Wunderman Thompson India’s Ajinkya Pawar writes about the advertising industry’s growing fragility, as agencies have failed to keep up with the new dimensions through which people now encounter brands.
Survival is a delicate affair of balance and luck. Consider the Monarch butterfly. Their breeding place needs a temperature of 86°F to 95°F. Too high, their eggs dry out. Too low, the Monarch can’t fly. Climate change, food and habitat loss are among the variables pushing the monarchs out of existence.
Strategists might not be as beautiful and blameless as the monarchs, but we are just as much under threat. Digital disruption, COVID-19, the lack of an organising culture among industry workers, a lack of vision among leaders…we are crashing out of the goldilocks zone hard.
The Future of Strategy 2020
This article is part of WARC's The Future of Strategy report, which is based on a global survey of senior strategists and in 2020 focuses on the impact of COVID-19 on strategy.
As advertising agencies refuse to evolve quickly enough, strategy departments, as a cost centre with an increasingly uncertain payoff will be the among the first for the cut. COVID-19 is merely accelerating this trend. Here’s my thesis on the industry’s growing fragility.
1. Advertising is no longer as important for brand growth as it was in 20th century
In 20th century, a memorable jingle ‘scaled’ quickly in the collective consciousness translating to years of brand success. But in 21st century, commercials simply can’t make that kind of imprint on the collective consciousness.
What scales instead?
- Supply chains with tech-based innovations;
- Predicting consumers’ needs and desires with big data analytics;
- Targeted nudges towards desire with cookies & notifications;
- Product personalisation with material innovation, delivery experience or social engagement;
- Memes that resonate with the zeitgeist…. The list is endless.
Digital technologies have given brand owners so many new tools to creatively find new ways to grow brands. Digital transformation is simply more deserving of the ‘growth’ budget. Consequently, advertising budgets are under pressure, putting advertising agency business models also under pressure.
What can help?
As dimensions of brand growth grow, so must a strategist's capabilities, even if the services agencies are providing don't. Strategists must develop an appreciation of context and not be focused merely on communications strategy. This can help build an agency’s capability, but also a strategist’s prospects beyond agency roles.
2. Agency leadership has, so far, shown a deep incapability to respond to this shift.
The advertising industry’s choices to grow are clear:
- Improve its capabilities in view of the changing world and offer new services
- Increase the premium of its offerings to earn more from the shrinking set of clients for whom advertising remains critical
- Leverage digital tech to scale, serving more brands with fewer people
Even after loud ‘re-launchings’ and ‘transformations’, most agencies remain fundamentally unchanged.
I don’t know of a single major agency that has substantially invested in either its capabilities, its delivery or its systems. Most changes are cosmetic. There are no path-breaking offerings or new products being created by agencies, and mass media communications remains their major source of revenue. There is no serious attempt at improving capabilities of their people, beyond the deluge of webinars. What is needed is a culture of positive feedback and experimentation.
As agency margins come under pressure, agency leadership look to prune costs rather than spending capital on building capabilities. This lack of vision is detrimental to the strategy department’s relevance.
What can help?
Strategists should play a major role in helping agencies navigate the transformation agenda. Strategists must appreciate reality of agency business and be capable of leading organisational improvements.
3. The role of communications in brand building is increasingly in short time frames and not in long-term brand legacies.
Many brands these days don’t find a need for long term campaigns or big TVCs. Since their product/ service is evolving daily, they keep their communications just as alive with daily/ weekly refreshes. They are often more attuned to changing market dynamics and want to respond in real time.
The new client expectation is for agency leadership and strategy teams to be just as immersed in the brand world as they are. They want agencies to proactively respond to emerging trends, events, sentiment etc. But often agencies expect a linear flow of directive: client brief -> creative brief -> idea. Repeat.
Agency leadership needs to step in here to set expectations and enable a working environment where client-talent collaboration is fruitful and not marred by mismatched expectations. It’s not a difficult problem to solve, we just need a will to adapt and partner in new ways.
What can help?
Strategists need to be more vocal in re-engineering workflows and creative processes. They need to lead the effort in guiding clients and agency leadership in collaborating more fruitfully in this new fluid brand world.
4. Covid’s impact
Covid has accelerated the shift of advertising dollars towards digital media. This has meant agencies have lost the majority of their revenue very suddenly. Agencies that had not worked on their transformation so far, are bleeding now. It’s time for tough choices in such agencies.
What can help?
Covid has precipitated economic hardships. Many of us will lose our jobs in this crisis. Industry bodies must take steps in safeguarding livelihoods, augmenting capabilities and creating opportunities to collaborate.
5. WFH
I don’t think working from home has affected the effectiveness or efficiency of work. However, it has radically alienated people from each other’s journeys. Some teams are exploiting the full potential of productivity tools while some aren’t. Webinars have helped some gain perspective while many have gotten tired with their frequency. Some of us will accelerate in their skill improvement while some will languish. The lack of visibility over each other’s work and conversations will only increase the disparity.
What can help?
Leadership needs to be more active in communicating with its team members during this time of crisis-lived-from-home. Efficiency and effectiveness are not everything. Community is being ruptured and we are not doing enough to heal it.
