Nancy A Shenker, Founder & CEO, theONswitch & nunu ventures.
I believe the ad agency, as we know it, will soon be obsolete. Big brands will work with a whole new type of creative and consulting partner.
Brand imperatives, the Covid-19 pandemic and the rise of artificial intelligence and machine learning (AI and ML) will reshape our industry. Mad Men will be replaced and augmented by Mad Machines, living in peace and prosperity with brand-fickle humans and cost-conscious business executives.
Media integration will make a comeback, and only the truly strong and customer-centric will survive.
How do I know this?
I’ve seen the marketing and agency world evolve over the past five decades. The five major tipping points have been:
• Proliferation, sophistication and availability of technology
• Smarter tools for turning big data into actionable — and immediate — insights
• The youthification of the marketing world, although most of the disposable dollars still rest with older generations
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• The entrance of new players into the marketing space
• Most importantly, the consumer has become the ultimate marketing force field and decision maker
A Brief History of Advertising Transformation
As an “OG” of marketing and advertising, I’ve seen at least three major waves of industry transformation:
1. Our direct response marketing era gave rise to a new range of consultants and third-party experts. Brands had their traditional partners who handled TV, print, radio and outdoor. The direct mail and telemarketing professionals were often viewed as sub-species. Although this media form generated millions for consumer products and financial services companies, it was referred to as “below the line.” Ironically, direct marketing relied heavily on establishing precise target markets, which we now call persona development — the same concept with a different lexicon and more sophisticated analytical tools.
2. The Internet brought with it a whole new range of marketing possibilities and agency specialists. Starting as digital brochures, sites gradually but steadily became more sophisticated. Enter social media in the early 2000s, and brands realized that digital marketing is an interactive conversation. Specialized agencies sprung up at amazing speed. Many of the consultants entering the space had no formal brand training but knew how to code and push buttons.
3. Marketing technology created a sea change in advertising and marketing arenas. Customer and prospect analytics, which would have taken weeks to execute in the ’80s and ’90s, are at our fingertips in an instant — sometimes before we even ask for them. Marketers have an estimated 8,000 options for research, marketing and sales platforms.
What the Ad World Looks Like Today
We’re currently living through an era of specialization. Much like how the direct mail era produced ad professionals who only knew direct response, we now see agencies that only specialize in one form of media.
The lines are starting to blur between B2B and B2C advertising, and the term B2P (business-to-person) has arisen. Marketers finally realize that human decision makers ultimately control spend.
A huge external event that will change marketing forever is the pandemic. Covid-19 has given rise to the need to replace live events and sponsorships with digital experiences. Brick-and-mortar brands are reinventing themselves to compete with Amazon and deal with the socially distanced shopper.
Predictions for the Future
We do not yet have fully functional prediction-generating AI, but based on what we humans have seen in the past and what business and brand needs are today, I believe we can expect to see:
• Integration: The one-specialty agency (e.g., social media or martech “gurus”) will be gobbled up by companies that can offer a broader range of solutions. But rolling up agencies into new conglomerates is not enough. Agency leaders must be generalist, trend-conscious, tech-driven visionaries.
• Automation: We haven’t seen anything yet! AI, machine learning and IoT (Internet of Things) technologies will transform every marketing department into a co-botting workshop, where analytics and actions are instantaneous. Most companies have amassed huge and disjointed data warehouses. They will need to simultaneously clean up and apply this rare and useful goldmine.
• The Return of the Brand: Technology (like financial services in the 1980s) has become commoditized, and engineers and founders with tech backgrounds will be heavily dependent on communicators to bring their benefits and unique selling propositions to life and create sustainable, diverse and inclusive corporate cultures. Consumer marketers will have to work extra hard to appeal to the fickle buyer, who has millions of choices of how, where and when to buy products. Companies will realize that decision makers are ultimately human, and we’re seeing B2B and B2C become B2P.
• Cross-Generational Collaboration: Who has the dollars? Businesses that want to scale will have to look way beyond Gen Z and millennials to build market share. They will start looking to Boomers for insights into how to tap into that market.
• The Demise of the Mark-up: Just as consumers have a vast array of product and service choices, business decision makers now have the ability to easily shop around for the best brands, service and pricing. This price competition will foster transparency and erode agency margins. The golden goose will become leaner and more agile. I predict the hourly billing and percentage mark-up era will come to an end.
• The Rule of ROI: We’ve entered another era of belt-tightening due to Covid-19 and economic uncertainties. “Why are we spending that?” will be on every C-level executive’s lips, and agencies will need to deliver solid answers — beyond squishy awareness speak.
Like Deloitte, Gartner and Accenture — consulting firms that once only counseled companies about business strategy — are becoming major players in the marketing space. They advise clients on significant consumer and business trends and have begun to advise brands on how to spend their marketing and advertising dollars.
The big agency holding companies will need to blow up old ways of thinking, fully embrace technology and spend more time and dollars finding new growth opportunities using AI-powered tools.
They will need to become more diverse and inclusive to reflect the perspectives of changing demographics. Most important, they must be willing to blow up old models and, with the help of automation, create new ones.
Welcome to the new era of Man Men (and Women) and Mad Machines!
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Author: Nancy A Shenker, Forbes Councils Member