Jerry Maguire: “I‘m finished. I’m fucked.  24 hours ago I was hot. Now….I’m a cautionary tale.”

At the Global Festival of Media I facilitated a panel of technology entreprenuers around the topic of “shift”. In short, in the world of exponential change linked to things like technology, social, mobile and big data are agencies going to take avantage or be hit by the shift. The idea was inspired by the the “Shift Happens” video. The last proper version of it I can find dates back 2 years ago.  It is already 2 years out of date!!!! So I gave them some more recent stimulus. You can read it on this sister blog : The stimulus – are agencies really awake to THE SHIFT?

The wonderful serial technology entrepreneurs :Stephen Messler, Cameron Yuill and Peter Goodman were my panel. So having read some stimulus…I asked them to be honest to questions like these (and they were):

1. Are agencies capable of taking advantage of the shift, or are they in the stands watching the water on the pitch from exponetial change rise…just before the whoosh that drowns them?

2. Is it possible for agencies to change – if so what do they need to do?

3. If you were the CEO of an agency what  would you do tomorrow?

Their response:

1.Agencies don’t disrupt their own model.

In comparison to the agency and brand world our entrepreneurs were not just comfortable with change, but sought it out. To quote Cameron: ” as an entrepreneur  - I wake up every morning and poke a fork in my eye”.  To quote Stephen: “We look at a market or a space and think how can we @£$% it up”. To quote Pete, who is that unusual thing a British Tech Entrepreneur:  “The difference between me and my mates in the pub was that I was willing to fail. In the USA Tech community failure is a badge of honour.  It is seen as good experience. Not in the UK”.

The fundamental nature of a tech entrepreneur is not only the speed at which they are willing to progress, but their willingness to cannabalise or destroy what they have already built. Consider how Apple cannabalised its previous products with its new ones.  Tech entrepreneurs also don’t get wedded to their original idea if it isn’t working.  They pivot. YouTube started off as a dating site.  They could not get video to stream or upload and went off to fix it.  They then realised they had an idea and they pivoted.  YouTube was born. In contrast, despite the desire to change claimed by agencies from a Tech Entrepreneurs perspective agencies at best adapt and do so slowly. They are unwilling or unable to rip up what they do.  This makes them vulnerable to change, because eventually somebody else will – just ask Nokia.

2. Can an agency tell you the big question they are trying to answer?

Tech entrepreneurs seek to find a problem or a gap in a market and fix it. They are driven by an insight into an issue and go full out on the answer.  See YouTube earlier. From the entrepreneur perspective – whilst they can see all agencies re-branding and changing what they do or say they do…big data…social…branded content etc – they struggle to easily identify what is the one problem that an agency is passionately trying to answer. In a tech start up there is a vision and possibly IPO that everyone is aiming for. The IPO is not the objective.  You get to the IPO by making your answer work. Everyone is moving in the same direction and working together in a tech start up, or an ogoing sucessful tech business. Without this vision (the answer) it is much harder for an established agency to motivate all of its people to embrace change in the way a tech entrepreneur business can.

3. Does the business model lead the business?

Tech entreprenuers start with a business model in mind, but will change it, adapt it or invent a new one. There was mobile and online gaming before Angry Birds and Farmville – but the way they used micro payments or virtual products also made a big idea much more commercial. Agencies need to ask themselves whether the model they work to, or the business they are in (be it creative, or media, digital etc) – has really changed? There is a danger that agencies are defining both the market they are in and their model based on the past. Is there something else other than commission, fees or performance bonus? Should an agency look to other areas for its business? Just adding new functions in contect or social or data isn’t it. As the tech entrepreneurs would point out…at a time where media and communications in the broadest sense should be rising and with it their role – agencies are from their perspective not easy to partner with.  As Pete Goodman said ” The first question from an agency to me tends to be “how much?  - not what does it do?” . As Cameron Yuill pointed out ” We went to see an agency recently and they said they couldn’t do anything because they had yet to develop their IPAD strategy.” He was puzzelled: 1. Why was there had to be an Ipad Strategy vs a business stratgey and 2.What they were waiting for? As Stephen Messler commented “There are some brilliant tech businesses out there who would love to partner with agencies.  They tend not to be invited in. If they are – agencies need to understand that a partnership is not sticking an unbranded slide in a client powerpoint”

4. Be good at what you are good at.

The nature of tech entrepreneurs and tech people means they are good at some things and not at others.  Tech entrepreneurs are disruptive and get bored easily. As Stephen Messler honestly said “If you brought me into an agency I’d ultimately destroy it”. That means tech entrepreneurs admit they are not as good at building and running a process, integrating things into a total solution,client service and making sense of what they do for brands. They tend to talk more comfortably to techies about tech.  “Agencies are brilliant at what we are bad at” said Stephen Messler. In the entrepreneurs opinion…agencies should wake up and leverage what they are good at.  They need to be honest with themselves and realise their own tech reality. At present an MIT grad isn’t going to have an agency top of their list for places to work.

5. If agencies want a bigger place in the tech shift they need to take seriously issues on credibility and trust.

At the Global Festival of Media in 2011 I ran a panel called “When Wall Street meets Madison Avenue” (video here).Dell, Vivaki and Google were the panel. The industry audience (agency, media owner and marketers) voted that Google would be the biggest commercial beneficiary of the shift to data.   In 2012, the attempt by agencies to piggyback data and  to shift upstream in their business model still has big barriers in its way. They operate against the pressures for their services to be commoditised by procurement and pitches. The 2012 Festival of Media Survey of Global CMO’s found that 35% believe they are not paying enough for agency services. That still means the majority, if agencies offer enhanced data and technology led services and charge for it, are not convinced or willing to pay any more. Also the elephant – and its a big one – is trust. Regrettably for agencies, their shift into digital trading desks has had an unexpected spin-off.  Call it a misunderstanding – as Agency CEO’s did when probed on the number– but the fact remains that 72% of Global CMOs surveyed believe agency trading desks are not transparent.  72% is a heck of a misunderstanding. Further, 80% believe agencies are not as good at digital media as they are at traditional media. The size of these numbers from agencies prime audience to buy these services shouldn’t be ignored.  To put this in a shift context: when the i-phone first arrived Nokia deflected it by saying (a) we still sell 40% of mobile phones (b) they are only in smart phones and that is a small % of the market (c) the i-phone is only really getting traction in USA…not in other markets and certainly not in big future markets like India and China (they cannot afford it!).  That was 5 years ago.  WHOOSH.

6. Invest in the future – not the margin.

Yet the biggest issue for agencies adapting to, or indeed benefitting from, the shift may not be client belief – but their culture. As my “Shift Happen” panel of entrepreneurs pointed out, tech entrepreneurs disproportionately invest in building out their businesses and profit may come later. Agencies struggle to reinvest in the new/change as they have to deliver margin every quarter. My entrepreneurs pointed out that there is a limited amount of tech talent with ideas and they are expensive – “where do you think they’ll go and who is willing to support the investment that it needs?”

So as the facilitator and an ex agency man….what is my view?

Shift means that to go forward you can’t look back.  You need to look sideways. The longer you have been in an industry  - as most of the agency CEOs have – the harder it is likely that you can look at things that way. The changes that occur don’t stay in neat boundaries. The shift in the music industry is well documented, but it was not just from CDs to downloads. Madonna shifted from a deal with Warner Music to a deal with event and venue promoter Live Nation.  Music shifted to become the 3^rd biggest category in gaming.  Music is at the heart of reality TV – from American Idol, X Factor and now The Voice. The opportunities are there for the agency world to change – but can it look sideways and then move?

Personally, as I again watched the global media agency and media owner community discuss the future at The Global Festival of Media 2012, I saw a lot of bright people and some great thinking and debate…but….and it is a big BUT – I’m still reminded of attending the Festival of Media four years ago.  We were talking about then about change to agencies and digital. I was in the bar with one of the leading CMOs in the music business after.  He laughed.  I asked what he was laughing at.  He said “this media conference feels just like a music industry conference from 10 years ago.  We said and did exactly the same”.

The question is not shift for agencies. The question is …..are agencies brave enough to pivot in a way the music industry didn’t and in a way a tech entrepreneur instinctivel can’t help but do?  Hands up the Ageny CEO most willing to poke himself in the eye with a fork!