Innovation: Agencies take lead in funding new ideas

For an industry that is devoted to the newest and latest, the ad industry’s struggles with innovation are surprising. Agencies are wary of getting too far in front of their clients; brands are focused on ROI. Brands complain that agencies won’t spend. Agencies grumble that brands do not take risks. 

In this light, the establishment of an agency fund to support ads in a new medium is positively revolutionary.

The Atom Fund, launched by Manila-based Mobext, promises to match clients’ mobile marketing spend dollar-for-dollar. It exhausted the first US$230,000 of the fund in eight months and has just launched a second fund worth $500,000. 

Arthur Policarpio, head of Mobext Asia-Pacific, says some 20 to 30 brands have taken up the offer, including McDonald’s (see case study), Dove and local brands like San Miguel Foods.

About half of those were in retail—most likely because of the clear ROI from mobile, Policarpio believes.

He says the idea came from a survey that showed many brands “knew of the potential, but were scared of taking the first step” into mobile. “The key is to get brands to experiment. Once they have started doing that, eventually they will invest more.”

On a similar wavelength is Hong Kong mobile ad sales outfit Snap Mobile. It is offering to fund the production costs of mobile ads created using HTML 5. Typically, that can be around HK$20,000 (US$2,580) to HK$30,000 per ad, says chief executive Kevin Huang. 

His frustration is directed at agencies, who he believes are responsible for the “boring, mundane GIF banners” used as mobile ads.

One of the biggest barriers to adoption is cost. “So we‘ve decided to break the barrier down and give it away for free,” Huang says.

Snap has built 11 templates for mobile ads. The clients work up the storyboard and the creative and choose the template they like, and Snap does the rest. In the first two weeks in August, Snap signed up 10 customers. 

But it’s a short-term measure. “We hope we don’t have to do it for more than two years,” says Huang. After that, it’s up to the agencies. 

Meanwhile, agencies themselves are experimenting. Metalworks, the newly-established research arm of media agency Maxus, says its mission is to deliver solutions that brands “may not be able to buy anywhere else”, according to Tom Kelshaw, director of technology. 

An example is the creation of the world’s first robotic sampling machine for fizzy tablet Berocca Boost. 

Berocca is repositioning itself as a vitamin and energy drink and needed to find its way to new customers. So Metalworks built the Boostbot out of a photo booth to get young consumers to sample the drink. 

They can check-in via Facebook and post photos of themselves with a Berocca. 

The result has been thousands of photo uploads and a 34 per cent increase in awareness among exposed audiences. The campaign was extended from two weeks to nine as more retailers requested the machine for their stores.

Kelshaw said Boostbot emerged from some experimental work Metalworks had done on ‘physical and digital connectivity’—linking the physical and online realms.

Another team testing out physical-and-digital is a new Sydney digital agency, Cypha.

In one of its first projects, it built a ski resort website where the home page changes with the actual weather conditions. Cypha creative partner Alex Christian believes the industry is about to shift away from screen-only communication to more integrated digital experiences. 

But he acknowledges that shifting clients to new technology “can be tricky,” especially when brands are wary of taking risks.

“It’s our role to take the risk, not the client’s.”

CASE STUDY Maccas and mobile

Every Chinese New Year, McDonald’s Philippines runs a two-and-a-half month campaign using ang pao, or lucky red envelopes, containing discount coupons. But with other fast food chains offering their own versions, the market suffered from ‘coupon clutter’, and physical clutter on the streets from discarded coupons.

This year McDonald’s and mobile agency Mobext created a mobile site where consumers could register to get free coupons. Using QR codes, it combined with other media channels, such as print ads, mobile apps and MRT ads, to lead customers to the coupon site. McDonald’s Facebook page hosted ‘Sponsored stories’, in which consumers shared their coupon redemption experiences.

The result was 28,334 consumers using the mobile coupons, 111,000 coupons redeemed and PHP8.3 million (US$190,000) revenue from coupon-aided purchases. A customer database was built from the consumer registrations, and McDonald’s sent out its first promotional SMS to them in May.

Mobext says the ratio of revenue to spend increased by 18 per cent when compared to print. 

BIG IDEAS Advertising industry not set up to deal with innovation

Rob DePinto, director, ikyo

Why is innovation in the advertising industry so difficult? I don’t think it has to be. The industry has some amazing assets at its disposal, yet innovation is nowhere near what it could be.

While agencies envy Silicon Valley and claim they want a cut of that action, how many will implement a 60 per cent pay cut across the business, tell the global CFO to forget the margins for the next 24 months, and bet it all on the next two ideas being game changers for clients? Okay, so no one really wants to live the Silicon Valley dream.

Innovation is a massive area, so I’m going to focus on one aspect that I think is the single greatest barrier between every large agency and innovation—it is all about the second component of strategy: execution. Yes, that means the operational structure.

Larger agencies are built to deliver a certain product—such as television commercials, print ads, digital campaigns and websites—in a certain way and at a certain margin.

Everyone understands that machine: it wants to produce TVCs, print ads and so on. That is what it is being fed—the more the better, because that improves the margins via operational efficiency. But put something new into the machine and it breaks.

The solution

Most agencies actually have the assets and resources needed to innovate. These assets just need to be rearranged.

For starters, take the existing machine and make it more effective by eliminating waste. I’ll bet almost every agency expends time, energy and money on things that do not add any value. 
Next, pick the right client project and deploy a very small team (right-sized for the job). Enable them to use all of their skills (not just what’s in their job-titles), precisely define value for them and then do everything in your power to clear the way for them to create value for the end customer.

Have the team fully dedicated to the project, and define progress by what they learn and implement.

Ideas are nothing without the ‘right’ system to execute them.