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Open innovation is changing the economics of advertising....
... while open innovation platforms in advertising lend themselves to creative work, they're also being tapped in the production phase of the business. MoFilm, Poptent, and Tongal, for example, focus on video production for television and web films. In every part of the industry, the open innovation model is changing the economics of advertising by switching significant fixed costs to variable costs and sourcing creative from more relevant and, many times, lower cost sources.
Each open innovation agency (and there are many) has its own revenue model, but common to all of them is the basic proposition of expanding the agency's capabilities by tapping the wisdom of a global self-selected crowd of creatives, strategists, and fans. In his research on InnoCentive, the first global Internet-based platform designed to match problems with creative problem-solvers,
Harvard Business School professor Karim Lakhani observed that the further a problem was from the solvers' field of expertise, the more likely they were to solve it. Since few companies have the resources to hire the diverse disciplinary expertise found in open innovation networks, agencies will have to tap these networks if they hope to compete on creative output....
Advertising is suffering from the same impact of social media as PR and marketing. In many respects the impact is biggest on the traditional advertising model and this post offers an interesting look at how some agencies are responding. One thing's for certain. There is no going back.