I caught a very interesting discussion about advertising and the future of media last night on BBC Radio 4’s “The Bottom Line”.
Sir Martin Sorrell shared his views about some key issues in marketing and media from an agency perspective, including the future of advertising, the benefits of scale, and how long the present financial crisis may last.
Also present were the CEOs of Vodafone and Eurostar respectively, both talking about the huge impact of digital marketing and media on their business.
The key take aways were:
1. Agency revenues are increasingly tied to consulting fees, and moving away from commissions.
“What we’re seeing is clients looking for us to harness the talent that we have in more effective and efficient ways. We’re seeing clients asking us to put teams together – for example we have a team Vodafone, a team Unilever, a team Ford or whatever it happens to be – to put together the best talent to deal with the issues in the marketplace.”
2. The rise of online and the decline of traditional media vehicles.
“The average client worldwide is spending 10 or 12% of his or her budget on internet. You and I spend, according to the statistics, 20% of our time online, so the weighting should at least be 20%. By the time we get to 20%, you and I will probably be spending a third of our time online.”
The balance has shifted. So TV, instead of being a third in a normal market or worldwide, probably will go to about 15 to 20%. Newspaper and press will go to 20 to 25% with internet, mobile, video content making up the balance.
3. Customer insight is increasingly becoming a viable revenue stream
“For us, there have been three engines. One is the new markets which are now 27% of our business; second is new media or digital, which is now 25% of our business; and third is consumer insight, which we think is becoming more and more important.”
All parties were fairly bullish about digital, and the structural changes occurring in media, feeling that even as existing revenue models collapse from both an agency and publisher perspective, new ones are forming to take their place.
In many cases this has meant a greater engagement with online, although the impact of new media is being felt as much by website owners and digital agencies as by owners of traditional media vehicles.