These are the slides from my talk at the APA International Content Summit 2010 yesterday. The gist of the talk follows, tidied up and with quite a few new thoughts thrown in. The numbers refer to the slides.
2. The panel topic was ‘The future of advertising: is the traditional model dead?’
And so I said ‘NO, it’s not’. FMCG companies especially, but everybody else too, are still throwing millions into traditional advertising on TV and in print and outdoors. It ain’t dead yet and probably never will be.
But advertising is losing its dominant place at the centre of communication between brands and customers; its influence is waning and it’s under attack: there’s a big shift happening and awareness of this is moving mainstream. This talk asks: Why? And what does the new model look like?
3. This sense of passing a tipping point is what struck me about the vitriol of Peter Merholz’s attack on the industry last week in the Adaptive Path blog . Here was a respected designer, founder of a well-established user experience company making a sustained no-holds-barred and intemperate critique of the entire advertising profession as “an inherently unethical and, frankly, poisonous endeavor that sees people as sheep to be manipulated, that vaunts style over substance, and deems success to be winning awards”.
Within two days of its publication there were over 100 comments on the post, some from senior people in the US ad industry and digital agencies. There was a wide disparity of views and those from agency people were sometimes supportive. But the frenzy of the response suggested that Merholz had hit a nerve.
His rant was about the inability of advertising agencies to do what he calls UX - user experience design - and what we would call, giving it a little wider definition, service design or designing for networks; combining communication and product, building internet services and adding services to products; making useful things that people actually want rather than stuff that gets in their way.
4. What’s emerging is a clear and simple separation between selling stuff and making useful stuff, people pitting experience design against messaging, a new model versus an old model.
5. As I’ve never made an ad in my life and, by choice, I belong towards the design end of the spectrum, I called on an ad guy to help me make the point: Gareth Kay at Goodby Silverstein talks about Ideas that Work: “Stop communicating products and start making communication products” he says. (There’s a short essay on this subject in my ancient post ‘the communication is the product’).
6. I’ll give an example of what Kay calls communication products later. First, though, I want to examine where the strength of the old model lay in order to explain its decline and see how the new model differs from the old. I made four diagrams.
7. The first is a picture of the recent and not-so-recent past, the mass media model. Sitting between the advertiser and the channel-to-the-customer is the advertising agency and the media agency. Often they’re part of the same group. The business model is built around taking a cut of bookings or a retainer. The position of strategic dominance comes through possession of buying power and access to creative talent.
8. The next picture shows the fragmented media model that started to emerge in the UK around 1995 with the proliferation of cable, new channels like the internet and mobile and big disruptions in the print market. Fragmentation slowly diminished the buying power of media agencies and brought in new specialisms like digital that ad agencies didn’t own. They responded by buying up digital, brand identity and other skills and introducing the discipline of engagement planning - strategic marketing across multiple channels - and so the fight to be lead agency, ‘agency of record’ or ‘brand guardian’ began in earnest.
9. This is today, the earned media model; it shows the beginning of the big shift created by mass access to broadband web, enabling brands to create their own direct channels to customers and dis-intermediate traditional media channels. Ad agencies and media buyers aren’t ready for this; they have lost their point of strategic advantage and are being pushed out to the periphery.
10. The networked media model. This diagram is really a crude approximation of something much more complex: communities of customers becoming value producers in their own right, creating content, making recommendations, providing thousands of small services to each other. There’s an opportunity for brands to harness that power by adding services to products and creating communities of interest around social objects.
And of course there are also opportunities for still-powerful media channel brands in television and print to build direct relationships with advertisers and sponsors, using technology creatively to build applications that add co-branded services to content and facilitate direct transactions. This removes their reliance on ad networks and ups their margins.
11. Does this all mean that the traditional advertising model is dead? The hesitation is caused by the finality of the statement. Let’s be careful with our words.
12. The traditional media agency model is in a terminal state. Apple’s iAd is an overt attempt to dis-intermediate media buyers in the mobile apps market. Google AdWords is now on Google TV, with this promise: “Create an affordable TV conmmercial and run it for as little as $20 per TV spot. That’s a game changer. Meanwhile, media channels know that the opportunities created by networked social media are more than matched by threats. Ad agencies, even if they aren’t as dominant as they once were, still have a role, but the trouble is the new advertising model really just isn’t advertising.
13. Here’s an example of the new model, a branded platform with elements of advertising that really isn’t advertising; it’s a communication product by a luxury brand that totally gets rich, networked social media and uses it to engage directly with a community of customers.
14-20. Burberry’s artofthetrench.com, seeded with street photography by the Sartorialist and Magnum photographers, gives Burberry fans the opportunity to style, shoot and upload images of themselves wearing trench coats in inspirational ways. It tells the story of the trench and how you can wear it, creating a layer of information over the product that enhances its value immensely. Burberry provides quality control by selecting only the images it likes and this adds exclusivity and prestige to those that make the cut. They can become part of Burberry. And they can share their achievement - and their comments - through facebook via Facebook Connect - the platform has its own marketing hardwired into it. This is, as WGSN’s Juliet Warkentin said at a BSME conference this year, ‘an incredibly intimate form of engagement’.
21. It’s also been proven to be very effective. Within 3 month of launch artofthetrench had 333,000 visitors from 191 countries spending an average 5.5 minutes on site, with press coverage reach valued at £6.8m, from a big PR effort but a paid media budget of zero and an increase in trenchcoat sales of 85%.
22. As well as being social, direct and (potentially) useful the new model can be transactional (not a route Burberry took for understandable reasons in this first foray) and most importantly it is measurable. This doesn’t just mean that we can prove effectiveness but that we can use the results to make informed decisions about how to move forward and develop products with customers. Selling black box creativity alone (ad agencies still cling to creativity as their core competence because this was once their point of strategic advantage) doesn’t hack it here. Instead there’s a new approach that is a longer game of learning, making and testing products, services and communications that relies on understanding and adapting to popular responses, not just moments of individual genius in message making.
23. The old model and the new model are starting to look like a mirror image of each other. mass media versus networked media; interruptive advertising versus earned attention; one-directional messaging versus active participation; mediated versus direct engagement; tried formats versus new formats; money spent on the basis of faith versus recorded results and return on investment. (And I should add intermittent campaigning versus persistent platforms for engagement).
24,25. Moving to the new model requires a huge cultural shift for advertising and marketing agencies - analogue or digital. Peter Merholz thinks its leap too big for many, saying: “While I would like to think advertising and marketing agencies can evolve their practices to appropriately engage in user experience problems, I believe that the industry’s DNA simply cannot support such mutations.”
26. This is the level of difficulty: shifting from a model in which you can have a very narrowly defined space for creativity, one in which a known problem has a known solution (build awareness and attraction for a product = create an advertising campaign) to a new model where not only is the solution unknown but the problem space too.
Six month lead times and linear respond-to-brief-create-solution thinking; considering only marketing solutions and not opening up to new opportunities in process, business model, product design or technology; teams in which only ‘creatives’ are allowed to be creative - these won’t work.
Instead we need to involve the client and involve the customers, think creatively across multiple disciplines and use systems thinking to make adjustments wherever necessary - not just in brand or marketing. Where I think Merholz is wrong is that people who can help clients achieve this can come from any cultural background: design, technology, media companies and content development, start-ups, brands, hell even advertising.
What I didn’t say this in the talk - and I wish I had - is that designers have to change their culture too, start incorporating marketing skills into a blended practice, as well as entrepreneurial and technology culture, and stop believing in ‘make it and they will come’. At Made by Many we’re learning that, sometimes the hard way, and we found it hugely valuable to be incubated in an ad agency for our first three years. In the new model, advertising is becoming more like design and design a little more like advertising.
27. I’ll leave the last word to an ad guy. Thanks to Bob Ryskamp, in his comment on Peter Merholz’s blog post, for picking out this quote from Russell Davies, now at Ogilvy: “Experience Design will become the master discipline for businesses that want to be good at selling stuff”. That’s nicely put.