In the ongoing saga of the transformation of our industry, one thing has become clear: Clients must lead the revolution. After all, it is their money, and their results, that are at stake.
When the multichannel revolution was in its infancy, many agencies attempted to build "one-stop" shops to handle all of a client's marketing needs and dollars. Whether it was Ogilvy's "360 degrees" or Y&R's "whole egg" or similar approaches, the idea was that clients didn't really need to change much to grapple with the revolution. The agencies they'd long trusted could manage the change for them. Ten years later, it's hard to find many one-stop-shop relationships. The business proved far too complex for any one agency to be truly best-of-breed across all channels. Furthermore, the agencies missed the point of the revolution. The multiple channels do not just represent more touchpoints through which to deliver a message. The real revolution is about the rise of new inbound channels that represent strings of behaviorally driven customer experiences.
Recently, agencies have turned to holding companies to solve their multichannel quandaries. While this might seem more promising than the one-stop shop, it has its own inherent problems. First and foremost, not even holding companies are best-of-breed across all channels. Second, holding companies have yet to figure out how to staff and organize these über-agency relationships, or how to manage the conflicts. Witness the vigorous debates among Martin Sorrell, Michael Roth and John Wren around the role of the holding company versus the individual agency brands in an über-agency relationship. The holding-company approach is still nascent, and clients will ultimately determine how it unfolds.
That leaves what might be called the "client-centered" model. This is the dominant model of our industry. Clients simply choose best-of-breed agencies across all of the necessary channels, often regardless of holding-company ownership. While the client-centered model is the most flexible, it puts greater strains on client organizations to review and select agencies, manage them and try to foster collaboration among them (most of which are fiercely competitive outside and even inside the particular client relationship).
The problem with the client-centered model is that it exposes the current shortcomings of client organizations. Like their agency counterparts, most client organizations were built to exploit the power of television to deliver marketing messages. Most of today's clients and their agencies achieved success in an era when television was the solution to most marketing problems. Clients and agencies became expert at delivering outbound messages aimed at changing perception. And the most popular media-delivery vehicle for the past 50 years was the 30-second TV spot.
As the power of television continued to diminish amid rapid technological change and customer control, perceptually focused agencies became commoditized. It's now a market-share game of the strong stealing business from the weak, while the real industry growth is now happening in the previously snubbed "below-the-line" disciplines of direct and interactive—both of which focus on changing behavior in measurable ways. At the same time, we've witnessed the rise of a new breed of perceptually focused agencies whose entire infrastructure and profit model is not premised on the creation of 30-second spots. This culminated in the recent award of the $400 million Volkswagen account to Crispin Porter + Bogusky without a review. After proving that it could successfully launch a major brand from scratch (Mini) in the world's largest market (the U.S.) without airing a single TV spot, CP+B exposed in one fell swoop the deficiencies of the TV-centric model.
Yet the ongoing revolution is not really a media debate about which formats can replace television. It's about the fact that consumers' lives have changed dramatically in the past 10 years. The changes are reflected in their media consumption, but they are reflected even more in what's become important in their daily lives. While the passive viewing of television long ago reached an innovation apex, every day we see change in the inbound worlds of customer experience, from the Web to on-demand to mobile technologies. Amid this explosion of innovation, most clients are wholly unprepared to exploit the opportunities. Despite crying out about the need to change, they continue to spend the lion's share of their dollars on outbound messages aimed at changing perception—mostly on television, and with agencies whose entire profit model revolves around the creation of such messages.
It's no longer clear that the right people are sitting at the table to embrace and profit from the multichannel revolution on the client side or the agency side. What is clear is that clients will get there first. As the stewards of the client-centered model, they have no choice but to do so. Clients must evolve their organizations from being perception-centric to experience-centric. They'll need to hire new internal people with 21st-century customer-engagement skills who understand inbound channels. And they will need to change the model of how they compensate agencies and finally break the 30-second deadlock.
In the end, many agency brands will continue to get deconstructed or perhaps not survive. New agency brands will certainly emerge. But clients will remain where they've always been: at the center.