Agencies: 15 Risks You Can’t Afford Not to Take
Viewpoint: Forget the Recession, This Is No Time to Ignore Changes to the Agency Business Model

By  Tim Williams founder of Ignition, a consultancy that works with marketing communications firms to help them create and capture more value.

(excerpts from the  full article, linked to above,  arereproduced here for your convenience)

…As every informed agency executive knows, we’re at the nexus of the Great Recession and the Great Transformation of Marketing. In circumstances like these, a strategy of “just try harder” won’t take you very far.

Economists are always talking about types of risks you can afford and the kinds you can’t afford to take. For those of us in the agency business, the latter bucket of risks is mostly about failing to adapt to the dramatic changes affecting the agency business model.

Here are 15 things agencies can’t afford to risk.

1. A skill set built mostly around interruption instead of engagement. Agencies are used to delivering exposure for their client’s brand messages, measured by things such as reach, frequency and cost per impression. With the consumer firmly in control of his or her media-viewing choices and habits, no amount of exposure matters if nobody’s paying attention. What agencies sell — or should sell, anyway — is engagement. The metrics of engagement are completely different from the traditional media measurements of the past, including attentiveness, receptivity and buzz potential. Exposure is about efficiency. Engagement is about effectiveness.

… 3. Core competencies focused on “one to many” instead of “one to one.” Lots of agency professionals have an irrational fear of data and databases, even though the future of marketing clearly revolves around understanding how to leverage that information. Thanks mostly to the internet, mass audiences can now be identified and targeted in ways that make much better use of marketers’ money. Agencies need to move from mass messaging to mass customization. Agencies know broadcasting, but must now learn narrowcasting.

4. Creating brand-to-consumer communications at the expense of consumer-to-consumer communications. The agencies that grew up in an era of controlled communications now have to learn how to serve their clients in a world of open conversations. This requires a very different skill-set and service offering. It also means moving beyond consumers as audience to consumers as media.

…6. Production systems that are linear instead of organic. Most agencies still have a straight-line approach to production, based on a legacy system of trafficking work out the door and then moving on to the next job. But in the digital world, most jobs never die. A website is never done. Online campaigns can be constantly monitored and optimized. Agencies must adjust both their workflow and compensation systems to accommodate production work in real time.

7. Developing media plans instead of channel plans. The view of progressive media professionals is that everything is a channel, and what’s really needed in place of the conventional media plan is a holistic channel plan that potentially includes all three major forms of communications channels: bought (paid media), earned (non-paid channels such as viral videos) and owned (channels owned by the brand itself, such as online properties, employees, stores, etc).

8. Placing media instead of creating media. Quick, name a headline created by Crispin Porter & Bogusky? Chances are you can’t, but this firm is considered a creative leader because they take such an inventive approach to where the message appears, not just what it says. The real opportunity for agencies isn’t in buying existing media channels, but rather creating channels that never existed before.

9. Creating brand transactions instead of brand relationships. We’ve all heard agency executives say to clients, “Our job is to get the consumer to buy the product once. It’s your job to take it from there.” Agencies have historically been focused on helping to make the sale. But in a marketplace where the actual experience with the brand forms strong customer opinions that get circulated worldwide at the touch of a button, agencies have a big opportunity to help clients create and maintain positive brand relationships from consideration to purchase to ownership.

10. Focusing on “the big idea” instead of “big multichannel ideas.”The days of a writer or art director holed up in a room to come up with the “big idea” for a broadcast campaign are over. No doubt brands still need powerful creative ideas to win in the marketplace, but what’s needed in place of one big, strategic TV-centric idea is a lot of smaller tactical ideas that can live in a number of channels. It’s surprising how many agency creative teams still lack this perspective.

11. Traditional production staff instead of “producers.” No longer does production just mean press checks and TV shoots. As agencies execute in channels ranging from sidewalks to iPhone apps, the production professional must become a real “producer” with the flexible skills and resources found in branded-entertainment companies.

…13. Continuing to allocate client budgets to media instead of creative. Consider this:

Q: How much does it cost to reach a million people on a major television network?
A: Around $60,000.
Q: How much does it cost to reach a million people on YouTube?
A: $0.

In a world where many of the most powerful media have a cost of $0, ideas are the real currency of marketing, not money.

…As Peter Drucker once said, “You can’t manage change; you can only be ahead of it.” Agencies, no matter how smart or resourceful, won’t be able to manage their way out of these disruptive changes in the marketplace. They can, however, devote their considerable creativity to staying one step ahead.

Rohit Bhargava: 9 Ways For Luxury Brands To Use Social Media

(the article linked to above is reproduced here for your convenience)

Late last week I had the opportunity to be part of a unique event for the Washington DC area. Dubbed “All Access Fashion” – the three day event was part of Washington’s response to NY’s Fashion Week and featured many luxury retailers participating in runway shows and customer events hosted at one of the largest luxury malls in the country – Tysons Galleria in Virginia. My role was to be part of a well chosen panel that included the CEO of German fashion brand Baseler and Ritz Carlton’s VP of Marketing and Communications, Julia Gajcak.

Through our hour long discussion moderated by Washington Post Style Editor Ned Martel, a key topic of discussion was the impact of the recession on the luxury market and how luxury brands could retain their customers and brand image in a world where anyone can speak for your brand online. The point of view I shared was that in many ways I believe luxury brands are the IDEAL brands to be using social media and that social networking, microblogging and online content creation represent big opportunities for these brands to really stand out, improve their customer loyalty, drive sales and, in fact, maintain the image they have worked hard to create for their brands. If this seems like overpromising, keep reading for what I feel are some of the biggest opportunities for luxury brands to use social media:

1. Live up to the promise of your brand. In luxury marketing, the brand is critical in creating an emotional attachment that goes beyond just a product or services features. If the value of your brand is built through your attention to service, such as the Ritz Carlton, then how can you use social media tools to reinforce that idea for your customers and live up to it?

2. Find your biggest fans. Most luxury brands have a steady stable of hardcore fans. Often these are the people who buy the products frequently, but it could just as likely be the enthusiastic aspirational customer who dreams of one day buying your product. Luxury automakers have known this for a long time, using tools like social networking to make sure that teenage boys continue to dream of one day buying a Ferrari, so one day when they can afford one, they might.
3. Create exclusive experiences. Exclusivity and luxury often go hand in hand. The nice thing about social media is that you have many opportunities to create things like exclusive private networks or special content that is only for customers or VIPs. The added benefit of this is that you can make those individuals feel engaged with the brand in a way that isn’t open to the general public.
4. Let fans make your brand part of their digital identity. As each of our digital identities moves online, we have new ways of attaching “badges” to our online profiles, becoming “fans” of brands and using other methods to not just connect with brands we love, but to broadcast that affiliation to our entire social networks online.Gucci does a great job of this on Facebook with hundreds of thousands of fans.
5. Track product or service opportunities. People talk about anything and everything online, and when it comes to the category of business you are in, listening can lead to breakthroughs that you may never have otherwise seen – including what your next product line might be or a new type of service that people are wishing for.
6. Identify emerging brand crisis or issues. The real time nature of much of social media means that many brands are seeing news of potential product defects or other types of brand crisis break through social media before they show up anywhere else. This alone could justify the effort of more actively listening to what people are saying about your brand online.
7. Improve retail and/or distribution. Sometimes the challenge in selling a luxury product or service has less to do with what you have and more about where you sell it. When it comes to deciding markets to focus on, many luxury brands simply focus on large metro markets – but social media can help you identify unlikely markets that might offer golden opportunities.
8. Prove customer base and demand. Part of the challenge for any luxury brand, particularly one that is less established or newer, is proving that there is enough customer passion and interest in the brand to warrant being stocked or sold through more mainstream distribution channels. Having a strong base of support through social media can help you get past this hurdle and demonstrate to a buyer that your brand is worth the risk.
9. Share live events more broadly. Often exclusive events are a core part of how many luxury brands connect with their customers. These are, by necessity, closed and focused on smaller groups – but social media could offer a way to let an equally exclusive subgroup participate in the event (or see an archive after the fact).

Any other thoughts from readers working on luxury brands for potential opportunities with social media?  From my conversations at the event, I got the sense this was a dramatically underdeveloped space and I’m looking forward to seeing more examples of brands actively using social media in the luxury market.

Play the video and find out!

This video is interactive.  Anytime you see a click right on the video for more in depth information.

Global Advertising: Consumers Trust Real Friends and Virtual Strangers the Most | Nielsen Wire.

(the article linked to above is reproduced here for your convenience)

Global Advertising: Consumers Trust Real Friends and Virtual Strangers the Most

July 7, 2009

Recommendations from personal acquaintances or opinions posted by consumers online are the most trusted forms of advertising, according to the latest Nielsen Global Online Consumer Survey of over 25,000 Internet consumers from 50 countries.

Ninety percent or consumers surveyed noted that they trust recommendations from people they know, while 70 percent trusted consumer opinions posted online.

“The explosion in Consumer Generated Media over the last couple of years means consumers’ reliance on word of mouth in the decision-making process, either from people they know or online consumers they don’t, has increased significantly,” says Jonathan Carson, President of Online, International, for the Nielsen Company.”

However, in this new age of consumer control, advertisers will be encouraged by the fact that brand websites are trusted at that same 70 percent level as online consumer opinions.

Carson adds, “We see that all forms of advertiser-led advertising, except ads in newspapers, have also experienced increases in levels of trust and it’s possible that the CGM revolution has forced advertisers to use a more realistic form of messaging that is grounded in the experience of consumers rather than the lofty ideals of the advertisers.”

Brands Gaining Global Trust… In Some Regions More Than Others

In the two years the biannual study has been conducted, brand sponsorship has seen the greatest increase in levels of trust from 49 percent of Internet consumers in April 2007 to 64 percent in April 2009. Regionally, Latin American countries lead the way with 81 percent of both Colombian and Venezuelan Internet consumers and 79 percent of Brazilians trusting brand sponsorships. In contrast, sponsorships hold the least sway amongst Swedish (33 percent), Latvian (36 percent) and Finnish online consumers (38 percent). In comparison, 72 percent of United States Internet consumers trust brand sponsorships, placing the United States 12th out of the 50 countries represented in the survey.

Brand websites, globally the most trusted form of advertiser-led advertising, hold the greatest sway in China (82 percent). Following China are Pakistan (81 percent) and Vietnam (80 percent). However, brand websites tend to be trusted least amongst Swedish (40 percent) and Israeli (45 percent) Internet consumers. In the US, 62 percent of Internet consumers said they trusted brand sponsorships, placing the United States 21st out of the 50 countries surveyed.

“The regional differences provide a clear guide to advertisers as to how they should focus their ad strategy in different countries. It also shows that, despite the authority of word of mouth when it comes to consumer decision-making, advertisers still have a major say in the process. This is backed up by past Nielsen studies which showed that the majority of people posting comments online went to the advertiser website or emailed feedback to the company before they posted. The website, and monitoring feedback through it, is a golden opportunity for advertisers to shape the tone and content of consumer opinion before it reaches the digital masses,” said Carson.

For more regional data, download the Nielsen Global Online Consumer Survey press release.