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While bringing value and innovative solutions, technology is disrupting the advertising industry and threatening the role of ad agencies. Hence, ad agencies in Saudi Arabia are facing the need to revisit their approach to technology to regain their role and protect the ad industry.
Saudi Arabia has placed technology at the heart of the Kingdom’s national development plan “Saudi Vision 2030”. The country is largely embracing technology without omitting Saudi values, and that reflects on different sectors and industries including advertising.
Digital technology is changing the behaviour of Saudis, their media consumption habits as well as the competitive scene. The media environment expanded to embrace emerging tech-marketing communication channels that have shifted the power to the consumer’s end, and opened the door for customized, personalized and user-generated content. Traditional media channels like OOH are evolving to integrate technology into their system. Emerging tracking and measurement tools are shaking the realm of trends like influencers marketing. Hence, choosing the right influencer and measuring its ROI is becoming more scientific due to such tools. This has landed in questioning the credibility of mega and macro-influencers and opened the door for micro-influencers to score remarkable engagement and conversion rates over exposure and follower counts, due to their authenticity.
Clients in Saudi Arabia are expecting a multifaceted value from ad agencies, which is evolving beyond creativity to encompass a relevant content and emerging needs such as tech and digital expertise. Thus, the agencies’ competitive edge can only be generated through the successful blend of Art, Relevance and Technology.
Agencies are facing challenges from the digital transformation of the media landscape and ad buying decentralization, in addition to the multifaceted competition from tech-enabled and consulting firms who are stepping into the realm of communication, and the trend of in-house ad-services. To that effect, clients are questioning the role and the added value provided by ad agencies today, especially by agencies that are chained by their traditional way of doing business.
Technology has a significant impact on the key components of the model of ad agencies operating in Saudi Arabia. The disruption has reached the structure of agencies, their key activities, their creative process, the behaviour of their clients, as well as their resources, revenue streams, relationship with their clients, value proposition, and competitive edge, which is urging a new set of strategies to cope with the new market dynamics.
Even though, some agencies acknowledge the need to innovate, and that innovation has its links with technology and digitalization, they are still struggling to keep up with the rapid pace of digital technologies that are usually associated with confusion and complexity. They omit the need to embrace a strategic approach to technology or even lack the know-how, the capabilities, or the skills to harness technologies.
It is true that international agencies are leveraging their global network to stand out in their tech and digital offering. However, one can argue that disruptive technologies endanger the market position of giant players in the ad industry. Even incumbents might be threatened by new entries capable of assessing and leveraging their resources, processes, and values to manage disruption.
In other words, ad agencies are facing the Darwinism challenge-- to evolve or disappear.
We, at AdCouncil, believe that the salvation of ad agencies resides in embracing change and harnessing technology to constantly evolve and cope with the digital changes. Regardless the level of change needed, ad agencies need to adjust to a more dynamic and hybrid model. They need to invest in technology, integrate digital into their strategy, master advanced digital tools, leverage data for customization, sharpen their digital/tech capabilities and expertise, adopt a transparent and value-based fees strategy, and nurture a digital and learning culture. This will allow agencies to leverage the opportunities of digital technologies to provide their clients with the multifaceted value, based on the successful blend of Creativity, Relevance and Technology.
We, at AdCouncil, have developed a framework to guide us through the transformation of our business model into a dynamic and hybrid model, which is allowing us to manage disruption and leave a fingerprint in the digital era.
