ADVERTISING AGENCIES FACING THE DIGITAL REVOLUTION
What challenges does the digital economy present to brand communications, and what are its implications on the role of traditional advertising agencies?
Nicolas JayrMSc Business AdministrationSemester 3: Master thesis Tuesday 1
st
June 2010Words: 30,285
2
Table of Contents
I. INTRODUCTION 3
II. CHARACTERISTICS OF THE DIGITAL REVOLUTION 5
A.
T
HE EMERGENCE OF DIGITAL AND THE
I
NTERNET ECONOMY IN THE BUSINESS DEBATE
5
1.
D
EMOCRATIZATION OF CONTENT CREATION
,
DISTRIBUTION AND ACCESS
5
2.
A
REVOLUTION IN MEDIAS AND A RADICAL CHANGE IN PEOPLE
’
S MEDIA BEHAVIOUR
10
B.
C
HALLENGES AND DEBATES REGARDING THE FUTURE OF BRAND COMMUNICATIONS
14
1.
T
HE END OF ADVERTISING AS WE KNOW IT
? 14
2.
T
HE EMERGENCE OF NEW FORMS OF MARKETING
17
3.
D
EBATES AROUND CONSUMER
-
CENTRIC AND RELATIONSHIP MARKETING
19
4.
O
BJECTIVE AND METHODOLOGY
22
III. EVALUATION OF STRATEGIC OPPORTUNITIES 24
A.
R
EDEFINING BRAND COMMUNICATIONS FOR THE DIGITAL AGE
24
1.
E
NHANCING
C
REATIVITY AND DIFFERENTIATION
24
2.
T
AKING CARE OF THE BRAND EXPERIENCE
26
3.
S
HIFTING FROM ADVERTISING TOWARD BRAND CONTENT
31
4.
C
HANGING THE VIEW ON MEDIA
33
5.
T
HE POWER OF STORYTELLING
35
B.
E
NGAGING CONSUMERS IN THE DIGITAL WORLD
38
1.
B
RANDS SHOULD LET CONSUMERS TAKE THE OWNERSHIP OF THEIR BRANDS
38
2.
B
UILDING THE ROAD TO SUCCESS
:
ENGAGE AND CONVERT CONSUMERS
43
3.
T
HE OPPORTUNITIES OF SOCIAL MEDIA STRATEGIES TO FOSTER CONSUMERS
’
ENGAGEMENT
49
C.
W
HICH ROLE FOR ADVERTISING AGENCIES
? 54
1.
I
NDUSTRY BACKGROUND
55
2.
D
IFFERENT MODELS ARE EMERGING
60
3.
T
HE QUEST FOR THE IDEAL MODEL
62
IV. DISCUSSIONS AND FINDINGS 64
A.
A
DAPTING THE ORGANIZATION TO THE PATH OF DIGITAL
64
1.
C
HANGING THE CREATIVE DEVELOPMENT PROCESS FROM STATIC TO DYNAMIC
65
2.
E
NHANCE COLLABORATION BETWEEN DISCIPLINES
67
3.
P
LANNING AND MANAGING FOR THE REAL
-
TIME ENVIRONMENT
69
B.
O
PENING THE ORGANIZATION TO EXTERNAL COLLABORATION
71
1.
A
PPROACHING
O
PEN
-I
NNOVATION IN THE COMMUNICATION INDUSTRY
71
2.
I
MPLEMENTING AN OPEN INNOVATION MODEL TO GENERATE CREATIVE IDEAS
74
3.
I
MPLEMENTING AN OPEN INNOVATION MODEL TO THE PRODUCTION OF CREATIVE IDEAS
75
C.
M
ANAGING THE CHANGE
78
1.
E
STABLISHING A SENSE OF URGENCY
78
2.
C
REATING A VISION
79
3.
F
OSTER EXCHANGE AND COLLABORATION ACROSS THE ORGANIZATION
80
VI. CONCLUSION 81
B
IBLIOGRAPHY
85
A
PPENDIX
92
I
NTERVIEWS
107
3
I. Introduction
The world economy has been facing serious challenges based on the adaptation to bothglobalization and the emergence of digital technologies. In addition to these two drivers of change, global businesses have been facing since 2008 one of the most important economiccrisis in the history of modern capitalism.With the economic recession in one hand and the emergence of digital technologies in the otherhand, the industry of advertising and communications has been facing a critical period of challenge and reinvention. The recession has been forcing companies to reduce massively theiradvertising expenditures while the increasing acceptation of digital technologies and interactiveplatforms by consumers transformed the operational system of advertising.While global audiences have been migrating toward new media platforms, the fragmentation of medias and the empowerment of consumers have been among the numerous drivers of change that challenged the effectiveness of traditional advertising, which in return has beenencouraging companies to benefit from the recession to rethink and reassess their overallcommunication strategies.Likewise, changing environments require new practices, and new circumstances challengeestablished principles. This project will examine how traditional advertising models are resultingineffective to face the profound challenges that the digital revolution present to brandcommunications. Moreover, this project will analyze how the model of advertising agencies itself is being questioned and threatened by this new environment. Advertising is operating in such shifting contexts that some affirmations in this project couldseem outdated, or irrelevant. One of the major challenges faced in this project has been that thecontemporary industry of communications is in constant evolution and in radical reconfiguration.Starting to write about this project, a number of emergent trends already indicated furtherrestructuring and reorganization in an industry that was already adapting to globalization,changing regulations and ever-evolving audiences. The observation of the changing environment around brand communications will be the mainfocus of the first part of this project. The emergence of the digital revolution will be discussedthrough the review of different theories and discourses questioning the impact of digital
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