Mobile Fix: SXSW, the future of agencies and proving search works

Simon Andrews, founder of Addictive!, looks at why agencies really go to SXSW and that eBay has not, despite popular reports, just proved that paid search ads don’t work in this week’s Mobile Fix.

SXSW

The SXSW event in Austin Texas last week seems to have matured from the super hip event of a few years ago and captured lots of the energy that Mobile World Congress seems to have lost.

This year the start-ups were joined by many brands – and consequently lots of agencies showed up too. And whilst there wasn’t some clear break-out as in previous years (Foursquare and Twitter both gained attention when they blew up at previous SXSW) there was lots to think about.

Essentially there are two strands worthy of attention – the thinking and the tech. The model where people propose panels and then whip up social buzz to drive voting on PanelPicker does lead to quite a lot of froth – over 100 events on storytelling? But there are a lot of smart people sharing some smart thinking.

Our favourite was probably John Hagel of Deloites talking about narratives as an alternative to stories. There is no video yet but these notes get the point over. With a book on the subject due we expect this to be very influential over the coming months. (one of Johns books from the 90s – Net Gain – still influences our thinking around community).

Future of Agencies

As you might expect there is some cynicism over the agency attendance at SXSW and this Digiday piece on the Real Reasons Agencies Go is really cutting.

There is an increasing recognition from brands that Tech is important and in our conversations we find an uncertainty over where to get smart advice on how to navigate the GAFA ecology. But whilst some digital agencies are getting over excited over the new new thing, a few are looking at the business transformative effects of tech and using their knowledge to add value, rather than just extract a fee for building some new artefact that will be redundant in a matter of months.

The idea that traditional agencies now get digital and therefore the role for digital specialists has come to an end is an enduring myth. But it is a myth. New data from the UK shows that the income of many traditional agencies has declined sharply in the last 12 months. The analyst view on why?

“growth had come from boutique players with digital offerings and decline from mature traditional players hit by the macroeconomic background.”

Despite talking the talk (Big Data, agile, social, blah blah) the business model of most agencies is around charging clients for the output of their factory. And most of those factories are designed to deliver TV commercials, TV buys or big websites. One question we’d like to see in industry reviews is the proportion of agency revenue that comes from digital. WPP make a big thing of their 30% – but that’s an average as they have some businesses which make all their revenue in digital, so they will have others that make rather less than that average.

Back in our DLKW days, digital was around 20% of the total revenue – despite being back when digital was out of fashion. We wonder how many traditional agencies would pass Saul Kleins 8% test today?

So we are seeing new entrants into the space. Former UK publisher St Ives has added digital agency Amaze to its growing marketing services business. As we have talked about in the past, tech firms like Adobe, Oracle, IBM and Salesforce are acquiring marketing capabilities – those four alone have invested over $20bn in marketing based M&A in the past 2 years.

Consultancy firms like Deloitte and Accenture have substantial teams devoted to marketing services too. And increasingly brands are taking the skills inhouse; the latest example being Ladbrokes who are building their own digital marketing team.

Design agency Landor have shared their view on the future of advertising and they recognise the challenge:

The ad agency of today must therefore become the “marketing maestro” of the future—leading the vast communications industry as curators of best-of-class ideas and their implementation

And of course there is an infographic on the Agency of the Future – which concludes;

Many marketers will rely on agencies to help them evolve. The agencies that embrace this new technology now will soon find themselves in the possession of a huge competitive differentiator…

We believe the jury is still out as to who will earn the right to be a brands trusted advisor – and there is a lot to play for.

Search Works

One of the downsides of social is that a story can quickly get shared around without always attracting the scrutiny it deserves. So this story in the Harvard Business Review has been heavily shared, Did eBay Just Prove That Paid Search Ads Don’t Work?

Well, no. They didn’t.

Essentially the article reports that eBay has realised that paying Google for a eBay ad to be shown when someone searches for eBay isn’t really that necessary if the top organic listing is eBay. Rather than giving the user two places to click to go to eBay – one of which means Google gets paid – they have decided to rely on just one; the free one.

For any other search eBay, like every other brand, can measure the effectiveness of paid search and make a decision. And as just about every smart brand has found, search tends to be a very good investment.

eBay have been big users of search over the years. Both they and Amazon used to blanket Google with search ads using Dynamic Keyword Insertion – meaning that whatever you searched for, an eBay or an Amazon ad would appear with your search query in the ad, suggesting they probably had it. Now this does give you some unusual results – but it did build the brand for both companies by reinforcing the breadth of their product offering. And because most of the ads don’t get clicked on, they did this essentially for free.

There is more evidence of just how effective mobile search can be in a new report from Google – with one fact jumping out; over half of the actions or conversions from mobile search happen within an hour of the search.

Out and about

Next week we are speaking at Sapient and at Media Playground where we are doing a live Mobile Fix review of how tech is disrupting everything. There are a few tickets still available. If you are at either event do come and say hello.