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 openad.net.