42 Admap • April 2008 © World Advertising Research Center 2008

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‘IHAVE A diminishing interest aboutthe future’ is what David Ogilvyanswered when he was asked about

the future of the advertising industry.When he said this he was, first of all,David Ogilvy and, second, in his late sev-enties. A diminishing interest about thefuture is a luxury only legends can afford.

I have a growing anxiety about thefuture. This is the only thing that gives methe right to propose some ideas about thefuture of our industry. I do not believe mythoughts will come close to a finalanswer, but I do believe that the advertis-ing industry is an interesting place towork and that finding ways to improve its efficiency and effectiveness is a worth-while project.

A brand-new world for brandsCommunication nowadays is far morecomplex than ever. I need not go intodetail about the social, media and techno-logical causes of this new reality, since so much has already been written, but clearly the nature of marketing communication has changed for good.Nonetheless, I can’t resist the temptationto mention the best description of thesechanges.

As my colleague Mohammed Iqbalwrites (1), as an industry we are accus-tomed to media time and space scarcityand to the idea of repetition as a device ofpersuasion. These ideas have becomeingrained in our thinking and practice somuch that we do not see them as a problem. The way we organise, developand judge our work follows conventionsof scarcity and repetition. But those con-ventions do not exist in today’s world ofmedia abundance and audience fragmen-tation. Also, the inhabitants of this newworld, the brands, are not monolithic entities that form uni-dimensional rela-tionships with consumers. Successfulbrands are multi-faceted, forming natural-ly multi-dimensional relationships – morelike the relationships between people.

Charles Darwin wrote that to surviveyou must be responsive to change.Responsiveness is usually found inhybrids that arise in an ecosystem inchange. These hybrids co-exist with lessresponsive species for some time and eventually a new species is born,properly equipped to survive in the newecosystem.

In our industry ecosystem, hybridshave been appearing for some time.

Agencies like Crispin Porter + Bogusky,Anomaly, Naked and others propose waysof working more suitable for the newworld of media abundance and audiencefragmentation. But their organisationaldesigns are not yet tested over time andthey have yet to prove themselves opera-tional on a global scale, so as to becomethe dominant species in our ecosystem.By studying the behaviour and organisa-tional design of those hybrids you canunderstand some things about the future;but I want to focus on understandingwhat stops the bulk of the industry fromevolving, even though the need for evolu-tion is unanimously accepted.

Any kind of idea, so long as it isbigAlso unanimously agreed is that ourindustry’s product is ideas. Ideas arestrange things. They can have incredibletransformative power, and they distin-guish great brands from also-rans.

What is not openly agreed, but we allknow, is that there is little understandingin our industry about what ideas are andhow they work. Our inability to definethis hampers efforts to review and revi-talise the way ideas are produced,developed, deployed and valued – stops usfrom responding to change.

Often an idea is sold by presenting agreat execution that’s instantly gratifyingbut disguises the fact that the idea is afalse dawn, with limited life expectancyor breadth of application. In a great bookentitled Rigorous Magic, Jim Taylor andSteve Hatch from Mediaedge:cia (2)explain what communication ideas areand what they do. We can understand thenature and status of communicationideas by placing them in a chart. On thevertical axis you define the status, strate-gic or tactical, of how the idea affects thebrand. On the horizontal axis is how theidea affects the audience, behaviourally orattitudinally (see Figure 1).

Advertising ideas are developed mainly above the line and aim to causeattitudinal transformation.

Platform ideas are territories or spring-boards for communication that can beused through the line, aiming to cause

Antonis Kocheilas suggests that the ad industry needs to evolve and develop anew business model

Agency practice: adherent tothe past

Tactical

Strategic

BehaviouralTransformation

AttitudinalTransformation

FIGURE 1

Defining the status and nature of an idea

Advertisingideas

Platform ideas

Activation ideas

CRM/directideas

April 2008 • Admap 43© World Advertising Research Center 2008

mainly attitudinal but also behaviouraltransformation.

CRM/direct ideas are developed mainlyabove the line; their nature is strategic and they aim to cause behavioural transformation.

Activation ideas are ad hoc participatoryactions, often executed through the line,aiming to cause mainly behavioural butalso attitudinal transformation.

A ‘big’ idea is a construct that liesbehind not just paid-for communications,but at the heart of the company’s explana-tion of who it is and what it does. A bigidea is a purpose, a rallying cry that guidesnot only marketing communications butthe whole organisation. A big idea is rare.It neither lives in a vacuum nor can it besimply produced by an agency and sold toa client. It is the product of a symbiosisbetween agency and client: the agencyexpresses the idea and the client lives it.

Our industry persistence with ‘big’ideas is idealistic, not to say romantic,because ‘big’ ideas are only a small portionof what we produce, just as sports cars areonly a small portion of what the automo-tive industry produces. What we say toour clients is that you can have any kindof idea you want, so long as it is what wethink is big.

Our tendency to claim that everythingwe do is a big idea diminishes the value ofbig ideas. Our industry’s inability todefine the characteristics of its productleads automatically to an inability tomatch this product with our clients’needs and to align the processes that produce it in order to make them moreefficient.

What is the price of sweat?How we define our product defines notonly our business model, but our com-pensation model. For agencies, it still doesnot seem right to be earning a living forsomething as intangible and indefinableas an idea. We prefer to sell somethingtangible – a reel of film, a poster or a point-of-sale display unit. Or, even worse, weprefer to charge for our sweat, our effort toproduce them. It is odd that an industrythat is thought to produce the oil thatlubricates the cogwheels of capitalism

prices it with Marxist logic. As Ron Baker explains (3), the current cost-based compensation model for advertisingagencies is based on Marx’s theories. Marx explained this in Value, Price andProfit, in 1865:

‘The relative values of commoditiesare, therefore, determined by the respec-tive quantities or amounts of labour,worked up, realized, fixed in them.’

If Marx was right, two friends emerg-ing from a movie would have enjoyed itequally, since it took the same amount oflabour hours to produce, so each wouldvalue it the same. Marx ignored the con-sumer, who ultimately determines value.

Any transaction between a willingbuyer and a seller is not based on equalityof labour, but on the subjective value of goods bought and sold. The currentcost-based compensation model for adver-tising agencies is flawed, because itmisaligns the economic incentives oneach side. The client pays whether theagency adds value or not, and the agencyis paid a fixed amount regardless of thevalue it creates.

This takes us back to one of AdamSmith’s central insights, that both buyerand seller must gain from an exchange, orit will not happen. The existing compen-sation model focuses entirely on thewrong things: efforts, executions andcosts. It does this at the expense of theright things: ideas, results and value. Avalue-defined price for our product pre-supposes a clear definition of what ourproduct is and how it works. Then theprice can be determined by the difficultyof the desired outcomes, ownership anduse of intellectual property, the risk theagency assumes, service guarantees andother permutations of value propositionsthe agency could propose. Ultimately, a business is defined by what it collectsrevenue for.

Existential dilemma Our inability to define our product, andour reluctance to charge for its value,affect our nature as an industry. We facean existential dilemma: are we offering aservice to our clients, or a product? Thishas a different answer depending on

where you look from. From the ‘creative’side, our industry produces a product, in the form of tangible executions of communication ideas, which are devel-oped, executed, sold and even awarded.From the ‘client-facing’ side, the industryoffers a service, ranging from brand strategy and consumer understanding toopportunities for delivering added valueand achieving growth.

This dilemma is reflected in the typicalstructure of the advertising agency. Halfthe agency is dedicated to building andnurturing the relationship with clientsand the other half to ‘creating’ the prod-ucts. For sure, advertising rhetoric isagainst this distinction, and preaches thatin an agency everyone should be creativeand everyone a brand ‘steward’, but this isfar from the reality of the average agency,anywhere.

What stops us from walking the talk isthat the industry compensates andrewards creatives for winning awards andaccount management for keeping theclient happy. This dual definition of pur-pose fosters a Tayloristic business model.Crafting a message that will speak mean-ingfully to the complex animal we call aconsumer is not simply a matter of theaccount manager opening the job, thecopywriter writing the copy, the art

Antonis Kocheilas has held seniorpositions in big communication

agencies – his last job was generalmanager of Ogilvy Athens. He is a

planner by trade.kocheila@hol.gr

‘To help our industry evolve to serve today’sneeds, we have todisrupt ourconventions and re-imagine ourselves,using the samecreativity that weuse for the brandsunder ourstewardship’

44 Admap • April 2008 © World Advertising Research Center 2008

director doing the layout, traffic puttingthe comp on the account manager’s deskat 2:45pm, and the account manager leav-ing at 3:00pm to present it to the client.Yet, sadly, that is how it works a lot of timein many agencies.

The process agencies use to develop marketing solutions needs to be muchmore interactive, both between depart-ments and between agency and client.Agencies need to break down departmentalwalls and the linear way they move a jobthrough the agency. Advertising is a service,but it is also a product, but what clientsvalue most is a solution (see Figure 2).

Neither an agency that creates self-indulgent artefacts nor one that just takesorders or is afraid to say no; but an agencywilling to make the effort to understandwhat the client really wants and needs.This empathy is necessary for big ideas toemerge.

A prophetic view?Google vaporised my illusion of writingabout the ad agency of the future. Notbecause Google is the closest manifesta-tion of the agency of the future, which itmay be, but because Google has over 45million listings under that heading. It issure that somewhere in the internet cloudexists a rough blueprint … but I will stillmake some predictions.

I believe that the first step that theindustry will take to escape the viciouscycle will be to unbundle thinking fromimplementation. Imagine that, perhaps,we reduce our implementation capabili-ties, not increase them. Perhaps we shouldjettison the creative department (or theyshould jettison us). Perhaps we shouldoutsource implementation completely –and re-create ourselves as genuinely neutral brand consultants, with commu-nication-planning capabilities that drawin ‘executors’ only when necessary. Wecould post briefs on a website and invitean online network for jobs when theyarise. We could have Tom Wolfe slug itout with Philip Roth for the AquafreshExtreme Clean screenplay. And Stingpitching against Rod Stewart for ananthem to Kellogg’s Strawberry Pop Tarts.

We would only have to pay them ifthey did a decent job. The new agencymight comprise: a management team

including most of the discipline heads inan existing conventional agency, areduced account management depart-ment, a reconfigured planningdepartment with both brand and commu-nications channel planning skills, and aservice department including IT, HR,finance, and so on. Most traffic and pro-duction, some planning and most creativeimplementation would be bought in adhoc, via a combination of an online mar-ketplace and the old-fashioned ‘littleblack book’.

By owning fewer assets and leveragingthe resources of partner companies, thesenetwork orchestrators require less capital;return higher revenues per employee, andspread volatile market risk across the network. The network organisation is notnew; a successful model has existed foryears. It’s called Hollywood. By switchingto it, the studios availed themselves of thebest talent for each product, creatingunique products and shedding unneces-sary overhead.

Maybe the business will evolve muchas clients have evolved; agencies willstructure themselves by segments. Taketelcos. They have moved away from divi-sional selling (for example, mobile,internet) into consumer segments. Agen-cies that were traditionally structuredinto direct, design, digital, etc., will breakdown the walls and group all this intoappropriate segments – ‘luxury’ or‘youth’. Agencies will use appropriatetools to build relationships by segment,rather than focusing on a single disci-pline. The tools used will vary, dependingon need: what matters is the segment weaim to reach, rather than the discipline wewant to sell. At the core are ideas – theessence of our lives.

Finally agencies will understand thateven the name ‘advertising agency’ is aproblem. ‘Advertising’ refers to paidmedia, and ‘agency’ connotes the idea ofcommissioned agents. That’s not howmost ad agencies want – or need – to be perceived by clients. The role of advertis-ing is to push (or pull) consumers towardproducts. At the centre is the product.Advertising is at the periphery, with pack-aging and CRM and distribution as layersbetween it and the product. The agency’sjob is not to interrupt, but to create con-nection content that is entertaining anduseful, so consumers wouldn’t want tolive without it. The future of advertising isgreat products with branding embeddedin them, not added at the end by commu-nications. All the brands we consider asiconic – Apple, Nike, Starbucks, Google,and so on – have branding embedded intheir offering.

Stop chasing our tailLet us return to the present. The three pitfalls described create a vicious circlethat keeps our industry glued to the past(see Figure 3). Our inability to define ourproduct, ideas, and how our productworks leads the industry to a flawed com-pensation model and a linear, Tayloristicbusiness model created to manufactureexecutions, not ideas.

Someone said that change is theprocess by which the future invades ourlives: let us welcome that invasion. Weshould understand that the three flawsare interrelated: each is both cause andeffect of the other two. So to help ourindustry evolve to serve today’s needs, wehave to disrupt our conventions and re-imagine ourselves, using the samecreativity that we use for the brandsunder our stewardship. The future isalways here, but is never evenly distrib-uted. David Ogilvy was blessed with alarger share of the future, his wordssounding ever more relevant:

‘Encourage innovation. Change is ourlifeblood, stagnation our death knell’. ■

Acknowledgements

Parts of the thinking and elaboration in this paperowe their existence to the books referenced, and tomany others. My thinking was also fuelled by con-versations between colleagues and myself atOgilvy’s Senior Management Program 12.

1. M Iqbal: The Elongating Tail of BrandCommunication.

2. J Taylor and S Hatch: Rigorous Magic.3. R Baker: Pricing for Purpose.4. T Williams: Take a stand for your brand.5. M Tungate: Ad Land.

More on agency management atWARC online

FIGURE 3

The vicious cicle that keeps the ad industry stuck in the past

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FIGURE 2

The value for our clients lies in the intersection

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