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Following my blog Co-Creation is Driving Change in the Way We Work here are my thoughts on how co-creation is creating a new breed of agency where the disciplines of research, innovation, social media and advertising/communications are coming together in a more seamless way under one roof.

Co-creation and its underlying philosophy whereby consumers want to have things done with them rather than at them will ultimately usher in a new breed of agency. There are several reasons for this:-

1) Consumers have replaced trust in advertising with trust in individuals: in particular, friends, family, and colleagues. Turning to communities and away from mass media, consumers are increasingly making traditional advertising more irrelevant. They have learned to block the ads they don’t want, and gate-keeping is becoming more sophisticated and widespread: according to Forrester Research DVR ownership in North America, which features ad-skipping, will grow from 19% of households in 2006 to 55% in 2011. More than half of UK consumers using the Internet at home utilize spam and popup blockers to filter unwanted messages from their online experiences, and countries like the Netherlands, France, and Germany are not far behind.

2) Consumers want to be more involved with the brands and products they consume: this applies also to the way they are communicated to them through advertising. Doritos is the most famous example in the UK whereby consumers were invited via a competition to create the next TV campaign. More recently Unilever’s Peperami have dropped Lowe to Crowdsource their next ad campaign with consumers. Noam Buchalter marketing manager at Peperami says: “We believe Peperami is a brand that deserves radical creative solutions and are confident taking our brief out to thousands rather than a small team of “creatives” will provide us with the best possible idea and take our advertising to the next level.”

3) Consumers are showing in increasing numbers that they prefer pull to push: almost all consumers own a PC and mobile phone, and they spend almost half of their media time with interactive channels. Use of RSS and podcasts has increased to 10% and 14%, respectively, from virtually nothing in 2003. Mark Earls author of Herd, says that it is no longer about what your brand does to the consumer but what consumers are doing to and with your brand. Putting it another way, James Murdoch in his Marketing Society Annual Lecture said ‘Ubiquitous connectivity means fundamentally that the individual becomes the agent of everything…we’ve learnt through experience what difference the new empowered world means for our relationship with customers. This is not a question of scale. It is a different way of existing’.

4) Different ways of existing means there is more fragmentation: which in turn is driving more complexity. The number of media channels available to marketers, agencies, and consumers has exploded. Proliferation of choice offers marketers new opportunities, such as social networks, mobile, and branded entertainment. Social media, in which consumers become publishers and media outlets drives media buyers crazy; there are more than 59 million videos in YouTube today, and they can’t cut deals with every blogger.

5) A new marketing funnel is required. The current one which sits at the heart of most current advertising and media buying agencies is out of date. “Integrated” or “360” marketing is still an excuse to sell campaign ideas as brand ideas so that they can produce a TV commercial and shoe horn other channels in afterwards. Consumers need to be at the heart of a new marketing model so that we can move away from channel marketing to “continuous brand engagement” marketing.

6) A new definition of “mass media” is emerging: More and more consumers are creating their own content and are coming together to form communities around it. Personal profiles on sites like Myspace, Bebo and Facebook don’t simply state vital statistics, they allow marketers access to preferences, allegiances, recommendations and conversations they could not have dreamed of even five years ago. And there are communities for every niche, so the same data richness can be experienced for every specific brand, sector or topic. It is always up to date being spontaneously added to by consumers. The new mass media is made up of a collection of communities. As more consumers become involved in social media, these platforms will grow and eclipse today’s mainstream media.

7) Traditional advertising can’t deliver a captive audience in this new consumer landscape: Nearly a quarter of marketers polled by Ipsos Mori for the Chartered Institute of Marketing’s latest Marketing Trends survey said advertising, excluding online, gave the worst return on investment. Almost a quarter of marketers rated CRM as the best, with PR activities coming in second highest in terms of ROI.

In the New Breed of Agency:

Consumers will be treated in a fundamentally different way: They will be given more responsibility and will be more involved throughout the brand marketing process. Co-creating with consumers as direct and active equals to deliver a range of marketing outputs will be part of its core philosophy.

Consumer communities will reign: The focus on the 30 second TV spot will give way to the content and conversations that are being generated by consumers and between consumers around the brand. This will in turn produce different segmentation models where brands see consumers not just as potential customers who want to buy something from them but as people who want to have a relationship with them.

New social media tools will help brands to be on 24/7: this is part of what we call at Face “the socialisation of brands” where campaign and channel marketing gives way to “continuous brand engagement marketing”. The environment the brand lives and breathes in is always on and is always changing so brands need to be listening to and observing their consumers not just in communities but also on the web as well as involving them on a continuous basis in everything they do.

Engaging and managing brand fan bases will be key: Developing creative ways for engaging and managing fan bases will be critical to the New Breed proposition. As Marmite and Peperami have shown involving consumers through co-creation and crowdsourcing respectively in what a brand says and does is a great way of driving brand engagement with important fan bases.

The arrival of research 3.0: new social media tools and web 2.0 are helping brands to research consumers in more exciting and different ways through mass collaboration and intimate co-creation. Combined with new ways of accumulating robust qualitative data which we can make sense of from the web, then research has an exciting future ahead of it. It will herald a new era – Research 3.0.

Ideas can come from anywhere: a new model which combines the creativity of experts with the creativity of consumers so that more ideas of better quality can be produced is on its way. In the New Breed Agency, experts have an even bigger role to play than ever before. The researchers, the designers, the marketers, the copywriters, the art directors, the account men, the planners will become facilitators, analysts, curators, editors, creative directors and publishers. Their role is critical to ensuring that the overall creative output is polished and of an extremely high standard.

A mix of old and new: the new breed of agency will exist both in a virtual capacity and the real world – consumers will not only feel comfortable hanging out in the agency as part of continuous co-creation programmes but their content will also be streamed live onto TV screens. The processes and methodologies of this new agency will also reflect a combination of the old and new. This will be done not just for the sake of it but because it delivers better ROI.

Talent resides in and outside the company: the new breed of agency will be less worried with employing everybody they work with. It recognises that the best talent can come from both inside and outside the company. This will also be reflected in more collaborative and flexible working practices.