Digital is the communications equivalent of air, Ian Pearman of AMV BBDO tells Stephen Lepitak, and attempts to keep the ‘D-word’ alive within agencies merely hampers innovation.
The advertising industry has witnessed more change in the last five years than in the preceding 50 according to Ian Pearman, CEO of AMV BBDO, who says the advent of digital favours strong agencies and client teams who “know what they stand for”.In a period of rapid change, three characteristics of successful agencies have emerged, Pearman points out, explaining that success is embodied by “organisational character”, an ability to “distinguish between means and ends” and teams who don’t confuse activity with progress.Pearman is speaking to The Drum as part of a series of interviews with agency chiefs around the disruptive effect digital has had on the marketing communications industry.
Yet, when it comes to the terminology, he doesn't believe “the D-word” holds much meaning in the current era of convergence, describing it as "a false currency" and adding that it is “the communications equivalent of air, so trying to demarcate specific executions, channels, ideas or budgets as ‘digital’ is a pointless exercise”.Yet budgets are still being siloed into disciplines that include digital in a separate pot, says Pearman, adding that clients’ existing business structures have evolved at a slower pace than those of marketing agencies, mainly due to the size of their organisations.Pearman believes that siloing budgets creates confusion over how money should be spent, and with whom. “It creates a perverse incentive for agencies to keep the ‘D-word’ alive in their own business, simply to improve their chances of laying claim to those budgets. The result is a drag effect on the innovation needed within agencies and marketing departments alike.”While the ‘D-word’ is an “oversimplification” that has created two types of agency, as the term becomes redundant clients will be able to focus on the overall offering of agencies from varying creative backgrounds, says Pearman. This of course throws up a limitless set of competitors in an already cut-throat market.“Theoretically, every agency is a potential competitor, as every agency has the right to extend its capabilities into new areas – broadcast advertising, social, content, web development – but whether they are actual competitors depends on the maturity of those offerings.“And as ever, most agencies have a centre of gravity; the likes of AKQA and SapientNitro are likely to continue with business models centred on building large web development projects, just as our business model is unlikely to veer away from big strategic and creative ideas.”Therefore, the main competitive battle facing AMV BBDO, according to Pearman, is centred around who retains the right to execute ideas across an increasingly wide media mix.“Specialist disciplinary agencies will always compete hard for those specific opportunities, and we have to earn our right to execute by showing our capability and evidence of previous success in those disciplines.Fortunately, we have lots of both,” he says.Coming from a more traditional creative background doesn't mean that Pearman sees his own agency as having a better positioning in the modern era when it comes to agency offerings, instead that it is simply “easier” to find technology partners to execute an idea rather than vice versa. "It’s always easier to find the means if you have an end in mind, and ideas first, technology second, fits that more easily than the reverse."The evolution has meant a change in hiring priorities for the business, while also creating more opportunity for internal working partnerships across varying disciplines: technology, strategy and creative production.“It’s the constant interplay of these inputs that creates ambitious ideas that can still be actually made – ideas that have never been done before, but that are strategically bang on for a brand’s business challenge. If you miss anyone of these inputs, you end up with ideas that are brilliant but can’t be made, ideas that are exciting but strategically bereft, or ideas that are right but workmanlike,” he adds.When it comes to ensuring agencies meet the capabilities sought by current and prospective clients, Pearman argues partnerships have become all the more vital. In a time of multiple specialisms, this need has become all the more pressing, he explains."No agency has every single capability in all of the shapes and sizes, and there will always be occasions when agencies need to call on best-in-class partners – particularly production experts – to execute best-in-class work. Clients increasingly recognise that reality and I’ve heard more and more talk of “ability to partner” as one of the metrics by which they judge agencies, knowing that it will significantly influence the final outputs.”Agency culture has a part to play in determining how collaborative companies are.“Agencies that have creative departments with a ‘black box’ attitude to creative development – with briefs pushed under the doors of creative offices – will do badly by this metric,” suggests Pearman. “Agencies that attract people who have ‘zero-sum’ attitudes – the sense that sharing ideas means giving away power – will also fail. Great production companies only partner with people who treat them properly, and if clients increasingly recognise this, the nice guys in the agency sector will come first not last,” he adds.While clients’ own structures have been slower to develop, they are at the same time no longer likely to be fazed by the emergence of new languages, as technological development continues to evolve and their understanding of that and the opportunities it creates continues to be imperative. However, more understanding does mean that agencies will now be judged on their capability and competency to deliver their clients’ needs more in future. Pearman adds that in recent years, he has yet to meet a client who has not had an eye in wider agency capability, describing integrated capability as having become “a hygiene factor”.It’s not just disciplines that are converging. Vertical differentiation between agencies has also faded as client needs have blurred, however that has in turn driven organic growth within businesses such as AMV BBDO. “Clients simply can’t manage or pay for huge rosters of specialist agencies any more,” he says. “They’d rather consolidate more business into one lead agency who can either provide those services in-house or sub-contract to specialist partners where necessary.” He suggests that agencies are now emerging from a “Wild West period” where he describes each campaign built on a new discipline as “a bit of a leap of faith”. Marketers now have the benefit of clear patterns of effectiveness to establish what works, and what doesn’t.“That is very reassuring for marketers, and will be the catalyst for a new wave of investment in highly integrated campaigns,” adds Pearman. “As ever, if you can measure it, you feel better equipped to manage it, and the risks of increased investments start to fall dramatically.”The feature was originally published in The Drum Magazine, the full issue, including the Design Census 2014, is available to purchase online.