New 4A's Book Explores the Differences Between Digital and Traditional Agency Services

Earlier this week the 4A’s (American Association of Advertising Agencies) published a detailed report outlining the differences between digital and traditional marketing and the impact those differences have on agency operations and economics.

The report, “Understanding the Economics of Digital Compared to Traditional Advertising and Media Services,” was primarily written for general advertising and media agency executives but is a great reference for any marketing firm that is making the transition to a digital-centric model.

http://www.aaaa.org/eweb/upload/catalog/pdfs/MG18.pdf

The report validates what a lot of people who work in digital already know; digital is a different and, in many ways, more complex medium in terms of both planning, creative and execution. And while the report’s findings may seem obvious to some, there are a few gems in the report that traditional marketers making the switch would do well to memorize:

• The amount of agency labor required per dollar of media spend is significantly greater for digital than for traditional media - this is true for all disciplines, but especially for creative, media and data analytics
• Digital media requires much tighter integration between creative, media and production – managing these functions in silos like most traditional agencies do will not work with digital assignments
• Digital assignments frequently resemble software development projects – the staffing models and talent that many traditional agencies have are not sufficient for the complexity and size of these types of assignments

As more marketing and media budgets move online, agencies are going to have to make changes in their staffing and operating models to keep up. It’s not going to be easy, but at this point traditional agencies really don’t have a choice if they want to remain relevant.

The User Experience Gap

You see the statistics and reports about how more companies are increasing their online ad budgets. You see the incredible growth of social media. And you see the high-levels of time spent online by all age groups (even among seniors!)

But what you don’t see are the steady improvements in Web site experiences you would expect considering these trends. For instance, last June Forrester Research published one of its many “Best and Worst” of site design reports.

This particular report focused on 16 B2C sites of companies across four industries: airlines, banks, department stores and MP3 manufacturers. All of the companies were brand names such as American Airlines, Apple, Bank of America and Macy’s (large companies with considerable resources).

Like most usability testing methodologies, Forrester’s approach evaluated basic site variables like presentation, content, functionality and task flow efficiency. What was remarkable about the test was that all 16 sites failed. And this wasn’t an anomaly, at least when using Forrester’s approach. In March 2007 Forrester submitted 16 different B2C sites to the same usability test. That time around 15 of 16 of the sites failed.

http://www.forrester.com/Research/Document/Excerpt/0,7211,45718,00.html

Which raises the question: if the Web is becoming more important to people in terms of the products they buy and services they use why aren’t companies committing the resources to deliver experiences that are commensurate with this growing prominence?

The short answer is that a lot of organizations are investing in improving their consumer sites but are finding that delivering exceptional Web experiences isn’t easy. This leads us to the long answer which is a bit more complicated.

In my opinion there are several reasons why companies fall short in this area. Some are related to organizational barriers and misguided marketing practices. Others have to do with the failure of some teams to use site design best-practices when planning their Web initiatives.

Organizational Barriers – many times the way a company is structured makes it difficult to generate consensus on a Web strategy and even more difficult to sustain it once implemented. Some common barriers include:

• Highly distributed companies without a strong centralized corporate communications or marketing function
• Companies with multiple lines of business with different value propositions and consumer audiences
• Highly silioed organizations

Misguided Marketing Practices – many companies insist that customers are their most valued asset but some don’t walk the walk when it comes to planning their consumer facing Web sites. This is a result, I believe, of marketing practices that sometimes cause managers to focus on the wrong things:

• Product features as opposed to consumer benefits
• Product differentiation as opposed to consumer relevance
• The assumption consumers are purely rational decision makers
• Downplaying the emotional aspect of how consumers consider and evaluate brands
• Underestimating the experiential dimensions of how consumers interact with brands on the Web

Failure to Use Web Design Best Practices – frequently Web teams short-cut critical activities that can make the difference between a decent and a great site. Sometimes this is because of tight timelines or limited budgets. A common result is a Web site that doesn’t meet the expectations of its visitors and is not set up for long term success:

• Design personas to define the needs of various visitor “archetypes” that will come to a site. They are critical and help Web designers create experiences that are based on visitor, not organizational, needs
• Cross-channel scenario maps to help Web planners consider the full context of how a site will complement other media channels and information sources as a consumer moves through a decision making process
• Governance models to ensure a controlled approach to a site’s design, content and management as it evolves - without governance there is no way to say what changes should or should not be made to a site

The gap between consumer expectations and the state of most B2C Web sites presents an opportunity. To seize that opportunity managers need to take a hard look at consumer sites under their charge and ask themselves whether they deliver a unique and valuable experience for their intended audiences. If the answer is no it’s also likely that they are not adding much value to their brands and business stakeholders either.

The New Velocity

For years managers worried about the velocity of their business. The measurement of how quickly they could get their products developed, distributed, sold and consumed. The theory being that the faster the rate of velocity the more efficient and profitable their business. In other words, you turn over more widgets in a year you generate more revenue. You develop and sell 25% more units than last year with the same assets you’re conceivably 25% more profitable, and so on.

Today, with the growth of social technologies managers now need to worry about a new type of velocity – the speed in which consumer sentiment towards their brands might change (whether for better or worse). Social networking tools like Facebook, Digg and Twitter have given people the means to instantaneously and virtually gather to discuss, share their views and spread potentially damaging messages or content about a brand. People, in many ways, are in control.

It goes without saying that this new velocity makes it harder to manage brand perception and reputation. There are many cases of how people in a matter of hours have used Web 2.0 technologies to wreak significant havoc on brands that have been around for decades. One of the best examples being the You Tube video of the Comcast technician sleeping on a customer’s couch while on a service call. Or the legions of parents who this past November joined forces on Twitter to rail against a TV ad for children’s Motrin (the spot was promptly pulled by parent company Johnson & Johnson).

The result is a real-time, mass consumer feedback loop. The impact is greater transparency and accountability for both corporations and brands. To be successful in this new environment it’s not enough that companies develop, distribute and market new products quickly to achieve optimum velocity. What also matters is how openly they engage with their consumers, how well they listen to them and how quickly they respond to their concerns.

Brands that neglect to use social technologies to build bridges to their consumers and monitor their brand health do so at their own risk. In a time of increasing commodization and decreasing differentiation this could be among the best strategies brands have for a competitive advantage.

Integrated marketing is harder than it has to be

Many big companies (certainly those in the Fortune 500) use more than one agency for campaigns encompassing multiple communication mediums. A common scenario might look something like this:

• Big brand agency for national TV and print brand campaigns
• Digital agency for Web design, online advertising, email and social media programs
• Direct marketing agency for targeted customer acquisition and retention efforts
• Promotions agency for trade and shopper marketing and field merchandising support
• Multi-cultural agencies for Hispanic, Asian or African American specific campaigns
• And so on…

There’s one critical problem with this scenario. For several reasons when two or more ad agencies are engaged to create an integrated campaign achieving great work becomes hard, not impossible, but hard.

There are many causes for this, but I think the main culprits are:

• Client side practices (especially in the area of briefing) that discourage inter-agency collaboration
• Inter-agency competition
• A lack of cross-trained, multi-discipline marketers on both the client and agency sides
• A cultural divide between the types of agencies involved

In my opinion with one exception these causes are hard to manage let alone eliminate – here’s what I mean.

Inter-agency competition will never go away
Agencies are always competing – it’s part of the business. And they compete on many levels: for the account, for their ideas, for a bigger share of the marketing budget, etc. Agency competitiveness is driven by ambition and ego; hard things to change let alone eliminate.

Training multi-discipline marketers – nice idea, but unrealistic
The notion that multi-lingual marketers can be created through some kind of corporate training program is not only naive, it’s a contradiction in terms. This is especially so with respect to agencies.

We have specialization in marketing communications for a reason. It’s a response to our increasingly complex, multi-dimensional and tech-driven culture. Specialization is an outgrowth of this complexity. As a result each marketing discipline has its own idioms, methodologies and techniques. These are not things that can be learned, at least not beyond a superficial level, through a training program.

Bridging the cultural divide – good luck
Habits, old and new, die hard. Agencies like all organizations are creatures of habit. For example, while some of the big brand agencies are starting to break away from the formula they have used for over fifty years, many still default to the 30 second spot as the central creative device. On the other hand, digital agencies think of interactions and non-linear experiences. While direct shops focus on driving response. Etc, and so on...

Along with these different approaches come different thought processes, value systems and theories on how things should work. The assumption that you can lock these different agency types in a room and they will miraculously and seamlessly collaborate is crazy – it’s mixing like oil and water.

Clients hold the keys to success
I think the best opportunity for getting great, high-impact integrated creative starts with clients. But the fact is that the engagement models many clients have in place are not sufficient to meet the challenges of a multi-agency arrangement. That said, I think there are at least two things client marketing organizations can do to meet the challenge.

1. Consider universal briefing and an inclusive approach to concept development - big ideas can come from anywhere. And in many instances the more agency minds working a creative problem the better. What’s needed is an environment where multiple agencies can collaborate and riff off of each other’s ideas as opposed to working in channel or audience specific silos. Consumers, after all, experience brands across multiple channels and touch points; the creative process should align with this reality.

All too often one agency, usually the brand agency, is briefed on a new assignment before all other agencies (who sometimes are not briefed at all). Clients should consider changing this practice by briefing all agencies at the same time with a universal brief that considers all channels and audiences. Then task each agency with coming up with ideas that both meet their specific channel/audience needs and are big enough to extend beyond as well. Then let the best idea win.

2. Use a program management approach to coordinate inter-agency activities - coordinating and synthesizing the myriad activities a large integrated marketing program involves is a complicated undertaking. Many client marketing organizations, unfortunately, don’t have the right processes in place to effectively meet this challenge.

Here’s where program management can help. Program management is the process of managing multiple projects towards a certain outcome (as opposed to project management which focuses on outputs) and has been used for years to coordinate complex technology implementation and software development initiatives.

In the context of integrated marketing, program management can help ensure that all agencies and client marketers are aligned and working towards a common goal. 

For example, program management techniques would require that client managers focus on orchestrating the full portfolio of cross-agency activities. Instead of looking at things from a channel or audience perspective, client focus would be drawn to the macro level and determining if activities across the portfolio are advancing in a way that best meet the desired business and marketing outcomes.

Another benefit is that program management techniques can be easily learned. There are four key aspects of program management that involve skills that most managers already possess; it just changes the focus and manner in which they are used:

• Strategic planning
• Governance (including definition of roles and responsibilities)
• Ongoing management of project and program level activities
• Financial management and control

Clients should want their agencies to focus on creating great work that drives results – not competing with one another and jockeying for position. The stakes are too high and the budgets are too big especially in this era of limited resources. While nobody likes excessive process I’ll take a little process over the alternative – ineffective and disintegrated marketing that no one is happy with.

Designing a corporate social media program? Plan carefully to avoid mishaps and unnecessary brand risk

It’s not news that many brands are using social media as a way to build brand preference, drive sales or increase customer satisfaction. In many ways social media is becoming table stakes for any brand that wants to generate awareness or stay engaged with today’s Web savvy consumer. These consumers expect it from companies they transact with and, in many instances, will reward them by being more loyal or even advocating on their behalf.

Social media programs, however, aren’t always successful. An October 2008 Gartner report predicts that 50% of future social media initiatives among the Fortune 1000 will be classified as failures. And social media programs do not come without brand risks. Two notable examples of brands that got into a social media storm include Dell Computer Corps’ infamous “Dell Hell,” and Wal-Mart’s fake “Wal-Marting Across America” blog. And, no surprise, the deeper the engagement enabled by social medias the greater the potential for brand risk.

Key issues to consider when planning a social media program
Despite the risks and high failure rates many organizations are still forging ahead with social media. If your company or client is one of those organizations consider the following factors first:

1. Be clear on your business objectives – some examples:

• Improving brand perception
• Increasing customer satisfaction or loyalty
• Creating a place where people can discuss product features or exchange best practices
• Reducing service costs
• Developing a dialogue with your customers
• An early stage warning system for bad customer experiences
• Monitoring social data to gauge sentiment

2. Identify the social media tactics that are best equipped to meet those objectives:

• Managed communities, polls or moderated comments
• Support forums
• Blogs
• User reviews and other user-generated content
• Wikis

3. Develop a plan on how to respond to any unforeseen brand backlash perpetrated by disaffected consumers:

• Disgruntled customers
• Customer complaints
• Negative reviews
• Pranksters

Corporate social media programs can be a powerful tool to build brand equity and increase sales. But they need to be approached in a sensible and planned manner.

Start small with low risk programs such as managed communities or polls. Then listen, learn and adjust. As your audience grows it might make sense to move on to higher engagement tactics such as user reviews, forums, wikis or other user-generated content.

And don’t forget that most social communities don’t just form by chance. In most instances a social media program will not on its own address low levels of brand awareness or Web site traffic. But it certainly can help in those areas if it’s part of a well thought out plan and provides value exchange to your intended audiences.

Measuring the ROI of your digital marketing efforts

Few doubt that the Web is the most measurable media available to marketers - at least in theory. In reality, many struggle with putting that theory into practice. This is true for both brand building and direct response campaigns. And the measurement challenge becomes even more difficult when digital marketing tactics are used in concert with traditional media.

This situation has several negative results. For client marketers it means bad decision making and media investments that fail to deliver their full potential. For digital agencies it makes it harder to show the ROI of their efforts and justify future investments in online marketing programs.

In addition, consumers rarely make purchase decisions using one channel. The inability to understand the impact of online and offline brand interactions on consumer behavior (both alone and as a complement to each other) makes it nearly impossible for marketers to align experiences with consumer expectations.

Several approaches can be used to close the gap between measurement theory and reality. This is especially so regarding direct response campaigns where I believe the measurement challenge is most difficult. For example, one framework that I have seen used with success is illustrated below.

The theory behind the approach is quite simple: identify the source of visitors coming from online tactics to a campaign Web site using cookies. For offline tactics visitor source is identified using unique URLs. This source data is then carried forward and matched with leads and sales records in a campaign database. This approach can be taken a step further to provide deeper insights by collecting and matching data beyond source such as banner creative, offer, keywords searched, etc.

While this type of approach is simple in theory, the devil is in the details when it comes to implementation. This is especially so as more attribution variables are added. But the payoff more than justifies the effort: better attribution of sales to tactics and critical insights that enable more effective allocation of ad budgets for future campaigns.

You never want a serious crisis to go to waste

David Leonhardt, economics columnist for The New York Times, wrote an interesting though somewhat depressing article called “The Big Fix” in yesterday's Sunday Magazine section. In the article he outlined the challenges our country will face trying to revive the economy without the old stand-by growth engines of Wall Street and consumer spending.

http://www.nytimes.com/2009/02/01/magazine/01Economy-t.html?_r=1

One positive in the article, at least for me, was when Leonhardt quoted a statement that White House Chief of Staff, Rahm Emanuel, made a couple of months ago about what is probably the only upside of the crisis:

“You never want a serious crisis to go to waste,”

What Emanuel meant was the that the severity of our situation is so bad that it could actually be a catalyst to make some of the transformative changes we as a country have been putting off for years but are needed if we’re going to get out of the mess we’re in.

That got me thinking. Whether you like it or not the federal government will play a lead role in shaping the future of our economy. However, the private sector, as always, must and should play a lead role as well. One of the ways that will happen is when companies start investing again in programs that put people to work whether that be new product launches, Web redesign projects, software upgrades, etc.

This is where people can make a difference. Whether you’re a middle manager in a large corporation, a software salesperson or, like me, an account guy at a marketing services firm, you, with a little bit of ingenuity and courage can do something to help get this economy going again.

Here’s what I mean.

Emanuel’s quote reminded me of something I read years ago about IBM’s Chairman and CEO, Sam Palmisano. Palmisano rose through the ranks of IBM’s vaunted sales organization. One of the tactics he used to use on sales calls that were not going well was to ask the executives he was meeting what their toughest business challenge was. Then, like any good sales executive, he would get their consent to come back with some ideas on how IBM would solve that problem. He would use that next meeting as an opportunity to ask for the assignment. Essentially, Palmisano was creating an opportunity where none existed (this is what sales professionals call solutions selling).

So, the next time you’re in a meeting with your senior managers or a client, or on a sales call try to create an opportunity where none exists by asking the tough questions. Get them thinking of the possibilities that can be realized by addressing the tough problems they have been avoiding for years and have been holding their business back. Here are some questions to get you thinking:

• What are our/your toughest business challenges?
• Is our/your top-of-mind unaided brand awareness where it needs to be?
• How much money are we/you leaving on the table because of poor customer experiences?
• What are the costs to our/your organization of continuing to delay implementing that customer retention program despite high lapse rates?
• What is the impact of not addressing these challenges on our/your ability to create shareholder value and a healthy return on equity?

Then, and this is the most important part, go back to your desk, cube or office, get your team or department together and brainstorm ideas on how to solve these challenges – now.

No one really knows what the next engines of economic growth will be (infrastructure projects, the digitization of our health care system, etc). What I do know is that nothing makes executives focus like a crisis and if they’re shown a way forward that generates results they will give it serious consideration. You really can’t ask for much more in this current climate.

So, marketers what's your empathy quotient?

We have all heard of emotional intelligence (EI) and the emotional intelligence quotient (EQ), but should we all be thinking about our empathy quotient? We will if business strategist and adjunct Stanford professor, Dev Patnaik, has his way.

Marketers and consultants have been preaching to their corporate clients for years about the benefits of making their organizations more customer-centric (indeed, many a multi-million dollar CRM project have been sold based on the promised benefits). But it's not always easy with all the internal politics, management layers and departmental silos that sap the energies of so many corporate managers.

An interesting new web site, http://wiredtocare.com/ blog and book by Patnaik makes a compelling case for a different, more intuitive approach to making companies more customer-centric (and prosperous) that is based on the innate human ability to empathize.

More empathy = more relevant products and services

While the idea of becoming more customer focused is not new, after a quick glance through a hard copy of Patnaik’s book (it’s not available in Kindle format - yet) it seems he may be on to something. He goes beyond making the well worn case that companies need to "align" with its customer's by actually showing how managers in several organizations have become more empathetic with their customers.

Patnaik shows how companies that embrace this approach have a deeper, more visceral appreciation for the needs, wants and expectations of their consumers. The ultimate payoff, of course, is that these organizations are able to bring services and products to market that delight their customers.

Many marketers have known this for years. For those that don’t yet get it this could be a useful tool. Now, if Patnaik could just get his book published in Kindle format I’d be delighted too.