Ideas
Ideas
Innovation gives Moore to agencies
by Henry Lawson, President, DDS
As the amount of media available has expanded massively in recent years, so media agencies have had to expand and do more for their clients to cover the bases. Luckily, technology has come to their aid.
In IT circles, Moore’s Law – that
computing capacity doubles every 24
months – has long been accepted.
Not so well known is that a similar law
applies to today’s media agencies.
Put simply, we now see media agencies fundamentally re-engineering their businesses using a combination of new workflows, eCommerce and their own systems. The overall productivity increase is radical and of a scale otherwise almost unseen in a business services environment.
The amount of media available has
exploded recently, with multi-channel
TV, radio deregulation and a technology
shift in print production. All of these
drastically reduced the break-even
point for new titles and channels. But
there’s no denying that the web has
been the biggest influence, with display
advertising, search and other emerging
forms growing fastest of all, so the web
has become a mainstream medium.
Lower unit prices
This combination has created a change
in supply – millions of slots available
with unit prices now dramatically
lower than in the past. The benefit
for the long tail of advertisers is that
the new channels, publications and
outlets are far more widely available.
These changes have brought with
them a fragmentation of audience
that’s resulted in increased advertising
budgets being spent on a wider range
of media than ever before. They’ve also
created a big shift in the unit pricing of
almost all forms of advertising – taking
the administrative burden for agencies
from being merely important to a
strategic imperative.
As a result, agencies have had to increase productivity, buying millions of dollars of advertising per head. This is where we see an effect similar to Moore’s Law.
Looking at the maths
During the past seven years, DDS has
seen its clients’ overall billings rise by
an average of 6% per year. Meanwhile,
processing, a measure of how much
work our clients are doing for their
advertiser clients, has increased by
about 25%-30% each year. In other
words, agencies are doing around 20%
more for their clients per annum for
each dollar the client spends.
Over the same period the agency has increased overall productivity by 5%-10% per annum (measured in billings per head), so we end up with an industry that’s improving productivity per transaction by more than 25% per annum – a change almost unseen in other industries.
What’s behind this increase? The answer is technology of all sorts, from smart planning systems and clever modelling software, to eCommerce and the automation of transactional functions like billing and paying.
Most industries see annual productivity changes of 5-10% and over 20% once in a career. Our industry through hard work, rigour and not a little creativity is achieving something much more impressive.
An industry that’s often seen as
holding back on process changes
has quietly been revolutionising itself,
doubling productivity every three
years. And the impressive thing is
that Moore’s Law was about the
performance of machines, but
we’re talking about a phenomenon
involving real human beings in the
creative industries.
