Engagement with young tech companies can drive rapid innovation and change, delegates at the first Diversification AdaptLab hosted by The Bakery heard yesterday (4th February 2014).
The benefits can be shared both by clients, which can trial new applications and communication techniques, and agencies which can diversify and potentially change their business models. There’s one problem: how to get started.
"Agencies can survive and thrive by partnering with existing tech companies rather than trying to build the technology themselves," Alex Dunsdon, co-founder of Shoreditch-based The Bakery (http://www.thebakerylondon.com/#!/), told delegates.
"There’s a glut of technology suppliers out there, and it’s cheaper, faster and more reliable to repurpose existing technology. The role for agencies is to take that tech to market," he said, urging agencies to embrace the opportunities of a new world order.
The core purpose of The Bakery is marry tech companies with brands and advertisers, allowing low-cost and low-risk experimentation. Clients and brands that have already used The Bakery service include BMW, Panasonic, brewer AB InBev, Knorr, Persil and Heinz.
The problem is getting started. Finding the right tech companies is difficult, and tech companies are fearful of agencies because they want to own everything, Dunsdon said. Agencies that take this approach may find clients go round them in order to get access to those technologies.
But agencies have a role to play as brokers and intermediaries, adding value to the process through creativity, project management and interpretation skills.
In addition, by filling the gap between client and technology company, they could change their fortunes in two ways: one, by solving business as well as communication problems, thus rising up the food chain; and partnership with technology companies could open up the potential of incremental revenue streams, for example by rolling out the same tech to other clients, and the addition of license-based revenues.
In what Dunsdon described as a ploy to provoke and encourage trial, agency delegates saw speed presentations and demos from 12 tech companies.
In hackathon style, they were then challenged to come up with a brand-based business or communication challenges those companies could solve, and commit to action plans that could see those plans come to life.
The Unilever view: tech is future of marketing
"We see engaging with technology start-ups as the future of marketing," Jeremy Basset, Unilever’s global marketing strategy and new ventures director, told the session. "Technology enables us to have deep and lasting connections with our end-users."
Like most legacy multinationals, Basset said, Unilever’s business was built on economies of scale. But it needed to build a model based on economies of scope – for example using contract manufacturing for short production runs, embracing e-commerce and low-cost digital marketing.
"For us, turning the model upside down is very disruptive. Tech enables us to be faster, more nimble," he added.
In this landscape, working with tech start-ups had several advantages: access to new technology; affordable experimentation – "failure needs to be affordable," he said, "and we can afford a tech failure in a way we can’t afford to fail with a £10m traditional campaign"; and the way working with tech companies helped Unilever change its mindset.
From its work with tech companies, Basset said, Unilever had derived four key lessons:
- Partnership matters, not ownership
- Embrace the new and different; don’t defend
- Build agility
- Be prepared to invest.
Tales from the agency front line
Media agency Vizeum was an early supporter of The Bakery (http://vizeum.co.uk/p/news-item/vizeum-backs-first-tech-city-ad-tech-hub-the-bakery/), and has accessed tech companies to support clients like Panasonic, BMW, AB InBev and Heinz.
"It’s been a learning process," said managing partner Piers Taylor, "and at times it’s taken us out of our comfort zone. But on the plus side we have acquired new skills and it means we are having real business conversations with our clients and taking on challenges over and above communications."
The agency’s role in facilitating and adding value to the process was crucial, Taylor said. "There’s a language and culture gap between client and tech provider, and the agency is critical to bridging that gap. The key is in commercialisation."
Areas where agencies added value included:
- Selecting the technology provider and selling in the solution to the client
- Ensuring there was a clear focus on objectives and the role of technology
- Managing the dialogue between client and tech company
- Project management to ensure the technology was ready to go at the time the client needed it
- Managing the relationships with other agencies, including creative and PR
- Legal, including exclusivity rights
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