Forum: Do agencies risk losing control of their industry?
Ibisworld chairman Phil Ruthven said at the AFA luncheon last week that agencies risk losing control of the industry as more and more dollars migrate “below-the-line”. Is this an accurate assessment, or can agencies maintain their position and relevance within the marketing industry?
Michael Graham
MD, Landor
Even talking ‘above and below’the line makes me smile. Secondly what is the ‘position’?
The first issue for me is that the terminology—below-the-line (BTL) and above-the-line (ATL)—will become redundant terms in the next two years. These are terms that come from the accounting world and relate to costs of goods, so why have they persisted in the marketing communications world?
Secondly, this terminology takes no account of the ‘online’component. There is a significant shift in people’s behaviour being enabled by technology. The technologies that the interactive agencies dreamed of five years ago are now real. Streaming music to mobiles, screens that play movies on phones, digital music for hire…the list extends every day.
The information economics transformation that will materialise over the next five years will be like we have never imagined. Not driven by venture capitalists, but by people blogging, vblogging, RSS and a host of other emerging technologies. Even Yahoo and Google have co-opted the fringe. This has yet to be recognised by the traditional communications agencies. We are very much focused on helping our clients to understand the impact of new technologies on consumer behaviour in a world where ‘mass’ media will become ‘me’ media.
Finally, can agencies maintain their position? In the light of the changes that we see forthcoming, all the so-called ‘positions’ are totally up for grabs.
Andrew Lamb
Associate media director, The Media Store
Phil’s statement might be true of ‘traditional’ advertising agencies; however, our observations have been that many have evolved (or are evolving) to make them relevant to this re-focused direct marketing era. As far as we are concerned, in media the closer that we get to a one-to-one conversation with potential customers, and therefore the more accountable our communication transactions, the better.
Gareth Eden-StycheBusiness development & account manager,Blue Marlin Brand Design
I would have to agree that more dollars will migrate below the line. Increasing brand power of the major retailers and lower margins for brand owners contribute to a need for effective, quantifiable marketing activity. In-store shout and on-shelf communication (sales promotion’s core territory) will certainly become a more focused part of a brand’s marketing activity in the future
As to whether agencies risk losing control, if by this we mean ATL agencies, then I’d partially agree. ATL agencies can further develop their BTL offer, but this requires a change in business model that is often hard to implement as it diversifies too far from the agency’s current core. The greater debate would be, are traditional BTL agencies up to the task? It would be interesting to hear from marketing and brand managers as to whether they would entrust their brand’s development with a BTL consultancy. I’d guess they probably wouldn't.
I don’t think that we’ll have a brand ownership battle on our hands, but generally speaking the marketing industry hasn’t found the right equilibrium, yet. But, I have confidence in the agencies. There is some great integrated marketing out there, such as Guinness’s ownership of St Patrick’s Day through in-store communication and giveaways in tandem with great advertising.
If the industry is changing, you must adapt to it, but do so within your organisation’s operational boundaries and skill-set.
BTL marketing’s role in the communications’ mix is growing. As a result it needs to look better, work harder, last longer and not get caught in the ‘vicious cycle’ of sales promotion.
Matthew Melhuish
CEO, BMF
I think Phil is the most amazingly talented forecaster and is a guru in many ways, but I do disagree with him here.
I think it depends a lot on your definition of ‘advertising’. We prefer the broadest definition—one that includes BTL and all forms of paid promotion of a product, brand or service. Almost all agencies these days successfully operate in the direct space and are doing very it well.
I think the real skill our industry offers lies in better connecting our clients with their customers. Creativity and problem-solving are key attributes to success and this is what will make us ‘future-proof’—the delivery mechanism of the message is not what defines us.
Andrew Edwards
MD, Leo Burnett Sydney
All businesses, let alone advertising agencies, that have had their heads buried in the sand and not embraced changes to the communication channels and the effects these changes have had on consumer behaviour should be at risk and deservedly so.
However, the fact is that most reputable agencies have changed their structure and core competencies to become more holistic. At Leo Burnett we have restructured the company so that emphasis isn’t placed on either above or below the line communication, but the effect that brand and emotion can have on actions and results.
Agencies should now be focusing on creating and delivering customer value which has no limitations in the channels in which it is communicated. I believe that agencies that have embraced these newish channels should actually be better qualified to deliver against the total communications needs of clients and that it will be more difficult for the specialist BTL providers to do the reverse. However, woe betide those whose heads remain in the sand.
