Media Forum: Can agencies adapt to survive?

Will media agencies meet the challenges of the latest IPA report, Alasdair Reid asks.

Early January is traditionally that time of year when we may take perverse pleasure in scaring ourselves. For many, this results in at least one New Year's resolution; while for a few, it can lead to dangerously foolhardy stunts, like trying to stay sober for the entire month.

There are, of course, other more cerebral forms of self-chastisement. You might choose, for instance, to read a new IPA report, published on 2 January and given the rather less than racy title of The Future of Advertising and Agencies: A Ten-Year Perspective.

But don't be misled. The title may lack urgency, but the contents are anything but cosy. This is a good old-fashioned "adapt or die" wake-up call, evoking as it does a new world order in which traditional advertising agencies (across the whole spectrum, from creative shops to direct and media specialists) will almost certainly see traditional forms of revenue declining as advertising's centre of gravity continues to shift.

Digital is the driver, obviously, and the much talked about rise in importance of phenomena such as "user-generated content" will, the report predicts, create a crazy mixed-up world in which "consumers may become channels, advertisers may become suppliers and agencies may become media owners".

To survive, it concludes, agencies must take on multiple roles - as media brand owners, joint venture partners, content collaborators and programme producers. Are the conclusions sound? And if so, are mainstream media agencies ready to meet the challenge?

Paul Phillips, the managing director of the AAR, isn't sure the world works that way, based on his experiences of what advertisers tend to look for when they are in pitch mode. The reality is that, although agencies of all sorts talk a good game in terms of the spectrum of services they are able to offer, they know that few clients will ever want to appoint them on that basis.

He says: "In that respect, agencies are often better understanding what they are best at and sticking to their knitting. Agencies are usually appointed on a discipline-specific basis - and a whole community of specialists has evolved because of that."

But he does agree that demarcation lines in certain disciplines are continuing to be blurred. He notes, for instance, the fact that News International now has a 30-strong planning department.

Dave King, the executive director at the Telegraph Group (another media owner that has been pushing the boundaries in recent years), argues that the dissolving of demarcation lines will continue - but that agencies shouldn't feel threatened by this.

He adds: "My belief in the short to medium term is that a tripartite approach is best, and that clients, media owners and agencies can all work together. There will be greater flexibility in terms of providing the skills that are needed and the boundaries in terms of which bit of the solution is provided by whom will become blurred. But this isn't a dog eat dog situation - media owners might well do more creative but equally, agencies may well do more in the way of content provision. It will be about coming up with great multimedia solutions for clients. This need not be a destructive thing - and agencies are capable of rising to that challenge."

Some of the new-generation specialist agencies, for instance those that began emerging in the dotcom era, are, in private, sceptical about the ability of mainstream agencies, particularly media agencies, to comprehend this.

Nick Blunden, the client services director of Profero, wouldn't go that far. But he does believe that the industry will evolve at an even faster rate than that predicted by the IPA report.

He comments: "One only has to look back on 2006 to see that the marketing communications space is changing at an incredible speed, with consumers enjoying unprecedented levels of control over the process. Extrapolating this forward, just about the only thing we can say with any degree of certainty is that the advertising industry will have to reinvent itself not just once, but many times between now and 2016."

Bring it on, Steve Williams, the chief executive of OMD Group, says. He thinks the IPA paper is to the point. He concludes: "It should force those that haven't already done so to think about future business opportunities, and shape their service accordingly. The challenge is to turn much of the theory into workable business practice, and in a transitional way that doesn't work to the detriment of the current business."

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MAYBE - Paul Phillips, managing director, AAR

"Advertisers tend to appoint agencies on the basis of best in class in different disciplines, so (while that is the case) there might be a disconnection between the way agencies talk about themselves and the way they act."

YES - Dave King, executive director, Telegraph Group

"Of course they are up to the challenge. If media owners have moved quicker, it's because they've had more access to investment in terms of time, money and experience. Once you decide to access the right resources, you can move as fast as you need to."

MAYBE - Nick Blunden, client services director, Profero

"Success in the emerging marketing communications space will need agencies to realign around consumers, and keep the flexibility to add value to their clients in ways that go beyond the constraints of traditional advertising."

YES - Steve Williams, chief executive, OMD Group

"The short answer is yes. Agencies and groups with the resources to invest in the future are perfectly placed. The more forward-thinking are taking responsibility for testing different models of working, both structurally and operationally."


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