Ad agencies should turn to app development, says marketing guru

As traditional revenue streams for ad firms dry up, once high flying outfits need to find alternate survival strategies.

One of these perhaps is to make forays into application development, according to a marketing strategy expert.

Social media technology has given consumers new found power to make their own purchasing decisions, noted Tim Williams, president and founder of Ignition Consulting Group, a Salt Lake City-based marketing consultancy.

And this, in turn, has turned the advertising world on its head, he said.

“Agencies are under assault from all sides. They are now competing with search companies, such as Google, media agencies, and even consumers.”

Williams, who has authored a book on market positioning titled Take a Stand for Your Brand, recently addressed an audience of marketing and advertising executives in Toronto. His presentation was titled: Agency 2.5 – How Agencies Are Transforming for the Future. The event was organized by the Institute of Communication Agencies and Casale Media.

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The marketing guru rued that most ad agencies are trying to operate in a 21st century environment on assumptions born of the 1950s Mad Men era.

Many agencies continue to invest the bulk of their budgets on media placements, but don’t realize they can never outspend the consumer on media. “Survey after survey today shows consumers today have an insatiable appetite for media — only this time they can create their own content and decide what to view.”

New competitors

Agencies have a slew of new opponents for consumer eyeballs, and the adversaries have the upper hand, said Williams.

Among the new competitors is Google. With its hegemony in the Search space, and its data on Web surfers’ online behaviour data, Google has the muscle and Web-analytics know-how that many ad agencies could only wish they could offer their clients, Williams noted.

Agencies once provided bread-and-butter revenues for traditional media channels, such as television and print media.

However many of these organizations have began to wise up on the ways of the Web. Not a few print publications only recently in danger of extinction, have began to use the Web and their social network presence to attract advertisers.

Williams said many publications and networks may have stumbled in the past but are learning fast.

They are using their subscriber or online data and cache with their audience to provide services that previously only ad agencies used to offer.

These brands and publications are “cutting out the middle man and saying we can do this for you.”  

Some companies are also becoming their own agencies. For example, WalMart now has its own YouTube channel, which has become one of the most watched on the video sharing site.

Social media technology has also freed consumers from their traditional role as passive audiences, Williams noted. “The consumer now has power to generate content, as well as review and recommend products and services in blog posts, tweets, and on YouTube.”

He said many companies are using the power of crowd sourcing to develop logos that cost just a few hundred bucks as opposed to the tens of thousands it would cost them to have the job done by an agency.

An upside down world

The future, however, need not be bleak for agencies, the marketing guru said.

In the past TV and print media were crucial aspects of an agency’s value chain. Today those channels have been replaced by the Internet and its myriad still evolving social media networks.

To harness these new channels and tools, said Williams, agencies need to rethink a few outdated assumptions. “We are still selling efficiency when what the client wants is effectiveness.”

For instance, pushing ad placements of TV and print represented the old model of broadcasting the shortest message, to the biggest audience possible, the greatest number of times.

Efficiency was measured in the cost-per-thousands of viewers. Exposure was the prime objective.   

Today, he said, the goal is audience engagement. The idea is to broadcast to a small targeted audience as much information on a product or service as they want, for only as long as they want it.

Agencies and apps

Another way agencies can help clients is by enabling the latter to offer utility, rather than just messages, said Williams.

“Software makers are ideal models in this respect because they have a tremendous capacity for adapting to change,” he said. But increasingly app development in creeping into the menus of services offered by agencies.

For instance, a recent Nike ad offers an iPhone app that enables runners to track their performance.

A utility strategy builds strong consumer affinity to the brand, and agencies have an opportunity to help their clients make this shift, said Williams.

“My wife is a designer and perhaps one of the most useful apps for her is the Sherwin Williams paint app for iPhone. You take a picture of a colour and the app tells you the equivalent Sherwin Williams product”.

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