You need to have money to make money. So goes the old saying. And with all the conversation about the disadvantages of capitalism right now (debate about Piketty’s mathematics notwithstanding!) this has never felt more true – the fruits of economic activity benefit the owners of capital disproportionately. The rich get richer, the poor get poorer.
At the same time you can’t open a paper without someone lauding the importance of creativity. It is dead hard though to make money from creativity. And it’s getting harder as digital networking lays waste to the old formats that middle class creative people have used to monetise their skills – things like books and records. As a society we need new ways to recognise the value of creativity and new business models and economic mechanisms to profit from the value creativity creates. And not allow 100% of that value to flow upwards to the owners of capital, platforms or siren servers.
“Technologists repeatedly apply the extreme efficiencies of digital networks in some area of endeavor in such a way that the sources of value, whatever they may be, are left more off-the-books than they used to be, but we end up in control of the server that runs the scheme. It happened to music and other media early on, but the pattern is being repeated everywhere.”
Jaron Lanier. Who Owns the Future.
The advertising industry also needs to find better ways of profiting from creativity too as was recognised by both clients (Martin Riley, Pernod Ricard CMO) and agency leaders alike (Debbie Klein, The Engine Group) at this week’s IPA event on agency remuneration. Let’s face it, our industry’s way of monetising IP and brand value added is hopeless. Despite the huge value that creativity can generate we get paid by the hour regardless of any value created. It is high time we developed new business models and disrupted our own industry paradigms, before it is too late.
Creative agencies are filled with creative people who think they make a product – a brand strategy, a design, an idea or an manifestation of that idea in a piece of communications, .product or digital service. And those ideas often have the potential to generate huge value for our clients brands.
However we don’t get paid for making a product, or whether that product generates value (I am sure there are plenty of great performance related schemes out there but mostly the upside is minimal and not anything to do with the true incremental sale/revenue increases). We monetize our work with a service business model. Agencies have been coming up with great ideas for years, contributing to reliable sustainable growth for clients and their brands, but since the death of the commission model we have been paid like lawyers or accountants. The clue is in the name – we are our client’s agents. But with less perceived skill and thus worse hourly rates, and fewer recovered billable hours.
This is of course a decades old set up. It made sense for agencies to cast themselves as agents back in the day when clients only had one agent, and could use that agent to help them make decisions about what strategies to pursue and where to spend their money. But now that has changed. Media fragmentation has led to agencies specialising and so their role as agents is much further downstream. Creative agencies like to think that their most important contribution is the big idea. But clients are increasingly taking ownership of the big idea and all they want from their agencies is to have that idea executed or specific deliverables produced.
“One CMO, who requested anonymity so as to avoid disparaging the shops currently working on his account, said he thinks that in five years agency networks like BBDO , McCann , Y&R and Saatchi & Saatchi will matter less. “The agency model is really dead. I don’t need all these different agencies working for me. I don’t want it to be about [agency brands]. I just need less overhead and more efficiency.” ” Ad Age.
The implication is we are less and less valued agents, and becoming a commodity, interchangeable makers of deliverables. If the industry shrivels and dies it won’t be because the 30″ commercial is no longer relevant. It will be because the service business model failed to support an industry that continued to fragment, specialise and slip down the value chain despite the continued value of its core product – creativity.
“For years agencies weren’t accountable. Now they are and the model is crumbling. Advertising that doesn’t drive business will lead to a quick end to the ad budget and perhaps the agency as well.” Anonymous CMO
Part of the reason we find ourselves here is that the service business model pays pretty well and CMOs can still justify agency fees when a slightly better/newer marketing campaign generates a positive ROI or percentage point sales increase. The other part of the reason is that the industry has been distracted by a macro argument about how the media and marketing landscape is changing and what it means for clients and agencies, and has assumed that the same business model would apply to a new world order. Even digital creative agency business models are largely the same as their traditional forebears, despite the measurable nature of the media in which they operate.
So there are two questions we need to answer to put better value on creativity:
Firstly, the age old question of how do we better demonstrate the value we create? How might we make the impact of creativity more measurable? How might we put more skin in the game and not expect to get paid when things don’t work out, but feel confident in sharing in the upside when things do? How do we change the conversation with procurement teams away from simply about getting to a lower number for a specific line item and get to a place where a true partnership can emerge.
And secondly, the new question of how do we change the business model that underpins the value that we create? How might we apply our creative skills to new ventures and spheres where the outcome is completely unknown but the potential is enormous? (see Taleb on optionality/convex payoffs)
What is exciting is that it used to be that you needed vast capital and resources to scale. In a mere few years Instagram built a $1billion dollar company with 13 people and a great idea and largely the same skills as is present in many creative agencies.
So time for us to get on and find new ways to monetize what we create. Sure it isn’t easy, and I speak as someone who’s current day job is 99% tied into the old way of doing business in the creative industry. But we’ve got to find the time in the day to try new things out, have tough conversations with existing clients, and find new and often smaller ones who want to do things differently.
The only constant is change. Heraclitus
Here is a quick go at a top 5 of the threats and the opportunities facing creative agencies that are created by technological change.
- Decline of Paid media models e.g. Newspaper ads revenue, Online Display CTR decline. Impact of on- demand/connected/OTT TV to linear TV ad revenue
- Platform brands (e.g. Google, Facebook etc) forging direct relationships with clients
- DSPs /programmatic buying taking up more client spend and therefore requiring less agency engagement
- Move from brands telling stories in paid media to brands creating value with their behaviour in owned and earned media and through utility and entertainment
- Media fragmentation leading to change in the role of agency partners as downstream providers of services/deliverables and the move of ownership of the idea towards clients. Ultimately leading to the “hour” we sell ever more commoditised
- Shareable ideas/memes and their manifestation in content, conversation, services and products are the currency of the web and creative agencies are all about ideas
- Fewer barriers to sharing/spreading ideas than in the industrial era means more ways of reaching consumers without huge spend
- Opportunity to use agency skills of understanding culture and what people need to better understand what people want from technology, and help clients shape their use of technology so that it is Open, Human centric, Diverse, Collaborative, Value based, Expressive
- Attention is more scarce than ever as media fragmentation overwhelms people with noise. Creativity has never been more relevant as a way for brands to be the signal in all that noise
- New ways of demonstrating tangible added value and theoretically more ways to get paid more fairly for creativity – more on this in my next post.
Last list-based post for while I reckon….
Let me start by saying that I am a rational optimist. I think that generally speaking things are getting better and will continue to get better. Whilst I rail against the technological determinist view, however I try to be realistic and rational about technology and avoid thinking every new thing is automatically great simply because it is new. I don’t believe that rise of digital technology is guaranteed to be a story with a happy ending. For me technology is a tool and we choose how to use it and we need to continually push to use it well. But here is a random list of some things that give off the impression that we could be choosing to use it better.
•Financial pressure on tech giants actually eroding customer service over time – decline in openness of services and interoperability, reliance on increasingly pernicious advertising formats and personal data exploitation
•Devil’s bargain of giving up personal data in exchange for free services results in decline of personal privacy and lack of trust in data security and platform brands
•Risks of our fragile economic system being shattered as a result of unintended consequences – e.g. Financial trading bots reading hoax Associated Press Twitter post and wiping billions off stock market
•Decline in the quality of information/news available to us about the world due to the massive rise in quantity – e.g. Boston bombings news coverage riddled with false rumours presented as fact in mainstream media due to pace and pressure of reporting a live event
•Fear of the impact of technology on livelihoods as many jobs become digitised shrinking overall market value or human workers replaced by computers and robots with no corresponding new job creation leading to mass protest/rejection of technological advancements
•Failure of most big companies to pursue disruptive innovation leaves them exposed and at risk of new entrants disrupting their marketplace with networkd digital technology which destroys marketplace value and impacts on shareholder value (which includes pension fund shares)
•Oh and threat to net neutrality from actions by bodies like the FCC stacking the deck against certain organisations by demanding fees for service or through the defacto favouring of big established business who can pay for faster services
I am sure there are more, but maybe I will write an optimists list next time….
“So modernity has brought with it an endless internal mental conflict between stern, rather parental inner voices and lazy childish ones. Unfortunately, these two voices, which have functioned as opposites, checking each other for centuries, have been confounded into idiotic agreement and collusion with the appearance of digital network technology…..both sides are saying that if technology makes life easier, it should also make you poor….. This is the stupidity of our age, a conclusion so utterly bankrupt that no single generation could muster a sufficient momentum of mental failure to express it alone. Only a collaboration of generations could manage to spread a dusting of credence over such a gaping, appalling, vacant falsehood.”
Jaron Lanier. Who owns the future
This was going to be my Admap prize entry to answer the question “How brands are built in the digital age”. But of course life got in the way so instead it is this blog post. So rather than well reasoned and evidenced argument, you’ll be reading conjecture, opinions and hypothesis. But hopefully interesting none-the-less….
In a world of change one thing remains constant in the marketing industry, and that is the power of creativity to generate ideas that build brands. Brands are built in the digital age through great creativity expressed in new ways and in new channels by creative agencies and clients who have an understanding of what great creativity requires.
With all the debate around the changing media landscape and what it means for the industry it is easy to feel that everything about what we do as marketers and creative people is changing. And of course things are changing. But the core of what makes for valuable brands and famous marketing campaigns hasn’t changed, and it is easy to get distracted from that main task – the relentless pursuit of better understanding of what great creativity takes, and the value that it can create.
Creativity and brands
Creativity allows brands to be distinctive, taking greater than their fair share of people’s attention, and the ideas and meme’s spawned by creativity are one of the main things that are shared over digital networks. Just think about the amount of Buzzfeed content shared in your newsfeed right now. That is a brand that is build on the power of ideas. Perversely, mainstream marketing spends a lot of time worrying about the packaging of these ideas; is it a Facebook post? or video content? how long should it be? how much should we spend? which of our agencies should make it? – and comparatively hardly any time on the ideas themselves.
Brands need ideas more than ever. The digital age has brought something that has always been true into sharp relief – that brands exist in the minds of consumers. Brands aren’t the result of one great advert, they are like a bird’s nest, built from the scraps of twigs that a person encounters and bothers to pick up. And a lot of those twigs are digital. So it takes time to define or reinvent a brand and changes happen relatively slowly as a result of consistent quality creativity – as was often said during my time at Dare – every idea counts.
Creativity and agencies
Creativity also help clients answer their main problem when it comes to growth. Most clients face the same problem with their brand. To grow they need to convince a greater number of disinterested, disloyal consumers to purchase, ideally also more frequently. To do so they need to be distinctive.
Creative agencies can help clients do be distinctive by taking products with functional parity and add intangible values and meaning to them to make them more valuable to the people that use them. Which isn’t simply about trying to “make people want things” it is about helping them choose, as well as adding meaning and fun to their lives through the brands they experience.
But this isn’t by and large about “making things that people want” either – that is what client organisations do – they have the resources required to create customer experiences at scale. Rather, there is an opportunity to re-conceive the role for creativity and the agency in the era of digital disruption, to move away from the industrial era’s myopic focus on communications, messages and positioning as the sole means to make brands distinctive and add meaning to them.
A vision for what that could be was created 10 years ago by Mark Earls in his book Welcome to the creative age. Earls talked about the role of the “Purpose idea” in elevating the brand above empty positioning and image, and envisioned “interventions” – brands doing things to live their purpose rather than talking at people in their marketing activities.
The thing that has changed since Earls wrote his book is that the physical barrier to entry to having a direct relationship with the customers that existed in the industrial era has fallen away. Agencies can now manifest brand behaviour in digital products and services and don’t just have to rely on comms “channels” and advertising. We can encourage people to pick up a brand’s twigs by making them entertaining, useful, rewarding, shareable.
If creative agencies can combine their creative skills, with technical skills and an ambition to elevate marketing beyond comms to brand behaviour, and seek to develop truly disruptive innovation, they can continue to be a vital source of value creation.
Creativity as a skill
The digital age requires specialism , and having the right idea in the right place, not just sticking a press ad in a banner with ruthless cost efficiency. So it is easy to think that the future of agencies is big data, and heavy technical skills. But creativity is a skill and is not the same as the skill of executing in a specific medium. In a digital age creativity is a skill to be nurtured and prized regardless of the medium. Because it allows us to “do the right thing” as well as “do things right”.
Creativity is great at:
Making insights resonate
Making ideas into memes
Making the tangible or rational engage emotionally
Making the human condition a shared experience
Creativity is about understanding that all ideas are not born equal, and whilst there is of course some subjectivity, creating and judging ideas is born out of experience and talent. Absolutely not about luck or gut-feel, great ideas are hard to identify, they are hard to develop, identify and bring to existence.
Creativity needs the right conditions to flourish, talent, culture and environment are all key and creative agencies have remained relevant because they offer something unique. They are able to create cultures and attract types of talent that the client can’t. At its best this talent is informed and in tune with the commercial reality of the client’s business, and passionate about the brand and it’s role in adding value to the lives of customers. And at its best the agency is a team of people with the skills to think laterally about creative solutions to problems and has the perspective to think objectively about those problems. This objectivity is the main benefit of sitting outside the client organisation and are not being solely dependent on it, and its politics, received wisdoms, and inertia.
Of course creativity needs to change as well. Technical skills and knowledge are essential to great digital creativity, and they need to be upstream in the creative development process. One can’t separate the artist from the brush. This means a more collaborative creative development process is required to truly unlock the power of creativity in a digital age.
So, successful brands are built in the digital age with creativity. Creativity that inspires ideas for brand behaviour that can build the brand twig by twig. Creativity applied to business problems allowing brands to embrace the digital age and find new ways to live their purpose. Creativity that is nurtured as a skill by agencies, and clients who value its contribution. And ultimately, creativity is what allows brands to add value and meaning to customers lives.
In no particular order…..
Rolf Dobelli has taken a bit of Jonah Lehrer style criticism but I try and only read the news once a week and find much to agree with here.
Agree with a lot of this, maximising shareholder value is a very narrow, short term objective. We ought to have triple bottom line accounting where all stakeholders are taken into account not just the owners of capital.
The essential marketing skills for start ups. Am really curious as to whether an agency could package these up for the start up community to tap into vs have in house.
As ever lucid and compelling argument from Martin Weigel on successful brand marketing based on the Erhenberg/Sharp school -Top of mind awareness and relevance to infrequent purchasers are more important than differentiation and appealing to fans if a brand wants to grow.
Gripping dissection of the impact of social media on how news is reported and how easily falsehoods are shared and reported as fact as media outlets trip over each other trying to be first with a scoop.
Not technically from 2013 but re posted by W+K on their blog last year. Amazing 2005 speech by Dan Weiden on the importance of chaos to creativity and insight into the agency philosophy.
Fab piece on the impact of technology on free speech written as a letter to JS Mill.
What constitutes modern feminism has been a hot topic recently and I enjoyed this by Natascha McElhone on the fourth wave of feminism that is tackling society and culture’s remaining issues around gender equality.
As one of the many people that I am sure hates email this rang true. And the start of the year certainly feels like a good time to focus on getting meaningful work done rather than spinning the wheels doing email and attending pointless meetings.
And finally, thought this was great insight into the creative process in the music industry from Rick Rubin’s work with artists such as LL Cool J, the Beastie Boys and Red Hot Chilli Peppers.
Hope you find some of them interesting and have a great 2014….
This is a précis of an article that was published in the January 2013 issue of Admap magazine ©Warc. To read the article visit http://www.warc.com/admap. For a limited time a full version is available at the bottom of this post.
Creative agencies have always been good at innovation. However, the need for predictable growth has meant that creative agencies have been sucked into focusing on one type of innovation- small, incremental improvements to what we did yesterday. A slightly more original TV ad, a responsive website design and so on. We have become experts at Clayton Christensen’s “sustaining” innovation.
So this focus has meant that we have neglected becoming expert at “disruptive” innovation. We haven’t applied a disruptive innovation approach to our client’s business, or to our own industry or business model. And that is dangerous in an era of rapid change, there couldn’t be a more crucial time for a new vision for the role of the creative agency in an era of digital disruption.
But simply re-conceiving the agency role as about moving from comms towards digitally enabled brand behaviour on its own isn’t enough. If creative agencies take the same working approach as the one that is appropriate for creating “sustaining” innovation, they will fail at creating true disruptive change.
We need to combine a new vision for the creative agency with genuinely new ways of doing things that will realize that vision – that is a disruptive innovation approach. Through our work within Dare Labs we have identified some general principles and practices for any creative agency looking to disrupt, whether by tackling client briefs or by producing products themselves.
1. Starting with problems – To create disruptive ideas you have to start with the core problem not just a list of requirements and then imagine how to disrupt the status quo to create a new solution.
2. Following your nose – Encourage serendipity and let people follow their gut feel and what interests them, a tiny idea about a piece of code can lead to disruptive innovation if you let it develop.
3. Open and bottom up innovation – Open innovation creates combinations of talent, insight, data, and points of view that aren’t possible if an organization innovates behind closed doors. Bottom up innovation increases the chance of convex payoffs as the number of ideas trialed is greater.
4. Break the rules – The skills to create ideas and produce digital products that many agencies have need to be combined with the right mindset. How can we disrupt value chains and business models and how can we exploit emerging technology and consumer trends?
5. Creating magic – Asking the question “what is going on in the mind of the user?” can create magical user experiences from quite simple technology
6. The cult of done – A lean start up approach helps to create experiments, helps to get out of “thoughtland” where mistaken assumptions rule, and helps you to figure out what works and what doesn’t for real users.
7. Keeping it core – Sharing the things you learn and the technology you create to improve the overall quality of innovative thinking and keep it core to the business and the search for new revenue streams.
These 7 principles are a modest start in the attempt to find new ways of working that lead to disruptive innovation and unlock the true value of our creative skills.
This is a précis of an article that was published in the January 2013 issue of Admap magazine ©Warc. To read the article visit http://www.warc.com/admap