The Role of Digital Agencies at SXSW - Jerry Shereshewsky

Those who don't learn the lessons of history are condemned to relive it. The latest lesson comes from an article in Ad Age Digital by John McDermott. He correctly points out that increasing numbers of marketers are attending things like SXSW and cutting deals directly with the plethora of tech start-ups flocking to Austin. If this reminds you of the late 1990's where Yahoo, AOL, Excite, Lycos and a host of others crafted "portal deals" directly with advertisers, circumventing their historic agency partners, then you're tuned to the right channel.

Agencies don't have a 'right' to an intermediated relationship, but, as they all discovered, with their clients, in those halcyon days, they served a very real need. Every brand manager worth his or her salt in, say, 1999, needed to check off a portal deal from the MBO list. Most of those deals were frankly worthless and few marketers got much besides a press release to show for their efforts (or money). But when the technology began to catch up with the hype, marketers discovered that they would need fairly significant increases in staffing to do the evaluation, pick the right partners, co-develop the executions and manage the implementation. Many, intelligently, simply turned to their historic agency partners and said: "take care of this…too."

This, of course, led to an explosive growth in digital arms of major and minor agencies. Companies were founded, acquired and eventually reintegrated back into the mother ships. Those that performed well, served valuable purposes, and became important partners for their clients survived. Others got lost along the way and were cast into the dustbin of failed agency start-ups. They didn't fail because clients didn't need or want them. They failed because they were, at the end of the day, techno-dweebs who didn't understand that the real purpose of all their work was the sale of their clients' products and services.

When I started in the agency world my boss told me that my real job was to be the second smartest person about our client's business. Not about advertising, not about production, not about anything other than a profound understanding of the structure of their market, their competitive landscape and the consumers (god bless them) who might actually pay for our client's stuff. We used to have something called a 'partnership'. And, as the proliferation of screens, technologies, databases, wizbangs and plain cool stuff continues, those partners who are spending a disproportionate amount of time and effort mastering this stuff as well as their clients' businesses will survive and thrive and those that don't….well, there's always that dustbin.

The agency business as continually reinvented itself not just because it had to survive, but because its clients needed and wanted them to do so. It survived…and thrived…the arrival of radio, television and the internet. Not unchanged but a lot more important and valuable. Those agencies that got it grew and those that became convinced that they needed to be technology companies (or completely ignore technology) disappeared. The cult of the new and cool is always an exciting place to be, but ultimately clients need to sell soda or analgesics or cars or drive butts into seats for the latest feature film release. Marketers will embrace every new idea, as they must, and discard those that become irrelevant or simply fail to live up to their promise. And that goes for their agencies too.

Jerry has been at the leading edge for his entire 40+ year career. He may be the only executive in the digital arena to have created a new brand of soda pop (Mello Yello for The Coca-Cola Company) and he was the first person to conceptualize (and execute) a coffee-by-mail business (Gevalia Kaffe for Kraft Foods), and he helped transform a nascent online entertainment company into a powerful digital marketing services company that became so attractive that Yahoo! purchased it (Yoyodyne). Jerry can be reached at jerry@grownupmarketing.com

Read all Jerry’s MediaBizBloggers commentaries at Rants & Raves from the Heart of Advertising.

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