2018 seemed to go past pretty quickly actually, and here we are right at the end, about to launch into 2019, so I thought I'd put down a few things that if I was stood in front of my team talking about what we should watch out for in 2019, these are the eight things that I think are quite important and what we should be focusing on.

1. Narratives Trump Data

Number one is about narratives always trumping data, and no pun intended there, but it's pretty much at the forefront of everyone's mind at the moment that people don't always look at the data. They look at the stories behind it. And I think sometimes in the agency world, we fall too much into the trap of presenting data to clients, especially around results, without the narratives to go with them. So I think if I was stood in front of my team first week of January 2019, I would be saying to them,

"Look, make sure that you have the story about how this solves the business problem that we set out to solve. It's not just about presenting them with fantastic data, these are the sales we've achieved, this is the efficiency that we've driven in the account, it's about wrapping that up in a story that can resonate not only with the client you're talking to, but with his boss and with the wider business when he takes the story back to them."

Now, that actually means that you need to know quite a lot about their business, so it's not just about getting involved in what you're doing. You need to know what's driving some of the decisions that have been made to drive forward the performance marketing that you're working on. I think it's absolutely key that we get the narratives right, and that we work on those going forward, because it is quite easy to get burnout in performance marketing where you take over an account, you make all the changes, you get the basics right, you get everything running, then all of a sudden, you sort of plateau, and you think the performance can't grow at the same level that it's been growing over the last 12 months or two years. And if you don't have the story correct, you don't have the right narrative, you don't understand the client's business, it becomes really difficult then to push that account forward. And what happens is, they end up going out to pitch choosing a new agency.

I think narrative's absolutely key, and especially in something that's quite mathematical, quite data led like in performance marketing. Finding people who can balance that with a story and with a narrative is not always easy to do, but it's why you need an account management team. It's why you need client service.

2. Trouble on the High Street

Number two is a bit of a given, really. And that is that retail, the High Street, will continue to struggle, and if you are an agency and you are looking after retail accounts, this really impacts you in two ways. One is you've got to help them find their way through digital transformation and help them do things which will keep them relevant on the High Street. The second thing is, not the nicest at all, you've got to be really careful that you don't get left out of pocket if someone does disappear off the High Street. It's not the greatest thing to think about, but having plans in place and contingencies and insurances and everything else is something you should look at. So if you're at a senior level in an agency and you don't have that, and you have retail clients, you need to be keeping a very close eye on the financial stability of those clients.

3. AI Isn’t Driving Bottom Line Anytime Soon

I think my third prediction for 2019, and the third thing I would have said to my guys is, "Look, artificial intelligence is here, and everyone's working on it, everyone's talking about it. But look,

   

The death of digital. Maybe that's overstating it just a little bit, but there's been a lot of chatter out there over the last few weeks on social media mainly around Mindshare's forecast for 2019's spends, and that chatter has been around digital reaching maturity.

I think the first thing that we really should talk about is the word "digital" because I think, if we're talking about online, we should use the word "online" because that's really what it is, because digital can include digital out of home, it can include digital TV, digital press, so I think if we talk more specifically about online, then it becomes much easier to look at whether we have hit maturity in that field or not.

I think if you look at the growth of certain online channels over the past few years, certainly the percentage growth terms is declining, were not growing as quickly as were in the past, but I think saying that we've reached maturity in digital is probably a bit of a step too far.

There were some Shopify research done recently that was talking about the very first online transaction which was in 1994, and it was a website called Net Market, and it was the sale of a CD, including posting, packing, and it took a credit card in payment online for that, and when you think it, that was just 24 years ago. In 24 years, where we are in eCommerce is sort of amazing, but it's actually been a journey and not an easy one, and it hasn't really seen the growth that you may have expected when you looked at this back in maybe '95, '96.

So heres my top three reasons why I think we haven't hit maturity, and I might throw in a bonus four at the end, let's see.

Number one, eCommerce. As I just said, 1994 was the very first transaction online. It was for a CD, I think it was for $15 or something like that. Currently in the UK, we are hovering around about 18-19% of all commerce is done online. That's all we've got to in 24 years. So if you look at where we are from a commerce point of view, there's still a long way to go. Now, if you look at the pain and suffering that's causing on the high street, imagine when we get to 45 or 50% of commerce being transacted online, and what effect that will have. So I think the number one factor in future growth is how we deal with eCommerce and the digital transformation of stores and the new pure players that are coming along.

Now, admittedly this is a lot of performance media that I'm talking about, but that's my background, so that's what I'm going to be talking about.

Number two. I think number two, and Google will love me for saying this, is YouTube. I think YouTube is just in it's infancy. Nobody has worked out how to advertise on YouTube yet, or very few people. In fact, if you speak to Google about it, I think that even they would admit that it's a bit like the very early days of TV, where people were taking photographs of Newspaper adverts and showing them on TV, and that's where we are on YouTube.

We're repurposing adverts that were meant for a different medium, and trying to shoe horn them into a different form of online, and a different way of looking at it. So I think that has got tremendous growth when people get that working. Admittedly that's more from a branding point of view, rather than a performance point of view, but can see that there is going to be opportunities moving forward of actually buying, and I think what YouTube has got in it's performance adverts, which are below the video generally where it shows products that are either spoken about or mentioned in the video. I think that's got great potential moving forward.

So number one, eCommerce. Number two, YouTube.

Number three, I think,

One of the reasons that I started this podcast was that it was becoming really obvious that there was a tribal thing happening in marketing, where you've got one side pitching against the other. You have guys who are standing up for all traditional marketing and pitching it against digital marketing, or online, and vice versa.

There's guys like Mr Ritson and Gary V who seem to ... well, certainly, they don't seem to agree. I think sometimes we let those who shout the loudest set the direction, and the tone, for an industry when it's actually not the case. I've worked in online for 20 years now and, certainly, the last 10 years with some of the world's biggest brands. Not once in that time, have I ever said to anyone that traditional media is moving towards online media, in terms of spend.

I've been a great advocate of traditional media. I think it plays a massive role in online performance media. I think most senior people in agencies, absolutely get that. What they're doing is defending the channels that they operate in, because they're the channels of today that they work in. But they may not necessarily be the channels of tomorrow, and who knows if online is going to stay the same, whether Google will be as dominate in search. What happens in social media with the likes of Facebook, Instagram, WhatsApp. I think the opportunities are vast, but I think we can get lost sometimes, because there are these two distinct views.

I know that it's an old Hollywood trick, isn't it? If you want to identify the bad guy, it's just the guy who's completely opposite to the good guy. That seems to be what's prevalent throughout all of our lives, that, at the moment, from a political sense, certainly in the marketing field, but I don't think anyone who operates in this field actually takes those views and thinks that, that's what it should be. At the end of the day, we're all trying to sell things. Whether that's through PPC, or SEO, or whatever type of media, that's what we do. Slightly different to what traditional media or advertising is because they're out building brand.

I think sometimes there is some desperation in the online space, from an agency point of view, where they think that they have to be something that's different to everybody else. I have seen some crazy job titles recently where people are calling themselves marketing architects or marketing engineers or marketing this and that. It really is grasping at straws on differentiation. Trying to talk about technology in a slightly different way and our industry is pretty straightforward. We activate on a very limited set of channels and we drive sales. We have to be effective and efficient and differentiation at that is quite difficult to do.

But let's not make our lives more difficult by picking a fight with traditional media. At the end of the day, certainly from online digital point of view, we absolutely need them. And to be honest, the more spend that there is going through traditional media, the better we can perform from a performance point of view online. PPC campaigns always run better when they are run parallel to a good TV campaign and the same can be said of press and radio. I mean, we just need each other to survive and I know it's great that we can all stand out by going to one end of the spectrum and say ah, those online guys don't get it ... ah those traditional guys, all their money should come to us. That isn't the truth. In client meetings as a leader of an independent agency with the big media agency, one of the big six holding companies, you can sometimes feel the tension and it shouldn't be there. We're not trying to grab their budget. We are trying to actually defend what we do and make sure that what we do is executed to its absolute best and sometimes we need to listen more. Sometimes we don't take the media plan seriously. We think, oh, it should all be going on Facebook,

So, how can the High Street compete with online? Recently, Mike Ashley, owner of Sports Direct and House of Fraser said that stores that have more than 20% of sales online should get taxed at 20% extra. Now other than being what I think is a completely ridiculous statement, to try and regulate something which is innovation, what can the High Street do to try and compete with online?

Actually, I think the answer is really simple. They can't do anything.

And neither should they. Because this isn't about trying to keep things as they were or trying to keep the High Street as it was. Things have changed, and the High Street needs to move forward with it. And I think it's perfectly reasonable for the department stores that have struggled over the last four or five years to compete with online to do things differently.

The vast majority of the department stores already do pretty much everything you would expect them to do, which is click and collect, have a really good online presence, they compete on a wide range of goods. But unfortunately they still haven't got what a pure play online retailer has. And that is a very, very low cost base. Because they are still trying to support High Street shops up and down the country when really what they need to be doing is pushing people online.

I think the problem there lies in their approach to overall marketing. I mean, I can speak from the performance marketing point of view and we can activate PPC and SEO to really drive traffic, but it's limited by how good the overall marketing effort is. Because a lot of that depends on the brand. And if the brand doesn't have a strong online reputation, then it becomes really difficult for the performance channels to maximise their effectiveness and efficiency. So if you think that some of these online retailers may be spending as much as 98% of their online performance spend just on the brand terms or brand extensions, and that's a huge amount, because it's very, very difficult to then compete on generics against everyone that's out there and competing on them simply from a cost point of view.

But if you look at someone like Nike, who has looked at how they can change the High Street stores, they're makit it an experience, a destination, I think that's what some of these people should do. The High Street should look out, number one, can it become collection points for online sales? And number two, can it become a centre for experience for people to go and look and try and touch and feel products when they need to, or somehow I'll get products that it's difficult to supply directly online, such as those which are customised in some way.

I think the High Street does have a place, but it has to change. And it's not that we're going to end up with High Street full of coffee shops, but I think we are going to end up with a High Street full of experience centres rather than retail outlets. They're going to be collection points that are close to where we work so it's easy to pick things up, and they can be the centres where we can go and look and try things.

I think if you look at someone like Ross Bailey who started Appear Here, we used to share a building with him back in Camden when he was there, but Ross has just gone from strength to strength, taking short term leases on vacant properties and letting them out for pop up shops. And that's worked wonders for some brands. He works with a lot of the major brands on popups and marketing activities so they can then get close to consumers at the time where they need to be. And I think that's what needs to happen with the High Street (think pop ups instead of concessions) . It needs to have a much more strategic approach. Rather than saying, "We have these shops, how can we compete?" It has to be,

Subline Performance Marketing Podcast Episode 1: Know when to say no.

If you run an agency, let me ask you a simple question, how many deals have you walked away from in the last 12 months? Because if you haven't, and procurement has said you'll match this price and you'll get the deal, then the chances are that you're gonna be looking at a PPC side to your business that isn't producing the profit that it should. That doesn't do justice to the industry at all.

We end up with agencies struggling thinking that they don't have the expertise, they don't have the staff, they don't have the right tools, they don't have the right tech, when a little bit of time, actually what's holding them back, is bad deals in the wrong structure.

If you're a big media agency, and you're pitching for consolidated accounts, absolutely, you're gonna find yourself in trouble when it comes to PPC. Because, unlike traditional media, like TV and radio, that derived value through the buying, PPC derives its value through its activation.

So, unless you can find a way of activating that effectively, you're gonna have an unhappy client. You're gonna have unhappy staff. You're gonna have people working long hours, you're going to have high staff turnover, and you're probably going to lose the account at some point, because a specialist is going to come along and say, "You know what? Are you not tired of cheap? Why not go for good instead?" That's what happens.

I think sometimes we do get caught up in the desperation of winning new business and growing, that we forget that in actual fact, part of growing sometimes is saying "no." I think with so many procurement-led pitches where fees are squeezed until you end up with a sheet of 20 people with 5% each. Which is just crazy. You'd have to be absolutely, ridiculously stupid to think that 5% of 20 people is gonna deliver you top class PPC. It maybe will, if you've only got a handful of keywords and you're not eCommerce enabled, and all you're doing is looking for some brand coverage, because that's not that difficult. It's not a complex account. Especially if the spend is quite low, and you're not looking at anything in different geographic regions, or different search engines.

But, if you have anything that's anywhere near a complex search account, especially if you're eCommerce enabled and you've got lots of SKUs and you're trying to promote across different search engines, in different languages, in different countries, then cheap isn't going to work. It really isn't.

The amount of times I hear people say, "Oh, you know, our PPC division isn't profitable." It's unbelievable. It comes down to signing bad deals and having a structure that just doesn't work.

Somehow or other, the big media agencies have to find a way of fitting PPC in as an activation service at a different fee level than they're doing everything else, and at a fee level that gives them the right amount of people to actually perform that account effectively.

Making profit, a lot of the time, is just about adding up, isn't it? You take your variable costs, and your fixed costs, and add in your profit and that's it. You get 100%. In our industry it's been widely know, for as long as I can remember, decades, that 40% fixed cost, 40% variable cost, 20% profit. That's what you should be aiming for as an absolute minimum.

Yet, if you look at a report in Campaign magazine, (https://www.campaignlive.co.uk/article/ad-agency-makes-money/1519713), it shows the average profit of media agency at 12.5%. I think that's unbelievably low. If you look at some of the profit coming out of, I think they've got Fallon in there, over 30%. And if you look at the specialists, they'll be somewhere in the middle.

So, it is possible to do it, but you have to be able to, number one,