You hear it all the time: Television advertising is on the decline. Audiences have become fragmented. The demise of traditional media is under way. The industry has been going back and forth for years, debating the longevity of advertising and predicting the moment of its eminent end. But what many ignore is the necessary evolution of marketing that’s been taking place for decades—or at least since the 1990s, when the internet made its way into an increasing number of homes.
Advertising has always depended on the power of traditional media to unite like-minded consumers around television, radio, or print. Brands were programmed to develop linear messages that would resonate with the largest audience possible, constantly promoting new products as they came to market. But the invention of the internet has unlocked a yet-to-be-determined medium for marketers, one with endless opportunities for reaching and engaging consumers.
"Digital moved advertising away from these singular media channels to these multifaceted contexts online," says Barry Wacksman, EVP, global chief strategy officer, R/GA, who monitors ongoing trends that are having an impact on the industry. "Then at the same time, digital started to deconstruct the entire world. It started to eat away at the old media ecosystem, eventually disrupting all of those businesses."
Today, those businesses and others are scrambling to remain relevant and survive new competition from every direction.
"Netflix came along and destroyed broadcast television," Wacksman says. "Airbnb came along and disrupted hotels. Uber comes along and disrupts transportation. Amazon is disrupting everybody! Technology has gone beyond just disrupting the media business; now it’s disrupting every business."
The advertising industry has already witnessed disruption—both of clients’ businesses and its own. But very few agencies are equipped to pivot. They remain dependent on dwindling broadcast dollars that, according to Nick Law, vice chairman, global chief creative officer, R/GA, indicates a shrinking pie to fight over. "Even if the whole pie shrinks, if the agencies are stealing share from that pie, they’ll be inoculated for a certain amount of time," he says. "But that’s worse for them. They’re just getting into a deeper hole, even though it seems as if things are going well."
The hole Law is referring to is the result of digital advertising’s gains at the expense of traditional media. In 2016, for instance, digital ad spending surpassed television for the first time ever, according to eMarketer’s US Ad Spending report, released in March 2017.
Google and Facebook alone account for most of that growth, but they are not the only disruptors encroaching on agency territory. Consultancies such as Accenture and Deloitte are among a group of aggressive players building out creative services to compete with traditional shops.
Amid all of this disruption, one thing remains true: Those who can successfully pivot their businesses will be the ones to survive.
While R/GA is known for its award-winning creative campaigns for technologies such as the Nike FuelBand and Nike+ ecosystem, the agency has always embraced the fringe of the industry. In fact, at its founding in 1977, the core of its business model was not marketing but motion graphics for film.
"Since our earliest days...we have been inventing the tools and technology to push industries forward," Bob Greenberg, founder, chairman & CEO, R/GA, wrote last December on Medium.com. "We are constantly solving the problems created by technology’s relentless march forward through smart design," he continued. "And there is no indication that this disruption is going to slow down or stop. It’s why we keep redesigning our company and why we strive to create simple but highly functional solutions across our wide spectrum of offerings."
Today, R/GA is a full-service agency, Connected by Design, an ecosystem of capabilities built to address changing landscapes across industries. From communications campaigns like Samsung’s S8
"Unbox Your Phone" launch, to prototyping innovative tech solutions such as Fossil Q to helping clients evolve their business models and avoid disruption in the future, brands can enter an engagement with R/GA through one service and then potentially benefit from a robust list of additional offerings and extend the reach of any one idea or campaign. "All of the things that we do are connected in a way that makes the whole bigger than each part," Law says.
In describing how design as a discipline is a system, he walks through the varied, intentional capabilities that R/GA has built into its services.
"We connect our accelerator with creativity, for instance, and that’s very valuable capital," he says. "In our experience-design discipline, we think about the user, and by extension an audience, in a different way.
When we create ad stories, our role is to connect what the brand wants to say with what the audience wants to say. Our Connected Spaces practice—which is technology built into the architecture, not just applied afterward—is something most architects don’t do. We’re always connecting things that were historically siloed."
R/GA’s ability to evolve its own business has helped establish its expertise in a wide-range of areas, including product and experience design, prototyping, innovation, branding, and business consulting. The company will celebrate its 40th anniversary this year, which also marks its latest pivot: from the Agency for the Connected Age to Connected by Design.
"R/GA today houses six different businesses all under one roof," Wacksman says. "We’ve built this integrated company where all of the parts are aimed at helping clients grow amid the technological disruption of the connected age and any other age that comes after."
While the integration of R/GA’s services is, in fact, intentional, full-service solutions are something more and more agencies are expected, but not equipped, to deliver.
In Turkey, R/GA Istanbul client Dogus Marketing Services sees its agency partners as business partners, part of one ecosystem surrounding its various businesses. "This allows us to move together from the very beginning, know each other well, and act as a whole," says the company’s CMO, Bilgen Aldan. "This brings the mutual trust, energy, synergy, and understanding that each team must have."
For Dogus Marketing Services, a data-driven company, that collaborative structure between client and agency partners, from start to finish, is invaluable. "We often get together for a task and finish our meeting with an idea that creates value [that’s different from] what we initially met up for," Aldan says. "We also work very well with agencies that can use test-scale methodology in today’s digital world. Nowadays, one-size-fits-all is a very challenging approach."
A challenging and yet necessary requirement for many.
In Australia, where brands have been somewhat insulated from major disruption by the likes of Amazon, for instance, companies are racing to find those partners that can do it all from concept to bringing new products to market. Rebecca Bezzina, VP, managing director, R/GA Sydney, says many clients are unsure of what to do with the large data sets they own and how to use them to deploy new products and services. Currently, R/GA Sydney has an embed team at Toyota, a new and growing trend for the market there.
"There is a real race on for agencies to become clients’ key one-stop shop," Bezzina says, "and their partners in business from consulting all the way to going to market with new products and services. We are seeing multiple holding companies merge their more traditional shops with digital shops, the acquisition of companies all over the place, and everyone trying to hold onto key talent. Clients are moving away from specialist agencies to one agency that can do it all."
Since the start of the decade, accelerators have proliferated from San Francisco’s Silicon Valley to New York, Boston, Toronto, and other startup hotbeds around the world.
Mentorship and seed-funding programs for entrepreneurs—a model originally developed by Y Combinator in 2005—have churned out some of the most iconic digital brands: Airbnb, Dropbox, and Twitch, to name a few.
But by 2012, an article in The Wall Street Journal cautioned that the newer accelerators might not have the success record of a Y Combinator or other established programs. "Of course, the odds of success are slim, even in a top program," wrote the authors, Sarah E. Needleman and Emily Maltby. "Just 0.1 percent of firms that are less than five years old receive seed or early-stage funding from venture-capital firms, according to Kauffman Foundation researchers."
While skeptics question the value of these programs, corporations and large tech companies are still increasingly embracing these models to discover and leverage new tools they wouldn’t otherwise be exposed to.
For R/GA, launching Ventures in 2013 enabled the agency to go deep and broad with technology startups based on the strategic objectives of its corporate partners, says Stephen Plumlee, EVP, global chief operating officer, R/GA. "We decided to launch a program around connected devices and IoT," he says."IoT was emerging as a megatrend. We built digital and physical projects for several clients, and we mentored several companies in an accelerator that Nike was doing at the time so we understood the model and how it could work for our clients."
Today, R/GA’s Venture Studio is now in its eighth program, with a class of Marketing Tech startups that receive guidance and feedback from Snap Inc., the agency’s partner for the remainder of the accelerator.
Included among the startups selected for the class are a bot-powered analytics platform (Dashbot), an Instagram influencer marketplace for brands (Whalar), and a short-form video creator (Quickframe). "We are excited to work with and support the growing ecosystem of partners that are innovating in the mobile advertising space, from leaders like IPG and R/GA to the startups selected for this program," Imran Khan, chief strategy officer of Snap Inc., said in a statement from the company.
"We believe it will help advertisers of all sizes take advantage of increasingly engaging and creative ad formats for smartphones."
Smartphones have unleashed more than just a new ad platform for marketers. The mini-computer in everyone’s pocket, along with the proliferation of global mobile economies, has allowed borderless communication to flourish, not just between people and their friends and family but also between people and the brands they buy. This gave way to an app economy, one driven by connectivity, personalisation, and the rise of big data.
All of this has led to the frenzy over machine learning, artificially intelligent messaging bots, self-driving cars, and in the previous decade, the quantified self. Technologies that were once limited to a futurist’s sandbox have unexpected applications in every industry today. Legacy brands, then, are being forced to learn fast and deploy new products and services even faster. They are struggling with scalability as consumers demand hyperconvenience and everything on demand.
These challenges are prevalent in industries from entertainment all the way to retail and consumer packaged goods. But they also come with endless opportunities for creatives to solve. Nicky Bell, SVP, managing director, R/GA Los Angeles, is excited about the new work R/GA will be doing for entertainment brands looking to build product ecosystems and "fuel fandom within them."
"It’s beyond creating adlike assets for entertainment brands," she says. "Instead, we’re moving into the realm of true experience design and understanding how fans want to interact with entertainment brands they are passionate about."
In San Francisco, R/GA is collaborating with a large tech client through an embed relationship, while in New York and London, R/GA’s Consulting team is helping clients such as Siemens and Walmart identify new market opportunities, innovate and launch new products and services, and even consult with HR to attract and retain key talent.
"One of the challenges with traditional agency models for some kinds of work is that the walls are very deeply established," says Allegra Aufderhaar, managing director of Google Brand Studio. "They tend to be quite thick and relatively inflexible. For much of the work we do we need a different model that allows us to have a much more seamless partnership with agencies on a couple of levels: one that allows our agencies to become deeply expert in not only our products, our strategic propositions, but also in how we work, the actual operating mechanics.
"There are so many people involved and so many teams involved in getting something to market," she continues. "So for us, one of the important roles that our most important agency partners play is actually being that connector, the connective tissue between various constituencies within Google.
That’s something that’s really important to getting to a successful launch and getting to successful work: making sure that there’s somebody who is keeping an eye on all of the various plates that are spinning in various places and bringing it all together for a more cohesive end product."
In today’s connected age, with seamless, invisible intelligence continuing to infiltrate consumers’ day-to-day lives, brands will increasingly need to adapt to new business models and partners so that they can turn insights and data into action, make actual new products and services and launch them at scale, and test and learn along the way.
"We may have to prototype, test, fail, prototype again, test, fail," says Paola Colombo, SVP, Managing Director, R/GA San Francisco. "But if we’re doing it together, testing and prototyping along the way, we may get to a solution faster and cheaper."
Bezzina of R/GA Sydney agrees. New, evolving partnerships will also help brands better scale personaliSed products and services. "A lot of our clients are sitting on large data sets," Bezzina says. "In pockets, they are doing some interesting things, but the combination of this on a large scale, getting their experiences right and continuing to evolve their business in line with technology, means they need to partner with new businesses that think differently from them, have skin in the game, and haven’t just come into the world overnight but have a history of making and helping businesses change."
As R/GA evolves its own business to help brands adapt—or pivot—in their own industries, the vast agency world will soon need to find new footing to avoid obsolescence. For now, the agency is focused on the future and how to stay far ahead of the increasingly complex competition. Says R/GA’s Law, "We’ve made very specific choices to disrupt the disruptors."
R/GA Global Perspectives
"Our business model–which spans everything from strategy to execution–is new to Japan, and clients are interested in testing our capabilities. Consultancies are not bringing the same type of integrated approach." – Sammy Hazui, managing director, R/GA Tokyo
"Amazon’s arrival in Australia will be very interesting to watch, as many companies have not had to think about consumer experience or service expectations. It’s now a very hot topic down here." – Rebecca Bezzina, VP, managing director, R/GA Sydney
"Because Brazilians are so social and friendly, the sharing economy is exploding. Every business has a high chance of launching a successful sharing service here. As the market matures, new software platforms are starting emerge." – Fabiano Coura, SVP, managing director, Brazil
"Brands don’t need partners that stare in through the window. They need partners that can immerse fast to understand the complexity of their existing business and then concept, create, and deliver new experiences from within." – Matt Lodder, EVP, managing director, R/GA EMEA
Tara Moore is managing editor, FutureVision