Reflections on a Decade in Advertising: Part 2

In the first part of my rant/reflection/ramble, I laid out what I think is a big problem with the ad agency business model, and promised some potential solutions in this post. Then I spent the next week or so panicking about my complete lack of answers to a problem many smarter people than me have failed to solve. I did have a few initial, sketchy ideas that I hoped would take me somewhere:


1) Create autonomous groups of people to take on the new media world outside of the main organization (I covered off on this briefly in the last post)

2) Experiment on yourself

3) Re-imagine what market research should be

4) Think relationship before reach (unless your product stinks)

5) Sell the audience along with the creative

Let me start by saying that I've given a bit more thought to idea 1, and I think there may be something more important that just creating a skunkworks-type group at some remove from regular agency operations, and that is to create competition. If I were running an agency, I'd want 2-3 groups assigned to selling and implementing digital and social campaigns to existing accounts. I would compare performance and provide additional scale to the group that did this best. I think this would work because ad agency folks, especially on the account side, are pretty competitive by nature, and I think would both like to best their colleagues in something like this, and would be incentivized by the financial rewards for getting it right. But whatever approach agencies take to building a stable business model around digital communications, let me just repeat that expecting the whole shop to be cajoled into becoming digital experts might be like expecting to turn a freighter on a dime.

So on to my second idea, which is inspired by my brother and his penchant for tattooing. When I asked him how he decides who to trust to tattoo him, he said, "I'd never let anyone do it until I saw the ink he put on his own body." If you want a client to trust you with their brand's reputation in this hypersocial world, prove your skills are solid by applying them to yourself, and your agency's brand. I give my old shop, CDM, credit here, since they were willing to dive into the social platforms. But I'd suggest agencies should go a lot farther, and view digital and social tools as one of their top tools for lead generation and relationship building.

My third point is that market research should be fundamentally reimagined, and it is a point near and dear to my heart. Market research is often treated as some hermetically sealed clean room where every variable must be controlled. But this makes market research essentially sterile and detached, bearing little resemblance to the messy, complex, fast-changing digital world we now have to work in. So instead of doing focus-group-facility, behind the glass market research, develop pilots to test ideas in the real world, or conduct intimate tracking research with a smaller number of subjects. Do anything to get into the real world and figure out how people actually use, think about, talk about and share your brands. Remember, the program might be the idea, so you need to have a clearer picture of how people are actually going to interact with that idea.

What do I mean about 'relationships before reach'? Simply put, that the number of people who saw your ad is no longer the standard for evaluating success. A campaign should be winning over converts, true believers who will help advocate for your brand. If you have a great product, this is very doable. Just create the story of why your product can improve your customers' lives, put the product in their hands, and watch the fireworks. (Easier said than done, I know.) But if your product stinks, or is only mediocre, your efforts to build a relationship will backfire, because your customer will resent you trying to force them to have a relationship with a product they dislike. If you're selling some me-too piece of garbage, then forget what I said and go for reach.

Lastly, I have a bit of an out-there thought that I nevertheless think might help many agencies thrive in the new advertising ecosystem that is emerging. Simply put, establish independent channels to target customers that can be sold to customers. For example, my old agency was focused on marketing to health care professionals. But we had no relationship with that audience that lived outside of each client's individual campaign. What if the agency (perhaps in collaboration with others to gain a critical mass of brands) created a knowledge exchange that physicians could sign up for to get product updates, request samples, sign up to participate in upcoming trials, and simplify other interactions they want to have with pharmaceutical brands? I'd think that would be valuable for that audience and for the agency's clients, and it makes more sense for it to be done by an agency (or a group of them) than by a client, who of course has a limited roster of brands. (There are, of course, a hundred practical issues that would need to be overcome, but I don't think any are insurmountable.)

So, those are my ideas. Perhaps some or all are terrible...I have written this post in bursts over several late evenings. But my hope is that they inspire some thinking, and challenge the notion that the agency business model essentially is what it is. The new digital framework cannot be twisted and bent to fit the way agencies have grown comfortable operating. Transformation of the sort that is needed is wrenching, but crucial to the long-term survival of what is still a great industry.

Reflections on a Decade in Advertising: Part 1

In 2002, in the midst of a recession caused by the implosion of the tech bubble and the September 11th attacks, I was about to graduate college. I had for some time imagined I would be seeking a job in journalism, but I had also gotten engaged while in school, and the road to success as a reporter seemed long and uncertain, to say the least. After putting off thoughts of my future for as long as possible, I went to the career services office at my alma mater and asked the counselor there what, exactly, I was qualified to do. Almost without hesitation he said, "Go work at an ad agency."

I found it was a business I loved, and only occasionally loathed. And I did well enough that I was able to move up, specialize as an account planner, and avoid the various layoffs and cutbacks that caused pain to a lot of other people in the field.

But even though advertising was very good to me, I think it is fundamentally an unhealthy industry right now. That is not to say that advertising will go away: if anything, it will continue to become more ubiquitous as time goes by, largely because people like to be given things for free. But the model that the industry has adopted is fundamentally out of whack with what clients want and need, and the result is likely to be a lingering illness that lasts for years to come.

What is this illness? In short, it is a business model that is predicated on gaining efficiencies through scale, when that scale is likely to prove inefficient for the indefinite future.

Most ad agencies go through the following life cycle: they start up with a small group of smart and talented people who have a vision for "the right way to do things". It doesn't necessarily matter what the vision is, so long as they believe in it and are passionate about it. That passion helps them to work their butts off for the few clients they have, and do great creative work. That attracts more clients, and they grow. Now, as they grow, they make the following tradeoff: the people they hire will never be as invested in what they're doing as they are, but they allow the scale to let the founders provide the high level ideas to more clients.

This eventually hits a limit, too, because the founders are spread thinner, and it is hard to bring along new people who contribute ideas. (And if you have them, they want to be treated like a partner or they don't stay.) But at this point, you have a lot of ideas, and you can sell variations on those ideas to new clients. (If you don't believe there's a lot of idea recycling in advertising, then check out this site and ask yourself why the satire works so well.)

More importantly, in the advertising world that's fading away, you could also sell them an implementation plan that more or less came off the shelf: this much TV, this much print and out of home, etc. (Or, in the healthcare world I just left, it went: do a great sales aid for the reps, place some journal ads, blow out a booth for a convention, and maybe some direct mail if you're feeling frisky.) Because the ad agencies launch campaigns all the time, and clients do it rarely, that expertise could be packaged and rolled out without much modification.

So now you have a nice, big ad agency with lots of prominent clients. What next? Well, a holding company comes along and makes a big, juicy offer to buy it up. Because an ad agency has no physical assets and could be worth nothing if it loses its clients, the founders have a hard time saying no, so they usually accept. And the holding company introduces additional efficiencies: it brings expertise and scale in finance, IT, benefits and other operational areas that every agency needs but are not core to the business.

So now you have a very large ad agency owned by a company that controls dozens of other ad agencies. And its business model gets pulled out from under it in two ways:

First, its ability to sell a 'paint by numbers' implementation plan is destroyed by the proliferation of media. Not only is there just a lot more media out there to think about, but now clients are confused and asking a lot more questions, which means each plan needs to be thought through and given a lot of senior-level scrutiny. So that mid-level account person can no longer be trusted to bang out a PowerPoint deck featuring the same basic plan in new wrapping paper. That's a major efficiency hit.

Second, a lot of these new media options call for fundamentally different ideas than what you see on TV or in print. However, as I learned watching "Everything's a Remix", we need to imitate and combine to generate new creative ideas. Since we don't have a large store of successful social media or mobile campaigns to draw from (yet), sometimes the new ideas are hard to come by. And many people who have made good careers off of the old way are still trying to find ways to squeeze their ideas into the new media world rather than accepting they need to start fresh. At any rate, the efficiencies that come from being able to remix, recycle and reformulate existing ideas evaporates when those ideas don't work in the new media.

This post has gotten damned long, and I'm going to write a second part with some ideas on how to solve this business problem. But I think the core of the answer come's from Clayton Christensen's Innovator's Dilemma: big companies need to create small, autonomous units that can take these problems head on, even if they disrupt the existing business model. Commanding hundreds of people to 'think digital' or to 'sell a Facebook campaign' isn't going to change anything. People need to have the chance to do it in an environment removed from the normal pressures of the agency's day-to-day business. Because that business isn't sustainable in the medium term, anyway.

Reflections on the iPad

I'm writing this on my sad old desktop computer because I haven't found just the right blogging app on my iPad yet. But I'm sure I will, and then happily abandon this annoying large screen and convenient full-sized keyboard. No, I'll be able to peck out these ramblings from anywhere!

For the last two weeks or so, I have in fact been glued to my new iPad. In fact, I'll probably be reading on it as soon as I'm done here. So obviously I love the darn thing. But why? 90% of the time I use it, I'm within 30 feet of a computer. Typing is undoubtedly slower, although I do have a wireless keyboard I can use with it. The games are good, but I have more advanced games on my Wii and the desktop. It doesn't add any major capability that some other device in my life doesn't have.

But, unless I'm completely irrational (no comments, please), there must be something that has driven me to spend hours a day with the darn thing. So here are three bits of speculation on why the iPad has wormed its way so deeply into my life, and the psychological drivers that have made it so popular.

1) Casualness: Nothing about the iPad feels like work, even when I'm doing something like capturing notes. The ability to pick it up and put it down, to switch to some other task, to close its cover like a book, all give it a less formal feel than plunking away at a laptop. Its weight and size also allow me to take it more places, allowing me to spontaneously use it when I have a need (or a free moment).

2) Bite-sized-ness: Everything feels stripped down and simple, and that translates in part to making it feel like you're not making a big time commitment when you start using any particular application. I can waste hours on a game, but it is not some elaborate epic that requires my whole engagement for long stretches. The successful games offer relatively quick levels or challenges that are almost endlessly repeatable, so each "five minutes" leads into the next, and soon you've lost an hour.

3) Utilitarianism: The iPad is a newspaper, a web browser, a video game console, a camera, an video phone, a notepad, a GPS, a TV, and a bunch of other things besides. People, and men in particular, like feeling that they have s tool for every need. The iPad is an electronic Swiss Army knife.

I'm sure there are other reasons people fall for the iPad, but those are the three that are most important to me. It is a transformative technology that sits at the intersections of productivity and entertainment, of simplicity and power, and of phone and computer. As these devices continue to advance, we will see more and more people experiencing the virtues of having so much of your life always at hand.

Climbing the Wrong Technological Hills

When I was a kid, I remember being told how amazing it was that the Aztecs built their great cities without the wheel, and thinking: "How the heck did they miss that one?" I couldn't fathom that millions of people had gone centuries without ever noticing that round things roll, and that could be useful for moving things around.

This article, on the development of rocketry as our means of reaching space, made me resolve to go a little easier on the Aztecs. The main point the author, Neal Stephenson, makes several times is that only a highly unlikely series of events led to the development of space-going rockets, and now we are wedded to that technology to the point that newer, better methods of getting off this planet are extremely difficult to develop.

I've always assumed, naively, that once we make discoveries in the basic sciences, that eventually we will appreciate the technological possibilities and make new and better stuff. The theoretical understanding of how to split the atom leads to fission bombs and nuclear power plants in a relatively straight line, because the rewards of technological innovation are so high. But, as the case of rocketry indicates, often technological innovation is haphazard, messy, and driven by the incidentals of history and personality.

So, my first question: how many great technologies could potentially be developed based on the theoretical knowledge we have, but aren't being created because of basic human oversight?

Then, the flip side: once a technological system is sufficiently developed, and bound up with all the other human institutions (government, the law, social expectations, finance and the like), what technologies suddenly become unappealing to develop because their adoption would depend on unlikely changes to these complex systems? I've joked before about wanting my flying car: would we have them if a flying car wouldn't lead to massive challenges to the air traffic control system, to our system of personal and corporate liability, to civic noise ordinances?

Which leads to my second question: how many great technologies will be smothered in the cradle because a society as complex as ours creates insurmountable barriers to certain types of innovation?

We've heard a lot recently about entrepreneurship being the key to revitalizing our economy. But the entrepreneur may be unable to break down the barriers to innovation erected by our laws, our systems, the past decisions of other innovators, and just plain old inertia.