Video: The Future of Media Agencies

We’re seeing a huge amount of disruption to our vertical that is changing the future of media agencies. In my latest video, I discuss the catalysts behind this change and what we need to be doing to keep up.

Video: The Future of Media Agencies

Video Transcription

Afternoon, everybody. I want to talk to you today about the future of media agencies. The reason I passionately want to communicate my thoughts on this is I believe we are facing the greatest level of disruption in our vertical we have ever seen. I mean bigger than when we decoupled creative agencies from media buying agencies, when we were back in the day when everything was full-service, and bigger than the event of digital advertising and digital media in itself. That moment when agencies like us were born, with new capabilities that the market did not have. This is bigger than that, because it’s fundamentally about the root-to-branch adoption of digital technology, and changes within the media landscape that affect the entire advertising and publishing supply chain.

How digital adoption effects the advertising and publishing chain

From a media owner perspective – and I’m not just talking publisher here, I’m talking about television, outdoor, radio – there are pressures upon these media owners right now to trade their inventory in a different way. That means changes to their technology, changes to their actual business plan, the way that they run their company.

Advertisers, thinking about them as businesses, they’re the driving force behind these changes that I want to talk about. They are going through transformational changes, which mean that they need a different type of agency today, right now. These pressures, either side of us from businesses, brands, advertisers and on the media/owner side, it’s meaning that a new type of agency needs to evolve right now. At an individual level, that sets a challenge for all of us in terms of the type of marketer we are going to need to become.

Where this is already happening

These are tectonic changes I’m talking about, and if you keep your eyes open, it’s happening right in front of you, in the headlines of our trade press, every single day. It’s very usual now to find, on an RFP for a large piece of business, a creative shop, a media agency, and somebody like accenture; a big consultancy firm. Businesses like accenture and Deloitte are making some very interesting acquisitions.

Accenture, in terms of digital, have historically been involved in the big transformational discussions with the C-suite. They have now purchased businesses like The Monkeys, a Sydney-based creative shop. They’ve purchased them very recently, and here they’ve bought Karmarama. These businesses now, they are big players across the entire advertising supply chain, and within digital transformation. They are in our world.

Huge networks, media agency networks, like Dentsu Aegis, they’ve seen the need to complement the skill set they have with a new type of agency. They’ve purchased Merkle. Merkle are historically a CRM, analytics, data-driven performance marketing agency. They are at the cutting edge of digital, and this legacy, huge network, Dentsu, have decided they need that capability within their business.

Then, more locally to us, Mindshare, part of the WPP stable, feigned for their clout in terms of buying the big media; the traditional TV, outdoor, press, radio. That’s what they do; they buy it well and they buy it cheaper for their advertisers.

Martin Sorrell has decided that within their network of WPP, he needs to take Neo Ogilvy, a specialist digital agency, and roll that into the kind of traditional capabilities that Mindshare have, so it is happening all around us, right now. The agency landscape is completely changing.

The catalysts behind this movement

Now, there are two real kind of huge catalysts behind this movement that I’m illustrating.

Buying people in real time

Firstly, this is about the personalisation of media. It’s about the fact that now, through technology, through digital advertising, we’re interested in buying people in real time for advertisers. We don’t want to buy a huge, expensive television slot with dramatic amounts of wastage. We want to buy people in real time, based upon data that we know about them.

The necessity of digital transformation

Digital, and specifically technological changes, is placing a transformational necessity upon companies globally. It’s about the experience they provide to consumers. Think about it; where do you set the bar? What do you expect as a consumer when you interact with a business? Is it good enough now, for a business to be the best in their local market? Is it good enough for a business to be good to average in their vertical? It’s not.

On a personal level, the best business I interact with in a digital capacity is Uber. I have a wonderful experience. It is efficient. It gives me exactly what I want. That’s the bar. That’s my bar. If any business doesn’t meet that from a consumer experience perspective in digital, then it doesn’t meet my expectations, and that’s the same for everybody. There is a fundamental necessity being placed upon businesses to digitally transform themselves.

Why the feedback process needs to change

Let’s have a quick look at a business that is hugely mature in terms of this transformation. Before we get into them, in terms of Amazon, I want to show you what the world looked like, or possibly in some courses, still looks like today, but certainly did way back when.

You have the C-suite. The high-paid executives sat in their ivory tower, making all of the decisions. They have all of the purse strings. At the other end, you have customer services, sat at the coalface, talking to customers about problems, friction points, things they want more of, products that maybe they don’t stock, price issues, competitor feedback, all manner of critical data that the C-suite could use.

What would happen in yesteryear was that this feedback would take great time to work its way back up to the C-suite. If we had a dynamic C-suite that were interested, they might make some good decisions based upon this information – not data – just information being passed on. They would act upon it, and it would work its way, right the way back to the coalface. This takes time, and by the time these decisions are being made, the market will have moved. That’s not how business is done today, and Amazon are a wonderful example of a business that do it exceptionally well.

Case study: Amazon

Think about them from a retail perspective. You’re there, using what is actually a dynamic interface for you, and every single thing you do with that interface is tracked. It’s passed back as data, and that stack that sits in the middle, it’s not just data that they’re collecting. They then have things like machine learning and AI that is put to work on that data. Obviously, all of this information, the critical management information, is passed and dashboarded in the correct way, suitable for each tier and segment of the organisation.

What that means is, instead of that legacy system I talked about a minute ago, you have strategy, digital transformation, that type of big-ticket item being dealt with at the C-suite. Real-time decisions being made by things like machine learning and AI, and they’re being able to do that because they have this dynamic interface, that’s giving you a unique experience for you. It’s being optimised for you, giving you the best possible consumer digital experience.

Should we be surprised that legacy agency models are failing?

If you think about it like that, and what I said a moment ago about the way media is changing, it’s very, very obvious that the current landscape within creative and within media agencies is not fit for purpose. They face huge disruption.

Creative agencies, historically, if we distil them down to what they’re best known for, long form creative, expensive television adverts; they are wonderful, some of them, do not get me wrong, but they face disruption, because what do we want now? We want to buy people in real time, and we want to give them a unique, creative experience for them, quite often across a gamut of media, and in a much smaller form. So they face dramatic disruption.

And media agencies, with their range of huge, large clients and huge, large budgets, marching around with that bag of cash to media owners and beating them up with it – so they get the best possible TV price for their client – that world is changing, too.

We know, as a team, we already buy things like Sky AdSmart. We are invested in addressable media. We want to buy people based upon data, this kind of data-activated media buying. In that world, that model does not work, and that’s why you’re seeing some of the acquisitions and mergers and changes that are happening within our marketplace.

How should we execute media buying in the future?

Let’s have a quick look at how we might execute media buying looking forwards. To some extent, this is in play right now. From a data perspective, you have things like analytics, CRM, first- and third-party data, all being fed into something like a data management platform, where we segment an audience based upon their propensity to do business with an advertiser, which we then feed into our ad tech, and we purchase media.

I’m on about purchasing people in real time, not just in digital, and I’ve put T there for traditional digital, which is probably what it will become known as, programmatic display, social, and obviously search. We can now buy TV. We, as a business, as an agency, we’ve purchased radio, using data. I know, from a former employer of mine at Clear Channel, they’re already rolling out digital products, which we’re going to be able to, and can, buy programmatically. These doors are opening for us, as an agency, and for advertisers. And this is what it’s going to look like. We’ll be trading across the entire piece, in real time.

This is what I’ve kind of tried to explain it as. This is a data-activated, omni-channel buying machine. It’s about an experience. You want to be plumbing in personalised creative into all this. This is about a digital experience, that we would execute on behalf of an advertiser.

What type of marketers do we need to be?

This new world that we’re talking about, where transformation is taking place, and where there is a need for a new type of media and creative agency, it’s causing debate at the minute within our industry, about what type of marketer do we need to be?

Some people are saying, we need to be left-brained. Left-brained, think probably historically Accenture, a consultancy, left-brained, mathematics, proof. That’s what it’s about, it’s about proof.

Some people believe we need to be right-brained, which is creative. It’s the realm of traditional marketing. That is intuition, right-brain, but I’m with my counterpart at Accenture Interactive, who believes we need to be whole-brained marketers. That’s very, very clear to me, and that whole-brained marketer needs to exist within a framework like this, where analytics, CRM, media buying and creative augment a central pillar of activity, which is based around the transformational element, the strategy and, obviously comms. It has data at its very, very core, and it also concerns itself perpetually with every single output around customer experience. That must sit at the very core of any organisational structure.

What my message is really about, and what I want to kind of get home to you all is that I’ve said many, many, many times, in my opinion, we will not be digital marketing agencies in the very near future. I don’t believe we’ll even be a marketing or a media agency in the very near future. I think we are now in the business of providing a customer experience. The quicker our industry orientates itself around that central theme, I think the quicker we’re going to mirror the type of value that our clients so desperately need, as they themselves transform. Thank you.

Find out the latest in digital marketing with the RocketMill weekly digest