Jon Wilkins, one of three founders of Naked Communications, was speaking at an ad-industry confab last January in London. The stylishly groomed 38-year-old Brit had just finished telling a room of 100 or so of his peers that their industry is institutionally incapable of giving clients the smartest ideas. How ad agencies and media agencies that decide where ads run are built like factories, focused on one output (and that output is their handcuff). How a new model needs to emerge, one that can provide unbiased advice to marketers. And lo and behold, he's the one selling it. Naked sells only ideas, not outputs in the shape of 30-second spots.
As he finished, someone in the audience complained, "You're saying everything's changing and it's not."
Before Wilkins could respond, one of his clients intercepted the challenge. "I used to kid myself I wasn't going bald," said Mark Finney, the clearly hairless head of media for Orange, Europe's third-largest wireless carrier. "I'd pull my hair forward, I'd cover it over this way, I'd look in the mirror and think, It's never going to happen to me. Then suddenly I started realizing I looked really stupid. . . . I hate to say it, but Jon's right and you're wrong. You're covering your baldness, and at a certain point, you're going to look stupid."
Finney was channeling the frustration of every marketer struggling with the question, How do I get my ad agencies to rethink how to reach my customer? After years of mass denial—of declining advertising effectiveness, of disruptive technologies such as the Internet and TiVo changing long-entrenched consumer behavior—the ad industry is finally beginning to acknowledge its baldness. Much of the response has come in the form of splintered, specialized approaches: buzz marketing, ambient marketing, product placement, you name it. But does anyone genuinely believe a one-hit gimmick like spraying graffiti on a billboard is the salvation of advertising?
Wilkins, along with his two partners in Naked, Will Collin, a boy-faced 38-year-old with buzzed blond hair, and John Harlow, 37, a scruffier-looking James Dean with piercing blue eyes, think they have a solution. The future of advertising is getting all the folks responsible for a company's brand together to brainstorm the answer to this seemingly simple question: What's the right message communicated in the right way through the right channel in order to effectively reach the right consumer? The answer may not be a TV spot. It may not even be anything that falls under the traditional domain of advertising or marketing.
Naked, whose name stems from the idea that companies need to approach how they communicate with customers in the purest form, isn't an advertising agency or even a media-planning firm. Although its founders left senior posts at one of Europe's largest media agencies in 1999 to start Naked, their creation is something between an ad-and-media shop and a consultancy. Its 65 strategists—former media planners, management consultants, journalists—insert themselves at the heart of the creative process, at the behest of the client or sometimes even an ad agency looking for a creative spark. Their value, the founders say, isn't in making sure the best advertising ideas get executed, but that the best nonadvertising ones do, too.
Naked's approach has started to gain traction in Europe. Nineteen clients—from Honda to Nokia—rely on the firm to shape their UK strategy. In the past year, it has won 23 projects from companies such as Nike and Unilever. Some 60 European ad agencies, including the across-the-pond outposts of BBDO, Leo Burnett, and Lowe, have brought Naked into their ad-creation process. The firm's fans credit it with unleashing creativity that had been stifled by bureaucracy for years. "Consultants come and flatten out an idea and almost round off the interesting edges, and what Naked does is push the idea to a less comfortable place," says Tony Wright, president and CEO of Lowe.
Now Collin, Wilkins, and Harlow are preparing to bring Naked to the United States. They expect to open a New York office by the end of the year—perhaps in the über-hip Brooklyn neighborhood of Williamsburg, strategically located far from the media and advertising world's Manhattan hub. They've already lined up a couple of American accounts to work on—Coca-Cola's Minute Maid brand and Nokia's multimedia division, which puts games and videos on its cell phones.
They may well make quite a splash here—especially if the Naked way demonstrates the kind of results it has achieved in Europe. In 2002, for example, one of Honda's UK agencies, Wieden+Kennedy London, came up with the idea of a two- minute short film featuring the innards of the Honda Accord. A two-minute commercial would be ludicrously expensive to air regularly on TV, though. So Naked came up with a clever distribution strategy: Air the ad 10 times in high-profile TV slots, unleash it virally online, and then create a DVD of the short film and a behind-the-scenes documentary that could be glued to the cover of men's and car magazines. Without Naked's contribution, the idea would have died because it didn't fit Honda's budget. In its four years working with Naked, Honda UK has "increased sales by 35%, and as a total business we've spent 3% less money doing it," says Simon Thompson, the carmaker's marketing director.
Naked did something similar for Boots, the UK's largest pharmacy chain. And it did so without TV advertising or some sexy stunt. In 2003, Boots had run a TV campaign for a new service that collects prescriptions directly from doctors so customers don't have to wait for them to get filled, but it had gotten little response. Naked's strategists realized that Boots wasn't doing anything in its pharmacies to encourage customers to get their doctors to use the program. In effect, Boots was ignoring the 16 million customers who were already walking through its stores every week. Under Naked's guidance, Boots discontinued its TV spots and had employees suggest the service to customers waiting in line for prescriptions. According to Chris Laud, Boots' media manager, the number of participants in the program has skyrocketed several hundred percent at a fraction of the cost of the TV campaign. "It's more of a process problem they helped us identify," he says.
But will Naked's ideas take root on these shores? It's hardly the first agency to try to revamp the way the advertising business works (see "Tilting at Windmills"). And hot European shops vowing to shake up the game are an industry cliché—as is their typical coming-to-America story, in which the wunderkinds get their comeuppance.
"Agencies say advertising is part of the solution because that's their output."
For one thing, flagship agencies such as BBDO, and major media buyers Carat Americas and Starcom MediaVest insist that they already think the way Naked does. In other words, they say they're willing to put marketing dollars wherever they'll have the most impact—commissions and industry awards be damned. The Naked boys, as they're known, don't buy it. In their view, it's unlikely, to say the least, that traditional Madison Avenue would ever recommend reshuffling a $30 million television budget to spend the money retraining call-center reps, simply because agencies are in the business of producing advertising, not training manuals. "A client goes into an ad agency with a problem," Wilkins explains, "and of course the agency is automatically saying advertising is part of the solution because that's their output, whether or not that's right or wrong." Dick Roth, whose firm does ad-agency searches for U.S. companies such as BMW North America and American Express, says that if the timing was ever right for a Naked to come along, it's now. "Everybody talks about media neutrality," he says, "but I think they seem actually set up to practice it."
American marketers do appear to be hungering for the process that Naked will bring to the States. In recent months, Coca-Cola and Visa each have developed internal marketing-strategy teams that make sure that not every problem is reflexively "solved" by advertising. Coca-Cola now plans to cherry-pick the agencies that it works with to build its own collaborative team—reflecting Naked's philosophy that the best ideas cannot always be found in a one-stop shop. And the hottest agency in the country is arguably Crispin Porter + Bogusky, which already follows a Naked-style approach: It's famous not for snazzy commercials but for things like clever, can't-miss magazine inserts for clients such as BMW's Mini and Virgin.
During this period of change, while the Madison Avenue behemoths try to evolve their financial and creative structures, Naked may thrive as clients insist on importing its thinking. But some competitors and potential collaborators downplay Naked as, well, merely consultants—folks who concoct big ideas without having to implement them. "I think we bring a little bit more to the party," sniffs David Verklin, CEO of media agency Carat Americas.
If that's true, then Naked will probably founder on these shores. But the ad business still has to prove that it's finally really ready to embrace change. "Most writers and art directors still want to go to Santa Monica and make TV spots," says Chuck Porter, chairman of Miami-based Crispin Porter. "That's the culture they come from, and to get them to think in a different way is a hard thing to do." Until that changes, the Naked boys will still have plenty of bald heads to point their fingers at.
Danielle Sacks (email@example.com) is a Fast Company reporter.