Big data, machine learning and AI are disrupting industries as diverse as travel, sports, health and many more. But what has stalled the disruption among both digital and traditional agencies? They talk big games, but have they made the shift to become technology-driven businesses?
An easy way to assess this is by weighing up all the daily decisions being made and cross-checking those against a year earlier. How much of what was done through spreadsheets and emails a year ago has been reimagined with technology today?
Here, based on my experience, are the top factors holding back agencies from adopting systematic digital transformation in processes and outcomes:
Pressure on the P&L: This is particularly true for the agencies owned by larger holding groups, where they’re measured almost entirely on the fabulous EBITDA. This demand on profit margins makes it incredibly difficult for management to make investments for longer-term gains.
Short tenures: The average agency CEO in a non-founding position lasts just 2.5 years. Pressure to deliver profit, coupled with pressure to make an early mark, cloud the ability to make informed decisions about the business in two or even five years. It’s likely the CEO will be out of the door before the digital transformation is complete.
Fear of technology: If the agency CEO has limited experience in technology, or does not have enough curiosity for it, chances are they will be ignorant of the implications of it. The more a CEO develops a technology-first mindset, the greater the openness to change is driven from within.
Overzealous expectations: Technology is an enabler. It makes more outcomes possible, and faster. Yet it doesn’t solve all the problems straight away, as things take time to mature, but many agency CEOs lose patience or interest. With most technology solutions, the outcomes are driven largely by how much you put into it - the more you put in, the better results you see across all business indicators.
Old-school culture: There’s a certain way things are done in most agencies just because it’s the way things have always been done. Usually, the DNA of the organisation explains why it is not receptive to deep change, or why the CEO is not embracing it and why efficiency is not high on the agenda. Unless the leadership team advances a performance-based culture, solutions that spur productivity and improve results are difficult to spread.
The above has been distilled from interactions with many of China’s leading international agencies. We saw times where there was a real enthusiasm for transformation, as well as periods of silence as the realities of culture and economics set in.
The new normal
We have yet to see major brand-side demands in digital transformation processes, but we are seeing it across media spend, reporting and data management. It’s only a matter of time before there’s a new industry norm, which will lift the minimum entry point in this category.
Meeting the challenge will not be easy. For example, we embarked on a transformation back in 2013 and in reality, it’s still going on today. We’ve invested somewhere in the vicinity of US$1.5 million over the past five years.
We faced many of the same pressures as mentioned above. Shifting a company culture to one that welcomes technology takes convincing. Having internal teams change their mindsets and processes takes time. A commitment from the CEO can be an important catalyst, together with these factors:
Develop champions: Teams must be tasked to demonstrate best-use cases of technology and be responsible for team accountability. No single team manages a project the same way, so allow for differences within a foundation of technology management and adoption.
Review transformation: Make transformation a part of the annual review for team leaders. If they aren’t driving the adoption of technology and measuring the impact, they should be penalised. Make examples of both sluggish teams and outstanding teams.
Quantify the pain: Work to understand pain points and how productivity is being dragged down by reporting, planning and scheduling processes. in our case, product teams sat with media planners weekly to help design a better workflow and then tested it before deploying it to the wider group.
Prod your clients: Sometimes it's necessary to force clients to adopt change. For example, we encountered clients that continued to want content plans to come in PPTs and Excel sheets via email. We had to push back to make them understand it’s no longer the year 2000.
With the expectations of data-driven decision making within our industry getting higher, continual refinement of processes—with a goal of moving toward total automation—should be the standard operating procedure. By taking away the mundane, the best thinkers and doers are freer to deliver the best work.
Andrew Collins is CEO of Mailman Group and the co-founder at Kawo.