Why is this interesting? - The Marketing Agency Edition

On advertising, experimentation, and the challenge of being a marketing agency in 2019

Noah here. Having spent a good portion of my career working in marketing agencies, I often find myself talking to friends about what’s happening in the industry. The refrains are pretty familiar at this point: Clients are spending less and less money, everything is moving from retained work to projects, the big consulting firms are encroaching, and lots of stuff, particularly the work digital agencies used to live off (banner ads, website maintains, etc.), is moving “in-house” to be managed by folks employed by the brands, not the agencies. To be honest I hadn’t spent a great deal of time thinking about the reasons for why this was all happening because I’ve been happily out of the agency business for a while now. This week, however, I was having breakfast with a friend at a big agency and a few thoughts dawned on me that felt worth jotting down. (I beta tested these on the WITI contributor’s Slack to make sure they were interesting enough to throw out here first.)

Even if you don’t work at a marketing agency (or a brand that employs one), I think the things happening in the industry point to some broader shifts that are telling for just about any business that has a digital component (which, at this point, is almost every business). Specifically, the challenges agency now face are more a result of the shifting landscape of technology over the last twenty years than it is specific to their business model. Put more simply: Digital marketing used to be novel and now it’s not.

Why is this interesting?

So what’s going on? My theory goes something like this: At the turn of the millennium, digital marketing started to become a thing. This isn’t a particularly controversial stance and plenty of pixels have been pushed on both the dot-com bubble and the early wave of digital advertising. But what I think is largely missed in much of the writing is that digital marketing was an almost entirely experimental thing all the way up to 2009 or 2010. Whether it was running banner ads or having an e-commerce site, companies were still testing the waters to see if there was really a there there in this whole internet thing. At The Barbarian Group, where I worked for a few years running strategy, we were known for experimenting with new models for distribution (aka “viral marketing”), most famously with Subservient Chicken for Burger King. But even those investing in e-comm weren’t sure what was going to happen. And when you’re a big company who isn’t sure if something is going to work out, it makes sense to outsource it. If it works, you can always figure out how to take it over, and if it doesn’t you can cut the contract and clean your books. 

But then 2007 rolled around and everything started to change. I dug into this a bit for a presentation I put together previously, but 2007 is this amazing inflection point for marketing, technology, and really the world. Here’s what I wrote about it last year:

In January, Apple announces the iPhone, and Netflix announces a shift to streaming. Fast-forward to April, and Twitter becomes its own company and begins to grow rapidly under Jack Dorsey, while Google buys DoubleClick for $3.1 billion. Then in June, Facebook announces Platform, which allowed third parties to build apps on the social network for the first time. The fall brought about some big tech announcements as well — with AWS coming out of beta in October, Google announcing Android and Facebook launching ads in November.

If you plucked just one or two of those introductions out of the year it would still be a monumental one, but to see them all happen together is pretty extraordinary, particularly when you layer on the implosion of the financial world just one year later. (As an aside, a fascinating thought experiment is what happens with all this technology if these big things don’t make it out in 2007? Do they get shelved? Does it take us longer to emerge from the recession?) The biggest of these was obviously iPhone and Android, which unlocked the web from desktops and allowed internet usage to explode globally.

All of these shifts laid the groundwork for the buildup of the marketing technology industry, which at its most basic is infrastructure used to manage things that you used to hire agencies to do for you. That allowed the brands to have a best-in-class email marketing, content management system, or e-comm backend that was maintained, updated, and, in the case of SaaS, even hosted by others. 

Then, as the financial crisis really hit, companies did what companies do: They stopped spending on things that seemed superfluous. Here, all the bad stuff about digital advertising measurement, turned into a huge boon, as brands were able to justify digital spend much more easily than other channels, regardless of whether there was any truth to the numbers. 

That gets us to this decade and our current state. Brands have fully bought into the idea that you need to be able to operate your business online, and those that haven’t already moved those capabilities to a combination of software vendors and in-house employees are in the process of doing so. What’s left is a combination of more experimental digital projects, in some ways not entirely dissimilar from what was around in the early 2000s, and stuff like 30-second films for YouTube or Instagram, which are basically just TV commercials. The agencies that got fat managing ongoing digital projects are left fighting for projects and dealing with the uncertainty that comes along with the model. (NRB)

Photo of the Day:

Bicycle seat shelters to keep seats snow free for winter riding in Norway. (NRB)

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Thanks for reading,

Noah (NRB) & Colin (CJN)


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