Sarah Fay: What will the media agency look like in five-ten years?


Sarah Fay, Carat USA CEO and Isobar US CEO spoke at a AAAAs panel last week in Orlando: "It’s 10 Years Later: Have Agencies Survived Digital Convergence?"

Before her panel, RBR/TVBR got a chance to sit down with Sarah and ask not only that all-important question, but a few others as well.

Remember, Sarah was named Carat USA CEO last summer (7/30/07 TVBR #147) and spearheaded the Carat USA-Carat Fusion reorganization.

How has Carat improved after the merger with Carat and Carat Fusion last summer?
So we are eight months into the merger of Carat USA and Carat Fusion, which is now just Carat.  Transition is a journey and we’ve made significant progress.  The merger has a new management team, so the organization has gone through a pretty significant amount of change.  But though we are in different roles, Scott and I are not new to the company.  We already had very strong relationships with the staff from both organizations.   Of course, it’s never a simple thing to bring two companies together and say "okay now you’re one".  But keep in mind that CUSA and Carat Fusion have been working together a long time. 

CUSA was a traditional media agency and Carat Fusion was a full-service digital marketing agency that incorporated lots of other services like creative, search engine marketing, and CRM.  Individuals from both companies were silo-ed into their areas of expertise. Under the new organization, we are giving account leaders license to manage their accounts holistically.  It’s not just about buying TV, planning a print buy or creating a website.  It is about looking at a client’s marketing challenges and helping them manage their brands across multiple channels.  People are absolutely charged by it.  They are grabbing the bull by the horns.  They are stepping in. They are owning the strategy. They are owning the relationship with their clients.  Our employees feel empowered by all these other things they can do.  They are learning other disciplines and adding tools to their skill sets.  It is working for our clients.  And our teams are getting valuable training and development. 

Is this driven more from the client side or from the content provider side?
It is what the market demands, based on the way consumers are controlling their media experiences.  Digital needs to factor into the mix more prominently.  Each medium has a role to play in reaching them. I think because Scott and I were put in charge of the organization there may have been people from the traditional side who felt that digital was taking over the world and that we were over-valuing digital and that we were under-valuing traditional.  That is a perception that we really had to work to dispel.  Scott and I have been in the business a long time.  We’re both too old to have only worked on  digital.  We both operate with a holistic prospective of how media can work together.  Traditional media also has an important role to play.

Andy Donchin.
Andy Donchin is great. He’s been wonderful at making introductions for Scott and me to people we should know, and bringing us up to speed on the TV side of the industry.  And he has been working hard to educate himself on digital. I put myself in the bucket of people who have a lot to learn.  There isn’t a single person in the whole company who knows everything there is to know right now about all the services that we offer.  That is something that is being addressed with training but it also has to be driven by the individual.  We need people in the organization who are open to expanding what they know and who are interested in changing the dynamics for their clients.  I’ll give you an example of a couple of clients where we really have made it happen.  The new Carat structure has the possibility of delivering completely different media dynamics and this is what we’re after.  There’s a guy for instance from the Carat Traditional side named Michael Nicholas who is very sharp, he’s very strategic.  He may not understand everything there is to know about digital media …he understands the role of digital media and he understands how consumers are interfacing with it and how TV fits within their lifestyles. Mike understands how to drive his clients’ customers online.  He owns strategy on the Reebok and the Philips accounts.  Both accounts have achieved amazing things this year in leveraging offline media to drive to a digital experience, helping the consumer to go deeper into a brand.  And as importantly, to get those consumers to become brand advocates, and carry the message forward. 

We know how to integrate on and offline marketing strategy and that is a big part of our proposition.  Philips is a good example.  Philips has a TV technology called Ambilight.  The benefit of the TV is the way the light is filtered.  In actuality, there’s no glare and it’s a more pleasurable viewing experience.  Really cool.

If you’ve ever seen Ambilight, you know there’s a special glow that it has – creating a better picture.  But you can’t understand it unless you see it.  You can run a print advertisement about it.  You can run it on TV but if your TV isn’t Ambilight it’s difficult to understand the experience.  You actually have to go to a store to see it.  So the challenge was how can we get the message across?  How can we get more people to experience Ambilight?  We ended up doing a deal with Yahoo!. Yahoo! agreed to help us re-create the Ambilight experience.  They had to do that through technology and  that was no easy feat.  They created the Ambilight experience.  We used the Philips TV as the skin around movie trailers that played at Yahoo! Movies.  So actually we had to get the permission of the theatrical houses to run their trailers in Ambilight.

Then we used all the other forms of media to drive people to the Ambilight experience. Consumers can see what it’s like to experience Ambilight at Yahoo! Movies.  We achieved more than twelve million individual impressions in the course of two weeks.  Now that isn’t just a media strategy.

That’s a marketing strategy.
It’s a marketing strategy and it takes a level of partnership with our media providers that goes beyond lines, spots and dots.

It also depends on being able to create a media architecture that points to that experience as well.  We had to have a hand in not only defining how the budgets would be spent but what the on and offline creative would do, as well.  Then we had a mechanism for measurement and for deepening the consumer experience.  I believe we are addressing new market requirements with first a strategy and then the level of technology expertise that can get this kind of program done.   Don’t forget, there is plenty of market road kill out there – the programs that agencies could envision, but couldn’t make happen because they didn’t’ realize how difficult the execution would be. That is the part we have under control.

Did you drive actual sales of the units? Did you see measurement on that?
Yes I can’t talk about the actual metrics of that but the client was very happy.

Tell us about your panel session-what media will look like 5-10 years from now?
I think already we’re seeing signs that the way we value media will change and the way we buy media will change too.  We are progressively moving from a model that values the broader opportunities.  We have cache-oriented mediums.  We buy TV media in big chunks and we depend on measurement mechanisms like Nielsen that give us projected numbers but based on fairly small panels.  I think that we’re going to be moving into a time where TV media and digital media and other formats become a bit more like the online in the way we buy and measure online media.  In other words, someday we will serve advertising impressions on TV and we will manage our reporting with similar tools to what we use in the online world…like Doubleclick.  The point is that we will have visibility to every impression served, watch times, etc, and we will pay accordingly based on CPM pricing.

Let’s hope that’s what it becomes, just more accurate in real time.
Well yes.  I think that at some point in time we’ll have much more exact measurement of what advertising was served and how it was consumed.  You know… what length of time somebody spent with the brand.

We send them from one place to another-did they go there?  When they go there, what did they do?  Did they end up buying at the end?  Did they send the information on to somebody else?  Track it from beginning to end and even after.

We’re already at a point in time when more than 80% of TV is digital. The viewing data is there and it’s really just a matter of tapping that data.  I believe that today we segment our consumers to just a few categories.  We develop our messaging in relevant ways to those segments.  In the future I think we’ll have hundreds of segments.  Our campaigns will morph and change according to who we’re speaking to, and what their motivations or behaviors show.  I also think that as an industry we will move away from campaign-based marketing to a more consumer form of marketing.  We’ll be constantly in communication with our consumer.  And it will be more of a two-way conversation.  We’ll be tuned in to what their responses are.  What their behaviors are.  What they’re saying and we’ll be able to respond to that in the ways that we think will best match their interests and our goals.

So television viewers are going to get an ad served to them because they’re female and they like exercise and they’ve got kids versus just one generic ad going out to everybody.  It’s going to be similar to the Internet in digital delivery.
Yes.  I also think that creative is going to become more and more like content or it’s going to feel more and more like content to the consumer.  We are already dealing with a fragmented market.  People are able to turn away from advertising messages when they want to unless they are really relevant to them.

I think we’ll start to become better at delivering advertising that feels like content.  The TiVo model of positioning advertising as content that’s self-selected is going to become more prevalent.  I think communities will become more prevalent and people will actually become more active with certain brands and participate in helping us carry the brands’ marketing message forward.  I think also the way budgets are spent will really start to tilt toward loyalty marketing versus acquisition marketing.  Again if you look at the customer base for any brand the 80/20 rule applies… 20% of the customers actually represent 80% of sales.  I think that actually if you take a closer look it’s probably more like 90/10.

Yeah I think so-or at least for a lot of products.
Marketers will start to focus much more on their own databases as ways to communicate.  I think there are many marketers today who are thinking forward to their future years of marketing and are starting to build the infrastructure for developing loyalty programs to communicate to their customers on an ongoing basis.  This has already happened in eCommerce.  It’s already happened in the B2B space, finance, travel.  But you can be sure that consumer brands will follow.  The database will become a big part of the media mix, so to speak.  There will be a big budget shift and companies will spend more to  communicate with their customer bases directly, by providing their own content.

The technology is there.  Why can’t your favorite automaker be a news source for you? 
Yes.  We have a number of clients today that we developed custom TV shows for around the brand.  For Reebok we have a show called Framed.  Look for it on IFC!  We are also selling advertising on Reebok’s social networking site  Are we in content, or what?

What more can you say about media agencies 5-10 years down the road?
I think the lead service will be data insight and strategy.  We will actually have a pretty massive need for both proprietary research and vendor supplied research.  The best practice in managing and manipulating data to maximize returns for our clients is going to be one of the biggest values that the agency offers. It will feed insight to our strategies so that can inspire creative innovation.  That will be a prominent team and a key differentiator for the agency.

It wouldn’t be unlikely for the person who heads data to be the person who is in line to be the CEO of the company

That’s the secret sauce; it all starts from there.
We’ll have technology, developers and producers.  That means a primary focus will be content management and what will stem from it will be done through a database, a client-driven database so that we can manage content that’s flowing to all kinds of different places whether it’s on the web or on TV.  We’ll still leverage and manage our media partnerships so we will have a team of media specialists that understand the value of the market and the types of partnerships we can put together.  I think there will be opportunities for major media partnerships but it will come in the form of not just advertising but also partnering for content development.

How do you think the media will be different? Radio? Television? Newspaper? Online?
Well you have to figure if we have 30% of DVRs in households today that in ten years it’s going to be a lot closer to 100% – if not 100%.  It could be TV morphs to a DVR model.  And media will need to adapt as it becomes even more fragmented and more personalized to viewers.  People will watch what they want to watch when they want to watch it.  TV may stop time based programming all together.   The model may change to producing content to be accessed on demand. TV providers may actually start serving TV.  Like TiVo, your TV may just predict what type of content to tee up based on what you typically like to watch.
Or, you will just sit back and say, "I want to watch the episode of Batman from where the Penguin blows up Commissioner Gordon’s office."  Boom there it is.
Right, there is so much content out there.  I think content libraries will continue to be built so that eventually it will be difficult to choose media by the content served.  Our media buys will revolve around consumer segments we wish to reach, and we will choose content categories to align our brands with.

You’ll align your buys to the consumer, because of their behavior and predictable viewing patterns.
Yes, well the exception to that will become sports and perhaps news. Sports will continue to capture live audiences because fans want to live the experience as the game is being played.  SOME things won’t change.