R.I.P. Mad Men
Creative Agencies are Failing to Deliver People-Based Marketing
The traditional agency model has encouraged the separation of Creative and Media - different processes, different cultures, different P&Ls. And over the years, they’ve never really shown much love for each other. Creative has often looked at Media as the boring afterthought of advertising, and Media has usually seen Creative as the spoiled child who always needs to get their own way.
Over the past decade, Media agencies and their business models have been blown up by digital marketing complexity, auction pricing, technology and powerful new arrivals such as Google and Facebook. Meanwhile, Creative agencies have hardly changed at all. That was Don Draper’s suicide.
$1 Million per Flop
Look at how Creative is often still done by agencies – it all starts with a brief from the client. Then, they go off for a few weeks to develop storyboards for, say, three different 30-second TV spot ideas. Once the HIPPO (highest paid person’s opinion) has been used to select one – just one, mind you – the agency takes it around the country (or the world) to focus groups - to get a whole raft of conflicting opinions. Unsurprisingly, they usually find enough evidence to validate their own proposal. Then they go into production, usually shooting in some exotic locale like the Seychelles or Fiji or Ecuador for three weeks, complete with free-flowing champagne-and-lobster dinners and a few guest celebrities. Finally, a few months later, after a lengthy post-production process involving animators, music composers, a celebrity-du-jour voiceover, and more free-flowing champagne – ta-da! – they present the completed 30-second TV ad. Oh, and a bill for over a million dollars. The whole process takes a grueling 6-8 months.
OK, I know I’m exaggerating slightly (except for the price), but the days of producing a single TV campaign to speak to a mass audience - as if they were all the same person - should have died years ago. These ads should have been replaced by something much faster, cheaper and more tailored.
The Future is People-Based Marketing
Facebook - the best run of all the big new digital companies - says that the future is all about people-based marketing, but doesn’t expand on it much. Let me try. In my mind, people-based marketing is a world in which - one day - we will be able to serve a different ad to every single person, tailored based on things like relationship with brand, relationship with competitor brands, past purchases, predicted future purchases, likelihood to purchase, media consumption (TV vs. Search vs. Social, etc.), shopping preferences (store vs. website vs. app vs. reseller), price sensitivity, likely purchase timing, gender, age, location, preferred language, family status, lifestyle etc.
That vision may not quite be possible today, but today it is entirely possible to identify different audiences of as small as a few thousand people and serve different ads to each of those audiences, custom-made to their unique needs. This requires Creative and Media working together seamlessly, with powerful technology acting as a catalyst to enable efficient mass creation of ads, programmatic optimization of each micro campaign, and deep insights about what is working and what isn’t.
We have found that by increasing the number of segments that you are targeting by three, combined with tailored creative for each campaign and a continuous improvement methodology, you can increase marketing ROI by 20-100%.
Now imagine if you could triple the number of customer segments that you target by three every quarter ….
Creative Agencies are the Problem
The most common barrier to implementing this people-based marketing vision is creative agencies and the creative process. As a general rule, even in 2017 most of them are way too expensive, too slow and massively out of touch with the kind of technology and processes that empower efficient production, tailoring and optimization. Take video ads as an example. World class 30 second video ads can - these days - be made for $20,000-100,000 in 2-4 weeks. This is a cost reduction of 90-98% vs. ‘old school’ TV ad production. In addition, ‘short form’ videos, for platforms like Facebook, can be created for $1,000-5,000.
Lower Costs and Faster Pace Improves Quality
But what about ad quality? Won’t that suffer? No! The beauty of these prices is that you can make multiple variations for each segment that you are targeting - if one ad doesn’t perform well, just drop it and use one of the others. Or make another. Creation potential is virtually limitless.
Think about it in simple numbers. Let’s say that Plan A was to make a $1m TV ad to show to 60 million people. Plan B could be to make nine $50k ads to show to three different audiences of 20 million people each. That means that each segment gets a MUCH more tailored ad (so more likely to succeed) PLUS you have three ad options to show to each segment - enabling you to run with the highest performer and drop the underperformers. And if none of them perform? You have only spent $450k of your $1m creative budget, leaving a whopping $550k of ‘dry powder’ if you need to make another one 😊
Getting Started - Break Up ‘Creative’ Into Two
So how do you get started if you feel stuck with a creative agency which charges you a fortune and takes forever to make pretty-but-underperforming ads for mass audiences? The first thing to do is to break what was once one ‘Creative’ bucket into two:
Big creative ideas, rebranding and breakthrough ideas
Tactical campaign creative
For #1 you may still want to use a creative agency, though likely one much more nimble and cost effective than your old one. For #2, this should be done as part of the digital campaign management team, with embedded creative people and technology to support them. You need to identify a team who has a clear picture of what world class people-based marketing looks like - for both Creative AND Media - and a step-by-step plan to get you there.