Michael Roth, chairman and CEO of Interpublic Group, debunked the myth of agency disintermediation this morning at the Ad Age Digital Conference, at Pier 36 in New York City.
Roth pointed to several news reports purporting a “growing threat” of agencies dying due to the growth of digital media and marketing. The surprise for the audience: The reports were all from 1972, not present-day media.
“I think that shows the strength of the agency and having the ability to change as the market changes,” Roth told attendees. “It’s about recognizing what is happening, having capital to react, and talent to make sure you stay relevant in the marketplace. These predictions I’ve shared with you from 1972 did not happen, and they won’t happen now either, as long as agencies respond to the needs in this market.”
According to Roth, several major forces are shaping the industry that agencies need to respond to. The first is fragmented media, which is causing confusion among brands trying to figure out where to shift their dollars. Agencies can help in determining where media dollars are spent, he said.
Another force, Roth said, is the fact that marketers have lost control to consumers, who want interactions with brands when, where, and how they want it. Again, agencies are well-positioned to help their clients respond.
On demand is the third major force driving the industry, as consumers increasingly demand immediacy. “Binge-watching is big, and I am guilty of that,” Roth said. “I finished the new season of House Of Cards in just four days. And 91% of those watching Breaking Bad binge watch.” The issue for brands is figuring out how to relate to these on-demand folks, and how to get the right message across to them, he said—yet another opportunity where agencies can be of assistance.
The last force—and probably the largest—that is driving the industry is the growth in technology, which Roth said is another area where agencies can add value. He provided Interpublic client UTEC, an engineering school in Peru, as an example. UTEC wanted to let people know about its program but didn’t think a traditional billboard would do the trick. Instead, it worked with an agency to create a digital billboard that not only shared information about its offering, but also converted humidity into clean drinking water, which is a big issue for that area. So while consumers lined up for water, they also learned more about UTEC’s engineering program.
“The relationship you can build between your brand and the consumer through social good is unprecedented,” Roth said. “Think of the relationship that UTEC built with these people when it provided them with drinking water. That cannot be broken. It has longevity. Using technology and creativity is really the linchpin of advertising and is going to drive the future.”
Another example of creative use of technology is a digital billboard by L’Oreal, which recognized the outfits of pedestrians and offered makeup recommendations based on what they were wearing. Consumers could also buy the products recommended right through the billboard.
"The next generation of marketing is going to consist of creativity, native utility, and data,” Roth said. “That integrated offering is going to be critical for agencies.”
Creativity is already at the heart of the agency model, but native utility means creating stories specifically for the media outlet or platform being used. “You can’t just use a TV spot on mobile anymore,” Roth warned. “It has to be an offering related to the distribution system and relatable to the individual using that distribution mechanism.”
Data is also very important in next-generation marketing, he added. “Everyone’s talking about it, but companies need to use it to know where the consumer is, get the right consumer to look at the story, and then use data to see if what you did works,” he said.