On September 2 and 3, the first ad:tech in Japan was held in Tokyo. I was honored to have the opportunity to moderate the panel discussion entitled "The Modern Agency" at the event. As the panelists were distinguished ad industry leaders with diversified backgrounds including those from a traditional agency, a media conglomerate, an interactive agency, and a planning shop, we explored what the ideal modern agency should look like in the rapidly changing business environment. Modern agencies are now facing four fundamental changes: a change in technology, a change in media, a change in consumer behavior, and a change in client demands.
The advent of the internet and mobile has caused a vast fragmentation of media. At the same time, a wide variety of ad technologies enables us to track performance of ad spending. John Wanamaker's famous saying, "Half the money I spend on advertising is wasted; the trouble is I don't know which half," is no longer true in the IT era, because we can now identify which half works well, and which is wasted. Empowered by social media such as Facebook and Twitter internationally, and Mixi and Mobage Town in Japan, consumers are now in control of conversations and communication with brands. It is getting harder and harder for marketers to capture these changing consumers. The modern agencies have to proactively respond to these changes, and are expected to offer optimal solutions to clients.
How should the modern agency cope with these four main changes? How can we transform ourselves into ideal modern agencies? Panelists raised several crucial hints to these questions.
1. Accountability
The modern agency should invent a new form of services model for clients to realize optimal communication activities with consumers. The model should be much more accountable using technology.
2. Full services, but lean organization
The modern agency has to offer fully integrated services to cover the entire communication funnel, that is to say, from reach, engagement, to acquiring through retention. Therefore, the modern agency has to embrace diversified talents; not only creative directors, media planners and account executives, but also data analysts, engineers, and consultants. At the same time, however, the organization should be lean and automated to make it possible to flexibly form a hybrid team.
3. Reengineering client relationships
The modern agency will reengineer client relationships to further contribute to the clients' business. A performance-based compensation system will be an answer to reflect the agency's commitment to its clients.
4. Strong leadership
In order to achieve the above innovations, leadership will be critical. Only a strong leadership with a bold vision will restructure the inside and outside of the agency, and transform it into an ideal modern agency.
In conclusion, no one can disagree that the advertising industry is changing dramatically and the ideal modern agency has to manage the changes. According to a Japanese blog, "Koukoku Kakushin Juku" by Masaya Ueda, 80 percent of Japanese advertising agencies will disappear by 2015, if they stick to a mass media-centric mentality and fail to adapt themselves to the changing environments. It is unfortunate for the overall advertising industry. But, at the same time, there will be tremendous opportunities for the survivors.
Reo Watanabe is President and CEO of Dentsu Razorfish.
