It's the End of the World as We Know It

…and I Feel Fine

(with apologies to REM)

Sean Carton recently wrote a very interesting column on ClickZ entitled “The End of Ad Agencies as We Know Them.” (http://www.clickz.com/3633372) He posits that a confluence of shifting forces have created a new world in which the “full-service monolithic agency model” is no longer effective and will likely die away.

• The Internet has changed how consumers are willing to receive information about products and services; instead of an “interrupt” model where channels are limited and attention has to be grabbed within a narrow set of viewing options, the consumer is now in charge and has a nearly infinite range of choices for viewing and receiving information
• Because of that, traditional media (broadcast television and newspaper/periodical readership, specifically) is experiencing monumental audience loss and a corresponding plummet in advertising revenue
• The economic downturn has exacerbated job loss in the advertising industry, releasing thousands of talented professionals into the market who often establish themselves as freelancers or independent contractors within their particular specialties. This has significantly improved the freelance pool and has made it relatively easy to find a qualified resource when one needs it for a particular project or program.

Agencies will need to remake themselves in a new image to cope with, and survive, these forces. Carton has an idea as to how that might work:

"So what's the agency of the future going to look like? Probably a lot smaller and focused on strategy, account/project management, creative leadership (but not execution), and media strategy (but not planning and buying). Most agencies will revolve around these hubs if they're honest with themselves. Agencies will exist to provide high-level strategic guidance that clients need in a media-chaotic environment. Agencies will expand or contract as needed or will explore radical solutions such as crowdsourcing to get work done for less money."

Historically, the B2B space has been smaller in scale than the monolithic full-service model as described by Carton, but the description is still applicable. Choices have been few on the business side, with media typically limited to trade publications and trade show sponsorship. Marketing consisted of making brochures or direct mail pieces, for the most part, or sponsoring educational outreach efforts that were necessarily limited in effect.

Now the options have exploded with the growth of the internet. Email marketing is now much more cost-effective and arguably more precise than printed mailers; web sites can be updated regularly and fresh information made available much more quickly and cheaply than a brochure redesign/print/mailing.

Coming from the interactive sphere, I have no reason to weep if this particular vision of Rome burning comes true. The key characteristics of interactive marketing are in direct contrast to those of traditional advertising.

Good interactive communications:

• Are crafted to receive interested visitors rather than reach out to grab attention
• Speak well to niche audiences as opposed to appealing to the lowest common denominator (and can speak directly to ALL audiences individually, there is no limit on the quantity or type of content that can be made available)
• Are measurable and can be tied to specific success metrics, vs. broadly distributed and only vaguely associated with quantifiable results

The challenge remains to develop a new agency model that can adapt to the realities of this new world and continue to properly service clients as well as be profitable. The value we bring as professional marketers will evolve from the “big idea” to more of a content-based approach, especially in these economic times where client staff has typically been reduced to skeleton levels. We will be integrated into not just the marketing of the client but the sales process as well. An agency of the future will:

• Staff core skills and abilities (like strategy, industry knowledge, creative direction, account relationship) but bring in freelance or independent resources for tactical execution needs (design, web programming, project coordination, media buying)
• Be a key partner to clients in developing content for use across all channels; this means becoming an expert in the client’s business and being able to step in and generate anything from press releases to web page content to technical white papers, at least in initial form. More importantly, the agency will need to be able to aggregate raw content from the client and refine to appropriate delivery format depending on the tactical need. Content management will be a key service in the future agency-client relationship.
• Build metrics and analysis into all client work; ROI calculations need to be considered for every engagement. Even broader-scope communications like TV or radio advertising are going to be tied into an interactive component, and agencies must be very sophisticated in how they track results that will cross several media channels and impact brand engagement over time. Clients will expect this as they themselves become more concerned with cost control and managing tighter budgets.
• Have a tight estimating and proposing process, which will then result in a tight project management process. Agencies need to know their actual costs for prospective projects, and make sure they know what they are providing for any retainer fee structure. Clients will pay for good talent, but measurable return is the benchmark of the future.

So it may be the beginning of the end, but smart marketers know that an end of an era marks the dawn of a new one, and if we play it properly we will emerge stronger from the cataclysm and succeed where others will fall away.

Search Engine Strategies Chicago
Lawrence Lessig and the “Copy Wrong” Laws

I have been attending the Search Engine Strategies Conference in Chicago this week as I am wont to do this time of year. Things got off to a rousing start with a very interesting keynote address from Lawrence Lessig, legendary Internet rights proponent and Stanford professor. He basically extended some of the themes from his book Remix and exhorted us all to activate with our elected officials on behalf of change to copyright laws.

I am a Lessig fan from back in the day and can remember reading his columns in Wired. His presentation was very smooth—in particular, his slide show was very dynamic and sync’d closely with his speech. I imagine he has presented it more than a few times. However, I came away vaguely dissatisfied.

In general I agree with the need for copyright reform as a central part of resolving the hubbub surrounding the music industry. Music companies cannot realistically enforce their interpretation of copyright laws in the digital age; still, it is arguably immoral for people to take and pass along somebody’s creative output without some sort of compensation for the artist. There has to be some common ground, and Professor Lessig paints an evocative picture of modern mash-up artists and children alike being branded as criminals in the heat of an outdated legal structure that is no longer applicable. His solution, broadly speaking, is to evolve the law to allow more explicit, and more enforceable, categorization of use (i.e. professional vs. amateur) and intent (art vs. commerce).

I guess that I feel he underestimates some aspects of the issue and overestimates others. I’ll start with the latter first.

He made a pretty big deal about “remix” artists, those who use existing copyrighted material to create something new. From obvious musical examples, like sample king Girl Talk or legendary remixes like the Grey Album from Danger Mouse, to more obscure You Tube darlings who pair up political footage with a clever soundtrack, he argues persuasively that these artists deserve to be allowed to make their art. These are the artists that must be protected by copyright revision because that is the wave of the future.

I think he oversells this concept and undervalues the “original” artist (to coin a phrase) who creates his or her own, original art. In the future, there are still going to be people who compose their own music and lyrics, and record their original art without using sampling or remixing. Even in the future, there are going to be talented artists who do it the old school way—inventing new music rather than piecing together snippets of old. I’ll go so far as to say that they will remain the dominant type, even at the amateur level. For every user of Garage Band remix software, there will be 10 users of Pro Tools and their own mic or Final Cut and their own camera.

I think he underestimates the power of money in this equation, too. He seems to imply that change will come in ready fashion if we can just update the laws. The fact that record companies literally can’t prosecute every single violator (there are just too many) leads to the conclusion that, if presented with a reasonable alternative, they will readily accept it. I tend to think that both the industry behemoths AND current popular artists are going to continue to fight the sampling/mash-up/digital download trends because of the money involved. For some artists (does Metallica still fit this bill?) they will never agree that they have to relinquish their notions of fair pay for their work. Songwriters will fight for residual rights and ASCAP payments, no matter if the forced payment of such will bankrupt many interactive music providers. They would rather, it seems, kill the golden goose than allow it to change and become a series of golden sparrows with smaller, although more numerous, golden eggs.

To me, that’s what the new technology represents: the true democratization of music as a commercial medium. The barriers to entry, which have been smacked down lower and lower ever since the punk DIY movement, are now essentially eliminated not only for the high-quality recording of music but its marketing as well. Now it is easy and cheap for artists to get their music to fans and be compensated for it. My italics are meant to underscore that in previous eras, distribution of music was a complicated and logistically expensive business that required proper financial resources and industry expertise. Now, however, it is easy for an artist to get a web site and post mp3’s and even to get their music into a 99 cent download compensation model. Thus they are able to reach everybody in the world, although most will not. The point is that they control their own avenues of promotion and distribution and thus will reap an exponentially higher margin of return on revenues, especially compared to their major-label contemporaries who are still being exploited by the suits.

There will still be stars in the future, popular artists who sell significant units, despite the explosion of niche artists or smaller average levels of sales. They will still sign with established music companies because that is an easier way than doing it all yourself, and they’ll make a lot of money (but not as much as their record company, and at a lower percentage of revenue than their independent cousins). Their reach and the sheer numbers of what they do will be lower, on average, than previous stars—there will be no more Elvis, Beatles, or Sinatra. Still, in comparison to their peers, they will sell the most. They may not make themselves as much money, though, as will those who control production, creation, distribution of their own product.

How do we make money? Provide artists tools and services to enable them to make and sell their music. Or perhaps figure out a way to help consumers filter through the exploded universe of content to find what they like and what speaks to them. Or maybe develop and market a “Rock Star—Manage the Tour” version, because that will be a key way artists will make money in the future—touring.