The Interactive Agency
A year ago I commented on Phil Johnson’s article in Ad Age. Recently he wrote about “The ROI of putting your pants on in the morning,” concerning accountability and measurement for social media. It is odd how Phil has changed his tune in a year, and moreover how the comments echo back to the Small Agency Interactive Blues. My comments are in the comment section and at the very end of the piece. I do believe that this dialogue is just beginning and will eventually be determined by CMO’s and Brand Managers. When it does, a whole new world of interactive media will take the place of what we see today.
The Small Agency Interactive Blues
A Lot of People Are Faking It
Posted by Phil Johnson on 03.19.08 @ 12:01 PM
Unless you've been on a retreat for the past two years, the holy mantra is how to transform your advertising agency into an interactive agency. A proof point for me was when Greg, our VP of business development, dragged me to a conference on the West Coast and they had a track for ad agencies and a track for interactive agencies. The traditional ad people seemed to be talking about how to generate leads and get into a couple of pitches, while the interactive agencies were talking about how to trade up accounts and the challenges of managing 50% growth. Who wouldn't want to be an interactive agency?
We're not stupid here. We want to make more money. We don't want to end our days as washed-up dinosaurs on the agency landscape. Here's what we've done to accelerate our own metamorphosis and also what I've observed taking place amongst our peer set.
First, a nod to the great agencies that understand how to innovate and transform themselves and who genuinely struggle with relevance for their clients while transcending categories like traditional and interactive. (Hey no names; they don't need any publicity from me.) They're alive and, like me, you probably lust after their success.
There are a lot of ad agencies talking a mean game and touting their capabilities in pitches. To paraphrase the head of a web-development firm (after I plied him with a few cocktails), 90% of the small agencies out there chasing interactive business have one guy on staff who knows anything, and if they're lucky maybe a Flash developer. According to my buddy, they're subcontracting all their development work to him, and he's growing at 50%. And the word from my friends on the client side is that every agency knocking on their doors can show you at least one respectable interactive program. Just don't scratch too deep. In other words, a lot of people are faking it.
I've been on my own personal quest to remain relevant, and have made a number of moves to create an agency that fully integrates the technology tools as well as the societal sea-change that defines the world of interactive marketing and social media. Like most of my endeavors, the path was treacherous. We bought a web-development shop in 2001. Bought is an overstatement and web development is just an outright lie. What we really got was a respectable designer and a guy who knew html. It didn't stick. They were unhappy that I discontinued massage Friday, and I was unhappy because they couldn't build websites that stood up under their own weight. The great thing about a failed experiment is that you're driven to try again.
In round two, my partner, Mike, hired a really smart guy named Doug. I don't even remember his original title, but he was wired and knew all the right people. He had built some elegant websites and loved the technology. To paraphrase my interactive buddy again, we became an agency with one smart guy, and our smart guy took us a long way. Best of all, Doug was, and is, an insatiable and voracious reader who filled my inbox with ideas, reports, case studies and books. Doug became the viral agent that drove the change. But one man is an island, especially in ad agency where everybody is getting rewarded for doing the stuff they were hired to do, which isn't to build an interactive capability. This was actually a frustrating period because I believed we had a lot of the answers and just couldn't act on them. It was like being given a table covered with beautiful, fresh ingredients -- but no one had time to cook dinner.
A couple of cool things happened in pretty quick succession. As we started doing more interactive advertising, we recognized that if you wanted to optimize online campaigns, media planning and buying had to be fluid and dynamic. We made the decision to bring media in-house and chose a director with a strong interactive background. That alone upped the innovation in our program thinking, and we broke the evil cycle of proposing print and banner ads that lead to a micro site. We actually created some interesting programs.
Throughout, I've driven people in the office crazy. Every time I read an article, or talk to somebody new, I come in with a new strategy. We need to build a search capability. We need to hire someone who understands mobile applications. That kind of exuberance doesn't translate into useful action.
One deliberate step I took was to discover what truly separated interactive agencies from ad agencies that were pitching interactive capabilities. I'm simplifying, but I found three qualities in the interactive agencies that were missing in traditional agencies.
. The truly interactive shops had senior technology leadership that was shaping agency direction and client engagements. That's a big difference than having a wicked smart programmer who's dancing to the tune of the creative department.
. They worshipped information architecture. The interactive agencies had a deep respect for a discipline to which ad agencies, at best, play lip service.
. The agencies that got it didn't try to push interactive engagements through a process developed 100 years ago for advertising. If you're an ad agency, you will need to break some bones to reset them correctly. We should be walking again soon.
The interesting point is that as we made these changes, we stopped thinking as much about interactive. We began to talk more about the multitude of options we had for communicating with people. We became obsessed with the idea that the new channels demanded a new definition of content and began to define content strategies for our clients. (OK, I admit that I still like to chase after bright shiny objects.) Beats me whether we made all the right bets, but that's the story of what one agency has done to join the party. I hope I'm still standing to talk about it a year from now.
By Jim | Chicago, IL March 20, 2008 09:10:10 am:
Great article. Particularly appreciate the honesty in your transition. Having watched a lot of 'traditional' agency leaders try to go through this transition, your the first I've met or read who has an honest assessment of their self-inflicted challenges.
I've worked in the industry for about 10 years now and have built what we call a marketing and design firm founded in the principles of user-centered design (www.manifestdigital.com). A mouth-full, but what it gets down to is what you insightfully note in your second point about successful interactive shops: They worship information architecture. God bless you for saying it. If you don't know information architecture, you can't build an experience, and if you can't built an experience you're doing your brand a disservice.
Look forward to learning more about your successful progression. I suspect you'll be doing just fine in a year given the self-awareness you already daringly exhibit.
By Bob | Annapolis, MD March 20, 2008 09:10:52 am:
Well said. Agencies born as interactive agencies have a lot to learn regarding how to transform cool technology into effective communications. Agencies born as traditional agencies have a lot to learn regarding how to use the new technology to transform the way they communicate. For our little company, there's sometimes a struggle dragging our clients into the 21st century, too. There's something comforting to them about the print/banner/microsite campaign--contemporary, but not frightening.
By gpowelldesign | PERRYSBURG, OH March 20, 2008 09:30:41 am:
Great article. It's about time someone throws back the curtain ("Pay no attention to that man!"). I've worked for both purely traditional and purely interactive groups and completely agree with Bob Fiddler's comment here that each side of the coin has something to learn from the other. The challenge for the leaders of either type of group is to keep the usual (read naturally occurring) silos from forming - divisions/walls/competition between creative and technology that prevent either from bringing the right value to bear for the client, or, worse yet, renders the entire operation ineffective.
By David | Oakbrook Terrac, IL March 20, 2008 10:09:22 am:
Hmmmm - interesting comments but not entirely true. I was on a webcast for a company that offers online PR services - talking about reinventing press releases to account for the new world of social media. I went to their web site and looked at the management team - low and behold, all but one had a technology/IT background - one had experience marketing for technology firms - and NONE of them had ever worked a day in PR! My experience with technologists is they are great looking at business rules and technology requirements but are very shallow when it comes to marketing strategy and deployment. That is where traditional agencies should shine. So we have found great success in coupling the two - and frankly the online world is changing so fast do you actually think these interactive firms aren't "faking it" themselves half the time?
By PHILIP | CAMBRIDGE, MA March 20, 2008 10:58:40 am:
David, I'd probably agree that everybody, including the interactive agencies are making it up, i.e. faking it, as they go. Not from bad intentions either. We're just witnessing businesses trying to capitalize on a technology and social shift that has the potential displace them to some degree. Recently, I've been influenced by reading "Here Comes Everybody" by Clay Shirky who talks about mass amateurization and how entire professions can be replaced by amateurs. I believe there will always be a role for agencies, of whatever nature, who have domain expertise, astute audience insights, and great thinking. All the new technologies that dazzle us today will be ubiquitous and at the disposal of everybody. Phil Johnson, Cambridge, MA
By MICK | DALLAS, TX March 20, 2008 11:10:25 am:
Interesting read. I've been with an Interactive Group for over 4 years now. We (www.newmediagateway.com) excel on the interactive side and have for years. We actually work with several agencies as their 'interactive partner'. The biggest challenge I deal with on a daily basis is the agencies become fearful that we are going to steal their clients.
We are not in the game of stealing clients...but if you aren't offering your current customers the solutions or 'new media' ideas...you're losing your clients, plain and simple! They aren't being 'stolen'.
By daryl orris | Minnetonka, MN March 20, 2008 11:43:10 am:
Interactive Agencies
Phil's agency is truly an Interactive Agency that uses IT, the Internet, and New Media to promote themselves – this according to his own article. I did not read where Phil uses IT, the Internet, and New Media to promote his clients' brands. And there is the rub. When agencies decide they need to jump on the bandwagon without the reason why? The why in this case was given as an example: (...) "A proof point for me was when Greg, our VP of business development, dragged me to a conference on the West Coast and they had a track for ad agencies and a track for interactive agencies. The traditional ad people seemed to be talking about how to generate leads and get into a couple of pitches, while the interactive agencies were talking about how to trade up accounts and the challenges of managing 50% growth. Who wouldn't want to be an interactive agency?" Phil eluded to: "We don't want to end our days as washed-up dinosaurs on the agency landscape. Here's what we've done to accelerate our own metamorphosis and also what I've observed taking place amongst our peer set." And then goes on to explain that metamorphoses sans clients, and from a purely agency perspective. Which from my take is the problem.
He then concludes with: (...) "The interesting point is that as we made these changes, we stopped thinking as much about interactive. We began to talk more about the multitude of options we had for communicating with people. We became obsessed with the idea that the new channels demanded a new definition of content and began to define content strategies for our clients." Again, sans client, discovering only that New Media is a way to communicate with people. It is interesting that Phil's take is not unusual or unique. So who's taking up the slack in client New Media promotion? The in-house IT personnel. It interests me to no end how observers say that New Media has a look of its own, when it has been IT people armed with their two-year degree from the community or technical college have given it that look. Weirder is how advertising agency people accept it. Weirder is that now even with rich-media print dominates websites. Weirder, weirder is that agencies with expertise in print, photography/ video, broadcast, and promotion copy the stayed format.
Nowhere in Phil's commentary did he address creativity. Which as an advertising agency he should have or know of as a difference between an advertising agency and a design studio.
Having pitched new media to several large Fortune 50 companies I have discovered the gate-keepers. The IT guys from vocational-tech. These dear fellows are horrified of us ad guys. They want to keep their mystery for themselves, enjoying the control that they have over otherwise intelligent managers. Corporate managers are clueless, and for whatever reason want to remain that way. These IT guys use their technocracy to confuse and control. It is their mystery, and they want to keep it that way.
I have submitted a sixty-page New Media Proposal to several large corporations, meeting with brand personnel only to discover that they have not read the proposal. Perhaps New Media is too dry? Was their expectation that I condense it for them? Which is what the proposal already did. It was the segue to be used to focus on how New Media applied to their brand promotion. To put us on some common ground so we could go beyond New Media and begin focusing on brand promotion and how New Media can be an effective part of the overall promotional effort. Bewildered, they then assign me to the IT guy who looks at the proposal, which is well beyond his purview, then tells me we'll be in touch and never does.
In New Media the in-house IT guys are the gatekeepers. The simple truth is that everything an agency does has to be tied to extending the promotion and the reach of traditional media by adding a New Media component. Advertising Agencies have to learn that New Media is not an end-all, but an add on. It can be an end-all if the website is the center-point for all brand promotion. Perhaps it could become an end-all media, but first the agency needs to discover the methodology and techniques needed to effectively promote the brands using New Media. If they strike gold, creating a truly interactive method of brand promotion, then the in-house IT folks are relegated to the sidelines where they can watch and mimic and pirate what the pros do. But if the pros product is creative, the IT guys are at a loss. They are the mechanics, not the designers. In the end it is all about creative content that promotes brands by creating innovative two-way communication with consumers.
Phil's article focused on his experiences in finding ways to become relevant in interactive media focusing on the IT hardware, the means and not the ends. It isn't the technology but the content that is important. And that content is creative messaging that develops a strong promotional message that promotes and advances the brand and do it while it encourages two-way communication – something traditional media does not and cannot. Something that leaves the IT cadre in the dust. Phil left that part out. Intentionally? Like it would let the cat out of the bag - intentionally? Or is it that he doesn't really know?
When Phil wrote: "We don't want to end our days as washed-up dinosaurs on the agency landscape. Here's what we've done to accelerate our own metamorphosis and also what I've observed taking place amongst our peer set." I think he is missing the point. Advertising is a mass-mediated attempt to persuade. Advertising Agencies use creativity to promote brands. New Media is certainly not free, it is paid media (it doesn't exist in cyberspace on its own) – it is mass-mediated, and needs to be looked at for what it is and leveraged in the same way: interactive, two-way media that the viewer controls. It is the content of the message that counts, not the media itself.
Phil's article places the advertising agency in a position of competing against the in-house IT guys or specialized IT studios. Agencies should not to become Interactive Design Agencies, but instead use New Media as a media extension of their traditional promotional efforts. Hire an IT studio to produce it, to be plugged into or linked to the client's website. If it becomes a profitable part of the agency's business, then hire a Flash Designer. The advertising business isn't changing, the media mix is. Technology in our industry has always been dynamic, ever-changing as it is today. But when it is all said and done, we still produce and place, a mass-mediated product designed to persuade – using the best media source(s) to get the job done. When Television replaced Radio as the new media, not everyone invented or created their own production studios – they hired them out as they do now. So what's the big rush here? Advertising Agencies are as good as their suppliers. Find a good IT supplier and use them as a part of what the agency offers its clients.
So when Phil said: "Unless you've been on a retreat for the past two years, the holy mantra is how to transform your advertising agency into an interactive agency. A proof point for me was when Greg, our VP of business development, dragged me to a conference on the West Coast and they had a track for ad agencies and a track for interactive agencies. The traditional ad people seemed to be talking about how to generate leads and get into a couple of pitches, while the interactive agencies were talking about how to trade up accounts and the challenges of managing 50% growth. Who wouldn't want to be an interactive agency?" I disagree – Interactive Agencies are one-trick ponies unless they can successfully advance brands and develop long-term representation with clients. It is still the content and not the media. Clients have their own internal IT Cadre armed with the latest technological advances fighting fiercely to keep to their jobs and relevance, Advertising Agencies need to continue with what they do and tie-into the internal IT with what agencies do best – promoting and advancing brands.
By Foghound | CUMBERLAND, RI March 20, 2008 11:44:03 am:
Phil,
Great article. It's amazing how slow traditional advertising and pr agencies are to see the world has changed. Clients are ahead. Consumers even further ahead than agency or marketer. I believe the only way for agencies to move faster is for the agency CEO, like you, to require new ways, take risks, learn from the failures and hire a new breed of talent that hasn't been trained and rewarded for staying within a silo. There has never been a more exciting time to be in marketing. Why resist the possibilities instead of embrace them?
Lois Kelly
By kcgroh | Chicago, IL March 20, 2008 11:49:09 am:
"The interesting point is that as we made these changes, we stopped thinking as much about interactive. We began to talk more about the multitude of options we had for communicating with people. We became obsessed with the idea that the new channels demanded a new definition of content and began to define content strategies for our clients."
Now you're headed in the right direction! The lines are so blurry - what it takes to be an interactive agency (remember when we called it "new media"?) is changing as I type. I have been working for interactive agencies for 10 years. We are successful as you say because we are truly devoted to information architecture, but more importantly, we are truly devoted to delivering CONTENT. Users are not experiencing content in the same way they were just a year ago. The paradigms for navigating content are morphing as Web 2.0 functionality allows us to customize the experiences we have with companies, products and information. This is the true challenge for marketing firms, ad firms and interactive firms alike - how do you get your messages out, how do you influence your audiences when your audience is calling the shots?
By rafaelcabrera | Poway, CA March 20, 2008 01:17:50 pm:
Phil, thank you for sharing your thoughts honestly.
In the book "Don't bother me mom I am learning" by Marc Prensky, he speaks of the digital immigrant and digital native. I think there is something there to be learned from Prensky's perspective here as we, as entrepreneurs and industry as we continue to morph in this rapidly moving industry.
Though fairly young now, I started in this business at 15 in our family when we set type on Linotypes and Ludlows. I have seen several shifts in our industry(ies)
I would like to see more articles with this type of experiences: open, honest and detailed enough to get the feel out there.
I am a great strategist and have a knack for creating very solid ROI for our clients. I would love to hear from and meet anyone out there that is looking for someone with my talents that has opposite strengths either to talk or work together.
Phil, thanks for your openness. This was a great article. AdAge, please give us more of this type of insight.
Rafael Cabrera - rafael@toolsforthecapitalist.com -- San Diego
By mmbeccue | Tampa, FL March 20, 2008 01:57:12 pm:
Bob, reading your article strikes fear in my heart. If the agency world is this slow to adapt to new media like online, it must be REALLY scared of mobile marketing programs, like text applications, mobile web, mobile search! Is this your experience? I'm interested because I have published a mobile marketing vendor guide directory as a tool to help agencies figure it out.
By David | Oakbrook Terrac, IL March 20, 2008 01:59:26 pm:
The bottom line for us is we work hard to meet the needs of our clients using an integrated marketing approach - which could involve interactive - or not. To date I have not had a client complain they weren't getting value because we are a hybrid agency versus a pure interactive shop. I have had clients complain interactive marketing is a waste of their money, because in their specific and specialized B2B play it was very difficult to target the true group of buyers using purely interactive tactics. What is funny to us is how specialized service providers (printers, exhibit firms, interactive agencies) proclaim they are brand and integrated marketing experts. Clients see through those smoke screens a mile away.
By John | Austin, TX March 20, 2008 03:55:45 pm:
Retrofitting a traditional agency has got to be hard and I can appreciate the challenges you've addressed. We were fortunate to start our agency (www.nfusion.com) with a blank sheet of paper seven years ago and to design it as a "both/and" agency (digital and traditional) instead of the "either/or" norm of the past. Key to our success has been to have marketing, creative and technology leadership at the highest levels of the organization. Clients really appreciate having all dimensions represented competently. Our challenge has been finding people who are equipped to think about marketing problems holistically and not myopically. Unfortunately, many candidates from the agency world are not equipped for today's challenges so we've had to use alternative approaches to talent management. Fortunately they are working, but it continues to remind us of the problems faced by agencies whose legacy is from a bygone era. Good luck with your evolution.
By rizzojn | Cincinnati, OH March 20, 2008 04:49:34 pm:
I loved the article. I also would like to note that some educational institutes are on an even slower track than a lot of agencies and have not merged programs—where Graphic Design and Digital Design are still two different areas. This is at the very base of our industries problems and needs to be resolved.
J Rizzo
Cincinnati, OH
By gunther | Los Angeles, CA March 20, 2008 08:15:17 pm:
Very interesting post, Phil, and some really great points here.
While I don't think most reputable interactive shops are at all what Darryl describes as "one-trick ponies", I do agree that some lack the skills to develop and promote brands. It also seems difficult for shops to make claims on intellectual capital when many of the best and brightest interactive developers are freelancers. That said, as an agency, it should be a given that you can execute an idea with just about any media platform or channel in mind.
Which leaves us with the notion of who is truly "integrated".
Is it sensible to hire a bunch of developers in-house, or, develop the right strategic partnerships? Does it even make sense as a business to take on multiple categories of interactive development? Are you then a technology outfit as opposed to a creative agency? More importantly, are a you strategist that can empower a client's marketing and advertising efforts as a whole?
My point is that most clients don't ask or even know to ask for specific media executions, they seek business solutions. It's our job to provide them with sound strategies and the resources to accomplish this, no matter how we go about doing it.
By PHILIP | CAMBRIDGE, MA March 20, 2008 08:46:15 pm:
Gunther, What I really believe is that as the technologies we call interactive become second nature, the best interactive and the best advertising agencies will all meet somewhere in the middle. (But they probably won't call themselves advertising agencies.) The big debates of the day will then dissipate. The upheaval seems to be that the learning curve for the new technologies and their applications is steep enough that it's more disruptive than, say, the move to a digital studio. It's also more than the technologies. It's whole new patterns of social behavior that have sprung up. That's much more significant than learning how to integrate blogs, search, and syndication into a marketing program. When the dust settles, the race will still go to the best creative thinkers, the most insightful storytellers, and the smartest marketers.
By Miguel | Makati City March 20, 2008 11:08:50 pm:
Thanks for the insightful post.
As the need for interactive talent and capabilities becomes more urgent for mainstream ad agencies, the challenge of ramping up the skills in-house becomes greater.
Our company, (www.republikaworldwide.com) was built around the demand for reliable back-end partners for ad agencies to take on the task of executing their ideas while they focus on the overall brand and creative ideation.
Works well for our partners, and as more flexibility is demanded for agency resources we believe it is a win-win partnership that will continue to get stronger.
Miguel Ramos
Los Angeles, CA
By daryl orris | Minnetonka, MN March 21, 2008 03:04:31 pm:
Gunther has asked many good questions for strategically handling new media – he says: (...) "That said, as an agency, it should be a given that you can execute an idea with just about any media platform or channel in mind." To which, I agree. You allude to integration, where the message strategy utilizes multiple platforms and mediums, including New Media. Most sophisticated clients have data on all mediums that they use, how they affect sales, seasonality, and so on – but they don't have that same data with new media and multiple message strategies. So making new media a part of the campaign allows for the accumulation of specific new media data for assessment.
(...) "Which leaves us with the notion of who is truly "integrated"(...)" The agencies I have owned and the packaged goods company I own have always utilized an Integrated Brand Promotion approach to marketing and brand promotion when we were agency of record – and even on project work we attempted to continue the branding effort of the main agency. Aside from project work, when we had brand responsibility we would plan the message strategy and media to coincide with the brand's strategic marketing. This includes New Media opportunities. I would tell marketers that utilizing New Media is both an investment in the brand and in New Media research applied to your brand. With New Media it was more of a research study of how to best utilize it, developing methodology for measuring its success or lack of it. With Liquor Ice Cream, our concern was search engine optimization to obtain the number one position on all major search engines for liquor ice cream. In 1994 we launched the website which has been cited as one of the first to engage in e-commerce along with Dominos. Liquor distributors and retailers could place orders via the Internet. In 2007 we restaged the brand from "the original adult ice cream," to "the original Liquor Ice Cream." Taking us out of the underworld of "Adult" and into the "Liquor" world of controversy. Consumers gained brand information. The website was also used for account and investor presentations by sales representatives, distributors and brokers, in that anywhere in the world the site could be accessed and a formal presentation given from it, materials printed out from it – translated into any language. When anyone contacted the company they were referred to the website for information on the new technology and encouraged to download information and print ads. Consumers could use their translation tools for their language. So it served its purpose and it became a center-point for all brand promotion – all direct mail, print literature, advertisements all directing consumers to the website. Despite our severe visual limitations from regulatory agencies worried about children and the brand's societal impact on everything we do from the package to website, all requiring multi-level governmental approval, we created a strategic brand that competes in both the liquor and ice cream categories. From its launch in 1994 it has remained the same other than updating it making it the center-point for branding and all brand promotion. For orders, once the order is given, a 5-color receipt is printed out that is the best branding piece of all showing what the purchased in an ad format. Making me believe that print is dead. Or soon will be.
(...) "Is it sensible to hire a bunch of developers in-house, or, develop the right strategic partnerships?" The answer is to develop strategic partnerships where the agency outlines projected growth for the supplier for client development and maintenance of New Media projects – planning New Media as a part of the overall branding and campaign strategy using New Media as the center-point for all promotion. When timed, and not a last minute add-on, what supplier wouldn't welcome this kind of work? Unless your agency is so large that you already have in-house broadcast production, photography, video, et. al., what's a few Flash-Developers? I prefer matching outside supplier talents to different assignments. Why hire a Picasso to paint a yard sign?
Because of the limits on broadcast and print mediums, referring consumers to an Internet destination where more information can be obtained is the logical extension of the message strategy. If a website can develop two-way consumer communication it is indeed the optimal medium. Optimal because it is two-way communication engaging the consumer instead of the telling and selling mentality of traditional media. What puzzles me is when I recommend media to promote the website, how clients bulk at the idea of promoting the website itself instead of directly promoting the brand. Getting in-bed with Google seems to frighten them. But what I've seen. It seems that they are a data collection agency able to tell you where to best put your dollars as indicated by results from like products, or category contenders. I have learned that on-packs, bounce-backs, notes on ads that direct consumers to the site, and other promotional gimmicks seem less painless than asking for dollars to advance and promote the site.
(...) "Does it even make sense as a business to take on multiple categories of interactive development?" – It depends upon your demographic, are they represented as multiple category users? And if your supplier can provide these services, why not?
(...) "Are you then a technology outfit as opposed to a creative agency? More importantly, are a you strategist that can empower a client's marketing and advertising efforts as a whole?"
It would seem that you are more of a full-service agency. If you are an integrated agency as you state, then the answer is yes, secure a supplier to grow with your agency who has the ability to dovetail into your agency's New Media offerings with the clients you represent. As an advertising agency I used outside production houses for broadcast. To me there is no giant leap in hiring a Technology Supplier to produce materials for our clients. How is it different from hiring out broadcast production? There was never any doubt where the creative was coming from – from our agency – and, production houses, video/photographers were happy to work with us growing their own portfolios and businesses. But in the end, the branding, strategic marketing, and promotion, was devised by us – produced by our production suppliers -- just as New Media is now produced by our suppliers. We used outside services, mark them up, and bill our clients as usual. Corporations seem to favor internal IT instead of out sourcing them because of reasons of confidentiality because all of their communications are linked. I have been proposing links to their sites for our specific promotional effort or tie-in.
I have also been careful not to step on the turf of the In-House IT, going out of my way to develop a relationship with them, asking them to augment our new media effort – requesting their assistance for finding ways to improve the delivery using the brand's website. Never have I found a major brand who has an outside supplier controlling the corporate or brand website. In-house IT uses many suppliers, but they do not relinquish control. It is their server and their domain.
(...) "My point is that most clients don't ask or even know to ask for specific media executions, they seek business solutions. It's our job to provide them with sound strategies and the resources to accomplish this, no matter how we go about doing it." Yes, it should be a part of your campaign planning efforts for them, an investment in the brand and an investment in New Media R&D – I tell clients that they want to be ahead of the curve, not behind it, and to be on the cusp of this 'new media' they need to explore it in all areas to determine what and how to best impact their consumers and their volume, sales, and profits. If you believe that it is not useful for brand promotion, then don't use or recommend it. But by doing so, you may impact the business solutions they are looking for. Even if the results are less than spectacular, you have now quantified it and know where not to go, what to use as a message strategy. Or you'll learn the opposite, which is why it is an investment in the brand. What brand manager wouldn't want that data?
By Larry | New York, NY March 26, 2008 05:37:22 pm:
The "faking it" notion struck me as odd since every traditional agency outsources virtually all production of media materials such as TV and Radio production to expert directors and producers. Most interactive is no different when specialist can program flash or java, and create web services or databases much better.
Transformation and "getting it" with new technology is often about the perspective, approach and big idea rather than the delivery medium using TCP/IP, HTTP, GSM, or SMS.
When I helped create the first Ragu website, Mama's Cuccina, the insight was that the brand should be human, so the website needed to be personable, friendly and real. For us, this was a radical departure from finding the most creative expression of a singluar messages impactfully delivered to break through the clutter of TV.
By cecilia47 | Rohnert Park, CA April 2, 2008 01:30:29 pm:
Thanks for the valuable insights Phil!
A comment-on-a-comment by Daryl Orris:
"The IT guys from vocational-tech. These dear fellows are horrified of us ad guys. They want to keep their mystery for themselves, enjoying the control that they have over otherwise intelligent managers."
Finally...the truth is revealed!
Beginning my career in traditional advertising 41 years ago and then moving on to incorporate interactive 12 years ago, my dealings with IT guys and gals has been an interesting experience.
One thing that seems to smooth-the-waters though, is to focus on results not methods when creating a relationship with business owners. After all, they have a very focused set of goals...they want to reach them and they only care about "how much it will cost and how fast can it be achieved". If you always see things through the eyes of your business client, you will speak their language and give them the confidence to go ahead with your interactive media plan or an integrated marketing plan. They will have the confidence to look their "IT Gurus" straight in the eyes and say, "Hold on now...we hired these people to drive our business...let them do it! You WILL give them everything they need and right now!"
If you are able to talk "tech" with the IT Gurus it helps to gain their respect and if they respect you and know that "you know what they are doing" to protect their positions and how they just might be "taking the lambs to slaughter" they will become VERY cooperative in hopes that they won't be revealed as the "Bafflers" they are.
Root Concepts
What's the ROI of Putting Your Pants on in the Morning?
The Dilemma of Measurement and Accountability
Posted by Phil Johnson on 10.20.09 @ 01:02 PM
A couple of months ago I had lunch with Scott Monty, a friend and former PJA manager, who is now director of social media at Ford. He was telling me a story about a speech he had recently given where someone in the audience kept challenging the ROI of social media. Scott is an analytical guy, but I guess he got exasperated and finally said, "What's the ROI of putting your pants on in the morning?" Some things just seem like a good idea, including program measurement and accountability. The dilemma I see is that while agencies have gotten religion about the discipline of measurement, these efforts have not necessarily increased the value of agency services.
Listen to the agency buzz, and we're all masters of measurement and analytics. Every agency worth its salt claims to not only solve its client's business problems but has the data and case studies to back it up. By the same token, CMOs cite producing measurable results as their No. 1 priority.
That's all great. CMOs want results and agencies deliver. Shouldn't everybody be happy? Not so fast. The other buzz out there is that agencies are getting killed on price and are frequently viewed as a commodity service. That's no way to treat someone who helps drive your business success. Maybe agencies are not measuring enough, or measuring the right variables? Maybe the measurement is fine, but the results just aren't good enough? In any case, there's a gap between what agencies are saying about the ROI of their programs and how they're valued in the market.
Direct agencies can argue that they have solved this problem, and digital agencies get high marks for raising the bar on analytics. But right now everybody suffers from the same price erosion and competitive pressure. While we debate the merits of one approach over another, billions of dollars are gushing straight to Google and contextual advertising. According to Ken Auletta in his recent article in the New Yorker about Google, they "provide an answer to the adman's legendary line: I know half of my advertising works, I just don't know which half."
The cold reality is that lots of money that used to go to agencies of every persuasion, now goes somewhere else. This shift has also led to the market devaluation of many of the attributes that agencies use to differentiate themselves, such as creativity, planning, service -- and, yes, even measurement. In a buyer's market, even the most specialized qualities become a commodity.
The only way out of this dilemma is for agencies to take the next step and conclusively prove beyond any doubt that they contribute to a client's business results. There's no faking it. You'll know you have succeeded because clients will happily pay premium pricing for an agency that's indispensable.
There is no secret formula. But after staring out the window for a good while, I'm convinced that agencies need to attack this problem from three specific directions: the client relationship, the resource allocation and the agency methodology.
To get credit for influencing business results, the agency's work has to be tied to a specific visible goal that the client management team really cares about and plans to measure. Then the agency can align its own measurement strategy around initiatives in which the client is fully vested. To enforce this alignment, the most senior people on the agency side need to stay fully engaged in the day-to-day strategy and management of the business. For the record, I think this is incredibly hard to achieve and depends on a near-perfect client-agency relationship.
Agencies also have to flip the financial equation. Too often the story goes, "Here's how much money I have; tell me what you can do." You wouldn't want a carpenter to take your money, but only fix half the roof. Agencies need better data to understand what it costs to achieve specific business results so that they have the resources to succeed.
The most important shift may be the need for agencies to reorient their culture and processes. We've read a lot about empowering everyone in an agency to be part of the creative process. Now we have to train and empower everyone to measure their contributions against the business results that we want to produce. The discussion can't stop with one sentence in the creative brief but has to track through every step in the agency methodology.
Just like putting on your pants in the morning, agencies deliver a lot of intangible value. That's why they will always have a place at the table. Business results, however, will guarantee their rightful place at the top of the business food chain.
~ ~ ~
You can follow Phil Johnson on Twitter: @philjohnson
By chrisabraham | Washington, DC October 20, 2009 05:00:32 pm:
I am the president of a virtual, distributed agency of over 35 employees who have no reason to put their pants on at all. Putting pants on as an assumed mandatory culture is dead. Putting pants on is the perfect dead analogy -- putting pants on is not mandatory and in many cases can be considered non-essential and, in many cases, a tip-of-the-hat to the 19th century, the height of pants-putting-on. More and more workers are rolling over in the morning and being productive without pants or cars or commutes or elevators or desks or conference rooms or spit-polishes or any of that Elizabethan hogwash. While I must admit that I am wearing pants now, at this moment, is it only because I guest lectured at a University today on the digital Agency. Universities are so stuck in the enlightenment era, when the fancier the pants the better -- also, tweet and elbow patches! Next thing you know, Phil, you're going to tell me that the pair of pants I need to don in the morning are from the House of Armani.
By keithboss | riverhead, NY October 20, 2009 05:02:00 pm:
Phil - I think the key sentence here is "For the record, I think this is incredibly hard to achieve and depends on a near-perfect client-agency relationship." I think too often, agencies don't know what the "big metric" is and their internal client may not know it either. In this case, we get stuck hitching wagons to lots of "little metrics" that don't impact the business. This is why we get the constant question of; what's the ROI of that? Because if we have lots of measurements, they may make up for the fact that we don't have the important measurement. I see the potential for lots of projects getting bogged down in measuring everything for this reason. There are some things that can't be measured. There are other things that aren't worth measuring.
By PHILIP | CAMBRIDGE, MA October 20, 2009 07:10:37 pm:
Keith, you actually said it better than I did. Thanks for the clarity.
Chris, I love your business model. And I would never tell you what kind of pants to wear.
- Phil Johnson agencypja.com
By nashway | Englewood Cliffs, NJ October 21, 2009 09:00:34 am:
Phil-
Excellent post as always. You seem to have your focus on some of the most important issues affecting agency/client relations. I just wanted to point out one area of your post where you said "agencies need to flip the financial equation." This is an extremely difficult and delicate task, and I'm not sure agencies really get it - your carpenter analogy is perfect.
You wrote: 'Too often the story goes, "Here's how much money I have; tell me what you can do." ' Generally speaking, this is how agencies are selected, reviewed and even dropped - by their ability to answer that question.
But I do think there should be more of a dialogue between agencies and marketers, (read: marketers need to do more of the talking,) and here are maybe some of the questions agencies should be asking when they send back RFPs:
What do you WANT us to do? (Make you look cool? Move the sales needle? Build a brand? All of the above?)
How, then, will WE really be measured?
What's the most important business problem that needs to get solved? (Sometimes, it's operational and has nothing to do with the agency - but it's good to get that out in the open.)
Phil, can you think of any others?
Nader Ashway
Blog: www.markethingthingy.wordpress.com
Twitter: @nashway
Getting back to the carpenter
One more
By jimmygilmore | Atlanta, GA October 21, 2009 09:21:48 am:
Phil, I love the title/Scott's comment. At Kilgannon, We spend a lot of time focused on ROI around here as well. To make sure we use metrics that are relevant to both us and our client, we create a scorecard in collaboration with our client. Our CFO talks about our scorecard in relationship to high-involvement brands here http://bit.ly/2cTzN4 .
Jimmy Gilmore
jimmy-gilmore.com
@jimmygilmore
By Brian | Naperville, IL October 21, 2009 09:57:58 am:
I think a lot of the ROI obsession is just obfuscation. "Just tell me the ROI on this" is often a smokescreen for weak or non-existent thinking. Talking ROI makes us all think we're smart without need of judgment, wisdom, insight, risk...
"There is an occasion for everything, and time for every activity under heaven" - and there is a time for using ROI metrics, of course. But too many of us are being lulled into incrementalism and monkey-see, monkey-do by the siren song of ROI.
By howie@skypulsemedia | Los Angeles, CA October 21, 2009 10:30:33 am:
Great write up. I think Brands overestimate their product/service and market potential. Agencies fail to stand up and say 'sorry but I am promoting a dog of a product what can I do with a dog?'. I love Miller/Bud/Coors commercials. I think they are funny most of the time. I will even purposefully watch them even when DVR'd because they make me laugh. I never buy the product! EVER! I like strong crafted beers. Think of the whole chain there. Agency made a great commercial. It gets Nielsen ratings! I don't buy the beer. Its the beer makers fault not the agency. How can the agency measure if their work has ROI for the beer makers? At Point of Sale with Club Card Bud is $3 a case cheaper so you buy Bud. At the Pub Coors Lite Pitchers are on sale Wed Nights. Each case saw an increase in sales that had nothing to do with Agency work or the product. And thus we have an ecosystem of wastage, voodoo, and fuzzy math.
By ajpress | DALLAS, TX October 21, 2009 10:34:07 am:
I have a similar question: "What is the ROI of measuring ROI?"
We spend a lot of time and effort agonizing about the methods of measuring countless metrics with precision and granularity. Every activity has a code, every action has a number, and all the data is dutifully collected. But these numbers are subject to human interactions, influence, and associated imperfections.
While measurement is certainly valuable, many companies and agencies push well beyond diminishing returns in the persuit of unerring accuracy, and begin justifying measurement for it's own sake.
By boxingclever1 | St. Louis, MO October 21, 2009 11:51:13 am:
I say we all wait and see what Rodney Mason has to say before we get any farther into this conversation!
Jim
By William | East Rockaway, NY October 21, 2009 07:15:29 pm:
Talking about putting our pants on in the morning ... all of this new hoopla about ROI, digital or otherwise, is simply the "Emperor's new clothes" revisited. We've had copy testing via the likes of Millward Brown and Starch; simulated marketing models via Nielsen's BASES; shopper marketing analytics via NPD; etc., for years. All very useful research tools to help guide our creative and investment decisions before rolling out the big media bucks. Quantitative measures like these are the metrics of agency performance! High brand identity, recall and persuasion scores, quality diagnostics and verbatims, hits and clicks, and converted consumer transactions, for example. But ROI, in a classic financial sense, is what it is and that's on the client - because they control most of what affects a brand's ultimate sales, market share and P&L, e.g., R&D, product innovation and quality control, pricing and distribution strategies, trade allowances, and so on. All things beyond any agency's control unless invited to participate (which rarely, if ever, happens these days). And for perspective, academic marketing icons such as Britt, Levy, Kotler, et al, have never been able to prove the ROI of a brand "advertising" investment. Cost-effectiveness and cost-benefit analyses, yes! But ROI, no! Indeed, John Wanamaker summed it up best many years ago for all of us today, "Half the money I spend on advertising is wasted; the trouble is I don't know which half". And so, the question remains. Bill Crandall at bcrandallnyc@aol.com
By Nevin_S | Lansing, MI October 22, 2009 08:36:52 am:
Phil,
As a corporate marketing guy for decades many agencies lose track of one thing when they work with metrics and measurements. The companies I've been at are there to make money that's the bottom line. The agencies I've employed bring all kinds of numbers and measurements to meetings but every time the missing part is "how are we buying pants after paying for the socks".
Not that I don't like the metrics of a good campaign. I love crunching the numbers of how good that program did among 20 somethings and other groups. But when it come down to corporate its all about how much did the socks cost and how many pants can I buy with the left over.
When I have been asked to track and trend ROI it comes down to one simple measurement, did the plan positively effect the income of the company. The presidents and board of directors I have worked with do not care how they get there or what I have worn just that the income is more then the cost of the socks.
By Todd_Sebastian | Cincinnati October 22, 2009 10:20:47 am:
SUCCESS STORIES are critical -- and not enough agencies take the time to create and leverage them back with their clients to prove the value they delivered.
One issue: Many agencies think that if they demonstrate a financial payout beyond a shadow of a doubt, then there is no use creating a case study. Not true. There are lots of creative ways to prove to a client that delivered value (e.g., testimonials, social media exposure, shelf presence, etc.).
http://www.TellYourClientsWhereToGo.com
By griffinof74 | Denver, CO October 22, 2009 12:25:27 pm:
While I work for an agency that is all about relationship marketing and tracking of results. I have seen a lot of turn over of CMOs and marketing directors. All of them were focused on the numbers - tracking ROI, trakcing leads, tracking conversions, etc.
While that is well and good, and something agencies should bring to the table. And yes, agencies need to know what the big metric is and have agreement with the client on its measurement and what would be deemed success.
But, the number one job of CMOs has always been brand management. How are they different than the competion and what is marketing doing to ensure that brand grows. I saw a poll recently of CMOs top concerns. They are were all things like ROI, tracking this, tracking that. But, of their list of concerns, there was no mention of supporting their brand and ensuring that they maintain what is different about them. That could be a reason why their turnover is so high, they have the numbers and results, but they have lost track of job number one.
No wonder fewer and fewer consumers perceive that there are really a handful of different and unique brands on the market. And no wonder everyone is getting pushed into a commodity state. Agencies, even with stressing the numbers and analytics still need to maintain the brand as job number one.
By Formula13 | Atlanta, GA October 22, 2009 01:05:09 pm:
Agencies and marketers need to keep their eyes on the big picture. While a Twitter profile for the brand may not produce measurable ROI, it can play an important role in connecting with customers and keeping the brand top of mind. Measuring the brand's awareness, preference, and equity are where the focus should be (that and the bottom line). Compensation models are shifting to reflect some of the changes we are seeing in the market.
I believe that agencies need to build stronger relationships with their clients so they have a seat at the table and a more vested interest in the brand's success. ROI concerns will not go away anytime soon, but the end result of a successful strategy should be evident on its own.
Dear Phil,
Banned, so I write to you direct.
I had been advocating a smarter version of what you pitched today: then need for Adver-Marketing. Adver-Marketing is when the CMO and the Agency team up to solve strategic business problems.
Since the advance of the Brand Manager, businesses have been collecting data about the effectiveness of media, timing, and agencies.
When sales slump, or volume dwindles, Advertisers look for ways to get a boost. More often then not it is to jump to another Agency. And why not, your own piece cites that Agencies have quantifiable data proving their worth.
But what you overlooked is the fact that CMO’s have strategic data about their product or service that the Agency will never see. It is both strategic and proprietary. Businesses operate in a category and in multiple markets. Each market has its unique problems requiring unique strategies. CMO’s amass data that they harvest which is strategic to the market and to the brand.
Getting CMO’s to share this data, and then work cooperatively with the Agency is what I call “Adver-Marketing.” When an agency understands what has worked, and what competitive brands are doing, then the agency can devise better strategies and creative that is developed to be strategic.
I worked primarily in Packaged Goods. What I have found is that CMO’s find it easier to use Trade Promotions than to rely on Agency Magic -- the latter being less quantifiable, and the former very quantifiable. Here’s why – CMO’s measure results by sales, and creative awards like agencies seem to prefer to use to judge their merit. When a CMO learns he can manipulate sales and volume by using trade promotions they become dependable and help him to achieve his quarterly objectives. I asked if we could be involved in that aspect of the promotional mix. What we did was to put display and promotional strings on the trade dollars where we had better brand identification during the promotion, to gain a strategic edge over our competitors. Eventually we tied all brand promotion to our creative strategy for the brand and this formula gave us number category rankings with every brand we represented. Moreover, when the brand came off deal, we suffered less loss because our regular and combined promotional mix yielded more brand loyal consumers then did the strategy employed by our many competitors.
When agencies get into the business of numbers they somehow seem to point to their creative strategy and forget about the other promotional activities handled by the CMO. If the agency is not involved in every aspect of the promotional mix used to advance the brand, they are by definition, replaceable. They have made themselves a commodity because they did not involve themselves in every aspect of the CMO’s promotional mix.
This is why I advocate Adver-Marketing, where CMO (Advertiser) and Agency team up together and seek to devise strategies for the brand and for each market. Everyone should be required to read Claude Hopkins’ My Life In Advertising and Scientific Advertising to understand that advertising and marketing are one. Agencies have a tendency to rely on creative instead of strategy to advance brands. But understanding the historic strategic battles that have occurred within the category, the media/strategy and creative that have worked for the brand and for competitors, is the linchpin for developing strategic creative.
CMO’s see the historic strategic information as proprietary to the brand and company, and then they increasingly see the Agency as a commodity because like the Godfather, they pull the strings. They hold the mysteries of the brand and they have the budget to advance the brand.
Truth be told, most agencies are like whores where anyone who shows them the money, they are in bed with. So can you blame the CMO for not trusting a new agency, entrusting them with their most closely held secrets? There are real marketplace battles going on where one slip could mark the end the life of a brand. That is the real problem.
Having been on both sides of the fence, or desk, I have understood that my boss is the CMO. The better the relationship I have with him, the more likely I am to succeed. As a CMO I also understand that Agencies are a commodity, because they are interchangeable and the secrets I have could be used against me, should they become known by my many competitors. As a CMO I have all of the marbles, the brand knowledge, the strategic category knowledge backed up by historic statistical records – and I use quantitative decision-making management techniques to determine how my marketing budget is to be spent. I tell upper management the resources I need to do my job. I hire agencies they don’t hire me.
The solution, better no-competes and discloser contracts that bind Advertiser and Agency into complete confidence in one another. For the CMO to do this, the Agency must be seen as a strategic advantage that the CMO has over category competitors. Your take is like voodoo magic.
Your statement: “The dilemma I see is that while agencies have gotten religion about the discipline of measurement, these efforts have not necessarily increased the value of agency services.” The reason is because the numbers you are pushing are shortsighted of the whole. Not until you understand the complete promotional mix, strategic category data, see the historical strategic record, and no that in the end you are competing against other brands within a category. Using all of this, then creative strategies designed to defeat competition once and for all either gaining dominance within the category or taking a firm second or third place strategy and then maintaining that position, will an agency be considered strategic to the CMO. Many leading brands are not as profitable as number two or three brands because they spend less and therefore on a price strategy alone can usurp the leader by riding on their coattails.
“There is no secret formula. But after staring out the window for a good while, I'm convinced that agencies need to attack this problem from three specific directions: the client relationship, the resource allocation and the agency methodology.” There really is a secret, and I just told it to you. Now you can put it into context: Adver-Marketing.
It is simply a cooperative partnership between CMO and Agency, where agency is involved in every aspect of the promotional mix. At my agency that also included Public Relations: both as a brand publicist and as a strategic public relations agency.
I could simply not state this in 500 words. That is another stupid directive from stupid.
Daryl Orris, Ph.D.
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