Blogs & CommentFeatured

The year ahead for advertising agencies by Kamal Dimachkie, executive regional managing director of Leo Burnett

Victor Hugo once said: “Nothing is as powerful as an idea whose time has come.” Truer words may never have been uttered, and if the disruption we have been living through over the past several years is anything to go by, the year head will submerge us further in the tidal wave of powerful notions whose time has come.

Arguably, this matter can be viewed through multiple lenses and all may be valid and valuable to examine. I am particularly interested in how the communication industry is being transformed by the simultaneous push of specialisation, coupled with the centrifugal forces that pull towards fusion. Agency collaboration will be an even hotter topic as we move forward. Expect further mutation in the nature of the agency, its structure and its composite services, and the collaboration of different skills that will need to be engaged in.
What has already started ever so gently and stealthily will continue; it will be deliberate, progressive but irreversible. 2018 will mark the march towards a re-formed agency organism that is more integrated, more holistic and more collaborative than in the recent past. This is what it has to be, this is what it will be.

However, and ahead of delving into all that, let’s take a look at some recent history to keep things in perspective.

Two decades ago, the advertising agency was one holistic organically integrated entity that had a complete view of the brand and a broad relationship with the consumer. Practically, all capabilities existed under one roof – certainly research/planning, creative and media did. True, back then life was much simpler and our universe had not expanded in the manner that it subsequently has. And then, using a famous Dire Straits song for inspiration, we embarked on our own Telegraph Road:
Then came spin-offs; then came specialisation; then came a proliferation of media; then came mobile; then came screens; then came social media; then came data; “then there was the hard times, then there was a war …”

Along the way, the creative agency was denied the raw material of insight: data. So we became “less informed and less intelligent” than many of our colleagues, and then … there were the hard times, which is where we find ourselves today. Then came the call for integration.

The current agency model is dysfunctional because, no matter how much clients insist on and push for integration, ask us to play nice and get us to work together, and no matter how hard we proclaim that we accept it and approach it in good faith, this model remains disaggregated and, therefore, cannot function like communicating vessels of information, data, knowledge and insight. As a result, we are all held back. Brands suffer from it due to inconsistency of messaging; consumers are confused because they are being bombarded by incoherence; clients are struggling because of complexity, higher costs and lack of agility; and, last, the communication agencies are suffering because of rising costs with depressed revenues and the pressure to do more with less, and an inability to hold all the strings. So, what is the period ahead likely to have in store? What will collaboration start to move to? What transformations are we likely to see within in the market? Here is a broad spectrum of changes we will likely see unfold: More brands and clients will seek integrated communication models. This is becoming less of a prediction and more of an imperative; this is what it will likely be. The current state of affairs is not sustainable, and anaemic top-line growth will force an overhaul in cost evaluation, which will automatically lead to reduction of duplication. Cost is, obviously, not the only driver, and complexity is another compelling one. Jointly, these forces will impose a reassessment of the model, and a genuinely organically integrated proposition will make increasing sense to brands.

Integration will happen in fits and stops. Not all attempts at integration will succeed. Like the early days of the automobile and flight, there will be crashes as both clients and agencies grapple with how to approach integration. Many will attempt to pursue and insist on collaboration within a disaggregated model. Beware, this is not integration, and while this has been the norm, it is a model that has reached its Peter Principle. Today’s business requirements and market dynamics are forcing a rethink of this approach. What is becoming increasingly obvious is the need to house all under one roof, and we should not lose sight of purpose. Leo Burnett, the man, best phrased it when he said: “Our real purpose in life is that of improving the sales effectiveness and reputation of our clients through ideas.” We are in the ideas and creativity business.

Agencies will struggle with the new model as they shed old habits and attempt to learn new behaviour and instil trust internally. While integration will require clients to change perspective and approach communication differently – and that is an enormous challenge – the real challenge and obstacles exist agency-side. The will to integrate will be hampered by the ability and practice to do so as the industry attempts to unlearn behaviour that was critical to the growth and the rising focus and specialisation we experienced, and replace it with the prerequisite of collaboration, which will be akin to getting people from very different driving cultures to share the road. Integral to the new chapter is the need to build trust with colleagues that may have become strangers to us, and with concepts that many have grown to regard as someone else’s responsibility and problem.
Some communication groups will have an advantage over others. Those that have done it before and have managed to learn, refine and replicate will use this experience to benefit their clients. Though consolidated teams have been around for some time, Publicis Groupe’s Power of One approach has been gaining momentum and demonstrating its effectiveness. Critical to the success of such a model is singular, clear leadership and cultural cohesion. We should not forget that capability and creative excellence are necessary but not sufficient conditions for the successful implementation of a Power of One model. Without trusted and singular direction,
without cultural glue, such models will flounder.

Leadership will come from anywhere across the communication spectrum. Previously, leadership of agency relationships seemed to follow a particular path with a leaning towards the creative and strategy part. We will see a change with leadership and competence coming from any area of the spectrum. Just as it may continue to come from the creative side, PR, media, data and other areas will prove equal, if not more suitable, to lead a diversity of integrated relationships.

The seeds of a new compensation model will be sowed. Agency collaboration, even Power of One approaches, will not be able to deliver their full potential until silos are broken. Silos can and will only truly be broken when the number of profit and loss statements are reduced to one. Said differently, for the new model to take root and grow, it needs to be driven by one leader; this cannot happen if you have to feed competing P&L statements. As such, you can only enable success with a consolidated singular P&L that represents one combined and integrated unit. Clearly, this is not an end in and of itself, but only the beginning, because there is efficiency to be
gained and duplication to be eliminated. Once this is achieved, then the industry will be able to further explore how to evolve the compensation model to enable growth, to ensure transparency and to reward success.

One does not need to be a rocket scientist to realise that our future is in collaboration. Then again, all business is the product of collaboration. Our future and the way forward will depend, in large measure, on how we collaborate. There are ways to collaborate and there are other ways, and while there will not be a “one-size fits all” model, the way forward will increasingly take us back to the future. One cannot resist an idea whose time has come to fruition, and there is no going back.