Saurabh Sharma – Drivers of Change and the Advertising Company of the Future

Saurabh Sharma, Planning Partner, Ogilvy & Mather

Confucius pretty much predicted the future of marketing communications when he said “Tell me and I will forget/ show me and I’ll remember / involve me and I will understand.” This is the basis of the future of our industry.

There are three important changes that I have witnessed since I started my advertising career almost twelve years back:

  1. We no longer use acetate sheets to make presentations. That task has now been taken over by application software like PowerPoint and Keynote
  2. Media folks used to sit in the same office as ours, and work closely with us as one team. Today they flash business cards different from ours and, in most cases, are competing with us
  3. Internet, which was till then mainly used to send mails to our clients, has now become central to engage with customers and prospects

The changes above are rather simple and not as fancy as those happening in personal communication technologies. However, the basic drivers beneath the above three changes are more revealing. The 1st and 3rd change outlined above are driven by technology. The 2nd change is driven by the realignment of business model.

Similarly, as we look ahead and attempt to predict the future of advertising, it is important to look at the drivers that could bring about these changes.

I am not a futurologist, but as advertising professional and as someone who is very interested in visualizing the future, the topic of future of advertising really got me thinking about drivers of change.

According to the global megatrends survey, there are five key drives bringing about change to our planet:

  1. Globalization of economy and culture
  2. Demographic developments and increasing longevity
  3. Urbanization
  4. Climate change
  5. Penetration of every area of life by information and communication technologies

What are the drivers and developments that could bring about significant change to the future of advertising? I can foresee three:

1st driver of future change – Technology

Advertising is problem solving. It isn’t movie making.

Miniaturization of processing power coupled with affordable interconnectivity between mobile devices has helped us create ‘always-on’ world. Social media, location based services, SoLoMo (Social, local mobile) are just some of the, and relatively early, outcomes of developments in technologies.

Such developments in technology have already impacted advertising in many ways –

  From To
1 Feel good / likable advertising Measurability across the board
2 Creativity Collaboration
3 Advertising message Content that does not look or feel like advertising
4 Segmentation by facts Segmentation by fantasies (facebook likes!)
5 Attitude based targeting Behavioral targeting
6 Annual / quarterly advertising planning Daily and weekly planning
7 Trust and awe for brands Relationships based on reason and mutual respect

 

As a result of the changes above, advertisers today need to concentrate on delivering a minimum of one of the four things to their constituents (the three Es): Education, Entertainment, and Engagement.

2nd driver of future change – Role of marketing in the overall business organization

Future of advertising hinges on the relative strategic importance of the marketing function in an organization. Over the years, marketing has been losing its strategic importance in board level discussions. In a recent HBR Blog post, Bill Lee points out how traditional marketing is under pressure for various reasons. Many CEOs do not think their CMOs are credible. A 2011 study of 600 CEOs and decision makers by the London-based Fournaise Marketing Group has startling findings.

  • 73% of CEOs think their CMOs lack business credibility and the ability to generate sufficient business growth
  • 72% are tired of being asked for money without explaining how it will generate increased business
  • 77% have had it with all the talk about brand equity that can’t be linked to actual firm equity or any other recognized financial metric.

This is bad news not only for marketing but also for advertising, for the latter is helping marketing teams realize their plans. However if marketing plans do not have board-level support then advertising automatically is that much less significant in the overall business value chain.

3rd driver of future changeDevelopments in emerging markets

Imagine how will the English language change when 1.3 billion Chinese start using it. Similarly, imagine the future of advertising when big and growing economies of Asia like China and India, among others, were to become the biggest advertising clusters in the world. According to eMarketer projections, Asia Pacific, at $162.4 billion in 2012 and with a CAGR of 9.2%, is poised to overtake North America as the largest advertising market by 2014.

Because of the growth potential of emerging markets in Asia, future of most global corporations depends on their success in these markets. The kind of marketing professionals and marketing and advertising strategies that are adopted in these markets are going to impact the future of advertising in more ways than we imagine today.

What do the above drivers point towards? How will they shape the advertising company of the future?

I believe together these drivers could lead to at least two kinds of scenarios for the advertising company of the future.

Scenario 1 – Polarization

In this scenario the advertising companies of the future could end up clustering around two poles based on belief in technology and access to technology. While one of the poles could be largely about data driven innovation and creation, the anti pole could be about idea driven creation that knows data but does not always/only heed to it. Lets look at these more closely now.

1. The Pole

This could be the world where data would shape and destiny of ideas (Think of this as the world of Agent Smith in the 1999 Hollywood blockbuster ‘The Matrix’). When technology takes over most of the decisions.

  • Large / global corporations driven by Big Data and their global network-­‐ advertising partners -­‐ big organizations would adopt this because they would have greater access to transformative data mining and data management technologies that can be deployed for business growth.
  • High on analytics and lower on intuition -­‐ system and process driven large corporations will find more truth in data than individual intuition while making important marketing and business decisions.
  • This will trigger rapid business growth initially and then slow down into incremental growth as more and more brands and businesses tap into similar technologies.

2. Anti-­‐Pole

This could be the world where ideas shape data and create disruptive new possibilities (Think of this as the ‘Nebuchadnezzar’ in ‘The Matrix’)

  • Smaller companies, in new industries and segments and their disruptive creative/advertising partners will lead this. Irrespective of all the major changes elsewhere, these smaller organizations will continue developing new and transformational ideas at the edge of mainstream developments in technology adoption. This could primarily be so because of lack of access to the latest technologies in data mining. It could also be due to a conscious decision to stay away from standard and machine mediated solutions and the desire to think of disruptive ideas at the edge of conventional thinking and beyond behavioural targeting.
  • Big on intuition/ ideas and lower on data – They will continue to rely on intuition more than information and data about past behaviour of customers
  • Leading to exponential growth alongside good-­old risk

Scenario 2 – Integration and evolution

In this scenario advertising companies of all kinds – big or small will start adopting the benefits of predictive technologies that are based on analysis of past user behaviour. This will lead to the creation of a new kind of advertising company with certain characters.

1. A new advertising company with digital at its center:
It would have deep understanding of the digital world coupled with solid capability to deliver marketing and communication solutions in this environment. This is a very likely scenario because many of the new consumers, customers and people that the marketer would be engaging, would have grown up with digital. These people would not see any difference between their real and virtual worlds. A friend for them could be someone on the same street or someone two continents away. For them, digital would not be a channel or medium, it would be a part of their life.

2. A new advertising company offering a new kind of creative service:
Creative services would be different in a sense that they would be broader spectrum viz:

  1. Creative
  2. Creative Media
  3. Creative Technologies

Creative departments will not just have art director and copywriters but also people who have great ideas in general. Copywriting will no longer be central to the team.

New kinds of creative skills would be needed like spotting opportunities for sponsorships, partnerships, and collaborations with brands and businesses using technology, for example many new opportunities like Nike+ in the past.

Media will see the evolution of creative. They would also distribute content in non-traditional ways like in peer-t0-peer networks.

Tech Creative technology departments will focus on providing value to customers in the real and digital worlds.

3. A new advertising company built on collaboration:

Advertising companies will work much more closely with their clients and other partners. The same room will see opinion leaders working with marketers, and advertising professionals.

4. A new advertising company with new streams of revenue:
Advertising companies will make money not only on communication and engagement ideas but more. Constant need to improve the product and service for the end user will need more hands that the product development teams. This will lead to advertising companies having their own product intellectual property (IP) disciplines.

In addition to the above-mentioned characters of the advertising organization of the future, there could be another kind of advertising company based on its place of origin.

5. A new advertising network in the East:
With the development of China’s own global corporations, we might also see the birth of a global advertising agency coming out of China. (It has not happened yet because global Chinese corporations are still not marketing driven and Chinese government has not categorized media as a strategic sector).

A global agency network that is Chinese could have closer ties with China’s global corporations, many of which are and could continue to be state owned. We can imagine this global agency the way Dentsu was, and still is, for global Japanese brands and corporations.

Preparing for this future

While technologists have done their homework and have predicted the future of technology, sociologies and marketers have perhaps not yet fathomed the overall impact of these advancements in technology on humans as individuals and as members of social groups and the wider society. In order to prepare our brands and businesses for this future, we need to think actively about the human impact of two key dimensions of technology viz.

  1. Ubiquitous computing – the ability of more and more things to think owing to cheaper and smaller embedded processing power
  2. Ubiquitous connectivity – the ability of all these things to connect with each other and communicate actively

Based on the above two pillars of technology development and application we need to map future scenarios (see chart) of human behaviour across all walks of work and life. We need to think about basic human behaviour that would/cannot be impacted by pervasive connectivity and computing and what would it mean for work and life and thus marketing and communication. We also need to closely observe the developments in the technology space and visualize the relevant role for brands in this context. Also, advertising organizations need to incubate ideas and systems for the digital world that we are heading towards. Only such experimentation can assure long-­‐term success and growth of marketing services.

“Scenario plan”
Visualize the future of ubiquitous connectivity and ubiquitous computing and what could be the early applications of it “Map human behaviour in the digital sphere”

Understand how ubiquitous connectivity & pervasive computing will alter everyday human experiences (Micro soft Productivity Future vision 2020*)

“Map ‘digital-­‐independent’ human behaviour”
Refresh understanding of basic human motivations and what could be and what cannot be influenced by pervasiveness of technology in times to come

“Create a company inside the company”
Speculate with different kinds of talent and incubate, test new models of working with different kinds of clients.

* Productivity Future Vision: http://www.youtube.com/watch?v=a6cNdhOKwi0

As advertising evolves, it would look and feel a lot less like advertising and that is what will help it grow and add more value to businesses, brands and the society. John O’Toole, retired chairman of Foote, Cone & Belding, once said -­‐

“When executing advertising, it’s best to think of yourself as an uninvited guest in the living room of a prospect who has the magical power to make you disappear instantly.”

It would be useful for all of us to remember this as we chart our course into the future.

Saurabh works with Ogilvy & Mather in China as Planning Partner