The digital future – what does it hold for big agencies?

The market is strong with this one.

All this talk of digital futures and changing markets makes me think about Star Wars. It doesn’t look as though anyone’s going to invent a lightsaber, but there are some drastic changes occurring in this disrupted market and the balance of power is shifting.

NE pic

The smiley gentleman you can see in that photo is Nick Ellsom. Nick was a big agency stalwart, leading the performance team at Diffiniti (now iProspect) before moving on to be Head of Digital at PhD. His most recent move has seen him set up on his own as the founder of Fast Thinking. I wanted to know why he moved, what was happening to the market and what the future holds.

What’s the big idea?

Nick founded Fast Thinking to help clients tell tailored stories to bespoke audiences. What this means beyond that rather nice description is that Nick and his clever colleagues are able to profile a brand’s audience extremely accurately, acquire a larger audience of the same profile and then tell them a story in the form of sequential ads which follow the user along their conversion journey. It really is clever stuff.

Why did you leave big business?

“Bureaucracy and politics,” was the answer. Nick is passionate about digital innovation and things moved too slowly in big agencies. Now in a startup things are motoring. “Being small and nimble means we can move so much quicker. It would take an agency 8-10 years to make the advances we have made in 18 months. That being said we are restricted because we don’t have a big pot of cash. If we have an idea we want to pursue we might have to wait until we have the money.”

How are big agencies coping in this market?

With programmatic beginning to eclipse traditional buying methods and all these innovative, nimble startups yapping at their heels, will big agencies adapt? “Some will, some won’t,” said Nick, “legacy players tend to go into a defensive mindset”. Interestingly, however, Nick suggested that this disrupting market hasn’t actually made a dent in the traditional big businesses. What they are doing is “scaling up at the expense of innovation” meaning they will grow and merge and take on more of the legwork instead of innovating and changing with the market.

What about the increased competition?

“The market is still growing,” says Nick, “there are more startups adding competition but more space in the market. Plus big agencies have a global presence which is a massive source of growth for them.”

What does the future look like?

According to Nick the future is uncertain but there’s a long way to go. “Agencies will change but slowly. For now they will try to throw their weight around.” A recent example of this is GroupM’s decision to stop using open ad exchanges, instead relying on direct relationships with publishers and private exchanges. This is a power move designed to gain leverage with which they can lock up premium ad space and use their scale to get the best prices.

If leveraging and leaning on people is the way they want to go they need to look over their shoulders. Giants like Adobe, IBM and Oracle are starting to enter the data race and if this happens “they could squash the big digital agencies like flies”.

Epilogue

So it’s a space age tech war out there. Giant companies swinging at each other, startups taking chunks out of the big boys and an innovation arms race lurks in the background. Our friend Nick is taking full advantage of this, moving at hyperdrive speed into an exciting, innovative digital future.