Ad agency uprising for data-driven transformation is not far away

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The world does not need ‘another’ advertising agency. Yes, but they do need an ‘other’ advertising agency.

The advertising and marketing world is in the midst of ongoing and tumultuous change. Agencies are facing several growing threats, including competition from new players (Deloitte, Accenture, to name just a few), calls for more transparency and a growing demand for data-driven approaches.

The good news is that agencies have always adapted to changes in the past. And come out trumps. But what’s required to cross the line this time?

The history of advertising has taken many twists and turns, from the first ads that spit out from printing presses to the catchy jingles that hit radios and televisions. There was the dawn of the internet and the first display ads, and then we moved into the advent of programmatic, trade desks, DSPs and a multitude of ad-tech acronyms.

Through it all, advertising has played centre stage in pop culture and, in a sense, has directed how we interact with each other.

Agencies (at least quite a few of them thankfully still) have not lost their edge in creating compelling, captivating, persuasive creative. But they are hitting speed breakers in the form of challengers like Deloitte and Accenture, who are successfully offering the same kind of creative services traditionally offered by agencies, combined with legacy management consulting capabilities.

A potent and winning combination. Added to that is the ‘flavour of the season’ of ‘in housing’ wherein brands are severing ties with agencies and taking work in house. Not in the least, the calls from clients and their customers for trust and transparency are getting louder and a data revolution is charging forward with eye-popping acquisitions.

An example worth looking at is that of Accenture Interactive, which has grown to be a $7.8 billion business in 2018 – the same size as Interpublic, the world’s fourth-largest ad group in a matter of just a few years. Expect this trend to continue as the percentage of marketers who say they would hire a consultancy for agency work has almost doubled from 44 per cent in 2016 to 77 per cent in 2017, according to Forrester Research.

All this is causing big ticket agencies launching data systems to ensure they’re wholly data-driven in all corners of their operations from strategy and design to measurement and analysis.

But what’s also required is the deepest consumer understanding, the most contextually relevant insights for their clients and a continuously updated view of today’s evolving consumer. Who remains unabashedly infidel. Aided in a large part by the 25 per cent to 70 per cent off malaise (vociferously supported by the big agencies, with brand owners being willing accomplices), 13 months in a year. The shoe has begun to bite, and how!

Another area of concern is that many brands are ditching their big agencies for smaller, independent shops. Not surprising. As these smaller agencies are able to offer more agility, creativity and targeted reach. At far greater value.

Data-driven is a basic requirement, insight driven leads to success. But will everyone be able to keep up? The biggest challenge in the move to becoming a data-driven agency is turning data into wisdom. Agencies will have to identify relevant and accurate data, amass and synthesise that data into information and then develop insight-driven strategies for clients.

Some of the big guns in the space have the resources to make the big investments in data. Recent examples being the acquisition of Merkle (a data-driven, technology-enabled performance marketing agency) in 2016 by the London-based Dentsu Aegis Network for $1.5 billion. Dentsu’s plan is to become a fully-digital economy business by 2020.

Another big transaction took place in July 2018 when Interpublic Group (IPG) announced plans to acquire Acxiom, a database marketing company that collects and distributes information from about 2.2 billion consumers around the world. IDG says the $2.3 billion acquisition will help clients better target their ads while relying less exclusively on tools provided by companies like Facebook and Google.

That’s nearly $4 billion invested by just two agencies to arm themselves with data and ultimately lead the transformative agency uprising. Agencies are quickly becoming more than just consumers of data but actual users and owners of data. Now they’re taking ownership of this data, not just their own but also leveraging clients’ data to build better strategies and better marketing for their customers.

But, simply having data is not going to help understand client’s customers. It’s about going beyond the basic demographics and sketching buyer personas. It’s about developing dimensional, dynamic modern-day personas based on the values and motivations of today’s consumer, combined with criteria such as demographics, media consumption, motivations, daily routines and many more attributes.

Time to reject the same old audience characterisations

Lots of agencies have data, but the key is turning data into wisdom and then wisdom into action. With the data revolution charging forward, most agencies will not have the same level of financial resources like Dentsu Aegis and IPG to acquire data-driven companies.

But they don’t have to. Agencies can have a better understanding of their client’s audiences with deep consumer insights, which can be outsourced to specialists catering to the SME agency network. When applied to acquisition, expansion or retention, these actionable insights produce better results for both agencies and clients – increased revenue and decreased costs for agencies and higher customer lifetime value for clients.

Suresh Dinakaran is Chief Storyteller at ISD Global, Dubai and Managing Editor of BrandKnew.

This article first appeared in Khaleej Times on the 13th August, 2019

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About Author

Suresh Dinakaran

Suresh Dinakaran is Group CEO of ISD Global, a brand strategy & creative ideations entity based out of Dubai with operations across the globe.With over two decades of insights, expertise and experience in building and growing brands across multiple geographies and media platforms.Passionate about innovation, ideations and creative leadership apart from writing,movies,music and sports. He can be reached on suresh@groupisd.com

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