Posts

There has been a lot of talk in recent years about the topic of media agencies and how they have to develop and position themselves. The answer is basically simple: The media agency of the future is a media agency – not a management consultancy, not a technology start-up and not a creative digital agency. Although all these related disciplines have been trying to penetrate the domain of media experts for years, this has not been crowned with lasting success yet.

Best examples are Blackwood Seven or SAP XM. Both providers, come from the pure technology and software side, and were hyped by many industry participants as the media agency model of the future. Algorithms and programmatic advertising instead of people should take the lead over media budgets. It was an exciting experiment, but the revolution did not happen – both companies have since withdrawn from media consulting. The all-encompassing algorithm, which can optimize everything from old clothes to cell phones, insurance, sweets and cars, simply doesn’t exist. And peta, exact or even zeta bytes of data do not change the fact that good media planning requires not only algorithms, but also experience and tools developed from this expertise.

The future naturally lies in (partial) automation. Without smart data, AI, programmatic advertising, individualized control of creation, and tools that work more or less automatically, no agency of the future, even of the present, will function. But if you want to be as creative as you are effective in media planning, you have to employ people with knowledge and experience in a wide range of disciplines in addition to your colleague computer. People who are capable of abstracting beyond the experiences made and of creating something new. Machines are still having a hard time here as well as agencies that are too focused on one discipline.

In the future, it will be essential for media consultants to look outside the box in their own discipline. There will continue to be agencies for very specific niches, such as employer branding or e-commerce. However, the media future belongs to the generalists and not to the specialists or rather: it belongs to a task force of differently positioned specialists, which can be put together individually according to the task and goal of the customer. Agency models such as the House of Communication, which combines all service providers under one roof and has been operating this type of collaboration since its inception, have an advantage here over companies that are only just starting to work in an integrated manner. And independent agencies score points over listed network bolides when it comes to the speed and flexibility with which they react to market developments.

Flexibility and speed regarding customer requirements is one thing, but the size of the company required to be able to implement these is an equally decisive factor that will separate the wheat from the chaff in the market. Investment in manpower, technical equipment and research is immense – which is why the tendency of smaller agencies to slip under the umbrella of more powerful partners, unless they have found their very special niche, will continue to increase.

The challenges that digitisation, the fragmented media landscape and the resulting individualised media use pose to planners are too diverse. The more data and information about the individual is available, the clearer it becomes: Mass communication as we know it from the past no longer works. It has been replaced by individual mass communication. Socio-demographies have had their day. The typical “man aged 14 to 49” no longer exists, nor do “householders” or the much-cited “best agers”. The stereotypes of the past are no longer applicable, for example; men are interested in cars, women in cosmetics, young people are modern and open-minded, old people are traditional and old-fashioned. If we look at people of identical age, place of residence, education and income, they tick completely different boxes.

In times of individualisation, easily accessible information and increased life expectancy and opportunities, values have become our distinguishing feature. What motivates people? What drives them? In order to describe this world of values, the so-called “value sphere”, 360-degree tools are needed that can assign specific values and people to specific media and thus create a value map of the target group. And this is where the algorithm comes into play again. The media agency can bring both aspects together: data and target group expertise to create messages tailored to each recipient.

This does not mean that mass media such as TV or OOH are obsolete per se. They only need to be supplemented by individualised messages and replaced where necessary. This can only be achieved with appropriate tools – tools like the Brand Investor, which the agency of the future does not buy, but develops itself based on its expertise and existing skills. The Brand Investor is the first AI-operated planning tool that manages the communication mix on basis of marketing goals and target groups across all media. 19 media genres are considered – from TV to advertising papers and affiliate marketing.

One thing is clear: the agency business has changed radically. New technologies are giving advertisers the opportunity to depict classic agency services themselves. In particular, with the increasing spread of programmatic advertising, digital-savvy and large companies are taking the path of anchoring media planning in-house. This development is a good thing, because this way advertisers are developing a better understanding of agency work. In practice, however, it often turns out that the strategic and, in many cases, also the operative know-how is missing to work successfully. Not to mention the experience that agencies gain from the overall view of all their clients. Technological development is quite simply progressing too rapidly for us to be able to keep up to date without any problems.

So how will media agencies earn their money in the future? What does their business model look like? Of course, purchasing power and the associated good conditions remain an important factor. And this is exactly where automation plays into the agencies’ cards, because it helps to implement more efficient media planning. But (strategic) consulting will increasingly become another mainstay beyond media. Advertising companies today need a partner who supports them in the development of a promising strategy, accompanies implementation across the entire range of communication and is also available later on for operational support if required. They need tailor-made technologies, specialist knowledge and many years of experience. You need researchers and creative and data specialists. In summary, you need an integrated (media) agency.

Florian Haller, CEO of the Serviceplan Group, explains in an interview with Marketing Review St. Gallen on how the agency group is positioned and on current developments in marketing. He was interviewed by Sven Reinecke, Director of the Institute for Marketing at the University of St. Gallen and Friedrich M. Kirn, CEO of MIM Marken Institut München GmbH.

At the University of St Gallen (HSG) we teach students marketing and management. However, many of the people employed by agencies have not studied these subjects. You are a rare example of someone who has. Do you think that your training was helpful or would you choose a different approach now?

I benefited greatly from my time at HSG. And that’s because the advertising agency business has undergone some extreme changes over the last 20 years. Our core business used to be driven by gut instinct and was primarily creative;   I suspect a technical angle would not have been at all useful then. That’s all completely different now. Advertising agencies operate in a much more strategic and complex way. Advertising used to run on four or five channels; now we’re faced with twenty to thirty.  Not only that, these channels are also supposed to be interconnected. Apart from that, numerous new careers in the sector have developed over the years and now we can’t even imagine the advertising landscape without them:  just consider the digital forms of advertising. Business models have also developed enormously. It is nowadays essential that the management of a company the size of ours is based on strategic and theoretical principles. In this respect, I have no doubt that my course at the University of St. Gallen provided me with fundamental knowledge of great value. I think it’s a shame that so few high-achieving graduates from prestigious universities choose to work for large communication agencies.  However, maybe we should take it upon ourselves to put out a stronger message about the jobs and promotion prospects we can offer.

What were the events in your career so far that you would consider particularly “critical” and which have brought you insight?  

Each of the key points in my career was a real “aha moment”. Starting, obviously, with the course in St. Gallen and the “St. Gallen Management Model”. The most crucial thing I learnt was that managers should not settle for a superficial approach, but must recognise structures. The understanding and development of structures result in the design of successful strategies. Contact with businesses was strongly encouraged at St. Gallen: we gave presentations and contributed to manager seminars early on in the course. Even though we were quite young, it was quite normal for us to come into contact with senior management from Swiss and European companies. As a matter of course, this resulted in contacts which have endured now for decades. While I was at university, I realised how fantastic advertising can be. Incidentally, it was not clear at the time whether I would go to work in my father’s agency at some point.

Starting at Procter & Gamble after I graduated was an important time for me.  Going to Brussels and working for a pan-European brand in an international team was great fun.  The management helped us young marketing professionals feel personally responsible for our brands and we related very strongly to them. Over the six and half years at Procter & Gamble, I gradually realised that I would eventually want to work more independently so I joined my father’s agency.

How do agencies differentiate themselves from the others? Positioning, vision and principles at most PR agencies are very similar with little room for individuality, the focus is on brand management and creativity.

That’s true.  It is really difficult for an agency to set itself apart from the others in public perception. That is simply because agencies must live up to certain values. Customers expect agencies to be highly creative and not to damage their brands. It’s in their nature. There are no uncreative agencies.

We distinguish ourselves on the market with our four ‘i’s: innovative, international, independent and integrated. We are independent and partner-led.  We have an integrated structure, which, it should be noted, is not just theoretical, but actively part of our practice in the Houses of Communication. In our agency, traditional PR people work closely with media planners, data analysts and market researchers. Each agency within the group is a standalone unit. We have depth of specialisation but also integration. We achieve this by giving the teams geographical proximity and grouping them into customer teams. The other values that distinguish us are innovation and internationality.

Companies are increasingly pursuing a “one-brand” philosophy. Serviceplan operates as a group, but maintains very many “subbrands” and regional links. Is that not contradictory at some level?  Is it still necessary to maintain such a pronounced national presence in these global times?

There is a distinction between the service level and the brand level. At the service level, we do have separate agencies for specialist areas. For example, one undertakes nothing other than business intelligence. Another specialises in search engine optimisation. We see these specialist agencies as tools which customers can buy individually. Very specific expertise is developing in the specialist units.   Creatives look for other creatives and people working with technology need technology enthusiasts. As a group of agencies, we need to create the right environments and find employees that fit into the various areas. On the other hand, we are trying to cut back on the brand level. We don’t want each service area to have its own brand. That is not sustainable on the market. That’s why we have a brand for the creative product in the broadest sense:  Serviceplan. We have a brand for the ability to deal with channels – Mediaplus. The Plan.Net brand represents the digital segment, Facit covers market research and our newest brand, Solutions, deals with the realisation side of the business. The service areas are organised under these brands.

Does it make any sense at all now to maintain a regional presence in so many countries and on so many continents or should agencies rather look for synergies in the individual markets?

The Serviceplan Group is the first German agency to have a significant international presence.  We have either our own offices or partnerships in other countries. We currently have a presence in more than 35 countries, ranging from France to Dubai to China. Although Germany is so export-oriented, no German agency has ever  operated on such an international level as Serviceplan. This is unusual because German companies are valued for their reliability and technology-oriented thinking, amongst other qualities.  Global players such as BMW want to work with partners who can design international advertising campaigns and localize them for the country in question, so a company needs different expertise in the various markets. Anyone planning a campaign for the BMW 7-series must understand the Chinese market where many more cars are sold than in Germany, for example. In a nutshell: our customers are adamant that internationalisation is essential. I must point out that internationalisation is hugely enriching for the Serviceplan Group. Kick-off events at which teams from China, Europe and the USA get together and jointly develop a vision are memorable experiences for me. Internationalisation is unquestionably also an emotive matter for us. It is clear that our expansion concentrates on hubs which are economically significant. It is important to us that the agencies in the different countries are independent and look after their customers.    Synergies are created between countries, of course.

Serviceplan’s “House of Communication” model has integration at its heart. I don’t want to ask you about your favourite campaign – no one likes to rank their customers –  but which Serviceplan campaign best showcases integration?

(He laughs) We provide every customer with the service that is right for them. I am proud of that. Our day-to-day operations produce real flagship projects, of course.   I am proud of much of the work we do for BMW in which we combine creativity, media and the digital approach. A good example is the launch campaign for the i8. It is quite simply a fantastic product and developing the campaign for it was a pleasure. And then there’s the global aspect and the roll-out on every channel. This is a challenge even for a large agency. Everyone likes to see a satisfied customer. However, there are also less high-profile cases which I find really exciting. For example, we developed a campaign for the German Bar Association that worked mainly on a viral basis. Innovative thinking is paramount in a case like that.

360-degree communication is frequently called for – however, SMEs with modest budgets prefer an 80:20 approach.  Can you give examples of when “integrated PR” might not be the aim and what the importance of branding is?

In my view, the term 360-degree communication is not very helpful. The primary aim today can’t be to advertise on every single possible channel. Firstly, there probably is not enough money in most cases and there is also the question of the logic behind it. Innovative concepts do take careful account of the channels available, but try to find an intelligent way of linking that makes sense sequentially.

The current trend towards digitalisation presents us with more than one issue. Increasing digitalisation has the effect of bring the competition closer together. I think this makes the brand more significant. There used to be high barriers to entry. Customers had to go into a shop for advice before deciding on a new jacket. Nowadays we have the Internet and it is normal to carry out the comparison with a series of mouseclicks. It is therefore easy to defend the proposition that brand work today is as important as never before.

Research is currently examining the subject of “sponsor activation”. Why is sponsorship in many cases, despite the high costs of rights, insufficiently used and integrated in brand management?  Are there any examples of best practice?

The Serviceplan Group has a small business unit which is concerned specifically with sponsorship. This is an exciting subject and sponsorship can be enormously effective advertising. At the same time, sponsorship will never occupy a central place in agency operations.  Sponsorship decisions are often made with a great deal of emotion and caution is advised especially in planning a budget. Anyone who invests in a sponsorship, which usually involves a considerable sum of money, must ensure that enough remains in the budget to follow up with advertising.  Only this approach makes sponsorship efficient.

The communication landscape is diverging into many parts; it’s almost impossible to keep track of it.  The digital advertising sector is dominated by two major players. What will communication and advertising look like in 2015? How are corporate budgets changing, what is happening to the work done at agencies and by other market players such as market researchers

I’m not at all concerned about this. There are many subjects not discussed in the current hype surrounding digitalisation. Going forward, companies will still need partners who can develop creative ideas. Even in digital advertising, there is a huge need for consultancy. Agencies which rely on their purchasing power in the media will disappear, because computers will take on this work. There are still no answers to the questions of which customer data I can have, what price do I pay for it and how do I segment the available data? The need for consultancy will grow, not diminish. When I translate my channel strategy to Google or Facebook, it is probably  quite clear which channels my budgets are being used for. That is not something that advertising customers will want. Our future opportunities will lie in using different sources and putting together efficient offers for our customers.

Looking ahead: what will Serviceplan look like in 15 years time?

Let’s be happy if Serviceplan gets through the next five years successfully. Joking apart,  whatever happens, we will be even more digital in 15 years time. The proportion of digital services at our company is already over 50%. Today, 30% on average of our customers’ advertising budgets is spent in the digital area. The topic of data will be important in the future. Serviceplan will be doing more content marketing than is currently the case and will be even more international. Despite the justified scepticism concerning the frantic collection of data and the analysis of big data in many countries on this earth, we in Europe must be careful that we are not left behind. I am a committed defender of data protection and the controlled use of data, but the future will be to a great extent digital and the business models developing from this future are also digital. If we want to participate in this massive trend, we must remain open to the digital world. Particularly in advertising, we must ensure that it is not only companies in the USA in their safe harbour that do everything that is not allowed here and earn good money with it.  It is therefore important to stop people being afraid of Big Data.

Finally, can we have a few words on your commitment to Switzerland, where Serviceplan of course has a branch?

Happily. My father is Swiss and so am I. I did my military service in Switzerland and I’ve studied and worked there and I have many reasons to be grateful to the country. All things considered, we are the largest Swiss agency in the world.  Switzerland is also an important market for us, because it is a hub for companies with international operations.  For example, we work for ABB international global, which is based in Zurich. I feel very at home in Switzerland.

This interview was published in Marketing Review St. Gallen.

First of all, it bodes well for the communications agency business model when larger numbers of vacancies are announced across the board. On the other hand, we also need to find the colleagues we are looking for and that is currently a problem for many agencies. None of us operating under the traditional designation of ‘agency’ have so far succeeded in conveying to the outside world that the new digital and media career paths of which there are so many can also be followed in agencies. Nor that most of them even originated in agencies. Frequently, we don’t even appear on the radar of young digital natives, who prefer to look towards internet companies and start-ups.
Just the word ‘agency’ brings an analogue image of the traditional advertising business to the minds of many people. That has not reflected the real situation for a long time. We are simply not saying that sufficiently clearly

Although there are enough opportunities to do so. University marketing is one of the most efficient. It is never too early to allow potential colleagues to share in our business and to inform them about the abilities and significance of communications agencies today. If a large agency is not maintaining an active partnership with at least 10 universities, it should come as no surprise if it never finds the staff it is looking for. Sporadic presentations and attendances at trade fairs are not, however, enough. Agency days and working groups looking at real customer cases are the way to go. Collaborating with the universities means more work, but it yields a great deal and not only job applications. We also get a lot of feedback and an outsider’s view from those who really drive us forward – our future colleagues. They know that agencies can still be places full of inspiration where you can fully commit to your career.