My Take on ‘Frenemies’ and the future of Agencies
I read Frenemies by Ken Auletta while on vacation this past week and it got me thinking about the trends we’re seeing in digital marketing and the impact on Agencies.
A brief recap of the book: the author explores the competitive and collaborative relationships between agencies (with focus on the big 6), cable TV networks, and tech giants (with most focus on Facebook). There’s also a lot of attention paid to the company Medialink, a consulting firm that provides numerous services, one of which is to helpto select an agency, and its founder Michael Kassan. It’s well written, though repetitive at times, and very insightful due to Ken Auletta’s direct access to leaders from each of these players over the last several years. The book was just published on June 5, 2018 so it’s current from a trend perspective but must have gone to print just prior to the Cambridge Analytica/Facebook scandal in March. There is reference to data privacy concerns by consumers, but the perspective almost feels dated and will need to be updated soon given how fast the industry is evolving on this topic.
The book does a great job of laying out the trends impacting the advertising and marketing industry but there was one example that really stood out to me from the book — how the agency R/GA helped Nike create a new product, Nike+, that allowed customers to collect data on their own performance by creating an account, and by doing so, allowed Nike to connect directly with their customers.
Forty million Nike customers signed up for Nike membership, [Bob] Greenberg [Founder, R/GA] says, granting Nike a bounty of data and an ability to communicate with its customers directly. Four year later, R/GA produced the software for the Nike+ FuelBand, a wearable device that allows customers to gauge their performance but also allowed Nike to gather data to improve its products and communicate with its customers. With a one-on-one relationship with customers, [Nick] Law [Vice Chairman R/GA] says, “Over time, Nike did fewer ads.”
Excerpt from Frenemies by Ken Auletta
This stood out to me because it showcases so many of the trends we are seeing in media now. Nike benefited by having a direct consumer relationship, which changed the way they approached brand and direct response marketing. Nike could now be more like Apple or Amazon and leverage a deeper understanding of their core customer in marketing, customer service, and even product evolution. It also showcased the direct to consumer and self serve aspects of digital media that have been identified as key reasons for shifts of advertising dollars to online, per a recent IAB report.
Another interesting piece in the book was on the future of the Ad Agency and the question most of the book revolves around — do Agencies have a future in this new world of digital advertising? Having worked for one of the big 6 agencies covered in the book (Publicis), as well as both Facebook and Google, my experience tells me yes, but agencies will have to significantly evolve to secure their future.
As the industry shifts from “mad men” to “math men”, as described in Frenemies, meaning from creative ideas and execution to data and algorithms, I believe an Agency’s value will come from its digital expertise, unique technical skill set in digital media, and from its creativity (i.e. the creative shops that generate new ideas). The relationships that Agencies built which allowed them to negotiate lower rates with large media properties in print and TV are less relevant in an online world that has been democratized by auction pricing and self-serve platforms.
Digital media is complex; it’s arguably more complicated to buy and implement an online campaign compared to TV and print, due to the proliferation of platforms, formats, creative specs and tracking. Agencies have an opportunity to help navigate this complexity. Digital is the future but digital isn’t easy and the pace of change only adds to the complexityadvertisers face. Businesses need help with digital advertising and this is where Agencies can add value. Agencies can succeed if they can find the right model to be that digital helper through expertise, consultancy and service. For agencies to get there, they need to install leaders that understand not only the trends in digital but also the complexities and challenges of digital at a deeper level. The agencies that do this, as shown in the Nike/ R/GA example, are likely the ones that will succeed, in my opinion.
If you read the book as well, I’d love to hear your thoughts!
(This post was originally published to The Digital Operator blog and contains links to products that are part of an affiliate program.)
