Innovative Agency Theory or how to get a head in Advertising

Last night was New Media Knowledge's (NMK's) 7th Beer and Innovations event, billed "Can agencies innovate". We had 3 good speakers, an opinionated MC and lots of comments from the floor, and the net result was....(drum roll):

The Short answer was - Well, Yeees (ish).

The Long answer was more nuanced, in essence it ran along the lines of (summarising a lot of discussions and sprinkling on a dose of irreverence )

1. Our clients say they want innovation, but so often won't pay for any upfront innovation
2. There is seldom a real RoI for Innovation that you can get a client to put a budget against
3. If we show them innovation it is often a long (and thus expensive) process before they actually "get" it
4. Even if they do "get it" the 9 month cycle time of the project purchase means that by the time they want to buy "it" - a MySpace campaign or whatever - the game has moved on.
5. We can give them what we believe they need, but if its not what they asked for we may not get paid (lots of discussion on this one, as you can imagine)
6. We can make thus our money more easily, by giving them what they say they want and just taking the cheque now.
7. As we are cashflow based service businesses, we'd rather take the money now thank you very much

Now, no doubt this is doing a grievous injustice to some or all of the parties and I hope they take extreme umbrage and pillory me publicly, thus driving up our traffic in best Big Brother tradition After, all, you can never believe everything you read. (Actually though, the above cycle rings fairly true of consulting as well - I think its in the very nature of advice based businesses. In fact, there is a lot of documentation about the long latency of new ideas in enterprises, often for good reason!)

Some snippets from the speakers' talks on Innovation that lodged in my brain even after the Beers:

Nick Roope of Poke - noted that Innovation is more rife in closely defined spaces of the brief and/or processes of the "Classic Income Generation" (aka Bread and Butter) work than is often acknowledged. He also noted that Agencies sometimes don't sit close enough to the markets to really know what is going on.

(An aside here - defining Innovation as distinct from Creativity - I think the overall view was that Creativity is conjuring up new stuff, Innovation is putting existing stuff together in new ways - the "thats so obvious, why didn't I think of it" play being the zenith of Innovation)

James Riddell of Cheeze Ltd similarly noted that there was a lot of internal innovation in the line of business, so for example innovation in Search has been rife in the last 18 months or so - but that the business RoI of explicit innovation early in the curve is far harder to justify, for example putting an agency up in Second Life, even though user awareness is high.

Desiree Coller of Marsteller was the 3rd speaker, she was more looking at it from a PR rather than Ad Agency point of view and gave a different message (well, it is PR)- in essence she felt that the emerging Ad/marketing game fell more naturally to PR's skills - comms, conversations, monitoring media, calculating responses - and their business is often more on a retainer (now that caused my ears to prick up) than a project basis because of that, so cost justifying innovation is easier.

Frank Boyd, the MC, made the point about the Media industry being better at understanding that it needs to pay for upfront innovation, eg the BBC Innovation Labs paying £5k for the chosen projects ( but is the choosing process then innovative, I wonder...separate question - is an innovation process oxymoronic?). However, a comment from a the floor re the needs of industrial clients made me realise that the client's own industry dynamics largely determine the processes required. For hit based businesses like much of the Media, that extra yard in creativity can have an extraordinary payoff. In FMCG businesses the swing between good and OK campaigns may not be nearly as dramatic.

Finally, some comments from the room:

- Often innovation is stifled because of disagreements over IP ownership between client and agency - if client wants all the IP, little incentive for agency to innovate unless they can get a piece of the action

- Internal restrictions can hinder innovation - the example was the CEO who wanted to Blog, (sounds like a parable for our times) and the company's Legal, Comms,and Marketing functions were horrified.

- Innovation requires getting many players together - Technical, Creative, PR - to put together the blocks in a new way

- Right Place and Time matters - the point was made re Web 2.0 or Second Live not being new - stuff like this was around 10 years ago - its just that there are now so many people on broadband "discovering" it for the first time. (Frank also made a similar point re SRI inventing the modern computer industry and giving it away to Apple et al for a bucket of beans)

And the last comment I thought was pertinent, Nick noting that a key thing about innovation was to be able to "fail fast, fail cheap". Easier said than done in large corporates, but very relevant for Innovation to work.

And two parting shots -

Firstly, we've been doing a lot of research into the evolution of online advertising including a major survey of Telco advertisers along with STL Partners (our report is out soon) and one of the things we get over and over again is "where are the metrics" - what gets measured gets done. I did wonder all night if this wasn't a part of the issue here - Advertisers need to construct business cases with real RoIs, they are businesses after all. Anyway, I asked the question about metrics last night and felt a bit like I had asked the "classic dumb question" judging by the reaction I got.....metrics? who wants metrics? To give Desiree her due she answered, noting that it was necessary to take clients through new metrics, and only once clients had seen and understood them could one progress.

Secondly, there has been a lot of discussion elsewhere about the impact of pull based advertising from search engines etc. disintermediating traditional "creative" agencies as Advertisers can increasingly see which half of their advertising actually works. This didn't really come up last night (though Desiree was implying this in her talk imho), but if it is a real trend - and it seems to me it is very likely - then I am sure we will see a whole lot of innovation around Agencies' business models - necessity et al being a fertile mother.

Anyway, good learning, this event is well worth it for the networking afterwards alone*, but these discussion sessions are in my view some of the best information one can get in these emerging areas, as by the time its properly written down often things have moved on.

* (Conversations last night for e.g - the metadata needs for Web 3.0. do Second Life avatars consume more energy than our First Life personae, when is a Blog just another mainstream media magazine)

Postscript....Ian Delaney of NMK wrote up the event here, and another blog of the event from Ivanka Majic is here