Welcome to Agency 3.0: You Can’t Go Home Again

Les Margulis spent 25 years at BBDO New York as International Media Director, and then settled with his Australian wife, Ann, in Sydney. However, he couldn’t quit the business. The lure of Bondi Beach or the famed Opera season just wasn’t enough. Les formed his own company, Margulis Media Group, and has been doing some serious globetrotting with a seminar series on best practices for media agencies.

His recent assignments have taken him from Kiev to Moscow to Dubai to TelAviv to Johannesberg, and next to Gainesville, Florida where he will serve for 4 months as a Freedom Forum
Professor of Advertising at the University of Florida.

He has found, however, that in his role as “trainer,” he is doing far more learning than teaching. In this new column for The Internationalist, Les Margulis will offer his perspective of how the concept of media is changing around the world, and he will share ideas and best practices from his various stops around the globe.

It was a great culture shock coming back to America after living abroad for the better part of a decade. My wife and I left soon after 9/11 with shattered illusions that America in general and New York City in particular, were safe. We moved to Sydney, Australia where coincidentally Neville Shute made man’s last refuge from a nuclear attack in the seminal novel (probably now mostly forgotten), On The Beach.

Various consulting jobs took me to the far corners of the world where time had mostly stood still and Internet access was available at the office but only dreamt of at home. These are countries where planes routinely crashed on take off and at the end of each air journey the cabin crew and passengers would burst into spontaneous applause at the surprise of surviving another journey.

TV still ruled and it was not unusual for prime time shows to deliver 40 and 50 target rating points per spot. Therefore, if a Brand scheduled 10 spots over a 4-week period, you were pretty much guaranteed a 90 reach.

When I came home (and I still do call America “home”) I was forced to reconnect to the 21st Century. Here, in America, we live in a “Digital Ecology.” We are able to control our world of entertainment that is unmatched elsewhere. We control our destiny with a flick of a mouse. When I left, one media agency that I had never worked for boasted that they were the ROI Agency. And it was a clear positioning statement. Clients understood what it meant.

But now? What is an impression? And what is the value of that impression across traditional vs. digital media? I would find it difficult to define an ROI on a media budget because the media (traditional vs. digital) have a different density (like oil vs. water).
I do not believe that we are speaking of an erosion of mass media (read TV) rather the media landscape has been totally and irrevocably altered.

But what is really important is that Brands are trying to figure out how they organically fit into their consumers’ world. If you are transparent and fun (read “engaging”) they will welcome you. But unless you are fun, stay off of Facebook and the other social networking sites as the consumer has no interest in the traditional forms of interaction. The thirty second TVC is playing to an empty house.

So now whose responsibility is it to get the consumer (viewer) to stay and watch more and not less TV? Most would argue the creative agency. But once clients start really calculating an ROI on that dwindling number, then failure may well be imminent. The creative agency may not be up to the task. The guys and women who made their fortune on mediocrity have since either moved on or passed on and left us wondering when this new creative Renaissance was going to happen to bring viewers back.
Yet as media agencies shift more and more dollars to low margin digital media to address the changing market conditions and the shifting consumer landscapes, these companies are still dependent on the Super Bowl economic models grounded in high out of pocket cost. It is a truism of our age that fragmentation is making it more difficult to reach mass audience yet the CPM’s of these mass media are continually being “cranked up a notch or two.” Clearly, media is in a transition period and no one in the CFO suite has found a workable compensation model that works for the agencies (both media and creative) and pays out for clients.
Although I am in my Ivory Tower office surrounded by the verdant lawns nurtured by the ever present Florida sun, I wonder if Madison Avenue is sitting where the record business was 10 years ago at the onset of the switch from CD’s to “free to steal” digital. Ten years later and 100 committees later, Tower records has come and gone and the industry still has not yet developed a monetary strategy.

Yet impacting us, I see Google with a clear corporate mandate to disintermediate the media agency so that their logarithms will rule the world. So as we passed through another upfront season, I wonder how many more will we have? Advertisers once bought TV because of its immediacy (and effective measurement be dammed), but with so many of the viewers gone elsewhere, there is less of a compelling reason to buy.

Yet, the agencies seem to be locked into a century old viewpoint that has us backed into a corner. We have to understand the realities of this new marketplace and develop a new approach that is truly on target with an ROI measurement system and financial model that is user and agency friendly.