In one of my previous articles, Why Agencies Are Failing to Adopt Real Change, I argued that the function of marketing communications has undergone a fundamental change and the industry godfathers are either not comprehending the need to adapt to these changes or are hesitant to do so.

My argument was based on the notion that the ‘platform’ that kept the advertising agency offerings integrated and effective was the ‘creative idea’. A creative idea is what brings to life a brand’s proposition to ensure that it sticks in the consumer’s mind. This platform works in the attention economy; however, as the economy evolves into an experience economy, grabbing the consumer’s attention is not enough... consumers are now seeking experiences and successful brands are those that deliver on this.

As a result, by sticking to what they do, developing and executing creative ideas rather than imparting engaging consumer experiences, conventional advertising agencies are losing their relevance. To be fair, some have attempted to deliver brand stories that evoke emotional experiences. For example, in their recent communication, 7-Up used the idea of forgiveness in their ‘Dil Ki Baat’ campaign; Shan did the same with ‘breaking the ice’ with strangers (the Chinese housewife commercial) and QMobile engaged consumers by making them relive the moments of pride they felt in their children’s achievements (‘Naya Zamana, Nai Batein’). What is important about the above experiences is that they work equally well in conventional and digital media and across multiple devices and content platforms.

As the landscape of marketing communications changes, creative, technology and data services add more value when they complement one another rather than when they operate in isolation. It makes sense for brands to create holistic experiences leveraging and bringing together the power of creativity, technology and data services, which is why we are seeing examples of creative agencies merging with digital agencies and creative agencies acquiring digital competence.

In October 2018, WPP announced the merger of their creative agency Y&R with their digital marketing agency VML to become VMLY&R. A WPP spokesperson quoted a fully contemporary, creative, and integrated offering to clients on a global scale as the reason for the merger, adding that the new agency would deliver a compelling brand experience to their clients’ audiences. WPP cited simplification as another important reason for the merger as both Y&R and VML had a significant client overlap. Another underlying reason for the VML-Y&R merger was to cut operational expenses, especially in a competitive environment when revenues were eroding. 

We also need to look at digital as part of the ‘fourth industrial revolution’ and not just as another channel. One of the problems within our industry is that we seem unable to think of digital as beyond a channel and do not really know how to respond to the fallout engendered by digital disruption (think Airbnb, Facebook and Uber). Pakistani advertising’s answer to digital disruption has largely been to dump a banner on the internet that existed in some shape or form in print, or running a TVC on YouTube or Facebook – in other words, we replicated our practices of using any media to new media. In fact, we have responded to every disruption slowly and unimaginatively. Media fragmented, so we had specialist media buying agencies getting better deals for clients but with low emphasis on creative media usage. The best we could do was to set up digital agencies, when in fact the advertising community should be using their creativity to develop customer experiences for the brands they service. This approach will also fuel new life into conventional agencies by helping them to stay relevant to changing client needs. 

Another benefit of merging a creative and digital agency is that it pulls data and creativity together. Creativity is a superpower and data is the compass that steers, guides and leads brands towards their consumers. A creative agency’s storytelling skills combined with a digital agency’s brand experience skills make a good enough logic for merging; an approach which according to Campaign has seen such mergers perform well, even despite the pandemic.

Yet, the fact is that in Pakistan, in our response to digital disruption, we are still thinking within boxes when we are supposed to be thinking out of them and all we see is a proliferation of digital marketing agencies. This has consequences for the clients and the industry as a whole. Here are some reasons why:

• With a separation between creative and digital agencies, brand teams have to brief both, losing valuable time that could be spent elsewhere more productively.

• Sometimes, ideas generated by standalone digital agencies do not align with a brand’s overall strategy, thus harming the brand’s reputation rather than benefitting it.

• Often, clients understand the input that comes from the technology platforms or analytics in terms of how their campaigns performed, while the creative input is lacking in quality leaving them frustrated.

• For clients, the internal cost of switching from a standalone digital agency is low compared to switching from a combined traditional-digital agency, because in the case of the latter, the pitching process is long and cumbersome, making the stakes higher. There are also lower expectations of a long-term partnership with a standalone digital agency with the result that there is also lower motivation for the agency to invest in enhancing its capacity to understand the client’s business objectives.  

• Most clients set up in-house digital agencies to save on costs, yet they lose out on integration as well as the creative and strategic quality of the creative agency. The emphasis shifts to the technical aspects rather than creating engaging consumer interactions.  

• Digital agencies have few barriers to entry. A small group of competent individuals with laptops can set one up. The start-up capital required is minimal and no security deposits are required by the All Pakistan Newspapers Society (APNS), as is in the case for conventional agencies. As a result, there is a mushroom growth of digital marketing agencies leading to stiff competition and a weakening of their bargaining power, resulting in low revenues and profitability. This in turn leaves them with hardly any funds to invest in training and acquiring better skills.

• Sometimes, the remuneration offered to digital agencies is so low that they cannot afford to acquire some essential but paid services such as Ahrefs, Grammarly, Moz and SEMrush and prefer to rely on free data which has its limitations. 

• Digital agencies have better developed internal quality control systems than conventional creative agencies and a merger would benefit the latter in this respect.

A better way for clients to get full advantage of the opportunities that digital platforms have created is to demand a more coherent consumer experience developed by leveraging and blending creative, technology and data analytics into a single integrated service offer. Only a combined agency can deliver it and the world is moving towards this model. Pakistani agencies need to consider this.

Khalid Naseem is Head of Strategy, Firebolt63. khalid.naseem@firebolt63.com