Why can’t traditional agencies make online advertising work?

Over the past few months I have been watching my clients struggle conceptually with the online advertising model. But they all seem to be coming around to the idea that it’s the direction they need to head. Many of these clients are seasoned marketing professionals with years of marketing communications experience, and often they are working with traditional agencies on other endeavors.

But their agencies, by and large, cannot seem to guide them at all.

Having come from a traditional agency background, I know what the problems are on the agency side. Nothing about a traditional agency setup—their campaign development process, their billing models, their org charts—makes it possible to effectively execute an online campaign. Furthermore, until these agencies drastically restructure themselves, they won’t ever be able to make it happen.

On the media planning side, unless they’re doing a lot of it, the agencies have little buying power online and little knowledge about what constitutes a good price. Furthermore, they’re trained to think of online as a supplement to the “real” campaign, which limits their creativity in developing the program. If they’re used to B2B or brand/awareness advertising, the direct response model is alien to them—and they have a hard time understanding how to adapt it to increase awareness. They don’t understand the role of search engine marketing in the mix and how to integrate it effectively, and they don’t understand how response ought to be measured.

On the creative side, fat-cat creative directors have zero motivation to move towards online, and this may be the biggest problem. Flying to shoots, long post-productions and the attendant expense account, plus the glamour of seeing your work on TV (“Mom! Turn on ABC, my commercial’s running!”) are irresistible. Making 120x600 skyscrapers is just not as exciting.

Many agency creatives think of themselves as artists. The traditional agency culture obscures the true nature of advertising: it is sales!! The collective fiction of Nielsen and Arbitron ratings allows agency folks to gloss over the unmeasurable nature of the campaign with faux-scientific “metrics.”

Online allows no such gray areas—the creative either works or it doesn’t. This is not about making a beautiful, music-video-like commercial: this is about selling widgets. Exposing the commercial nature of our enterprise is unpalatable to most agency creatives, because it undermines their whole identity as inspired aesthetes who can’t possibly be held to measurable standards.

Finally, agencies will have to reduce their staffing bloat and change their processes in order to play in a world where turnaround times are incredibly fast and metrics happen in real time. The slow-as-molasses branding/campaign brief/heavy account management model weighs the process down. Pitches and client meetings don’t need to have 15 people. Online creative doesn’t require a cast of thousands to produce. A solid team composed of a client services person, a media buyer, and a good two-person creative team is sufficient to execute a large campaign. But agencies will be loath to slim down, because to do so will expose the fact that they’ve been too slow and too expensive for years.

So what does the future hold? Some agencies, probably large ones, will (and have begun to) make the transition. But I think many will suffer, because I suspect even now they don’t see the writing on the wall. After the dollars have already moved, the old-school agencies will try and make the shift, but it will be difficult and generally too late. Meanwhile, upstarts who do know how to do this stuff will be hungry and waiting for the business.

The tectonic shift has only just begun.

Labels: advertising