Google Firestarters: The New Operating System For Agencies

Firestarters #3, hosted by Google and curated by Neil Perkin, featured three fascinating and provocative presentations from Mel ExonMartin Bailie  and James Caig on “The New Operating System For Agencies”

Each of the three talks had slightly different emphases:
• Mel posited that brands need to be useful, entertaining and epic, and so should its marketing. To the point that the marketing and product is indistinguishable – the marketing singularity
• Martin argued that agencies should decide whether they are interested in outputs or outcomes, and indeed whether they are serving the right master – should agencies be dealing with consumers rather than clients?
• James talked in favour of open ideas and innovation so that agencies can diversify their revenue streams. Experimentation and sharing in the short-term pays off in the long-term

However, what I found surprising was the level of agreement , both among the speakers and in the audience, with some of the more disruptive suggestions. While there are the odd exceptions – Zag, Victors and Spoils etc – most agencies still seem to represent fairly traditional models.

Why is this? A few suggestions
• Semantically, the agency of the future doesn’t exist yet
• The status quo is difficult to change, and progress tends to be slow, phased and invisible
John V. Willshire makes the excellent point of the Prisoner’s Dilemma here
• Particularly in a recession, it takes a brave company to emphasise long-term strategic development (and investment) over the short-term cash-flow required to keep the business running
• Start-up culture might accelerate innovation, but start-ups motivate its staff members to bear the long hours and high risk due to the potential of a vast reward. Agency contracts tend to stipulate that all ideas generated are agency property
• Marketing agencies are generally unknown at the company level and distrusted at the industry level so becoming consumer-facing is a big challenge
• With brands increasingly present across multiple sectors and disciplines, it might be hard for an agency’s own product to offer credible independence

These are all obstacles, but none are insurmountable. Things can and will change. Hence the excitement in the room.

So, synthesising the views of the speakers (and casually ignoring the slight disagreements) with a couple of my own, the agency of the future will
• Be more strategic and focused on the long-term. This requires investment to slowly change the core but to quickly innovate around the edges.
• Meditate on strategic decisions before acting. Martin’s advocacy of real-time insights is one of the few things I (partially) disagree with – the filter challenges make it very easy for a small tail to wag a very large dog. (SIDENOTE: This isn’t a reaction to his jibe that “research agencies are shit” because they don’t do real-time, though that opinion is as reductive as me saying digital agencies are shit because they don’t create banner ads I want to click on)
• Focus relentlessly on the public as people rather than consumers of a particular product, brand or industry. True cultural understanding means engaging with people as peers, whether through traditional market research, observation or hiring spokespeople
• Prioritise the opinions of the target audience over the opinions of the client, since no client other than Apple can dictate what people want and can have
• Widen teams to encompass a variety of generalists and specialists required for the situation.

Taking these points to an extreme, one example of an agency of the future could be an incorporated joint venture between a brand and various specialists (client marketers, strategists, creatives, PRs, researchers, designers etc), where everyone is a partner with a financial stake in the long-term success of that brand. Even more extreme, agencies could engage in multiple JVs, acting as the pivotal node between brands in different industries, with complete autonomy in how ideas are distributed between brands or kept for themselves. In some ways, they become mini Unilevers – a holding company bringing together disparate, individual brands. This would enable
• Greater integration between the brand’s desires and the actions of the “agency”
• More potential reward for the team members
• Reduced dependence on account managers to mediate between the two (sorry, account managers)
• Greater agency synergies in creativity and ideas, in addition to the bargaining power from media buys
• Reduced duplication between different stakeholders e.g. social media can be concentrated with one person rather than spread across multiple agencies or client departments
• More control over which ideas are invested where – they could be kept for the JV themselves, or even shared across multiple brands

Of course, this proposal has a ton of holes in it (can holes have weight?) and is pretty impractical. Nevertheless, the first two bullet points should be critical for any future agency. There should be no cross-purposes – is the desire to generate profits or to make a great campaign? And there should be more reward for success. Steven Spielberg was paid $250m for Jurassic Park yet Universal Studios didn’t moan (loudly) because it was only a pre-agreed cut from enormous profits. It is better to work together for a big win, than to antagonise and penny pinch for the sake of “fairness” with others.

While failure can be random and out of the hands of the individual; shared reward should be a priority for the agencies of the future.

sk

NB: Slides and notes from the talks are available from James here, from Mel here and from Martin here

Replacement cycles

There have been several news articles recently that incorporate quotes from people lamenting lower than anticipated sales for new technological innovations. These articles on Smart/Connected TVs and the Nintendo 3DS are but two examples.

As everyone knows (or at least should know), technological superiority is not enough to guarantee success. Hence the Beta-Max not succeeding over VHS or the Atari Jaguar or Neo-Geo losing out to their 16-bit incumbent predecessors.

Nevertheless, too much attention is paid to the specific product when predicting future success. A combination of technological innovation, strong branding, suitable distribution and attractive price point may prove a compelling package. Yet this may not correspond to sufficient demand.

Even if an organisation pays sufficient attention to the market and adequately segments and targets a particular group of consumers, there is still no guarantee of success.

Randomness aside, a major – and what appears to be to be overlooked – factor is replacement cycles.

Once early adopters have been sated, a product will only move into mainstream penetration if the general public find a compelling reason to upgrade their existing kit. Since most, if not all, new devices are evolutionary rather than revolutionary, this can be a tough ask.

(NOTE: Looking at it from a purely technical perspective, one could argue that the different 3D technologies are revolutionary. However, from a consumer perspective it is fundamentally evolutionary. At heart, it is the same service but with a graphical innovation).

Smart TVs do face a particularly tough challenge, as they are entering the market just after the majority of the mainstream have recently gone through a replacement cycle. This cycle was unusually synchronised due to the twin forces of legislation – digital switchover – and technology/manufacture. Flat screen HD TVs may show the same channels, but larger and lighter screens offer twin benefits of better picture (when compared to analogue equivalent) and easier placement (e.g. wall hanging) and transportation (transporting a 50 inch CRT up a flight of stairs was possibly one of the most painful experiences of my life).

Smart TVs may have additional services that appeal to the mainstream, but since the core proposition – watching live TV – remains unaltered, I don’t perceive many mainstream viewers as being eager to adopt their recently acquired HD TVs.

On a similar note, now that the market is already saturated with set-top boxes, second screens and such like, it may prove difficult for both Youview and Google TV to offer a compelling upgrade proposition (Nigel Walley has written an interesting piece on Google TV here)

The 3DS was always going to be a tough sell – the DS was massively successful among casual gamers who were unlikely to upgrade because of a novelty gimmick. But it also points to the wider trend in gaming of extending the life cycles of consoles and platforms. Interestingly, this is supply side rather than demand side – the costs of investment are so great that developers want a longer life cycle to maximise their profitability.

Looking at other forms of technology, I’m particularly intrigued to see the effect of replacement cycles for tablet computers. I was quite sceptical about the chances of mainstream success for the iPad to begin with. While it has undoubtedly been successful (and profitable) among the early adopters, I’m still not convinced iPads/tablets (market share means they are effectively synonymous) will permeate the mainstream before all laptops become touchscreen.

As such, what will happen when everyone who is likely to want a tablet computer already has one? Will tablets need to work on the same principle as mobile phones, which are effectively rented for the duration of a contract and then swapped for a new one? Given the additional cost of manufacture and purchase, I’m not sure how feasible this is.

In fact, perhaps the mobile industry points to way to shortening upgrade cycles. With the trends toward digital consumption, we are slowly being accustomed to not tangibly owning things. Perhaps this could be extended to hardware. Do we still need to own our TVs and games consoles, or could we rent subsidized devices over a period of time, before swapping them for the latest models?

Rental shops have had a bit of a bad reputation for ripping off the old and poor, but perhaps a rejuvenated version could be due a comeback.

sk

Image credit: http://www.flickr.com/photos/mgat/3282519651/