Of Ad Agencies, Specialists and Brands

A recent article in The Economic Times stated that leading companies in India ‘prefer startups over old agencies for digital ads.' The headline may have been awkwardly phrased but the message was clear: marketers are increasingly turning to ‘specialist’ social media or digital agencies for digital creatives and execution, instead of their traditional ad agency. The universal underlying reason attributed to this is that the traditional or mainline agency ‘does not get the new medium’.

If one were to elaborate, the marketing team at the client’s side must have been given reasons to believe that the mainline agency team which interacts with them on a daily basis does not fully understand the digital medium and/or has not recommended suitable digital campaigns, or has not delivered a digital campaign. From the client’s side, what they usually ‘expect’ from a ‘digital’ campaign is:

1. A strategy presentation on how the brand can use new media and suggestions on the execution of the same.
2. An execution plan or road map.
3. A sample creative to demonstrate their understanding.

That might seem like a lot but what they usually end up approving is:

1. a Facebook page and a team to churn out the content on it.
2. a Twitter handle and frequent hashtag driven campaigns designed to trend and as a bonus.
3. A website design and management.

While this may seem like a straightforward deal, there are wheels within wheels. From the perspective of the ad agency, they feel like the input to output ratio is precarious when it comes to social media management. Clients get away with a pretty low retainer feel in most cases for mainline advertising and they expect the social media part to come free or at best, a marginal extra cost.

But the demands of social media management is no less stressful than handling the mainline advertising. It means expecting a call at 10pm from the client, howling about ‘some guy from Baroda who has uploaded a video of our product with worms all over it! Get it off YouTube right now!”

Clients, on the other hand feel that the senior management at the agency is not involved enough in their social media activities and are maybe too old school to even understand this medium. They also believe that the specialist social media agency understands the medium better and executes far more effective (and cost-effective!) campaigns in new media.

In the context of ‘social media agency vs. ad agency for digital’ debate, herewith some views (unconnected ramblings, more like):

1. What needs to be at the centre of the debate is ‘brand management’ and not ‘social media management’. In marketing and advertising history we have never heard of ‘Radio Management’ or TV creative and plan management before for a good reason. It has always been and will be about understanding the consumer and formulating brand strategies for long term business growth. The media used to reach the consumer -- be it television, social networks or mobile --  is only the means to an end.

2. Just because someone spends a lot of time surfing social media networks doesn't mean he/she is a ‘social media expert’. By that yardstick, anyone who spends 3 hours in front of the television everyday should have been labelled a ‘Television content and media planning expert’. What is critical is an understanding of brands and the business of brand building using both short term tactics and long term strategy, instead of the prerequisite being knowing  ‘How to make a hashtag trend in 15 minutes.’

3. Ad agencies have themselves to blame for the situation they are in vis-a-vis digital media, especially in India. In the West, global agencies as well as independent ones have integrated digital thinking in brand communication. There are two models in operation: the old-school ad agency model whose core team formulates brand strategy and creative across media, without hiving off a specialist division, and the specialist model, where a social media or digital agency (often part of a global holding group or a division of the mainline agency) handles the digital duties.

When the topic of the old school ad agencies comes up, Wieden+Kennedy, CP+B and Droga 5 come to mind . Just take a look at their brand building success stories of late (note: not just award winning campaigns) and you will notice that new media, digital or social (whichever term you use), is an integral part of the success and recognition. It sends out the signal to the outside world that these guys don't just understand new media but are masters of it. More importantly they know how to use marketing communication to craft business building campaigns.

Coming to the specialist model, there have been success stories here as well. In my view, with a sub-optimal option as the core team formulating the strategy, tactics and executing them has to be one. In India, the latter option seems to be the preferred choice with marketers for reasons mentioned earlier.

4. Clients have begun to realise the importance of a digital presence and understanding of the medium. They have invested in MarCom talent to lead such initiatives within the company. Such talent is relatively junior – having come from an ad agency, digital agency or media backgrounds. They find kindred souls (read: young people who have an affinity for new media) in specialist agencies.

And their media agency is steeped in understanding media consumption habits of the consumer, including on digital media. In contrast, their mainline agency team is perhaps content with handling big ticket film production and other collateral. Naturally, the silo system will only continue to thrive.

5. The Utopian solution is to go back to the days of ‘one agency’. Unfortunately, that is impossible. The media planning and buying agencies have become powerhouses of their own and will continue to operate as separate entities.

They seem to be better off than their ad agency counterparts in many ways: they attract and retain better talent, they get a place in discussions with the CMO, and are seen as adding value (they number-crunch and understand media consumption habits, invest in research and make recommendations), they have media clout and their award winning work is not only creative but also used to solve real business problems for real brands.

6. The loser in all this is the humble account man. He has no interaction with the specialist media planning team and therefore has no clue about media in terms of numbers or strategy. If the other specialist division, Digital is housed within the agency – he has some scope of interaction and contribution to digital. If the agency is an outside entity, that too is not an option.

7. Ad agencies cannot afford to train all their employees across disciplines or hire specialist talent (for digital, mobile etc.) simply because their current remuneration structure does not permit it. Due to lack of unity within the ad industry, the concept of the monthly fee has become the standard as opposed to the 15% commission.

The fee system has very little margin and agencies undercut each other to survive the next quarter. The end result is that they are unable to hire the right (often premium) talent and bring down the fee structure for the entire industry. There are agencies which sign on a retainer fee of Rs.1,00,000 even (I guess the average is 2-3 lakhs per month) – at that fee they will only end up compromising on the quality of inputs to the client’s brand. No wonder the client feels the pinch in no time and calls for a pitch or calls a specialist agency to handle digital media.

Given the cost structure of such specialists, they will only be glad to accept assignments at Rs.50,000-2 lakhs a month as a fee. For that amount, all they are expected to do is maintain the Facebook page (2-3 posts a day, few contests and ensure a fan following larger than the competing brand) and conceive Twitter campaigns emphasizing on trending the hashtags.

Sometimes you have to wonder what impact a trending hashtag has on a brand; and the most common response you get to that is ‘awareness.' But even well-known FMCG brands who have spent millions in brand building adopt such moronic tactics. A ‘specialist’ agency and a willing client aren't always necessarily the right fit.

8. In my opinion, the long run will see brands revert to the concept of a single agency handling all their brand communication needs based on an understanding of the brand and their business-building techniques. Ad agencies may employ or hire specialist talent (say, for creating mobile apps) which they may not need as a full-time employee through the year.

Clients will soon realise that trussing up all their requirements with one agency and one business leader is more effective in the long run. But the onus is clearly on the ad agencies for that shift to happen. They need to invest in training their current lot and in bringing digital thinking to the centre of brand communication and not just pay lip service. It is not going to be easy without the support of clients, especially when it comes to fees.

9. The other global trend is for clients to handle social media in-house. Not all clients can afford it but if they can, it is great – especially in service categories. A retail store or a service brand may have to deal with consumer interactions in real time and who better than an employee to deal with it? But that kind of investment may not be possible for all brands.

10. So where does all of this leave specialist social media agencies or digital agencies? There will be enough business floating around for them: entrepreneurs, small businesses, NGOs and others who cannot afford the ‘big agency’ will find such specialists great to work with, which shouldn't, and doesn't, automatically mean that it is a ‘small business’.

Republished From: bhatnaturally.com