Can a weaving spider collaborate? Or, A circular story about the evolving client-agency relationship Mark Linder WPP Global Client Leader National eMedia Conference 2008 IIR Finland Helsinki 21 November 2007 Contact [email_address] +44 774 00 7927

Advisors

“ JR ”

“ Marketing” was invented in an unusual time Mass production Mass communication Mass consumption In the 1960’s and 70’s, we were GLUED to our TVs

A “destination” model of communication Besides, it’s easy to blow your own horn Brand marketer Interpreter Decoder The Mass Audience Many receivers Each de-coding Interpreting Encoding Each connected with a group where message re-interpreted Cheap TV “Reach and Frequency” Repetition Increasing sales Indirect feedback (research, sales, etc) Inputs from social sources Based on Shannon & Weaver’s 1947 process model

Commission business model rewarded mass Agency takes risk Buys blocks of media space Offers to client at a profit Performs value-adding services

Remember the long-running campaign? One benefit of a trust-based relationship

Clients and agencies co-owned the business problem The word “brief” did not exist Client-agency partnership was in shared risk/ reward Agency investment Client spend (Agency revenue) Client profit

However when “marketing” = Advertising Advertising = commissions Commissions = exploitation

It is hard to overstate the culture of impressions-based “marketing” Global size of the industry, in $billions 34 Sponsorship 241 Direct marketing 700 7 24 394 Worldwide Total PR Research Advertising

A sidebar why the “USP” hinders true marketing

Agencies became USP “concept factories” and forgot about socialization of media itself Percept an external event that causes the activation of a certain category in the mind Concept an abstract idea or a mental symbol Concepts are the basic elements of propositions, much the same way a word is the basic element of a sentence "Nobody reads ads. People read what interests them, and sometimes it's an ad.“ --Howard Gossage

Osgood-Schramm (1954) Communication is a two-way process Did we hear? Message Encoder Interpreter Decoder Message Decoder Interpreter Decoder

And there were a few other developments…

And at the same time, the emergence of new technologies

Acceleration… Gary William Flake Microsoft / MSN

Over 30% of South Koreans are on high-speed braodband – 32MBit download

1966

The new media landscape Not how do we reach us, but how is it affecting us? Dual Sync 40 Million Homes DVR 3.5 Million Homes Gaming 80 Million Homes Video On Demand 16 Million Homes Interactive Program Guide 20 Million Homes Virtual Channels 2 Million Homes Ad Targeting 108 Million Homes 65.2% cell phone U.S. penetration Satellite Radio & Internet Radio 1.5 Million Subscribers / 70% Penetration Interactive/Placed Based Out of Home – 400M BB’s Internet / Broadband 150 Million Users / 57 Million BB Users DVD Player 50 Million Homes Portable Audio 15 Million Units Custom Publishing

The socialization of this technology is the real change

“We are connected, but not connecting” Rob Alexander, JWT Fragmentation creates the need for re-integration

We are worked over by the media

What about “non-media” Advent of actual UTILITY in marketing!! Why promise to be something, when you can actually DELIVER that thing!

Welcome to the brave new world of Branded Utility, where brands look to provide a useful service or a helpful application; to give people something they actually need – without demanding an immediate return. “ Simon Andrews – Chief Strategy Officer, Mindshare Interaction "I believe the next stage of brand advertising is going to be in the realm of 'branded utility,"' says Palmer (with Johnny Vulcan)

What role does an agency have?

Android Software Operators Semiconductors Handset Commercialization Plus $10M in prize money for developers!

OHA launch video

Is it any wonder who is on top? Source: Interbrand Corp, Business Week Aug 2007, Brand Channel Reader’s Choice 2006 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Value Change 2007 vs. ’06 -3% +3% +2% +5% -4% +12% +15% +5% +7% +8% Most Valuable Most Impactful in my life 1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

Crowd-sourcing Gardening Me Squared Interestingness -- Flamingo, for Nokia

Jennierose, crowd-sourcing

As technologies socialize, virtual becomes real

Business models are evolving Relationship Knowledge Relevance Interaction Effectiveness Opt in Dialogue Profile Blyk Advertiser-supported MVNO

What is the role of agencies in this context? What is the role of media owners?

Landscape is changing, and everyone seems interesting! Tactical Strength of Advertiser Relationships Strategic Traffic and Inventory Control Direct Indirect Advertising / Optimization Networks Affiliate Marketing Direct Navigation Price Comparison E-Mail Marketing Niche Search Yellowpages Interactive Agencies Vertical Portals Behavioral Targeting Lead Generation SafetyNet Strategic Advertiser Relationships / Vertical Expertise Key for Lead Gen Tier 2 Sites with Traffic / Content Being Consolidated (e.g. Price Comp, Verticals) Ad Networks Evolving Upstream into Direct Response / P4P Strategic Advertiser Relationships Are Important Competitive Advantage... eBay, MSN and AOL will Need to Expand Advertising Services and Monetization Direct Response ...But Content and Traffic Drives the Economics Niche Players Expanding into Lead Generation Ad Management Online/ Mobile Advertising Landscape

New media owners provide marketing services WPP Yahoo Google Microsoft AOL Ad Serving Ad Networks Ad Exchange Mobile Marketing In-Game Advertising

Aimed at long tail marketers only? Who has become Google’s largest customer? Number of producers that realize those numbers Sales or popularity 20% that = 80% of volume The long tail Flow of effect

Google led the way

Microsoft has a rich offer

Microsoft takes an educator role

Who are all these guys? WPP entries Interactive Digital Media & Search Mobile Data & Analytics ID Consultores Century Harmony Viral Boole

New models

Open agency model

Single-point accountability is an answer, if the skills and incentives are right “P&G says it's testing ways to change its agency model to improve collaboration and marketing plans while reducing the number of transactions for its brands and marketers. “

Today’s agencies and networks Advertising-centric skills replicated in every office Original business was a talent business Challenge: specialist skills “Networks” consist of large numbers of offices with the same skills Best people start “owned and operated” hot shops The middle Production goes to specialists

De-coupling of the value-adding parts Lose the middle Strategic ideas, programme management from smaller units, some parent-controlled, some operator-controlled Technology-enabled implementation shared by many originating units Many specialist skills serving clients anywhere Better career paths for all Glue provided by strong work-flow and content management systems

Collaborative networkers Insights Research Media/ Analytics Planning Holistic Client Team One-to-many Comms design production One-to-one Relationship Lifetime Value Ident Design Concept/ Program Leader Social Networking Branded utilities Shopper/ Channels Shopper/ eCommerce Media/ Buying Experience Design Search Mobile OOH SNS Content Events Ethno Quant Performance Measurement Workflow/ CMS Econometric modeling

A larger spider Insights Research Media/ Analytics Planning One-to-one Relationship Lifetime Value Ident Design Branded utilities Shopper/ Channels Shopper/ eCommerce Experience Design Search Mobile OOH SNS Content Events Ethno Quant Performance Measurement Econometric modeling Workflow/ CMS

In summary…

What does this mean in Finland?

Polar access to the world

Thank you Mark Linder [email_address] +44 774 00 7927