Agencies Using Creativity to Save Themselves

IAA Participants Told the Time Has Come to Invent New Business Models

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WASHINGTON (AdAge.com) -- Traditional ad agencies will have a role in the advertising world for years to come, but their role is going to change, Publicis Groupe CEO Maurice Levy and Dentsu Chairman-CEO Tateo Mataki told the International Advertising Association's World Congress yesterday.

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The executives, though, presented somewhat differing views of what those new roles would be.

Mr. Mataki said Dentsu is increasingly looking to become entrepreneurial in ways that allow both it and advertising clients to capitalize on brands and then share profits from developing new revenue streams instead of just relying on fees from doing traditional advertising.

"The business model in which the agency's sole function is to create advertising and buy media is no longer viable," he said. "We need a new model. We need to develop relationships where both parties share risks and rewards equally. Rather than just accepting assignments, we must be proactive. To manage change, we must take risks."

Why not?
He said the company has even created a name for the push, calling it "Dentrepreneurship." Dentsu executives Kotaro Sugiyama and Akira Kagami cited as examples an interactive TV channel guide and a weekly newspaper for commuters, but pointed to Dentsu's solution for an advertising assignment for a cup of noodles as the strongest example of what they're striving for.

Dentsu decided to promote the cup with anime advertising, then created actual issues of a comic book and episodes of anime programs that could be sold on DVDs as part of the campaign. The DVDs have been bestsellers, giving the client and Dentsu additional revenue.
Maurice Levy
Maurice Levy Credit: Christophe Bertolin

Mr. Levy agreed that the traditional model of ad agencies coming up with TV spots and taglines is being called into question, and for good reason.

"That model is close to broken. That's as it should be. The model is no longer valid, no longer relevant."

Time for change
Yet he said that there remains a big role for agencies, just a different one. "While many things have evolved, our industry still mostly reposes on a magic tripod: advertiser, agency and media owner."

He suggested the tripod is "more critical than ever" to navigating "the blur. To help shape the dreams of consumers, to inform them, to comfort them, to inspire them and to connect with them."

"The new model of the agency will work like an eco-system. Everything has to fit and contribute 'rationally': the understanding and knowledge of the consumer, how he/she interacts with society, the understanding of the product, the brand, the competition, the 'marketing-mix,' media and non-media channels, and above all the idea."

Marketers, he said, still need people to create content that is effective, that offers context, value and emotion.

"That is exactly the business we are in," he said.

Still he cautioned that the agency will increasingly look at creative that doesn't just talk to a consumer, but enables interaction between consumers and marketers.

Silos crumbling
He suggested the change will give rise to a new golden age of media where walls and silos will come tumbling down and creative is ultimate, but where services provided by agencies may have more value that physical assets.

Mr. Levy said in that new world, agencies will suggest solutions based only on the best interest of the client, but will need to be paid differently.

"To build that new model, we need visionary clients not led by procurement and number crunchers, but people who can understand and appreciate the sheer value of our work, our ideas.

"The best solution is to be associated with the success, or the failures, of our work. Pay per performance. License our ideas. We need to be compensated more fairly," he said.
Chuck Brymer
Chuck Brymer

Chuck Brymer, president-CEO of Omnicom Group's DDB Worldwide, said that an agency's role in producing creative for individual clients is also changing as technology that allows consumers to communicate with each other increasingly makes consumers behave much like swarms. In this scenario, advertising becomes a two-track challenge of not only influencing the overall herd, but also influencing swarm behavior.

'Fast eats slow'
"In the past, we've always seen the big eat the small. In the new knowledge-based economy, the fast eats the slow," he said. "Speed is the new big."

Mr. Brymer suggested that the ability of one individual to impact the swarm, through social networking and blogs, changes the nature of what ad agencies need to do.

"Technology has made it possible for human communities to behave like swarms of our own. We are more in touch and more attuned to our peers than ever before."

Mr. Brymer said creativity is the tool "to ignite and motivate the swarm."
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