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Feb
9
Technology Threatens Ad Agencies
February 9, 2006 | Anita Campbell
The Fallon Planning blog has an interesting piece about how new technologies and new business models threaten traditional ad agencies, writing ”[t]he days (and fortunes) grow shorter for the traditional ad agency as nimble upstarts leverage technology advances to subvert our long-held business models.” The article points to new sites that make it easier and cheaper than ever to advertise, all without requiring an ad agency’s assistance.
For instance, the article highlights Spot Runner, which lets you create TV ads for as little as $500 and in as little as one week. Spot Runner is an Internet site where you can choose from existing video clips, and then add your company’s name and marketing message to them. It’s self-serve ad creation.
I definitely can see how these new Internet sites level the playing field for small businesses, by putting TV ads within reach of smaller budgets. However, I’m not sure the impact of Spot Runner and others is so significant that I would sound the death knell for ad agencies.
The impact of technology is more nuanced.
In fact, technology can actually work hand-in-hand with ad agencies. Take for instance, Brand Muscle, a company local to me here in Cleveland, Ohio in the Midwest USA. Brand Muscle serves corporate clients that have large networks of dealers or field agents or numerous local outlets. The company offers technology that allows a corporation to set up pre-approved creative and messaging, and then create hundreds of different local versions of the ads. Their system can even allow individual dealers or agents to customize their own ads, within pre-approved corporate guidelines.
When I first saw Spot Runner I was immediately reminded of Brand Muscle. But 30 seconds later I realized the two are completely different in who they target and serve. For instance, Brand Muscle notes on its website: “BrandMuscle is not an advertising agency and we do not develop creative concepts. We leave those responsibilities to the experts within our clients’ marketing departments and their respective agencies. We do, however, staff a team of graphics coordinators that work tirelessly to ensure that the integrity of our clients’ brand and message is kept intact.”
Brand Muscle does not seek to replace agencies, but rather to implement their creative ideas more effectively using technology. Brand Muscle is about quality control for large corporations and their ad agencies. Spot Runner, on the other hand, appears more oriented toward eliminating the need for an ad agency.
In my view large corporations are going to need ad agencies for a long time to come. Witness Super Bowl ads, which get more elaborate every year. There is no way you could create a Super Bowl quality ad using Spot Runner.
What technology really does is create a barbell effect, with large corporations on one end and lots of small businesses on the other end. Large corporations with large budgets will still be hiring agencies, and using technology for better quality, to cut costs, and for speed.
But now, thanks to technology, you also have large numbers of small companies that may be able to afford TV ad campaigns for the first time. Most of these smaller players were not likely to be sending much business to ad agencies, anyways. So I am not sure it is a meaningful loss to the agencies.
To some degree it is within the ad agencies’ control as to how big their future role is. The nature of their role is evolving and requires them to be more tech-savvy.
For example, some of the other solutions mentioned in the Fallon blog article require considerable expertise and regular monitoring if you are going to carry them out effectively — such as AdWords campaigns. Some agencies are developing tech expertise, but others may have difficulty making the transition — and may even feel threatened by technology. In the end, it’s really about adapting to change.
Hat tip to If.Psfk.com for the link to the Fallon Planning article.
