Are Agencies About to Enter a New Golden Age?
By Mike Carlton

The advertising model was simple. Communications was From One to Many.
Are agencies about to enter a new golden age? Or will agencies become redundant and begin a long decline?

The Birth of Advertising

Eons ago, an enterprising tradesman placed a sign outside his cave. It promoted his products to passers by. It was his intuitive way of trying to increase his business and thus improve his standard of living.

Now since there was no written language at that time the sign probably only contained a crude picture of his offerings. That graphic was historyís first logo. And the sign was the first advertising. While none recognized it then, that sign, and the brand it conveyed, was the momentous beginning of our industry.

From One to Many

The advertising model was simple. Communications was From One to Many. That is From One (the entrepreneurial cave man) to Many (his neighbors). It was a one way message. And of course assumed that his cave was in a high traffic location and thus a lot of prospective customers had a chance to see his sign.

Coming to the Message

Another factor in this early advertising was that the message was stationary. The sign was mounted at the merchantís place of business. It did not move. Thus, the customer had to come by that location to see it.

And if he did not come by he completely missed the message.

During the next tens of thousands of years the use of location signage grew dramatically. Visual branding and logo design increased in what could be called sophistication for that time. All based on communications principles that became the foundation for the future advertising industry.

Written Language

Ever so slowly written communications began emerging. First as hieroglyphs using graphical images. Then followed by primitive languages. This meant that messages could now be put into writing. A new craft skill was born. Persuasive copy writing came into being. A great leap forward.

However, copying and distributing a written message was an enormous challenge. Wide distribution of any writing was almost impossible. An individual could spend years making just one additional copy of a large document by hand.

Along Comes Mass Media

Around 3,000 BC primitive printing began. China led the way in early printing and paper technology. But it was still impractical to print many copies at a time. But, ever so slowly the printing process improved.

Then in the 15th century things changed abruptly when Gutenberg invented movable type printing. All of a sudden it became quick and easy to produce many copies of a message. And to deliver it simultaneously to many customers.

This was another great leap forward for advertising.

For the first time a mass message could be delivered to the customers rather than the customers having to come to the message. Think about that for a minute. The marketer could now reach out to multiple customers wherever they may be. Big, big change.

While signs and logos continued to flourish they were now augmented by printed advertising messages in newspapers, magazines, direct mail flyers, catalogs and brochures.

But one thing didnít change. The advertising model was still From One to Many. The marketer sent a common message and lots of consumers received it. Much more efficient. But not very personalized.

Remember, the only thing that mass media had changed was the way the message was delivered. The From One to Many model endured.

More importantly, mass media slowly ushered in the creation of advertising agencies to help marketers craft the needed messages. Being able to just deliver a mundane message is different from being able to deliver a persuasive message. Creating messages that engage the consumer and change her behavior is the magic dust of advertising agencies. No one does it better.

Electronic Media

In the 20th century electronics dramatically expanded the scope of mass media. Radio and then TV burst upon the stage with new ways of reaching consumers. Audience numbers skyrocketed.

Advertisingís role in the economy grew exponentially. A large part of each of our lives became influenced by the thousands of commercial messages we received each day.

And contrary to initial concerns, radio and TV did not replace earlier forms of advertising. Logos, signage, newspapers, magazines, direct mail, catalogs, brochures, all continued to be part of the media mix. Electronic media just dramatically expanded the playing field. And continued to improve efficiency

The First Golden Age

Advertising agencies flourished during this period. It was called their golden age. They became masters at crafting singular messages that moved large groups of consumers. The entire advertising agency business model was built around one highly persuasive message for lots of people. The From One to Many model. Only the way of distributing that singular message had expanded dramatically.

So while there had been enormous technical change, and agencies perfected their skills in persuasion, the controlling model, From One to Many, continued unabated. Essentially that dimension of advertising was no different than it was in the day of our entrepreneurial cave man.

Personal Relevance Marketing

Late in the 20th Century, Don Peppers and Martha Rogers championed the concept of 1to1 marketing. The principle was simple. Marketing communications is much more effective when you treat different customers differently. Very simple but enormously powerful thinking.

Now this idea had always been applied by smart personal salespeople. But now, with technology, maybe it could be applied to customize mass advertising.

This became an ďah-haĒ moment. It opened the door to the whole notion of personal relevance marketing which embraced the collection of relevant information about each individual customer in a big database and then using that knowledge to create dynamic content so that each customer could receive messaging individually tailored to that customerís special interests.

A Tens of Thousands Years Old Model Turned Upside Down

Wow! The entire marketing model of From One to Many began coming into question. If customers responded better to messaging that was personally relevant to them didnít it make sense to use technology to make that happen?

But wait. The traditional business model for the entire advertising agency industry, and related firms, is deeply rooted in the From One to Many approach. A model ingrained in everyoneís thinking. The whole idea of a different message for each different customer was almost unthinkable.

How in the world could an agency create a million different messages for a million different customers?

Marketing Automation

Wikipedia defines Marketing Automation in its broadest scope as ďSoftware platforms to streamline sales and marketing by automating repetitive tasks.Ē But in practice, it is much more than that. The late Josh Stailey of The Pursuit Group was a pioneering thinker in this area. He wrote one of the clearest treatises on the subject which is on their website.

Marketing automation can now make it possible to touch each consumer in the right way at the right time with the right message. All tailored exclusively for the needs and interests of that individual.

The unthinkable has become thinkable.

The Technology Trap

But marketing automation is a lot more than just software. Yet the buzz at this time is mostly about technology. There are lots of marketing automation software suppliers out there. Most are quite new at it. And some are a lot better at it than others. And the buzz is about who has the best system. And which technology providers will survive and which will founder.

To one degree or another, most are capable of capturing relevant information about individual customers and then delivering dynamic messaging to them. And the better systems can easily integrate messaging across multiple media platforms.

But the conversation about the technology misses an important point. If the messaging is not in sync with where the customer is in his personal buying stage or if the messaging is not emotionally compelling to him how effective is it?

What to Say and How to Say it

This takes everything to a whole new level.

Once the marketer knows what the customerís individual interests are and has the ability to tailor the messaging to her, the next two crucial questions are, 1. What to say? and 2. How to say it?

The first question here is about message appropriateness. As we all learned in Marketing 101, buyers go through a series of stages on their journey to a purchase. Generally, those sequential stages are defined as Awareness, Comprehension, Conviction and Action.

The buyer must first become Aware of the vendor, then, and only then, must Comprehend how the vendorís offering can benefit him. That should be followed by a Conviction that the vendorís offering is the right thing for him and finally Action is necessary to complete the purchase.

At each of these stages the customer is most receptive to different specific information from the vendor. Messaging should be stage appropriate.

Message Appropriateness

For example, at the Awareness stage messages about the vendorís brand are usually most appropriate. Then when she moves to the Comprehension stage the buyer wants to understand the features and benefits of the vendorís offering. At the Conviction stage third party endorsements of the product can have great traction. And at the Action stage the price or deal moves to the fore.

Obviously, the content for each of these messages is different. It is the same customer with the same general interests. But her information needs change as she goes through the buying stage process. And just as obviously, delivering appropriate messages that are in sync with her immediate needs produce the best results.

So pushing beyond the basics of marketing automation the smart marketer captures information about where each customer is in their personal buying stages and then delivers appropriate messaging at just the right time. This answers the what to say question.

Creative Leverage

But thatís only the first part of it.

While it is seldom defined this way the primary benefit marketers seek from their advertising agencies is to make the marketerís spending more effective. Everyone knows that a good ad delivers better market outcomes than a poor ad, even though they may cost the same.

It is the simple creative leverage that is the essential value a good agency brings to a smart marketer.

Agencies have always been the experts at how to say it in ways that maximize creative leverage. But up to now, most of their efforts have been focused on the From One to Many model. Traditional Super Bowl spots are a classic showcase of creative leverage at work in the From One to Many model.

From One to One

Now, for the first time in history advertisingís From One to Many model is being challenged. The potential impact on advertising agencies is incalculable!

It is now possible for each consumer to receive personally relevant commercial messages that are also appropriate to their position in the buying stages and are crafted to touch their emotions in a highly effective way.

Clearly it is possible. But is it practical?

Many Different Messages for Many Different People

Technology can support it but can existing creative resources fulfill it? Thatís the fundamental question facing agencies and their clients. And perhaps even more basic, if agencies do it can they make money at it?

Now we must understand, traditional advertising from One to Many will not go away. Singular messages for a lot of people will continue. But increasingly, marketers will be using marketing automation to tailor unique messages for individual customers.

This means a quantum leap in the number of different advertising messages that will need to be created. And the traditional craft skills that reside within advertising agencies are the logical first place to look for fulfillment.

Stop and think about this for a minute.

We could be looking at a ten fold, possibly even a hundred fold, increase in the number of different advertising messages that will need to be created. The magnitude of this shift can be mind-boggling.

Are Agencies Up For It?

Clearly most business models and cost structures used by agencies today are insufficient. It is unlikely that clients who need many more unique messages will pay the same average unit cost for each message as they do today. So, new, more cost effective, agency business models and processes must be created.

Ones that demonstrate that agency creative prowess delivers better value than the client can find elsewhere. Because if agencies canít or wonít do this clients will take the work in-house or use yet to emerge new breeds of outside creative resources.

It Took Eons to Get Here

Confucius is credited with the saying, ďMay you live in interesting times.Ē No one has ever been sure if this was meant as a curse or a blessing. But it sure looks like we are on the cusp of the most interesting times the advertising agency industry has ever experienced.

Where to from here? Are agencies about to enter a new golden age? One where their message crafting skills meet the exploding demands of marketing automation? Or will agencies cling to the past and let themselves become redundant while sliding into a long decline?

The answer is up to you.

© Carlton Associates Inc.

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