These agencies specialize in promotional marketing and direct marketing. The way they work right now gives them a strong head start on creating truly effective interactive marketing in the near future.
Big advertising agencies don't work the same way. And they're burdened with years of "business as usual" baggage. They've defined what advertising is. So it's going to be difficult for them to overcome inertia and make the paradigm shift: to define what interactive will be and show their clients how to use it.
In spite of their pioneering efforts, the new interactive agencies will have to make a paradigm shift, too. Right now they're technological tacticians. They'll have to gain the skills that will change them into true marketing strategists.
That's because the real reason for choosing an agency will stay the same: strategic thinking skills. Creating programs on CD-ROM or developing interactive point-of-sale kiosks are practical skills. They'll be important, but no more important than the ability to create TV or outdoor advertising is today.
What will change is the kind of skills required for interactive. Promotion and direct marketing agencies are already practicing those thinking skills today.
1. They aim to change behavior. Look at the word we use to describe marketing communications of the future: interactive. Action, not just awareness, will be the goal.
Action has always been the primary goal of promotion and direct marketing agencies. They create qualified entry sweepstakes to assure consumer learning; instant reward programs to drive store traffic; added-value incentives to motivate multiple purchase; and membership card incentives to assure loyalty. These techniques drive consumers to the ultimate behavior change-purchase.
2. They try to satisfy individual needs. That's supposed to be one of the big advantages of interactive. In the future, a marketer can run many campaigns, each targeting a specialized set of best prospects.
Sophisticated direct marketers are doing that now. The decision tree for a comprehensive direct marketing campaign starts with a few communications events, each targets to a different broad audience. Over time, consumer response makes each event's communication path split again and again. The result is many "campaigns" aimed at consumers as individuals.
3. They know how to create a dialogue. Direct marketing communications generates response, which determines the next communication, and so forth. Interactive will make that dialogue even more like a real conversation because it will take place in seconds, and because the responses and the relationship will be one-on-one.
When interactive becomes reality, the combination of relationship marketing, narrow reach and instant rewards will redefine creativity in marketing communications. Recall won't count. Instead, "creativity" will be whatever works for transmitting the right information and gaining consumer response-what promotion and direct marketing agencies are doing right now.
4. They know how to integrate marketing at all levels. Interactive will turn marketing communications upside-down. Elements that directly drive behavior-direct mail, promotions and trade communications-are extensions. But successful interactive just won't work that way. As behavior change replaces simple awareness as the key objective, all those extensions will become the core of the campaign.
That will make promotion thinkers the real drivers, because they know how to leverage multi-dimensional skills to change behavior at every level: corporate, internal, sales force, wholesaler, retail management, retail store and consumer.
5. They know many ways to make money. For decades, large traditional agencies knew just one way: commissions on paid media. Promotion and direct marketing agencies have always had to base their compensation on work accomplished and results generated. Working with their clients, they've created a variety of innovative compensation systems.
Will large agencies figure out how to make money with interactive? We doubt the commission system will work when money is split among hundreds of channels, and when the extensions mean more than the TV campaign.
Will large advertising agencies redefine their business models in response to the interactive opportunity? Promotion and direct agencies can. They've redefined themselves time and again in response to marketing trends. We're not sure big ad agencies can do the same. Some already have working interactive departments. But 10 years ago a lot of large agencies had active sales promotion departments; very few have grown into successful profit centers, and many have folded because management couldn't figure how to make promotion part of the agency's core business.
Messrs. Robinson and Maites are managing partners of Robinson & Maites, a Chicago-based promotional marketing agency.