Monday, November 26, 2007
Accenture & Others: Traditional Agencies Are Having Trouble Adapting To A Digital World
byA study by consulting firm Accenture says traditional agencies are going to have the most to lose as the shift to digital advertising continues. Accenture surveyed 70 business leaders in advertising, media, and technology for the study. The conclusion of many of those leaders according to this story at ClickZ was that “traditional agencies are incapable of adapting to the digital era.” Furthermore, the article cites other significant conclusions by the Accenture study team:
“Advertising will become more performance based...Advertising agencies, to survive, must master technology to target advertising, perform customer analytics, measure performance, and interact with customers. Fewer than one in four respondents said their companies are equipped to do so now.”
Accenture notes that future advertising will intersect with three main channels—television, the computer and wireless handsets—and traditional agencies are only reasonably competent in television.
The Accenture study might be easier to ignore if it wasn’t supported by two other similar assessments. The first is an IBM study that we discussed here a couple of weeks ago: The End Of Advertising As We Know It. There are also some more interesting comments on that IBM study here.
There is a story in the Harvard Business Schools Working Knowledge Newsletter that corroborates the Accenture assessments. It is titled, Broadband: Remaking the Advertising Industry. Julia Hanna, the author of the article, bases it on in interview with Stephen Bradley, who is a Baker Foundation Professor at Harvard Business School and the author of an upcoming book about how broadband is rapidly changing many industries—including advertising. In the newsletter story, Bradley elaborates:
“As broadband enables new forms of entertainment and new ways to consume and manage media, we see radical transformation in the music and television industries as well. Their audiences are fragmented and people are demanding mobility, immediacy, and control over their media consumption.
This makes some industries’ traditional business and delivery models no longer viable. The networks, for instance, struggled with a time-shift in television viewing as digital video recorders (DVR) became commonplace. With broadband, they must now also contend with a place-shift. The family no longer sits in the living room together with all eyes focused on the television.
So the reality for the advertising industry is that the old model is broken. The most effective advertising medium for decades has been television. But this traditional advertising [vehicle] is getting more expensive while also reaching fewer people. People may be watching more television hours, but their attention is spread across many more channels.”
While this might be trying times for traditional agencies, it is a time of opportunity and excitement for firms with more digital roots. Marketing, and advertising as a subset of marketing, is not going away. It is simply changing rapidly. For companies that can pair creativity with broad technical expertise, the party has just begun.
