Agencies aren't leading the orchestra, they are dancing with the flash mob.
Last week, industry leaders claimed this was the start of a new era for media agencies. With the ever increasing forces bearing down on agencies, from a laser focus on transparency in the media supply chain to disruptive technologies minimising the reliance on trading scale, through to the evolution of software vendors and consultancies within the digital ecosystem, the immediate need for media agencies to adapt and evolve to remain relevant in the new universe became undeniable. Given all the challenges that are stacking up against our sector and for our clients, we couldn't agree more.
From an economic perspective, 2017 and 2018 presented significant challenges. In many markets, we're situated in small and highly competitive advertising markets. Comparative to our international counterparts, markets like Australia spend more per capita on advertising than any other key market outside of only the U.S. Coupled with a volatile outlook for consumer spending, and a flat forecasted advertising market, it's becoming increasingly harder to achieve cut through. It's no secret that saturation has a knock on effect: reduced opportunity to see results in less effective advertising and lower ROI. An inability to demonstrate ROI leads CMOs down the slippery slope of cut budgets, with the marketing function positioned as a cost centre.
As Marketers, we are also competing with the best experience a consumer has ever had: they are connected, have an overwhelming amount of choice and in control of their purchasing decisions. By now, the number of connected devices has exceeded the number of people on earth. And the vast majority of the world's population has access to mobile phones. This leans into the creative conversation, and the ability to stop the scrolling thumb.
The greatest downward pressure is coming from digital disruption, for both clients and agencies, and the issues relating to transparency. The result is companies are struggling in a complex economy with a decline in the importance of their brands, retail brand substitution, high levels of organizational legacy, a lack of direct customer data and declining advertising effectiveness.
The digital media supply chain has become opaque and convoluted creating issues in brand safety, transparency, measurement, viewability and fraud. This has negatively affected performance and badly damaged confidence amongst traditionally high spending brand marketers. Highly acquisitive management consultants are attacking the marketing services sector. The new value system of marketing has created opportunities for new types of specialized services (Facebook Marketing Partners, Amazon Experts, and their ilk). Marketing service holding groups have highly complex fragmented organizations and are experiencing low or no growth. They are starting to respond.
All of that said, we are one of the most dynamic and innovative sectors in the world. We are evolving. The kind of services we deliver will become more directly and measurably important to the commercial success of our clients' business.
The next frontier for agencies lies in addressable, people-based marketing. This represents a fundamental shift in how we approach the market:
- It overcomes fraud in digital supply chains
- It is 100 percent transparent in its approach
- It is based on real people, not proxies or assumptions
- It draws on the data riches of the most data-forward companies in our market
Growth is undoubtedly becoming harder to find and clients are increasingly under pressure to deliver results. We need to be strategically ambitious but tactically cautious. Clients on one end need cash flow and results now, but we have the ability, smarts and operating model to really drive long term strategy.
Insanity is doing the same thing over and over again, but expecting different results. It's time for change.