$137.8B U.S. ad spend for top 200 advertisers
BtoB: What has changed in the past year in terms of the direct marketing agency?
Howard Draft: When I built the agency, we started as a direct marketing agency. Now with merger with FCB, we have everything under one roof and one P&L. Direct marketing is a tool we use to give our clients business solutions across the spectrum of channels, whether it's the Internet, or in-store or another channel. We've created a single P&L on a global basis so that, when a client comes to us, we don't think about the discipline, we think about providing a solution for that client in whatever the most efficient way is to build the brand and build loyalty from there.
My attitude is that there's no above the line anymore and no below the line anymore. There's no offline anymore. There's no online anymore. There's no line anymore. I'm a classic direct marketer, but I can't think of it in my classic ways anymore. I have to think about it in a business solution way now.
We have a single P&L across all disciplines from event marketing to direct marketing to promotions marketing to advertising to search marketing. We go to a client with a single business proposal, and the client can feel safe that we are moving the money to the right discipline at the right time. We've created something called the "Wheel." There are now five people who run an account. Ours is not an account-led agency model anymore.
Stan Rapp: One of the changes in the past year—not only for the direct marketing agency but for the traditional agency, and for the promotion agency and for the public relations agency—is broadband: The arrival of broadband about two and half years ago started a new era for marketing as I see it. And it got us to the point where we are now truly interconnected.
George Wiedemann: I want to talk about customer-centricity just a little bit. We have gone back to starting with a deeper understanding of the customer and focusing on, specifically within that, how the customer prefers to interact with the brand. I think a lot of brands are behind how consumers are changing owing to the broadband phenomenon—how they are finding the brand, engaging the brand, interacting with the brand—and so what we want to do is create better maps of how the customer is doing that. Their marketing mix is lagging behind how this interaction is taking place. So we are trying to help lead our clients into these new configurations.
Carla Hendra: It is pretty obvious that it's become digitalized to such a tremendous degree that while there still is quite a lot of paper-based and print-based marketing done, we have just seen this explosion of all types of direct marketing and relationship marketing through teleweb, and e-mail, and e-commerce and now through mobile, I think being the next big growth area. And so what that's done is that agencies that have been paying attention push this kind of idea of media-agnostic thinking: strategic, and creative and media coming together, and taking the lines down a bit between branding and selling. That's what George was talking about, that we have to think about brands in terms of how the customer interacts with them. We have kept up, and have hired more and trained more specialists in direct and database marketing and the science side of it.
Rapp: I think Carla is right on target with what she is saying, and I see it in fact as being far more: Let's say, it's almost a historic moment in marketing. We have talked about change endlessly. We have not seen that much change until the last year or two, and in this last year or two, the most fundamental change as I see it, is that every marketer became a direct marketer or is marketing directly. … And now, you can market directly everywhere to everything and aim it at everyone. The place that I depart from some of my colleagues and others is that I don't believe in a level playing field. I don't believe that integration is the best solution in marketing. It's not a level playing field. The Internet is the center of the universe. In the 20th century, marketing was dominated by TV screens because [that] was the lowest-cost and best way to get out and build the brand. Now marketing is dominated by the building of communities on the Internet, and that's the best way not only to establish a brand but to build a community and to have a relationship with your customers. There is a reluctance out there to accept just how fundamentally the Internet changes everything.
BtoB: How does search change the overall direct marketing strategy and how you are leveraging that for clients?
Wiedemann: It's perfect market entry and we have never had that before. It's real-time market entry. … The first requirement is you have to have terrific search engine marketing capabilities. You have to have your site audited and have it optimized for search, and then you have to have good strategies for both organic and paid searching. You have to buy the right keywords and integrate that back into the media. But the question is should we be starting everything that we do strategically with understanding that sort of perfect real time market entry?
I think the database marketing that we have in place is highly relevant. I think what we may want to start adding, is ask this question about what we can learn from search and perfect market entry, and how that might change our media strategy.
Hendra: I was struck very much by the person who runs our entire digital media and search operation here at Ogilvy, who said last year to me "Look, a guy, a car dealership and a credit card can now challenge Chrysler. All they need is to understand search marketing really well." That's a very disruptive thing.
Wiedemann: It's already disrupted everything. In the last five, six years paid search—the Internet spending has jumped to over $20 billion and only $6 [billion] of that I think is online advertising. Paid search is the hugest paid advertising phenomenon since the birth of television. I agree with Carla and her search practice leader. It really shifts everything, and we're just trying to figure out if that's the starting place, the starting point of strategy.
Rapp: The phenomenon of paid search was and still is the most appropriate method of advertising on the Internet. What we are seeing now is a very dangerous thing happening: the very opposite of search, the attempt of the mass marketers and their agencies to turn the Internet into a bombarded, confusing, absolutely ineffective place to do brand advertising—now that we have video streaming. The brilliant Madison Avenue people came along with popups, so we answer with, "This, our medium and this, the people's medium." People find a way to block the popup, just as eventually people found a way to block getting intrusive telephone calls when they were having dinner. We talk customercentric and we as an industry then go and abuse the consumer over and over again. The latest form of abuse is bombarding the Internet with preroles, post-roles, hard rolls or whatever. It is not a medium for brand advertising. This is the direct marketer's medium, and we need to fight to keep it that way.
BtoB: Is there a place for video to describe in greater detail complicated products?
Hendra: We have been doing video on the Web for many years for IBM. It seemed to get a lot more attention suddenly when Google launched Google video … but the truth is it still pretty early days on what are the right and wrong uses of video. But there are some right ones. What we have always tried to do with IBM is to first of all, if we are going to create video content to engage in a longer story—like we used to in the old days doing long copy ads maybe—really tell a story. We now do it with a lot more charm and interest and, when you are selling high-end software, it's not that easy to get everybody to pay attention who needs to be part of the decision-making unit. So you might be able to use highly targeted digital advertising to technical decision-makers, but we also have to somehow tell the story and engage the CFO and the CIO who are going to sign off on it. We did some really great episodes early on for IBM software that taught us a lot, but you don't have them forcibly pushed out into every possible destination and consumption point on the Web; and I think IBM has been pretty smart about understanding who their key target audiences are and really trying to put their investments in a targeted way behind that.
Rapp: I wasn't for a moment saying that the use of video in a business-to-business Web experience to demonstrate something important about a process or an expensive business product isn't a wonderful opportunity, particularly when it is done with permission marketing. What I was talking about was something entirely different, which is taking a 30-second commercial and squeezing it down to be a 15-second commercial, and having it come at you when you least expect it, and don't want it and are not looking for it.
BtoB: What are some of the biggest challenges you are facing right now?
Hendra: Well, we've got to worry a little bit about our economy, this nice big global economy. It's great, but it could have a few rough moments in the future in a general sense; and in urban centers like New York, and some of the places where we live, the agencies could be challenged. … We are a legacy business that is changing, and we've gone through a lot of very significant structural change. So we are looking at new business models, and one of the things we have to figure out is how we want to be compensated for those—and what's the fair way for us to be compensated for the value we create for our clients, some of whom are used to just paying for hours, or paying for FTEs or paying for concept, or commercials, or Internet ads or whatever.
Draft: What keeps me up at night is the fact that every major corporation in the world has built silos. Thirty years ago, a client went to an agency and said, "Here's my budget: Solve my problem." Agencies like mine, and Wunderman and other direct agencies were built to create specializations. Corporations then built silos— there was advertising, promotions, direct marketing, online and event marketing. Each major corporation has separate groups with separate budgets. You can't think about marketing that way anymore. We have to help corporations destroy those silos that exist. … In today's world, marketing happens so fast and changes happen so quickly that if you exist in the silos, you can never be effective.
Wiedemann: I'm shocked at how fast mobile marketing has taken hold, and the demand [from] the clients to help them with it has taken hold. In terms of b-to-b, we have a lot of financial services clients that have business banking operations, and mobile is a big deal in financial services. I never would have expected it to grow that way. So from a talent perspective, to get the people who understand these new areas is really challenging. It's just like in the analytics area. You could argue that there is a shortage of really good people who know these various technologies. But to find people that understand thinks like digital print on-demand mail sent from a variable data platform [is difficult].
Rapp: There are two big challenges we face. One is the fascination with ROI. ROI is fine on the project; it's fine on a limited strategic initiative. But if you want to build a company, if you want to double the size of a business, you need something called AOF: A-O-F, that's an amazingly lead forward. You need to think entirely differently than you do in an ROI mode. ROI can lead to limited thinking and limited doing. The other big challenge we face is the word time. We have a generation of chief marketing officers who where trained in business school, and grew up with a model that is outdated and no longer the optimum model.