Conceptualizing a Business Model Innovation Framework for Advertising Agencies in the Digital Disruption Era
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Abstract
The advertising industry continues to evolve in accordance with changing factors in terms of trends, times and, in this case, technological advances and digitalization, which affect core elements of the advertising industry. Marketers, especially disruptors, now build brands and communicate with consumers as the media landscape evolves by creating new, unexpected rivals. This means that advertising agencies must change their roles as intermediaries by altering, adapting, and/ or disrupting to survive. Thus, advertising agencies should be revisiting their culture, structure, policies, resources, talents, and processes as well as their business and revenue, or overall business models to embrace digitalization (Bloom, 2019). The challenges for advertising agencies’ business models remain the same as they primarily depend on a commission system for their earnings, i.e., revenue based on a markup of production and media costs (Sharma, 2017). To provide insight for business models of advertising agencies in the future, this article examines various models such as Fixed-fee method, Fee-commission combination, Cost-plus agreement, Incentive-based compensation and then will conceptualize a business model innovation framework for advertising agencies, especially in the Thai market in the digital disruption era.
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