Irish agencies must innovate and adapt to remain relevant to clients, says Cox
Structural changes within the advertising industry are long overdue, according to Core Media's Alan Cox, who talks to John McGee
Depending on who you talk to, the advertising agency model in its current format is broken and is no longer fit for purpose. For a sector that prides itself in solving the problems of its clients, the biggest challenge it faces lies within the complexity of the industry itself.
While this has prompted a fair degree of introspection and soul-searching within the industry over the past few years, change comes dropping slowly.
At a recent advertising conference in the US, Marc Pritchard, chief brand officer of P&G, the largest advertiser in the world, nailed it on the head when he told a gathering of agency chiefs that "your complexity should not be our problem, so we want you to make that complexity invisible."
Pritchard was referring to the often unwieldy and time-consuming exercise that many large advertisers have to go through when it comes to managing the layer-upon-layer of agency relationships they have in place, something that is not sustainable over the longer term. As Pritchard succinctly noted, it's a problem for the advertising industry, not its clients, to sort out.
For Alan Cox, CEO of Core Media, Ireland's biggest marketing communications agency with billings of €194.2m last year and 235 staff, it's an issue that needs to be tackled sooner rather than later.
According to Cox, one of the biggest debates taking place within the industry revolves around the full extent of the services agencies should be supplying to their clients and whether or not they should be fully integrated under one roof.
In the Mad Men era of the 1960s and 1970s, advertising agencies were, by and large, one-stop shops for all creative and media buying and planning services. In the 1990s, however, a trend towards the unbundling of these services began, largely orchestrated by the multi-national agency groups.
A lot has changed in the intervening period, and the swift absorption of digital into the overall marketing mix has compounded the challenges by adding yet another layer to the complexity of the so-called long tail of agencies that advertisers have to deal with.
Not surprisingly, they are now questioning all of this - and demanding alternatives. A return to the fully integrated agency model, albeit with a few twists, seems to be the most likely outcome.
"People have been talking about integration for a number of years, but the reality is that the industry is still disintegrated and it's frustrating for clients," says Cox.
"Everyone is still providing a range of different disintegrated services, from media and digital to creative to PR, and the result is there's a lot of duplication and wasted time. I would also question who has ownership of the client problem and the solution and who is the voice of the client in all of this. I worry about the amount of time it takes for clients to re-assemble all of the disintegrated advice that they are being given.
"The cracks in the existing model have been clearly visible for a while, but in the past it worked to some degree because times were simpler and the delineation between the responsibilities was very clear. You were either a media agency, a creative agency or a PR agency and you got on with it. Those days are over."
"Now that the lines of demarcation between the different disciplines are blurred and there's confusion about who does what, this is adding to the existing strain on clients, which in turn is leading to a waste of time, a lack of integration and under-performance."
Cox is also critical of the silos that exist within the industry.
"Agencies continue to operate a siloed service model," he says. "What would happen if the great businesses of the world, like Apple, operated internal silos, with no cross-pollination between departments? I suspect [they] wouldn't be the great success they are today. In the agency world, how do you get the best campaigns if you operate in silos? The answer, in my view, is you don't."
While the structural challenges facing the industry are indeed important, Cox stresses that agencies also need to invest a lot more resources in areas such as data science and innovation and make themselves a lot more useful and important to their clients and their day-to-day operations.
"Historically, the industry has not been particularly innovative," he says. "In fact, it has been highly conservative, slow to change and there is a genuine fear of failure. We need to change that. If one looks at the technology industry, for example, it is leading the charge in terms of innovation and making a difference. We can learn a lot from this.
"One of the other big opportunities for the industry is to harness the power of data and unlock the many insights within it and use them to help our clients solve problems, while using it to inform every aspect of their marketing communications plan.
"But what is absolutely needed within the industry is true leadership, and agencies need to develop the same kind of relationships that business consultants, accountants or lawyers have with their clients.
"This will involve a deep understanding of the challenges they face and how they can be best overcome. If we can achieve this, along with the other challenges, then the industry has a bright future."
Sunday Indo Business