Wanted: New revenue model for ad agencies

Is disintermediation of media really a boon for the advertising industry or is it actually decreasing the value proposition that agencies bring to the table?

This was what Rama Bijapurkar, marketing consultant, debated at the third day of the Advertising Agencies Association of India's diamond jubilee symposium - 'The Future of Advertising'.

Addressing the issue of accelerating the renaissance of the advertising industry, she said, "With business needs getting more complicated, many new entrants who are first-time users of the advertising service are ignorant of their bill of rights. While advertising today has still not lost its relevance, it is time the ad fraternity created new rituals for the new times."

With severe fragmentation, and everyone doing everything, advertising seems to have no clear value spaces. With decline margins and, hence, diminishing benefits, revenue models of agencies have been broken down.

From a time when the agency used to be the integrator of all advertising services, the breakdown of advertising to creative, media and other specialist units have migrated the value to the client, also making the client the integrator of all advertising services. "Disintermediation of media will only leads to pushing the value of the agency services lower as the client becomes the service integrator."

Bijapurkar stressed that advertising ought to look at providing integrated services as well as taking back the role of the integrator from the client so as to increase the agency's value proposition.

Given today's age of intense competition, the push across all industries is towards total solutions, and it was urged that advertising too should examine the integrator model.

Bijapurkar said it is time advertising began working as a web and the advertising agency took up the role of the webmaster.

With agencies being the integrators, they would have to look at the possibility of strategic sourcing, acquisition of consulting companies and investment in proprietary knowledge.

"All this would mean owning the client in totality. It's time we go back to the future but with a new delivery and revenue model," Bijapurkar added.