Thursday, April 10, 2008

Naked and Media-Agnostic - What This Says About Ad Agencies

The New York Times has a fascinating article about Naked, a new type of communications firm. Naked really isn't an agency---it does not create ads or purchase media. Instead, Naked helps brands determine how to distribute its marketing and media dollars.

The key to Naked's services is that they're "media agnostic." They say they are indifferent to where the advertising dollars of their clients are spent.

Another notable difference with Naked is that they put skin in the game. The firm often derives part of its compensation from whether its strategies translate into higher sales.

Naked can't get the job done with being frank with clients. “We get up in front of a group of agencies and tell them, very nicely, that they have wasted tens of millions of dollars,” said Ben Richards, senior strategist at Naked New York.

Some brands they tell to stop advertising on TV. Others they tell to boost TV ad spending. It all depends upon the recommendations that come out of the “big tool,” a 50-question survey that tries to pinpoint the client’s priorities and problems.

What is most interesting to me is what the rise of Naked and other Communication Planning Consultants means to and about ad agencies. After all, planning the media spend and brand strategy has traditionally been solidly within the purview of ad agency services. The fact clients are increasingly turning elsewhere for guidance on how to spend their money with agencies should be a huge concern to agencies.

It would seem part of the problem is the perception that ad agencies have a vested interest in one medium over another. In the article, there are a couple of telling lines: A Kimberly-Clark executive speaks about "not presuming that you have to have a 30-second TV spot," and the article notes that the traditional agency revenue model "is based on producing ads or placing them in particular media."

I believe that marketers are getting restless with the traditional ad agency obsession with television and aren't sure if agencies recommend TV because they believe in it or because they can earn fees producing expensive ads and buying pricey ad time. Marketers know that recent studies reveal that consumers are spending as much time online as they are watching TV (and some studies even show a greater amount of time online), but marketing spending continues to skew very heavily to television.

Naked's success is coming at the expense of ad agencies, and those agencies need to explore the reasons marketers are losing faith in agencies' media planning capabilities (or objectivity). My personal opinion is that this is occurring because even now--more than a decade into the Internet era--most traditional agencies are still struggling to understand how online fits into the mix.

What are your thoughts? Does the fact brands are turning to new communication planners mean something to traditional agencies, and if so, what?

1 comment:

Jeff Larche said...

This sounds similar to the work of Crispin Porter + Bogusky (of Burger King's Subservient Chicken fame). For clients that include Nike, VW and Geek Squad, they focus on creating experiences that consumers want to download, play with and share. Jeff Hicks, their CEO, stresses that advertising as we know it is dead. And he proves it with the success his agency has had with his clients.

Our agency is definitely moving in that direction. And also in getting some "skin in the game." Where appropriate, we either conduct pilot programs that go away if they don't perform well in the first quarter, or performance-based compensation.

Ultimately agencies survive on bottled imagination. As long as there are better sources of creativity outside of corporate walls as opposed to in-house, small groups of smart, perceptive, strategic people will be available for hire.

Of course, the "dumbest" of the smart won't make the cut, from a Darwinian perspective. And I'd definitely place those who are too married to traditional media as especially vulnerable to extinction.