New Media World Makes Partners in Morning, Rivals in Afternoon
NEW YORK (AdAge.com) -- After landing at McCann Worldgroup with the charge of turning around one of the world's largest agency networks, CEO Nick Brien called in a special speaker to deliver a speech to his management team: Jack Griffin.
At the time an exec at publishing giant Meredith, Mr. Griffin had helped build its integrated marketing group into a powerhouse customer-relations management and digital shop. The choice of speaker was met with some uneasiness. After all, Mr. Griffin wasn't just putting out magazines; Meredith had gone head to head with McCann Worldgroup in pitches for big Chrysler business.
But as Mr. Brien tells it, he told his team to get over it, that in the new world order, agencies and publishers are "partners in the morning, competition in the afternoon."
That dynamic had a place in the marketing business even before Martin Sorrell started calling Google a "frenemy." But there's no denying that co-opetition -- a term Silicon Valley gave us -- has grown fiercer and the lines blurrier. Media sellers have launched legitimate marketing-services divisions that work directly with clients; marketers have aggressively built their own media and content platforms, creating competition with some of the same people who sell them ads; and agencies have scrambled to build out all sorts of new capabilities, from consulting practices to digital-media-buying platforms that usurp ad networks and portals.
It's a big pool and everybody's in it.
"Co-opetition is in full bloom," said Mr. Griffin, now CEO of Time Inc. "It's driven by the client. The client hires the agency; the client hires a media company. ... You can look and say publishers have gotten into the marketing-services business or the search business. But you see agencies are, in fact, developing customer relationships through demand-side platforms and databases of online users that are housed in agencies. The boundaries that used to be very clear are not so clear anymore."
Take Kraft, which thinks of itself not just as the maker of Singles cheese and Oreo cookies, but as a legitimate media company. It launched a magazine, Food & Family, in the early part of the decade, but last year began charging for the formerly free quarterly. Today Food & Family counts over a million subscribers shelling out $7 a year (a full-price annual sub is $14). Putting a price tag on these experiences is what differentiates them from more traditional custom products. They're not simply marketing vehicles; they are money makers, albeit tiny ones compared to Kraft's main business.
"It's clear we have to offer these services on top [of products]," said Lisa Mann, VP-customer experience at Kraft. While technology is increasingly the enabler for this trend, the business reason has everything to do with a broader consumer-focused mission. For Kraft, that's helping mom come up with food solutions for her family. "I'd argue iFood Assistant was in development for 10 years," said Ms. Mann. "It's about what service am I delivering to the consumer and what technology or publishing asset will get me there."
For marketers, playing in the media and services game is driven by opportunity: a desire to promote their own ongoing consumer experiences, provide better brand utility and, in rarer cases, turn marketing expense into an investment.
For agencies and media companies, it's about survival. Their models are under threat and they need to adopt a new suite of capabilities and move higher up on a marketer's food chain. Eighteen months ago, Ogilvy CEO Miles Young announced his ambitions to transform the hulking global agency into a higher-value offering for clients by devoting resources to a consulting business -- not exactly what "Father of Advertising" David Ogilvy might have had in mind.
But in short order, Ogilvy Consulting has gone from something experimental to a 100-person unit that's become a significant revenue generator for the WPP agency. "It's literally our fastest-growing segment," said Mr. Young, noting that U.S. revenue has jumped 30% year on year from a mix of its advertising clients and other companies. "The need to move from the merely transactional to the more added value -- this has become particularly acute in the area of media disaggregation for agencies. By definition, ideation isn't that scalable, so we have to find other ways to scale."
Of course, blurring the lines is risky business and often doesn't work.
The pressure is mounting these days on companies to be jacks of all trades, and, well, you know how that saying goes. And just because you can afford to buy up different companies or staff up new offerings doesn't mean you should. In fact, it could seriously confuse your business proposition. Microsoft as recently as last year ranked as a top 100 national advertiser, top 100 media company and top 25 agency company, according to Ad Age's DataCenter, but the giant ultimately felt it necessary to unload digital agency Razorfish, which now sits under Publicis Groupe.
Cautionary tales include ill-fated experiments like Bud.TV -- the beermaker's bold plan to attract 2 million visitors monthly to web-based humor and sports programming -- and Honeyshed, David Droga's attempt to reinvent the online-shopping experience by dropping brands into vignettes.
"It's fine to be optimistic and bold about something that's new in this space, but given the economic climate, the promise of certainty is more responsible than the allure of massive potential," Mr. Droga had said at the time of Honeyshed's closing. Droga execs said one of the biggest issues with Honeyshed was the cost -- in terms of both time and money -- to keep feeding the beast with content. Which is why Droga now looks at the future of content and ongoing sustained relationships as a platform play where content can come from any number of sources: users, third parties, existing media players.
Dave Knox, a former P&Ger who last month jumped to become Rockfish Interactive's chief marketing officer, agrees, and thinks one of the biggest fears for many traditional agencies in the space is that they feel they have to create every- thing themselves. He points to companies such as Associated Content or Six Apart as fitting the new media mold. "Look at the emergence of what we'd call a media company today," he said. "Is Yelp a media company? Definitely. But how much of that content is created by Yelp?"
That means learning to play nice with competitors -- and knowing when not to. "The landscape that's been created in the brand world is filled with tension," said Mr. Knox. "Think about the traditional brand -- you've got a PR agency, a design agency, a traditional agency, a digital agency, a social agency. Then throw a publisher in there and it gets more complex. The real opportunity is for people who have a mind-set toward collaboration by nature. The ideal opportunity for marketers, brands, agencies and everyone else is how can we each do what we're really good at."