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Cannes 2010: Why AoRs are less common than project-based work in digital advertising

By Prajjal Saha , afaqs!, Cannes | In Advertising | June 25, 2010
PWC's Marcel Fenez, IPG's Michael Roth and J&J's Brian Perkins discussed the future of media consumption as a result of new technologies and the changing agency structure

At the Debussy Hall at Palais Des Festivals, the afternoon session started with a short film, where people from across the world talked about their online consumption habits. The film showed the growing importance of online media in consumers' lives, be it for downloading movies and music, or for news.
 
Marcel Fenez, global entertainment and media leader, PWC then presented some data, which revealed that the share of digital advertising in the worldwide advertising revenue pie would grow from 15 per cent in 2009 to 20 per cent in 2010. Among traditional media, television would maintain its growth from 35 per cent to 37 per cent, but print media was heading for a decline. Newspapers were expected to decline from 20 per cent to 16 per cent in this period.
 
& #BANNER1 & #Even though digital advertising has registered high growth, advertisers still aren't comfortable hiring a digital AoR (agency of record), unlike in the case of traditional advertising. The panel discussed the reasons for this.
 
Brian Perkins, vice-president, corporate affairs, Johnson & Johnson said that was surprised by the small number of AoRs in the digital media space; though his company was just wrapping a digital review. Most brands, he said, were comfortable working with digital agencies on a project basis.
 
He recalled a presentation made by Bob Greenberg of R/GA, where he referred to traditional agencies as dinosaurs.
 
Michael Roth, chairman and CEO, Interpublic Group, commented that with the changing business landscape, one has to ensure that all disciplines in advertising have a digital component.
However, he added that it was a two-way sword. He blames the client community for the structure they follow. He says, "We can offer an integrated approach, but clients want to work on a project basis."
 
According to Roth, the future will be in aligning media with digital agencies too, which are focused on creative. This will help them achieve scale. 
 
The next question was: Which media takes the lead in the integrated approach?
Perkins observed that the structure was not important; but putting the right people in the right way was. For instance, Bob Greenberg could come up with ideas, irrespective of discipline.
 
The prominence of TV in the media plan was quite evident, as both Perkins and Roth said TV was important. While some brands can work with digital; others do need TV. Also, the breakup between TV and digital is equally relevant for emerging markets.
 
About the recent recession, the panel said that it proved to be a test of the relationship between the agency and the client. On the learning it engendered, Roth says, "We have to be efficient in what we do, reposition our assets and get the right people in the right job; and get the right people to service clients."
 
The final question for the two was -- what they would do if their roles were swapped.
 
Perkins said, "I would change the agencies from being capital-intensive to labour-intensive businesses."
 
Roth concluded, "I would introduce a new compensation model for the agency business, where there is a value for creative offerings."