The Future for Interactive Advertising Agencies
Remarks by Wally Snyder, President & CEO, American Advertising Federation
To the Art Directors – DC Conference, Monday, May 7, 2007
Omni Shoreham Hotel, Washington, D.C.


Download the accompanying PowerPoint.

[SLIDE 1 – AAF LOGO]

Thank you for that generous introduction and this opportunity to meet with the Art Directors Club of Metropolitan Washington. You've got great leaders, and I want to compliment them on doing a fantastic job building the organization—Doug Fuller, your president, Stephen Mealy, who heads up Interactive Programs, and all the officers and members who make it a unique entity.

[SLIDE 2 – SPEECH TITLE]

I'll be talking about The Future for Interactive Advertising Agencies. In order to do that I'll refer to a recent interview in which I was asked for my take on the biggest changes occurring in the advertising industry. Without a doubt, it's the media options available in the market place. Not too long ago we were talking about the impact of creating online communities, products and services. Now, we're living it. And as the technology expands, so do the possibilities. Clients—from the United Kingdom to the United States, from Tokyo to Washington, D.C.—have more access and want more opportunities to connect with consumers. And it doesn't matter where you live and work-we're all connected.

So here's the bottom line from Wally Snyder: The future is now. The digital landscape is transforming everybody's business. The growing reality is there is no such thing as a noninteractive agency; client and consumer demands increasingly will not allow for agencies to operate under the "general" or "specialized" banners; there's no more "choose one or the other." The only real choice for viable businesses is do both—or risk extinction.

An ever-expanding array of media choices makes decision making tougher—for clients and agencies, account execs and creatives.

The real opportunity is to create an extended plan that blends traditional and new media to enhance performance. If you're interested in running a profitable business (and who isn't?), you have to dig into the research, question your clients about their goals and expectations and realize that the future is here and now. Integrated marketing and media plans maximize the bottom line that speaks to the needs, desires and cultures that are changing America's demographics.

The AAF is proud of what we like to call "Inclusive DNA," which means we love to bring everyone to the table to discuss challenges, solutions and goals. This special DNA means we have no fear of diversity. We believe it fosters unity, ideas and innovation. We believe a diverse and inclusive workforce may answer many questions posed by the evolving digital landscape.

These changing demographics and emerging technologies prompt some very critical questions:
  • How will creativity differ in traditional and experimental environments?
  • And how will creativity unite advertising on traditional and online platforms?
  • How will accountability change?
  • What customized metrics will be developed to measure effectiveness?
The successful "Ad Agency of the Future" will employ emerging technologies, traditional and new media in an integrated approach to reach more consumers; simply put, it will help clients connect better in a variety of ways, and it will use new metrics to prove and improve accountability.

And as I've said before, all this is going on now—there's no tomorrow; tomorrow is today. Technology is changing the digital landscape-for manufacturers, consumers and the advertising industry. None of us are exempt. We either jump in or stand on the sidelines. More and more, consumers are in control of their media. They want information delivered to their devices—from their 50-inch high-def TVs to their iPods and smart phones; they want it in new and unique ways, and they want to decide how to interact with the information. And so begins what I'll call "The Digital Chain Reaction"—customers place demands for interactive products and services on our clients, then clients come to us for answers and solutions. Again, this development of the digital landscape is not a wrinkle or some short-lived oddity. It's reality.

[SLIDE 3 – ONLINE ADS]

According to recent statistics online advertising has grown nearly 19 percent in the last year, making it the sixth largest media category.

[SLIDE 4 – GOOGLE & YOUTUBE]

Google gobbled YouTube and together will control 60 percent of the Web's video advertising market. Analysts say video advertising is one of the fastest-growing revenue streams in cyberspace and predict spending to triple by 2009-that's 1.5 billion dollars.

Keeping up with what's happening can be exhausting. Every week it seems there's a multibillion deal involving a company that didn't exist a few years ago. That's the pace of change—fast and faster.

[SLIDE 5 – AAF LOGO]

As the Unifying Voice for Advertising, the AAF is dedicated to providing top-notch information to members and our colleagues in advertising, marketing and communications.

[SLIDE 6 – INVESTMENT RESEARCH TITLE]

That's what our Media Investment Survey 2007 is all about-an attempt to make sense of what's going on so that we can serve our clients more efficiently, run our business more profitably and draw from the available talent pools more effectively. We conduct research to tell where we stand…and where to stand. You can view this and other studies on our Web site at www.aaf.org. And much of our National Conference—convening June 7 to 9 in Louisville, Kentucky—will be devoted to this topic and will feature a stellar lineup of speakers and professional development workshops.

In order to get an accurate picture of what's going on and the thinking in and around the industry, the respondents to our Media Investment Survey 2007 came from all over—agency, media, advertiser/client, supplier, and academia. A majority identified themselves as directors, owners and managers, and almost 90 percent were to some degree involved in the company or client's decision-making process for media investment.

[SLIDE 7 – ]

We started out with a simple question: During a time of unprecedented change, how are marketers navigating the tumultuous media landscape? A few major findings:

[SLIDE 8 – STATEMENT RANKINGS]

  • When asked about media planning in 2007, respondents ranked the following statement-"I am open to new ways to use traditional media" —highest at 78 percent; the next statement—"The right media mix almost always includes a balance of traditional and nontraditional media"—came in with 76 percent and the final statement—"The search for new properties to grow my brand never stops"—garnered 58 percent. When it came to traditional media...
  • 51 percent of respondents said newspapers are the media category with the most opportunity for reinvention;
  • 34 percent said it was network TV.
  • And in the magazine sector, 46 percent said the business category is "most in need of a newcomer to shake things up."


[SLIDE 9 – TWO WORLDS]

When asked to rate their own performance at managing, adapting to and getting out in front of significant changes in 2006, one-third of marketers give themselves high marks while one in five admit they have much room for improvement.

These finding confirm our other findings about the general wariness among advertising executives about their own ability to keep pace with the changing digital environment.

[SLIDE 10 – MEDIA TRENDS TITLE]

In the recent AAF Survey of Industry Leaders on Digital Media Trends, a whopping 58 percent said they are, and I quote, "struggling simply to manage existing online efforts, let alone stay ahead of the curve."

[SLIDE 11 – AAF LOGO]

Despite this trepidation, most advertising leaders are embracing new media as part of their arsenal. An overwhelming majority surveyed recognizes the effectiveness of digital marketing, with 91 percent citing the online media environment as "empowering to advertisers, allowing the ad industry to shape its own development." Digital media's high return on investment was also recognized, with 42 percent citing paid search as offering the highest ROI platform.

They also expect a significant portion of broadcast and cable TV ad dollars to shift to online video by 2010.

And regarding integrating traditional media with online media, the research shows broadcast TV offers the "most innovative" integration, while magazines are considered "most effective" for driving consumers online.

These challenging times represent opportunities for all of us. Some of you sitting out there may say, "my company doesn't have the size and budget of the big firms." True enough. But the wonderful thing about new media is the continuing evolution of niche markets. And there's always the age-old business concept of partnering—and because of new media and the Internet, you may be here in our nation's capital, but your partners may be in South Carolina or South Africa, Singapore or Spain.

It's a new world. Digital media are making new demands on our staffing, budgets and creativity. But the sheer numbers of consumers they draw make a compelling argument to continue exploring this emerging and ever-changing digital landscape:

[SLIDES 12 & 13 –MYSPACE & FRIENDSTER]

MySpace, Facebook, Tickle and Friendster offer social networking, blogs and photos—unique ways to reach consumers. MySpace is the most popular with more than 24 million users. Even popular advertising icons have online profiles.

[SLIDE 14 – BURGER KING]

The Burger King character has more than 134,000 friends and more than 5,000 comments posted.

[SLIDE 15 – YARIS]

The Yaris, a car from Toyota, has its own profile too. Agencies are letting their creative juices run wild as they figure out new marketing possibilities.

[SLIDE 16 – PODCASTS]

Podcasts, videocasts and music downloads also bring big numbers to the table-59 percent of 12- to 17-year-olds listen to or download free music online, and eight percent listen to podcasts.

[SLIDE 17 – CSI BLOG]

Blogs, those personal online diaries that provide commentary or news on various topics from food to politics, are another rich vein to mine. Twenty-two percent of all Americans read blogs.

[SLIDE 18 – AAF LOGO]

The AAF has created a Media Planning Task Force with some of the best and brightest in the business. Discussions among this task force and our corporate board members are yielding areas of particular concern, resulting in the early development of principles to guide us in the new media frontier, including:

[SLIDE 19 – PRINCIPLES]

  • Principle 1: Clients have to be exposed to all media options that will best showcase their products to consumers.
  • Principle 2: Clients need to be exposed to methodologies and metrics that work in this environment.
What does this mean? That to best serve our clients, agencies must provide a broad, comprehensive media plan that will incorporate the most effective media delivery systems for the product. And that we have to provide evidence that our plans are working.

[SLIDE 20 – AAF LOGO]

This is not the time for the industry to be divisive, secular or individualist. Rather, it is a time for use to be inclusive, agnostic and communal. Above all, it's time to be imaginative, ingenious and open-minded. The great artist Pablo Picasso said, "Computers are useless. They can only give you answers." While computers have changed since Picasso's day, the need for human innovation has not. If creative minds are not in charge of the hardware, software and delivery of messages, Picasso is right. New media means a new way of thinking. Implementing new media means going beyond answers and searching for new questions.

Ultimately, your future as agencies depends on what you do today.

Thank you.

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