How to get ahead in advertising: get caught up in the Net

A decade from now, and the world of advertising will be unrecognisable. Agencies will have to adapt to survive

With all those deep-pocketed dot.com start-ups eager to persuade us to remember their names you'd be forgiven for thinking adland has never had it so good. You'd be wrong. True, the so-called "digital revolution" has created new advertisers, but the challenges it also presents are fundamental. Such as what exactly "advertising" in the 21st century should be.

With all those deep-pocketed dot.com start-ups eager to persuade us to remember their names you'd be forgiven for thinking adland has never had it so good. You'd be wrong. True, the so-called "digital revolution" has created new advertisers, but the challenges it also presents are fundamental. Such as what exactly "advertising" in the 21st century should be.

The question cuts to the heart of the advertising business' raison d'être. The arrival of digital interactive media reverses the traditional notion of the advertiser talking at an audience. In the brave new interactive world, the consumer is in control.

The notion of "advertising" is fast becoming outmoded as the emphasis shifts to "brand communication" - not just promotion in the traditional sense, but the development of commercial messages dressed up not to look like advertising at all. Such as? Well, "value-added services" like promotions, competitions, coupons, loyalty schemes and sponsorship. Worse, consumers are increasingly cynical about traditional advertising and how it sits alongside advertisers' other activities - the furore over Barclays' Eighties-style "big is best" campaign being a case in point.

Hardly surprising, then, that traditional ad agencies are doing some serious soul searching. Almost any agency you care to mention has bought or set up its own team of "digital" specialist to monitor the rise of e-business. Recent weeks, meanwhile, have seen a series of international gatherings as agency executives attempt to better understand how they should change - to remain relevant to their clients' changing needs.

Recently global giant McCann Erickson organised a worldwide event bringing together agency personnel and leading advertisers under the banner "i:m-e" - a piece of internal branding designed to motivate staff to think differently. The week before, TBWA GGT Simons Palmer staged an event called "digerati" with the clarion call to staff and advertisers alike: "Don't lose your head in the revolution." It may sound dramatic, but for ad agencies like McCann and TBWA, the risks to their business are real.

"A decade from now we will not recognise the world of advertising," says author and trends forecaster Peter Schwartz, who addressed delegates attending the McCann Erickson forum. "Maybe the future advertising agency is Yahoo!, or some other such search engine helping me to plan where to shop and what to buy. Maybe the ad agency of 2010 will represent the consumer, not the producer." Assuming the ad agency is willing to change, that is. For according to ex-adman Joey Reiman, also speaking at the McCann event, past performance suggests few are.

The former head of a US ad agency, Reiman turned his back on the industry in the Eighties and now runs BrightHouse, an "ideation" business which sells creative ideas rather than executions to clients, which have included Coca-Cola, Coty Perfumes and Holiday Inn. "Ideas people are not interested in having society reflected back to them" - the approach of the traditional ad agency, he says. "They want fresh and original thinking, and I'm not so sure the traditional advertising agency is able to offer this any more."

Adland's problem since the mid-Nineties has been turning talk about change into action, Reiman notes. And the industry's slowness in responding to growing competition from other marketing and design specialists is now being thrown into clear relief by dot.com companies eager to re-write the rules.

"The new model as demonstrated by dot.com businesses is (the ad agency) works 24 hours a day, seven days a week in return for an equity stake that might turn out to be worth nothing," laments Nick Brien, chief executive of Leo Burnett, whose clients include McDonald's, Heinz and Max Factor. He adds: "Few 'new economy' companies seem to grasp the importance of brand development and consistent brand communication. The difference between them and the 'old economy' is that old economy companies were built to last."

Meanwhile, the knock-on effect for 'old economy' businesses has also created pressure on advertising agencies. The solution, most of adland now agrees, is to re-invent the "advertising agency". Which is fine for those starting up in business today, but not so easy for ad agencies whose basic structure and approach has remained unchanged for decades.

"We must learn how to become more selective in the ways we talk to people," says Coral McCann, an account manager at TBWA. "Technology might enable us to send additional information to the mobile phone of someone walking by a particular ad site but would this be appropriate, or intrusive? Get it wrong and consumers will turn off."

It's a popular refrain. So why, if everyone knows what they should be doing, have so few of the large established agency players done it yet?

One reason is the inability of different parts of many agencies to work together. "Most agency people have grown up in a particular specialism and this departmental structure dictates their approach," says Brien. "As a result, the industry is failing to grasp the opportunities of the fusion of analogue and digital, the old and the new."

Another agency head goes further in apportioning blame for the unwillingness to embrace change."Traditionally, advertising agencies are creatively led and obsessed with awards - the biggest of which are to do with television commercials. As a result, they've been slow to integrate: it's not been in their interest- you can make more money out of making television ads."

Yet the traditional platform for advertising fame - the television commercial - is declining in importance. Britain's largest advertiser, Procter & Gamble, has cut its television spend by 25 per cent since the start of the year in favour of internet and other promotions. Whether the best creative talent will be so highly motivated by the lure of subtler advertising platforms remains to be seen.