John Hingley, CEO, Andiamo Systems

Then they started compiling other kinds of information. Like credit information or household information or business information. They really became source of data enrichment, in terms of, “What else do we know about John Hingley who lives in San Francisco?”

A lot of these systems or companies-Epsilon and so on-started developing database marketing and direct response service capabilities by which to harness the data that they had plans to maintain and compile.

Now they’re addressing the fact that that’s just one part of the mix. The real growth is not necessarily in direct-response marketing, per se, but it’s how we manage the engagement and interaction with customers with direct response being one aspect of the overall engagement. Is that a fair summarization?

JH
It’s a great summarization. The way these traditional Epsilons of the world see social media is, it’s a huge opportunity for them to build upon their service offerings, maybe reposition their brand and become more relevant to a lot of today’s potential customers. They may also take a wait-and-see approach though. See what shakes out, in terms of players, metrics and overall market size of word-of-mouth. The market is sized at right around $1 billion currently which may not be large enough for some of these guys to take action on.

But also, just like myself, coming from a direct marketing numbers-and-metrics standpoint, and knowing that metrics are in a huge flux right now. No one really knows how to measure engagement, but everybody’s trying to give that some type of definition.

Being very acutely aware that traditional direct marketing and even advertising metrics are becoming if not less relevant, challenged by some of the newer types of metrics such as engagement. They see this as an opportunity to build on something they already have.

As you mentioned, Michael, it’s a prowess in gathering information to help companies make better decisions. I’ve always been a believer that social media analysis-analyzing what’s going on with Facebook and MySpace or any blog out there-is an integral part of an overall marketing strategy or marketing offering for an end-user or client. Warner Brothers, Fox TV, Sony, Intuit or whoever it might be.

So the agencies see-I believe-an opportunity and really, a necessity, to have some type of offering or expertise in the social media area. To be more holistic in their offering and their understanding of the customer. And to be able to keep current clients and attract new ones.

We speak with agencies every day. Of our client base, I’d say that 40% are agencies. They deliver about 80% of our business. They’re acting out of two primary motivations. One is a true understanding and appreciation of social media. How to use social media to cost-effectively build a brand and keep it relevant and buzzy out there over time.

The second motivator is the individual brand owners. The CMO at Coke or the VP of Marketing at Warner Bros are getting educated on the values of social media. So agencies need to become pros in this area as well or they risk losing business. I hear this from agencies, repeatedly. They feel a threat to not being that traditional “expert,” in all areas of advertising. Social media in some ways levels the playing field. So small, focused agencies can compete with big ones, because now they’re the experts in social media. Agencies feel that even if they don’t know exactly what to do with social media, and how best to drive benefit for their clients, they at least need to start with a monitoring and measurement system. Because they know they at least have to listen to what’s being said online, and be able to integrate that in with other pieces of their campaign planning. Or, as you mentioned before, their media planning.

Within an agency, there are two primary users from our perspective. One is account planning. One is media planning. Helping the media planners allocate budget toward the appropriate venues. Offline and online.

The second is account planning. How to use this newly available and readily available information online to have a better success rate in client pitch-to-win ratios. So it’s actually using this ahead of the curve, during a client pitch phase.

MM
Actually, you’re really talking about three functions. The media planning is usually the caboose. Right? That’s putting together the online/offline media mix in terms of given these objectives and given these demographics, where do we best spend the money. Right?

Account planning is not just about account services, but what projects to pitch and sell hard as opposed to pitching more tentatively or prospectively. Right? But that’s all about managing an existing account.

The third that you’ve just called attention to is really new business development. Oftentimes, it’s the insights supported by the analytics-and more specifically, the social media analysis-that justifies breaking out of my agency of record relationship and going with a small interactive shop. Because they’ve got the data to support doing this, and they’ve got the feedback loop to measure its effectiveness.

You’re saying that this tight fast-cycle closed-loop that social media analysis provides gives the smaller, nimble, hot interactive shop not just parity, but an unfair competitive advantage by which to start stealing most of the upside growth in an account.

JH
I’d say that’s a fair assessment, yes.

MM
There is another thing that kind of falls out of this whole thing is. Fundamentally, as we start to get better and better data in terms of “who’s consuming what,” as a part of our message, this comes back and changes the while ideation process for creative. I think we’ve covered that.

I’m interested in understanding this both from an agency perspective or agency business model. How does that ripple into more of the account planning piece, and ultimately the sourcing? All of a sudden now, agencies have to not just source from a bunch of local creative boutiques or creative subcontractors, but oftentimes across the globe. Be they in Singapore, Australia or Amsterdam.

Can you speak a little bit in terms of how social media analysis and social media tracking is not just about how to spend money more effectively in my domestic market, but also international ones? Social media knows no bounds. Right?

JH
True.

I’d point to a new agency called Alt. I believe the URL is ThinkAlt.com. They take a true cross-functional view and approach to social media analysis
We have been in very close conversation with these folks at the use-case level of our services. They have many. Although they’re brand new, they all come from other agencies, and they left to start this new agency that was an alternative-just like we’ve been talking about-[to] the traditional agency. Using new types of media, new thinking, new tools such as ours, to help them do a better job for their clients-and, of course, win more business overall.

It may sound more simple than it is. It’s easy to say that you’re going to set up a global or at least a shared media buy or media planning group within your agency. Most large, entrenched agencies can’t move that quickly.

Alt is in the process of perfecting something for which they definitely have the right culture and plans in place. They have a few big clients that they actually perform some global campaigns for. Number 1-the most simple-they make sure that every regional domestic or international client has been in the same conversation with us about the use of our services. They go into the planning mode ahead of even using it, with a strategy on the communication and use and responsibility of using the data that we provide them.

I think it’s more cultural and organizational versus any type of necessities to change platform. Some of the things I’m seeing in most agencies-especially ones that have been around longer than others-is similar to about any industry type. Whether it’s Mattel or a smaller company.. The more you grow and the more tenure your business has, the more you typically silo and become more challenged to respond quickly and efficiently to new technologies and customer needs. You get stuck.
That’s hard to break out of. I’ve seen agencies say they’re going to do this, and they’ll share information across functional groups. That always needs to be done-but also with regional groups inside and outside the US. It just doesn’t transfer.

Goals aren’t aligned. Roles and responsibilities aren’t aligned. It’s my best guess that Alt has a real advantage in starting with a blank slate.