Why Ad Agencies Need to Change

By Alain Portmann

The advent of Web 2.0 in which consumers are empowered to promote and shape the persona of a brand will challenge the role of advertising agencies. The same way in which media conglomerates, owners of the airwaves and print press used to be the custodians of public information, agencies used to be architects of brands. Not anymore.

This change is not solely caused by the emergence of consumer generated content or a shift in consumers relationship with advertising, but the growth of free labour.

Futurists Alvin and Heidi Toffler argue a new trend is emerging within the economy, by which prosuming" or "creating what we consume" is restructuring the entire relationship between brands and consumers. The phenomenon is already taking place in our industry with the emergence of open source software such as Mozilla Firefox in which open participation and free creation determines the consumption cycle of a product. The way this free labour movement will shape the role of advertising agencies cannot be underestimated. With consumers being more involved in shaping brands and products, the existing model of advertising agencies based on execution of media, creative or strategic services will no longer be feasible.

For decades advertising agencies have acted more as a "brand lobbyists" mandating, executing and influencing consumers in behalf of brand owners. Agencies will have to become "brand ambassadors", helping understand and grow a constituency of consumers, which in turn is empowered to shape and determine the future of a brand or product.

This shift will require advertising agencies to fill their ranks with field experts as opposed to channel experts, individuals able to understand and harness the potential of this free labour resource. However, few advertising agencies will make the change, for there will always be a market for channel specific services such as media services or creative agencies. It will be the smaller, nimble agencies that drive this trend, for their legacy, structure and corporate DNA is far more malleable.

The challenge of harnessing free labour will also fall on the shoulders of advertisers and their Marketing Directors. They will not only have to recognise the impact of free labour on their plans, but select the best "brand ambassadors" to help them.

Alain Portmann, Web Liquid