Is it possible for agencies to embrace marketing “complexity”?

The ad business is going through a change not seen in 3 decades.

For 3 decades there were three chairs at the marketing table — agencies, brands and the media. All 3 parts technologically evolved in a symbiotic “one:many” model to grow the business. Agencies “produced once and ran many times”; brands (one) had a message to get out to many and each media property created its media content for many people.

But Internet was a fourth chair that came to the table. It started to dominate the other three chairs utterly disrupting the “one:many” efficient, profitable marketing model in favor of a “many:many” model brought on by social media and mobile technologies.

As technology continued to evolve much faster than the other chairs at the table, the result of this disequilibrium was first felt by the media which suffered a near fatal blow. Agencies, now are feeling the full brunt of this dynamic largely because the “complexity” of social media is taking more and more of the traditional ad budgets.

So while the business has gotten more complex, agencies are trapped in an old “one:many” business model and have no clear way to evolve. Clients do not pay often for agency’s’ technological learning curves (how many agency folks were at TechCrunch Disrupt for instance???). And agencies can not charge $10,000 for a bunch of twitter updates (if you want to sleep peacefully at night).

That’s why in this new scenario even agencies that want to embrace complexity — can not because the profitable “one:many” marketing business model does not support the “many:many” business model. Case in point. Digital media buying agencies are paid as a percentage of billings, but since there are few billings in social media — they do not create those types of programs for their clients. There is no incentive for a digital agency to develop a program with no/ low billings and high complexity – now is there?

So before agencies can embrace marketing complexity – we have to figure out how to make money at it. Talk about complex.

Judy Shapiro

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10 Responses

  1. Judith, this is a great post. I worked in the music business doing online promotion and publicity for independent artists and labels for several years, and watched as our awesome little niche was suddenly subject to competition from huge traditional publicity firms who didn’t understand the medium, charged too much for it, and were freaking out about their increasing lack of relevance in an online world.

    This media bloodbath pretty much ended my enjoyment in the music business, which I had loved. However, I have seen so much opportunity in the business world to use these cutting-edge tactics. Of course, so many people don’t understand it, but are increasingly seeing the power of social media in a brick and mortar world.

    For the past year, I have been scraping by building up case studies and coming up with some measurements to provide ROI for small businesses. (It hasn’t helped that I’m located in Michigan). However, I am sensing a huge moment of opportunity, and suddenly am finding myself almost completely booked with clients who are recognizing the value of converting much of their media spend to social media and blog/eNews strategies.

    I understand how Ad Agencies, who are used to big money, are resistant to this change taking place, but I’m afraid they are going to have to get used to it…turning some of their one-time (expensive) branding campaigns into longer-term contracts for developing creative web content to fuel this new paradigm of communication.

    The rewards will be smaller, but more ongoing, and with proper management, I think they will learn to prosper in this new environment. Change is a bitch, but the learning curve (once creative people embrace it) is pretty exhilarating! The possibilities are endless.

  2. Very interesting.

    I guess in the past, television, print, radio and word of mouth were the ways to market things. The Web certainly isn’t new (mainstream since 1995?) and prior to social media being what it is today, I’m going to assume that there was still money to be made. While the marketing dynamics of television, print, radio and traditional non-social media Websites have changed, wouldn’t you consider social media word of mouth? How did you measure the effectiveness of word of mouth in the past with respect to billing a client?

    I was reading someone’s blog awhile back in which the author stated that it’s no longer possible to sell people something they don’t need. That it’s really about finding out what people need and selling them those particular products and services – and the way to find out what people need, is through social media channels. Do you agree with this paradigm shift?

    It seems to me, that a “build it and they will come” social media blitz is still missing the key element of the market buzz that grows something into a social media firestorm. There needs to be a “point of ignition” and figuring out that point of ignition is where the complexity comes into play.

    Have you seen Seth Godin’s video on TED about tribes? It seems to apply – http://www.ted.com/talks/seth_godin_on_the_tribes_we_lead.html

    I’m looking forward to your response. Thanks!

    • Hi there Mister Reiner–

      Philosophically, your questions highlight a fundamental issue in this evolving business called marketing which is that the model of “brand communicating to Judy Consumer” a.k.a. “one:many” model is disintegrating and quickly. The emerging “many:many” model has no business model behind it yet.

      That is the focus of my work now – creating a sustainable tech/agency/ marketing model that serves everyone. As Seth Godin suggests, I could see the demise of the “one:many” model and I have built a team to think about to correct it.

      At a more down to earth level – social media’s role in business is evolving. I don’t think of social media as “word of mouth” – social media allows WOM to happen, but social media is broader than that. I lack a crystal ball but I see social media merging with mobile media technologies that will fundamental alter not just the marketing landscape but overall business practices as well.

      In this landscape – people will be convinced of things not only because of need but because of “peer pressure” or just the cool factor. In this world, the high school obsession with “popularity” that normally becomes irrelevant in the real world will become will a pivotal ingredient of online activity across the demographic spectrum.

      In this landscape, we will organize around “communities of intersect” that interweave and intertwine like a vine that grows over a house.

      The creation of this new landscape is still a blue ocean (to borrow the phrase from the book of the same title), but I am sure of one thing. We are evolving to become digital social citizens and given the age of Internet, we are all adolescents. It explains a lot of aberrant behaviors we see (hehe)

      The best is yet to be – but we are in for a rocky ride for a while I fear.

      Judy Shapiro

  3. You said it — Can ad agencies master the disruption of the social media?  in a word – nope.

  4. I get it. It’s no longer about producing one ad and distributing it many, many times.

    The evolved marketing model is still “one:many” but involves developing a new technique or marketing technology that agencies can re-sell to many, many different clients.

    For example, you can’t sell tweets, but you CAN sell a proven Twitter marketing strategy.

    The new “one:many” = $

  5. I worked in professional advertising photography studios in nyc
    between 1986 and 2006.
    I appreciate your blog and your refreshingly witty writting.
    And, its really difficult to even start about the changes that advertising photographers underwent. With the digital age, stock agencies owned by Bill Gates, the dot com bust, 911 and incomphrensible overhead of running a studio in Manhattan. I’m happy I got to experience in that kind of business before it collapsed…or it seems to have collapsed. Its also, seems like people bad photography is so acceptable. The glowing light from the monitor and all the clickable squares has had a effect on perception of composition, gravity, texture, lighting, ect… I’m very curious of the point of view of advertising agencies, how they can keep up, especially when it seems like, too many of them have really poorly designed websites, as though that is some kind of big bad warning sign that the advertising agencies are not in touch.

  6. Hi Judy. Great post and insights. We are definitely of like mind on this subject. If the ad business positively deconstructs and reconstructs itself the ad biz could actually be in a position to be better and stronger than ever. Here are links to a mashable article I wrote on the subject http://mashable.com/2010/07/06/social-media-advertising/ and a video of my talk at the NYC 140conference that I think you will find interesting. http://vimeo.com/13193859

    Great work. Would love to chat with you about all this some time…perhaps our combined points of view could help change things.

    Thanks

    Hank Wasiak

    • What a great piece Hank! Yes — it is so refreshing to hear someone with a perspective that is deeper than just being able to hearken back to their first “iPod” moment (hehe).

      Indeed, I agree- social media is a game changer. And I’ll swap you a recent piece I wrote in Ad Age that is hand in glove to your Mashable piece (“I can sing that tune in 7 notes …”). http://adage.com/digitalnext/post?article_id=143910. – Welcome Social Relationship Marketing.

      Only those of us with a broad perspective can see the change and have an idea of what to do about it. It is for this reason that I started Alternating Current (see below). Industry — heal thyself. And so it starts.

  7. POSTSCRIPT —

    There is an industry consortium forming called Alternating Current that is meant to be an action committee made up of both leading agencies and brands to create guidelines for this new marketing reality we are entering.

    Please note — this is a working committee meant to deliver industry guidelines for a number of topics including: measurement, trust/ privacy, certification among other subjects (emphasis on “working committee” if you get my point).

    If interesting in participating, please DM me judyshapiro@engagesimply.com.

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