So here is the dilemma. Brands want to be “digital”, so the agency models who serve those brands have re-aligned to offer “digital” services, but the incentives that drive agency decision-making haven’t changed since the TV commercial was invented. Now step back and look at the digital marketing universe in terms of the brands who use it – there seem to be two very clear approaches in play; Empire Building and City-State Refinement/Centralization. (I’ll go into more detail on what the heck those words mean in a bit.) Now here’s the issue… the production/services model of the “traditional” agency drives strategies of digital empire building, but time and time again we see the City-State brands winning online.
Building an “Interactive” Empire
Empire building is a fairly common practice in the business world. Almost every business metric that measures a company’s performance is based in growth and expansion. In the retail world it’s often driven by new markets entered by buying competitors or building new stores. In tech it’s often driven by adding new features or building new product lines. In the consumer packaged goods space its seems to be all about new flavors and new product types. At the end of the day it’s about constant “growth”, which is often measured in locations, shelf-space, or installs. So you can see how when a marketing team or agency pitches to its “business leaders” the idea of growth into new markets they love the idea. The problem is… that’s not how the digital world usually works. Last time I checked micro-sites are poor performers unless you are spending a ton of money to send people there, meaning they don’t retain customers rather only offer a single engagement. Building a micro-site is the equivalent of building a store in a low traffic area, getting shelf space way in the back where no one is looking, or adding a new feature that only impacts 1% of users. These concepts of growth aren’t going to work over time, rather only when advertised.
The core part to Empire Building is in the sales pitch, often to a large multi-product or services organization. It’s very hard to sell in a “strategy” of “we need to continue building on our core properties”. Rather everyone is happy when you pitch the idea of “expanding to reach new customers”. The problem is that expansion strategy while sounding smart for business is often not, these concepts often involve building/creating many different destinations inside the digital ecosystem. However the problem with that is the digital ecosystem is a portal to anywhere in one step – so every website/experience is just as easy to get to as the next. This is a very difficult concept for most business owners to understand in large matrix organizations, because they don’t see the whole picture, rather they want something just for them. You know just like in the “growth” oriented business model they follow.
Building a Centralized City-State
A Centralized City-State gets its model from the myth of a brand focused community. It’s not that they’re aren’t brand focused communities in the world, it just that in 99% of cases your Facebook page isn’t one of them. Centralized City-States are the brands who have chosen to keep things simple for the customer. If you search the brand name, you’re only going to find 1 of everything, or you’ll only find the brand in places that directly connect with the brand’s core experience. In this model the brand focuses on building long-term entities that represent the whole, rather than short-term campaigns that satisfy one part of the brand/company’s “growth” model. These are the companies that stick to their guns around the idea of “one brand, one message”. These are the brands that sometimes don’t even bother with social media, or only have one website, or use digital to extend their products rather than their marketing.
The model of centralization was the core of the first digital plan any company puts in place, just like every major power in history basically started as a city-state. The first extension into digital is often one centralized experience, and often works pretty well. But that’s the point when harsh decisions about “growth” come into play – what is the trade-off to building many different experiences? Well I’ll put it this way, from a business perspective I completely agree with a “growth” model of building an empire, compared to history the most successful countries in the old world where larger empires that ruled many resources such as Persia, Rome, China, and even England years later. That said, the digital marketing space doesn’t have the same resource limitations of the real world, rather it is an infinite space. The only resource that is actually scarce is people, “users” is the metric that drives digital. So if that’s the case, it’s not about the real world resources you have, rather the users you influence. Now look back into history and identify from where the most influence on culture came… great cities were the great champions such as Athens, the City of Rome, the City of Paris, and the City of London – not the empires.
Agency Incentive Models
So with those two concepts in place, I’m guessing its pretty clear which way I lean. The problem I have is that the model from which an agency (the entities most often entrusted with spreading a brand) works in digital doesn’t align the clearly correct way. Now I’m not saying agencies are bad, just disadvantaged by their incentives in the digital space.
Agencies are a supporting function to the client in most cases. In a supporting role the entity in charge of the brand is often not speaking to one centralized stakeholder, rather working with many different stockholders. In this model they often have a brand statement and concept they’re going to apply to all things around this brand. The problem is while having a tag-line and look-&-feel planned out automatically solves for any centralization problems on TV or Radio, it doesn’t really address digital. Enter now a number of stakeholder who each want their unique thing. This puts agencies in a position of serving the client, rather than the client’s brand. (In theory you hire an agency to say “No”, but their incentives over time will drive them to say “Yes”.)
Agencies are outside entities, this sucks for them. They don’t really get the insider’s experience… often causing them to missing out on a lot of context that would help them in a situation where they have to protect the brand from a client.
Agencies are self-policing. I’m not sure how this industry pulled this one-off, but they’re work is judged by their peers. The way agencies are graded as “good” or “bad” is often determined by a number of awards that are given out by, you guessed it, other agencies. This creates a major creative dilemma – awards, especially in digital, are given to the most “innovative” campaigns. This is a problem because the agency in most cases can’t share their client’s results, so the definition of innovative is in the creative. Meaning to win, creative teams are tasked with creating new experiences, the kinds that often require a new blank canvas to build from. This drives agencies over time to push for empire building.
Agencies are a business too, this isn’t a bad thing just something that needs to be understood. In order for them to make money they need to keep checks from clients coming. It’s not that they need to keep getting more and more work, but that it’s a lot easier to retain a client when all of the various company stakeholders are happy and the company keeps winning awards.
I’ve covered a lot in this blog post, so here are the basic points summed up.
1. Empire Building is a great business model, but it doesn’t translate to digital. The digital world has only one scarce resource in the user, and because of that centers of influence have more impact than resource driven empires.
2. Centralization of experience builds extended brand offering in the long-term – the most important of which is the retained user, who begins to view the marketing experience as a destination.
3. Agencies who have simply translated the original model that works so well for TV and Radio to digital are starting to find it hard to succeed in their new matrix of incentives.
Finally I want to end on something I preach often. The people in charge of digital marketing in an organization (all of them) need to be incredibly integrated into the business and its needs in order to produce strategic long-term results in growing influence rather than short-term results in one time visits.
Thanks for Listening,