Monday, March 03, 2008

Advertisers Become Conductors

McKinsey published a report on the way that technology has changed how businesses interact with each other, specialist suppliers and service providers.

Time was when management theory’s answer used to be that if these activities were contracted out to specialized companies, coordinating them would create excessive "interaction costs": the expense and bother of dealing with outside suppliers.

As an illustration these interactions account for over a third of economic activity in the United States. They exert a potent but little understood influence on how industries are structured, how firms are organized, and how customers behave. They argue that any major change in their level or nature would trigger a new dynamic in economic activity.
Think about advertising. We used to be set up to outsource a minimal amount at the bottom, commodity end of the scale with whole departments set up to deliver a single channel like TV or medium like print.

As the ways to reach our audience tends to the infinite, the cost of interactions tending to zero is incredibly timely. If harnessed correctly could stop many an agency creaking at the sides.
This makes the conductor agency model - the agency acting as a strategic middle man connecting and managing specialist suppliers to deliver - a possibility.

With the cost of interaction zero you could theoretically have departments made up of an indivdual, think


john said...

Not a bad image Giles -- but the question you need to blog on is whether agencies should be outsourcing grey or building green assets.

Can an agency be nothing but a Yellow brain (planner and creative concept team) with a host of Grey boxes (acct men and producers)?

Campfiresteve said...

This is fascinating, Giles. I'm reading thru the original McKinsey report now, over a strong cappuccino, and want to post your comments to our site (

We deal with the issues you raise everyday -- as our agency is deeply involved in social media for major clients -- and we struggle with what we should farm out and what we should be producing in-house.

The best relationships we have are with very close-in partner/vendors, like Chopping Block right now, our web company for our Verizon project, MyHome2.0 (

They are peers who come in with as many strategic and creative ideas as our team. Meanwhile we have five people on our staff deeply involved in the web work they are doing. The line is blurred for sure.

More later, but great piece. ...And why are you listed as a "director" in your tag?

Giles Rhys Jones said...

cheers for the comment steve and apologies for the tardy response. i like

director as i am one - it manages to hide a multitude of roles quite nicely without being prescriptive.

Giles Rhys Jones said...

yeah john. i think the choice of grey was subconscious...