A lot of folks on the client side don’t know this yet, but most traditional advertising agencies – even ones with a shiny new “digital/on-line/interactive” department – are headed for a world of hurt.  Why?  Three reasons.

HISTORY
For more than 100 years, ad agencies have all operated pretty much the same way. Be clever, know how to sell, and get in deep with the client. Being clever is a good thing, as is getting in deep. But ad agencies are so focused on selling the client’s stuff – and have been for so many years – they are not very good at figuring out what people want to buy.  Consider the very terms that are used in sales and marketing: “taking market share,” “grabbing eyeballs,” “capturing customers,” etc. Even the word “brand” originally meant a red-hot piece of metal used to burn the identity of the owner into a horse or cow’s rump. Barring a few bumps in the road (like when big media mark-ups went away) the ad agencies have pretty much continued on status quo. But now that the power has shifted to buyers (as opposed to sellers), ad agencies continue to tap dance on an ice-berg that is slowly – but surely – melting.  So why can’t they change?

MOTIVATION
Ad agencies are not motivated by the success of their clients. They are motivated by two things: money (from the their clients) and prestige (by their peers).  The ultimate goal is deploy the uber-weapon: the 30 second TV spot. Spend lots of money and time building it and then more money sending it over the airwaves and cables. Over and over again. Repeat. Over and over again. It’s a sad fact that the old adage, “I know half my advertising doesn’t work – I just don’t know which half,” is still true today, some fifty years after the phrase was coined. Frankly, ad agencies are in no great rush to help you figure that out. Why? Because they make their money whether the campaign works or not. Sure, they might get fired a year or two down the line, but until then, let’s party! The second motivator is creativity for creativity sake and the oohs-and-ahhs it brings from their peers in the mutual admiration societies. So why can’t they change?

STRUCTURE
Typically, each group inside an agency is competing against each other inside the client’s account. The individual departments become silos, or worse yet, companies within a company all with their own agendas, P&Ls and bitter rivalries. And the bigger the agency, the worse the problem. Media doesn’t want to lose budget to interactive, print doesn’t want to budget to the media buys, and interactive thinks “print is dead.” Obviously, this is not in the best interest of the client.

So, how is Frontier Service Design different? Well, first, we’re not an advertising agency.  ; )

But more importantly, as it relates to history we are constantly re-inventing ourselves around how to get our clients closer to their customers. In the 1990s, that meant interactive media. Today, that means helping clients design services that matter for their customers. As for motivation, we are more than happy to share in the risk – and the upside – with our clients when it comes to deploying new services.

And finally, regarding structure, our goal is to create an organization that is a hub (as opposed to a series of silos) where the brain trust lives at the core with strong producers and project managers around the edges pulling in the best and brightest resources (companies or individuals) to work on specific projects and initiatives. This is how Hollywood has produced feature films for years.

Tags: Advertising, Business Model, Innovation, Legacy, Silo

Posted by Bob Cooper on Wednesday, October 29th, 2008 at 5:45 pm and is filed under Innovation, Theory, Thought, Trends.