At the upcoming Digital Westconference, set for Sept. 20 in San Francisco, Ad Age will be hosting its first social and mobile brand hacks, in which 12 startups will have the chance to pitch big-time marketers to be the recipients of two $25,000 projects.
One of those marketing executives is Eric Johnson, former senior VP-marketing at Activision and now president and founder of Ignited, an Los Angeles-based agency.
Faced by the same challenges encountered by many agencies in volatile times, Mr. Johnson's solution wasn't to outsource but to incubate, joining the ranks of Rockfish Ventures and Wieden & Kennedy's Portland Incubator Experiment. In this way, Ignited simultaneously addresses clients' needs for innovation and his own agency's imperative to evolve, while also building out a new potential revenue generator.
Ad Age talked with Mr. Johnson to get a better understanding of what lead him to open Ignited Labs and which technologies and platforms he sees as crucial for the future of marketing.
Ad Age : What lead you to begin incubating startups within the agency?
Mr. Johnson: We began investing in early-stage marketing technology ideas about 18 months ago. We picked five categories that we believed would be important to the future of marketing: Facebook, smartphones with LBS [location-based services], next-generation research, next-generation use of video, and marketing on tablet computers. Here is why we started investing:
Valuation/margin challenge: The ad agency business model has been under severe pricing pressure. Too many agencies combined with increasingly aggressive procurement departments make it tough to make reasonable margins. Marketing technology companies have much higher value and potential to scale.
Commitment to continuous learning: Most agencies are struggling with how to catch up with marketing technology. We would rather learn by doing, and be ahead of the pack. This will attract the next 10 clients.
Talent attraction and retention: A commitment to being involved in new things and providing a means for your team to have equity in them creates a tremendous magnet for smart, forward-thinking talent.
Better investment than expensive shootouts: The cost of perpetually pitching in big shootouts is high, both financially and emotionally for our team. By investing in new marketing technology, we attract inbound leads from like-minded marketers, often without big expensive reviews.
Ad Age : Why do you think this model is one in which agencies should be investing?
Mr. Johnson: Clients today are struggling with tremendous change caused by a massive shift in consumer behavior. Much of this disruption has been brought on by marketing technology that allows you to get your content without advertising interrupting it. If agencies want to stay relevant, they must develop expertise and thought leadership about how marketing will work in the "post-interruption" world that is emerging. It's clear that consumers are in control, and they will increasingly only invite marketing and brands that they choose to bring into their life. To understand this new behavior, agencies must invest, and become experts in how to utilize the power of these newer technologies. In a sense, we'll be making less "ads" and making more "marketing software" that people will engage with.
Ad Age : What companies, or types of companies, are being incubated in Ignited Labs?
Mr. Johnson: PixelMags, a digital magazine publishing platform; Mass Canvas, a crowd-sourced apparel design company on Facebook; Mobile Broadcast Network, a smartphone video-publishing platform; and Brain Mapping Technologies, a neuromarketing research company.
Ad Age : How do you evaluate startups and determine which technologies and platforms to invest in?
Mr. Johnson: We first see if they fit in the five areas we think are important in marketing (see above). Then we look at how they might solve our current clients' problems. Then we look at the management and business model, to see if it can scale. The unique perspective we bring, that many outside investors don't, is that we know the kinds or challenges our clients are facing every day. This informs every one of our investment decision.
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Want to hear more from Eric Johnson and the rest of the speakers at Ad Age Digital West? Get your tickets today.
And if you've got a mobile or location-based startup and want to pitch Eric at Digital West, email firstname.lastname@example.org. But hurry, spots are filling up quickly.