Self Limbing

Every couple of months I hear a startup pitch how they are going to put the ad agencies out of business. My usual response is along the lines of "have fun with that." The agency business is not especially big or profitable, as businesses go. By definition, the business is a small fraction the size of the media business. And the only way to grow an agency is to hire more people, people that you aren't afraid to have talk to your clients. This is hard.

On the other hand, agencies are annoying. They punch way above their weight. Some junior account exec can make or break your company with the money the budget their client has classed as "Other." Plus, the whole ad agency business is just a bunch of people who sit around all day either schmoozing or being "creative." How inefficient. Clearly a target for a disruptive technology, no?

The merits of this argument aside (I'll address that some other time), the agencies seem to love to assist the process of making themselves irrelevant. I thought of this when I read Josh Kopelman's amusing post on The Giving Tree. I was always in the camp that the loss of the tree was tragic and shortsighted.

A couple of weeks ago, a consortium of various media and technology companies, led by the advertising agency Publicis announced "The Pool", to create online video ad standards. Ad standards allow systems to be created that streamline ads, monitor them, test them, optimize them, target them, etc. These systems promise to create the advertising wonderland of frictionless one-to-one marketing. The friction being, of course, the marketing people.

Most online ad units are standardized. Banner ads were the first to be standardized, and their growth in volume took off immediately afterwards. But the standardization that made banner ads ubiquitous doomed the format to eventual failure: there was very little room for agencies to come up with creative ways to get people's attention. Banner ads are not only not clicked on by users, eye-tracking suggests that they are not even seen. Now marketers can only break through a user's built-in banner-ad shield by putting something insanely relevant in front of them and hoping they look at it by accident.

I understand why Microsoft and Yahoo! want The Pool. The technologization of the ad business requires standards. But Publicis is shooting themselves in the foot. In the end, human creativity is required for display ads to work. Giving in to the engineers' desire to standardize, systematize and streamline means that the ads eventually become ineffective. Ad agencies need to explain to their clients that it is the unusual that gets attention. This is what clients pay them for: the 'unique' in unique selling proposition, the 'big' in big idea.

The media companies may resist, because without standardization they will do less volume. But if they haven't realized that they can't make up the $0.50 CPMs on volume yet, what will it take?

If the agencies want to end up more than a stump to sit on, they need to stop helping the efficiency experts change marketing to nothing more than analytics.