Tuesday, March 4th, 2008

The inversion of advertising

The inversion of advertising
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All of us in design, marketing, and advertising are used to change. It’s simply a matter of fact that the way we communicate evolves. You and I, however, know that we are all in the midst of a change of epic proportions that may in-fact result in the complete re-writing of how companies and customers communicate.

Some of you are undoubtedly well aware of how the landscape is reforming. A few weeks ago, however, I was reminded that many are slow to accept these changes. This one surprising meeting opened my eyes.

Looking for partners

After smashLAB re-focused its offering to solely interactive services, we contacted a number of traditional agencies, looking to build partnerships. While we did find ways to work with a few groups, the underlying sensation was one of “we already do interactive.” Well enough, but the comment at the end of one meeting illustrated how few agencies really “do” interactive.

We were very excited to meet one particular group, due to their cachet in the industry as “thought leaders”. The conversation was stifled by an odd tone that we could only pin-down as some kind of a generational divide. We couldn’t really understand the reason for the disconnect until our host summarized his perspective on interactive by noting, “Really, when did you last click on a banner ad anyway?” In my mind, I could only think, “holy shit, this guy is absolutely lost.”

Let me stress that this isn’t a “fly-by-night” operation. This is a highly awarded agency that is perceived by many to be amongst the most progressive of the lot. As such, that comment blew me away. No talk of integrated campaigns, no ideas around enabling community, just “banner ads”. Ugh.

That spooky feeling of the rug being pulled

Whenever I’m around smart people, I’m reminded by how they get this way: They ask questions. They probe and dig with the knowledge that everything can change in a heartbeat. You always have to be receptive to new possibilities.

What had us perplexed was that this guy really didn’t have any notion of what was occurring. He didn’t see any need to talk about the changes in process. Realistically though, why would he have? He wasn’t aware, or fearful, of his lack of knowledge; he simply didn’t see the web as anything more than a support channel for traditional advertising. He was still in the world of the 30 second spot.

As we returned to our office, I kept thinking that this fellow’s whole world was about to be rocked. All of those cute ad spots that were pulling in awards were going to look awfully antiquated a few years down the road.

This is where we are at

Is advertising dead? No. It will always be here, but it’s changing wildly, and established power-brokers may well be shaken from their spots as this occurs. Just read this article at Wired if you’re interested in how (and why) this shift is occurring. I’ve heard it said that this is a great time for musicians, but a bad time for labels. It’s not that music is facing extinction, but that the (broken) system of delivering it certainly is.

My crystal ball has been in the shop for the past couple of weeks, and as a result, my predictions are only moderately accurate, but let me hazard a guess on how this plays out.

First of all, I’m willing to place my bet that groups will, in time, use the interactive channel as their primary (and sometimes only) method of connecting with clients. Ads will persist, but as the noise increases, the public will increasingly block-out messages that don’t immediately resonate with them. As a result, companies are going to have to start dialogues with select groups of people. These dialogues will serve to build brand value and loyalty.

There will be numerous opportunities and entry points for progressive companies to leverage. Some will deliver entertaining content that affords value to users. Others will find compelling and non-conventional ways to engage people in adventures, much like what 42 Entertainment and Trent Reznor recently did in their ARG to promote the new Nine Inch Nails release. Some will actively utilize communities to drive feedback, refine their products, and build passionate user-bases for their offerings. Some will build unprecedented brand awareness without any traditional advertising whatsoever.

This is the end of top-down broadcasting. The future of advertising puts the supplier and user on a parallel path.

Why the agencies won’t (and will) change

Advertising is a nice industry to be in. There’s plenty of money, especially given how many get away with just churning out cheeky one-liners. Agencies bill enormous sums, and rightly so, given that for a long time they’ve held the keys to the only real method to broadly reach new prospects.

With the inversion of advertising, however, the tools are at the disposal of all of us. Imagine someone in the 80s saying, “I’m going to start writing and sending videos to friends, and I’ll become a household name.” lonelygirl15 (albeit a fabrication), Perez Hilton, and numerous others have done it though, and this is only the beginning.

The challenge for agencies though, is that this is really tricky terrain. Few are excited about the notion of advertising having to be rewritten. Just look at GM’s foray into user generated content. They launched a campaign that allowed users to create their own ads to promote the new Tahoe. What they (perhaps) hadn’t anticipated was that community members might have their own opinions and agendas. We can all talk about this fundamental shift in advertising, but really, do you want to be the one left holding the bag for that campaign?

The truth is that all of these new channels and opportunities are largely untested and as such risky for advertisers. As a result, the big companies are likely going to play it safe, and this buys them some time to adapt. The smart ones are already working to get their footing.

Kevin Roberts of Saatchi & Saatchi sees the opportunity for ad agencies to embrace a new model, and he’s clearly well aware of the threat presented by not moving fast enough. Business Week‘s “Struggles of a Mad Man” provides insight to Kevin’s effort to redefine his agency and better deal with a fragmented and evolving media space.

This evolution is an issue of mindset

It has been said that the thing that killed many shipping companies was their inability to evolve. Most all of them believed that they were in the boat business, when in fact they were in the transport business. Most couldn’t make this transition, and as a result, the doors were opened to an entirely new set of players, as technology made alternate means available.

The next generation of agencies will not be about advertising. They will be about defining heightened brand awareness for the groups they support. This may be done through traditional tools including ads, broadcast placement and direct mail; but, it will also be in the form of online experiences, value-added content, and a plethora of other tools and delivery devices.

Chan Suh of Agency.com was recently quoted stating that in the future, advertising would change to become, “an incredible dance partner, who knows when you are going to take a sudden step, knows when you’re going to dip, and knows what state of mind you’re in based just on your behavior.”

Farewell for now (and my gratuitous plug)

Well, that’s a wrap for this post; thanks for reading! What a topic! I keep feeling like we’ve only scratched the surface. In an upcoming ideasonideas post, we’ll talk about a few key trends you should be aware of, in this evolving space.

And if you’re running a traditional agency, and want to start integrating stronger interactive strategy in campaigns, perhaps we should talk. Just drop a note to me at: karj@smashlab.com

Follow @karj to hear about these posts first.

Comments & Trackbacks

  1. David V. says:

    Eric,

    Nice thought on the evolution of ad agencies to emerge into the digital age. I think part of this problem was set up in the late 1990s when big consumer companies set up "Internet Groups" separate from the brands and with small budgets to try to understand the Internet bubble. Those groups attracted niche agencies (Digitas, Razorfish, etc) who specialized in creating websites or banner ads. The money was too small for mainstream agencies to get excited, so they too created small "Internet groups." Everyone looked smart when the bubble burst.

    Unfortunately, two years ago when YouTube exploded, everyone was caught flat-footed. It is very hard to turn a huge ship with a small engine and that is exactly what a traditional agency used to spending a large amount of money on a small number of campaigns for television, radio, print and outdoors are. So the real weak link in the system is still those brands and agencies who are not completely ready for the new world.

    dv

  2. Sean Howard says:

    Hi Eric,

    Nice article. I think the challenge is inherent in viewing digital as a "channel."

    A "channel" designation puts it in competition with spend against traditional media, promotion and outreach strategies. It motivates us to think of some media as outbound and others as interactive. It separates our thinking by way of the brands relationship to the "consumer" versus how they interact or desire to interact with us.

    Reality is that digital encapsulates just some of the tools by which audiences and citizens are taking active part in their world.

    I think the future is going to evolve around understanding two things: context and engagement. How to engage with a brand is dependent on context (admittedly with other factors). My hope is that this type of thinking will change the way we model and build campaigns to maximize engagement over frequency and reach (which are both sorely ineffective as both measures and strategies in themselves).

  3. Brittt says:

    I wonder if the disconnect between traditional agencies and interactive is comparable to what we see between the generations who've never not known the Internet versus the individuals who may still be non digital. Until there's a catalyst (e.g., losing a client because of the missing interactive piece) traditional agencies won't feel the pressure to evolve. We like our ruts and few people actively seek out reasons to change their habits or opinions. Seekers of true change, I believe, make up a minority of the population.

    Going back to your experience with the respected agency, this individual is getting something out of believing that interactive is about "banner ads." If interactive was about something else, he might have to act differently or acknowledge that someone else's expertise/knowledge outweighs his. Who likes admitting ignorance, especially if they've been previously held in high regard and considered all knowing?

    Great post and fascinating insights into the agency evolution.

  4. Ike says:

    "Pull" is the new "push".

    There is an awful lot of institutional momentum behind pushing messages "at" targets.

    It takes time, attention, and respect -- but you can create the magnet that attracts exactly the people you want. If you're "electric" enough, you can turn some of those fans into evangelists, magnets of their very own.

    The dinosaurs never saw the comet, either.

  5. Toad says:

    Yes and no Eric.

    Yes traditional agencies don't get it.
    I suspect that this has everything to do with the fact that they don't see a place for themselves in the digital world. Digital advertising is about delivering utility and creating community. Traditional advertising is about delivering news in an entertaining manner. Traditional agencies see digital as a form of DM or promotional advertising, one that doesn't require that much creativity.
    It doesn't let them play to their traditional strengths and their reaction has been to ignore it and hope it will go away the way Web 1.0 did.

    But no, traditional advertising is not going away. As I've said time and again, Your Brand Is Not My Friend™. There are only a handful of Prom King Brands™ that people want to engage with and/or establish communities with. The rest of you have to give them a reason to engage with you. But they will gladly listen to news from you. So traditional advertising is not dead. TV still reaches the most people in the most efficient manner. It's entertaining and it helps build the brand. (I mean seriously Eric, not everyone has time to interact with brands online. Even brands they like.) And while DVRs are taking their toll, live sporting events, news programs and the like are well, live and quite popular: there's no DVRing through them.

    I'd suggest you keep the same open minded philosophy that you suggest traditional agencies adopt. Only in reverse. Their media is not going away. Yours is getting more prominent. How do you merge the two? How do you determine which brands work best in which media? Whose customers want news and whose want engagement?
    Oh, and how do you make lots of money now that the 15% commission thing is over?

    That's the real trick.

  6. Kaytlyn says:

    Loved the post and all the comments, especially Ike's. I have had so many clients say "I don't want those ugly ads on my site" and many are developing their own ad networks much like The Deck and individual sites like Design*Sponge and Daring Fireball sponsors. I have to say as a web designer, I click on more ads from The Deck than any other network as I have learned to tune the rest out.

    I have also come in contact with many senior design agencies and have heard some similar noise not wanting to adopt new technologies or ways of making their product or services sustainable. "We didn't want to have a 'crunchy' look." It's hard to decide whether to say nothing to them and watch them fall behind or try to warn them and get criticized. What business stays successful without change?

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  8. Toad makes a good point
    both sides need to be open minded.
    In truth both are not: admen still feel its about buying eyeballs and entertaining-interrupting people but in a nice way.
    Digital folk start from the assumption that it is about engaging people-building relationships through being useful/informative/participative.
    Design folk start from the assumption that it is about visual triggers and sub conscious processing.
    These are simply different effectiveness models. On a particular brand all may be true. Or the centre of gravity may lay with the people who interrupt or the people who engage or the people who invented a truly attractive identity.
    There seem to me to be a few key things to think about and they are both to do with better planning.
    -What is the brands problem?
    -How do people choose and buy in the category?
    (AKA How are people available to influence)
    -What is your effectiveness model?
    In truth is we all enter rooms with assumptions in our heads about what works,without ever making them explicit so that they can be examined .
    The admen may be right some times. After all as someone else in this thread observed the idea that we all have the time or interest to "engage" is as absurb the forlorn belief of many admen that digital is simply another channel for messaging.
    The future lies with better planning and the integration of brand planning with smart data planning.

  9. bg says:

    I don't get over here much anymore so I save up for one mega comment, hopefully not longer than the original post. ;-p

    Little different POV. Can I have permission to blame the brands?

    I know it’s our job to educate them, but I can’t let clients off the hook here. Yes, some agencies are going to be left by the wayside, but here are some REAL naive clients out there, big and small.

    There are major brands who don’t get even the basics of the online space, let alone microsites, blogs or full-on integrated online campaigns with virals, mobile ads, etc. They only recently wrapped their heads around microsites and YouTube videos, try explaining guerilla stuff executed online.

    Many creative shops haven't even grasped the concept that your messaging does not have to be the same everywhere it appears, that it can tell different parts of the brand story and consumers now dictate how they will engage with a brand, let alone 'sold' to them.

    How the hell can we expect brands to be aware?

    And so if the question is how do agencies make money in this climate, it seems easy:

    Not that I would, but you do it by taking advantage of those same brands who haven't yet learned to consolidate all their efforts among fewer shops. by offering to take on the work that falls through the cracks from the AOR, or the projects too small for them to go after on the interactive side.

    (I think this strategy is ultimately doomed as the big shops shore up their capabilities and leave less scraps for the little guy.)

    I watched firsthand as a brand recently split the work among a bunch of different shops: search, traditional, promotions, microsites, banner ads, media, PR, IT, virals, etc. One shop for EACH one of those things.

    What was that definition of insanity again?

    Guaranteed none of those agencies ever said, you know what, we have some obvious overlap here with (X) so we'll just let them handle it. Sure they each may want a bigger piece of the brand pie, but they take what they can get for now.


    To Toad’s point, as long as TV is in the mix, there are not many small to mid shops that can handle all this stuff at once for national/global brands, so brands overpay by keeping their offline AOR, taking the campaign for the year and repurposing it online in the form of banner ads with a smaller interactive place.

    Or, they take the TV and resize it as a clip for the website. Done. We have interactive now!

    Problem is, the interactive shop, (if it has any pride), ain't gonna want to do banner ads for long. They're focused on a killer Flash site that wins awards. But they take the work on because to them, they think they have a foot in the door to bigger and better stuff.

    Never happens though.

    The client thinks, great, we have our traditional and interactive covered. They could care less about pure creative, they've just solved their problem.

    The AOR for offline is not going to concede any of the cooler projects to the interactive shop, so they bring in their own people or partner with someone for that stuff.

    Think the brand will let the banner ad place have a shot at TV?

    Nope, because in their mind, what does a banner ad shop know about TV? (Btw, notice how they've now gone from being 'interactive’ to being the banner ad shop.)

    Oh, let's not forget the media agency who btw, also presented creative on some ads or promotional tie-ins. Did I say promotion?

    I forgot about the PR people who want to do a celebrity tie-in, which means of course, they need a microsite. (Sorry banner ad shop, this one gets farmed out to the PR person’s friends.)

    Suddenly, everyone but the interactive shop is creative. And everyone in the picture now wants to be thought of as having creative chops.

    By now, we’re headed back to creative as commodity again, where you can get a full-on campaign from the planners and designer at the media firm.

    Problem is there, I've seen the creative from media shops too, and much of it is first thought syndrome. Stuff that traditional AORs would never present. But the client doesn't care because with all these new channels, they just want to make sense of it all.

    And again, you're dealing with the old school mindset that says “my creative must be consistent across all channels,” read: I want the same visual in every place. (Heads nodded in agreement with the TV/Radio/Print DOM who said this to the room as I watched in shock and awe.)

    Factor in that younger brand assistant who learned under Mr. TV DOM. You know, the one who you have to deal with regularly who thinks the term 'creative' means the blank ad units on the page the media agency presented? Is it any wonder things are messed up?

    So the challenge will be either for big shops to improve their interactive chops, or for the small to mids to get better at the basics. (The latter requires more faith from a client that a younger upstart can handle traditional like TV.)

  10. bg says:

    (Long rant with quality typos too.)

    ...but there are some...

  11. Great post! I've definitely come across a number of these issues.

    With GM, yes, there was a lot wrong with that campaign, but they helped define some of the standards of how you can and can't approach social media. Both the successes and the failures delineate how to most effectively use online media.

    In any case, yes, an evolution is clearly upon us.

  12. Toad says:

    You (and Brian Morrissey) inspired this post:

    http://tangerinetoad.blogspot.com/2008/03/thegreatleapforward.html

  13. James says:

    I see the problem a little simpler (maybe too simply?).

    Traditional agencies are built for mass marketing. Their processes, mindset, compensation -- it's all geared toward delivering very few outputs (ads) through a few channels to a large number of people. It's a few-to-many model.

    Interactive agencies have inherited many of the traditional processes, structure, pricing, etc. but as soon as they get deep into execution they realize that the model is b0rked. Mass marketing is pretty broken because mass markets no longer exist, except in odd circumstances like live events. The markets have fragmented, even in the massest market of all, TV. On the web there is nothing but fragments.

    So a new model has to emerge. I think it'll incorporate a many-to-many approach that we can already see starting to play out online. People make the content (blogs, YouTube, etc.) and people will make the ads for the products and services they believe in.

    Before you scoff -- Quality! Amateurs! -- remember that this was exactly the response of traditional media to the web. Turns out the quality matters a lot less than you might think, that people care about the things said by the people they care about, regardless of the quality.

    I'm not going to claim that the ad industry is going to die out, but ask yourself how you made your last purchase decision. I asked my friends and sought out the opinions of people with real-world experience. I believe they call it 'word of mouth,' which is a fancy way of saying many-to-many.

  14. one of the big issues for digital agencies is to develop their own planning tools and approaches. The first generation of digital agencies have hired ad planners and ended up with versions of ad agency planning tools that are geared towards "the proposition" rather arriving at and proving the effectiveness of many to many communications.
    Many to many communications requires a brand to act more like "a good host at a party" rather than a deliverer of consistent messages. So the old ad brief can lead you down the wrong path
    Mind you, a lot of media shops still want to do the big volume deal and they bring this attitude to the web.

  15. Fubiz says:

    Excellent article (and template)

  16. Phil13 says:

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