Why agencies are failing to adopt real change

Everyone knows Bill Gates to be one of the world’s richest men, yet, few know how he changed the course of the IT industry. Gates envisioned a world in which there would be a computer on every desk, at a time when PCs did not exist. He understood that the way to capitalise on the future was by controlling software. Therefore, he focused his energies not on making products but on building software-based platforms and ecosystems. Once you have control over the platform, you control the entire ecosystem and thus set the direction for the industry.

The fact is that no one product can provide a lasting competitive advantage; however, if customers become hooked to a particular platform (such as the Microsoft OS), then one can roll out new products that they will adopt (Word, Internet Explorer and Windows Media Player). Microsoft Windows influenced the entire ecosystem. PC manufacturers were required to manufacture computers compatible with Windows because customers demanded Windows. Downstream software developers had to develop software that could work with Windows.

The story of the advertising industry is not very different. A few visionary leaders realised the need to have platforms that would serve as ‘glue’ to bind or integrate multiple activities in the industry’s ecosystem, such as research, brand and communication strategy, design, media planning and buying, production, event creation and so on. That ‘glue’ was consumer insight and/or the creative idea. While the creative idea differentiated the offering, the goal of consumer insights was to make the offering relevant. They elevated the importance and status of the creative idea/consumer insight to a level where no client was ready to compromise their communication’s effectiveness by having it executed by anyone else other than the agency which produced it.

David Ogilvy championed the creative idea. “If your campaign does not have an idea, it will pass like a ship in the night,” he espoused. Bill Bernbach also cherished ideas. “There are few things more destructive than an unsound idea persuasively expressed”. Stephen King, the pioneer of modern-day brand planning at J. Walter Thompson, tirelessly worked to make consumer insights the springboard for various activities within the purview of the agency.

They were visionary leaders because they saw the evolution of the value creation process and its implications for marketing communications. Over a period of hundreds of years, humans have moved from extracting commodities to making goods to delivering services and now staging experiences. This can be understood by a simple example: in a commodities economy, a mom would gather ingredients and bake a cake for her child’s birthday at home. In a goods economy, she would buy it from the market; in a service economy, she would order it over the phone for home delivery, and in an experience economy, she would commission an events company to plan the entire birthday party.

However, from a resource perspective (which has stronger implications for marketing communications), each of these stages has corresponding ones from the value creation perspective: barter economy, money economy, attention economy and now engagement economy.

In the attention economy, the attention of consumers was a scarce resource and brands competed for a share of it. The tool which advertising agencies used to grab attention was creative ideas/consumer insights. With the onset of the experience economy, engagement gained supremacy, and attention became secondary – this led to a decline in the importance of creative ideas and an increase in emphasis on engagement. With creative ideas no longer acting as the ‘glue’ that stuck various marketing communication activities together, the disintegration of the traditional advertising agency model was imminent.

We now need a new platform (or glue) to bind marketing communication activities together under one agency.

Let’s start with the basics. The purpose of an agency is to build brands. So what is a brand? The traditional definition is: “a collection of associations in the mind of a consumer.” However, in an experience economy, it should evolve to: “a collection of memories of the experiences consumers have had with an entity.” For example, Apple do a lot more than dramatise their proposition ‘Think Different’ (which was enough in the attention economy). It engages consumers in experiential cues that impart feelings of being creative, unconventional, rebellious, not being like everyone else, breaking the status quo, doing things differently, etc. With this in mind, the new ‘glue’ becomes ‘the holistic brand experience’, which blurs and ultimately removes the boundaries between various standalone marketing communication entities: For example, the traditional/digital divide. Hitherto, the search for an alternative platform to the creative idea/consumer insight has been a hindrance to reorganising the agency model according to the needs of the time.

Such reorganisation has started to some extent in other parts of the world, but there are also examples of movement in the opposite direction, although one cannot be sure if they are happening for the same reason. Creative agency Y&R and digital network VML have merged to become a new entity called VMLY&R. Some creative agencies have opened a digital arm. The rebranding of Ogilvy as one entity with a fluid structure that adjusts according to clients’ needs and improves flexibility, speed and simplicity, is another example. We will witness more such mergers, more so between creative, digital and activation because they are integral to creating experiences.

Many CEOs fail to take these ideas forward because although they espouse these ideas about what the world is going to look like in five years, they are not able to identify what they need to do to achieve this result. Visionary leadership is what sets the direction for nations, societies, and businesses. They influence the course of history by making their vision a reality by establishing a model for others to follow. Unfortunately, in the marketing communications industry in Pakistan, there have not been any visionary leadership examples lately. In Pakistan we are mostly followers. Our agency owners will not adopt the change unless they have seen it successfully implemented elsewhere. They may be right because they have lot more at stake than agency owners elsewhere in the world, where ad agencies are part of bigger groups. Another reason is the current economic downturn. The ability to take risks reduces during hard times when it already is difficult to sustain the status quo. However, the downturn may also present an opportunity to reflect and rethink the current business model.

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