The Future of Ad Agencies Roundup

Friday, February 26th, 2010

“No longer can advertising agencies afford to rest on their creative laurels to pull dollars from CMOs.”

This according to Sean Corcoran (@SeanCor), analyst at Forrester Research, last night at #MITX’s “The Future of Ad Agencies.”

It came as no surprise that Forrester’s research indicates that agencies are struggling to find their place in the world of multi-channel digital marketing and to retain their role as a “one-stop-shop.”

According to Corcoran, a majority of CMOs – the agency’s typical client – are wary of single sourcing their marketing dollars.  Instead, they are searching for discreet solution providers – SEM/SEO specialists, communications, etc. – to provide bandwidth outside of their traditional agency relationship.

“Most CMOs don’t have confidence in their agency to provide services outside of their typical relationship,” Corcoran mentioned. And for good reason.

“Most agencies typically struggle with analytics and how to provide them to their clients,” he added.

Most interestingly, Cocoran stated that despite his urging toward his agency clients to adopt much more robust analytic infrastructures to address their clients’ demands for accountability and optimization, some are reluctant as they feel they cannot monetize that exercise. “Kind of a Catch-22 on their part,” he said.

Yet despite agency deficiencies, Corcoran was quick to note that despite CMOs’ unwillingness to provide the entire marketing pie just to one agency, they were just as reluctant to take strategic and creative elements from their primary agency and trust this deliverable to a more specialized provider – such as an interactive agency or a PR firm with diversified offerings.

Follow the Dollar

Despite all the talk of the digital realm taking over the ad world, Corcoran presented some startling numbers when it came to advertising spend.

Magazines still hold the lion’s share of ad revenues over all other channels with gross spend of roughly $29b USD – an off-putting revelation given the state of the current plight of publishers such as Reed Business Information and Conde Naste.

Television clocked in at around $26b USD.

What really got heads turning was the prediction that web ad revenues would exceed $50b USD in four short years. “By 2014, we could be seeing the web clearly dominate,” Corcoran added.

Meeting of the Minds

Following a presentation by Forrester’s Corcoran, a panel of advertising luminaries took the stage to wax candid regarding the current state of their industry, new technologies, client challenges, and their top priorities.

The following sat:

• Ryan Alderman – SVP, Financial Services, Razorfish
• Chris Colbert – CEO, Holland Mark
• Joe Grimaldi – CEO, Mullen
• Matt Lindley – Director of Brand Engagement and Innovation, Sapient
• Larry Weber – Chairman, W2 Group

While the panel provided insight into the minds of the agency leader, one particular anecdote stood out.

Larry Weber, an internationally renowned communications genius recalled a recent brand experience that perfectly encapsulated the marriage between creative and technology.

He recounted that one recent Friday evening he received an email from Amazon indicating that the online retailer had invited him to view some online footage of his favorite author, John Updike, doing a reading of one of his novels at Harvard.

“So since I don’t have a life, I made a drink and sat down at my computer,” he said with no particular jest.

Ninety minutes later and after numerous video views, and not to mention $150 in book purchases, Larry was finally done. More important, according to Larry, was the data Amazon had now generated about his surfing and purchasing interests.

He added, “Agencies are now responsible for creating experiences for consumers, like Amazon did for me.”

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