The agency of the future

I’ve been thinking a lot recently about the future of ad agencies. They’ve evolved over the last 150 years to mirror the massive industries they serve. Top down, structured as silos, good at scale and, generally, bad at nuance and speed. What’s next? Here’s a good interview with Clement Mok of Sapient.

By training, many designers are taught to give structure to form and systems, and create order out of chaos. That’s one kind of design; but then you have the medium of interactive games. I think from an engineering perspective, you would tend to structure and systematize the game’s play. However, when designing interactive games, you actually want the user interface to support wandering and exploration, as opposed to a structured and readily apparent system. It might not be a good idea to impose structure, rules, and order if you want to encourage play.

Other experiences like chat rooms, MySpace, and Instant Messaging facilitate a non-linear structure of play. Randomness, and the ability to find a unique experience, are part of the strengths and charm of these services. Having too many rules and structures might actually hinder a user experience. I think design should enable these experiences to happen. Design should provide the platform or system that will enable discovery and understanding. … An advertising account executive once told me that creative, media, and financials drive the world of advertising. If one fails, it affects the other. In my humble opinion, I think all three drivers are at various stage of failure.

I think the financial model of advertising and design is the most broken. The incentives and focus are in the wrong place. Agencies are spending too much time focusing on the size of their client’s marketing budget, when they should be focusing on how much value an agency creates for their client’s BUSINESS. In a world of fragmented markets, with more choices of media outlets and delivery platforms, not knowing how effectively one spends on media can bury you.

In the advertising world, one makes money by discounting creative, and charging for media purchases and placement. This used to be lucrative, because the channels were limited and because one can leverage a single creative for multiple media execution options. The industry evolved to a point where they can decouple the message from the media placement – they actually have agencies doing media independent of content. Now the clients have gotten smarter, and they’re doing the media buying themselves. As a result, the advertising agencies are hard pressed to recoup their creative cost without the media purchase component. Clients are now outsourcing their SEO/SEM work to firms that have little or nothing to do with the agencies.

The agencies are succeeding right now in spite of themselves because their clients don’t have anywhere else to turn. Look at what’s been happening the last three years in the relationship between clients and agencies. Clients and agencies used to have five- or ten-year relationships. When they talked about a long-term relationships five years ago, they started talking a three-year relationship. Over the last two to three years, the relationship tenure has just gotten shorter and shorter. The clients can’t afford to build those relationships now unless the agency can to demonstrate that they can bring the value they want.

The model of the big idea and the big content campaign is still relevant for certain industries, like fashion or maybe the movie business. They have not been able to translate those campaigns into other logical secondary platforms. They don’t have the capabilities to do it, and if they decide to do this, they don’t have the technical core competencies to do it well. If anything, the execution of those campaigns tends to be dumb and dumber, and the result is a very frustrating experience: long downloads, multiple instances of entering data, clumsy execution, and a lack of connectivity with other systems.