AGENCY BUSINESS REPORT 2014

TODAY’S MARKETING AGENCY MUST BE ADriving Force15 AGENCY EXECUTIVES EXAMINE THE EVOLVING ROLE OF THE MARKETING AGENCY TO CLIENTS AND THE INDUSTRY AT LARGE.

By Ginger Conlon

Like a gathering storm, the confluence of customers’ change-

able behaviors, data velocity, and emergent technology has

some marketers running for cover. In many cases agencies to-

day are positioning themselves to buoy up these besieged marketers

and help them to navigate through this tempestuous time of change.

In doing so, many marketing agencies are quickly evolving to meet

their clients’ fast-changing needs.

With that in mind we asked 15 agency executives: What’s the biggest

change in the role of the marketing agency today, and what should cli-

ent-side marketers expect as a result? Here, they share their opinions.

introduction

BRIAN FETHERSTONHAUGH, CEO, OGILVYONEHistorically, some agencies focused on creative; others concentrated on data. In today’s world they’re both half right.

There’s so much talk today about data. But too often data is used simply as a measurement tool, just to produce a report card. When used creatively data serves as inspiration, such as giving us insight into consumer intent, and shap-ing and triggering content.

Creativity is often missing from the equation. It’s not just about words or pic-tures; when informed by data, creativ-ity can lead to business-transformative ideas, such as innovative product design.

Together, data and creativity are an unstoppable force. They combine to cre-ate compelling personalized experiences that help client-side marketers win more customers and make them more valu-able. It’s no longer about just data or just creativity. Client-side marketers should insist on both.

The future of marketing lies at the in-tersection of data and creativity. Today’s marketing agencies need to be fluent in both disciplines, because it’s here that customer engagement happens.

CINDY RANDAZZO, VP AND CHIEF STRATEGY OFFICER, SOURCELINK In recent years we’ve seen clients place greater emphasis on cus-tomer intelligence services (e.g., modeling, analytics, segmenta-tion) to drive higher consumer engagement. Today the quest for intelligence-driven marketing has escalated to strategy and in-sight consulting, including map-ping the customer journey and brand engagement strategies.

Further, the convergence of the marketing and IT depart-ments has changed the paradigm of client organizations. Thus, the agency role in some cases has expanded from designing and maintaining data warehouses to developing comprehensive marketing ecosystems that en-able a single version of the truth composed of traditional and Big Data. Additionally, clients are seeking coordinated, branded messaging with real-time offers and access to customer data in a cross-functional environment.

Clients have come to expect coalescence of technology, cus-tomer intelligence, and strategy to support intelligence-driven omnichannel approaches—from decisioning to analytics and business-level marketing ac-countability. Clients today antic-ipate improved business impact and more precisely demonstrat-ed marketing ROI.

SALLY KENNEDY, CEO, PUBLICIS HAWKEYE For more than 100 years we’ve been referred to as “advertising” agencies. With each successive year this characterization becomes less applicable. Today, progressive agencies are creative catalysts, informed by data, inspired by insights, powered by technology, and continuously validated by consumer behavior.

Smart clients should engage their agencies in a re-lentless quest to unearth what their customers desire; ideate constantly to conceive ideas that can uniquely quench these desires; innovate rigorously to deliver extraordinary experiences; iterate consistently to build an expanding community of brand advocates; and optimize endlessly to drive ever-improving finan-cial results.

Clients should also expect a participatory process that creates a powerful triumvirate between the con-

sumer, the agency, and the client itself. Although the term “advertising” doesn’t define us anymore, the advertising an agency creates

needs to engage, entertain, and inform like never before. Consumers today expect a lot

from companies; so, companies should ex-pect a lot from their agencies. And agen-

cies that deliver should expect to suc-ceed while evolving every day to stay

relevant for the next 100 years.

DAVID WILLIAMS, CHAIRMAN AND CEO, MERKLE The majority of marketers are now on board with the movement to evolve business strategies from a product-fo-cused to a customer-focused approach. Today, the biggest change in the role of the mar-keting agency is in helping brands with the “how.”

Agencies are taking on greater responsibility for supporting the transforma-tion effort required to build a customer-centric business strategy. As the digitization of media and channels con-tinues to expand and prolif-erate, the opportunity for ad-dressability will continue to scale in a massive way. There will be a rapid increase in the expertise required to man-age customer relationships from every angle, on every digital and offline platform. Client-side marketers will rely on the agency to pro-vide the “platform marketer” skills necessary to compete within this ever-changing digital landscape. The role of the agency will become even more diverse, serving as the expert in platform data, analytics, technology, experience design, and, most important, the necessary transformation skills that collectively enable address-ability at scale.

PAUL MARESKI, PRESIDENT, TEAM ONE With the influx of social, mobile, and other digital channels, agencies now more than ever need to be a true ex-tension of brand teams and solve business goals, but also provide comprehensive, holistic solutions that engage audiences in new and exciting ways. Agencies today must aim to generate consumer loyalty beyond reason for brands. We’ve found success in partnering with clients to define and execute on their visions, by figuring out the most meaningful ways and opportunities to connect a brand to its audiences.

For marketers, this is an exciting time because of the opportunities at their fingertips; there are new forms of media and technologies popping up every day that allow them to win consumers in new ways. However, because of this deluge of options, consumers are barraged with hundreds of marketing messages each day. Every piece of content that brands put out in the world must be engaging, shareable, and have entertainment value of some kind.

KEITH TURCO, PRESIDENT, GYRO NEW YORK The changing role of marketing agencies isn’t going to impact cli-ent-side expectations. Rather, it’s the other way around.

Clients are driving the change of agencies today. They don’t care about agencies’ resources and processes, instead clients are demand-ing transformational ideas that build their business and bolster their bottom line. They expect ideas that are rooted in facts and informed by the plethora of information swirling around all of us today. Dare I say the overused phrase: Big Data?

Having majored in both marketing and IT and grown up in direct, this isn’t surprising to me. “Direct shops” have evolved or rebrand-ed and “traditional agencies” are incorporating insights and data to inform big ideas; in other words, agencies are becoming holistic mar-keters. This is best evidenced by the planning function, where we’re beginning to see a change from being a brand planner, a digital plan-ner, or an analytics specialist to the broader role of strategic planner.

It’s the confluence of media that smartly and strategically informs customers, propels them to act, and generates results—which, of course, when done right, positively impacts a client’s bottom line.

Clients can expect the good agencies to drive this movement. Or clients can continue to do what they’re doing: demand it.

BRANDS, MEET YOUR CUSTOMERS

49% U.S. consumers who say brands could be a lot better at the integrat-ed marketing game. [Accenture]

9X User engagement on social is growing even faster than the user bases of social networks themselves. [Sprout Social]

71% U.S. consumers who get very irritated by inconsistent cross-channel mes-saging. [Forrester]

86% of U.S. consumers will shell out more money for better customer experience…

…but just 1% of consumers feel like their expectations are being met. [CEI]

49% 9X 71% 86%

MICHAEL HEMSEY, PRESIDENT, KOBIE MARKETING As CMOs have been tasked to “do more with less” in recent years, they’re looking to agencies (e.g., branding, email, advertising) for more integrated service offerings. In the loyalty industry, CMOs expect their agen-cy to provide a highly flexible and scalable loyalty platform with CRM and advanced analytics capabilities—services that were previously siloed.

CMOs also look to their agency for in-sights that can guide other marketing initia-tives and strategies. This coalescing of ser-vices means CMOs can do more to enhance the overall customer experience through an omnichannel lens.

As a result, the services that agencies offer must integrate seamlessly with oper-ations; taking into account employee chan-nels like customer service. Additionally, CMOs should expect their agency to have the ability to interface with existing tech-nology infrastructures, to have a fluid in-tegration that allows marketing leaders to maintain their vital customer and employee data sources.

MARY LAPOINT, CHIEF STRATEGIST AND PRESIDENT, TO THE POINT MARKETING SYSTEM It’s no longer enough to be creative and wow the client with that “big idea.” (Think: cigarettes, martinis, and Madison Avenue.) The big-gest change in the role of today’s marketing agency is to provide a wide, connect-ed scope of services with the goal of driving more quali-fied leads to the client’s sales department.

An agency has to be cre-ative enough to design a com-pelling campaign with graph-ically captivating Web pages, and technical enough to make that website interactive and magnetic. Today’s connect-ed, mobile, Web-based world demands tactics that satisfy the entire customer journey, and marketing automation technology helps to facilitate that. Marketing agencies to-day need to know how to run marketing automation on be-half of their clients; from get-ting found and known online, to generating new demand, to assisting in the lead-nurturing process. We need to follow the breadcrumbs, or in this case, the links, from the first touch to the final sale.

JONAH BLOOM, CHIEF STRATEGY OFFICER, KBS+ The marketing agency today is moving simultaneously up-stream and downstream. With the increasing importance of owned media channels—websites, mobile apps, eCRM, social channels—agencies are operating at the point of inter-face with the consumer, making critical, tactical decisions to ensure a sales conversion or sales lead generation. Simul-taneously, agencies are amassing and, hopefully, analyzing critical data on consumer behavior and sentiment. When the potential of that data is maximized, it can inform brand strategy, new product development, and other tactics be-cause it reveals rich, new opportunities to give consumers something better than they’re currently getting, or even to invent something that doesn’t exist.

As a result, client-side marketers should be looking at their agencies to solve business problems, not just create commu-nications. Communications can be the solution to business challenges, but it’s not the only solution. Often the answer is to change a product, service, or business practice in some meaningful way and then tell a story about that, rather than to simply showcase existing offerings in a different light.

“THE PURSUIT OF CREATIVE AWARDS SEDUCES CREATIVE PEOPLE FROM THE PURSUIT OF SALES.” —David Ogilvy

“WE MOVE THE BRAND RELATIONSHIP UP A NOTCH. ADVERTISING BECOMES A DIALOGUE THAT BECOMES AN INVITATION TO A RELA-TIONSHIP.” —Lester Wunderman

“THERE’S TOO MUCH SMART-ASS ADVERTISING TODAY AND NOT ENOUGH THAT EMOTIONALLY MOVES CONSUMERS TO GO OUT AND BUY SOMETHING.” —Mary Wells Lawrence

THE MAD MEN—AND WOMEN—WHO GOT IT

VIN FARRELL, GLOBAL CHIEF CONTENT OFFICER, HAVAS WORLDWIDE The past 20 years has yielded an increase of digital formats that have dramatically changed media consumption habits. Modern day consumers are connected to information faster, more accurately, and at scale. The advertising business was set up to deliver campaign messaging through TV, print, and radio. These linear experiences still exist, but the inclusion of social media, websites, and utility-based apps has expanded the way a brand can touch or be relevant to consumers. Agencies must change their infrastructure to match the new criteria of expertise needed to offer brands.

JENNIFER PATTERSON, EVP, DIRECTOR OF PLANNING, DEUTSCH LA As agencies, we’ve always been about narrative. Now we also think about action: What is the one problem we’re trying to solve? We try to reach beyond metrics like volume or awareness to find the real human be-havior that we’d like to see change. It might be asking people to linger longer in a particular aisle of the store. It might be getting them to fall in love with their car online before the test drive. We’re best when we’re free-range thinkers. We’re looking for the most interesting way to tell the story, even in arenas beyond our scope. At first, these lateral ideas may seem like a potential waste of time. But we won’t have done our jobs unless we’ve found a way to expand the conversation.

THE CREATIVITY VERSUS DATA DEBATE

80% of Super Bowl ads don’t trans-late into hard

sales. [Communicus]

$156B Value of the data

-driven marketing economy. [DMA]

3 out of 4 of marketers are unable to calculate social media ROI. [Domo]

69% Brand aware-ness generated by creatively

awarded marketing campaigns.

SABRINA LIST, SENIOR VP, BLASTMEDIA According to Experian’s 2014 Digital Marketer: Benchmark and Trend Report, 80% of marketers plan to run cross-channel mar-keting campaigns in 2014; more than half plan to integrate their marketing campaigns across four or more different channels. As cross-channel marketing in-creases and traditional silos in marketing are broken down, collaboration among marketing agencies will sharply increase.

Gone are the days when your PR agency worked with blinders on and no insight into campaigns being created and executed by your social media team, creative agency, or ad agency. For marketers to best communicate with their audi-ence and make the maximum impact, campaigns must inte-grate multiple channels (and agencies) across the marketing spectrum. Thanks to this shift, agencies have the unique op-portunity to collaborate with one another to ensure that the client’s messages are reaching audiences appropriately.

Marketers sitting in the client seat should expect agencies to initiate collaboration with one another. If they aren’t, it’s up to the agencies to make it happen.

PETE CARTER, PRINCIPAL AND SVP, CHAPMAN CUBINE ADAMS + HUSSEY Most agencies began using traditional media like direct mail and print, but social me-dia and mobile are evolving quickly and must be reflected on every marketing agenda. Smart agencies are adapting to the times and offering clients a multichannel ap-proach.

In this environment, staff-ing is a challenge. Veterans who grew up with direct mail must learn the ins and outs of new media and how to coordinate their use with old-school techniques. Younger practitioners, who tend to fo-cus on social media and Web marketing, must understand that direct mail, telemarket-ing, print, and DRTV are invaluable in driving online giving and sales.

Clients should expect agencies to develop best-of-breed creative, where presen-tations articulate an overall concept and illustrate its implementation in an omni-channel environment. Con-versely, clients must come to the table prepared to discuss and implement cross-channel recommendations and have all the right decision-makers present to approve the ap-proach for their channel.

MATT LOWER, GENERAL MANAGER, SUB ROSA With the wealth of different marketing disciplines gaining traction, clients are increasingly coming to shops asking for their variant of disruptive and exciting executions. These aren’t always the best solutions for every brand, but clients are seduced by their perceived impact.

The shifting role of the agency is to act as a trusted brand steward, creat-ing campaigns that authentically align with their objectives and ethos. Rather than wildly chasing trends, the agency must set and articulate for them an un-swerving narrative. Brands need to shift with what’s trending, but in a way that’s unique to them.

At Sub Rosa the analogy we use is that we’re in the passenger seat of the car; the brand is driving. We can be a sort of GPS, helping steer toward a smart destination, choosing a route that fits the brand and appeals to the audi-ence. But sometimes our job is to put a helping hand on the wheel, keeping to the mission and avoiding detours.

JOE KUCHTA, CO-OWNER AND CEO, GA COMMUNI-CATION GROUPToday’s top agency tal-ent is looking for a less bureaucratic work envi-ronment that allows them to focus on the delivery of great work that builds their clients’ business, not navigating internal poli-tics and structure. Clients are most distressed by the inability of disparate agen-cy offices to work togeth-er, and they’re looking for agencies that provide a larger set of services.

Independent-agency networks provide both talent and clients—who in the past were often limited to choosing between rival-ing large holding compa-nies—with an opportunity to find the creative and strategic strength they’re looking for.

JOE KUCHTA

@OgilvyOne: How do you find your influencers? Look for the total customer value regardless of channel @tfcullen @OgilvyOne #APPNATIONNYC

@Ryan_Q3L: I like these words: Ideas that ignite emotions are ideas that ignite business decisions via @gyro http://www.gyro.com/#/why/our-time/

@megheuer: Are you doing account-based marketing? Data is critical to success - great tips via @merkleCRM on reality of global sources #SDSummit

@TeamOneUSA: A GIF in an appropriate place native to the user’s experience can work just as hard as the trad :15/:30 #digitalhollywood @scottydub

@contagious: That’s a big mind shift, for agencies, accepting that failure is a win sometimes. @winstonbinch #FF2014

@SpencerStuView: 62% of #CMOSummit attendees said both creativity & analytical ability will be equally important for marketing leaders

@TopTenSM: “Creativity is an advertising agency’s most valuable asset, because it is the rarest.” -Jef I. Richar #advertising

@dereemus: TV show idea: zombie vampires run an advertising agency. #million$$$

@earnestagency: What’s killing your creativity? Budget? Or time? #marketing

@Vocus: Marketing automation myth: “It makes us less creative and turns us into machines.” - it doesn’t have to, according to @youmon #vocuswebinar