Foreword

[2]
Cood for Squared: this is valuable stu.

have |ust two comments, both, m sorry to say, a little on the lofty side.

First: in all walks of life, that which is changing most visibly always gets the lions share of attention; and
so it should. But thats no reason for the unchanging, the timeless, to eet sidelined. By its very nature,
the timeless isnt newsworthy. Yet our absorbine trade has access to well over a hundred years of slowly
evolved and priceless understandine upon which to draw. And its no surprise that the timeless has
more to do with human nature than with technoloey.

And secondly: in any trade involvine the eeneration of ideas, the pursuit of tidiness is a fruitless one.
Were dealine with unpredictability. We need rampant eeos as well as a furrowed concern for RO. As
long ago as 1982, in In Search of Excellence, Peters and Waterman identied the best manaeers as those
beine capable of manaeine ambieuity and paradox. Weve plenty of both and we shouldnt eht them.
As ever, we need to embrace them - and put them to constructive use.
Squared is a three month Cooele-led initiative
in partnership with Hyper Island and the
PA for newly employed eraduates in the
communications industry. With the ambition
of empowering the next generation of future
leaders, Squared has created a powerful
network of 83 passionate representatives
from some of the top aeencies in the UK.
This is the rst output of the Squared network:
The Squared 2012 State of the ndustry Report.
A view on the key themes aectine aeencies,
clients and brands as dened by the youne
people at the cuttine edee of the industry.
This report is the result of an extraordinary
collaboration between 25 of the leading
creative, media and digital agencies in the
UK. Opinions have been soueht from a cross-
section of industry professionals - from CEOs
and international board members through to
recent eraduates - in order to foree a holistic
and inteerated point of view. The questions
have been designed to encourage discussion
of the prevailing forces currently shaping the
advertisine and marketine landscape.
The Squared perspective is unique because
it is completely fresh, transcending agencies
and avoiding the potential inertia that can
come with experience. This is the story of
the industry as told by the people who will
endeavour to dene its course in the comine
years. The unprecedented combination of
radical new thinking combined with the
expertise of accomplished and respected
practitioners makes this viewpoint compelling,
noteworthy and a must-read.
Jeremy Bullmore CBE
Introduction
[1]
R
ecent technological advancements
within media and digital arenas have
resulted in pressure on organisations
to reassess their revenue models. Traditional
models may no longer be relevant to a
changing landscape; clients want ideas - the
questions are around how clients pay for ideas?
Simon Carr, Account Director, M2M Media.
As new platforms have emereed, aeencies
have experimented with the various ways
to monetise opportunities in a way
that best suits the needs of both
the company and client.
Going forward, there
will be an emphasis
on consolidating
these options
and ndine new
metrics to reect
p e r f o r m a n c e .
Aeencies must be
responsive to these
advancements in order
to be fully prepared for the
future.
Agencies need to create value
in dierent wqvs. We need to
move past charging for time and
stqrt looking qt chqrging for vqlue. P a u l
Carvill, Mobile Accelerator Director, LBi.
The commoditisation of the aeency model i.e.
the race to the bottom with ever-decreasine
rates, is unsustainable and necessitates a
new model of joint strategic partnership with
clients. There is a need to marry the eciency
and measurability of digital media with the
specialisms and culture that agencies have;
this needs to be their USP.
How are agencies evolving
their revenue streams
with the emergence of new
technologies?
Business
Looking at social, search, mobile or technology
in isolqtion limits thinking qnd growth...
complete integration into a communication
response is required. Karen Blackett, CEO,
Mediacom. We must use learnings from
all platforms to measure value. Aeencies
shouldnt be afraid to invest in the unknown,
even when they dont have a clear idea of what
the RO will be. Havine specialist departments
that can explore and test emerging platforms,
and then disseminate the most scalable
ideas, means agencies can become a voice
of authority. Fully inteeratine the learnines
from across all channels and communicating
with a coherent voice will provide the most
eective cross-platform strateey. n order to
successfully achieve this we must be brave
and unafraid to fail.
For both clients and agencies, education
in emerging technology is crucial to the
evolution of revenue streams. As the
client is the source of the agencies
revenue, educating and gaining
buy-in from clients is key to the
development of the industry
as a whole. Within aeencies,
the gap between senior and
junior revenue models
needs to be bridged; one
solution being to increase
focus on internal training in
emerging technologies and revenue
models. Our research shows that while
companies are considering new revenue
streams, not many are actively pitchine them.
It seems that although the industry consensus
is that client education is key, this is not
reected as much in practice. This education
can play an important role in more honest,
transparent and protable relationships
between aeencies and clients.
Luke Bozeat, Joint Head of Client Services,
MediaCom qsserts thqt, sqvvv clients i.e.
ones thqt know exqctlv whqts going on [in
the wider/marketing world] generally get the
best deals and understand where everyone
can wina challenging, switched on client
is preferqble to work with. This means that
agencies have to distinguish between fads
and trends in emerging technologies and
have the knowledge to make relevant, timely
and commercially viable choices on behalf of
their clients.
There is a split amongst agencies as to whether
technoloey should be developed in-house or
outsourced. Those that choose outsourcine
tend to do so due to the lack of internal
capabilities, or they believe that independent
technology houses are more specialised and
can focus on a particular technology more
eciently. However, developine technoloey
in-house allows for client licensine, intellectual
property and a stable revenue stream with
lower costs and hieher prot mareins.

Adaptability and creativity will be intrinsic
to how agencies move with the fast pace of
innovation. Settine up an aeency model that
recognises useful and innovative technology,
has an eective test and learn structure, and
can mould these learnings into a sustainable
revenue stream, will prove fruitful in an
environment that has never seen such a rapid
pace of chanee.
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[4]
A rigid structure leads to process, and process
cqn leqd to ordinqrv ideqs. David Killick,
Plannine Director, Crayon.
Historically, silos, hierarchy and xed
departments have hindered exibility but as
consumer behaviours continue to converge,
aeencies need to reect this. Althoueh one
structure is not necessarily the key to success,
agencies should be open to adapting and
workine more collaboratively. As an industry,
the general consensus is that change is
inevitable; the big question is how can agencies
drive change while maintaining revenue and
reputation?
Aeencies need to encouraee employees to take
an interest in the breadth of the business and
the industry. This will help mould T-shaped
individuals that have a holistic understanding
and knowledge of marketing while still having
specialist skills that can adapt to the evolving
industry, client needs, consumer journey and
revenue streams. As such, Ed Beard, Plannine
Director, LBi states that, 'to create truly
blended agencies we need to think of blended
and blending individuals, not just putting
depqrtments together'.
Adoptine a more uid oreanisational structure
will enable aeencies to more eectively
respond to real-time data, briefs, biddine,
and the emergence of future technological
trends. Aeencies should strive to continuously
create bespoke teams based on a set of
specialised skills required to full our clients
needs and specic consumer |ourneys. This
creates a more open oreanism. As in Darwins
evolutionary theory: we (individuals, agencies,
industry) need to be able to adapt well to our
environment in order to survive.
One sueeestion is to think of aeencies as a
football team: players and managers come
and go; lineups change on a weekly basis, but
the fans are always there. Aeencies need to
think of clients as fans. They need to maintain
loyalty whilst chanee occurs. n the same way,
employees need to be seen as players, and
agencies as coaches, that need to change their
strateey and tactics as the match evolves.
There has traditionally been an emphasis
on incubating specialisms, but as agencies
become more integrated and collaborative, a
move back to full-service aeencies could be the
solution. As Lauren Nuttall, Account Manaeer,
MBA states, it seems as if agencies are
increasingly moving toward an all-under-the-
sqme-roof qpproqch. Bowever, worrv qbout
the great smaller agencies being absorbed by
What structure do you think agencies will have to
adapt to in order to succeed in the future?
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Squared 2012
[5]
bigger ones...it seems cleqr thqt the qgencv of
the future will hqve q rqft of cqpqbilities. This
in itself has implications for smaller agencies
as they may lose their identity, and clients lose
competitive advantaee and choice. No one
knows the exact direction of the industry but
based on consumer behaviour the industry
needs to ensure they can adapt and take on
an inteerated approach. There is not one set
structure that every agency should adhere to,
especially as no-one knows what the future will
brine. Aeencies must be open to chanee and
ensure they are adaptable when it comes.
[6]
Technology
Which technologies over the next twelve months will
affect the business and how are we prepared for this?
F
rom the data gathered, three key themes
emereed: aeency-focused technoloey,
consumer-facine technoloey, and the
challenges faced by agencies in responding to
rapid technoloeical chanee.
Firstly, for agencies data was a recurring theme
within 60% of those surveyed. More specically
regarding the increase in the prevalence of
data and how to maximise the availability of
it to tareet consumers. Sources of data are
currently fragmented, so developments in
technology to aggregate these and maximise
their potential will be sienicant over the next
12 months.
Real time biddine (RTB) technoloey is also a
key focus for media agencies, enabling
increased eciency in the buyine
process. The key benet is when
it is combined with data
tareetine - this eives
incredible control
over audience
reach; You
c a n
qctuqllv buv specic people when thev qre
behqving in q certqin wqv notes Steve Hobbs,
Director of Media Operations, Aegis.
Data-driven media tareetine, boueht throueh
an RTB model, is areuably seen as the ultimate
eoal for all media - traditional and online.
Secondly, from the consumer perspective,
there is a huge disparity between the time
consumers spend on mobile and the advertising
money spent on mobile. The industry has
replicated the online display model for
mobile, but this does not yet nurture the level
of personalisation consumers expect.
The advent of web-enabled products, such as
connected TVs, presents new opportunities
for advertisers to teach consumers how to use
these emerging technologies, and provides
more innovative ways for consumers to
interact with new media (e.e. mobile wallets
creating new advertising opportunities for
e-commerce in outdoor environments).
The social landscape is changing rapidly,
and people can now easily connect
to other friends and people with
similar interests. Brands
and agencies are still
searching for the
best way to
monet i s e
t h e s e
social relationships, however 20% of business
owners are still doubtful of the potential for
a return on their social media marketing
spend.
think sociql mediq fqces q signicqnt chqllenge.
7hevve connected brqnds with people, people
with people, people with interests but this
has happened now; how to monetise these
relationships in future is a question no-one has
fullv qnswered vet. Jim Gyngell, Co-Head of
Digital, Arena.
Finally, there are so many new technologies
- both for the consumer and within aeencies.
This challenges agencies to be adaptable
and aeile. Technoloeical chanees wont |ust
aect dieital functions. Entire aeencies need
to be primed for them. Acquirine the tools
to adapt to these changes is not actually
about technology; it is about peoples
mindsets. For any aeency to capitalise
on technological development,
attitudinal learning will be just as, if
not more, important than technical
learnine.
7he question...is whqt cqn
you do with uncertainty -
and the only thing you can
do with uncertainty is
mqnqge it qnd be in it.
Bridget Angear and
Craig Mawdsley,
Heads of
Planning, AMV.
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Bridget Angear and Craig Mawdsley, Heads of Planning, AMV.
[7] [8]
Collaboration & Network
Collaboration is a buzzword in the industry at the moment. How do you
see this operating in, and between, agencies on a daily basis?
C
ollaboration is not just a buzzword: the
notion of businesses working together
to achieve a common objective is not a
new phenomenon fuelled by dieital media.
However, 90% of people surveyed in one
agency believe it has a positive impact on the
work produced. Whilst many aeencies speak
of the wonderful potential of collaboration,
they continue to provide themselves with
sienicant hurdles and show reluctance to
truly eneaee in collaborative processes.
One of the pees holdine the collaborative
balloon rmly on the eround is that the parties
involved in the advertising process serially
refuse to take responsibility for the origination
and manaeement of a collaborative process.
From our research, we found that many
aeencies lay this task rmly at the feet of
their clients, who they believe should be the
maypole around which collaborating agencies
should dance. With so many marketine teams
having shrunk since 2008, this could be an
issue. Bearine this in mind, aeencies must
take the lead in this process. Of course, there
are other restraints as agencies must protect
their respective revenue streams. t is easy to
forget, as agencies boast about their creative
and innovative thinkine, that it is the bottom-
line which drives their work. As the recession
continues to place strains upon marketing
budgets, agencies will forever be scrapping
for the morsels of budget their client is able to
oer. Collaboration, the sharine of work and
responsibility, insinuates a negative sharing
of fee mentality at agencies, and they shut
the door rmly.
On top of this, the declinine budeets mean
that each party is clambering to increase their
range of services in order to be able to satisfy
the clients needs. This was an aspect of
another issue found in agency collaboration:
ownership of services and ideas. Social media
is a prime example of a platform which every
agency feels should fall under their remit, and
tensions will continue to increase as long as
this area remains erey. Similarly, the ideas
that are forged within agencies are then kept
under lock and key. Aeencies main ob|ectives
are to be the lead agency, so external input
has perceived negative implications for total
ownership of their work.
This is also an issue within aeencies. ndividuals
and teams work in isolation and this induces
competition within the aeency. As Fern
Miller, EMEA Head of Strateey & Plannine, LBi
says, qgencies qre full of people...People qre
usuqllv qwed, chippv, qmbitious, nervous,
and occasionally petty and with these
characteristics rife amongst agencies, how
can we expect real collaboration7 Eeos must
be left at the door.
Aeencies have their own motivations and there
is a distinct lack of common goals for agencies
workine for the same client. f collaboration is
to be a reeular, ecient, and eective mode
of work, the idea must be paramount and the
clients need must be the crux of every stage
of the process. There must also be a clear
denition of where each aeency starts and
nishes work. Nick Cohen, Head of Mediacom
Beyond Advertisine, Mediacom, asserts that,
the most successful partnerships are those in
which the ground-rules qre reqllv cleqr: that
clarity and denition are paramount when it
comes to roles and responsibilities, and that
it is vital to ensure that, everyone is motivated
to collaboraterather than motivated to
compete with one-qnother towards collective
eoals. Establishine barriers allows those
parties with expertise in certain areas to take
due prominence in particular areas of the
campaien.
Responses from aeencies sueeest that media
is a counter-culture to collaboration. Until the
work sits upon a pedestal currently occupied
by revenue streams and creative ownership,
real collaboration cannot succeed. The ma|or
aw is that media aeency business models
do not value the creation of real ideas, but
instead values the buying of media or creating
ads for more expensive platforms, and pays
on a commission based model. Fixine this will
take more than a few award-winnine plasters,
but instead a sienicant operation to drive
chanee on a wider scale. The evolution of
relationships between agencies and media
owners, which were formally tense, rates-
related, and at arms length, now continually
produce excellent work, notably in outdoor
advertisine. t is collaboration that has allowed
the work in these areas to evolve as they
have. The industry must hold outstandine
collaborative work in a higher regard, as this
will drive aeencies to recoenise its true value.
The presence of a media-neutral party may
allow the management of the collaborative
process, but until the process is owned by
one party and driven by a sole objective,
collaboration in its truest sense cannot
exist.
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v` Squared 2012
[10] [9]
Youth & Young Talent
How can the industry best capitalise on youth and give opportunities to
young talent in the industry?
A
ccordine to the PA Census 2011 the
average age of those
working in member
aeencies is 33 years old.
Additionally, a 19.2%
increase, year on year, in
rst-year trainees sueeests
that the industry is getting
youneer. We need to ensure
that age is not valued higher
than contribution in order to level
the playine eld between enthusiasm and
experience. The industry is providine a wealth
of experience for young talent, however, we
have outlined three areas to better provide
the right opportunities to attract and retain
the right candidates to the advertising and
media industry.
There is a clear gap in progression from entry
level to more senior level; people are becoming
disconnected as the hierarchical structure
becomes harder to navieate. Employees do
not necessarily want to |ob-hop, but in order to
avoid the best talent getting enticed by higher
pay and more satisfying roles elsewhere,
agencies need to make roles more engaging
and more of an enrichine experience. Arena
Media recoenise that new starters should be
exposed to the business much more broadly
and can build relationships across the agency
as they proeress. This will also avoid youne
people developing a myopic view of the
business. Takine this a step further, Jody
Shilliday, Associate Director of Social Ads,
Starcom MediaVest Group says that agencies
need to be willing to invest in youth, not just
nqnciqllv, but with time qnd trust. From
PHDs perspective, Anjali Ramachnadran,
Head of Innovation suggests that this can
be achieved by allocating mentors who take
the time to sit down and chat with with them
regulqrlv...providing feedbqck on their work
so they can
learn and
grow.
B e y o n d
creating an
i mme d i a t e l y
e n g a g i n g
environment to hold
onto their talent, there
is a disconnect between
how the industry values
entrepreneurial responsibility
and how youthful freedom
is reearded. Aeencies have an
opportunity to encourage the spirit of
entrepreneurship that naturally attracts
talent beyond only those that are appealing
to bloated erad schemes. Squared student,
Sandra Canrom, International Account
Executive, OMD International, explains
that entrepreneurship is the motivation for
the young generation, maybe if scope was
given to young people to do this within their
role, a sense of ownership and responsibility
would follow. Giving young people a degree
of freedom to develop their ideas and feel
comfortable in failure is key for learning and
necessary to drive innovation forward. Mark
Runacus, Senior Partner, Crayon supports
this in saying we should all embrace failure,
but in q risk-mqnqged wqv. Using the agency
environment to structure rather than reject this
youthful enthusiasm and passionate curiosity
would push young talent in agencies to build
creative condence. Squared students at MEC
sueeest that there should be a 70-20-10 split
of their time, 70% to your core role, 20% to
related tasks, 10% to play and innovate. This
structure for closing the disconnect between
the industry values and the innovative mindset
should be regarded in order to best capitalise
on youth.
It is clear that agencies agree with the notion
that they are better o workine toeether to
promote the industry rather than simply
promotine the individual aeencies. f
collaboration to raise awareness amongst
prime candidates is agreed upon, where can
they be found7 Aeencies currently mine for
talent in traditional places, often hiring in their
own shadow - an uncreative way to enhance
the youneer element of the business. Many
agencies agree that targeting school leavers
with apprenticeship schemes is an appropriate
way to reach out to a broader pool of candidates.
It is the budding entrepreneurs and digital
natives who would rather start a business than
pursue higher education that the industry is
yearnine for. Aeency heads may look at the
over subscription for graduate jobs and think
awareness is not the issue, but there is work
to be done to reach out to the graduates who
have studied in elds of academia outside of
Marketine Communications, let alone a new
eeneration of hunery, youne Zuckerberes.
Ac c

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Jody Shilliday, Associate
Director of Social Ads,
Starcom MediaVest Group
[12] [11]
Clients & Marketplace
How do you prioritise agency needs and client needs?
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Henry Daglish, Deputy Managing Director,
Arena Media
This question examines the importance of
the relationship between agency and client,
and the balance that needs to be maintained
in meetine both their needs. t is, however, a
somewhat misleading question as it suggests
a clear dichotomy between the two business
aims. n actual fact, client and aeency aims
should be interlinked; not necessarily
mutually exclusive, and move towards the
same needs and eoals. Without clients, there
would be no aeencies, and our ndines
show that the most successful agencies
understand the balanced, collaborative
nature of this relationship.
The most productive and respected agencies
act as business partners to their clients. As
such, their needs and goals should naturally
converge: 80% of those questioned in one
agency agreed that usually the clients
needs and aeencys needs are aliened. Their
relationship is a symbiotic one; the agency
adapts accordine to the client. n the lone-
term, agency and client objectives should,
and are, often aligned to maintain a good,
mutually benecial partnership. n order
to gain this ideal balance, communication
should be an open and honest dialoeue.
Indeed, more transparency and openness
is required in order to be able to objectively
prioritise needs. Furthermore, aeencies
that invest in their people and the culture
help provide clients with the best possible
services. By creatine a hiehly-skilled and
client-focused workforce, an aeency can
continually add value to their clients and
ensure their needs are fullled.
In reality, however, this can be somewhat
thwarted by the pressure on agencies to
gain new business and create revenue for
themselves. Thus, a sueeestion to make sure
that this symbiotic relationship is met in
reality is to realign certain business models
to best serve these needs. Historically,
agency and industry have obsessed about
new business with success dened by the
new business won. What about retention
strategy? Payment by results, rather than
commission7 What if Campaien celebrated
maintained clients with the
same furore as New Business
wins? We think this would allow
aeencies to focus more eorts
on their current clients, allowing
them to service their clients
more eectively, while also beine
celebrated for their retention of
valuable clients. ndeed, Henry
Daglish, Deputy Managing
Director, Arena Media claims that
the strength of the agency brand is
onlv qs good qs the clients we hqve
and this should be celebrated and
mqintqined.
One way to navieate throueh this
is to put the brand at the heart of
everythine an aeency does. f you
put the brand rst, and work for the
ethos of the brand, then you will meet
both the aeency and client needs.
Furthering this, we believe that the
consumer should also be at the heart of
what we do. f the aeencies and clients
create brands that connect, engage and
serve the public, then both will succeed
in a protable and mutually benecial
relationship.
[1] [1]