Should advertising agencies build webshops?

Last week, WPP launched Everymile: “a new fully managed service that will provide brands with an outsourced direct-to-consumer (DTC) e-commerce solution.” And just two days ago, Publicis acquired e-commerce software company Profitero. In other words, big advertising is moving into e-commerce. Why? And more importantly: will it work?

The move into e-commerce might seem visionary, ambitious and even impressive at first sight, but first let’s ask ourselves why they would do that. Let’s look at some numbers to see if it makes sense business-wise. Look at the advertising landscape worldwide, there are currently four parties that really matter*. They are called WPP, Omnicom, Publicis, and Interpublic. They are currently valued around US$15 bilion each. Both WPP and Publicis operate in 110 countries. WPP has 100.000 people on the payroll, Publicis 80.000. Impressive numbers.

Now let’s take a look at the other side. Let’s look at Shopify. It is the single most popular e-commerce platform with over 1,5 million webshops. Their headcount: 10.000. Though currently under a bit of heavy weather, they are valued at US$50 bilion. Now you do the math: Shopify alone is worth more than the 3 biggest advertising networks combined. And it does so with less than 5% of the employees of those 3. So yes, it makes a lot of sense, business-wise.

Shopify alone is worth more than the 3 biggest advertising networks combined. And it does so with 5% of the employees of those three.

Though I can imagine that those figures came up at a slide during a board meeting before the launch of Everymile, they don’t explain why a company makes a shift in its offering. The shift should resonate with the core of the company, with its ‘why’. Say you build cars and your core is about sheer driving pleasure it makes sense that at a certain point you may decide to build motorcycles as well, as BMW did. It would make less sense for them to start building utility vans or trucks.
So the question really is: is offering an e-commerce solution inline with the core of these advertising agencies? Is it like BMW building motorbikes? Or is it a bad idea. Is it like BMW building utility vans?

It’s not about your business, it’s about their journey

Advertising agencies, much like the rest of the world, have been struggling with the changing realities the internet brought with it. First Google and then Facebook and Amazon ate away an ever bigger piece of the media-budget-pie. Copywriters had to learn how to write Google-friendly long-copy and search ads instead of witty headlines. Art directors cursed Generation Z whose attention span on their smartphones simply didn’t last 30 seconds. Video was no longer a landscape format, it had to be vertical or square. Somewhat reluctantly, most of the big advertising agencies coped. More specifically, they coped with these changing formats. Just like they had made the shift form newspapers to radio and from radio to TV, they would now create ads that fitted this medium: banners. Social ads. Online advertorials. As far as the ad agencies were concerned, it was just another place you could shout your slogans at people.

The advertising business failed to see the more fundamental change: they had always thought of the internet as just another medium. What they didn’t fully appreciate, was the fundamental change in behavior it brought with it. The internet is a place where the entire customer journey happens. Old school marketing thought the Ad-men about the AIDA funnels: from Attention over Interest and Desire to Action. You bought attention for your new car on TV, created interest with good reviews in car magazines, had people desire it after a test drive and had them take action at a dealership where they finally bought the car.

In today’s reality, the entire customer journey often happens online. When people need something, they search for it. And if people don’t need something, ad agencies make them want it by pushing ads in their social media feeds or videostreams. These people then click and visit websites. Then and there they expect buy buttons and next-day delivery. Brands that don't have that on their website, lose their clients to competitors who do.
Many a brand loses clients exactly at this point. Because at this point in the journey, their website points to a dealer page. Where you can consult their opening hours, and a roadmap - yihaa!

These people then click and visit websites: then and there they expect buy buttons and next-day delivery. Brands that don't have that on their website, lose their clients to competitors who do.

So while they may have invested in a clear brand proposition and an eye-catching campaign, it’s a wasted effort and investment if you don’t have the entire customer journey in place. For most brands and use case, that means having a webshop. If you think you can’t, because of dealerships or because your product is too exclusive, bear in mind that Tesla has one. Polestar too. Even brands like Omega and Delvaux, in spite of longstanding and exclusive dealerships, have gone directly to the consumer.

So the question isn’t whether or not advertising agencies should build webshops is actually the question whether or not they want to make an impact on the business. It’s where the money is. And it’s where the client are. Because in the end, that has always been the ultimate goal of advertising. As Ogilvy said it, long before the Internet: “If it doesn’t sell, it isn’t creative.” So yes, webshops are inline with the core of the advertising business.

Publicis and WPP finally seem to have realized that. Have you?

* Some will say 5 parties, Dentsu being the fifth. While that may make sense, they are more of a media company than an advertising agency network.