Does the world really need another set of year-end predictions for 2017?
Sure it does! And I’m here to supply it.
My list, a modest but thoughtfully compiled set of five, is partially inspired by a conversation over coffee recently in Boulder, CO with a friend of mine who’s a partner at a small creative agency. Our wide-ranging conversation touched on a number of influential events that I think are going to have an effect on how ad agencies go about business development in the year
1. Management consultants will continue to encroach on the turf of ad agencies.
2016 saw notable acquisitions by Accenture, Deloitte, and IBM while PwC bestowed partner status on a creative director for the first time ever. The invading army of management consultants has been advancing for some time, but, as Avi Dan noted earlier this year in Forbes, the emergence of the consultancies on Madison Avenue is directly related to the shift toward the centrality of the consumer experience, made possible by technology and data.
Management consultants have some competitive advantages over ad agencies when it comes to pursuing new business – and it’s going to force ad agencies to up their game.
2. The CEO will be more important than the CMO.
Ad agency leaders rejoice when they have the ear of the CMO. They've made it to the inner circle where they'll have more influence over decisions that may favor their agency.
But management consultants speak the language of high-level business strategy and, as a result, have earned the right to knock on the door of someone more influential – the CEO. Some agency leaders have already recognized this advantage and have shifted their strategy. Over coffee that morning in Boulder, we talked about one of them – our former boss, Bob Greenberg, CEO of R/GA.
Bob has been a consistent bellwether for shifts that reshape our industry. These shifts have spurred him to restructure his agency every nine years.
My friend and I worked at R/GA during the third nine-year cycle, from 1995-2004, when R/GA was known as an interactive ad agency. At that time, our direct clients were almost exclusively digital marketers. These people were as new to digital media as we were, but they knew a lot more than the generalists to whom they reported. That changed over time, of course. As digital media moved in from the fringes, we began redirecting our pitch to the CMO.
Today, R/GA is structured for the “connected age.” Its primary focus is on growing (big surprise) its consultancy business. Bob isn’t waiting for management consultants to infringe on his territory. Instead, he’s positioned R/GA to step beyond the realm of marketing and speak meaningfully not only to CEOs, but also CIOs and CFOs.
It may still be rare to see the CEO’s name listed in most pitch briefs, but you’d be naïve to assume it’s because they’re not involved. The more technology and data blur the line between sales and marketing, not to mention between production, logistics, and other business functions (more on this later), the more the CEO and others in the C-suite will have influence over marketing decisions.
In 2017, start to redirect your pitch toward the CEO.
3. The death of the AOR signals the resurgence of the account manager.
My friend and I also got to talking about the proliferation of boutique creative shops in Boulder and other small cities across the US. My question to him: how are they staying competitive and finding new business?
In his experience (which I admit is more anecdotal than empirical), these agencies are endowing their account managers with greater responsibility for client growth. I think that’s a trend we’ll see more of. One reason: the demise of the agency-of-record, or AOR, and the corresponding rise of project-based work.
This means fewer “winner take all” pitches and more frequent, smaller pitches for smaller assignments.
It’s been shown that it’s easier and cheaper to keep a client you already have. Therefore, it makes sense to train the people working closest to that client how to strategically grow that account (in ways that are in the best interest of the client, of course).
The influence of management consultants is felt here too. Consultants are expected to grow their own book of business. Account managers at ad agencies are not. That wasn’t always the case, of course. If you tallied the new business revenue brought in by fictional account exec Pete Campbell over the course of the television series Mad Men, it would add up to a tidy sum.
The role of the account person is making a comeback (and, as Maureen Morrison offered in Ad Age earlier this year, the job description has never been more complex), but it’s got a way to go in terms of its influence over new business. As another friend of mine, a former McKinsey consultant who's now a group strategy director at one of those boutique creative firms, told me, “there honestly isn't as great a financial reward for hustling hard at new business and you're not usually embedded in the organization as deeply.”
4. The rise (finally!) of digital.
Earlier this month, Coca-Cola’s CMO Marcos de Quinto made some interesting remarks at an industry event about the beverage giant’s spend in TV and digital media. As reported by Ad Age, de Quinto said TV “still offers the best ROI across media channels.” Sounds like high praise for a medium that’s thought to be losing ground, right?
But then he went on to say this: “We are very seriously trying to transform our company to make it a digital company but not just to put ads in social media.” The business may be “investing big amounts of money” in digital but “historically probably not in the smartest way.” As an example, Coca-Cola runs around 300 apps worldwide and yet most of them have an insignificant number of users.
It’s probably not a coincidence, then, that earlier this month Coca-Cola also announced it hired its first chief digital marketing officer, former Bank of America executive David Godsman. Viewing that in the light of De Qunito's comments, I don’t think that’s an anachronistic move (in fact Nike also hired its first CDO earlier this year). Rather, it’s a sign that they’re ready to truly integrate digital with the rest of their marketing mix – and they’ll expect their agencies to be structured to support that integration.
(By the way, another thing de Quinto said was that Coca-Cola is “doing constant pitches with a roster of agencies.” Another nail in the AOR coffin.)
5. The line between sales and marketing will continue to blur.
That is if it hasn't blurred beyond distinction already.
For those of you who read my last post, this will sound familiar, but I think it’s a subject worth repeating.
Back in the day, there was a point in the purchase funnel when marketing gracefully ceded to sales. Today, thanks to the centrality of the consumer experience referred to earlier, that point no longer exists. Your clients recognize this and are starting to adapt. A study by The Economist and Marketo shows a majority of chief marketing officers believe that marketers will own the lion’s share of the sales experience in the next three years. And consider that briefs for two recent ad agency reviews – Electrolux and J.M. Smucker – both included CRM as part of the agency's scope of work.
As I said in my post, I’m not recommending that all ad agencies become CRM experts, but I do think ad agencies would serve themselves well if they invested some time to learn more about the stages of the purchase funnel that they traditionally left to the sales experts.
Admit it, we're not in this business because it's neat and tidy.
There’s never been a more complicated, more exciting time to be in advertising and I can’t wait to see what we’ll be talking about this time next year.
In the meantime, I wish you all a happy holiday season, free from last-minute RFPs that are due on January 2, and a productive, winning 2017.