It was only a matter of time before traditional advertising agencies would be forced to not only face, but also embrace, digital technology. As the global marketplace evolves, more and more agencies are coming to the realization that to not only succeed, but to survive, they will be required to evolve their business model and business plans to accommodate the ever-changing communication requirements and demands of their customers.
Big news out of Minneapolis this week was the announcement of the Campbell Mithun agency’s merger with MRM, a publicly held global media firm based in New York City. Both are units of Interpublic Group. Rachael Marret, the combined group’s new president said it best: “We’re all competing for the same dollars. Traditional agencies are attempting to go digital, and digital agencies are trying to become the brand stewards that traditional agencies are.”
The questions are, how will the agencies choose to build their business model, and where will they play? Will digital content simply be a means (i.e. the ad model via mass distribution and content development for major media buys)? Or will it be a means to an end (i.e. digital signage content development for individual private brand networks)?
To refresh your memory: Your business model ensures your company generates income through operational efficiencies, infrastructure, policies and procedures and organizational structure. A strong model describes the rationale of how your organization creates, delivers and captures value. Your business plan is based on a series of measurable goals by which to gauge your performance.
I’ve always thought that as soon as agencies could figure out a winning business model in which content could quickly, efficiently and effectively be deployed, the industry would take off. Hopefully these new digital agency players are building strong models for success. It appears that, more often than not, business models drift away from modeling and into business planning. You can have the most dynamic plan in town, but if it’s built on a bad business model, it’s likely to ultimately fail.
Last year, the digital signage industry saw a surge in the number of big brand hardware players coming to the table. Next year, I anticipate a higher level of industry involvement by groups such as McCann Worldwide, BBDO Worldwide, JWT and other leading advertising agencies. These early “digital progression” indicators, such as agency mergers and acquisitions, appear to be a positive sign that the dawn of a Brave New World is upon us and fingers are collectively crossed that the digital screenmedia explosion is on the horizon.
