Large, Traditional Agencies Having Trouble With Rapidly Evolving Marketing Shift

The rate and depth of marketing shift ushered in by new communications technologies, and a rapidly expanding broadband Internet, have caught many traditional agencies by surprise. In addition, client demands for accountability and well-designed performance metrics have left many long-term agency/client relationships on less than firm ground. That is the conclusion of an extensive new white paper by the Winterberry Group titled:  The State of the Agency: Market Transformation & the New Client Dynamic.

Most traditional agencies have been conditioned to “long-cycle” metrics such as brand awareness and brand affinity. These types of metrics are certainly important, but they are relatively easy to gauge through traditional research methods and account planning activities. They are long-cycle because potential positive or negative movement of brand strength is measured over months, quarters and often years. However, over the last few years increased competitive pressures have caused most companies to demand short-cycle accountability as well. This is often the area that the largest traditional advertising firms find difficult to address. Why?

For one thing short-cycle metrics and analysis often requires some deep technical expertise on staff to build into the marketing program. Most large traditional advertising firms have developed their expertise around qualitative expertise such as good account planning. Account planning is an important function, and it certainly addresses quantitative specifics in arriving at qualitative conclusions, but the whole process is, again, long-cycle. The contemporary marketplace is often operating on “Internet time” and this has increased the importance of understanding the results of marketing activities in real, short-cycle time. For much of the traditional advertising world, the intricacies, depth and deployment of this type of measurement system are beyond their areas of expertise—and interest.

But the main reason large traditional ad firms are having trouble is that marketing has undergone a paradigm shift and many advertising giants have been too slow or too fogbound to see it. As Thomas Kuhn said in his book, The Structure of Scientific Revolutions, “You cannot explain a new paradigm using the language of the old one.” Senior management and boards of directors are demanding that the money spent on advertising and other marketing activities is creating a worthwhile return. For years they have been told advertising is an investment; now they want to measure the dividends on those investments without obscurity.

The Winterberry Group white paper reinforces some of these above conclusions. Similar results were also confirmed in a recent large marketing management survey by research company Millward Brown (via Marketing Vox). The Millard Brown research points out that the worst examples of marketing integration often come from large holding company agencies (Ominicom Group, WPP Group, Interpublic, Publicis, etc.) that have dozen of companies and supposedly dozens of areas of expertise. In the Brown study “only 7.5 percent of marketers said holding companies were more effective at offering integrated strategies than independent firms.” Both the Winterberry paper and the Millard Brown study underscore how poorly large, traditional firms are at integrating new media into the mix and subsequently keeping track of return on investment.

Clearly the marketing landscape has shifted and clients—not big traditional advertising agencies—are leading the charge for needed change. As anybody familiar with the story of the Titanic knows, being large is not an advantage when a rapid course correction is needed.