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Exploring the Advertising Sector's Remake

USA Today reports that digital media has turned Madison Avenue on its head in the past year, and ad agencies are racing to remake themselves to respond.

As new media challenge traditional media's dominance with marketers trying to hawk products, agencies are scrambling to reorganize to be able to create advertising for the growing range of platforms, to develop tools to measure effectiveness of alternative ad forms and to devise models for getting paid for the new types of work.

The pace of change will be the hot topic this week for the ad industry's leadership at the 53rd International Cannes Lions Advertising Festival, opening today in France.

There is no consensus on how to measure the effectiveness of new ad forms vs. old, nor on how to meet some marketers' demands to base agency compensation on performance measures. Not everyone in the industry is on board with the notion of upending the decades-old pay model under which an agency collects 15 percent of what the advertiser spends to place ads in TV, radio, print or other media.

The hot button for advertisers has become "engagement," or getting a customer to spend time, online or elsewhere, with a brand. The size of an audience is no longer the only ad measure that matters. Measures tracked for advertising online include downloads, e-mail pass-along rates (so-called viral campaigns), website registrations and product-information requests.

Clearly, the ad investment metrics need to be more meaningful to marketers, and the 'leap-of-faith advertising ROI model' is a long-standing ad agency relic that must be replaced with something truly credible.

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