AOL CEO Tim Armstrong Encourages Agencies to Step Up Their Game on Execution

Tells 4A's crowd to take advantage of new opportunities in media

When asked to grade agencies on how well they're leveraging new opportunities in media, AOL CEO Tim Armstrong today gave a measured, qualified response at the 4A's Transformation conference in Austin, Texas.

He gives them an A- for talking about new communications channels but only a B- for how they're using them. In short, he likes what agencies are saying but not the execution. And of course, he doesn't know any marketer or media owner—including AOL—who's satisfied with B work.

He talked about how the old ways that agencies plugged into media companies no longer work due to the complexities in the marketplace. Going forward, he suggested agencies and media owners "plug in" or connect in four vital areas: sales, product, content and engineering.

Armstrong also thinks that agencies are doing a poor job of marketing their work.

"From a talent perspective, from a client perspective, from a media perspective, the ongoing discussion about ad agencies and what comes up in those marketplaces in general—very little of it talks about the value proposition," Armstrong said. "There's a lot of value getting driven here that will get you better talent, get you better clients."

Rather, Armstrong hears more about competition and agency fee reduction than the value that shops bring to marketers. Big picture, he believes that agencies have a unique position in the marketplace to help marketers understand the sea of new communications channels and how to spend their money. Most marketers today simply don't have the resources to do it themselves.

"The biggest misnomer that people seem to have in the agency business is this whole notion of whether or not you need an agency," Armstrong said. "The clients don't have the headcount to operationalize a lot of the stuff we just talked about in general. They'll hire their people, they'll get there, but right now they don't."