Reconsidering the Advertising Industry

1. A Conversation Starter Reconsidering the Advertising Industry By: Alain Thys and Stefan Kolle © Lisovskaya | Dreamstime.com FUTURELAB Sponsored by Management Centre Europe.

2. FUTURELAB Comparative Estimates: US Total Media Advertising Spending Growth, 2009 (% change vs prior year) Wachovia: BMO Capital Markets: Collins Stewart LLC: GroupM: Citi Investment Research: MAGNA: Morgan Stanley: ThinkPanmure LLC: UBS: ZenithOptimedia: Myers Publishing LLC: Barclays Capital: - 0.8% - 1.9% - 2.0% - 3.2% - 3.6% - 4.5% - 5.0% - 5.0% - 6.0% - 6.2% - 6.7% -10.0% Source: Seven Predictions for 2009, eMarketer, January 2009 Prelude: Why This Document Exists © Lisovskaya | Dreamstime.com

3. FUTURELAB Prelude: How will Agency’s Fare in a Market Where Clients are Dissatisfied? Net Promoter Score™ by Industry telco advertising automotive -6% -21% © Stockphotonyc | Dreamstime.com -48% The Net Promoter Score ™ is a registered trademark of Bain, Satmetrix and Fred Reichheld

4. Prelude: Are Marketers Held Hostage by the Advertising Industry? High Hostages Loyalists Likelihood to repurchase Defectors Mercenaries © Alexey Avdeev | Dreamstime.com" Low Low Likelihood to recommend High FUTURELAB

5. Prelude: Do Agencies Overestimate Their Impact on the Client’s Success? © Chris Fourie | Dreamstime.com FUTURELAB

6. Table of Contents SITUATIONAL ANALYSIS: Agency Challenges 2009 Page 7 12 REMEDIES: Setting Things Right Page 35 10 FORMATS: Agency Models of the Future Page 48 Page 59 Appendices for Digging Deeper FUTURELAB

7. FUTURELAB Chapter One Situational Analysis: Agency Challenges 2009

8. FUTURELAB Chapter One Situational Analysis 7 client needs many agencies ignore. 3 areas where agencies are “out of synch” 4 gaps in agency authenticity

9. Client Need #1: 75% of clients want a truly tailored approach to their business FUTURELAB © Frozenpeas | Dreamstime.com

10. Agency Response #1: Services that Happen to Fit the Agency Model FUTURELAB

11. © Breeze393 | Dreamstime.com Client Need #2: Show Me the Return on My Marketing Investments FUTURELAB

12. Agency Response #2: We Are Very Creative ... And Big ... And have Big Clients © Robert Byron | Dreamstime.com FUTURELAB

13. Of the 50 largest advertisers in the world ... 74% Opined that these deals caused bias in the choice of media and recommendations. 91% 85% Consider the media buying process to be insufficiently transparent Are convinced their media agency had deals outside the client agreement Client Need #3: Be A Trusted Media Partner FUTURELAB

14. The Occasional Scandal Continued Intransparency Underperformance and “creative math”” Agency Response #3: Bad Apples Image 1: CC 2.0: Phauly Image 2: (c) Design 56 – Dreamstime.com Image 3: (c) Aleksander Ruzicka FUTURELAB

15. Client Need #4: Engage Our Audience Image cc: Dogsbylori's - http://tinyurl.com/6658d7 FUTURELAB

16. Agency Response #4: Saturation Bombing FUTURELAB

17. What marketing leaders want from their agencies when it comes to digital Client Need #5: Walk Digital FUTURELAB

18. FUTURELAB Agency Response #5: Talk Digital © Yuri Strakhov | Dreamstime.com

19. FUTURELAB CAGR by Marketing Mix Element - Manufacturers (2004-2010 Est.) Source: Deloitte, 2007 Client Need #6: Shopper Marketing

20. FUTURELAB Agency Response #6: Silo-based Thinking © Phillip Minnis | Dreamstime.com

21. FUTURELAB Client Need #7: Help me into the C-suite

22. FUTURELAB Agency Response #7: Look How Cool and Fun We Are ... And Creative Too! © Tomislav Birtic | Dreamstime.com

23. FUTURELAB Chapter One Situational Analysis 7 client needs many agencies ignore. 3 areas where agencies are “out of synch” 4 gaps in agency authenticity

24. FUTURELAB Agencies have optimised their business for themselves. Not for their customers. Kris Hoet, EMEA Digital Media Communications Manager, Microsoft Disconnect 1: Most Large Agencies are Mass Production Factories… © Leigh Prather | Dreamstime.com

25. FUTURELAB Agencies need to be chameleons which can become what ever the client requires them to be. Not just what they happen to be good at. … While The World Needs Multi-Disciplinary Boutiques © Iphotoexpert | Dreamstime.com

26. Digital Creative Production Management Account Mgmt Planning Disconnect 2: Most Agencies are Multi-Local with High Levels of Duplication ... © Michael Brown| Dreamstime.com FUTURELAB

27. ... While Today’s World is Global and Highly Interconnected © Hewlett Packard, Halo Room FUTURELAB

28. Disconnect 3: Agencies Compete within “Their Crowd” ... © Julien Tromeur | Dreamstime.com FUTURELAB

29. © Kevin Renes | Dreamstime.com ... While the Competition is Transforming FUTURELAB

30. FUTURELAB Chapter One Situational Analysis 7 client needs many agencies ignore. 3 areas where agencies are “out of synch” 4 gaps in agency authenticity

31. FUTURELAB Authenticity Gap 1: Diffuse Identity © Eric Marechal | Dreamstime.com

32. Authenticity Gap 2: Oversensitivity to Trends FUTURELAB

33. FUTURELAB “We knew that it wouldn’t work, but the client wanted it. So we made it happen. After all, under all the gloss, we must accept that we are prostitutes.” Head of Business Development commenting on modifications to a global campaign you know. Authenticity Gap 3: Undue Compliance © Jose Antonio Sánchez Reyes | Dreamstime.com

34. © Steve Cukrov | Dreamstime.com “I don’t care about making money for my clients. I just want another award before I jump this ship. ” Agency CEO of a A-list mediterranean agency “Listen, we know that spending x million in above won’t fix the issue, but they’re going to spend it anyway. We can just as well try to grab as much as possible.” Pitch team on an international account If a client thinks a brand is great, but you find out his consumers disagree, you’d only tell him if you’d get more business out it. Otherwise, best to leave these things untouched. Major agency creative director instructing a recent recruit over lunch Authenticity Gap 4: Occasionally Questionable Motivations FUTURELAB

35. 1. Become a solution house ... 2. ... Or Not 3. Talk Money 4. Media Neutrality & Transparency 5. Replace Noise by Engagement 6. Be Digital 7. Think of the Shopper 8. Get a Makeover 9. Synch to Global Reality 10. Establish A Clear & Differentiated Position 11. Align Good Apples, Get Rid of Bad Ones 12. Take a Moment of Self-Reflection Chapter Two 12 Remedies to Set Things Right FUTURELAB

36. © Jan Prchal | Dreamstime.com “Our recommendation is not to proceed with any above-the-line campaign in the coming year. In stead, it is better to upgrade call-centre training and accellerate the go-to-market processes so they co-incide with the consumer shopping cycle. Obviously we are happy to assist in these areas.” #1 Become a Solutions House ... FUTURELAB

37. © Infomages | Dreamstime.com #2 ... or not FUTURELAB © Lisa F. Young | Dreamstime.com

38. © Breeze393 | Dreamstime.com #3 Talk Money FUTURELAB

39. FUTURELAB © Nob50 | Dreamstime.com #4 Media Neutrality and Transparency

40. FUTURELAB #5 Replace Noise by Engagement ©i Dan Breckwoldt | Dreamstime.com

41. © Spaceheater | Dreamstime.com #6 Be Digital FUTURELAB

42. #7 Think of the Shopper ©i Edyta Pawlowska | Dreamstime.com FUTURELAB

43. FUTURELAB #8 Get a Makeover © Rebecca Abell | Dreamstime.com

44. Image: (c) Sebast1an – Dreamstime.com #9 Synch to Global Reality FUTURELAB

45. #10 Establish A Clear and Differentiated Position FUTURELAB

46. Customer Proposition Strategy Commitment Behaviour of Leaders Culture Performance Metrics Processes & Structures (c) This framework is property of Management Centre Europe – used with permission #11 Align Good Apples, Get Rid of Bad Ones FUTURELAB

47. © Pavalache Stelian | Dreamstime.com FUTURELAB #12 Take a Moment of Self-Reflection

48. FUTURELAB Chapter Three 10 Formats: Agency Models of the Future

49. © Sedam35 | Dreamstime.com #1 The Factory FUTURELAB

50. FUTURELAB © Infokus408 | Dreamstime.com #2 The Category Killer A: Media