Media

Why Publishers Are a Huge Threat to Ad Agencies

Back in the days of Mad Men, agencies were bulletproof institutions. Nobody had to question how things worked. Account managers dealt with clients, creatives created, and everybody smoked. But once the digital revolution hit a few decades ago, the traditional agency model splintered into an array of concentrated niches.

In this age of specialization, you can find agencies that focus solely on placements or digital or email marketing. But few of those niches offer as much value as content marketing. Every brand wants to be a publisher. Meanwhile, legacy publishers have started creating in-house studios, born out of journalistic roots, to meet branded content needs. The move is working; some of these agencies at places like The Atlantic are becoming full-service shops in their own right.

“Agencies have always tapped into the ecosystem of the most creative people, which used to be within their four walls and [clients’] four walls,” Marc Mathieu, CMO of Samsung USA, told Contagious last year. “Today it’s much more diverse.”

The increased concentration has wide-ranging effects on how clients maintain relationships with agencies. Rather than throwing all of their business at one agency of record, companies can now portion off different parts to the most relevant contractors. This system lets media specialists work on content plans while digital experts tailor web offerings. For the more generalist agencies still around, like Ogilvy & Mather, JWT, and DDB, this should be of the utmost concern.

To see the danger of fractured responsibilities, just look back at the ascent of digital shops during the mid-2000s. Agencies like R/GA and 360i used to rely on their digital fluency to win work. But with time, these shops extended their areas of influence to offline campaigns, challenging established industry players in sectors like television.

“Too many charlatans who get by on political alliances and favors get in the way of good creative getting done.”

In 2013, E-Trade moved its creative operations from Grey to Ogilvy & Mather, a large agency switch that led to the retirement of the famous talking baby, who was replaced with the more sophisticated “Type E” campaign. At the time, R/GA held pieces of E-Trade’s digital business that were unaffected by the swap. But in 2015, the financial services corporation made the surprising decision to drop Ogilvy as agency of record less than two years in, transferring the title and its television business to R/GA.

“A traditional agency would have gone from TV to the internet to mobile and social,” R/GA CEO Bob Greenberg told Ad Age in 2014. “R/GA is the first company to go the opposite way.”

It’s probably easier for agencies with a modern expertise to learn traditional practices than for an Ogilvy to become an expert on new technology. If agencies don’t rethink their branded content practices, we may see similar takeovers in content marketing.

When Vice launched in 1994, the culture platform was nothing more than a print magazine giving voice to music and cultural trends not covered elsewhere. It wasn’t until 2006 that the outlet began experimenting with digital video. A decade later, it bolstered its news verticals with television programs and a full-fledged network. The flourishing media empire may have begun in journalism, but it’s managed to blur the lines between edgy content shop and traditional marketing agency. Vice’s 2013 absorption of digital agency Carrot Creative, meant to augment content distribution and activation plans, served as another clue that Vice plans to carve out a bigger place in advertising.

“[Vice] is a total threat,” said Katy Reyers, associate strategy director at ad agency MRY. “They’re super smart and don’t get caught up in process. That’s honestly what is wrong with the agency model. Too many charlatans who get by on political alliances and favors get in the way of good creative getting done.”

It’s especially crucial that publishers spawn in-house branded content studios as they face arguably more volatility than all other media industries. T Brand Studio, the custom content unit of The New York Times, started in 2014 with the purpose of creating in-depth stories for brands that would live on the Times website. Now, however, a lot of T Brand’s output lives on client websites, per Digiday. The Times continues to gobble up small agencies and is looking to develop the studio into a full-service creative marketing agency.

“You have to anticipate tectonic shifts and be ready to evolve your business before it’s too late.”

“The line between publishers and agencies is eroding. In fact, the lines between most forms of media are eroding,” Justin Montanino, senior director of branded content at New York magazine, told me. “In this business, you have to anticipate tectonic shifts and be ready to evolve your business before it’s too late.”

For legacy ad agencies, studios like T Brand are quickly becoming threatening competitors appealing enough to steal work. So what are these agencies to do?

As a first step, it’s time for them to stop thinking about content as a separate entity to account, strategy, and creative. Content planning and creation need to be cross-departmental. For example, longstanding PR powerhouse Edelman has formed a “collaborative journalism” department, which essentially acts as a brand newsroom staffed with journalists who can help new and existing clients produce content.

For agencies opposed to overhauling internal infrastructure, it may be wise to partner with authorities in the space. Not every small content shop or in-house studio will turn into a creative agency. Instead of competing against established players in journalism, larger agencies can reap the benefits of content specialists while niche shops gain access to a vast new client network.

Of course, agencies can try to keep fending off the competition themselves, but those that do shouldn’t complain when a T Brand or Vice takes a slice of their business. After all, Mad Men ended a year and a half ago. It’s time to move on.

Image by Retro Atelier & Johan J.K. / Getty
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