What IP for Agencies

Most - vocal - readers agree that ad industry value is heading south: both overall or if one zooms on an individual agency (thanks to hammerandtong for his comparison of WPP’s and aQuantive’s market value). 

The agency view is great context, but at some point, I would still like to have a look at the history of the industry and compare the part of the pie agencies have gotten.  However, my friends at the DataCenter at Ad Age have assured me that would be extremely difficult, given the different ways of counting revenue over the years.  Any ideas welcome.

I do wonder at point things began to go sour (30 years ago, 20… 10?) and if there is an indication of a way out by untangling history...

While retrospection may be helpful, I’ll get back to the (nearer) present. When Pete and I were working on the Connected Agency research late last year, we were quickly convinced that agencies needed new IP to save their skins.  They needed to invest to create new value. 

The intellectual property that we put forward is deep consumer knowledge. In short, this translates for marketers as the promise of better performing marketing activities. That consumer knowledge is the driving center of a Connected Agency.

Off target? Far-fetched?  Or spot on?

What do you think?  Is IP the right pursuit?  And if so, what IP must agencies develop to keep themselves relevant for the next 20 years?

Comments

[David Mattia]

The distinction between "reported" and "directly measured" consumer metrics regarding media consumption has been around for a long time but the media side of the agency world has been slow to make strong distinctions in the nature and use of the data.
There is a lot to be gained by seeing deeper into this distinction. It is not as much of a sausage grinder as one may imagine and the comparative details, I think, will eventually produce sizable insights...especially during this part of the industry's evolution.

[Gunjan]

Yes, consumer knowledge is an IP that agencies can cultivate. That combined with 'market/ product knowledge' which the client brings in can create a powerful combination. They also need to be able to harvest a lot of knowledge from their work across industries, clients and create models around those. Or create Best Known Methods around those. That is something most client will value.

[Patti Sanchez]

I absolutely agree that agencies must innovate to stay relevant to clients and their changing markets. But at least in the B2B arena the biggest gap to address with IP isn’t the old saw of consumer insight – it’s the growing need to align Marketing with Sales. Both have become incredibly strategic disciplines that require a high degree of integration for success in either domain to really be achieved.

In our agency, we focus on bridging the literal gap between Sales and Marketing and have produced cutting-edge work in that arena. Here are some examples: http://www.getpearson.com/think/casestudy_channel.php, http://www.getpearson.com/think/symplaybook.php, http://www.getpearson.com/think/sales_enablement.php
We’d love to hear how others are grappling with the issue of Sales and Marketing alignment, too.

[Mary Beth Kemp]

@Patti - Proving marketing's value to business (ie Sales) is a growing concern of B2C marketers too. Hence the interest in accountability and marketing measurement. I do think that enablement will happen with consumer/customer knowledge, not necessarily via insight, as important as that it is, but through data and hooking the pieces of the marketing mix together on an individual level. (BTW, something that should happen on the B2B side too).
Lastly, I'd throw a 3rd piece into the Marketing and Sales allignment challenge: Service, and I suggest to you that the three will morph to be indistinguishable.

[Pavan Sabharwal]

this probably is going to sound a little simplistic, but here goes. I agree that IP that the agency should build is deep consumer knowledge, but hell, that is what is probably the most difficult thing to build in the first place.

Next come the G guys. Google probably has taken the art of math (if math is an art) for deep customer knowledge. G has the volumes that can be statistically used to define customer behavior, however that said and done, I as a consumer am 'Predictably Irrational' (do read this book).

I like the concept of the connected agency and the move to be part of the community eventually. I do believ that it would be imperative for the agencies to start focusing on the emotional factor as the next generation is a greater part of the impulse economy. While a the high margin consumers would continue to exist in the US and Western Europe, agencies had better get their thinking caps on to determine how and what needs to be created for the Bottom of the Pyramid. And trust me mothing works like trust here. Agencies need to build IP around managing WOM. That is something I don't see the infomediaries ever managing to achieve.

I think relationship and engagement mapping are two area where agencies can and should build a greater emphasis. A partnership with the data providers may help in defining some of the lies, damned lies and statistics, but at the end of the day what counts is how well can you either guess my intention or create an intention for me.

It would be great if you could share what are the top 5 areas within customer knowledge that you think agencies can create IP around.

BTW - 'Connected Agency' is a wonderful read as is 'Agencies Must Build Digital Skills To Survive' by Peter

[Mary Beth Kemp]

Thanks Pavan. My next book is indeed Irrational. You may enjoy too Daniel Pink's Whole New Mind (see my lastest post).
Agree that consumer knowledge is tough IP to build, but I suppose that's why it's valuable afterall...
Here's a short list of what I was thinking about in terms of consumer knowledge IP: first, how to access that consumer (most efficient and effective 'media' channels) and the access itself in some cases; an understanding of media triggers - so what impacts each consumer; their priorities and interests (as a community and as individuals), a framework for understanding consumer value (financial and social); and social relationship mapping - how consumers within the communities connect with each other.
What do you think?

[Pavan Sabharwal]

read the brief for 'A Whole new Mind'. Will definitely pick it up after I complete Irrational (few pages left) and 'Billions of Entrepreneurs'.
I did read your new post and will share my thoughts on it as well, however coming to agency IP again :-)

Thanks for sharing some more details on what you meant by conumser IP. I agree that since it is so difficult to build, it must be valuable. I particularly liked the 'framework for understanding customer' - financial, social and relationship slice of the IP as I think that this ties in well with the creative where the agency is still required.

Regarding the rest why would an agency build the IP when you already have folks such as Google, Yahoo!, Nielsen, Microsoft etc who have started down (and have built it for the online aka next gen consumers) the path and have the wherewithal (read - deep pockets) to invest in the same. Wouldn't it be more prudent for an agency to have a strategic tie up with someone like them to address the IP in a joint manner or do you still see the possibility of a 3rd party emerging that can complete this gap for the agencies and thereby create a new division similar to what has happned in the past with media buying and digital arms being spun off as divisions from end-end agencies? (whew)

I still belive that the true value of an agency is in the creative. You CANNOT replace that with anyone else. Storytelling is an art that most people will pay BIG money for. Agencies need to capture the science behind this art. Another key factor that I believe agencies should look at is IP creation to manage a global audience. In some sense would like to see an agency create an IP around creative process that mimics what the offshore IT industry in India has done. As an analogy, global agencies today still behave like the IBM of yesteryears, wherein they have a global brand managed by local teams. However today IBM has re-invented itself to be able to deliver anythign from the most economical delivery location(s) that make sense for the customer as well.

With the world shrinking and people travelling more (virtually as well) the agency needs to have a creative process that is GLOCAL. I would love to hear your views on how you have seen global agencies collaborate on a campaign (cradle - grave)

[Mary Beth Kemp]

I'm skeptical about delinking creative from intelligence. Sure, telling a story is truly important, but knowing who you're telling it too/or increasingly with, is equally important. That added to emerging niche markets and consumers valuing uniqueness, and the combination becomes even more powerful.

So will data sit with large destination sites like Google, etc? Yes. But not only there. I suspect that Google won’t be interested in drilling down to that one consumer/one community level nor have the appetite to consolidate data across all contacts/media; and to manage thousands of client/brand relationships. Connecting with agencies is for Google etc a way to multiply reach. And for agencies, Google et al are resources… perhaps foes today, allies tomorrow.