The elusive digital transformation of traditional agencies

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I read this post published by Rodrigo Reyes, Digital VP of BBDO Sancho – major rivals of our Territorio creativo Colombian offices – and I don’t want to believe that we find ourselves before a naïve analysis. Rather, I believe, we find ourselves before the cries of despair and loneliness from a rider in Comanche territory. Simplifying his lament, Rodrigo comes to blame digital service complaints of his agency on perfectionist customers, who are too finicky to approach digital production without excessive restrictive parameters.

Rodrigo’s observations are not inaccurate, of course. Digital production can have more edge and be more sophisticated than traditional methods. But his analysis is only the tip of the iceberg. What is concealed beneath the icy waters around BBDO Sancho, and so many other agencies born in the time of “traditional media” is the sudden languor they face, and the painful adaptation to the Internet age. The new laws of physics that endanger this transformation are varied, and from my vantage point, I will draw up some of the most significant.

At Territorio creativo, we spent many years paddling the deep waters against large traditional agencies. We are the small proverbial ‘David’, sneaking into the kitchens of these large organizations robbing the different Goliaths of their most delectable and innovative dishes (neither necessarily the most abundant or the most profitable). In these past years, we have felt contempt for the digital revolution, then growing concern – which has resulted in rummaging through our pockets for meticulous hiring. And now, as in Rodrigo’s post, we can read between the lines of desperation. Throughout this post, I will attempt to list some of the laws that hinder the digital transformation of traditional agencies:

 

The law of the diminishing returns:

The Internet disrupted the natural state of affairs, adding uncertainty to the ROIs of communication. On the one hand, the fragmentation of channels makes it difficult to link online investments to ‘offline sales’; on the other hand, the abundance of digital metrics demonstrates too often the inability to measure the direct impact of an action. Both situations result in lower budgets for campaigns and therefore, directly affect agency returns.

The disappearance of entry barriers:

Historically, the ability to acquire a TV spot was not available to everyone; the economies of scale in media buying rewarded the bigger conglomerates. However, today what we couldn’t have with TV spots, we now have with YouTube and Facebook, and with an even greater advantage. On these platforms, we are many times more likely to gain millions of ‘organic’ views (i.e. not paid for) if an agency is not involved, and in the absence of a client that attempts to measure, or rather, undermine creativity with the use of an over-analytical committee. The ability to create a website or a blog is now available to everyone. This newfound ability to compete sufficiently summons the perfect storm for larger agencies.

The principle of vision loss:

Years ago, the consumer aspired to improve our society, and the advertising was cool. Now, that is no more. How do agencies work today to create a better world? They have not only lost their way, but on the way, they have also lost their principles. They have been sold to the capital, and the capital is now handing them back. And if there are no more fundamental values to defend me before my client, what heroic mission can I offer to my employees?

The theory of outgoing talent:

The golden age of communication is now, but the astronomical salaries and the glamour days of advertising are over. The old-fashioned way no longer works, and the most creative people in the world can be found outside of the agencies. This is certainly no surprise – who can withstand abuse without a big check or the illusion of getting one? The circle is tainted – less money; extreme pressure from the central headquarters to maintain year-on-year returns; lower salaries; and less talent. The agencies are no longer cool, and moreover, in order to digitize, they have sought to ‘obtain’ digital talent through the use of their fat pockets – attempting to swallow the smaller agencies whole in the process – hence, fanning the flames of the vicious cycle.

The consequences of hyper-specialization to the quadrant (or the death of the 360º approach):

The ‘best-of-breed’ approach is gaining strength as digital specialties multiply. And though advertisers are known for their fierce defense of the one-stop shop, they have been forced to resign to their fates, and have given carte blanche to the niche boutiques that they now hire. How can we today possibly present credentials of the ‘full service digital’ agency without arousing ironic smiles of disbelief?

The scrum theory of agile creativity:

A good media plan saves the most mediocre creativity. But what happens when there is no media to plan? And how do the agencies that have grown accustomed to their clients paying the creative talent through media buying commissions, get paid? Secondly, digitization governs transmedia. Each medium, or new digital or social platform, imposes its own laws. If I spent years referring to television ‘spots’, and getting comfortable in that normalcy, how do I now gain expertise in these new environments? The answer is this: digitization involves being lean: agile and innovative; and requires that clients become accustomed to failure (who will bell the cat?) For that, we must develop a creative methodology to reduce risks and increase investments in an uncertain environment. Creating ‘minimum viable products’ obtaining data, and optimizing on the fly. But for that, the agency workers have to eradicate the sense of boredom and weariness, and return to feeling hunger and emotion – something that will oppose the aforementioned theory of the outgoing talent.

The hypothesis of stifling hierarchies:

You have done all the work, and I confirm that it will appear in your creative record, and you will win the prize, yet all of your work will continue to support my resume. First of all, in this era of transparency, creative awards have lost their ‘mojo’. But moreover, it is that the intrinsic motivation to generate hunger (discussed in the previous theory) and to compensate for the loss of extrinsic motivation that produces dismal wages, crumbles under the weight of the traditional hierarchy and the exile of the meritocracy.

The theory of the old-fashioned organization:

It always seemed to me that the go-between – the ‘account manager’ – on client accounts was too well paid. I have theorized that the figure of the strategic planner came to life when an account manager had been given up to develop this role. The fact is however that, digitization imposes hyper-efficiency, and professional digital service firms cannot afford to waste resources on the roles and legacies of traditional organizations of the past. This unburdening is sine qua non for obtaining the profiles and professional abilities that we do not have, and that which the mother digitization imposes on us. It is that which leads to the law that follows.

The data triangle – creativity – technology:

From Mad Men to Math Men: Imperceptibly, creativity born of the classic ‘because-I-am-worth-it’ paradigm loses weight against the plenipotentiary sensations that generate massive analytics and big data. Millions of conversations are expressed each second on Social Media networks, and the ubiquitous sensors promised by the Internet of Things, Smart Cities, and wearables give rise to gargantuan powers. Although we doubt that these may come to forecast the success of creative campaigns – through predictive analysis – agencies full of pseudo-intellectuals with huge egos, atrophied left cerebral hemispheres, and a compulsive allergy to Excel will help us to prove it. Have you seen many programmers or mathematicians working alongside ‘creatives’ under the same roof? No? Well, there you have it.

The law of the obsolete advertising:

In the era of social networks and engagement, agencies continue aiming and shooting at targets. I do not wish to declare the death of the traditional media, but it cannot be denied that communication on social media networks and user recommendations are gaining significant influence over traditional advertising. The thing is, traditional advertising not only insists on reaching a specific target, moreover, it continues thinking in terms of communication, when really, it should now be thought of and constructed in terms of ‘design experiences’. And additionally, within this experience, various points of digital contact should be introduced, to help to transform the ‘customer journey’. As a result, the customer ends up disseminating all communication of the abundance of products and services organically and voluntarily.

I would not trade places with Rodrigo in BBDO Sancho, though a firm that I admire and respect. We sympathize with your tale and your denouncement of perfection, as opposed to the agility and to the complexity of the digital. To transform an agency must be as difficult as creating one from scratch. The difference however, is that, the creation of one triggers much more positive energy than the transformation of an existing one. These circumstances predetermine our options more that we would like to believe, as in the instance where we come to find ourselves walking along one path or another, we prefer to walk along with plenty of positive energy.

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