Automation & The Simplifying of Ad Agencies

It’s a bit of an understatement to say that marketing has changed a lot in recent years. However, what hasn’t changed at nearly the same pace is the marketing agencies.

Looking at what I call the ‘Mad Men era’ of marketing agencies, the business was straightforward. Brands would hire agencies to develop an idea over several weeks, and afterward run their 30 second ad on TV and create images for placement in magazines to send through direct mail. Data back then was simply the addresses these direct mail went to, and the number of eyes on the magazines and TV. But brands' needs have changed.

Nowadays, brands must consider the changing nature of data; managing marketing across devices and serving customized ads to specific audiences based on real-time analysis of data. That data must inform creative, CRM and media buying strategies tied to new commerce and brand experiences. 

So what have agencies done to adapt to this change in marketing? According to a survey run by UK-based market intelligence firm Creativebrief, 68% of agency respondents and 72% of brands believe that ‘agency structures, processes and pace of delivery’ are not developing at the same rate as a brand’s needs.

Not only is it no longer about the TV and/or magazine ad, but the lead time for a campaign has reduced dramatically because of real-time data. KFC’s global CMO Jennelle Tilling believes that these factors are now redundant, while brands are still looking for cultural insights and a creative vision from their agencies.

“Marketing has fundamentally changed from marketing to publishing, and the pace and turnaround is so much faster. What we’re asking for is ideas but in a different shape and form,” she explained.

 Agencies that had trudged along for decades have now found themselves playing catch-up to satisfy brands and are under increasing pressure to develop more compelling ways to communicate with consumers. 

As a response to these recent changes, many brands to have started to bring their marketing to in-house teams, particularly for content creation. Creativebrief’s research also found that 72% of CMOs plan to in-house more marketing activity over the next three years, while just 47% of agency CEOs expected this to happen. This shows a worrying disconnect between what is about to happen with marketing and what the agencies believe is going to happen. However, there are ways for agencies to prevent this.

Another key change that has been happening is the automation of marketing actions, Marketing Automation. The technology of marketing automation makes numerous repetitive tasks easier such as emails, social media, and other website actions. The technology of marketing automation not only makes these tasks easier, but it also reduces the need for a human element to work on these.

Let’s look at digital advertising for example, specifically Search Engine Marketing (SEM). In the early days of SEM, knowing what keywords you wanted to appear against was enough for many marketing professionals to build out a campaign. However, the proliferation of new devices means that there is more context to take into consideration, and the intent from someone on mobile might be very different to someone on desktop. We are now inundated with different signals - some within our control, others not so much - and this creates complexity, especially as campaign sizes swell.

New technologies are far superior to any human in understanding these complexities and optimizing a marketing campaign accordingly. This means that many marketing roles that were previously available are being handed over to the machines. It also means that if a brand were to directly apply the technology to their own campaigns, the role of the agency with the brand can be reduced. 

However, we must remember that this technology still needs to be created and set up by humans. Of course, before the technology is adopted, they still must determine the digital marketing strategy, choose the KPIs (key performance indicators) to measure, and create all the content.

It is my opinion that as time progresses and there is greater adoption of technology, automating these repetitive tasks, we’ll see greater demand for strategic services and creation of content. Understanding the brand and what they want to represent are essential for a great marketer to determine the right strategy and content.  

Not all marketing jobs will be automated, but like I have stated in previous articles, it will be important for agencies to invest in their current employees whose jobs are at threat from automation, to make sure they are learning new skills to make them great marketers.

Once agencies can focus on these strategic and creative activities, I believe the term “agency” should be avoided. “Agency” denotes that this is a service for the brand, something that is expendable, which they can change for a cheaper alternative if they so choose. Instead, they should replace the term with “partner” or “consultant”. This will elevate these strategic and creative skills to an indispensable level within the brand. For the purpose of this article, I will refer only to “consultant” moving forward.

It’s one thing to have data. You can place as many tracking pixels on a website or run as many surveys as you want, data is nothing without insight. Data is simply information, insights the credible and novel finding tied to a clear so what that are derived from this data.  Insights provide the “ah-ha” light bulb that sparks smart new marketing movements and can elevate conversations with brands. Consultants can aspire to be the source of these insights.  

Introducing the human touch at this moment can be invaluable. Having technology to collect and collate this data is something that every brand can do but being able to analyse this data, pull these insights and then come up with a marketing strategy and creative off the back of this data is another story. It’s important for the consultant to be frank and direct, fearlessly pitching ideas to a brand; because the consultant has the insights to back it up.

The structure of these agencies/consultants will also change dramatically. Without the need for one large central office with hundreds of workers doing repetitive work, consultants can have multiple offices in many locations where a smaller workforce can focus on the strategic and creative activities.

This has multiple benefits.

1. Having multiple offices all over the country, and the world, opens the opportunity for the consultant to take on more business. Proximity to brands who you may not have previously had access being the primary reason here.
2. It will reduce overheads. Having a large office building in the middle of a major city is a huge financial burden. The cost of living and the demand for a well educated workforce in those cities results in higher wages.
3. Employees being able to work remotely (from an office near where their family is or a home office) will increase employee satisfaction resulting in reduced attrition and unscheduled absences. This has been shown time and time again in studies

If you don’t believe me, just re-examine the example of how the ATM impacted the financial system.  

ATMs were seen as a job destroyer. However what they did was reduce the need for the same number of bank tellers per branch therefore reducing overheads, allowing for more branches to open which serviced more customers. The ATM also freed up time for bank tellers to work on more strategic activities which both increased revenues for the bank and increased retention of tellers. All of this while increasing the number of teller jobs. You can read more about this in one of my previous articles: https://www.dhirubhai.net/pulse/automation-latest-greatest-job-creator-dave-byrne

With this move away from the traditional agency to a consultant, there is the matter of how these businesses will be compensated. Many of the traditional agencies were built on a percentage of the media placed (x% of total media investment). These kinds of models are being disrupted thanks to the increase use of technology, the diversifying user journey of potential customers and the need for real-time analysis of data.

 Up to 66% of brands in the US are currently looking into changing their compensation model.  Delivering a seamless experience across the web - with the ever growing list of platforms, devices, apps, browsers and social networks - and offline is vital for ensuring that both current and potential customers can engage with brands when, where and how they want. The right strategy, the right creative, the right insights and the right attribution will be key to ensuring that the consultants can highlight how they are generating ROI, ROAS, grow or profits for the brand. Coupled with mutual trust — and a contract that rewards consultants for delivering measurable results — brands can keep making the most of their ad spend. 

For these reasons, I’m betting the future of the marketing agency will be more about consultants with highly specialized experts at a local level as opposed to the big box model. The ‘Mad Men era’ of advertising is gone and it’s not coming back. While there will still be agencies clinging on to trying to have all of the different disciplines under one roof for many years ahead, in the future it will be the consultants that brands will turn to first and inevitably rise above.