Accenture interactive future_of_agency_relationships

Making Leaders Successful Every Day
March 29, 2010
The Future Of Agency
Relationships
by Sean Corcoran, Dave Frankland, and Vidya Drego
for Marketing Leadership Professionals

© 2010, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available
resources. Opinions reflect judgment at the time and are subject to change. Forrester®, Technographics®, Forrester Wave, RoleView, TechRadar,
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For Marketing Leadership Professionals
Executive Summary
Agencies continually reinvent themselves to serve their clients — they have to quickly adapt to changes
in marketing strategy, media, technology, and society. And with the rise of social media and digital
proliferation, we are entering an Adaptive Marketing era. In this era, mass media is no longer the
foundation of marketing communication, forcing yet another change in the expectations of what
marketing agencies can and should deliver. Marketers should assess their partners using the three I’s —
ideas, interaction, and intelligence — to select the right partners. Marketers who change their thinking
will lay the groundwork for partners that are more agile, can build long-term relationships with active
customers and communities, and can use data to drive real-time decisions.
table of Contents
Marketing Leaders Must Drive Agency
Change
The Three I’s: A Framework For Agency
Selection For Adaptive Marketing
Choosing Your Adaptive Marketing Era
Agencies Requires A Look Inward
recommendations
Start Laying The Foundation For Your Agency
House Of The Future
WHAT IT MEANS
The Agency Landscape Is Permanently Altered
Supplemental Material
NOTES & RESOURCES
Forrester interviewed executive and senior level
members at 25 agencies, executive and senior
level marketers at 18 companies, and industry
experts for this report.
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March 29, 2010
The Future Of Agency Relationships
Marketers Need To Lead Agency Change In The Adaptive Marketing Era
by Sean Corcoran, Dave Frankland, and Vidya Drego
with David Cooperstein, Michael Greene, and Jennifer Wise
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© 2010, Forrester Research, Inc. Reproduction ProhibitedMarch 29, 2010
2
Marketing Leaders Must Drive Agency Change
For more than a century, marketers have turned to advertising and marketing agencies for both
strategic and tactical support. Today, marketers tell us that their agency relationships have devolved
into a web of confusion. Even leading advertisers struggle to distinguish one set of agency capabilities
from another, and they invest too much time and too many resources to coordinate multiple complex
relationships. We have reached a level of complexity in which the agency model is breaking.
Agencies Evolve When Their Clients’Needs Change
Since the mid-1800s, agencies have supported their clients’ marketing efforts. As the marketing
discipline has evolved, so too have the relationships with, and services bought from, agencies (see
Figure 1). Each era has arisen from:
· Technological and social change. Newspapers in the 19th century, television in the 1950s, and,
more recently, the Internet introduced new marketing media through which brands connect
with consumers.1
Each new medium forced agencies to rethink the message and how it gets
distributed. Social media and digital proliferation accelerate this change.
· Marketing strategy change. The importance of branding grew during the past century as
marketers increasingly sought to establish an emotional connection with consumers. Digital
marketing practices favor direct marketing and communication over broad targeting and visual
stimuli, causing brand dilution and a greater dependence on direct response metrics.
· Marketer/agency relationship change. Agencies once held the keys to the executive bathroom
at major marketing-led firms. But economic pressures in the late 20th century led many
companies to negotiate and manage agency relationships through purchase orders and
procurement teams to minimize fees. Holding companies emerged to consolidate agencies
across the globe — to gain scale and maximize revenues — across a broad suite of agency
services including creative, media planning and buying, direct marketing, and public relations
services. This often leaves marketers to manage a portfolio of agencies rather than a single point
of contact (see Figure 2).

© 2010, Forrester Research, Inc. Reproduction Prohibited March 29, 2010
3
Figure 1 Agencies Have Adapted To Each Major Era
Source: Forrester Research, Inc.56625
Ad sales era
(1840-1869)
Unbundled era
(1980-1999)
“Mad Men”era
(1950-1979)
Push marketing era
(1920-1949)
Brand era
(1870-1919)
Internet era
(2000-2009)
Media environment
Magazines emerge and are
distributed nationally.
Media environment
TV emerges as the dominant
medium of the 20th century.
Media environment
Internet challenges TV for
dominance.
Marketing strategy
The concept of“brand”
emerges. Trademark
registrations increase.
Marketing strategy
Marketers use visual images
and emotion over
promotion to gain brand
awareness.
Marketing strategy
Rapid onslaught of new
digital media creates a huge
opportunity for specialists.
Agency approach
Agencies begin to charge
commission for advertising
and add services like
market research and copy-
writing.
Agency approach
Agencies thrive by creating
the“big idea”and are key
strategic partners to the CEO.
Agency approach
Specialists and traditionalists
try to compete for the same
dollars.
Agency approach
Ad salesmen or“agents”begin
buying and selling
newspaper advertising space
at volume.
Agency approach
Agencies begin to include
radio advertising and PR
services.
Agency approach
Agencies unbundle services
creating ﬁve types of smaller
agencies: PR, media, creative,
interactive, and direct.
Marketing strategy
Newspapers provide new
opportunities to widely
promote product services.
Marketing strategy
The brand manager emerges
as a role that monitors and
controls brand messaging.
Marketing strategy
Procurement begins to
regulate ad spending.
Media environment
The Industrial Revolution
spurs massive growth of
newspaper consumption
across the US and Western
Europe.
Media environment
Radio becomes the dominant
mass media. Following WWI,
propaganda, and PR also
become popular.
Media environment
Cable TV rises to power, but
the Internet appears in the
mid-1990s, and the ﬁrst wave
of Internet advertising
emerges.
20091920 1980 200019501840 1870

4
Figure 2 The“Great Race”— No One Agency Can Do It All
Signiﬁcant ability Moderate ability Limited ability No ability
We rated each type of agency on a 4-point scale for each criterion as deﬁned below, shown as
shaded squares for ease of visual comparison.
“Big 5”agency type:
Advertising
agency
Direct
marketing
agency
Media planning
and buying
agency
Interactive
agency
Communications/
PR agency
Communications
strategy and
planning
Creative
Channel planning
Channel execution
Brand strategy
and planning
Technology
Analytics
Agencies are in a race to add new skill
sets and compete more directly. Yet
no one type of agency does it all well,
and adding new skills is an inherent
challenge for any agency.
Marketing Leaders Must Shift Their Expectations Of Their Agencies
Beyond “digitization” of media, the impact of the Internet on the way people communicate, absorb
content, and interact continues to evolve.2
Forrester believes that these changes will drive us into the
next phase of marketing, which we call the Adaptive Marketing era:
A period in which marketers must become more adaptable as new channels and constructs for
interacting with consumers flood the market that must be tied to the overall brand promise.

5
In the Adaptive Marketing era, marketers’ new reality — and consequently those of marketing
partners — is a world in which the ability, desire, and pace of change are constant, supported by a
shift in focus:
· From outbound to surround. Consumers tell us that the marketing that they are exposed
to is irrelevant to their interests3
And now consumers can opt out of telemarketing, direct
mail, and email; they skip TV ads; and they will publicly blow the whistle on unacceptable
advertising practices. Marketers recognize this problem: 62% believe that their TV advertising
is less effective than two years ago.4
As Larry Flanagan, CMO of MasterCard, points out, his
organization is now “moving from decades of push strategy to a more holistic 360-degree
consumer strategy” in order to keep consumers engaged.
· From campaigns to experiences. In an Adaptive Marketing era, the old campaign mindset has
to be put out to pasture, but most marketers and agencies still organize, sell, and service from
a campaign mindset. The advertising ecosystem is ill-equipped to capture, analyze, and use
insight about how to engage best with customers to improve their ongoing experience with the
firm. As the former CMO at a global car rental company pointed out, “As media fragmented,
agencies approached each channel the same way: as a new means of bombarding the consumer
with our message. We found the quality of work declined over time while agencies floundered to
layer on skills that just weren’t native to them.”
· From segmented “audiences” to individuals. The days of reach and frequency as effective
advertising metrics are on their last legs. But most agencies still apply broad segmentation
strategies to new channels. Consumers don’t want to be “targeted” as an audience — they want
to participate. Yet most marketers and agencies have a long way to go to fully embrace the
notion of customer participation. As one senior marketer commented, “We’re keen to embrace
social media, but there’s also a part of me that thinks that anyone with a keyboard is dangerous.”
The Three I’s: A framework for Agency Selection for ADAPTIVE marketing
Most marketers say that they will always need to outsource work for a variety of reasons. But as
marketing challenges become ever-faster and more complex, marketers must rethink how, why, and
to whom they outsource their marketing needs. In the Adaptive Marketing era, Forrester believes
marketers must tap outsiders for (see Figure 3):
· Ideas: emotional connections that can be adapted to all touchpoints. The big ideas behind
the “Mad Men”-era campaigns remain relevant because brands must still connect emotionally
with their consumers. But digital experiences adapt faster. Consumer control and media
fragmentation will require new approaches that help the message hang together wherever they
are encountered.5

6
· Interaction: ever-changing dialogue between brand and consumers. As marketing shifts to
focus on pulling in customers, marketers need to rethink the interplay between paid, owned,
and earned media.6
This requires marketers to find firms that can stay on top of the conversation
wherever it is happening.
· Intelligence: real-time insight into customer behavior. The volume and interdependency of
data gathered in multiple fragmented channels provide an opportunity for marketers to learn
more about their customers than at any time in the past. The challenge is to gather, analyze, and
create actions as these insights materialize.
Figure 3 The Three I’s Of Agency Selection, And Why They Matter
Why is it still important? What do you need to consider?
• Ideas are fundamental to engaging with customers,
but they need to be vetted.
• Ideas need to span touchpoints and be appropriate
in those touchpoints.
• Experiences become more prominent than
campaigns.
• How should we manage, filter, and prioritize ideas
that come from diverse sources?
• How do we find and disseminate ideas that
encourage social participation?
• How do we create ideas that work in harmony but
are appropriate to specific channels?
• Understanding interactions will drive future
marketing success.
• Paid media shifts from the foundation of campaigns
to the catalyst of experiences.
• Earned and owned media help deliver experiences
to consumers who are initiated in paid media.
• Which agencies can successfully work across
different types of media (paid, owned, and earned)?
• What new metrics exist beyond impressions, reach,
and frequency?
• Who do I trust to engage or talk back to consumers?
• Greater emphasis on accountability and more
opportunity to measure
• Enables brands to optimize products and
experiences
• Provides insights to treat consumers as individuals
• How do we integrate online and offline data? How
do we manage structured and unstructured data?
• Do I have the resources and technical skills to
manage my own data?
• Can we analyze data quickly enough to respond and
optimize experiences?
Ideas
Intelligence
Interaction

7
Require Ideas To Be Versatile
For every marketer, the brand’s core value proposition starts with a strong statement. Think BMW
and “performance” (now “joy”), or Tide and “clean”. In the Adaptive Marketing era, these ideas must
be conveyed beyond prime-time TV visuals that succeed or fail based on ratings. Rather, marketers
need to press agencies on how they take a solid brand promise, and:
· Demonstrate channel diversity. As Jim Garrity, former CMO of Wachovia pointed out,
agencies today should “think first about ideas that will build your brand and think about the
best way to make that work across every appropriate platform.” Ask your prospective creative
or strategic agencies about their ideation process. Organizationally, do they manage team
structures for both horizontal creative leads and deep channel experts, or are they building
a platform for the idea, then leaving the execution to the silos? The more integrated their
approach, the more adaptive they can be.
· Show media-specific creativity. Media increasingly drives the finessing of the message, from
TV to Twitter to custom treatments in magazines. Does your agency’s ideation start with a
TV-centric mindset, or do creative teams start with the mix of media outlets that the brand’s
consumers engage with? Steve Center, Honda’s CMO explained, “Working with agencies is
something of a symphony. You have generalists and specialists. But while it’s a symphony,
everyone’s recording in their own room. I’m the guy at the mixing board, layering in the
tracks. So, it’s important to view your messaging as one integrated stream on many channels
concurrently. The more players that are involved, the more important it is to manage this
correctly.” For agencies, the more attuned the creative team is to the placement of all messages,
the more adaptive it can be with each stream of outreach.
· Display an agile process for evolving the message. The linear planning and design processes
that most agencies use doesn’t allow them to respond quickly enough in an era that is defined
by relentless adjustment. Instead, look for agencies that have shorter, more nimble design and
planning processes. Agency teams should include data analysts and technologists that work in
tandem with creative staff. Ben Malbon, Executive Director of Innovation, BBH, and co-founder
at BBH Labs, says “Agency skills need to change. Iteration is key. You need to be able to work
fast and iterate as you go while baking in analytics. Search for ways of collapsing — or ideally
removing — process. This usually requires much tighter collaboration and a flatter structure. ”
Make Agencies Map Out Expected Interactions With Consumers
Good ideas in a pull marketing environment rest on clear and substantive interactions. Media, PR,
and interactive agencies all focus on some form of call to action, but in the Adaptive Marketing era,
marketers need agencies to design interactions that:

8
· Generate conversations across all forms of media. Richard Edelman, president and CEO of
the Edelman PR agency, argues, “Free media allows paid media to succeed. It facilitates the
discussion and gives paid media a multiplier.” Your media agencies should be able to think
beyond the traditional passive audience metrics such as GRPs or impressions. Expect these
agencies to think in terms of active participation — specifically the ability to measure influence,
lifetime value, and quality of engagement.7
· Create a cohesive experience for customers. Customers expect a seamless brand experience
regardless of channel. Adaptive Marketing era agencies must be set up to enable that. When
interviewing potential agency partners, you need them to detail for you the manpower,
processes, and platforms required to manage customer experience across these channels, using
conversion data, listening platforms, and response results.8
This includes their ability to identify
and connect you with community participants, manage long-term relationships, and develop
valuable brand experiences across increasingly splintered platforms.9
· Track the best interactions, and respond to Groundswell opportunities. As a marketer, the
social aspects of the Adaptive Marketing era create exciting opportunities to engage, as well as
scary brand disasters like the now-famous “United Hates Guitars” phenomenon.10
Press your
agency to tell you how prepared they are to accentuate the good and respond to the bad. Expect
them to earn goodwill whenever possible and make lemonade out of viral lemons, rather than
trying to bury them.
Require Agencies To Define Success Through Customer Intelligence
Analytics is the new black for agencies. But the term is becoming meaningless because each firm
uses it to describe a different set of activities. While attribution modeling and media mix modeling
are important activities for marketers to understand the contribution of each activity to customer
behavior, in the Adaptive Marketing era, marketers need agencies to help them:
· Understand the implications of customer behavior. Marketers should follow the lead of
Disney Park and Resorts’ SVP of Customer Managed Relationships, Tom Boyles, who views his
team’s objective through the eyes of a guest who simply wants the company to “know me and
be relevant.” Truly adaptive agencies should be able to analyze customer data — structured or
unstructured, online or offline, qualitative or quantitative — to make smart marketing decisions.
Get agencies to show you their modeling expertise, vendor partnerships, and how they adjust
campaigns based on insights to show they are serious about data and its outcomes.
· Identify the value of every customer. Not all customers are created equal. Most firms
acknowledge that the majority of their revenue comes from their top clients, while it is also
estimated that the bottom 20% of a firm’s customers drain 80% of the firm’s profits.11
By
helping marketers focus on the distributed value of customers, your agency can adjust how

9
you approach, react to, and engage with customers at an individual level. As Chris Moloney,
former CMO of Scottrade and current CMO of Experian, told us, “Agencies tend to struggle
with analytics. Search marketers, for instance, are nerds who crunch data all day. Few agencies
really get this type of skill.” Make sure your agencies have advanced analytic capabilities and
can put it to use at the point of interaction with customers — regardless of how and where the
conversation starts.
· Turn intelligence into action. It is not enough for adaptive agencies to understand market
research, ethnographic, or behavioral data. To fully understand customers, and to leverage
that knowledge to improve customer experience, requires agencies to understand the interplay
between the various types of data, and crucially, demands the ability to turn the data into
actionable intelligence. What should you look for? Ask agencies to show you how they use
customer data to drive decisions relating to everything from contact strategy to positioning and
messaging to product ideation. As the VP of marketing at a national pizza chain pointed out,
“Our brand is owned by the consumer. To be successful, we have to understand their passion
points and hit them with relevant connections where they live, work, or play.”
Choosing Your Adaptive marketing era Agencies Requires A Look INward
Determining which agencies to work with first requires a look at where across the three I’s your
marketing efforts need help. Then the foundation can be laid for selecting agency partners that fit
the changes brought on in the Adaptive Marketing era. Unfortunately, and somewhat ironically,
it takes time, energy, and resources to determine what is needed for outsourcing to agencies. But
rather than lag behind more fleet-footed competitors, it’s time for marketing leaders to apply a new
set of criteria to their agencies and force them to adapt:
· First, rethink your own philosophy. If you want your agencies to move into the new era, then
you need to move as well. This starts with marketing and branding philosophy. You need to
adapt your own strategy with a focus on: 1) long-term experiences rather than short-term
campaigns; 2) speedy iteration; and 3) greater reliance on data and intelligence. You also need to
make sure you have the right skills in place internally to help shift the culture from the current
era to the new one. Your agencies won’t change if you don’t change first.
· Second, confirm the optimal agency model for your firm. There are no silver bullets in
agency models. The reality is that most organizations are large and complex, and each one is
different in terms of philosophy, structure, industry, regulation, and goals. To find the optimal
agency model, you have to start by making tough choices — best-of-breed versus consolidated,
centralized versus decentralized, and global versus local. Andrew Meurer, general manager for
feminine care brands at Kimberly-Clark, described the marketer’s role as being “either field
marshal general or Joe the collaborator.” Either way, the agency model should reflect your
organizational model and objectives.

10
· Third, apply these new criteria to your current agencies. Some of the criteria marketers use
to evaluate agencies remain intact, such as cultural fit, understanding of the business, proven
experience, etc. Yet as most marketers know quite well, agencies tend be very opportunistic.
Many of the marketers we spoke with described how their agencies have hurt the relationship by
overpromising to garner more business, when in fact it may be beyond their core competency.
Carole Walker, VP of Integrated Marketing for Mars, said of agencies, “They are so passionate
and want to run with, and execute, the entire marketing campaign. However, we need them to
focus on what they do best.” Test your current agencies to see if they really have what you’ll need
for a rapid-fire adaptive environment.
· Fourth, start your agency review. If your agencies fail to deliver on the three I’s, you need to
start looking for new partners. Take a methodical approach. Compare your assessment of the
agencies’ skills in each area with their own assessment and see who comes closest to the truth
about how cross-channel, interactive, and analytical they are. Then give them the ultimate test:
How would they take your current campaign or story and adapt it to the new era? Base your
selection on how they can take an existing idea and morph it successfully.
R ecomme n dat i o n s
start laying the Foundation FOR YOur agency HOUSE of the future
You can’t simply flip a switch to restructure your agencies for Adaptive Marketing. But after
applying the new criteria to your current agencies, there are some practical steps you can take for
long-term success:
· Redefine the roles of your agencies. Many marketers have already started to remove the
“line”between their“above the line”and“below the line”agencies by allowing ideas and
leadership to come from any agency under contract. While you can still have a traditional
firm lead other agency relationships, giving more opportunity to other partners creates
incentives for change across the board.
· Test partners from the non-agency world. The agency and marketing services world
changes almost daily. Beyond the Goodby, Silverstein & Partners, Ogilvy & Mathers, and
McCann Ericksons of the world, Google, Sapient, and Akamai Technologies also want to
deliver media and marketing services. It’s important to have resources that continually
monitor the space and think beyond traditional“agencies”for help. Implement a resource
that sits between marketing and procurement that regularly evaluates outsourced skills and
tools for marketing success. In the long run, the investments made in knowledge will far
outweigh the costs of making an uninformed selection.
· Create a productive relationship with procurement. Procurement teams can treat
agencies just like the vendors who clean the carpets or sell office supplies. Peter Stringham,

11
CEO of Young & Rubicam Brands, compares procurement leading a pitch to“a car dealer
negotiating price before showing you any models.”When Hilton recently decided to
consolidate the interactive work done by 13 agencies with one online agency, Chuck Sullivan,
SVP of Global Online, got permission to lead the evaluation himself because, as he says,“I
was hired for a reason — to provide online lodging seekers with the best user experience in
the industry.”He then leveraged procurement for support in administration — the role they
should play.
· Test incentive-based compensation. As we move into an era in which data will be
abundant, marketers will be able to more easily quantify an agency’s performance. Until
that time, begin testing incentive-based compensation to create an environment in which
the agency wins and loses when the brand wins and loses. Many brands now implement
performance-based compensation that measures an agency on quantifiable objectives (e.g.,
lift in sales, increase in brand awareness, higher-quality leads, etc.) while also paying them
based on the overall success of the brand. For example, Proctor & Gamble moved from a
media commission to a sales-based commission several years ago to ensure that its agencies
were more vested in real business results.
· Start the process in more advanced markets. Miles Young, CEO of Ogilvy & Mather
Worldwide, notes that in today’s global economy,“it’s dangerous to look at the agency
landscape through a Western lens only.”Global marketers already know that different
regions and markets move at different speeds, so it’s important to start rethinking agency
relationships in advanced markets that are ready for it first. More developed markets such as
the US and the UK have a stronger platform for change than a traditional market like Japan
or a market in an earlier stage of the development curve like Russia. Then take learnings and
apply where necessary in growing markets like China, India, and Brazil.
what i t mea n s
The agency landscape is permanently altered
Marketers that change their agency relationships will get a jump start on the Adaptive Marketing
era. Once a handful of leading marketers begin to alter their agency relationships, a domino effect
will occur, and the agency world will never be the same.
· The“agent”model will come full circle. Co-creation and crowdsourcing will become integral
skills for creative agencies of the future. Firms will invite consumers into the fold and operate
as a“Connected Agency”— an agency that becomes a conduit to the community to help
brands deliver messages and products that resonate with their constituents.12
As true“agents,”
they will play the role of directing, managing and filtering co-creation for their clients.
· A new marketing language will arise. Today’s marketing terminology is still very much
based on the old world of mass media. Terms such as“impressions,”“GRPs,”and“above
the line”are becoming less important while terms such as“influence,”“lifetime value,”and

12
“sentiment”rise in value. Even“audience,”a passive term, will give way to more active terms
like“participants.”However, familiar terms like“awareness”and“favorability”will continue to
be important parts of the marketing lexicon.
· Technology companies and agencies will compete more directly. Technology companies
and consultancies like Accenture, Covario, and BM, now offering agency-like services. This
trend will continue as digitization moves marketing from art to risk planning. While these
companies will compete more directly with agencies for marketing service opportunities,
they will struggle to provide the emotional connections and creativity that marketers will still
require to establish their distinctiveness. On the other hand, agency-holding companies like
WPP and Omnicom Group will continue to invest in technology companies to enhance their
left-brain abilities. Yet competing against the big technology giants, even in the marketing
world, will be an uphill battle. As Sir Martin Sorrell, CEO and founder of WPP told us,“We do
have a new set of competitors. Google, for instance, is a‘frienemy’that has a market cap five
times that of the top parent agency companies combined.”
· The interactive agency of record will die. In the Adaptive Marketing era, interactive
marketing will become core rather than a secondary effort for marketing departments.
The end result: The interactive agency of record will become obsolete. Leading interactive
agencies will have to make the big choice to enter the race to be the lead agency or fall back
into a niche specialty.
· Media will be managed holistically. In the Adaptive Marketing era, marketers will need
to move seamlessly between digital, broadcast, and branded entertainment options and
across earned, owned, and paid media options. This holistic approach to media will mean
agencies that deal in this broader definition of media (e.g., media planning, interactive, and
PR agencies) will blend together or compete as“interaction”agencies. Starcom MediaVest
already describes itself as a“human experience”agency focusing on all forms of media, while
social media agencies like the Digital Influence Group start planning some paid media to go
along with the earned media it creates through social experiences.
· Media ”derivatives”will emerge. With the rise of demand-side platforms and ad exchanges,
media planning and buying is moving from math to a higher science. Many of the services an
agency provides, especially in paid media, such as optimization and traffic analysis, are now
being automated or sent offshore. As David Kenny, managing partner of Publicis Groupe’s
VivaKi predicts, media planners of the future will“be like portfolio managers focused on
managing risk for their clients.”
· Agencies (and other marketing outsourcers) will become more important than ever.
Marketing is becoming faster and more complex by the day. Twitter and iPhone apps were
a blip two years ago, and Foursquare was a blip until the end of 2009. Consumer behavior
is changing rapidly, while media platforms are becoming more splintered and unique.13
Marketers will need to look to specialists in creativity, technology, and data to help make
sense of this complicated landscape.

13
Supplemental Material
Companies And Individuals Interviewed For This Document
Sarah Fay, former CEO, Aegis Americas
Amy Fuller, former EVP/Group Executive,
MasterCard
Jim Garrity, former CMO, Wachovia
Steve Smith, former CMO, Enterprise Rent-A-Car
Acxiom
Advertising Age
Aegis Media
Ariad Custom Communications
Association of National Advertisers (ANA)
BBH Labs
Catalyst:SF
Crispin Porter + Bogusky
Digital Influence Group
Diversified Agency Services (DAS) Global
Domino’s
Draftfcb
Edelman
Engauge
Epsilon
Euro RSCG
Goodby, Silverstein & Partners
GroupM Interaction
Hill and Knowlton
Hilton Worldwide
Honda
HP
Interactive Advertising Bureau (IAB)
Johnson & Johnson
Kimberly-Clark
Mars
MasterCard
Merkle
MRM Worldwide
Mullen
Northwestern Memorial Hospital
Ogilvy & Mather
Omnicom Digital
Organic
Procter & Gamble
RAPP
Razorfish
Sapient
Schwartz Communications
Scottrade
SHIFT Communications
Starcom MediaVest Group
Victors & Spoils
VivaKi
VML
WPP
Wunderman
Young & Rubicam

14
Endnotes
1
Source (for newspaper-related data): Mark Tungate, Adland: A Global History Of Advertising, Kogan Page,
2007.
In the three years from 1949 to 1952, total spending on TV advertising in the US grew from $58 million to
$454 million. Source: U.S. Census Bureau, Historical Statistics of the United States: Colonial Times to 1970,
1900-1970. http://www2.census.gov/prod2/statcomp/documents/CT1970p2-05.pdf
2
We have proclaimed the death of the music industry, the decline of print journalism, and the radical
overhaul of the TV and movie business. And while each industry is being remade in its own unique way,
there is a fundamental similarity in the way that these media industries are being remade: They are all
suffering from media digitization, which removes distribution scarcity. This ultimately alters how content
is produced, distributed, and consumed. In this report, we lay out three phases that media industries have
begun to pass through: digitization, meltdown, and rebuild. Most media businesses are in meltdown. It’s
time to rebuild. Product strategists in all the phases of media production, distribution, or consumption —
including device makers — must prepare for a world in which media are characterized by multiplatform
access, increased audiences, and diverse revenue sources. See the October 9, 2009, “How To Rebuild The
Media Industries” report.
3
Only 14% of consumers strongly agree with the statement “The ads I see are relevant to my personal wants
and needs.” See the July 22, 2009, “Marketers Stop The Abuse! Adopt Preference Management” report.
4
Forrester and the Association of National Advertisers (ANA) surveyed 104 US advertisers representing
nearly $14 billion in measured media budgets. More than half of them — 62% — told us that TV
advertising is less effective than it used to be. See the February 8, 2010, “TV Advertising Budgets Are Under
Siege” report.
5
As consumers increasingly look to connect with companies online, lackluster Web experiences will damage
many brands. But better functional design won’t solve the problem. Instead, Forrester recommends that
companies master the three principles of a new approach that we call Emotional Experience Design (EED):
Address customers’ real goals, develop a coherent personality, and engage a mix of senses. Firms can get
started by focusing their research on uncovering users’ emotional needs, capturing emotional feedback
in testing, and charting a course to Experience-Based Differentiation (EBD). See the October 26, 2009,
“Emotional Experience Design” report.
6
Increasingly, interactive marketers are being asked to manage a wide range of paid and unpaid marketing
communication — despite the fact that many marketing departments are still organized around traditional
paid marketing channels. All types of online media (whether “earned,” “owned,” or “paid”) can play specific
roles in meeting marketers’ objectives — especially when seamlessly working together. To find the right
balance between these types of media, marketers should take stock of their resources, listen for the impact
of earned media, look for opportunities to shift short-term paid media to the role of catalyst, and begin to
build out a solar system of long-term owned media touchpoints. See the December 16, 2009, “No Media
Should Stand Alone” report.

15
7
The metrics marketers use today fail to capture the supercharged social behaviors and intimate relationships
people have with brands. With the four I’s of engagement: involvement, interaction, intimacy, and influence
— marketers obtain a framework to decipher this complexity. To measure engagement, marketers need to
take four critical steps: define, audit, assess, and prioritize the metrics that are appropriate for their
customer buying processes. See the June 10, 2008, “Measuring Engagement” report.
8
Today’s agencies fail to help marketers engage with consumers, who, as a result, are becoming less brand-
loyal and more trusting of each other. To turn the tide, marketers will move to the Connected Agency —
one that shifts: from making messages to nurturing consumer connections; from delivering push to creating
pull interactions; and from orchestrating campaigns to facilitating conversations. Over the next five years,
traditional agencies will make this shift; they will start by connecting with consumer communities and will
eventually become an integral part of them. See the February 8, 2008, “The Connected Agency” report.
9
The standardized Internet is fraying. Long live the Splinternet. Interactive marketers have thrived in the
golden age of the Web, where people access Web sites using standard, similarly formatted PCs and browsers.
No more. The Internet is splintering across proprietary platforms like the Apple iPhone and Google
Android. Connected televisions will have their own interactive formats. Even on PCs, social sites like
Facebook shatter the unity of the Web with content behind a password, invisible to search engines. Familiar
online marketing tools like links, search engine optimization (SEO), and analytics are different or missing
in these new environments. Even so, marketers must follow their customers into these environments.
Adjust your planning and measurement approaches and get comfortable with experimentation. The future
of the Splinternet is one where vendors like Apple perpetuate proprietary platform creation and marketers
rely on a modular approach to create interactive customer experiences. See the January 26, 2010, “The
Splinternet” report.
10
In July 2009, one unhappy United Airlines customer posted a video on YouTube with a song about how
the airline broke his guitar. The video was so popular that it generated more than1.5 million views in
three days alone. Source: Bob Garfield, “Music Video Forces United to Clean Up Customer-Service Act”,
AdvertisingAge, July 13, 2009. (http://adage.com/garfield/post?article_id=137864)
11
Larry Selden and Geoffrey Colvin, Angel Customers & Demon Customers: Discover Which Is Which And
Turbo-Charge Your Stock, Portfolio Hardcover, 2003.
12
Today’s agencies fail to help marketers engage with consumers, who, as a result, are becoming less brand-
loyal and more trusting of each other. To turn the tide, marketers will move to the Connected Agency —
one that shifts: from making messages to nurturing consumer connections; from delivering push to creating
pull interactions; and from orchestrating campaigns to facilitating conversations. Over the next five years,
traditional agencies will make this shift; they will start by connecting with consumer communities and will
eventually become an integral part of them. See the February 8, 2008, “The Connected Agency” report.
13
The standardized Internet is fraying. Long live the Splinternet. Interactive marketers have thrived in the
golden age of the Web, where people access Web sites using standard, similarly formatted PCs and browsers.
No more. The Internet is splintering across proprietary platforms like the Apple iPhone and Google
Android. Connected televisions will have their own interactive formats. Even on PCs, social sites like
Facebook shatter the unity of the Web with content behind a password, invisible to search engines. Familiar

16
online marketing tools like links, search engine optimization (SEO), and analytics are different or missing
in these new environments. Even so, marketers must follow their customers into these environments.
Adjust your planning and measurement approaches and get comfortable with experimentation. The future
of the Splinternet is one where vendors like Apple perpetuate proprietary platform creation and marketers
rely on a modular approach to create interactive customer experiences. See the January 26, 2010, “The
Splinternet” report.

Forrester Research, Inc. (Nasdaq: FORR)
is an independent research company
that provides pragmatic and forward-
thinking advice to global leaders in
business and technology. Forrester
works with professionals in 20 key roles
at major companies providing
proprietary research, customer insight,
consulting, events, and peer-to-peer
executive programs. For more than 26
years, Forrester has been making IT,
marketing, and technology industry
leaders successful every day. For more
information, visit www.forrester.com.
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Cambridge, MA 02139 USA
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