accenture interactive future_of_agency_relationships

Making Leaders Successful Every Day

March 29, 2010

The Future Of Agency Relationshipsby Sean Corcoran, Dave Frankland, and Vidya Dregofor Marketing Leadership Professionals

www.forrester.com

© 2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar, and Total Economic Impact are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective companies. To purchase reprints of this document, please email [email protected]. For additional information, go to www.forrester.com.

For Marketing Leadership Professionals

ExECuTiVE SuMMARyAgencies continually reinvent themselves to serve their clients — they have to quickly adapt to changes in marketing strategy, media, technology, and society. And with the rise of social media and digital proliferation, we are entering an Adaptive Marketing era. In this era, mass media is no longer the foundation of marketing communication, forcing yet another change in the expectations of what marketing agencies can and should deliver. Marketers should assess their partners using the three I’s — ideas, interaction, and intelligence — to select the right partners. Marketers who change their thinking will lay the groundwork for partners that are more agile, can build long-term relationships with active customers and communities, and can use data to drive real-time decisions.

TAbLE OF COnTEnTSMarketing Leaders Must Drive Agency Change

The Three I’s: A Framework For Agency Selection For Adaptive Marketing

Choosing Your Adaptive Marketing Era Agencies Requires A Look Inward

RECOMMEnDATiOnS

Start Laying The Foundation For Your Agency House Of The Future

WHAT iT MEAnS

The Agency Landscape Is Permanently Altered

Supplemental Material

nOTES & RESOuRCESForrester interviewed executive and senior level members at 25 agencies, executive and senior level marketers at 18 companies, and industry experts for this report.

Related Research Documents“The Splinternet” January 26, 2010

“Adaptive brand Marketing” October 9, 2009

The Forrester Wave™: uS interactive Agencies — Strategy And Execution, Q3 2009August 7, 2009

The Forrester Wave™: interactive Marketing Agencies — Web Design Capabilities, Q2 2009June 5, 2009

March 29, 2010

The Future Of Agency RelationshipsMarketers need To Lead Agency Change in The Adaptive Marketing Eraby Sean Corcoran, Dave Frankland, and Vidya Dregowith David Cooperstein, Michael Greene, and Jennifer Wise

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mailto:[email protected]

www.forrester.com

www.forrester.com

http://www.forrester.com/go?docid=56303&src=56625pdf






© 2010, Forrester Research, inc. Reproduction ProhibitedMarch 29, 2010

The Future Of Agency Relationships For Marketing Leadership Professionals

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MARkETIng LEADERS MuST DRIVE AgEnCY CHAngE

For more than a century, marketers have turned to advertising and marketing agencies for both strategic and tactical support. Today, marketers tell us that their agency relationships have devolved into a web of confusion. Even leading advertisers struggle to distinguish one set of agency capabilities from another, and they invest too much time and too many resources to coordinate multiple complex relationships. We have reached a level of complexity in which the agency model is breaking.

Agencies Evolve When Their Clients’ needs Change

Since the mid-1800s, agencies have supported their clients’ marketing efforts. As the marketing discipline has evolved, so too have the relationships with, and services bought from, agencies (see Figure 1). Each era has arisen from:

· Technological and social change. Newspapers in the 19th century, television in the 1950s, and, more recently, the Internet introduced new marketing media through which brands connect with consumers.1 Each new medium forced agencies to rethink the message and how it gets distributed. Social media and digital proliferation accelerate this change.

· Marketing strategy change. The importance of branding grew during the past century as marketers increasingly sought to establish an emotional connection with consumers. Digital marketing practices favor direct marketing and communication over broad targeting and visual stimuli, causing brand dilution and a greater dependence on direct response metrics.

· Marketer/agency relationship change. Agencies once held the keys to the executive bathroom at major marketing-led firms. But economic pressures in the late 20th century led many companies to negotiate and manage agency relationships through purchase orders and procurement teams to minimize fees. Holding companies emerged to consolidate agencies across the globe — to gain scale and maximize revenues — across a broad suite of agency services including creative, media planning and buying, direct marketing, and public relations services. This often leaves marketers to manage a portfolio of agencies rather than a single point of contact (see Figure 2).

© 2010, Forrester Research, inc. Reproduction Prohibited March 29, 2010


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Figure 1 Agencies Have Adapted To Each Major Era

Source: Forrester Research, Inc. 56625

Ad sales era(1840-1869)

Unbundled era(1980-1999)

“Mad Men” era(1950-1979)

Push marketing era(1920-1949)

Brand era(1870-1919)

Internet era(2000-2009)

Media environmentMagazines emerge and aredistributed nationally.

Media environmentTV emerges as the dominantmedium of the 20th century.

Media environmentInternet challenges TV fordominance.

Marketing strategyThe concept of “brand” emerges. Trademarkregistrations increase.

Marketing strategyMarketers use visual imagesand emotion over promotion to gain brandawareness.

Marketing strategyRapid onslaught of newdigital media creates a hugeopportunity for specialists.

Agency approachAgencies begin to chargecommission for advertisingand add services likemarket research and copy-writing.

Agency approachAgencies thrive by creatingthe “big idea” and are keystrategic partners to the CEO.

Agency approachSpecialists and traditionaliststry to compete for the samedollars.

Agency approachAd salesmen or “agents” beginbuying and selling newspaper advertising spaceat volume.

Agency approachAgencies begin to includeradio advertising and PRservices.

Agency approachAgencies unbundle services creating five types of smalleragencies: PR, media, creative, interactive, and direct.

Marketing strategyNewspapers provide newopportunities to widelypromote product services.

Marketing strategyThe brand manager emergesas a role that monitors andcontrols brand messaging.

Marketing strategyProcurement begins toregulate ad spending.

Media environmentThe Industrial Revolution spurs massive growth of newspaper consumption across the US and Western Europe.

Media environmentRadio becomes the dominantmass media. Following WWI,propaganda, and PR alsobecome popular.

Media environmentCable TV rises to power, butthe Internet appears in themid-1990s, and the first wave of Internet advertising emerges.

20091920 1980 200019501840 1870



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Figure 2 The “Great Race” — no One Agency Can Do it All

Source: Forrester Research, Inc. 56625

Significant ability Moderate ability Limited ability No ability

We rated each type of agency on a 4-point scale for each criterion as defined below, shown asshaded squares for ease of visual comparison.

“Big 5” agency type:

Advertisingagency

Directmarketing

agency

Media planningand buying

agencyInteractive

agencyCommunications/

PR agency

Communicationsstrategy and

planning

Creative

Channel planning

Channel execution

Brand strategyand planning

Technology

Analytics

Agencies are in a race to add new skillsets and compete more directly. Yetno one type of agency does it all well,and adding new skills is an inherentchallenge for any agency.

Marketing Leaders Must Shift Their Expectations Of Their Agencies

Beyond “digitization” of media, the impact of the Internet on the way people communicate, absorb content, and interact continues to evolve.2 Forrester believes that these changes will drive us into the next phase of marketing, which we call the Adaptive Marketing era:

A period in which marketers must become more adaptable as new channels and constructs for interacting with consumers flood the market that must be tied to the overall brand promise.



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In the Adaptive Marketing era, marketers’ new reality — and consequently those of marketing partners — is a world in which the ability, desire, and pace of change are constant, supported by a shift in focus:

· From outbound to surround. Consumers tell us that the marketing that they are exposed to is irrelevant to their interests3 And now consumers can opt out of telemarketing, direct mail, and email; they skip TV ads; and they will publicly blow the whistle on unacceptable advertising practices. Marketers recognize this problem: 62% believe that their TV advertising is less effective than two years ago.4 As Larry Flanagan, CMO of MasterCard, points out, his organization is now “moving from decades of push strategy to a more holistic 360-degree consumer strategy” in order to keep consumers engaged.

· From campaigns to experiences. In an Adaptive Marketing era, the old campaign mindset has to be put out to pasture, but most marketers and agencies still organize, sell, and service from a campaign mindset. The advertising ecosystem is ill-equipped to capture, analyze, and use insight about how to engage best with customers to improve their ongoing experience with the firm. As the former CMO at a global car rental company pointed out, “As media fragmented, agencies approached each channel the same way: as a new means of bombarding the consumer with our message. We found the quality of work declined over time while agencies floundered to layer on skills that just weren’t native to them.”

· From segmented “audiences” to individuals. The days of reach and frequency as effective advertising metrics are on their last legs. But most agencies still apply broad segmentation strategies to new channels. Consumers don’t want to be “targeted” as an audience — they want to participate. Yet most marketers and agencies have a long way to go to fully embrace the notion of customer participation. As one senior marketer commented, “We’re keen to embrace social media, but there’s also a part of me that thinks that anyone with a keyboard is dangerous.”

THE THREE I’s: A FRAMEWORk FOR AgEnCY SELECTIOn FOR ADAPTIVE MARkETIng

Most marketers say that they will always need to outsource work for a variety of reasons. But as marketing challenges become ever-faster and more complex, marketers must rethink how, why, and to whom they outsource their marketing needs. In the Adaptive Marketing era, Forrester believes marketers must tap outsiders for (see Figure 3):

· Ideas: emotional connections that can be adapted to all touchpoints. The big ideas behind the “Mad Men”-era campaigns remain relevant because brands must still connect emotionally with their consumers. But digital experiences adapt faster. Consumer control and media fragmentation will require new approaches that help the message hang together wherever they are encountered.5



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· Interaction: ever-changing dialogue between brand and consumers. As marketing shifts to focus on pulling in customers, marketers need to rethink the interplay between paid, owned, and earned media.6 This requires marketers to find firms that can stay on top of the conversation wherever it is happening.

· Intelligence: real-time insight into customer behavior. The volume and interdependency of data gathered in multiple fragmented channels provide an opportunity for marketers to learn more about their customers than at any time in the past. The challenge is to gather, analyze, and create actions as these insights materialize.

Figure 3 The Three i’s Of Agency Selection, And Why They Matter

Source: Forrester Research, Inc.56625

Why is it still important? What do you need to consider?

• Ideas are fundamental to engaging with customers, but they need to be vetted.

• Ideas need to span touchpoints and be appropriatein those touchpoints.

• Experiences become more prominent thancampaigns.

• How should we manage, filter, and prioritize ideasthat come from diverse sources?

• How do we find and disseminate ideas thatencourage social participation?

• How do we create ideas that work in harmony butare appropriate to specific channels?

• Understanding interactions will drive futuremarketing success.

• Paid media shifts from the foundation of campaignsto the catalyst of experiences.

• Earned and owned media help deliver experiencesto consumers who are initiated in paid media.

• Which agencies can successfully work acrossdifferent types of media (paid, owned, and earned)?

• What new metrics exist beyond impressions, reach, and frequency?

• Who do I trust to engage or talk back to consumers?

• Greater emphasis on accountability and moreopportunity to measure

• Enables brands to optimize products andexperiences

• Provides insights to treat consumers as individuals

• How do we integrate online and offline data? Howdo we manage structured and unstructured data?

• Do I have the resources and technical skills tomanage my own data?

• Can we analyze data quickly enough to respond andoptimize experiences?

Ideas

Intelligence

Interaction



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Require Ideas To Be Versatile

For every marketer, the brand’s core value proposition starts with a strong statement. Think BMW and “performance” (now “joy”), or Tide and “clean”. In the Adaptive Marketing era, these ideas must be conveyed beyond prime-time TV visuals that succeed or fail based on ratings. Rather, marketers need to press agencies on how they take a solid brand promise, and:

· Demonstrate channel diversity. As Jim Garrity, former CMO of Wachovia pointed out, agencies today should “think first about ideas that will build your brand and think about the best way to make that work across every appropriate platform.” Ask your prospective creative or strategic agencies about their ideation process. Organizationally, do they manage team structures for both horizontal creative leads and deep channel experts, or are they building a platform for the idea, then leaving the execution to the silos? The more integrated their approach, the more adaptive they can be.

· Show media-specific creativity. Media increasingly drives the finessing of the message, from TV to Twitter to custom treatments in magazines. Does your agency’s ideation start with a TV-centric mindset, or do creative teams start with the mix of media outlets that the brand’s consumers engage with? Steve Center, Honda’s CMO explained, “Working with agencies is something of a symphony. You have generalists and specialists. But while it’s a symphony, everyone’s recording in their own room. I’m the guy at the mixing board, layering in the tracks. So, it’s important to view your messaging as one integrated stream on many channels concurrently. The more players that are involved, the more important it is to manage this correctly.” For agencies, the more attuned the creative team is to the placement of all messages, the more adaptive it can be with each stream of outreach.

· Display an agile process for evolving the message. The linear planning and design processes that most agencies use doesn’t allow them to respond quickly enough in an era that is defined by relentless adjustment. Instead, look for agencies that have shorter, more nimble design and planning processes. Agency teams should include data analysts and technologists that work in tandem with creative staff. Ben Malbon, Executive Director of Innovation, BBH, and co-founder at BBH Labs, says “Agency skills need to change. Iteration is key. You need to be able to work fast and iterate as you go while baking in analytics. Search for ways of collapsing — or ideally removing — process. This usually requires much tighter collaboration and a flatter structure. ”

Make Agencies Map Out Expected Interactions With Consumers

Good ideas in a pull marketing environment rest on clear and substantive interactions. Media, PR, and interactive agencies all focus on some form of call to action, but in the Adaptive Marketing era, marketers need agencies to design interactions that:



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· Generate conversations across all forms of media. Richard Edelman, president and CEO of the Edelman PR agency, argues, “Free media allows paid media to succeed. It facilitates the discussion and gives paid media a multiplier.” Your media agencies should be able to think beyond the traditional passive audience metrics such as GRPs or impressions. Expect these agencies to think in terms of active participation — specifically the ability to measure influence, lifetime value, and quality of engagement.7

· Create a cohesive experience for customers. Customers expect a seamless brand experience regardless of channel. Adaptive Marketing era agencies must be set up to enable that. When interviewing potential agency partners, you need them to detail for you the manpower, processes, and platforms required to manage customer experience across these channels, using conversion data, listening platforms, and response results.8 This includes their ability to identify and connect you with community participants, manage long-term relationships, and develop valuable brand experiences across increasingly splintered platforms.9

· Track the best interactions, and respond to Groundswell opportunities. As a marketer, the social aspects of the Adaptive Marketing era create exciting opportunities to engage, as well as scary brand disasters like the now-famous “United Hates Guitars” phenomenon.10 Press your agency to tell you how prepared they are to accentuate the good and respond to the bad. Expect them to earn goodwill whenever possible and make lemonade out of viral lemons, rather than trying to bury them.

Require Agencies To Define Success Through Customer Intelligence

Analytics is the new black for agencies. But the term is becoming meaningless because each firm uses it to describe a different set of activities. While attribution modeling and media mix modeling are important activities for marketers to understand the contribution of each activity to customer behavior, in the Adaptive Marketing era, marketers need agencies to help them:

· Understand the implications of customer behavior. Marketers should follow the lead of Disney Park and Resorts’ SVP of Customer Managed Relationships, Tom Boyles, who views his team’s objective through the eyes of a guest who simply wants the company to “know me and be relevant.” Truly adaptive agencies should be able to analyze customer data — structured or unstructured, online or offline, qualitative or quantitative — to make smart marketing decisions. Get agencies to show you their modeling expertise, vendor partnerships, and how they adjust campaigns based on insights to show they are serious about data and its outcomes.

· Identify the value of every customer. Not all customers are created equal. Most firms acknowledge that the majority of their revenue comes from their top clients, while it is also estimated that the bottom 20% of a firm’s customers drain 80% of the firm’s profits.11 By helping marketers focus on the distributed value of customers, your agency can adjust how



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you approach, react to, and engage with customers at an individual level. As Chris Moloney, former CMO of Scottrade and current CMO of Experian, told us, “Agencies tend to struggle with analytics. Search marketers, for instance, are nerds who crunch data all day. Few agencies really get this type of skill.” Make sure your agencies have advanced analytic capabilities and can put it to use at the point of interaction with customers — regardless of how and where the conversation starts.

· Turn intelligence into action. It is not enough for adaptive agencies to understand market research, ethnographic, or behavioral data. To fully understand customers, and to leverage that knowledge to improve customer experience, requires agencies to understand the interplay between the various types of data, and crucially, demands the ability to turn the data into actionable intelligence. What should you look for? Ask agencies to show you how they use customer data to drive decisions relating to everything from contact strategy to positioning and messaging to product ideation. As the VP of marketing at a national pizza chain pointed out,

“Our brand is owned by the consumer. To be successful, we have to understand their passion points and hit them with relevant connections where they live, work, or play.”

CHOOSIng YOuR ADAPTIVE MARkETIng ERA AgEnCIES REquIRES A LOOk InWARD

Determining which agencies to work with first requires a look at where across the three I’s your marketing efforts need help. Then the foundation can be laid for selecting agency partners that fit the changes brought on in the Adaptive Marketing era. Unfortunately, and somewhat ironically, it takes time, energy, and resources to determine what is needed for outsourcing to agencies. But rather than lag behind more fleet-footed competitors, it’s time for marketing leaders to apply a new set of criteria to their agencies and force them to adapt:

· First, rethink your own philosophy. If you want your agencies to move into the new era, then you need to move as well. This starts with marketing and branding philosophy. You need to adapt your own strategy with a focus on: 1) long-term experiences rather than short-term campaigns; 2) speedy iteration; and 3) greater reliance on data and intelligence. You also need to make sure you have the right skills in place internally to help shift the culture from the current era to the new one. Your agencies won’t change if you don’t change first.

· Second, confirm the optimal agency model for your firm. There are no silver bullets in agency models. The reality is that most organizations are large and complex, and each one is different in terms of philosophy, structure, industry, regulation, and goals. To find the optimal agency model, you have to start by making tough choices — best-of-breed versus consolidated, centralized versus decentralized, and global versus local. Andrew Meurer, general manager for feminine care brands at Kimberly-Clark, described the marketer’s role as being “either field marshal general or Joe the collaborator.” Either way, the agency model should reflect your organizational model and objectives.



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· Third, apply these new criteria to your current agencies. Some of the criteria marketers use to evaluate agencies remain intact, such as cultural fit, understanding of the business, proven experience, etc. Yet as most marketers know quite well, agencies tend be very opportunistic. Many of the marketers we spoke with described how their agencies have hurt the relationship by overpromising to garner more business, when in fact it may be beyond their core competency. Carole Walker, VP of Integrated Marketing for Mars, said of agencies, “They are so passionate and want to run with, and execute, the entire marketing campaign. However, we need them to focus on what they do best.” Test your current agencies to see if they really have what you’ll need for a rapid-fire adaptive environment.

· Fourth, start your agency review. If your agencies fail to deliver on the three I’s, you need to start looking for new partners. Take a methodical approach. Compare your assessment of the agencies’ skills in each area with their own assessment and see who comes closest to the truth about how cross-channel, interactive, and analytical they are. Then give them the ultimate test: How would they take your current campaign or story and adapt it to the new era? Base your selection on how they can take an existing idea and morph it successfully.

R E C O M M E n D A T i O n S

START LAYIng THE FOunDATIOn FOR YOuR AgEnCY HOuSE OF THE FuTuRE

you can’t simply flip a switch to restructure your agencies for Adaptive Marketing. but after applying the new criteria to your current agencies, there are some practical steps you can take for long-term success:

· Redefine the roles of your agencies. Many marketers have already started to remove the “line” between their “above the line” and “below the line” agencies by allowing ideas and leadership to come from any agency under contract. While you can still have a traditional firm lead other agency relationships, giving more opportunity to other partners creates incentives for change across the board.

· Test partners from the non-agency world. The agency and marketing services world changes almost daily. beyond the Goodby, Silverstein & Partners, Ogilvy & Mathers, and McCann Ericksons of the world, Google, Sapient, and Akamai Technologies also want to deliver media and marketing services. it’s important to have resources that continually monitor the space and think beyond traditional “agencies” for help. implement a resource that sits between marketing and procurement that regularly evaluates outsourced skills and tools for marketing success. in the long run, the investments made in knowledge will far outweigh the costs of making an uninformed selection.

· Create a productive relationship with procurement. Procurement teams can treat agencies just like the vendors who clean the carpets or sell office supplies. Peter Stringham,



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CEO of young & Rubicam brands, compares procurement leading a pitch to “a car dealer negotiating price before showing you any models.” When Hilton recently decided to consolidate the interactive work done by 13 agencies with one online agency, Chuck Sullivan, SVP of Global Online, got permission to lead the evaluation himself because, as he says, “i was hired for a reason — to provide online lodging seekers with the best user experience in the industry.” He then leveraged procurement for support in administration — the role they should play.

· Test incentive-based compensation. As we move into an era in which data will be abundant, marketers will be able to more easily quantify an agency’s performance. until that time, begin testing incentive-based compensation to create an environment in which the agency wins and loses when the brand wins and loses. Many brands now implement performance-based compensation that measures an agency on quantifiable objectives (e.g., lift in sales, increase in brand awareness, higher-quality leads, etc.) while also paying them based on the overall success of the brand. For example, Proctor & Gamble moved from a media commission to a sales-based commission several years ago to ensure that its agencies were more vested in real business results.

· Start the process in more advanced markets. Miles young, CEO of Ogilvy & Mather Worldwide, notes that in today’s global economy, “it’s dangerous to look at the agency landscape through a Western lens only.” Global marketers already know that different regions and markets move at different speeds, so it’s important to start rethinking agency relationships in advanced markets that are ready for it first. More developed markets such as the uS and the uK have a stronger platform for change than a traditional market like Japan or a market in an earlier stage of the development curve like Russia. Then take learnings and apply where necessary in growing markets like China, india, and brazil.

W H A T i T M E A n S

THE AgEnCY LAnDSCAPE IS PERMAnEnTLY ALTERED

Marketers that change their agency relationships will get a jump start on the Adaptive Marketing era. Once a handful of leading marketers begin to alter their agency relationships, a domino effect will occur, and the agency world will never be the same.

· The “agent” model will come full circle. Co-creation and crowdsourcing will become integral skills for creative agencies of the future. Firms will invite consumers into the fold and operate as a “Connected Agency” — an agency that becomes a conduit to the community to help brands deliver messages and products that resonate with their constituents.12 As true “agents,” they will play the role of directing, managing and filtering co-creation for their clients.

· A new marketing language will arise. Today’s marketing terminology is still very much based on the old world of mass media. Terms such as “impressions,” “GRPs,” and “above the line” are becoming less important while terms such as “influence,” “lifetime value,” and



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“sentiment” rise in value. Even “audience,” a passive term, will give way to more active terms like “participants.” However, familiar terms like “awareness” and “favorability” will continue to be important parts of the marketing lexicon.

· Technology companies and agencies will compete more directly. Technology companies and consultancies like Accenture, Covario, and bM, now offering agency-like services. This trend will continue as digitization moves marketing from art to risk planning. While these companies will compete more directly with agencies for marketing service opportunities, they will struggle to provide the emotional connections and creativity that marketers will still require to establish their distinctiveness. On the other hand, agency-holding companies like WPP and Omnicom Group will continue to invest in technology companies to enhance their left-brain abilities. yet competing against the big technology giants, even in the marketing world, will be an uphill battle. As Sir Martin Sorrell, CEO and founder of WPP told us, “We do have a new set of competitors. Google, for instance, is a ‘frienemy’ that has a market cap five times that of the top parent agency companies combined.”

· The interactive agency of record will die. in the Adaptive Marketing era, interactive marketing will become core rather than a secondary effort for marketing departments. The end result: The interactive agency of record will become obsolete. Leading interactive agencies will have to make the big choice to enter the race to be the lead agency or fall back into a niche specialty.

· Media will be managed holistically. in the Adaptive Marketing era, marketers will need to move seamlessly between digital, broadcast, and branded entertainment options and across earned, owned, and paid media options. This holistic approach to media will mean agencies that deal in this broader definition of media (e.g., media planning, interactive, and PR agencies) will blend together or compete as “interaction” agencies. Starcom MediaVest already describes itself as a “human experience” agency focusing on all forms of media, while social media agencies like the Digital influence Group start planning some paid media to go along with the earned media it creates through social experiences.

· Media ”derivatives” will emerge. With the rise of demand-side platforms and ad exchanges, media planning and buying is moving from math to a higher science. Many of the services an agency provides, especially in paid media, such as optimization and traffic analysis, are now being automated or sent offshore. As David Kenny, managing partner of Publicis Groupe’s VivaKi predicts, media planners of the future will “be like portfolio managers focused on managing risk for their clients.”

· Agencies (and other marketing outsourcers) will become more important than ever. Marketing is becoming faster and more complex by the day. Twitter and iPhone apps were a blip two years ago, and Foursquare was a blip until the end of 2009. Consumer behavior is changing rapidly, while media platforms are becoming more splintered and unique.13 Marketers will need to look to specialists in creativity, technology, and data to help make sense of this complicated landscape.



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SuPPLEMEnTAL MATERIAL

Companies And Individuals Interviewed For This Document

Sarah Fay, former CEO, Aegis Americas

Amy Fuller, former EVP/Group Executive, MasterCard

Jim Garrity, former CMO, Wachovia

Steve Smith, former CMO, Enterprise Rent-A-Car

Acxiom

Advertising Age

Aegis Media

Ariad Custom Communications

Association of National Advertisers (ANA)

BBH Labs

Catalyst:SF

Crispin Porter + Bogusky

Digital Influence Group

Diversified Agency Services (DAS) Global

Domino’s

Draftfcb

Edelman

Engauge

Epsilon

Euro RSCG

Goodby, Silverstein & Partners

GroupM Interaction

Hill and Knowlton

Hilton Worldwide

Honda

HP

Interactive Advertising Bureau (IAB)

Johnson & Johnson

Kimberly-Clark

Mars

MasterCard

Merkle

MRM Worldwide

Mullen

Northwestern Memorial Hospital

Ogilvy & Mather

Omnicom Digital

Organic

Procter & Gamble

RAPP

Razorfish

Sapient

Schwartz Communications

Scottrade

SHIFT Communications

Starcom MediaVest Group

Victors & Spoils

VivaKi

VML

WPP

Wunderman

Young & Rubicam



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EnDnOTES1 Source (for newspaper-related data): Mark Tungate, Adland: A Global History Of Advertising, Kogan Page,

2007.

In the three years from 1949 to 1952, total spending on TV advertising in the US grew from $58 million to $454 million. Source: U.S. Census Bureau, Historical Statistics of the United States: Colonial Times to 1970, 1900-1970. http://www2.census.gov/prod2/statcomp/documents/CT1970p2-05.pdf

2 We have proclaimed the death of the music industry, the decline of print journalism, and the radical overhaul of the TV and movie business. And while each industry is being remade in its own unique way, there is a fundamental similarity in the way that these media industries are being remade: They are all suffering from media digitization, which removes distribution scarcity. This ultimately alters how content is produced, distributed, and consumed. In this report, we lay out three phases that media industries have begun to pass through: digitization, meltdown, and rebuild. Most media businesses are in meltdown. It’s time to rebuild. Product strategists in all the phases of media production, distribution, or consumption — including device makers — must prepare for a world in which media are characterized by multiplatform access, increased audiences, and diverse revenue sources. See the October 9, 2009, “How To Rebuild The Media Industries” report.

3 Only 14% of consumers strongly agree with the statement “The ads I see are relevant to my personal wants and needs.” See the July 22, 2009, “Marketers Stop The Abuse! Adopt Preference Management” report.

4 Forrester and the Association of National Advertisers (ANA) surveyed 104 US advertisers representing nearly $14 billion in measured media budgets. More than half of them — 62% — told us that TV advertising is less effective than it used to be. See the February 8, 2010, “TV Advertising Budgets Are Under Siege” report.

5 As consumers increasingly look to connect with companies online, lackluster Web experiences will damage many brands. But better functional design won’t solve the problem. Instead, Forrester recommends that companies master the three principles of a new approach that we call Emotional Experience Design (EED): Address customers’ real goals, develop a coherent personality, and engage a mix of senses. Firms can get started by focusing their research on uncovering users’ emotional needs, capturing emotional feedback in testing, and charting a course to Experience-Based Differentiation (EBD). See the October 26, 2009,

“Emotional Experience Design” report.

6 Increasingly, interactive marketers are being asked to manage a wide range of paid and unpaid marketing communication — despite the fact that many marketing departments are still organized around traditional paid marketing channels. All types of online media (whether “earned,” “owned,” or “paid”) can play specific roles in meeting marketers’ objectives — especially when seamlessly working together. To find the right balance between these types of media, marketers should take stock of their resources, listen for the impact of earned media, look for opportunities to shift short-term paid media to the role of catalyst, and begin to build out a solar system of long-term owned media touchpoints. See the December 16, 2009, “No Media Should Stand Alone” report.











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7 The metrics marketers use today fail to capture the supercharged social behaviors and intimate relationships people have with brands. With the four I’s of engagement: involvement, interaction, intimacy, and influence

— marketers obtain a framework to decipher this complexity. To measure engagement, marketers need to take four critical steps: define, audit, assess, and prioritize the metrics that are appropriate for their customer buying processes. See the June 10, 2008, “Measuring Engagement” report.

8 Today’s agencies fail to help marketers engage with consumers, who, as a result, are becoming less brand-loyal and more trusting of each other. To turn the tide, marketers will move to the Connected Agency — one that shifts: from making messages to nurturing consumer connections; from delivering push to creating pull interactions; and from orchestrating campaigns to facilitating conversations. Over the next five years, traditional agencies will make this shift; they will start by connecting with consumer communities and will eventually become an integral part of them. See the February 8, 2008, “The Connected Agency” report.

9 The standardized Internet is fraying. Long live the Splinternet. Interactive marketers have thrived in the golden age of the Web, where people access Web sites using standard, similarly formatted PCs and browsers. No more. The Internet is splintering across proprietary platforms like the Apple iPhone and Google Android. Connected televisions will have their own interactive formats. Even on PCs, social sites like Facebook shatter the unity of the Web with content behind a password, invisible to search engines. Familiar online marketing tools like links, search engine optimization (SEO), and analytics are different or missing in these new environments. Even so, marketers must follow their customers into these environments. Adjust your planning and measurement approaches and get comfortable with experimentation. The future of the Splinternet is one where vendors like Apple perpetuate proprietary platform creation and marketers rely on a modular approach to create interactive customer experiences. See the January 26, 2010, “The Splinternet” report.

10 In July 2009, one unhappy United Airlines customer posted a video on YouTube with a song about how the airline broke his guitar. The video was so popular that it generated more than1.5 million views in three days alone. Source: Bob Garfield, “Music Video Forces United to Clean Up Customer-Service Act”, AdvertisingAge, July 13, 2009. (http://adage.com/garfield/post?article_id=137864)

11 Larry Selden and Geoffrey Colvin, Angel Customers & Demon Customers: Discover Which Is Which And Turbo-Charge Your Stock, Portfolio Hardcover, 2003.

12 Today’s agencies fail to help marketers engage with consumers, who, as a result, are becoming less brand-loyal and more trusting of each other. To turn the tide, marketers will move to the Connected Agency — one that shifts: from making messages to nurturing consumer connections; from delivering push to creating pull interactions; and from orchestrating campaigns to facilitating conversations. Over the next five years, traditional agencies will make this shift; they will start by connecting with consumer communities and will eventually become an integral part of them. See the February 8, 2008, “The Connected Agency” report.

13 The standardized Internet is fraying. Long live the Splinternet. Interactive marketers have thrived in the golden age of the Web, where people access Web sites using standard, similarly formatted PCs and browsers. No more. The Internet is splintering across proprietary platforms like the Apple iPhone and Google Android. Connected televisions will have their own interactive formats. Even on PCs, social sites like Facebook shatter the unity of the Web with content behind a password, invisible to search engines. Familiar








16

online marketing tools like links, search engine optimization (SEO), and analytics are different or missing in these new environments. Even so, marketers must follow their customers into these environments. Adjust your planning and measurement approaches and get comfortable with experimentation. The future of the Splinternet is one where vendors like Apple perpetuate proprietary platform creation and marketers rely on a modular approach to create interactive customer experiences. See the January 26, 2010, “The Splinternet” report.



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