By David Golding

H&M: runs counter to the less risky data-led marketing shaped by media agencies

The industry is splitting into agencies that make marketing collateral and those creating culture, says Adam & Eve/DDB's David Golding.

So here we are settling into 2017 and everyone has been making predictions about the year and what it will bring for adland. There are lots of ways of looking at how our industry is changing and has to change, but I have a simple view that I think sets a clear course for the future. And here it is…

Our industry will split into two types of company, which will set out to create two very different things. The first will work to create culture through campaigns that generate fame, talk-ability and memetic power. The second will create collateral driven by data and the ongoing ability to precisely target and reach audiences in new ways. 

So, culture versus collateral. That’s the big divide. 

Sir Martin Sorrell very clearly set out where he wants his holding company to stand when he was filmed recently at CES. WPP will put data first; this will inform the media agencies and the creative work will come last, filling the boxes on the audience-focused buying plans. As Sorrell says: "The classic agency pitch has been reversed." He is undoubtedly correct that there is a big opportunity to be a leader in this part of the marketing world. For many clients, low growth will lead to cost pressures, and the promise of delivering data-optimised, low-production-cost marketing will be appealing. In fact, the growth of addressable and programmatic marketing is exactly this – find an audience, mine the data you have on them and serve them many variations of copy, testing and optimising as you go. 

In this world view, the creative agencies need to get better at making low-cost, flexible (templated) copy that is constantly refined to unlock a data insight about a niche audience and move them along the purchase path, creating more data as they go. 

This is creative agencies making marketing collateral, directed by media agencies. It’s not there to get noticed, to be brand-building or defining, but to quietly nudge an audience member along a customer journey. And there’s nothing wrong with that at all. I am not making a qualitative judgment in any way. In fact, if I could have started any agency other than my own recently, it would have been Oliver, which is a huge business with many clients and embedded studios making and managing millions of marketing assets. But can you name one piece of marketing you know that Oliver has done? I can’t either. Which brings me to the other side of the agency divide. 

Agencies like mine make culture. We put songs in the charts, inspire hundreds of online spoofs, collaborate with world-class creative minds and create work everyone has an opinion on. Very little of the culture we make would or could come from a data-driven model. There is no data in H&M’s universe that would suggest Wes Anderson and a four-minute film would chime with its audience but it has been a commercial and critical success; Christmas Jumper Day for Save the Children didn’t come from any data insight but has become a social phenomenon and won an IPA Effectiveness gold; no data said Skittles was a favourite sweet of Gay Pride or that many 100-year-old ladies shop at Harvey Nichols. All these cultural events were born from creative minds and brave clients. Not numbers. 

And it’s not just the limitations of data insight that challenge the creation of culture – media developments do too. Take the whole premise of addressable – if different family members are seeing different ads in different rooms even when watching the same show, there’s no way a mass "did you see that?" moment can result. 

For clients, the choice of which sorts of marketing companies they want to work with is really one of risk and reward. Working to create culture is a big risk. It’s very easy to fail, to waste money and look silly. But, equally, it’s the only way to create stellar returns, transforming businesses and brands. The IPA analysis is very clear that "fame" campaigns drive the biggest profits. The agencies that create culture are therefore the marketing hedge funds – high on risk but with the possibility of market-beating returns. 

The agencies focusing on collateral are the pension funds. They are steady and safe. They set out to optimise incremental returns and minimise risks. 

So there will be two different models based on two different ambitions and two different attitudes to risk and reward. Most clients will like to have a roster that features both – a large integrated, low-cost, collateral engine, with a smaller culture rocket strapped to it. I expect these will come from different groups to manage the associated procurement requirements. After all, the best investors have a balanced portfolio of hedge and pension funds working on their behalf.

Despite being more attuned to the culture approach, I admire the emerging collateral model and, in the short term, there is clearly money in it. But I do fear for its long-term future. My belief is that it is the collateral area that the management consultants will most easily move in on. The competitive set will be the Accentures and Bains that are buying ad agencies so they can create their own collateral for their clients, built on unparalleled access to data and a wealth of smarts skilled at using it. It will be hard for marketing service agencies to compete here. Sorrell himself says WPP is the only group to have "first data", not just third-party data, but how does that competitive advantage stand versus the "Masters of the Universe" and their data capabilities?

And that will leave the culture agencies, doing the things that make no sense to the data guys but that can occasionally change the game. The data says eight out of ten dogs like lying in front of the fire, not bouncing on trampolines. 

David Golding is the co-founder and group chief strategy officer of Adam & Eve/DDB

Read more at http://www.campaignlive.com/article/big-adland-divide-culture-vs-collateral/1424173?#1ysXLbAwMcT7Rtgl.99