When was the last time you said “color” TV? Probably not in a while. The same thing is about to happen with the word “digital,” at least when its comes to the ad business. Right now a lot of agencies call themselves digital and many others tout the fact that they can do digital, but one day pretty soon all ad agencies will be digital and the word will be as unnecessary as color is to TV.
We are in the third wave of the modern ad business. The first wave was print. In 1940, when you walked into an ad agency you were walking into a print shop. By 1960, an ad agency was all about TV with some print thrown in. Tomorrow all ad agencies will be digital, of course, with working knowledge of all those other media, too. So just to state the obvious, digital channels will drive the ad business for the foreseeable future.
Putting aside the question of whether advertising, as we have known it, will even be relevant in the digital age, we in the ad business are faced with the question of who is going to lead this new world. Will it be digitized traditional agencies or the new breed of digital agencies with big ambitions? Every day we see evidence of the contest afoot. The outcome, however, is far from clear.
Traditional agencies have ruled the roost for 75 years. They’re huge, massively financed, deep experience and a multi-generation incestuous relationship with big brands. On paper they seem unbeatable, but when the ad world began its digital shift around five years ago they became vulnerable.
First, a word about what digital marketing actually is, although, of course, it may be something entirely different tomorrow. Anyone who has worked in both traditional and digital recognizes that digital is brain surgery compared to traditional. Sometimes I really miss the simplicity of an idea, some boards and a TV shoot. Digital, on the other hand, requires all the same skills we’ve always used in traditional plus a host of other disciplines. The result is a complex stew of skill sets that produce the pieces of a complex, interconnected, digital marketing ecosystem.
So the idea that traditional ad agencies can throw some money at digital, hire a few bright sparks and call themselves a digital agency might not fly. Looking like a digital agency to clients, when most of them still do not really understand the space, is a lot easier than actually doing it. Digital work is just too hard. It takes a different mind-set, much more sophisticated processes, a deep understanding of what technology can do and very experienced people. Then when you have all those pieces together, the whole has to mesh perfectly because the tolerances are so much less than traditional advertising. And doing it with the burden of a business model built on making money through mass media is, I believe, virtually impossible.
On the other side of the table digital agencies are confronting their lack of experience in leading accounts. While they know how to create digital projects better than their traditional brethren, they don’t get the basics. Sure clients want digital know-how, but they want functioning, reliable full-service ad agencies more. Before it’s time to talk about tactics and channels, brands need strategy and all the old skills perfected and refined by Madison Avenue. And with gaps in their service offerings and a history of operating below the line, most digital agencies don’t know how to be full service and are not used to the responsibility of the brand vision.
So here we are with traditional agencies struggling to become digital agencies and digital agencies struggling to become traditional agencies. It just another big convergence mess and the losers for now are the clients. On both sides you have partially constructed solutions: brands suffer from traditional agencies that are renovated with a digital coat of paint but doing what they’ve always done, and from digital agencies with incomplete organizations and inexperienced traditional skills.
The winners in this race, of course, will come from both sides. The holding companies will buy and build digital agencies that successfully integrate traditional, while other traditional agencies will try and fail to transform themselves and ride their old models down. Snapping at their heels will be the digital agencies full of energy and innovation, but suffering from their lack of discipline, credibility and resources. The battle for the lead agency position will thin the ranks. Some will lead, many others will fail and still others will be content to follow below the line. As with all Darwinian situations, the smartest and most adaptive from both sides will win while the weak will be killed and eaten.
Tony Quin is CEO at IQ Interactive and a board member of the Society of Digital Agencies.