All of us in design, marketing, and advertising are used to change. It’s simply a matter of fact that the way we communicate evolves. You and I, however, know that we are all in the midst of a change of epic proportions that may in-fact result in the complete re-writing of how companies and customers communicate.

Some of you are undoubtedly well aware of how the landscape is reforming. A few weeks ago, however, I was reminded that many are slow to accept these changes. This one surprising meeting opened my eyes.

Looking for partners

After smashLAB re-focused its offering to solely interactive services, we contacted a number of traditional agencies, looking to build partnerships. While we did find ways to work with a few groups, the underlying sensation was one of “we already do interactive.” Well enough, but the comment at the end of one meeting illustrated how few agencies really “do” interactive.

We were very excited to meet one particular group, due to their cachet in the industry as “thought leaders”. The conversation was stifled by an odd tone that we could only pin-down as some kind of a generational divide. We couldn’t really understand the reason for the disconnect until our host summarized his perspective on interactive by noting, “Really, when did you last click on a banner ad anyway?” In my mind, I could only think, “holy shit, this guy is absolutely lost.”

Let me stress that this isn’t a “fly-by-night” operation. This is a highly awarded agency that is perceived by many to be amongst the most progressive of the lot. As such, that comment blew me away. No talk of integrated campaigns, no ideas around enabling community, just “banner ads”. Ugh.

That spooky feeling of the rug being pulled

Whenever I’m around smart people, I’m reminded by how they get this way: They ask questions. They probe and dig with the knowledge that everything can change in a heartbeat. You always have to be receptive to new possibilities.

What had us perplexed was that this guy really didn’t have any notion of what was occurring. He didn’t see any need to talk about the changes in process. Realistically though, why would he have? He wasn’t aware, or fearful, of his lack of knowledge; he simply didn’t see the web as anything more than a support channel for traditional advertising. He was still in the world of the 30 second spot.

As we returned to our office, I kept thinking that this fellow’s whole world was about to be rocked. All of those cute ad spots that were pulling in awards were going to look awfully antiquated a few years down the road.

This is where we are at

Is advertising dead? No. It will always be here, but it’s changing wildly, and established power-brokers may well be shaken from their spots as this occurs. Just read this article at Wired if you’re interested in how (and why) this shift is occurring. I’ve heard it said that this is a great time for musicians, but a bad time for labels. It’s not that music is facing extinction, but that the (broken) system of delivering it certainly is.

My crystal ball has been in the shop for the past couple of weeks, and as a result, my predictions are only moderately accurate, but let me hazard a guess on how this plays out.

First of all, I’m willing to place my bet that groups will, in time, use the interactive channel as their primary (and sometimes only) method of connecting with clients. Ads will persist, but as the noise increases, the public will increasingly block-out messages that don’t immediately resonate with them. As a result, companies are going to have to start dialogues with select groups of people. These dialogues will serve to build brand value and loyalty.

There will be numerous opportunities and entry points for progressive companies to leverage. Some will deliver entertaining content that affords value to users. Others will find compelling and non-conventional ways to engage people in adventures, much like what 42 Entertainment and Trent Reznor recently did in their ARG to promote the new Nine Inch Nails release. Some will actively utilize communities to drive feedback, refine their products, and build passionate user-bases for their offerings. Some will build unprecedented brand awareness without any traditional advertising whatsoever.

This is the end of top-down broadcasting. The future of advertising puts the supplier and user on a parallel path.

Why the agencies won’t (and will) change

Advertising is a nice industry to be in. There’s plenty of money, especially given how many get away with just churning out cheeky one-liners. Agencies bill enormous sums, and rightly so, given that for a long time they’ve held the keys to the only real method to broadly reach new prospects.

With the inversion of advertising, however, the tools are at the disposal of all of us. Imagine someone in the 80s saying, “I’m going to start writing and sending videos to friends, and I’ll become a household name.” lonelygirl15 (albeit a fabrication), Perez Hilton, and numerous others have done it though, and this is only the beginning.

The challenge for agencies though, is that this is really tricky terrain. Few are excited about the notion of advertising having to be rewritten. Just look at GM’s foray into user generated content. They launched a campaign that allowed users to create their own ads to promote the new Tahoe. What they (perhaps) hadn’t anticipated was that community members might have their own opinions and agendas. We can all talk about this fundamental shift in advertising, but really, do you want to be the one left holding the bag for that campaign?

The truth is that all of these new channels and opportunities are largely untested and as such risky for advertisers. As a result, the big companies are likely going to play it safe, and this buys them some time to adapt. The smart ones are already working to get their footing.

Kevin Roberts of Saatchi & Saatchi sees the opportunity for ad agencies to embrace a new model, and he’s clearly well aware of the threat presented by not moving fast enough. Business Week‘s “Struggles of a Mad Man” provides insight to Kevin’s effort to redefine his agency and better deal with a fragmented and evolving media space.

This evolution is an issue of mindset

It has been said that the thing that killed many shipping companies was their inability to evolve. Most all of them believed that they were in the boat business, when in fact they were in the transport business. Most couldn’t make this transition, and as a result, the doors were opened to an entirely new set of players, as technology made alternate means available.

The next generation of agencies will not be about advertising. They will be about defining heightened brand awareness for the groups they support. This may be done through traditional tools including ads, broadcast placement and direct mail; but, it will also be in the form of online experiences, value-added content, and a plethora of other tools and delivery devices.

Chan Suh of Agency.com was recently quoted stating that in the future, advertising would change to become, “an incredible dance partner, who knows when you are going to take a sudden step, knows when you’re going to dip, and knows what state of mind you’re in based just on your behavior.”

Farewell for now (and my gratuitous plug)

Well, that’s a wrap for this post; thanks for reading! What a topic! I keep feeling like we’ve only scratched the surface. In an upcoming ideasonideas post, we’ll talk about a few key trends you should be aware of, in this evolving space.

And if you’re running a traditional agency, and want to start integrating stronger interactive strategy in campaigns, perhaps we should talk. Just drop a note to me at: karj@smashlab.com