Top Of Mind

2014: Advertising To See Massive Disruptions

January 2014
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R/GA Founder, CEO,  and Chairman Bob Greenberg shares five ways the advertising industry will be disrupted in 2014:

1) Clients: New business models – The advertising industry will be massively disrupted by clients moving away from horizontal integration to embrace new business models that do not rely on the same amounts of mass advertising to drive growth. Instead, growth will be driven through a new form of innovation that is unique to the digital age (see #2 below) and relies on an entirely new set of marketing channels to drive awareness and purchase. However, in this new business model the purchase is just the beginning that connects consumers to an “ecosystem of value” and spurs further purchases, as Apple, Google and Amazon have all done with their ecosystems: get the same consumer to buy more things from the same brand.

2) Connected devices and the Internet of Things – Many of these new business models for clients will be based upon the integration of physical products with digital services. The marketing of them will be “built in” to the device itself, as was the case with Nike+ Fuelband. Most consumers became aware of Fuelband through social sharing of data. Devices that collect data and share them through digital services will transform everyday life as well as the entire marketing industry.

In 2013, R/GA launched an Accelerator at our New York headquarters in partnership with TechStars to invest in 10 startup companies in the connected devices spaces, exposing our clients to early-stage technology that can help drive their business growth. We will help the startups with everything from business strategy to design to technology to marketing and branding, while also gaining an ownership stake in each one.

3) Agencies as business transformation consultants – Agencies will transform into broad ranging companies that provide business transformation consulting, product innovation, technology innovation (development of digital services for brands), brand development and a myriad of production capabilities. The “agency” part of these new companies will just be a piece of the whole, not the entire business.

Note that this trend is happening at the very same time when two of the largest holding companies have announced a merger to create an even larger holding company with the same exact kinds of assets. The merger just makes what already exists much bigger, rather than bringing new capabilities to the table. The distraction of this merger will create opportunities for new kinds of partners to gain traction with major clients.

4) Big Data = Earned data – Clients will increasingly “own” the data about their consumers, rather than relying upon third party, paid sources. They will “earn” the data from their consumers by providing digital services that deliver tremendous value by becoming personalised partners to consumers in everything from their finances to their health/fitness to what they cook for dinner at night to where they go on vacation to what clothes they wear, what make-up they use.

In fact, the marketing world will soon be divided between those companies who have made investments in digital platforms in order to reap earned data, and those that have not. The ones earning the data will use this to inform everything from product development strategies to CRM programs to one-to-one marketing approaches that deliver relevant, actionable messages to consumers — again, at a massive cost savings relative to shotgun mass media approaches.

5) Sustainability and the future of business growth – Brands will need to tackle the sustainability issue head-on and demonstrate how they can continue to grow and innovate without contributing to climate change and natural resource depletion. Millennial consumers will simply stop doing business with brands that are not demonstrably “green.”

As mentioned in #1 above, digital innovation will be at the core of these efforts to enable consumers to get greater value from the things they purchase, with less environmental impact.

Originally published in the Economic Times.