Reconfigure. Rewire. Reset
The world’s largest advertisers are no longer happy with the way their agency partners are set up. The likes of P&G (Procter & Gamble) and Unilever have made this clear. P&G took it a step forward in challenging current structures, and stating upfront that not only will it take capabilities in-house but also that it is going to be very choosy about what it will pay for. It is cutting down its investments in digital and the number of agencies it is working with.
The last two years have seen more than 50 agency chiefs, directors and other people in prominent positions being asked to leave for inappropriate conduct, which has ranged from gender and racial bias at work to sexual misconduct to even the allegation that saw the most powerful man in present-day advertising — Sir Martin Sorrell — fall on his sword, and step down as WPP CEO.
A few days later, Vivendi’s Chief Vincent Bolloré was placed under formal investigation, where media reports suggested that communications group Havas too had a role to play.
Bolloré’s case dates back almost a decade and the financial impropriety complaint against Sorrell was for an expense done over a year ago.
The industry, and the environment it is working in, is introspecting, it is asking for transparency and it is holding its leaders accountable.
This dual trend of the advertising business model, that has for some time now relied on scale, coming in the line of fire and the aspersions being cast on some of the senior leaders who have been this industry’s visionaries, shaping it and defining it, is not the best news for advertising.
What it does reiterate is that things will change.
Reconfigure
There is no denying that it was Martin Sorrell’s sudden exit from WPP that triggered and heated up the conversation of the change that holding company models, and advertising itself would have to undergo. If holding companies were about consolidation for strength in scale, the predictions forward are for breaking down. Ad land chiefs will tell you that the very sound of that is neither appealing nor happening.
Fragmentation, irrespective its application, has meant a challenge more than anything else. If the likes of P&G want to cut down the number of agencies, fragmentation is an exact opposite of a solution. But if the likes of P&G are going to take capabilities in-house, the shape of advertising will have to change.
Publicis Groupe’s Chairman and CEO, Arthur Sadoun, one of the newest holding company chiefs having been in the position for not even a year now, said in a recent interview that “Nobody should’ve waited to see what has happened at WPP to realise that yes, holding companies need to transform drastically.”
He is of the opinion that holding companies, in their current structure, will not survive. This may be true or not but it is his argument that is noteworthy.
Everything has changed — the consumer, the media landscape and a direct impact of that is the fact that marketers and their companies have to change.
If the marketing at P&G is seeking more streamlined and cost efficient solutions, it is because the company on the whole is driving towards that course. They are addressing new realities and market uncertainties.
If Ford has asked to review its advertising mandate, which in the wake of Sorrell’s exit sounded like the beginning of the end to a very select few, it is because Ford itself needs to shape up for a new reality for the auto sector — one of the industries that has been most impacted and most embracing of new technologies.
As the industry changes, advertising will have to reconfigure. Ad landers have survived many challenges over the centuries. The legacy advertising brings to the equation cannot be substituted but it needs an overhaul for a digital or a new age perspective.
Holding companies such as Havas and Publicis took a step in the direction of change, and this will define how the advertising structure and model changes in the next decade.
Rewire
The next decade will force decision makers to unlearn a lot of what has formed the foundation of the advertising business. As leadership itself comes under crisis — seen in the increased number of abrupt exits and investigations launched against agency leaders — there will soon be a push for a ‘clean slate’.
Ashish Bhasin, Chairman & CEO Dentsu Aegis Network South Asia & Chairman Posterscope & MKTG APAC told BW Businessworld that for the longest time, advertising and marketing has been about the one-way conversation, a talk down approach. In the wake of social media and other digital platforms, the talk down approach may have changed to seek a dialogue instead of a monologue, but the art of listening to the consumer, and to the industry, has yet not taken form.
The effort for change is there, but changing old habits is never simple. The decade ahead however will see this change take form. The question then would be — what would the role of a brand, and hence the mandate of an agency, be?
Among the many changes, the most popular prediction is of the changing role that content will play.
“Content was and continues to be the hero of the ad land. According to Havas research, there is a 71 per cent correlation between how a brand performs on improving personal wellbeing and the strength of its content, of which 60 per cent of the content provided by brands is poor, irrelevant or fails to deliver,” points out Anita Nayyar, CEO, Havas Media Group, India & South Asia and CEO, Havas Group, North India.
Agencies will have to rewire their thinking patterns to make meaningful changes for their future. Among the many changes that can be expected, Harish Shriyan, CEO, Omnicom Media Group India reminds that communications will be integral to the cause of business transformation.
Along with content, the role of data has been repeatedly pointed out as a building block for a new industry structure.
“The rise of algorithms is on the cards. Agencies will play to their strength and data will be used to pre-empt possibilities. Gut feel will get validated, but will remain the hero,” says Shriyan, adding, “It is said that change is the only constant. It is up to us to just accept it or to impact it. Sometimes answers to the future lie in the past.”
Reset
The advertising industry is standing at a crossroad. It is the industry that understood the importance of global best practices in local presentation, bringing Indian insights to life and making a difference to brand and consumer.
This role of advertising is its very definition. Irrespective the structure advertising dons, this role is unlikely to change. How and who does it may be the biggest questions to watch out for in the decade forward.
The skill sets of the future that will have artificial intelligence and machine learning at its heart, will not be what is seen today. The new ad landers will not need to do any manual — they will be about the creative and the strategy, and this will not be limited to the so-called creative agencies, indicating advertising is heading to the very roots of adaptation — only the fittest will survive.
