Live From New York, It's All About Innovation

I recently attended two events in NY – the 4A’s Strategy Festival and Pivotcon: The Rise of the Social Consumer. Big brands, big agencies, big egos presenting big ideas, and there really was lot to take away for [wire] stone as a midsize agency to help us get better at what we do.

But more than any specific social campaign or keynote on how to handle big data, there was an undeniable theme that spread across nearly every aspect of these two events. Innovation is happening in every aspect of a digital agency’s world, and new, innovative thinking is spawning transformation of the very definition of what it means to be a digital agency today.

At the heart of this movement is new technology – but the innovative spirit that is driving media and marketing is no longer about technology in and of itself. It’s about how innovative technology is deployed, how brands and their agency partners are using technology to engage, to facilitate and nurture meaningful, relevant, and scalable relationships between people and organizations.

For agencies, nearly everywhere we look we see new models popping up, spawned by a proliferation of technologies and applications that create diversified revenue streams, new corporate ownership models, re-considered operational infrastructures, and new spins on the traditional agency-brand relationship.

Beautifully articulated by John Hayes, CMO at American Express, here are the attributes defining the spirit of innovation that is facilitating transformation:

• Speed – change happens at unprecedented speed because information is propagated through social channels instantaneously and people are informed in real time -- only the nimblest agencies who adopt an agile and lean business philosophy can keep pace or ahead of industry and market movement;
  
  
• Disruption – innovation is again a guiding cultural, political, and economic mantra, driven by the proliferation of digital code and a creative design renaissance that enable nearly anyone (tech labs, global brands, governments, general consumers) to create paradigm-shifting experiences;
  
  
• Listening – in an era where people are increasingly in control of their own relationships with brands, agencies must master the art of listening to people to fully understand consumer motivations, needs, and wants – listening is at the heart of all brand engagement and relationship building experiences;
  
  
• Losing control – agencies must help brands become comfortable with and ultimately exploit the fact that they have already lost a significant amount of control of their own image as well as their ability to direct or manipulate sentiment about their brand, products, or services.

Change is happening in real-time for digital agencies -- “full service” firms are now offering interactive services, public relations firms hold firm as lead social media providers, and some media firms are now offering digital.

This is leading to an increasingly competitive marketplace that can make it hard to successfully differentiate one agency from another. In response, a new era of mergers and buyouts is underway as large holding companies aggregate social, technical, and other niche technology and services agencies to aggregate the focused talent pools they offer to support existing teams or augment their own portfolio of service offerings.

Potentially more threatening for agencies, however, is the trend that many brands are developing in-house capabilities once core to the digital agency portfolio. Some believe the situation could become even more destabilizing for agencies -- as an example, tvguide.com recently consolidated their mobile development capabilities in-house with a new staff that is several dozen deep.

Brands, on the other hand, are also savvy, and sophisticated marketers know full well that no agency can “do it all”. Agencies that represent they are experts in every area increasingly run the risk of not being credible in the minds of brand marketers.

Within this miasma of change, however, we can see the following “innovation waves” driving the formula for agency differentiation:

1. Strategy
   Miles Nadal, CEO of MDC Partners, stated “strategy has become a critical differentiator for agencies, and there has never been a better time for strategy to take its rightful position as primary in an agency’s portfolio.” “Strategy innovation” is one of the core areas [wire] stone is differentiating, and we fully suspect brands will increasingly consider our ability to create innovative consumer engagement strategies a determining factor for picking us versus competitors. A recent survey of CMO’s indicated that the #1 reason agencies were fired is a “lack of innovative thinking and strategy, the ability to develop strategies that drive innovation across the brand’s business units that are primarily derived from insights derived from an understanding and optimization of data and information”. At a higher level, there is another perspective agencies simply must adopt -- as I learned from my favorite strategist, planner (and curmudgeon) Farrah Bostic, to lead, innovative digital agencies must adopt lean, agile strategy planning and technology development philosophies – leading shops must think and act like startups. Nuf said.
   
   
2. Social + Mobile
   The tsunami of social engagement protocols, technologies, and techniques continues to transform every aspect of business, as well as cultural and societal change. Some posit that “social agencies” are the only ones capable of leading brands in the connected, networked social future because they represent the seamless blend of technology and social interaction / engagement understanding. Further, there is a shortage of talent among agencies in this space – agencies are investing rapidly and deeply in training and skill development, including at the programmatic level with efforts like social marketing certification programs. Mobile (i.e., device / screen proliferation) has also become a core capability – enabling brands to connect with consumers anywhere and any time is no longer an option. [Wire] stone believes social marketing is not a silo-d arm of the marketing or PR department; rather, it is the glue that connects everything a brand does both internally with employees and stakeholders as well as to the external world of consumers. It is a philosophy of business that integrates a brand’s entire portfolio of marketing and business operations together into a connected enterprise built around people. Social media and marketing places people at the center of relationships between brands and consumers, disrupting traditional marketing model brands have typically organized themselves to execute.
   
   
3. Disruptive Technology Deployment  
   At the heart of the rise of digital and social media is technological innovation. There is no shortage of disruptive technological change -- the challenge for agencies is that brands have become enamored with bringing new tech development in-house. The availability of inexpensive and highly efficient tools, and the talent needed to turn tools into dollars, potentially marginalizes the role of the agency. If it is simply using an analytics or social monitoring or digital media tool then the agency risks becoming unnecessary overhead. Successful agencies will either be able to demonstrate strategy combined with mastery of the tool or they will invent the tool.
   
   
4. Creative + Design
   A renaissance in the philosophy and role of design is propelling innovation across the agency landscape, and leading digital shops are taking a design approach to everything from consumer marketing creative, to emerging and immersive technology experiences, to proprietary technology and product development, and to the agency’s own business model. Design is increasingly a core pillar of our philosophical approach to everything we do, and we are in the process of “designing our business” for the future, incorporating a new design perspective to what we do.
5. Execution
   Brands are more discerning than ever about how agencies price and deliver services, forcing more openness and transparency during sales and account/client management processes. Similarly, agencies are increasingly being judged more on the ability to deliver high levels of quality work at extremely rapid speed because brands are forced to respond to more rapidly shifting consumers than ever before. As a result, developing new and more efficient executional processes and models are more important than ever, and agencies who are not efficient AND nimble in deploying high-quality resources risk losing new and existing business opportunities. See lean planning discussion above.
   
   
6. Analytics
   Big Data. It is everywhere, overwhelming, and unstructured – therefore, increasingly critical to brands as they search for ever-more granular insights into consumer behavior and keys to building relationships. Search – both SEO and SEM/PPC -- as well as social analytics, social CRM, data mining, and a host of other sub-disciplines are must-haves for agencies, either as core practice areas or strategic consulting capabilities.
   
   
7. Diversification
   Independent agencies are exploring and experimenting in social and mobile technologies to develop new, proprietary products to sell or license (i.e., see Buddy Media). Some agencies are building incubation hubs and technology labs specifically to invent new services and innovate core capabilities. Pepsi, for example, has an “official” desk at one of the largest technology incubators in New York city so that they are at the origin of new ideas and applications. Holding companies like MDC Partners are expanding into pure consulting, think-tanks, and product development in an effort to define entirely new revenue streams.