September 3, 2015 — I once worked for a business that was looking to change the way people bought sponsorship in sport, arts and entertainment. It intended to create an open and transparent marketplace for brands to buy sponsorship packages - presented in a uniform and clear format on a website - from the appropriate rights holders. Great idea, huh? Who needs an agency who's charging a 20% fee (or more) when a site might only charge 5%?

Yes, but ultimately no. The business ran out of money over ten years ago. Perhaps more importantly however nobody else picked up or elaborated on this basic concept. The business of buying and selling sponsorship had (and still has) so many parties invested in the status quo that there was no need to do anything differently.

"Problem solving" is probably the most compelling reason to change behaviour. In the context of a new business model in a competitive marketplace its very difficult to demonstrate. This is particularly so in a discipline which has become dominated by the agency groups, who have a vested interest in maintaining the status quo - particularly in an area where they can achieve higher than normal margin. Looking back I came to the conclusion a long while ago that the agencies clearly didn't believe that their higher margin was a problem for them, and their client's didn't feel brave enough to challenge this view.  

Things then become self-perpetuating. Sponsorship is evaluated by the same metrics as other forms of advertising….. and that means key decisions continue to fall within the remit of the agencies, as who else knows how to drive (their own) metrics.  This seemingly applies even if, on the whole, their experience or knowledge of the discipline in question might be limited. Our experience is the same applies to other non-core disciplines such as PR, Events, Product Placement, and Social Media, and most aspects of AdTech.

Now nobody is good at everything, are they? So why do so many marketeers treat advertising agencies like that? Now that’s not to say that they aren’t excellent at their core competencies, but we have often come across marketing directors who seem to have outsourced responsibility for making any decisions to their agency groups. Our experience is that many of these agencies are simply not sufficiently knowledgeable of, and therefore capable of catering for a client’s interests in, new advertising or promotional technology.

Creative agencies should be generating ideas for how to engage customers; media agencies should understand where the execution of these “ideas” should be placed; and data analysts and market researchers should be able to clarify return on investment. However this only really applies in established markets, where these is sufficient historical data to suggest and support what works and what doesn’t. (NB – we are working on technology that tracks engagement with the applications and content we deliver….. so watch this space).

There are bags of articles from business gurus that discuss how we adopt new technology. When you overlay that research with psychologist’s opinions on how we then form “use” habits, there is no wonder then agencies can’t keep track of habits or behaviour that simply haven’t been established to the level of granularity they are used to. 

A recent article I read from one of the founders of Zendesk suggested one of the reasons why. “The brain drain from creative agencies is out of control these days. Meanwhile, as in-house teams become more and more capable, they require less help from outside specialist shops. Even illustrators, animators, video crews, and 3D artists get cherry picked into larger and larger in-house startup teams”

As a business that applies new technology for marketing and promotional purposes (alongside others) it’s exasperating that the vast majority of ad agencies we deal with are seemingly the gatekeepers to areas that they don't understand. We’ve learnt this through (unfortunately repeated) experience of calls or e-mails that can be paraphrased like this:

“We’ve got a brief from [a client I can’t mention] for something in AR or VR. Can you send us some ideas? No, the budget’s not clear and, oh no, you can’t speak to them. Can you work up a presentation or demo? We’ll present it for you, and of course we’ll let you know when we have an answer”.

The truth is that many agencies are dropping AR or VR into virtually every proposal that they have because its "new and sexy", and they think they have to be seen knowing all about it. When we do speak to them its quickly apparent that they're unaware of the potential benefits and pitfalls of delivering a project in this area - beyond what they see in a youtube search and one (desperate) phone call to people such as us. However what's often apparent is a lack of willingness to invest the time in trying to learn, or better still engage the appropriate expert in the process.

The agency model also doesn't lend itself to understanding technology and integrating it beyond one-off campaigns. This ultimately costs their clients money in the medium and long-term, and starves their client of the more strategic benefits that tech-led innovation can bring - ultimately attracting users to the brand for the longer term. It’s short-termism gone mad - not the long-term investment that creates real value for any business.

Time will tell how advertising evolves, but many believe its future can only be realised by two-way, longer-term communication and personalisation (rather than one-way billboards and expensive TV campaigns). We’re inclined to agree.

We’re very used to our role of evangelists as well as delivery partners, as this is a necessary part of any business that seeks to operate at the cutting edge of technology. We know that breaching the knowledge gap in relation to (ultimately) discretionary spend is a very difficult challenge. However all we ask for is to be able to present what we do alongside agencies, and effect real change for the end client.

We’re good at what we do, and we’ll make you look good too.