In the past few months I have met with over 20 executives at digital agencies – big, small, holding company-affiliated and independent. Each of these conversations included agency strategy. My conclusion is that  digital agencies, or at least executives within these agencies, loosely fall into two camps.

The distinction between these two camps is the following: The first is the Torch Bearers. Torch Bearers understand the legacy of great brands and great advertising, and strive to extend it in a world where consumers are online vs. offline, in control vs. passive, media snackers vs. media eaters-of three-square-meals. In this new world companies like Google and (to a lesser extent) ad networks and exchanges have inserted themselves into the strategic conversations AND into the revenue streams that previous directly connected advertisers with agencies. The Torch Bearers are not distracted by Google or ad-networks, although they recognize both the risk and the challenge. These execs think deeply about the disintermediation of agencies, about the role of third-party data, and about the importance of technology to today’s CMO. But they are not distracted: they understand that the legacy of good advertising and marketing is compelling story-telling. And they know that no-one, including Microsoft, Google, Yahoo, (but especially Google, which lacks the creative assets of the other two) is doing a good job of creating compelling story-telling on the web.

Since storytelling is meant to sell stuff, Torch Bearers know that there is a way for them to be successful in the new world, they just have to find it. They know that success will NOT be achieved by copying the folks who have not figured out how to tell stories yet, however tempting that may be.

Need proof that we have not figured out storytelling on the web yet? When was the last time you clicked on a banner? When was the last time you actively hovered over, pulled down, or dragged an ad? Did you buy a mortgage in 50 states from grooving silhouettes? Punch any monkeys recently?

David Ogilvy, Chairman, Ogilvy and Mather

Torch Bearers know that no one has found a way to tell a story online the way the masters did this in the past. And they know that story telling sells things. The fact that search engines and networks and exchanges are being credited with selling things today does not obviate the need for real story telling online. Consider what David Ogilvy said about advertising: “The function of advertising is to sell, and that successful advertising for any product is based on information about its consumer.”

Now if Ogilvy were alive today and said this we might think he meant “cookie data” when he said “information.” What he meant that advertising needs to understand and respond to the emotions of consumers. And Ogilvy was great at leveraging that kind of information to tell the right kind of stories. And sell things like soap. Take for instance “Only Dove is One-Quarter Moisturizing Cream.” Ogilvy and his team understood that selling soap was not about “how clean” or “how germ-free.”

"If it doesn’t sell, it isn’t creative" - David Ogilvy

Nor were generic attributes like “smooth” the right way to engage. Moisturizing cream was the unassailable ingredient ubiquitously associated with beautiful skin. And this was the story that needed to be told in words and images, and it worked. David Ogilvy would not have bought the keyword ‘soap’ or ‘smooth’ or ‘cream.’ It’s doubtful he would have bought a targeted banner placement. To the Torch Bearers, storytelling remains the constant to selling stuff; the fact that media is consumed and analyzed very differently than in the times of Mad Men, and even differently than 5 years ago, is a challenge. To the Torch Bearer, the fact that more consumer data is available now than in David Ogilvy’s day is an opportunity, but not a game-changer.

The second group is the Shark Jumpers. Consistent with the etymology of the term “jumping the shark” this group wants to out-Google Google, out-network the networks, and out-exchange the exchanges to retain their past glory. Simply put these agencies and marketers are making bold moves out of frustration that:

 • in 10 years, Google has wrested relevance and profitability from their hands.

• the exclusive “magic” of media planning and buying seems not to be as effective or efficient as the data-driven algorithms of networks and exchanges.

 • their clients are increasingly using agencies as execution teams rather than brilliant advertising and marketing leaders.

To be clear, the Torch Bearers feel the same pain as Shark Jumpers, but the way the Torch Bearers respond is to innovate around how to tell the stories that sell stuff in a digital age. On the other hand, The Shark Jumpers put less energy into storytelling innovation; instead they focus on the bright, shiny object of networks and exchanges: “we want to do that too!” Instead of remaining true to their legacy, Shark Jumpers get excited at the possibility of dropping what has made them successful in the past and trade that in for the new toys. The Shark Jumpers speak to the tactics of data management and targeting and ad-network building as a holy grail. What’s gets lost is the strategy of telling the right story. If an agency devolves into selling one-time clicks, perhaps it can compete against networks; but at what cost? What are they giving up? (And while an agency can try and compete by building robust technologies to collect and manage data, the road is a steep one for them – building proprietary technology has never been a strength of any agency, digital or otherwise.) Neither Torch Bearers or Shark Jumpers have an easy path today- this is a tough time to be an agency, period. But if Torch Bearers are successful in convincing marketers that story telling goes beyond a one-click-pony, then they at least have a shot extending the legacy of great agencies and great marketers into the future. And just as Happy Days began its decline when Fonzie gave up his innocent coolness by ridiculously entering a shark-infested water ski competition in his leather jacket, the Shark Jumpers risk losing what made them great if they strive to be something that they are not, and lose their relevance.

And then of course you have agencies who can’t decide on the right path, so they pursue on-again-off again debates and investment strategies, all of which seem to evolve into a dysfunctional mess of politics.

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