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Much like newspapers, conventional advertising agencies are becoming irrelevant. When one person with a wireless connection can be an agency, a media company, or even a manufacturer, traditional advertising organizations have to change their culture, processes, structure, talent policies, resources, and even their business and revenue models in order to embrace the power of open systems being fueled by digital connectivity. The old agency businesses may still have time to correct their course, but they must start now.

The radical democratization of business over the last decade created by open innovation, crowdsourcing, and co-creation is transforming how advertising organizations work. Victors and Spoils (V&S), where John is CEO, for example, wanted to land the Harley Davidson account after the motorcycle maker split with its long-time agency. But instead of going through the typical pitch process, the V&S team created a brief and posted it to its crowd of 7,200 creatives and strategists — made up of freelancers, moonlighters from other agencies, and brand and advertising enthusiasts all opting to work in a new open model. Six hundred ideas flooded in, John tweeted Harley CMO Mark-Hans Richer about what V&S was up to, and Richer tweeted back “go for it.” V&S ultimately presented 65 of the ideas to Richer and landed the account. Whit Hiller, a Vespa dealer in Lexington, Kentucky, came up with the theme of “No Cages” and it continues to be Harley’s brand anthem two years later.

As part of the crowdsourcing effort, V&S created Fan Machine, an app that turns a brand’s social media platform into a virtual creative department, making fans central to the advertising process. Harley helped V&S launch Fan Machine by enlisting its fans to develop a new campaign. The app is one part ideation engine, one part social media platform, and one part ad agency. Harley used Fan Machine to communicate the idea-submission process to fans, describe awards and deadlines, and push a brief live. Then, fans got busy submitting ideas, voting them up or down, and sharing their own entries with their friends. Meanwhile, V&S tracked the brief, moderated the entries, collected fan data, and reported it back to Harley. Two-hundred-twenty-two ideas and 8,193 votes later, a concept from Harold Chase, a Harley fan from Tukwila, Washington, rose to the top. Harley fans loved it, the client loved it, and V&S crafted and produced it. The resulting “Stereotypical Harley” campaign was conceived by and for Harley fans and launched via twitter.

In another crowdsourcing venture, V&S helped Smartwool create fan-based advertising through a social media app that invites the firm’s fans to upload images of themselves “Stripping to their Smartwool” to Facebook. The brand makes these fans into stars by using their images in Smartwool’s advertising. Taking the campaign further, V&S has turned Smartwool’s fans into field-testers who not only star in the advertising but also help the brand in its product innovation process. Typically, outdoor companies use professional athletes as field testers to help them not only test their products but also help innovate. Using real customers and fans makes more sense as they’re actually buying and using the products.

While open innovation platforms in advertising lend themselves to creative work, they’re also being tapped in the production phase of the business. MoFilm, Poptent, and Tongal, for example, focus on video production for television and web films. In every part of the industry, the open innovation model is changing the economics of advertising by switching significant fixed costs to variable costs and sourcing creative from more relevant and, many times, lower cost sources.

Each open innovation agency (and there are many) has its own revenue model, but common to all of them is the basic proposition of expanding the agency’s capabilities by tapping the wisdom of a global self-selected crowd of creatives, strategists, and fans. In his research on InnoCentive, the first global Internet-based platform designed to match problems with creative problem-solvers, Harvard Business School professor Karim Lakhani observed that the further a problem was from the solvers’ field of expertise, the more likely they were to solve it. Since few companies have the resources to hire the diverse disciplinary expertise found in open innovation networks, agencies will have to tap these networks if they hope to compete on creative output.

They’ll also need these networks in order to compete on cost: The open innovation model can shave time and expense off the old ad development cycle. V&S begins a client engagement by inviting its crowd to help define the brand’s problem — sometimes using the brand’s own community of fans. This “defining” is the same thing that traditional agencies do, but the process is virtual, larger scale, and often both faster and more likely to produce relevant insights. During the creative development process fans can provide feedback early in the process, during pre-production, saving a lot of time and money compared to the old cycle of campaign, test, refine, and so on. When one of ten ideas catches fire, then the V&S core group of professionals, who are also from the open innovation pool, work with the new input and insights to deliver the final product.

For ad agencies to survive the shift to open systems they must not think of it as an innovation but as a transformation. As we’re still in the experimentation phase, we need fearless clients, managers, and organizations. Agencies must rethink their business models and go from being place-based organizations that sell employees’ time to creating a new operating system that harnesses the creativity that’s all around them.

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With increasing heterogeneity in every market and global exposure just one tweet away, all brands, even local ones, must begin to think globally or suffer the consequences. In 2008, Fiat used Richard Gere as a spokesman in an Italian ad campaign. Though the ad never aired in China, the use of Gere, a pro-Tibet activist, outraged Chinese consumers and caused Fiat to lose traction in the booming Chinese auto market. There are many examples of global advertising concepts getting lost in translation, but today the stakes are higher than ever; a poorly conceived ad in one market can damage the entire brand.

It’s hard to create relevant and timely global advertising themes, positioning, and stories that reinforce the brand, appeal to consumers around the world, and can be creatively delivered through all touch points. Global brand advertising can rarely reflect the idiosyncratic characteristics of every market, but the alternative — locally designed advertising — often sacrifices a consistent global message and misses out on economies of scale. One solution to this tension is to pursue what we call glocal advertising strategy — locally adapting a universally embraced core idea that will resonate in any market anywhere in the world.

This strategy rests on three pillars: 1) a global concept that addresses a universal human motivation; 2) a unified brand vision with creative delivery that respects local nuances and empowered consumers in each locale; 3) an organizational architecture, including culture, technological platform, and dedicated resources, that emphasizes and facilitates dynamic and effective collaboration between the developers of global strategy and local strategists and implementers. Below we examine two campaigns from companies that have effectively applied these interrelated principles.

By getting the glocal model right, Johnnie Walker reversed a continuing decline and more than doubled its global business in ten years. Successful global advertising concepts, as demonstrated by the EffectiveBrands consultancy’s Leading Global Brands project, start with a simple but powerful idea: they address a universal human motivation that crosses cultures. At the highest level are motivations like a desire to be healthy and safe, attain an education, provide well for one’s children, and achieve one’s aspirations. Next, they find a positioning that goes beyond describing product attributes to address the motivation. Johnnie Walker started with the understanding that men around the world, regardless of culture or country of origin, seek to advance in their lives. This universal human motivation unlocked both a global positioning — specifically, “inspiring men to progress” — and an advertising expression of this, “Keep Walking.”

From the outset this campaign was both global and local. For example, the initial print and poster elements of the campaign featured inspirational quotes from many cultures: “A journey of a thousand miles begins with a single step” from Lao Tsu was particularly powerful in Asian cultures; Hannibal’s “We will either find a way or make one” resonated in Western cultures. There were more than 100 quotations used, many uncovered in the local markets, such as the twelve quotes in Swahili, a language not written down. Over more than 13 years, the “Keep Walking” campaign has transformed the Johnnie Walker and Scotch whisky business globally. It has spawned more than 70 TV ads, hundreds of outdoor and print ads, and numerous other adaptations across the marketing mix.

Coca-Cola has similarly embraced the glocal model. The company’s “freedom within a framework” marketing philosophy epitomizes a successful glocal mindset and organizational culture and architecture. It requires that the designers of global advertising strategy carry a creative concept most of the way to execution while regional marketers tailor the work to make it locally relevant and aligned to the different category and brand situations in different places. Importantly, the framework respects and encourages local decision-making while at the same time supporting a unified brand identity. Moreover, the organizational architecture aims to tap into the best ideas and talent, no matter where in the world they come from; this fluid process lets more innovative ideas get recognized and become the basis for a global strategy. Content management systems then enable the organization to scale ideas quickly by making content available and accessible around the world.

Glocal strategy is not only for global brands — this three-pronged approach has increasing relevance for any advertising directed at diverse consumer segments. While this is particularly true in markets such as the US, with numerous ethnic and cultural segments, consumers worldwide are becoming increasingly identifiable as what The Tanning of America author Steve Stoute calls “Omniculturals”— people who define themselves more by their lifestyles and economic and educational attainment than by their race or ethnicity (read Stoute’s contribution to the Wharton’s Advertising 2020 project here).

Glocal approaches will transform the development and delivery of advertising as more brands discover their global potential. In a contribution to the 2020 project, Garinois-Melenikiotou, CMO of Estée Lauder, suggests that by 2020, “global brands and agencies will reorganize themselves — with speed, agility, and editorial spirit — to create stories that will travel across countries without being lost in translation.” Today more than ever, brands can and must reorganize for the global stage.

JERRY WIND, STAN STHANUNATHAN AND ROB MALCOLM

Jerry Wind is The Lauder Professor and Professor of Marketing,The Wharton School; Director, SEI Center for Advanced Studies in Management; and Director of the Future of Advertising Program. Stan Sthanunathan is Vice President of Marketing Strategy and Insights, The Coca-Cola Company. Rob Malcolm, is the former President, Global Marketing, Sales and Innovation, Diageo (retired).

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- Field experiments
- Advertising models: going beyond marketing mix and attribution
- Combining experimental and non-experimental data
- New measurement techniques: eye tracking and emotional response

To encourage a lively discussion on what these cutting-edge findings mean for today’s marketing analytics professionals, the program will feature short research presentations combined with panel discussions. The highlight of the day will be a keynote from Deb Roy, an expert in data-driven methods for analyzing and modeling human linguistic and social behavior, and founder of Bluefin Labs (recently acquired by Twitter).

Visit event webpage here.

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