Back to Gartner for Marketers Blog

IBM iX, The Whole Egg, and the Agency of Tomorrow

By Jay Wilson | February 05, 2016 | 2 Comments

In just the past week, IBM Interactive Experience (IBM iX) announced three acquisitions of smaller agencies – Aperto and exc.io in Europe, along with Columbus, OH based Resource/Ammirati.

It’s easy to look at this triple-play as just another episode in the series of acquisitions that have come to symbolize the ad world since the 1980’s, but in order to understand its context we have to go back a little further.

In 1973, Young & Rubicam, a Madison Avenue anchor, acquired direct marketing firm Wunderman in pursuit of then-CEO Ed Ney’s “whole egg” theory of marketing communications.   Ney knew he could disrupt the industry by offering clients a host of marketing services beyond advertising – from public relations to market research.

Ney continued to embrace emerging disciplines well into his eighties, inviting junior staffers into his wood-paneled office to discuss social marketing and digital commerce.  No doubt, he’d see today’s convergence of marketing, technology, and consulting as a natural progression of his “whole egg” vision.

Sadly, a few eggs were cracked along the way.

Where Ney saw the value he could bring clients who needed comprehensive marketing communications solutions, leadership of the industry soon turned to the holding companies, who instead saw the value they could bring stockholders.

The agency buying sprees of the eighties and nineties weren’t about complementary services, they were about bottom line efficiency.  Agencies with similar strengths and capabilities but vastly different cultures and processes were forcibly joined, whisked into complex, over-salted omelets, sharing little in common beyond a ticker symbol.  Client work played second fiddle to quarterly reports.  Impressive bonuses were paid and holding company stocks soared.  Marketers bought into those models, consolidating their agency rosters and driving prices down.

Today, clients are no longer impressed. Pepsi’s Brad Jakeman took a flamethrower to an ANA conference last fall, saying the agency model was “going to break” unless something changed.  AdAge proclaimed the coming death of the agency of record.  Digiday, Mashable, and Forbes echo Jakeman, saying traditional advertising is dead.

They’re right. Like Humpty Dumpty, big agencies have taken a fall.

As today’s CMO focuses on customer experience, the financial benefits of agency consolidation and territoriality are outweighed by the need for collaboration and agility.  Agencies need to become business experts, not just marketing experts.  Creative and data must be partners, not foes. No single agency of record can master all technologies, channels, and touchpoints.  Lumbering global networks must adapt or die.

And while back in 1973, Ney’s “whole egg” viewed the client as the customer, and in the 198o’s the holding company saw the investor as the customer, today’s successful agencies must focus on the real customer – and the role a brand plays the human experience, in order to thrive.

To deliver on this promise, three converging forces – “traditional” agencies, technology companies, and management consultants are vying to become the agency of the future.

To compete, traditional agencies are investing in tech and business transformation expertise.  The consultants and technology firms are buying up agencies to improve the execution of the their strategies.

More competition is on the way – Facebook recently added former Crispin Porter + Bogusky CEO Andrew Keller as Global Creative Director for its in-house creative team.

Smaller, independent agencies are getting traction with big marketers, because they’re nimble and can bring technology, consulting, and marketing services to bear quickly on the customer experience, without cumbersome process.

Back to IBM iX –  which defines itself through experience design based on “transformative moments” – and found like-minded partners in the agencies it acquired. Although AdAge ranks them as the world’s largest digital agency network, the moves are designed to make them more nimble, not bigger still.

Because the new breed of agencies are aligning around the customer, rather than the client or the Street, there is hope the cracked shells can be put back together again, but agencies of all sizes will need to deliver, not just talk the talk.

Take a look at many of the leading agencies’ websites and you’ll see ad stalwarts redefining themselves as “customer agencies” or “experience agencies” whose work is executed through journeys, platforms, and products.

The word “advertising” is hard to find.

And though his name is enshrined in the Advertising Hall of Fame, I think Ed Ney would approve.

 

Leave a Comment

2 Comments

  • Fantastic post Jay! Thank you.

  • Madhusudan Bhaskaran says:

    Makes absolute sense, Jay. The days of the ‘traditional’ bag of offerings is long over. Given that the market is now defined by its customer base and add to it, the proliferation of technology, making things simpler, easier to understand, assimilate and disperse, there is hardly any time to be complacent. Feedback is a two second process now. Like technologists, folks in this arena need to keep on re-inventing themselves and their bag of ideas to stay relevant in today’s game. Else, it’s bye-bye.

    I have had the good fortune of being a part of this roller-coaster ride (both on the agency and the corporate world) for sometime and believe that every piece of word written by you is absolutely true to its sense.Great post again!!!