The New Agency Is OnThe Horizon - Hell, It's Here! A Comment by Neal Burns

Talk of a new advertising agency model is probably as dated as agencies themselves. A business that is, at its core, purposed to help other businesses succeed certainly changes as economies, values, distribution and technology change. Yet, this time seems different.

Without trying to re-write advertising agency history certainly the modifications - new agency models -instituted by Howard Gossage, Leo Bernbach and Jay Chiat stand out as having changed the operational philosophy and internal architecture of their peer groups at the time. Certainly the move from commission-based compensation to a professional fee structure represented a major departure from past practice. So, what will be the operating principles and the major shifts that define the new advertising agency? Here are a couple of the new organizing principles that I have noted in my recent travels and agency visits.

First, there is a shift from agency centric organizations to internal structures that are consumer or market centric. This means that the organization is not about a direct or PR or interactive division, but is rather about those that play in the outdoors or the agency having an unsurpassed understanding of the baby boomer cohort. Being recognized as knowing more about a particular market segment than the competition is a undisputed agency strength and - perish the thought - may supplant creative as king.

Secondly, initially led by a few innovative shops from the UK, the financial model and capitalizing on the value of agency developed intellectual property is clearly in play. The impact here moves from setting hourly rates and receiving so much per hour for spending 40 or 50 hours for writing "You deserve a break today" , or "Just do it", or "Reach out and touch someone" . . . agencies will seek long term payouts ( royalty-like in character) for continued use. Whoa - scary on the one hand yet fundamentally sound on the other; taking risks now describes the agency-client relationship more fully. Big hits mean more than a plaque for the wall, a pushpin or small statue - we're talking real money.

Third, the artificially created 'above and below the line' agency structure goes out the window as agencies become truly market centric. The new agency offering seamlessly incorporates these disciplines It was an artificial distinction at best that can't be maintained and profess to offer fully integrated service to the client. The impact on corporate and brand perception (essentially the domain of PR) and the intimate relationship that perception has to the product and its sales is as true for Ben & Jerry's as it is for The New York Times. Unpaid media's effectiveness and understanding the impact and changes the web and consumer generated content has on the enterprise and its products represents a PR focused knowledge base - and it is an integral part of the brand and marketing effort.

And finally, there is the active agency incorporation of the definition that the brand is defined by the experience - and those specializing in experiential advertising now get a seat at the table. The action and participation with the brand build the bond and basis of likeability, purchase and loyalty. Equally important is the leadership experiential advertising has demonstrated in taking the brand to a virtual space. In time, three-dimensional representations will be de rigor for product sale on the web and the virtual reality created already defines the equities the brand possesses.

If readers have other new dimensions of agency behavior to add - let me know. Soon its fall - and I could use another lecture.

7/31/2007