of holding companies.

In today’s industry, independents (like Conversation) are constantly rivaling holding companies for client. First, how did holding companies originate? Holding companies, as we know them, were born out of agency consolidation in the mid-1980′s. Facing growing competition, the largest agencies partnered up to form networks as a protection against competition, sharing profits and offering economies of scale. The holding company model has had its benefits over the last 25 years. Yet, at the same time, with increased fragmentation and segmentation the scale of agencies needed to offer a cohesive, cross-channel, integrated strategy for 90 percent of the consumer population (which come from varying demographics) has led to an increase in specialized agencies necessary to “get the job done.” Many more traditional agencies have held tight to the glamorous parts of the business – planning, strategy, media – and let smaller shops, sometimes several at a time, handle the dirty work. Through this, a client is on the line for paying several agency fees, overhead, and team allocation costs for the different seats at the table, which benefits the bottom line of the holding companies. The efficiencies, which were once in place in the holding company model, have been lost with hyper fragmentation of execution channels, merger and acquisition costs associated with constantly expanding holding companies, and communication blockage within the network model, which still requires agencies to look out for their bottom line before their clients.

Fast forward to the year 2020. What will change with regard to marketing mix, the client/agency relationship, and holding companies? In true Conversation style, we can sum it up creatively with a proverb that exudes as much double meaning as “Agency 2020″ and “the new traditional agency”: “The more things change, the more they stay the same.” We can guarantee that in 2020 we will still be human beings at our core (sorry all of you science fiction buffs), therefore traditional communication development strategy must be employed to be successful. We can also be sure that clients and agencies will still exist, but how many agencies a client has depends on how fast particular bubbles burst. Finally, we can say that (okay, science fiction buffs, here’s a nod) that there will always be a struggle between good and evil when effectively using funds versus padding a holding company’s bottom line.

In the end, Agency 2020 will produce sharper creative by nature of evolved thinking amongst team members. They will be more lean in their execution going back to producing a majority of tactical work in-house, and the power players will rival holding companies with cross channel prowess, from research and planning to measuring and analyzing executed campaigns. At Conversation we look forward to this renaissance and pioneering the forward thinking of what it will take to be the new traditional agency.

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