Disintermediation III

“Disintermediation” is a fancy word that means “cutting out the middleman.”  The actual economics definition is “the removal of intermediaries in a supply chain.”  No matter what words you use, it’s a concern for agency leaders – more so in recent years.

Not-So-Secret-Agent Man

Uh, sorry -- which one of my
agencies do you represent?

If you think about it, the very concept of an agency is that of a middleman.  The word “agent” literally means “a person who acts on behalf of another.”  That’s how ad agencies began, as purveyors of media space on behalf of their clients.  Creative development became part of the bargain.  During the 20^th Century the business evolved into more of a partnership, the best agencies working hard to move their clients’ businesses forward.

Not far into the 21^st Century, however, we’re losing sight of how to move our clients’ businesses forward, and clients are responding. 

Relationships are Too Transactional

Yes, agency-client relationships are shorter.  That’s not news.  Now they’re shallower.  Clients juggle an array of resources at any given time, and not just additional agencies.  They hire content creators, data scientists, startups and even agency people as in-house resources.  Some of this results from a need to connect with consumers in ways that only newer, specialist agencies can deliver.  But there’s a more fundamental reason.

Clients eschew the AOR model because agencies made it easy for them.  Labor-based compensation focused agencies on making the ad, shelf talker or website, distracting from the need to bring business-building ideas.  The relationship got more transactional.  Clients can hire almost anyone to get “fresh thinking”.  Monogamy is dead.  Is there any wonder someone started an agency search consultancy named “Madam”?

Agencies Can Cope In a Couple of Ways

One is to respect reality.  Rather than just walking on eggshells, do the best work you can for existing clients.  Bring them business-building ideas, which is something different and something more than delivering the scope of work.  It builds trust with a client who will think twice about straying from an agency that proves how much it cares about the business.

The other is to approach prospective clients with the same attitude:  How do we solve your business problems?  You’ll start to turn the tide, at least in your corner of the world.

What not to do:  Chase all the services your client is buying from other agencies or suppliers.  If it’s something you’re good at doing, then by all means sell it.  If you think you can develop it as a core competency, keep at it.  Even then, however, it means little if you don’t also bring business-building ideas.  Without those, you’ll be disintermediated.  (According to spell check, I just made up that word.)

Previous posts on this subject:

Disintermediation

Disintermediation II

"Net Neutrality"

Following Wednesday's post about the role of government at the intersection of Marketing and the Internet comes the latest news about "net neutrality".

Net Neutrality

The actual term is "network neutrality", a concept where all Internet access would be treated equally. All access to all content would be available at the same speed. There's a complete article on Wikipedia describing it fully. In any case, it sounds like an appealing concept, doesn't it?

Not so fast...

The U.S. Federal Communications Commission tried to enforce net neutrality last year, but the courts ruled that the Internet falls outside their jurisdiction. The FCC regulates broadcast communications only, not even cable television, while the Internet counts as an "information service".

You get what you pay for

The opposite of net neutrality is a tiered system, where Internet users would pay their service providers a premium to access certain content faster. This would depend on an arrangement among Internet service providers such as Verizon, content providers and users willing to pay more.

The latest news

Since the FCC is powerless (for now) to enforce net neutrality, those who own the networks are starting to arrange tiered systems. This week the New York Times reported that Google and Verizon are close to such a deal; today Google and Verizon denied it, saying they were continuing to talk to the government. The FCC says that the talks are on hold for the moment.

What's my position on net neutrality?

No one can say how this will play out. The starry-eyed idealist in me wants to believe in net neutrality because it sounds fair and equal. Yet the Internet is not a government program, it's a commercial enterprise. Said differently, it's publishing.

If net neutrality had been applied to newspapers and magazines, then every consumer would have paid the same price for each magazine they received, no matter how premium the content or how many pages it required.

You may perceive that I haven't decided what I think about this. Please use the comments section to sway me to one side or the other.

The "marketing kill switch"

You just arrived at this page from somewhere else on the Internet, perhaps by link, RSS feed or a tweet. Thanks to a combination of 1s and 0s, a microprocessor, some network switching technology and electricity, everything worked. We take this for granted.

No Internet?

When you can’t get a connection, it’s usually a problem with your server or your Internet service provider. But what about a mass outage where no one can get online? This situation was memorably captured in an episode of South Park, but some recent news items report very real threats.

“We’re from the government, and we’re here to help”

The U.S. Congress is considering the Protecting Cyberspace as a National Asset Act (S. 3480), which has been reported as an “Internet kill switch”. The truth is a little more complicated, but undeniably the law would allow for circumstances where the executive branch of the U.S. Government could shut down the Internet. You can read the law for yourself and this letter from civil liberties groups opposing it.

Force majeure

NASA reported earlier this summer that an expected increase in solar activity will threaten our telecommunications infrastructure. “Our technological society has developed an unprecedented sensitivity to solar storms,” said NASA scientist Richard Fisher. The good news is that they’re watching the Sun carefully. If you’re reading this today it means we suffered no consequence from a “solar tsunami” that hit Earth last night.

Downtime

By act of Congress or act of God, a major shutdown would be catastrophic and few people would care if we couldn't sell our clients’ products. Fortunately, everyday life is much less dramatic. Technical downtime happens here and there every day, affecting about 0.1% of operating time in most commercial applications. Someone fixes it and we get back to business pretty quickly.

Marketing kill switch

The bigger concern is protecting commercial speech. There has been a lot of press lately about how corporations invade privacy via Internet data collection, and we should take those concerns seriously. At the same time, let's be aware of government abuse. Just as a local government used Google Earth to spy on residents' backyards, there are other efforts to restrict how we advertise and sell products online. These amount to a "marketing kill switch" that would a cause a scene in your office like the one in South Park.

Tell me your thoughts, readers, in the comments section below.

Should ad agencies and media agencies re-bundle?

This coming week in San Francisco the 4A's will combine two traditionally separate conferences into one event.

The first of the two pieces is the annual leadership conference, formerly the "management" conference, which they've been holding since 1917. The second is the media conference which dates back to the mid-1990s. The conference agenda is here. You can read a bit more in this NYTimes.com column by Stuart Elliott.

A bit of history is in order

What's missing from the Times piece is the observation that the 4A's media conference started right around the same time that ad agencies spun off their media departments into separate companies such as Starcom and Universal McCann. Under the rules of Ye Olde Marketing such spin-offs were possible because so much of the work was in TV or Radio commercials or print advertising. The ad agency and the media agency could work in silos because both processes ended up with a tape being sent to the networks.

Obviously that's not the case anymore. Tom Carroll, outgoing chairman of the 4A's and President-CEO of TBWA, said: "The idea of having separate conferences just isn’t reflective of the realities of the business today. It’s better to get everyone in one room because we all have the same issues and should be working together on them."

There's an elephant in that "one room"

Should ad agencies and media agencies re-bundle? It would be fun if someone asked the question this week in San Francisco. In the unlikely event someone did ask, the question probably wouldn't attract much discussion. There are too many egos and P&Ls at stake, and in fairness, perhaps a few client conflicts as well.

It's too bad. The industry needs this kind of discussion. We have seen at our shop the benefit of having media planning within the agency for some clients even when buying is done elsewhere. Given some of my recent experiences with channel-neutral planning (here and here) it seems impossible to create advertising for any medium in a silo separated from media strategy.

Jumping from silo to silo

One other interesting story to watch will be that of Nick Brien, listed on the conference agenda as the head of IPG's Mediabrands, the company that includes Universal McCann and Initiative Media. His title on the conference agenda is ironic, because just last month he was named CEO of...

McCann-Erickson.

Why Diversity is important in Marketing, and how you can help achieve it in the workplace

Diversity is critical to embracing the changes and challenges of modern marketing.

Today is a good day to think about diversity since we celebrate a U.S. holiday in remembrance of Rev. Martin Luther King, Jr., a Baptist pastor and civil rights leader who personifies our country's struggle to establish equality for everyone in a very diverse society. You can read all about Rev. King on Wikipedia.

The importance of diversity in society requires no explanation. Why is diversity important in marketing, then?

Marketing has an influence on society

Marketing and advertising have an influence on society: our messages, images, words and music set the trends rather than follow them. This is often lamentable but it is almost always powerful and we dare not misunderstand it. Hence we should consider diversity when we prepare something for public consumption. A very tangible action, for example, is to hire diverse on-camera talent.

Diversity is also important behind the camera and in the office. We are more likely to present diversity in our work if we have it in our workforce. Much has been written about the need for our employee roster to match the diversity in our society, and I share the commitment to making it happen.

Modern marketing demands diversity

Diversity in the workplace is even more important when one considers that marketing plans and tools themselves are more diverse than ever. In Ye Olde Marketing the planning process was relatively straightforward because we had only three TV networks and limited other media available. Today, of course, there are hundreds of tools and millions of ways to combine them. If you appreciate the diversity of it all, your mind will be open to new creative possibilities.

The same applies to human diversity, be it racial , social or economic. If you appreciate the diversity of the people around you, your mind will be open to new creative possibilities. Diversity is not only a moral imperative; it's an ingredient in business success.

Modern marketers value diversity

How do we achieve a more diverse workforce? There are numerous corporate, government and other programs available, which I won't try to catalog here. I only suggest that if your company offers a course or workshop, take it -- and take it seriously. Many of these are high-quality, and it's never a waste of time to stop and challenge the way we think about our relationships with others.

This is akin to developing yourself as a Renaissance Practitioner -- someone who recognizes their own unique perspective but works hard to appreciate the perspective of others. Shouldn't we work just as hard to understand a colleague's life experience as we do their professional specialty?

My answer would be "Yes" -- and we must try to make a little bit of progress each day.

Three lawyers walk into a blog about advertising...

It seems lawyers and the law kept popping up in my world this week. Yes, lawyers. Those people who water down our claims and tone down our prose.

Carla Michelotti and the CAF. Carla (pictured here) is the general counsel at Leo Burnett and an effective, tireless advocate for commercial speech. She's a key player in the AAAA, ABA, IAA and other industry groups. She is also one of the most ethical people in business today. For all this and more, the Chicago Advertising Federation yesterday gave her the Silver Medal Award for outstanding contribution to the industry. The event was a fitting tribute with speeches by industry leaders past and present. On a personal note, Carla also saved my Super Bowl spot from a legal technicality. Thank you, Carla, for saving our spot and giving many other people the means of saving theirs.

Trademarks and IMC. Regular readers know that we've been working on a multi-agency IMC project. As part of the process we make sure our selling language is accurate and ownable. One of the lawyers we work with observed that messages in one channel may have a slightly different legal interpretation in another so we should be careful to compare notes with our partners in other disciplines.

Argentina's new law governing media. As a former Argentine resident, I follow all news about my former home, especially when it concerns our industry. The current government passed a law restricting media ownership and airing of foreign-made advertising. Two Argentine journalists explained on AdAge.com this week how these aren't just legislative developments; they force advertisers to rethink media strategy.

The rule of law is important and in the United States we often take it for granted. Lawyers remind us what we have and how to use it.