Have you signed in at Pottermore?

Alex Hunter, finance director, IPA, asks: how can we convince our clients of the true value of our new type of services?

Have you signed in at Pottermore? If so, you’ll be familiar with a business model that has taken Harry Potter from books to film and theme music and now to a range of online experiences – the same sort of gamification approach to attracting and retaining customers that has become part of adland’s armoury.

Digital competency is not the whole story but it has led to significant changes in the marketing business.

While traditional media campaigns remain in demand, the growth of online offerings is a reflection of the UK public’s rapid adoption of the full range of digitally enabled and ambulant media, as confirmed by the latest IPA TouchPoints* research.

There won’t be many ad agencies that have not already changed some part of their business model: Most have changed their operating structure so as to, for example, merge creative and digital to form a unified “screen team”.

Many have changed the way they provide their services to enable integrated, or interactive, or partnered campaign offerings. But how many have changed the remuneration base to reflect that? And how many clients recognise the need to take a fresh look at that basis?

If your remuneration model still gives you sufficient returns to cover your reinvestment needs, you’re fortunate – for the time being.

For many agencies, the new digitally-enabled, multimedia marketing environment has led to a plethora of new and integrated service offerings for which a sufficiently rewarding business model remains elusive.

In music and publishing, duration is revenue. Advertisements, though, have had a short shelf life and the creators, the agencies, have been content to be remunerated mainly over the period of related costs with a small margin for reinvestment, and no retention of copyright. The purchased campaign period has made it relatively simple to manage costs within a defined budget.

However, the integrated multichannel campaigns can create a series over a period of time: “You’ve seen this, you might be interested in this?”, or “Visit this for a coupon for that” type.

In taking the customer on a journey, there is a one-to-one engagement that creates a demand-led access to marketing rather than a brief tell-everyone message. And this can be measured and tweaked to optimise reach and reaction – not forgetting the need to manage any spoiler attempts. Extended duration here is extra cost (not least from rights holders), and it should be at least matched by extra revenue.

Progressive agencies are operating in a very different way from only a few years ago, and the question is not “what business are we now in?”, but rather, “how can we convince our clients of the true value of our new type of services?”.

This is no easy task since there will be different models developed for the different forms of campaign, alongside the traditional business. One thing is clear: There is no “one size fits all” for a fresh business model.

So it is useful to see how other creative industries have fared in coming up with a new paradigm through re-inventing, or re-configuring, the basis of their service provision.

To this end the IPA has invited key players in the music and games industry to not only explain the changes made to their own industries’ business models, but also to provide some thoughts on how ad agencies can learn from them.

The forum is the IPA Commercial Conference due to be held on 27 June and representatives from all its member agencies – typically the CFOs and MDs – are invited, with their guests. Details can be found here.

The next business model will continue to evolve. After all, even Pottermore.com has yet to enter the mobile domain…

*TouchPoints is the IPA’s consumer-centric survey that enables media planning across the whole spectrum of media channels – www.ipa.co.uk/touchpoints