The Death of the Ad Agency?

I'm in Aspen this week, sitting in on the Aspen Institute's FOCAS conference on communication and society. Today's discussion compared old vs new media and the impact of the web. I often feel this topic has been overplayed, but the panel included some heavy hitters like Michael Eisner and Ariana Huffington, so was definitely fun to watch.

One subject that sparked my interest was when Lynda Resnick, the marketing guru behind such brands as Fiji Water and POM Wonderful pomegranate juice, spoke about building the POM brand over 4 years with a $14m marketing budget, which to contextualize, is nothing compared to most new product launches.

So, how did Resnick create a successful launch, on a small budget, with no agency, for an unknown and relatively expensive product? (around $4.50/bottle) Apparently, she did her advertising in-house, meaning, no agency fees, no flying to meetings, and no time explaining what the product was all about. She, therefore, left herself more time to act and to innovate (developing a reusable glass, expanding the product line, researching the medical benefits) and less time negotiating and explaining all of this to an agency.

Which is smart because most of what Resnick did to launch her product wasn't really advertising. Primarily, she distributed the product widely and for free, like the old supermarket sample model. She also created a compelling PR story by leveraging the medical benefits of the juice. She eliminated a step. Consumers didn't have to go to POM, instead, POM found the consumer.

Is this type of thinking going to eventually outsmart the big advertising agency? Already, marketing budgets are being cut. TV spots are being replaced by interactive, viral, guerrilla and content distribution through social media platforms. But to take it a step further, do companies even need an outside source to market a product? For one, no one outside of a company will understand or care about a brand/product to the extent of those working for a company. In Resnick's case, she truly loves and believes in her product. Secondly, isn't a lot of the technology required to market becoming readily accessible to the masses?  YouTube quality videos are rapidly becoming legitimate sources of information and can be created at virtually no cost while a TV spot requires about $1m to produce not to mention the mess of hiring the film crews, casting agents etc. And that's all before it even airs. Plus, consumer demographics are changing. As today's teens grow up, a generation bred on immediacy and user generated content, will they acknowledge or trust content created by third parties? Do they need slick presentation?

So, my question is: are traditional agencies on the way out? And for now, I'd say, probably not. At least not yet. But, to compete with the Lynda Resnicks of the world, finding ways to to become more nimble, more media and PR saavy and certainly more willing to work with smaller budgets is imperative.

Goodbye month-long TV shoots in Paris, you sure were fun.

 

Comments

[Pom Queen]

I couldn't have said it better myself. Never despair; there are still "week long shoots in Paris" should the shoot be necessary, the only difference is you would be working on the client side, not the agency.

That is where the action is going to be going forward, for when you are part of the marketing team in a marketing driven business you are in business, not creating window dressing. The training teaches you how to run businesses, create products and market them. It is like getting an MBA on the job.

I urge you young ad professionals out there that are stuck in the old paradigm to consider moving over the great brands that are blazing the trail that give consumers products they don't just like; but poducts they love, and products they soon become ambassadors for.

Wouldn't be a better world all around if we spent more money on the integretiy of the product not the advertising?