Archive for the ‘The Marketing Industry’ Category

Today I’m going to kick off a multi-part series that addresses some of the challenges facing the changing client/agency relationship, along with some solutions that clients and agencies can work together to implement. Let’s just call it – Client/Agency Therapy.

Since this is the introductory Client-Agency Therapy post, i wanted to set the stage with a few principles, disclaimers and caveats.

  1. My goal is to help clients and agencies establish better working relationships, not to bash agencies (or clients). There are plenty of agencies and clients who buck the trends, really have their acts together and should be an inspiration to their peers.
  2. We live in interesting times. We’re working in a difficult and quickly evolving business climate that has been less forgiving than in the past. We are all tasked with doing more with less. We need to cut each other a little slack sometimes and foster positive and motivating relationships that focus on improving the future rather getting hung up on past negativity. That said, due diligence should not be taken lightly, and complacency and inefficiency should not be tolerated.
  3. We must all strive to be the best at what we do and instill this characteristic in those we manage and lead; enter into relationships with the intention of a respectful partnership; and establish accountability and feedback loops that maximize business performance and ensure that expectations are being exceeded.

Here’s just a sample of some of the topics we’ll be exploring together in Client-Agency Therapy:

  • Collaboration
  • Culture alignment and culture clashes
  • Agency organization challenges
  • Client organizational challenges
  • The role of specialists and generalists
  • The vital role of process
  • The implications of efficiency, or lack thereof
  • Importance of the right marketing technologies
  • Accountability
  • How people make all the difference
  • Client expectations
  • Agency proficiency
  • A new era of procurement
  • Agility

I’m excited to address a number of topics that tend to get swept under the carpet or ignored because they are either difficult to deal with, nobody has the time to think about, or sometimes we just don’t know what we don’t know. As a veteran digital agency executive who has led and sold a successful digital agency,  managed the integration into a large agency culture, and moved on to train and consult agencies and clients, including some of the largest media agencies in the world and several leading brands, I have a variety of hands on experience to speak authoritatively on these topics. However, I also have enough humility to reach out to the community and ask you to chime in and augment and debate some of my concepts and statements. In fact, I very much look forward to the intellectual discussion and journey.

I hope that Client/Agency Therapy will also spark conversation within your organizations on how to become better digital marketers and partners.

 

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There has been a lot of talk over the last couple of years about how the “agency model is broken”. While a sexy headline for marketing trades, and a great scapegoat for clients, I find this phrase a gross misrepresentation of what has been happening in the industry.

Lovers Quarrels

First – there is truth to the client-agency relationship changing – often uncomfortably. Sometimes it is the agency’s fault for over promising, staffing non-strategic thinkers at the helm of account strategy, not fostering proper collaboration, not nurturing a culture of discovery and innovation – and sometimes the client’s fault for having unrealistic expectations, pushing agencies to do too much more with less, and not taking the responsibility to understand their own business better. But truth be told, the client and agency need each other and they both know it. Agencies need to learn how to say “no” and set realistic expectations of the new labor intensity, costs and resources required to accomplish the objectives of a client. This does fly in the face of the “old agency model” of saying “yes” first and figuring out how to execute and manage the work later. The recent resignation of the sizable Home Depot account by MRM is a a prime example of an agency forced to take a stand to ensure a profit from their work. I say kudos! Of course I don’t know if the account was improperly scoped in the first place (a common agency blunder in the over-eagerness to win an account).

MRM New York managing director Corey Mitchell wrote that “for reasons based on a fair exchange of services and a mutual inability to arrive at realistic expectations, we are choosing to walk away from our relationship with The Home Depot completely.”

Embracing Change

Undoubtedly, the only path to success on the client or agency side is to understand the seismic shift in the way we communicate with consumers,  the fragmentation of the distribution channels where we reach them, and the desensitization to marketing in general. Strategy used to be about the creative platform and how to inspire, motivate and tap into consumer passion. While these   creative and messaging objectives remain prerequisite components of an increasingly difficult task of  influencing consumers, the strategic emphasis has actually shifted to understanding how and where to reach consumers and the mechanisms  and marketing attributes that influence them. Agencies have been focusing on reintegrating services and capabilities – to a degree creating jacks of all trades, while they should be focusing on integrating strategic planning, analytics and modeling  while allowing for the growth of specialized units for the disciplines that are increasing in specialization. It’s not a silo’ed approach if the head (strategy & insights) and the tail (analytics and modeling) are driving and fostering collaboration. IPG just announced such a restructuring of their digital agency assets. Of course agency announcements and intentions sometimes vary from actual practice and proficiency.

The Good, The Bad & The Ugly

Since leaving the agency world in 2007, I have been working with Laredo Group, training agencies of all sizes, including some of the largest media shops in the industry. I have seen firsthand the challenges faced and how some agencies overcome these challenges while others struggle. Additionally, I have been consulting clients and agencies, including leading client  agency reviews and selections for clients of various sizes. Big agencies get a bad rap sometimes from pundits. I must say that I have seen some impressive agencies who are embracing  and leading the charge of change, innovation and growth. I have also seen a lot of complacency, mediocrity, arrogance with resistance to change, ignorance with a desire for change, and in a couple of instances, even straight up cluelessness. It’s tough running an agency when margins are being eroded by the complexities of the marketplace and the world is evolving faster than your staff can keep up with. It’s also tough for clients who are looking to lean on their agencies for thought  leadership and executional prowess when you keep hearing how the “agency model is broken” and agencies are the bad guys.

It’s All About The Talent

The Stylistics and Michael Jackson got it right – “People Make The World Go ‘Round”. An agency IS its people. The best agencies have developed a culture that attracts and retains top talent. To a client, agencies are as good as the weakest team members assigned to their account. This is often where the biggest perception of “broken” lies. Clients – be sure to request to meet the actual team assigned to your account before working with an agency. If already engaged with an agency, take the team out to lunch, get to know them better, empower them and make them want to kick ass for you. Often times they are unappreciated and overworked. But keep an eye open for the weaker links – hey, everybody has to learn sometime – just make sure they aren’t on your strategic planning or analytics teams!

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Best Buy TV Ad SpendingToday Ad Age reported that Best Buy is shifting more advertising dollars to TV this holiday season.

The consumer electronics giant wouldn’t give exact figures, but it is increasing its spending by a low double- digit percentage. In 2009, it spent $150 million on TV advertising, according to Kantar; network TV ads accounted for $65 million of that figure. To free up funds for TV, the retailer is pulling money away from inserts and trimming distribution in parts of the country where newspaper readership has suffered.

Quoting a Best Buy exec: “When you have big budgets like we do, a 5% to 10% improvement is a big deal.”

What’s Good For The Goose…

Believe it or not, as a digital strategist, I am actually thrilled to see this move and think it is wholeheartedly the right one – because it is supported by sophisticated media mix models that predict the impact and outcome of the media investments. Make no mistake about it – media mix econometric modeling is neither simple nor absolute, but more companies need to attempt to crack this nut. Unfortunately, today a lot of media investment is based on intuition and debate under the guise of collaborative channel planning, rather than a systematic approach to modeling a mix. And BTW – you don’t need a nine figure budget to take a deeper look at the way your media works together. You may not be able to develop the sophistication level of a comprehensive econometric model, but there are so many different ways to analyze your data. It starts with the desire to do so and a lack of aversion to walk outside of your comfort zone – because trust me, that’s where you’ll be very quickly.

Based on the model’s recommendations, Best Buy has also tweaked its digital spending, putting more money into display advertising. And it’s also considering putting more money into events. Mr. Panayiotou said that the model made other suggestions, which the retailer is still evaluating. His team is looking at everything from events to the loyalty program, digital to online search.

The fact of the matter is that all media spend, whether direct response or branding focused, has the same objective – to influence and sell product to consumers. The primary difference is where in the sales cycle you reach a consumer and how long it takes to influence the sale. This is extremely over simplified, but a fact nonetheless.

Media Investment Predictability

The beauty of the concept of GRP’s is that a historical level of media weight could somewhat reliably predict the business outcome in the market. One of the challenges of digital media for large brand advertisers is that, unlike traditional media, it’s hard to predict the outcome in the market as a result of ad spending. To a degree this is because of the small budget allocations to digital, but is also due to the differences in media currency and the lack of significant corollary research on investment impact. Many brands believe in the power of digital media, but most have yet to quantify the marginal increase to their businesses as media dollars get shifted between traditional and digital media. We can talk ad nauseum about how digital is an essential part of the mix (and it is!) – but as an industry we must do a better job at proving it.

Digital Media is Growing Up

Of course, within the digital ecosystem there is significant evolution all around us. The market is still dominated by direct response marketers – and supports these efforts at scale. Most DR marketers have yet to hit a point of diminishing returns and the market is evolving to push that point even further. Even within this space most agencies and marketers fail to use available tools like attribution reporting to properly model a digital mix and prevent duplicate tracking and over-crediting of activation channels like search and retargeting – a huge issue that plagues every multi-channel digital marketer, particularly retailers, whether they take the time to realize it or not.

As marketers get savvier about the word “accountability” not equating to “direct response”, we will see  more branding dollars shifting to the web. But this won’t happen until every company has a champion to drive modeling that incorporates  and measures digital in a more intelligent fashion than is happening  today, where we use disconnected proxy metrics and great salesmanship to feed into brands’ (and often our own) desire to want to believe in digital. DO believe – digital media IS integral to your or your clients’ businesses. But take a systematic approach to how everything works together, because it’s only becoming more  fragmented and complicated. CMO’s today have a tough job, and they are dropping like flies, with an average tenure being less than 2 years. Maybe  the role of the CMO needs a fundamental shift. Maybe the transformation is underway already. Enter the era of the “Chief Modeling Officer”.

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With the announcement of the Open Graph, Facebook has once again provided an evolutionary leap for the entire industry. Publishers, brands and consumers alike will benefit from “a smarter, personalized web that gets better with every action taken”, as concisely described by Mark Zuckerberg at yesterday’s F8 conference.  With Facebook’s critical mass (nearly 500 million members as of today), the Open Graph is poised to become the most powerful move the company has made so far – if successful it will revolutionize the web as we know it and propel Facebook into a position to compete with Google for the throne of dominance.

The Open Graph – We Like

Facebook is already fairly ubiquitous among consumers. Facebook Connect has extended that ubiquity to sites outside of Facebook, but the process for consumers, publishers and marketers was not seamless. While successful, Connect was not the technology that extended the social experience of Facebook to the entire web. But that is exactly what the Open Graph will do. Facebook has simplified the process of implementing the code for developers and for sharing and connecting with content and brands for consumers. It is truly a win-win-win. One line of code (an iFrame for those who care), will enable publishers to include a “Like” button, which will facilitate social actions anywhere on the web. As long as you are logged into Facebook, your cookie will allow your social graph to augment the experience on any site with the code. Bret Taylor said it best during F8  yesterday that “Lowering the friction of sharing will increase the volume of sharing”.

Vaults of Data

Facebook already sits on a data goldmine, but these vaults will become far deeper with wider ranging application as the Open Graph further connects social graphs of individuals, brands and publishers around the web. For now the targeting opportunities resulting from the additional data will be limited, most likely providing marketers the opportunity to target interests “liked” for the time being. But the potential of the data applications are profound – think Minority Report-like, as mobile and geo-location converge on the Open Graph.

Privacy

Inevitably there will be some privacy backlash, as all forms of behavioral data applications are under severe scrutiny by the FTC and advocacy groups. Of course Facebook thought about this too – and they will be rolling out a new simplistic privacy panel where you can opt out of the Open Graph. Ultimately there will be collection of an amount of non-personally identifiable data at a scale that we have never witnessed before, and the proximity and ability to connect it to personally identifiable information will most likely become the issue at hand. But the benefit of the Open Graph adding significant value to the overall consumer experience, and the affinity with Facebook as a trusted brand powering the collection, storage and usage of the data will trump any privacy backlash. Make no doubt about it – there will be some backlash – there always is – but we will get past it rather quickly. The social web is here in a big way, and our lives have been changed forever – and soon everyone will realize it.

A Monumental Day

For marketers, in the short term this turning point will make it exponentially easier to turn fans into advocates, identify new prospective customers, and drive peer influence through the coveted Facebook newsfeed. In the long term, the potential is far wider reaching and as mobile and geo-location (Facebook is launching their own geo-location service as well) converge with the Open Graph, this may be the catalyst that soon connects the online and offline world. It is truly a monumental day.

You can see the F8 conference videos here.

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cloud computingFast forward a generation … the concept and delineation of what is “TV” or “online” or “mobile” content will have not existed for some time. What we once referred to as a “media channel” will be irrelevant, and content ubiquitous. We consume what we want anytime, anywhere, on any device. We interact with others and enjoy collective social experiences that are not separate from our content consumption. We shop when we are influenced or reminded of a specific need or want and can do so easily and securely on any device without whipping out a credit card. Consumers have unlimited options and access, and marketers integrate into the experience. It’s an exciting future, and we are well down the path of this reality.

With media, evolution is constant. Old technology, and often the old guard, gets displaced and disrupted by the next big shift. The shift to on-demand has been long underway, and the tipping point is just ahead of us.

While we have all declared 2009 and 2010 the ‘year of mobile’, what we now need to shout from the rooftops is that the convergence of mobile, social, commerce and cloud computing together have created something far more profound.

Mobile connectivity, high quality video and social actions are becoming the standard in our lives. As access to the cloud becomes a reliable always-on connection from any device, content, social objects and commerce surround us, all the time, everywhere. I find myself hopping back and forth from my PC to my iPhone to my iPad at different times, for different reasons. Entertainment, communication, productivity and commerce all feel different on each device, and we tend to gravitate towards a preferred device for specific needs. But ultimately we can access pretty much anything we need from any of them in a pinch.

The Status Quo Has Fallen and It Can’t Get Up

Ramifications for the media industry are significant, and the ecosystem has been adapting. There will always be a creator -> distributor -> consumer ecosystem. The consumer only cares about the end result – immediate satisfaction. Content creators are at the other side of the ecosystem and they seem to get the short end of the stick as the value of each media asset decreases with the increase in options and access. However, the market does grow in aggregate, and distributors benefit from the wide variety and massive volume. We have witnessed the separation of content from media channels affect different traditional distribution networks in different ways – newspapers, and magazines getting hit harder and earlier than TV networks and MSO’s for example. But the shift is affecting all traditional channels. The new regime is led by Apple (iTunes) and Amazon, and consumers are paying for content and applications in droves, but the market is wider reaching.

Marketers are becoming more reliant on technology – the data and ad exchanges – in order to reach specific consumers in relevant environments, at the right time. The ad models are evolving, but still in their infancy. Search has become an effective direct response staple of most marketers’ arsenals, but the brand dollars have not followed at the same scale. We have oversold targeting to marketers for years, making the process of buying and managing digital marketing a significantly laborious task. We have currency discrepancies as compared to traditional media. But as the device-specific walls dissolve into a media-everywhere world, as what once was “TV” now becomes content accessed across various devices, the media mix models become a very different beast than ever before. We are about to head into uncharted territory. It’s early in the game, and many winners will emerge. The biggest of all are consumers of course.

This past weekend I found a little downtime (a rarity) and conjured up my inner couch-potato. Interestingly after browsing my DVR, I opted to access Netflix via my Wii and picked up from the point in a TV show where I paused during a long cab in traffic earlier that day, when I was watching on my iPad. This is the cloud, and on-demand, at their best.

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At the risk of sounding cliche, welcome to a new decade of marketing. Indeed it is an exciting time to be a marketer. The past decade may prove to be the most pivotal ever in terms of the changes in how we communicate with consumers. It was also the decade of aggregation – or better put, the decade that killed the “big idea”. The era of the big idea is over (in the context of marketing communication). Since the explosion of digital marketing during the last decade, the new big idea morphed into an aggregation of many smaller “ideas”. This aggregation has a bigger impact than any one “big idea” ever could, by distributing risk and providing more chances to develop successful approaches.

Marketing evolution continues in 2010, and here are some of the areas to keep your eyes on.

Mobile Forges Forward

We keep joking about how “this year has been the year of mobile for the last few years”. Well, we’re waist deep the age of mobile and moving further along every day. We’ve crossed the proverbial tipping point. The handsets and data speeds provide better experiences, and the data plans are affordable. Over 60 million US consumers access the web via mobile device.  Globally we’re on track for more people to access the mobile web than the PC web (of course I’ll need to save that post for Jan 2020). The thing is, the distribution of this access is skewed, significantly towards the iPhone. While the iPhone catalyzed mobile web usage, competition is not far behind with the Droid, Pre, new Blackberries and other devices to come in 2010. Consumers are using, and even paying for mobile applications and mobile websites that provide value. Of course, as with any marketing channels, there are plenty of misguided executions that do not focus on the consumer, provide little value and flop. Unfortunately oftentimes the medium gets blamed for poor strategy on the part of the marketer and/or agency. Provide experiential or utility-based value to consumers and you’ll reap the rewards of consumer engagement. Additionally, keep your sights set on the convergence of mobile and social experiences as well. This will prove big in 2010.

Location Based Applications

As consumers become more comfortable with GPS enabled smart phones and the first generation of applications that incorporate GPS into the experience, the marketing opportunities that utilize geo-location data will come to fruition. However, it will be 100% predicated on permission, transparency and trust. Of course the recurring theme of providing actual value to the consumer experience is key as well. An early success story is FourSquare, which combines social actions and geo-tagging. But FourSquare is definitely not for everyone. Marketers will have to provide utility in order to gain access to consumers’ private lives and  geo-location data. A few bad apples can spoil the bunch very easily here. Where your brand attributes meet consumers’ needs is a good crossroads to  aim for. Note: If would be interesting to see Facebook acquire and incorporate FourSquare into their current platform.

Real Time Search & Social Search

As social media has become ingrained in the digital media experience for consumers and marketers alike, real time search was inevitable. Information is distributed via so many channels including consumers’ social media feeds, that not including real time data in search results created a void in the relevancy of search results at the major engines. Google’s roll out of social search results from “people in your social circle” also fills the void that was otherwise filled directly from the social media sites like Twitter and Facebook. Real time search will indeed make search results more relevant, but the algorithms for filtering signal to noise will be an interesting evolution to watch and participate in.  The implications for marketers is a new era of SEO that ties even more tightly into social media.

Social Media Expands Its Journey

There are two major areas to keep an eye on here. First is the portable social graph. Facebook Connect really took off in 2009, and 2010 marks the tipping point for social graph / data portability. The social graph is just beginning to become part of the overarching digital platform. Through this ubiquity consumers are empowered, taking the influence and social activities of their social connections with them everywhere they go (well not everywhere, but soon enough). Check out one of my favorite implementations of Facebook Connect so far in the Prototype trailer. Try it out. It takes a minute to load, but it’s worth the wait.

The social graph has become portable on the PC-based and mobile web, and the second area to keep an eye on is the expansion of the social graph to your television. Samsung was the first to release high end flat screen TV’s with internet based widgets that allow you to access Twitter on your TV (currently via Yahoo, but inevitably this will become more open very soon). Expect the social graph to become a standard part of our TV viewing experience in the future (note: not in 2010).

Multiple Attribution

While all marketers would agree that reaching consumers at multiple marketing touch points is essential, most marketers still maintain disparate data systems and utilize the last ad standard protocol when it comes to attribution of influence or conversion.  Multiple attribution tracking capabilities have existed at the major ad servers for a couple of years now, provide a solution to attribution modeling, yet are underutilized by the industry. Third parties, such as ClearSaleing, also offer dashboard, reporting and analytics platforms to provide multiple attribution reporting for marketers. Let’s face it, we are constantly increasing the number of digital marketing channels we are working in and as an industry our analytical capability, or more accurately – marketers’ and agencies’ willingness to utilize the tools available,  has been lagging behind . Some of the dashboard tools can also incorporate a limited set of non digital channels as well. If you are not using a multiple attribution system currently, make 2010 the year to do so. There is simply no excuse not to.

The Privacy Issue Marches On

Privacy is always a heated topic. This has been true since the dawn of digital data collection. The issue is over-hyped by the media and advocacy groups, however there are some underlying truths to the hype. As we have seen with the privacy policy changes on Facebook over the last year, if nothing else, consumers do pay attention and now have the means to spread the word quickly.  As digital marketing technologies evolved, more parties gained access to more data. Although most of this data does not actually contain personally identifiable (PII)  data, in some instances it can be associated with other data assets that do. Tying the  vast amounts of anonymous and PII data together will become a bigger focus of the FTC and advocacy groups as the portable social graph  continues to morph the internet as we knew it into one big social web. The FTC warned the industry in 2009 that a day of reckoning was near, and that the self governance was not working due to a lack of enforcement. The industry will have to take the issue more seriously in 2010 or the government will do so for us.

Augmented Reality

For the uninitiated, augmented reality (AR) is conceptually any technology that ties the real and virtual world’s together. For the mobile device, AR will utilize the built in GPS, compass and video camera, creating an unlimited potential to layer content onto any physical location in the real world. On the PC, AR utilizes the webcam to overlay data, usually in the form of a virtual hologram. Most of the augmented reality executions to-date have focused on the novelty factor and have not provided consumers with much actual value. The few mobile AR applications available, including Yelp, are beginning to provide actual utility. I see a bright future there. On the PC side of things, the USPS Priority Mail box simulator is by far the most useful application of PC/webcam based AR implementation to date.

The key to AR is to hone in on the utility aspect, and provide real value to the consumer. (That concept is starting to sound awfully familiar, huh)

Long Live Display

Display ads get a bad rap. The reality is that online advertising works, and not only for direct response. While search see’s the lion’s share of industry ad spending, display is a standard part of the mix and will continue to be for the long term. That is not to say that display doesn’t have its issues. Lack of creative prowess, challenges with media currency and an inefficient process still plague the industry, but all are common topics of conversation and ad hoc work-arounds are being implemented every day. Most agencies and media buyers have had to develop large infrastructures to support the inefficiency of digital media. Clients constantly challenge the process and costs. Yet very little industry-level research is being conducted to better the situation. The IAB, nor any other industry body has set forth to develop the correlational research required to make advertisers feel more comfortable about the market-level impact of online advertising. The last industry-level research was released almost 10 years ago. Some individual agencies embark on this type of research on a client by client basis, but there is little public domain research readily available for most marketers, who for the most part, park the vast majority of their brand budgets elsewhere. Hopefully in 2010 we will see more industry collaboration to develop research and studies and the tools and systems to create more efficiency in the media buying and management process, without commoditizing it.

Even with all that said, display ads do work at creating influence, this can be and is measured by many marketers and agencies, and display is a standard part of the media mix just like any other medium. The degree of inclusion is what is in question, and hopefully we will at least see more discussion and proposed improvements that make advertisers confident to allocate more brand dollars online.

The Elephant in The Room … The Economy

All indicators lead to a slow and steady economic recovery ahead of us.  But this will happen at a different pace for each category and client. The reality for digital marketing is that most marketers have not been and won’t be experimenting much, and focusing on the more accountable (read – DR) focused channels and tactics. I do expect budgets to open up for social media and mobile. Amid the greatest recession of our lives we witnessed the explosive growth of social media. Some marketers had the budgets to allocate proper resources to understanding, monitoring and integrating social media into their corporate culture, while others put forth a minimal effort and yielded an equal impact. The brands that embraced social media have developed social voices separate from their brand voices and are on their way to becoming accepted social brands. Most are still playing catch-up, and we’ll see a lot of that in 2010.

So there you have it, some areas to keep your sights set on for 2010 and beyond. Have any additional thoughts about what else will be big in 2010? Post your ideas in the comments.

Agencies have become commoditized. To a degree many may have deserved it. But a good strategically minded agency is a good partner and needs to be treated as such. Commoditized agencies have no problem doing spec work, or bowing to clients’ every demand. Clients – I love you, how can I not, but if you see yourself in this video, know that you are often hurting yourself more than your agency or partners. The reality is – good work is not cheap. As the adage goes: Pick two of the following: Fast, Cheap, Good.

Enjoy!