OPINION: Drivers of change and the advertising company of the future

When Confucius said “Tell me and I will forget/ show me and I’ll remember/involve me and I will understand”, he, in a way, predicted the future of marketing communications. This is the basis of the future of our industry.

There are three important changes that I have witnessed since I started my advertising career almost twelve years back:

1. We no longer use acetate sheets to make presentations. That task has now been taken over by application software like PowerPoint and Keynote.

2. Internet, which was till then mainly used to send mails to our clients, has now become central to engage with customers and prospects.

3. Media folks used to sit in the same office as ours, and work closely with us as one team. Today they flash business cards different from ours and, in most cases, are competing with us.

The changes above are rather simple and not as fancy as those happening in personal communication technologies. But the fundamental drivers beneath these changes are more revealing. The 1st and 2nd change is driven by technology. The 3rd change is driven by the realignment of business models.

Similarly, as we look ahead and try to predict the future of advertising, it is important to look at fundamental drivers that could bring about change. I am not a futurologist, but as an advertising professional and as someone who is interested in visualising the future, the topic of the future of advertising really got me thinking about what will drive change in the future.

I can foresee three drivers of change:

1st driver of change—Technology
Miniaturisation of processing power coupled with affordable interconnectivity between mobile devices has helped us create ‘always‐on’ world. Social media, location based services, SoLoMo (social, local, mobile) are just some of the, and relatively early, outcomes of development in technology.

Such developments in technology have already impacted advertising in many ways:

Consequently, advertisers today need to concentrate on delivering a minimum of one of the four things to their constituents (the four Es: Education, Entertainment, Engagement, Exchange of values).

Today, like never before, advertising is problem solving. It isn’t movie making.

2nd driver of change ‐ Role of marketing in the overall business organization
Future of advertising hinges on the relative strategic importance of the marketing function in an organisation. Over the years, marketing has been losing its strategic importance in board level discussions. In a recent HBR Blog post, Bill Lee points out how traditional marketing is under pressure for various reasons.

Many CEOs do not think their CMOs are credible. A 2011 study of 600 CEOs and decision makers by the London‐based Fournaise Marketing Group has startling findings:
• 73 per cent of CEOs think their CMOs lack business credibility and the ability to generate sufficient business growth
• 72 per cent are tired of being asked for money without being explained to how it will generate increased business
• 77 per cent are done with all the talk about brand equity that can't be linked to actual firm equity or any other recognised financial metric

This is bad news not only for marketing but also for advertising for the latter is helping marketing teams realise their plans. If marketing plans do not have board‐level support then advertising automatically is that much less significant in the overall business.

3rd driver of change—Developments in emerging markets
Imagine how will the English language change when 1.3 billion Chinese start using it. Similarly, imagine the future of advertising when big and growing economies of Asia like China and India, among others, were to become the biggest advertising clusters in the world. (Asia Pacific, at $162.4 billion in 2012 and with a CAGR of 9.2 per cent, is poised to overtake North America as the largest advertising market by 2014 according to eMarketer)
Because of the growth potential of emerging markets like those in Asia, future of most global corporations depends on their own success in these markets.

Marketing professionals and advertising and marketing strategies that are adopted in emerging markets will influence future of advertising.

This brings us to the next question—what do above three drivers point towards? How will they shape the advertising company of the future?

I believe together these three drivers will lead to the creation of a new type of advertising organisation.

1. A new advertising company with digital at its core:
It would have deep understanding of the digital world coupled with solid capability to deliver marketing and communication solutions in this environment. This is a very likely scenario because the next generation of customers would have grown up with digital. These people would not see any difference between their real and virtual worlds. A friend for them could be someone on the same street or someone two continents away.

For them, digital would not be a channel or medium, it would be a part of their life.

2. A new advertising company offering a new kind of full service:
There will be a return to full service but different from the way we have known full‐service in the past. The new full service would be made up of three basic elements: Creative, Creative Media, Creative Tech.

Creative departments will no longer be the preserve of the art director and copywriter team but will rather consist of people who simply have great ideas, whatever their background. There would still be room for skill‐specific arts (copywriting, scriptwriting etc) but they will not be the heart of the team. Creatives of the future would need ever‐broader range of skills.

Media will not be about mass media buys that could be left to large media buying companies. We will see the evolution of creative media—like it is being done by agencies like Naked.

Creative technology departments will build applications and widgets that will provide value to the people both in physical world (Nike+) and the digital world (digital utilities and services).

Entirely new opportunities could be opened with the rise of predictive genetics. Imagine future celebrities being identified at the time of birth and brands partnering with them from a very early stage. New regulations could be introduced to prevent such predictions from being made public conversely this could give privacy and ethics an entirely new meaning.

3. A new advertising company built on collaboration:
The way advertising companies work with their clients and constituents will change significantly. They will be more integrated. The same room will see opinion leaders sitting and discussing marketing plans and communication ideas with marketers, company leaders and advertising
company professionals. Such collaboration will make advertising feedback loops shorter through real‐time measurement and adaptation.

People don’t connect to share; they share to connect. Shareability is now a common feature in most advertising briefs. Social seeders will become a new discipline in advertising agencies in much the same way as planners did in the 1970s. Planners were psychology students who abstracted the target audience into research, data, and insights. Seeders will be sociology students who can network with and influence people who do connect with the target audience.

4. A new advertising company with new streams of revenue: Rise of digital has lead to the growing importance of a “platform” over “proposition.” This is a big opportunity for advertising companies. They can now make money not only on communication and engagement ideas but more also on creating, owning and revitalising sustainable platform and engagement assets in digital domain. (The ‘platform opportunity’ will also lead to new forms of companies diversifying into advertising‐ the most obvious would be the digital and event marketing companies that can create IPs and products that brands could use to ride via association, presence or plain utilisation.)

Constant need to improve the product and service for the end user will lead to the need for more hands than the product development teams. This will lead to advertising companies having their own product intellectual property (IP) disciplines. Naked’s ‘Naked innovation’ and BBH’s ‘Zag’ are early examples of this phenomenon.

5. A new advertising network in the east:
With the development of China’s own global corporations, we might also see the birth of a global advertising agency coming out of China. A global agency network that is Chinese could have closer ties with China’s global corporations, many of which are and could continue to be state owned. We can imagine this new global agency the way Dentsu, and Hakuhodo are for Japanese corporations and Chiel is for Samsung.

This has not happened yet because many of the global Chinese corporations are still not marketing driven. Also, media in China has not yet been categorized as a strategic sector to have national champions in.

To sum up, I will quote John O’Toole, retired chairman of Foote, Cone & Belding, who once said ‐

“When executing advertising, it’s best to think of yourself as an uninvited guest in the living room of a prospect who has the magical power to make you disappear instantly.”

As advertising evolves, it will have to look and feel a lot less like advertising and
that is what will help it grow and add more value to businesses, brands and
society.

This essay was written as a part of the Wharton Future of Advertising Initiative 2012/13. Views expressed here are personal.