Can ad agencies avoid a Kodak moment?

Margaret Manning

Margaret Manning, previously a consultant with PriceWaterhouseCoopers, has been with digital consultancy Reading Room for just over 17 years, as CEO.

In this Q&A with Mumbrella’s Asia editor Robin Hicks, Manning talks about the meaning of “agile” in business and marketing, why ad agency culture is a barrier to embracing digital, and what agencies have to do to avoid their “Kodak moment”.

The word ‘agility’ is banded around a lot in marketing circles these days. What does it mean to agencies?

Digital is about speed of change, it’s about disruption. This goes back to The Cluetrain manifesto, published in 1999. The author argued that the internet takes us back to a state of perfect information and a perfect marketplace. In days gone by, we had market places where people could buy stuff. You didn’t have a brand, you just had the idea of quality.

Now, the internet has forced us back into a place of perfect information, and the user is moving much more quickly than brands and governments can deal with.

We have to be able to create products or technology in an agile way. Yes, you can do agile projects using certain software. But it’s not enough – you’ve got to run an agile business.

The trusted three-year plan has to be thrown out. We need to start thinking in three-month terms with new ways of approaching old problems. We have to become faster and think about the world in a different way.

So where do advertising agencies fit into all this?

Ad agencies were created around the concept of broadcast media, or push-media. The internet, by contrast, is a pull, narrowcast medium. Ad agencies have been built – their culture and their processes – around this thing that was born in the Mad Men era; a consumer boom created alongside TV and radio. But now we’re in a different boom period, that of the internet.

But ad agencies have been restructuring and focusing on digital. Are they not doing enough?

There are some ad agencies that are changing. But the culture embedded within the ad agency world is what has slowed them growing digitally to date. So many people ask me, are you worried about ad agencies taking your clients away? I say no, because they are still thinking in campaign terms, and in terms of broadcast media.

I have argued for many years that digital is not just another channel to market. It is a strategic competency, not just another channel in the marketing mix. Until ad agencies understand that, they’ll only see a small slice of what the internet can offer.

So you don’t see ad agencies as a threat to your business?

I have started to hear the word ‘consultancy’ a bit more from agencies, as the language moves away from a preoccupation with campaigns to providing advice. But I see that likes of Deloitte Digital and Accenture more as competitors than agencies. We have more common ground.

Ad agencies need to understand that the ground is shifting beneath their feet. Look at the money spent on print media compared to the eyeball statistics for where people are spending their time. This shows that ad agencies still love old channels. Can they adapt culturally to the digital era? I haven’t seen much evidence that they can. If an ad agency buys a digital agency, it usually means the death of the acquired. It’s very hard to change culture.

But what is culture? Bean bags, ping pong tables and away-days?

Personality is one thing. But culture is really about how things work. In the world of the ad agency, a creative director is usually a copywriter or an art director. Creativity is locked into words and pictures. Here, I’m proud to say that every one of our creative directors comes from a tech background. Creativity is about the art of the possible, and that has to take into account technology.

Could the centre of power in an ad agency shift to the extent where technology is at the centre? Even in a hair dresser’s salon there are creative directors who have to understand the technology around hair. You can be creative beyond the look of a picture or the snappiness of words. You can be creative with tech, which is about finding new uses of technology. We look at creating innovative products. That is a world away from creating an ad. Digital is about understanding the art of what is technically possible.

You say that it’s difficult for agencies to make the transition to the digital world. But can’t you just hire people who know what they’re talking about as many seem to be doing?

It’s not as simple as that. Nokia moved from felling trees to mobile phones, but that doesn’t happen often. There is a big difference between digital as a strategic competency and as another channel in the marketing mix.

You need to ask agencies if what they’re doing is marketing or digital business. That will show you how far they’ve come on the digital continuum, from broadcast push to narrowcast pull. The world is moving towards an agile consultative model, and it’s hard for agencies to build this into their cultures.

Martin Sorrell recently said that Publicis Groupe had been premature in declaring itself an “internet company” as so much of its business is still through digital media. Would you agree?

I would. I don’t think you hire a few digital people and shove them into your business, or spend big on acquisition deals and suddenly you’re an internet company.

Stick to your knitting and yes, you will make money for now. But the point is, when people catch up with the fact that 45 per cent of a media budget is spent on print when the media consumption doesn’t match it, what then?

Ad agencies will change, but not all ad agencies will change into digital agencies. A lot seem to think they can get a few digital people who will be their silver bullet. It will not be that easy.

So what do agencies have to do to catch up?

You’d have to replace the board, but then you’d lose half your people. As soon as people realise that digital is digital business and not a strain of marketing the easier the transition will go. And when you’ve replaced the board, you need a chief digital officer sitting on it.


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