A Perfect Storm of Uncertainty: Part 1

07/09/2017

Pete McGarr, managing director of icuc.social quizzes our own Dan Hagen, CSO on the digital climate. In this two part series, you’ll have the chance to eavesdrop on their conversation.

Dan Hagen Dan Hagen Chief Strategy Officer London Digital
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Myself and icuc.social’s Managing Director, Pete McGarr go way back, having worked together some 20 years ago. Since then, our careers have run in parallel with the rapid evolution of digital.

We have now been reunited under the Dentsu Aegis Network umbrella, and Pete and I caught up to reflect on how the industry has changed and discuss where we’re at right now.

Here’s Part 1, in which Pete grills me on the current climate, new business models, shifting client/agency relationships, and the most precious 21st-century commodity – trust.

Then and now: 20 years, three distinct eras

Pete: It’s 20 years since we first met. Any reflections on how those two decades have played out for our industry?

Dan: I’d group the last 20 years into a couple of eras. When I started out, digital was just emerging. On my second day, my boss said to me: “Dan, we’re going to be looking at advertising on the internet.” I had to figure out what the ‘internet’ was. I actually learned about it from a book…

Quickly, the excitement hit the marketplace, then it burned out after two or three years. After that early boom and bust, there was a reset which lead to around six years of pretty steady growth. During that time, digital became a more and more important part of the marketing mix. Then 2008 hit and, as we all know, that was a substantial crunch.

I reckon we’re due another downturn right about now, and we’re already seeing the early signs of it. What we’re witnessing in the marketplace right now is a perfect storm of uncertainty.

Media as service: brands are beginning to create functional products

Pete: So, what’s next for digital? What opportunities do you see emerging amongst the uncertainty?

Dan: Digital marketing isn’t growing as much, but we’re increasingly talking about media as service. New, disruptive business models are emerging, especially around commerce and the provision of services.

Think about the interface you use with Uber, for example. There are serious issues with their working culture, but the frictionless service and deployment idea are really, really interesting. I can order a car from my phone, from what’s essentially a media channel. Media is delivering a service to me, rather than communications.

Pete: Consumer expectations are evolving too, aren’t they? In 2013 when Uber launched, people were prepared to wait for 10 minutes. Now, it’s down to less than two.

Dan: Exactly. We’re seeing that across the board. Today, if you’re a bank, you’re not just competing with other banks. Your competitors are also Uber and Airbnb, from a consumer expectation and functionality perspective. So banks need to think: “What should we be doing? Should we launch an Alexa-style product? Why not, if Amazon’s done it?” Do I trust Amazon with my data? I’m not sure. Do I trust my bank with my data? Probably.

Ripping up the rule book: unanswered questions are replacing established ideas

Pete: The landscape is shifting for clients – fast. There’s no room for complacency or playing it safe. Should they be scared? Or excited?

Dan: Both! The established rules around “Who am I?”, “Who are my competitors?”, “Who’s setting the expectations for my customers?” have all been ripped up. A brand can no longer say “We do it this way, because we do it this way.” It’s new. It’s challenging. It’s exciting.

Pete: It’s exciting and, as you said earlier, uncertain. Brands don’t know the answers yet. They’re asking: “What model should I be using?”, “Who should I talk to?”, and “How do I position myself within a market I don’t understand anymore?

Dan: And that uncertainty is intensified by the geo-political landscape. Do any of us know what the world is going to look like in the next 12 – 36 months?

All this means brands are thinking: “Change is coming at me from new competitive models, consumers are increasingly disenfranchised, but (paradoxically) they also have more power than ever before. How do I manage that? Is now the time to invest in anything?

That’s where we’re at right now. We’re in the midst of a seriously disruptive moment. We need to plough through, whilst giving careful thought to what we as an organisation (the Dentsu Aegis Network) need to become in the future. The industry can no longer hide and say: “Just a bit of telly and a bit of press and it’ll all be alright.” We need to help marketers understand that now, more than ever, they need to actually live what they say through their media channels, rather than simply pushing out messaging.

The agency and the client: honest dialogue and genuine trust are more important than ever

Pete: At icuc.social, we’ve always championed living your values. We work with clients to define their true social role, then help them perform and execute that over

the long term to earn preference. It can be a difficult sell, because brands need hard numbers, fast. Especially today. Now, it’s about balancing that long-term, strategic planning with the industry’s new passion for agility.

So, do you think we can still push that longer term thinking through with clients, in this environment, this atmosphere? Or is that getting harder and harder, even though it’s what you fundamentally have to do?

Dan: Yes, it’s important to focus on client leadership and the immediate output – the work. And ‘the work’ should inspire people. It should be something people can connect with.

For that to function at its best, you’ve got to have a deeply trusting, high-level relationship with clients, despite the frenetic world we’re all working in today. It’s vital to go beyond the transactional, the now, the urgent. More and more, senior people within Dentsu Aegis Network agencies are spending significant, quality time talking to senior clients about the challenges within those clients’ businesses. That builds genuine credibility, and – the big one – trust. It’s about fostering dialogue – a peer-to-peer relationship, not a master and service relationship. You start to really have a conversation.

At it’s core, what we do isn’t just about media. It’s about the future of business. We’re here to help clients see (and shape) what marketing will look like in the next 3-5 years.

Oh, and when it comes to ‘the work’, people still aren’t doing enough with data. We need to understand people – to find the insights that lead to inspiring stuff. Clients have a tendency to want to measure what’s easy, not what’s important. So we’ll always need to educate and encourage.

Making big changes: revolutionising client spend and commercial relationships

Pete: Primary research and upfront insight are expensive, but often transformative. Do you think, more than ever, we need to challenge clients to invest in this stuff?

Dan: Absolutely. It’s about shifting client perceptions. Clients are happy to spend £20m on marketing activity, but some are still uncomfortable hiving off half a million (just 2.5%) to benchmark whether or not the 97.5% made a difference – for the brand, or the business. That thinking can be driven by personal fear: “What if the data shows my spend didn’t have an impact? What if it shows I should spend less money?” But we’re here to support clients to be bold, and guarantee impact.

And we need to be brave too. Increasingly, I’m seeing a need for new commercial relationships. Current relationships are largely based on commissions and FTEs. As we move towards automation, and start helping clients automate their businesses, that model will no longer be sustainable or scalable. It won’t incentivise us, and it won’t motivate our clients. We need to reshape our commercial relationships for a new era.

Next week, Pete and Dan share their views on automation, and the enduring power of human creativity and intuition.

 

Dan Hagen Dan Hagen Chief Strategy Officer London Digital
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