This document discusses challenges facing the advertising industry and potential remedies. It identifies 7 client needs that many agencies ignore and 3 areas where agencies are out of sync with clients. It also outlines 4 gaps in agency authenticity. The document then proposes 12 remedies for agencies to better serve clients and lists 10 potential new agency models for the future.

1. FUTURE LAB Reconsidering the Advertising Industry A Conversation Starter © Lisovskaya | Dreamstime.com Sponsored by Management Centre Europe. By: Alain Thys and Stefan Kolle

2. Prelude: Why This Document Exists © Lisovskaya | Dreamstime.com FUTURE LAB Comparative Estimates: US Total Media Advertising Spending Growth, 2009 (% change vs prior year) Wachovia: - 0.8% BMO Capital Markets: - 1.9% Collins Stewart LLC: - 2.0% GroupM: - 3.2% Citi Investment Research: - 3.6% MAGNA: - 4.5% Morgan Stanley: - 5.0% ThinkPanmure LLC: - 5.0% UBS: - 6.0% ZenithOptimedia: - 6.2% Myers Publishing LLC: - 6.7% Barclays Capital: -10.0% Source: Seven Predictions for 2009, eMarketer, January 2009

3. automotive advertising telco -6% -21% -48% The Net Promoter Score ™ is a registered trademark of Bain, Satmetrix and Fred Reichheld Net Promoter Score™ by Industry Prelude: How will Agency’s Fare in a Market Where Clients are Dissatisfied ? © Stockphotonyc | Dreamstime.com FUTURE LAB

4. Prelude: Are Marketers Held Hostage by the Advertising Industry? © Alexey Avdeev | Dreamstime.com " FUTURE LAB Likelihood to recommend Low High Likelihood to repurchase Low High Hostages Loyalists Defectors Mercenaries

5. Prelude: Do Agencies Overestimate Their Impact on the Client’s Success? © Chris Fourie | Dreamstime.com FUTURE LAB

6. Table of Contents SITUATIONAL ANALYSIS: Agency Challenges 2009 12 REMEDIES: Setting Things Right 10 FORMATS: Agency Models of the Future Page 7 Page 35 Page 48 Appendices for Digging Deeper Page 59 FUTURE LAB

7. Chapter One Situational Analysis: Agency Challenges 2009 FUTURE LAB

8. Chapter One Situational Analysis 7 client needs many agencies ignore. 3 areas where agencies are “out of synch” 4 gaps in agency authenticity FUTURE LAB

9. Client Need #1: 75% of clients want a truly tailored approach to their business © Frozenpeas | Dreamstime.com FUTURE LAB

10. Agency Response #1: Services that Happen to Fit the Agency Model FUTURE LAB

11. Client Need #2: Show Me the Return on My Marketing Investments © Breeze393 | Dreamstime.com FUTURE LAB

12. Agency Response #2: We Are Very Creative ... And Big ... And have Big Clients © Robert Byron | Dreamstime.com FUTURE LAB

13. Client Need #3: Be A Trusted Media Partner 91% Consider the media buying process to be insufficiently transparent Of the 50 largest advertisers in the world ... 85% Are convinced their media agency had deals outside the client agreement 74% Opined that these deals caused bias in the choice of media and recommendations. FUTURE LAB

14. Agency Response #3: Bad Apples The Occasional Scandal Underperformance and “creative math”” Continued Intransparency Image 1: CC 2.0: Phauly Image 2: (c) Design 56 – Dreamstime.com Image 3: (c) Aleksander Ruzicka FUTURE LAB

15. Client Need #4: Engage Our Audience Image cc: Dogsbylori's - http://tinyurl.com/6658d7 FUTURE LAB

16. Agency Response #4: Saturation Bombing FUTURE LAB

17. Client Need #5: Walk Digital What marketing leaders want from their agencies when it comes to digital FUTURE LAB

18. Agency Response #5: Talk Digital © Yuri Strakhov | Dreamstime.com FUTURE LAB

19. Client Need #6: Shopper Marketing CAGR by Marketing Mix Element - Manufacturers (2004-2010 Est.) Source: Deloitte, 2007 FUTURE LAB

20. Agency Response #6: Silo-based Thinking © Phillip Minnis | Dreamstime.com FUTURE LAB

21. Client Need #7: Help me into the C-suite FUTURE LAB

22. Agency Response #7: Look How Cool and Fun We Are ... And Creative Too! © Tomislav Birtic | Dreamstime.com FUTURE LAB

23. Chapter One Situational Analysis 7 client needs many agencies ignore. 3 areas where agencies are “out of synch” 4 gaps in agency authenticity FUTURE LAB

24. Kris Hoet, EMEA Digital Media Communications Manager, Microsoft Agencies have optimised their business for themselves. Not for their customers. Disconnect 1: Most Large Agencies are Mass Production Factories… © Leigh Prather | Dreamstime.com FUTURE LAB

25. … While The World Needs Multi-Disciplinary Boutiques © Iphotoexpert | Dreamstime.com Agencies need to be chameleons which can become what ever the client requires them to be. Not just what they happen to be good at. FUTURE LAB

26. Disconnect 2: Most Agencies are Multi-Local with High Levels of Duplication ... Creative Production Account Mgmt Planning Digital Management © Michael Brown| Dreamstime.com FUTURE LAB

27. ... While Today’s World is Global and Highly Interconnected © Hewlett Packard, Halo Room FUTURE LAB

28. Disconnect 3: Agencies Compete within “Their Crowd” ... © Julien Tromeur | Dreamstime.com FUTURE LAB

29. ... While the Competition is Transforming © Kevin Renes | Dreamstime.com FUTURE LAB

30. Chapter One Situational Analysis 7 client needs many agencies ignore. 3 areas where agencies are “out of synch” 4 gaps in agency authenticity FUTURE LAB

31. Authenticity Gap 1: Diffuse Identity © Eric Marechal | Dreamstime.com FUTURE LAB

32. Authenticity Gap 2: Oversensitivity to Trends FUTURE LAB

33. Authenticity Gap 3: Undue Compliance “ We knew that it wouldn’t work, but the client wanted it. So we made it happen. After all, under all the gloss, we must accept that we are prostitutes.” Head of Business Development commenting on modifications to a global campaign you know. © Jose Antonio Sánchez Reyes | Dreamstime.com FUTURE LAB

34. Authenticity Gap 4: Occasionally Questionable Motivations “ I don’t care about making money for my clients. I just want another award before I jump this ship. ” Agency CEO of a A-list mediterranean agency “ Listen, we know that spending x million in above won’t fix the issue, but they’re going to spend it anyway. We can just as well try to grab as much as possible.” Pitch team on an international account If a client thinks a brand is great, but you find out his consumers disagree, you’d only tell him if you’d get more business out it. Otherwise, best to leave these things untouched. Major agency creative director instructing a recent recruit over lunch © Steve Cukrov | Dreamstime.com FUTURE LAB

36. #1 Become a Solutions House ... “ Our recommendation is not to proceed with any above-the-line campaign in the coming year. In stead, it is better to upgrade call-centre training and accellerate the go-to-market processes so they co-incide with the consumer shopping cycle. Obviously we are happy to assist in these areas.” © Jan Prchal | Dreamstime.com FUTURE LAB

37. #2 ... or not © Infomages | Dreamstime.com © Lisa F. Young | Dreamstime.com FUTURE LAB

38. #3 Talk Money © Breeze393 | Dreamstime.com FUTURE LAB

39. #4 Media Neutrality and Transparency © Nob50 | Dreamstime.com FUTURE LAB

40. © i Dan Breckwoldt | Dreamstime.com #5 Replace Noise by Engagement FUTURE LAB

41. #6 Be Digital © Spaceheater | Dreamstime.com FUTURE LAB

42. #7 Think of the Shopper © i Edyta Pawlowska | Dreamstime.com FUTURE LAB

43. #8 Get a Makeover © Rebecca Abell | Dreamstime.com FUTURE LAB

44. #9 Synch to Global Reality Image: (c) Sebast1an – Dreamstime.com FUTURE LAB

45. #10 Establish A Clear and Differentiated Position FUTURE LAB

46. #11 Align Good Apples, Get Rid of Bad Ones (c) This framework is property of Management Centre Europe – used with permission Customer Proposition Behaviour of Leaders Processes & Structures Performance Metrics Strategy Commitment Culture FUTURE LAB

47. #12 Take a Moment of Self-Reflection © Pavalache Stelian | Dreamstime.com FUTURE LAB

48. 10 Formats: Agency Models of the Future Chapter Three FUTURE LAB

49. #1 The Factory © Sedam35 | Dreamstime.com FUTURE LAB

50. #2 The Category Killer A: Media © Infokus408 | Dreamstime.com FUTURE LAB

51. #3 The Category Killer B: Curated Creative Marketplaces © Rui Vale de Sousa | Dreamstime.com FUTURE LAB

52. #4 The Category Killer C: Production Machines © Richard Thomas | Dreamstime.com FUTURE LAB

53. #5 The Customer Specialist FUTURE LAB

54. #6 The Serial Monogamist FUTURE LAB

55. #7 The Marketing & Communication Boutique © Helder Almeida| Dreamstime.com FUTURE LAB

56. #8 The Craftsman © Sebastian Czapnik | Dreamstime.com FUTURE LAB

57. #9 The Fragmented Giant FUTURE LAB

58. #10 The Persistent One © Drx| Dreamstime.com FUTURE LAB

59. Appendices for Digging Deeper FUTURE LAB

61. More Information & Action If you want more information on this report or would like to discuss the pursuit of any of the strategies discussed in your agency, get in touch with us on info@futurelab.net: International: + 32 2 733 8332 Alain Thys/Stefan Kolle Athens: +30 210 6101240 Milton Papadakis Bucharest: +40 751 229 217 Ramona Patrascanu Hamburg: +49 40 2780 6223 Anne Marx Kiev: +38 067 502 99 41 Olga Vaganova Moscow: +7 905 500 5856 Marina Natanova Shanghai: +86 136 2179 9450 Jan Van den Bergh For a conversation on aligning the people in your agency to your strategy, get in touch with Management Centre Europe who have acted as co-sponsor to this report: Mr. Patrick Faniel Customer Specific Solutions Director Tel.: +32/2/543.21.20 Email: pfaniel@mce-ama.com FUTURE LAB

62. WWW.FUTURELAB.NET - BLOG.FUTURELAB.NET - 100.FUTURELAB.NET - PROBES.FUTURELAB.NET About Futurelab and This Report FUTURE LAB