2019: What Will Be the Future of Communication Agencies? – Sarkovas Propósitos Corporativos
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2019: What Will Be the Future of Communication Agencies?

From the start of the 21st century, profound and diverse transformations in the nature and the market of communication agencies started to happen, changes that had not been seen since the inception of their two traditional sectors –advertising and PR – in the late 19th and early 20th centuries

In Brazil, the agencies began their history with a delay of several decades – advertising in 1914 and public relations (now called “corporate communication”) in 1952. Today they are at par with global market standards and engaged in the same task: reinvent themselves.

In a non-linear way, in this article I will list what I consider to be the main challenges and trends that will continue to set the frantic pace of business model changes and the way the agencies and their professionals operate.

Digital Omnipresence

The world has radically digitalized itself. And it’s just starting. Digital interaction among people as well as between things and people will continue to grow exponentially. Buy, inform, learn, express yourself, work, move around, take care of health, have fun … The list of activities carried out in digital media and environments will be infinite.

Companies are and will be suppliers of a good part of these products, services and contents, and the quality of this interaction will have more and more impact on the process of building their brands. It has long been recognized that communication is not limited to “communication parts and channels,” but extends to all points of contact of brands with their audiences. Digitalization has expanded these points and strengthened their engaging power. It has also diminished the role of intermediaries in the interaction between companies and their customers, dissolving links in the chain.

It is increasingly absurd to treat digital communications as a discipline or a part of it: it is cross-cutting through all disciplines and strategies. Marketing and communication managers in companies and all agency professionals must live, understand, learn and apply the rules of digital media: instantaneity, mobility, interconnectivity, speed, sharing, its multi-sensorial and horizontal nature, etc., as well as generating massive amounts of data that allow real and accurate measurement of results.

If today much of the budget is still spent on non-digital means and/or disruptive and ineffective means of contact, this is due to the impossibility of changing the mindset of many communication and marketing executives in companies. The natural rise of a generation of innate digital adepts to these positions will make the allocation of such resources more compatible with the new reality.

Consolidation & Pulverization

On the one hand, as a result of the digital revolution, it became more practical, direct and cheaper for companies to communicate with their audiences; on the other hand, the movement towards diversification and integration of competencies, promoted by all kinds of agencies (advertising, corporate communication, digital, etc.) generated overlapping services among the various suppliers of the companies. And to make matters worse, through the digital window, new and powerful members of the market appeared: the strategic consultancies. The result: Too many agencies and fewer resources.

Therefore, the reduction in the number of players tends to continue, with the most capitalized groups attracting companies with different kinds of expertise to incorporate and diversify the competencies of their main agencies.

Paradoxically, the lowering of the threshold for access to knowledge and technology, the entrepreneurial vocation of the new generations and the demand for more specialized and lower cost services will continue to stimulate the entry of new players in the market, more agile, up to date and cost-effective, becoming a vast, diversified and pulverized network of suppliers with high rates of mortality and renewal.

Specialization & Diversification

The space for generalists will continue to decrease. Digital-based communication requires professionals with deeper and more specific training, be it in technical, strategic or relationship functions.

As a result, the agencies’ staffing will no longer be monopolized by graduates from communication faculties, and will include engineers, statisticians, administrators, psychologists, sociologists and many other specialties.

What everyone should have in common is the emotional ability to work in integrated and collaborative structures.

Integration & Collaboration

I bet on the disappearance of the agency separation model by discipline: advertising, public relations, promotion, etc. Customers want to buy solutions, not tools. And the solutions depend on the simultaneous use of different tools.

I understand that the market will tend to recognize two basic types of communication providers: integrators and specialists.

The integrators will be multidisciplinary, internalizing fundamental skills and of greater strategic value in order to position themselves as leading agencies for their clients. They will network with super-specialized partners who, together, will make up a range of specific skills much broader and more diverse than the current network of agencies and business suppliers.

Radical Transparency

The Emperor is naked. Companies are exposed in a glass dome. There are no shaded areas to hide in. In a networked society with instantaneous and multisensorial communication power, everyone is under everyone else´s scrutiny, for good or bad.

Being low profile or no profile is no longer an option. On a larger or smaller scale, all brands are part of locally-born conversations that in an instant can turn global. Therefore, it is smarter to participate and influence.

Potentially, this context greatly increases the demand for communication services. Never mind whether small, medium or large, B to B or B to C, startups or century-olds, all companies today need to interact and share value with their various audiences in a continuous and structured way.

The new paradigms have not only amplified the relevance of communication, but also the way it is done. The context of radical transparency requires that all messages have absolute consistency and coherence. The gaps between what is internal and the outside world have disappeared. An internal communication must be written based on the assumption that its content may go viral on social networks. The contents conveyed by the company’s most varied departments and spokespeople need to be in sync because they will be compared and their discrepancies pointed out.

One thing will not change: the burden of coherence will continue to be the externalization of the brand´s essence at all contact points.

The Good Old Story

Something else won’t change either: the principles of storytelling will continue to be adopted as the basis of brand narrative. The aversion to invasive and seductive communication, which has reigned for decades, has valued persuasive content structured in plots by techniques that have been improved since the day we used to meet in caves around campfires.

However, the technique itself does not guarantee the conquering of people’s hearts. Content must have meaning to be relevant. Today much of the storytelling is still full of the same hollow precepts that are in decline. The perspective of saturation is evident. How much longer will people tolerate fake stories that end with the “surprise & excitement” of the characters, captured by hidden cameras?

Brands should embrace more concrete themes that express their identity, share their purpose, disseminate their attitudes and have real value for their audiences. Professionals who help companies define the essence of their brands and those who have always dedicated themselves to telling their best stories to gain media space and gain the attention of their audiences have a competitive advantage.

Who Will Be The Conductor?

During decades, the advertising agencies were the so-called AOR (Agency of Record) of their clients. They took full responsibility for corporate communication services, from brand strategy to media creation and insertion. Historically, corporate communications agencies were not subordinated to them, not necessarily based on their merit, but as a result of being linked to institutional and low-budget departments.

This model offered advantages for companies: strategy alignment, continuous efficiency gain, clear responsibility, cumulative knowledge, trust bonds; and, for the agencies: guarantee of customer acquisition cost recovery, stability and predictability of revenue, blocking of competitors, recognition monopoly.

This oasis is turning into a mirage.

The digital media have given rise to new types of suppliers that gain relevance and autonomy commensurate with the results they produce. And the inversion of the pyramid of influence brought about by these interactive means, giving greater power to the individuals towards the brands, has led the culture of the public relations to be at the center of the strategy, because the dialogue, the horizontality and the storytelling are in its DNA.

Some companies have already transferred the AOR scepter to corporate and digital communication agencies, which have even taken over the creation and placement of conventional advertising campaigns.

I do not think it is possible to predict the future of AORs. There are only two things that are certain: 1. Advertising agencies have lost their monopoly because their key competency has lost effectiveness and relevance. 2. Agencies from all other disciplines will try to take on the role.

The challenge of advertising agencies is to recreate themselves. Their current business model is based on purchased media, and their culture is that of massive one-way communication, based on seduction rather than attitudes, attributes that are irreconcilable with the public’s new paradigms.

Agencies from other disciplines must be more successful in incorporating and integrating new skills. Corporate communications, for example, need to digitalize themselves across the board, broaden their relationships with influencers far beyond editorial offices, incorporate robust creations into their deliverables, and demonstrate their results with more tangible indicators.

The lack of clarity about the role that clients are willing to take on and internalize completes the list of difficulties to predict who will be the new teacher.

People Want To Be Happy.

One cannot but repeat the cliché: attracting, retaining, motivating and developing talents is the critical factor for the success of any business, especially for those that have people as unique assets, as it is the case with communication agencies.

This is another very challenging front. If financial constraints are not enough to limit the costing of great talent, the new professional generations are less likely to compromise quality of life due to the excess pressure and workload common to most agencies. They also seem more willing to take risks, prefer to work autonomously or set up their own businesses.

Open, transparent, accountability and trust-based relationships; inclusive environments that respect diversity; flexibility of working hours and workplaces; sustainability goals and practices; regular training and sharing of new knowledge; freedom to innovate and undertake; financial reward proportionate to the results achieved for the clients – this is my list of suggestions to keep the best people in the agencies.

The Ends Don´t Meet

Among so many challenges, the greatest will be to rebuild the business model of the agencies. I do not see light at the end of the tunnel for the advertising agency model, particularly in Brazil, based on media commissions fueled by bonuses of questionable ethics. The loss of relevance of conventional media and public aversion to disruptive ads through linear channels will continue to dwindle their once billionaire budgets, rendering a structure built in those times of abundance, unfeasible today.

But agency life with models based on professional hours and/or projects, such as corporate communications, is also far from easy. Its costs are in inversely proportional to the reduction of their clients’ budget. The context requires them to heavily invest in the incorporation, integration and costing of new competencies (digital, creation, media, metrics, etc.), at a time when companies seek to cut costs by promoting draconian competition processes, taking advantage of the abundance of suppliers available.

The outlook is a very low return on all “commodity” services. Soon, some of them may also be provided by robots. Significant returns will only be obtained by agencies that manage to assemble teams capable of generating high value deliveries that have an effective impact on their customers’ business and which accept the risk of seeking solutions by offering high remunerations, but contingent upon measurable results.

Countdown

In this article I have conjugated many verbs in the future, but in fact everything I point out has already begun and has been prompting obvious change. The process has not yet reached enough momentum to break the hegemony of the old model because of its inertial force accumulated over decades. However, it is all a matter of (little) time. Those who survive will

Yacoff Sarkovas
Published in the book  “50 Anos Aberje: Ensaios e Memórias”, in January, 2019.