A feature that I wrote for the relaunch issue of Applied Arts Magazine, featuring a new editorial focus and design.
In the beginning is my end. In succession
Houses rise and fall, crumble . . .
—T.S. Eliot, “Four Quartets”
This is the end
My only friend, the end
Of our elaborate plans, the end
Of everything that stands, the end
—Jim Morrison, “The End”
In the beginning, advertising made a choice that it would one day regret. In 1877, former bookkeeping clerk James Walter Thompson bought New York-based Carlton and Smith, which sold advertising space in religious journals. He paid $500 for the agency, and $800 for its furniture, and renamed it after himself. After starting to place ads in women’s journals, JWT came up with the bright idea of developing creative content for clients, so he could sell more ad space. Creative services, acting as a kind of loss leader, became part of the agency’s offering.
The business model seemed perfect. The creative product drove up the volume of bookings and the media commission provided a healthy profit margin. All was well in the kingdom until media and creative were detached from each another with the dawn of another bright idea: the emergence of the media-buying house. So agencies turned to a “fees” financial model.
They began to charge an hourly rate and prospered. Agency bank accounts grew fat and advertising executives looked upon cottages in Muskoka and chalets in Whistler or the Laurentians as a birthright.
But as the advertising market became more cutthroat, agencies began to compete by slashing fees. Very quickly, the creative product was devalued, agencies became commoditized and cost-conscious clients questioned the worth of their agency’s contribution by examining it as a basic line item.
“The business became extremely fee conscious,” says Ian Mirlin, partner at Ignyte in Toronto. “Clients would ask, ‘Am I really getting value for this?’ Agencies then, in a desperate bid to show their clients their value, pared back on unnecessary ‘layering’ of account resources but, of course, the workload didn’t decrease. Fewer people simply had to work harder.”
The rise of new media added to that misery. The technology carried with it the promise that it was going to be cheaper and more cost efficient than ever for an advertiser to reach an audience. Agencies were forced to adapt, shifting the emphasis from a manufacturing-based model (product quality) to a distribution-based one (media delivery). “Traditional media bore the brunt,” explains Mirlin. “In the glory days we would have been doing expensive, creatively ambitious newspaper inserts or a TV commercial. Then everything became digitally considered first.”
A case in point was last fall’s campaign for the new Volkswagen GTI, which only ran digitally, without TV, print or radio support. It drove online as an iPhone racing game app (licensed from an Australian game developer), its success resting on viral distribution among tech-savvy game players and social networkers. Apparently this approach saved the client approximately $60 million from its last GTI launch, in 2006.
No TV, print or radio? Gulp!
However, this is not just an advertising story. The whole visual communications industry is being reshaped by the twin pressures of technology and economy. One notable effect is that the barriers between professions are falling. Ad agencies have become designers. Designers are taking pages from the advertising book. Everybody’s doing branding and, of course, they’re all calling themselves digital agencies.
The choice seems to be: adapt and find new ways to connect to clients and consumers, or join the once-proud typesetters in the soup kitchen.
In the knowledge derived from experience,
The knowledge imposes a pattern, and falsifies,
For the pattern is new in every moment.
People have been ballyhooing “convergence” for years. But now the time has come, as suits like to say, to walk the talk. Ad agencies are increasingly adding new services in-house to expand business and pump up the shrinking bottom line. In the Applied Arts awards, for example, “traditional” ad agencies are more and more popping up as winners in design and interactive categories.
“I’m not sure you can call advertising agencies advertising agencies anymore, because the definition of advertising is so different now,” says Shawn King, vice-president and creative director at the Extreme Group in Halifax. “It’s more than print. It’s more than TV. It’s about interacting with people. I don’t think that anyone has coined the right phrase for us yet. But I do agree that we are going back to full service. Where digital, advertising, design and PR were all once specialties, now I think those things have to be part of what you offer. Whether or not you do it yourself, you have to be able to provide the strategy and expertise.”
Others argue that it is impossible for one creative firm to do everything well, and that it is better to operate with a series of strategic partnerships. Gaetan Namouric, CD at Bleublancrouge in Montreal, points out that his agency has, through acquisition, brought interactive capabilities in-house. Even so, it still depends on outside suppliers to supplement its creative offerings. “At the end of the day, clients don’t care about what we do or don’t do ourselves,” says Namouric. “They care about the relationship between the customer and their brand. And if the solution for that comes through design or interactive in my company, I am happy with that. But if I need a CGI specialist in Russia, I’m going to go to Russia. My job is to grab the best talent at the right time to achieve the best results possible in a given media.”
While Gerald George, CD of the George Partnership in Toronto, feels that some ad agencies do design and branding well, many are hampered by the their advertising mentality, geared to creating fast and dirty campaigns, as opposed to building long-term relationships. “They will use advertising ideas to introduce a brand, which are very trend-driven to create sales, but then leave very quickly,” he says. “What really separates brands are their reputations. And reputations aren’t made over a period of weeks. It takes years.”
Of course, some design firms are also taking cues from advertising, expanding their offerings. Scott Christie, partner at Pylon in Toronto, reveals that his firm just brought in an expert in research and strategy, after adding an interactive partner earlier in the year. While Pylon was once a traditional print design firm, 60 per cent of its work is now interactive. Asked what he calls his company, he laughs and says, “We’re not a branding agency or an ad agency, because we can’t do TV. But we can do touchscreens, projections and a lot of things in the digital realm, while keeping the traditional craftsmanship that a graphic design firm is known for. I guess you could call us a ‘creative agency.'”
Christie sees nothing wrong with advertising getting into the design realm, though he questions whether or not designers gets the same respect in an agency or wind up just being forced to implement what they are told. He cites England’s Mother London as one ad agency that can do graphic design equally well. “I also think it’s great if designers do more of what advertising is doing,” he says. “I’ve always loved the big idea of advertising.”
Since interactive is the only medium that saw an increase in advertising during a year of recession, it’s not surprising that ad agencies and design studios (or whatever you want to call them) are both staking their places on the Internet, to the consternation of agencies that have made this their bread and butter. Dawna Henderson, president and CEO of henderson bas in Toronto, says, “We’ve done interactive design for 17 years now. We’ve helped build the industry, invested time and money, and developed best practices based on experience. And now we’re competing against traditional agencies and upstarts, who are often recommending things we did 10 years ago. The trouble is, a majority of marketers don’t know the difference.”
She’s also dismissive of agencies whose main focus is to develop viral sensations, as lacking true Web strategy or measurable results. “They say, ‘Four-million people saw it on YouTube.’ I say, ‘Fine. How is that different than TV?’ You aren’t getting people into trial offers. And lots of people who see it aren’t in your target audience. The agencies are going for shock value. Does that help sell a bottle of shampoo? Lots of people saw the ‘Wigging Out’ video, but did it sell anything? I doubt it.”
Ryan Wolman, CD at henderson bas, adds that changes in the interactive field are happening so quickly that “you can’t expect clients to be on top of it all. That’s why you’re the expert. Generally the traditional agency isn’t much more educated on this than the client and will tell them what they want to hear: ‘You should be on Facebook or Twitter.’ But really, what’s the point without strategy behind it?”
Wolman argues that most agencies treat interactive as an “add-on” to their core services, but more often now the traditional media serve to support the interactive hub. So the main purpose of a TV spot, for example, might be to drive traffic to a client’s Web property or properties. “I think you are going to start seeing digital agencies become agencies of record,” says Wolman. “They will start coming at things from the end, doing such things as television and digital billboards, as technologies converge.”
Agencies and studios are not alone in practising convergence. As photographers see their livelihoods eroded by recession and microstock, some innovators are finding ways to diversify. Veteran shooter Shin Sugino, who long ago added commercial direction to his repertoire, has now redefined his role as an “image maker.” “A few years ago we could see this convergence coming,” says Sugino from his Toronto studio. “So we decided we’d better adopt this now and become a turnkey operation. With the advertising dollar being stretched so far, we can now handle all of a client’s image needs cost-effectively.” For a client such as Telus, Sugino will take care of the full range its digital image assets with one setup, shooting stills and motion for print, TV and Web applications.
Ride the snake, ride the snake.
When it comes to interactive, the sweetheart of the moment is social media. The challenge for agencies is not only how to figure out how to make money from it but to find ways to build long-term relationships, instead of doing one-off campaigns. And they have to get used to the notion that they can’t simply “push” information, that it’s now a two-way dialogue.
“We have to charge for ideas, but first we have to redefine what an idea is,” says Bennett Klein, chief creative director at Capital C, in Toronto. “Some people think through the traditional lens of media and advertising. But the social Web requires more strategy and relationship management, fewer creative ideas in the traditional sense. It’s all about how to approach the long tail of marketing, moving from mass to a mass of niches.”
Referring to the widely circulated theory espoused by Wired editor Chris Anderson, the short head of the long tail is mass marketing, mainly based on the physical world, with its limited shelf space and number of products. The long tail is the nearly infinite online world of small niche markets, where shelf space is virtual and essentially free, and it is economically viable to market small quantities of goods to narrowly defined niches.
“The whole idea is to build on trust, reputation and relationship,” says Klein. “It’s not just immediate sales.” Marketers might find themselves playing the role of community managers, and finding ways to add value and build relationships as professional brand advocates and community “imagineers.”
As an example of a highly successful exercise in community building, Klein points to the Nike Running portal, which has tapped into the rabid enthusiasm of runners by providing the tools to let them manage their passion. “It was creative to refer to the experience as ‘the human race,’ but 99 per cent of the value is in the ongoing enablement of lifestyle and community through technology,” says Klein. “Even the shoe is secondary. Nike will find itself leveraging this community to offer more and more niche offerings in the coming years, as their shoes become increasingly commoditized.”
Eric Karjaluoto, of the interactive design firm SmashLab in Vancouver, is loathe to use the term “social media” because “everybody is spouting it and it’s been stripped of its meaning.” Having recently written and published a hard-copy book, Speak Human: Outmarket the Big Guys by Getting Personal, he points out that Internet tools have democratized things for small businesses, letting them compete against the big boys. Under these conditions, he says that the role in which an agency provides most value is as a strategic consultant. “We use these tools everyday,” Karjaluoto explains. “Many organizations aren’t familiar with them and they need help to understand how to use them effectively.”
“The tricky part for all of us,” he adds, “is that we struggle with clients when we are helping them with social media, knowing that we can only be involved in shaping that so far before we step out of the way and let the clients take over. If we just keep doing it for them, it becomes a phony exercise, in opposition to the kind of dialogue they should be having directly with their customers.”
Looking down the road, Gaetan Namouric of Bleublancrouge insists that it will take imagination to find new ways to cater to this kind of fragmented market, which will reduce the need for traditional creative services. “Why?” he asks. “Because if you are already a fan of chairs, you just need to see the chair; you don’t need a big creative pitch. So in the future we’ll have to offer another kind of creativity, of service, to our clients. As the consumer looks at the quality of the final product, the client will need partners to help deliver more creative products. We may use our creativity more to build products than sell them.”
In the meantime, creative agencies may have to use all their finesse to keep clients out of trouble. As companies go from passive communications to direct, interactive dialogue with customers through Facebook, Twitter and YouTube, they may not like what they hear back. Direct complaints, reposts of Twitter feeds with mocking comments and devastating YouTube responses to commercials are forcing executives, who normally get their secretaries to answer their e-mail, to scramble to post responses. “We’ve all had clients who have asked what do you do if someone has some negative things to say about the brand,” says Shawn King of the Extreme Group. “Those things have always been said but now, with the tools at people’s disposal, the clients have to hear and deal with them.”
Time past and time future
What might have been and what has been
Point to one end, which is always present
In this discussion of where creative agencies are going, we may be letting the long tail wag the dog. While new interactive technologies are impressive and mind-boggling, they are still tools. Agencies have to stay atop of them to remain competitive but the tools’ purpose is to execute ideas not lead them.
“If you rely on technology alone, you are in trouble, because it changes so quickly,” says Gerald George of the George Partnership. “When television became so ubiquitous, people wondered what would happen to print and radio. They just became part of the mix. I think that will be the case here. If you have the right idea, the idea will determine the media platform. It’s too easy to look at a screen, where everything seems so good and sweet. Too many ideas are driven purely by execution. The idea and the promise of the brand must lead.”
Bleublancrouge’s Namouric agrees with the sentiment and adds, “If tomorrow I need to reach two-million people in Quebec, it’s not with an Android app. It’ll be a big 30-second commercial during a famous show.” He insists that with more and more media channels available – from 500 TV channels to multiple RSS feeds on a computer screen – the challenge more than ever is to have the right creative ideas that cut through the clutter. “A new tool we have at Bleublancrouge is what we call ‘Brandcasting.’ We’re not just pushing an idea in a commercial or on a street poster or on Facebook. Each media has to be used for the precise role it can play to reach a particular target. The Brandcast is a way to reach the customer in some places they weren’t found in the past.”
However, Dawna Henderson of henderson bas points out that changes in interactive technologies are sweeping and rapid. You have to stay on top of them, because they will actually shape the strategies and ideas you employ. “It’s not only understanding the relationship you have with the user but it is also the entire back end [of the interactive design process],” she explains. “Yes, technology is the enabler but at the same time you have to understand it to be able to do all the strategy and creative, because they are very tightly combined.”
But any discussion about new media in cash-strapped times always leads back to the question of how to make money from creative ideas, if they are not based on old agency compensation models. Henderson argues that interactive agencies should have defined goals and measurable results, with recompense pegged to that.
Ian Mirlin of Ignyte agrees. Once the creative director of a number of ad agencies, including Harrod & Mirlin, the hot ad boutique of the 1980s, he has teamed up with his old partner Brian Harrod at Ignyte, to help rescue and renew brands in distress. “We are talking to clients about brand recovery, because so many are in transition,” he says. “We offer compensation-based performance. A lot of agencies are talking about it but not many are doing it. We want to be paid according to how we perform. We think that that makes sense in these times, to prove the value and show that we are passionate, that we have skin in the game.”
In my end is my beginning.
However, it might be too early to be talking about new funding methods. Without giving it away for free, creativity needs to be set free from the old models. In Vancouver, Chris Staples, partner and co-creative director at Rethink, reveals the agency has spent more than $30,000 in the past year sending its people to new media conferences, without thought of any immediate financial return.
“We’re just trying to soak up as much as we can,” says Staples. “Everybody’s just trying to keep up with this and it’s morphing by the minute. Our strategy is to hop on all these new technologies ourselves, really use and play around with them, and try to see quickly if they have applications for our clients. You’ve got to learn first. It’s too early to be talking about return on investment. This is more return on engagement.
“Before you start worrying about the value of an idea, you need to worry about the idea. If the idea is good enough, it will find its own value. We’re also investing in small projects for smaller clients. We are writing off time completely with anything to do with social media, just so we can learn. Anyone worrying about the bottom line first instead of ideas is going to have trouble getting up to speed.”
The agencies that do embrace the potential of new ways to work may have exhilaration mixed with their fear and see a new beginning in the end of the old agency model. Others, sadly enmeshed in the dissolution of the world they knew, might join Jim Morrison, in “The End,” for his wail: “FUCK YOU!”