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← Back to IdeasAtticus Winner: The Advertising Agencies of the Future Will Be Open Sourced
he following article won the 2016 Atticus Award in the Advertising category.
The alternative ‘new normal’
The ‘new normal’ for global advertising industry is that of ‘low growth’, according to Sir Martin Sorrell. Unless, we relook at the assumptions we hold when we think about the source of growth for advertising industry.
The changing digitally-powered landscape has forced agencies to change their business models, and one agency model will prove to rule them all.
Think about this: 30 years ago, if I was a small restaurateur, my avenues for advertising would have been local listings, a billboard perhaps and a few mailers for special days. Today, I also might solicit reviews on Tripadvisor.com and run low-budget campaigns online for prospective customers from my area. Today, to remain competitively relevant, I must be where my potential consumers are.
What has changed in these 30 years? Increased competition and an explosion of media options – from expensive to cheap ways of reaching all sorts of potential consumers.
What has remained unchanged? Small enterprises’ access to advertising agencies has.
Agencies are still too distant/expensive/slow/intimidating for most small businesses to access. They might access Amazon for buying kitchen utensils and use cloud based restaurant management app, yet they don’t have access to creative strategy and ideas for growing business on an app. There is simply no app for that. Yet.
30 years ago, the situation was different – much growth was yet to come from globalising markets, increasing consumptive lifestyles, proliferating capitalist economies. So agencies didn’t need the restaurateur’s business to grow. But now, as world stands (almost) completely globalised, consumptive lifestyles have maxed out and capitalist economies are struggling from one bailout to next, advertising industry is finding it much harder to grow with only big-spending corporate brands. Creative agencies are being squeezed by competitive pressures and demanding clients who prefer to work on project basis rather than on retainer basis. Agency business was never as uncertain as it is now.
But what if we embrace this uncertainty? What if we expand our horizons to embrace a wider set of branding efforts?
The long tail of advertising business
First source of growth: Small businesses
95% of enterprises across the world are SMEs. If advertising is about helping businesses grow, why don’t we help 95% of global enterprises grow? Yes, it will require a fundamental shift in the business model of advertising agencies, but would it not be worth it? Let’s look at the possible worth we can tap into. SMEs contribution to GDP varies from 16% in low income countries to 51% in high-income countries2. Let us assume they spend 10% of their revenues in marketing3, out of which say 2% goes in creative/ strategy services. That is the 2% not coming to organised advertising industry now. That is the 2% spent on work by either amateurs, freelancers or in-house part-timers – often inefficiently, unprofessionally and with hit and miss results. What if creative agencies could realise just 1% of the global SME revenues through largely an online algorithmic service? Is that worth going after?
Second source of growth: Personal brands
The second market to tap for growth is the rise of ‘personal brands’. People want to build brands for themselves to help them grow in their careers. This expanding pool of potential customers can only look at self-help books/ blogs and other ‘gurus’ for help as of now. They don’t have a professional service that they can access for definite and easy access to proven way of building brands.
Combine these two long tails and see the potential source of growth for global advertising agencies. The potential is huge, but no one has yet attempted to create an integrated offering for the three broad segments of customers – Individuals, small enterprises, large corporate brands.
Change is difficult and scary for everyone, especially (it seems) for advertising leadership. Advertising industry spends a lot of time bemoaning the death of AOR, shrinking margins, frequent pitches. The sense one gets is that that everyone sees what the problem is and wishes to turn back the time to good old days. Nostalgia is a form of denial. And it doesn’t bode well when many in the industry fall back on nostalgia to make sense of their present.
The new gold rush for advertising agencies will be for leadership in offering integrated user experience for the three broad segments of customers — individuals, small enterprises, and large corporate brands.
The change that we need to incorporate is not a new idea, but rather a poorly understood idea. The idea is called – ‘Open Source’.
Misunderstood ‘Open’
There have been many attempts at creating ‘open marketplace of ideas’. However, attempts like adhack.com which hoped to be a ‘marketplace for ad creatives’ no longer exist. The simplistic metaphor of marketplace is problematic because, it treats ideas as commodity. When one exchanges a book for a certain sum of money, the exchange is complete, expectations met. Exchange of ideas against money is not that simple.
A business cannot share its problems openly without giving away strategic vulnerability. Even if it does, how do you judge and work together on an idea in an open marketplace? So companies like ‘Victor and Spoils’ have a certain level of ‘curation’. When decisions are made by committees (as against by individuals) it requires ‘servicing’ support, which V&S provides. This is also perhaps the reason why Adhack couldn’t succeed – it was structured for individual decision makers but the money is in companies that decide by committees.
Secondly, small businesses are wary of advertising because they see it as an expense that might payoff or not and they don’t have spare funds to experiment with. Adhack might have still survived if it had a way of guiding clients in creating solutions that work. An Adhack can’t provide the feedback loop that can improve campaigns that Google can. But even Google can’t what an Ogilvy theoretically can. If Ogilvy puts together data about the campaigns it has done across the globe over the last few decades, big data analysis can provide confidence level ‘thumb rules’ that clients can use to make decisions real time. That is one part of the equation. But an important one.
Some companies adapted crowdsourcing (not open source) to varying degrees of success. For example, 99designs.com solicits designs from hundreds of designers for a client. It is exploitative in the sense that a designer is not paid for her time but only if her design is selected. That way, the system is only useful for budding artists who are testing their skills, building their confidence and portfolio. It cannot sustainably scale to win bigger businesses or attract established creative talent.
V&S is essentially a normal advertising agency with a ‘plug-in’ for crowdsourced ideas. They open up some client briefs to a set of planners, creative directors across the world who have registered with them. This idea has obvious limitations of sharing strategically important projects, speed of delivery, feedback mechanism, learning curve etc. As such V&S cannot sustainably scale.
Surprisingly, there is no existing body of theoretical or practical work that explores the potential of open source in advertising. So here’s my idea.
Open source advertising agency
'Open’ = universally accessible and open to contributions.
‘Source’ = the proprietary logic that solves a problem uniquely.
Understanding this basic perspective about Open Source is critical. When people talk about Open source, they might think about only using open source material to create advertising. Or they might talk about projects where users and brand team co-created something. That is a small perspective. What I am talking about is Open source as an idea to inform advertising business model.
So first, what is ‘source’ in advertising’s context?
All agencies have proprietary planning tools for various branding purposes – For example, Ogilvy has its ‘Big Ideal’, ‘Fusion’, ‘Do brief’; Publicis has ‘Lead the change’, DDB had its ‘Springboards’, Saatchi & Saatchi has the ‘Lovemarks’ and so on.
These are very useful tools that guide application of common sense to solve business problems and give clarity regarding branding strategy and tactics. The more I work with clients, the more I realise how important these tools are; how easy it is to stray away from basic common sense when confronted with too much data; how easy it is to choose actions that are easy rather than actions that are right. The planning and creative tools help make the right decision for a brand. And these decision make all the difference in brand’s success or failure. So for example, if Ogilvy becomes an Open source advertising agency, it will design ‘its interface’ such that people would be encouraged to use, adapt, and improve upon its planning and creative tools. It will make the wisdom existing in its employees and its campaigns through the years available to people to learn from and inform their decisions.
For this to work, Ogilvy will have to be cognizant of the different requirement and hence different consumer journeys for the three broad bucket of clients.
- Individuals seeking help with personal branding at a flat fee
- SMEs who need help in growing business with limited budgets
- Corporate owned consumer/ enterprise brands with high media spends
To be able to cater to these three different segment at the same time, the agency will require a new business model, new practices and new expectations of revenue growth. To get a glimpse of that interface, we can learn from pricing strategies of online services.
For example, Ogilvy can curate and code its tools and make it easy to use (not only accessible as it is now) to all for free. This is the difference between Google’s search interface now and a Yahoo! search and directory from 1996.
For individual users looking to either build personal loan or test new business ideas, we can provide algorithm based assistance in formulating strategy (programs that take in key data points to choose the right tools/ perspective). Thereafter the focused ‘brief’ at hand can help the person in finding the right ideas with the help of fellow idea seekers and creators in an open forum. Look at the interface of Coursera classrooms for example.
If a small restauranteur wants help with his business growth in this scenario, he can either access free tools and figure out strategy for herself; or pay a flat fee and access the community of people who might help him. Perhaps he can even find a budding creative artist in the community who could help him in designing art works informed with the Do brief she formulated with the help of an algorithm earlier. If she is ambitious and is seeking rapid growth and doesn’t mind paying the fees for access to agency’s team, then she can do that too. She will now feel comfortable approaching Ogilvy.
With millions of people using its free tools, Ogilvy stands to create the ‘default’ language and logic of branding strategy for the planet with its Do brief, the Brand Ideal etc. The first mover in the Open Source Advertising agency game, stands to set the rules of the game in 21st century. ** The changes in business of advertising**
- From servicing a few hundred clients at max a year, to catering to potentially a million clients a year.
- From being critically dependent on a few large clients for survival, to hedged bet with the long tail.
- From enterprise oriented to nimble orientation – adaptable to serve anybody from an individual to a fortune 100 company.
- From intimidating jargon to simplified tools that most people can use. Simple and obvious always trumps complicated and laborious in advertising – may it be in ads, pitches or every day work.
- From resource allocation per brand, to additional resources for Skype services and transition teams who would facilitate the transition of a project from online open source to inside agency (and confidential).
What does not change?
- The creative leap still comes from a human insight and articulated/ envisioned by a human, often an agency personnel/ community mentor.
- The business dynamic with the corporate brands will remain unchanged, apart from improvements in universal availability of data and tools.
The Open Source advantage for the first mover
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New repository of consumer insights The agency will have access to big data and metadata about its user’s business, their preference, and their possible growth trajectories. The data will be useful in building agency intelligence, its effectiveness and its new business efforts
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Mindshare leadership First mover will set the language and logic of business growth for a million business leaders of tomorrow.
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Virtuous cycle of new business growth Small businesses and startups would grow with us and might stay on as they grow big. Community of thousands of enthusiasts and free tools users will help establish agency brand credentials. The word of mouth due to the currency of our tools will position us favourably among business leaders.
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Attracting good talent The community would become a channel for budding talent to get noticed. The transparency in helping businesses grow will excite creative talent and attract the best creative talent to the industry again. The widened pool of visible talent and the plurality of projects will help agency find, train and mentor the right talent.
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Increased marketing literacy among clients and agency personnel To be frank, many of us in marketing and advertising industry could do with a basic marketing course. Even in 2017, many among us are unsure about digital marketing. Many advertisers could increase efficiency and improve quality of their efforts if they knew about concepts such as ‘insights’, ‘emotional needs’, ‘strategic choices’ in creative ideas and so on. By ‘opening up’ the culture of advertising thinking, we will help increase marketing literacy and consequently increase confidence in marketing efforts. After all, if clients understand marketing better, they will be more confident about spending money on it.
I am eager to work on this idea and bring it to reality. If anyone finds this idea interesting, let me know with comments below.