Will most major advertising/marketing firms be able to deliver what clients need as engagement replaces impressions, or are they too deeply rooted in impressions-based revenue models to change?

I think big communications and advertising players will deepen their benches over time so that they can service without outsourcing social media, search optimization, application development and other communication services clients may need. It’s going to take time. Part of the challenge is that PR firms, corporate communication departments as well as large advertising agencies are not staffed nor trained to provide customer-facing engagement.  Media/editorial relations? Certainly. Media buys?  Oh Yeah! Digital marketing.  No so much. The research shows it. Many firms still don’t have strategies that incorporate social media. Hell - there are firms generating $100 million in revenue that don’t include digital marketing in their growth forecasts.  It makes it easy to simply ignore the whole digital arena when you operate like that. The agencies are trying:  Look at how many big firms used the word digital as part of their header now.   Small firms holding social media seminars to show how connected they are to the digital arena to support BD. In the long run, the big agencies have to shut down or overhaul their advertising factories. One solution is to spin out all new digital firms within a network that are based on the aggregation of smaller portfolio holdings.   The delay tactic is to outsource digital. I don’t see engagement replacing impressions as a purchase method for media.  Look at the lack of mobile advertising integration in Super Bowl ads in Super Bowl XLV. Engagement integration into ads is likely to be part of the next wave of customer-engagement. @davearmano had a few good early executions. Simple #hashtags are a start as well as QR codes and social integration of individuals in your network when search engines display search engine results pages. Firms can’t buy anything. Firms have tried but they’ve quickly learned that they can’t purchase engagement nor can they fake or fabricate levels of engagement.   Firms can purchase media – in many different forms - to drive awareness, education, consideration as well as to trigger motivators to stimulate desired behavioral objectives that are often linked to a shared community interest. But this is where the industry seems to get stuck.  There is a belief, which if we just purchase another list and append one more data file our CRM models, leverage product lifecycle data, life stage forecasting, past purchase behavior and demographic info we will somehow generate better marketing results and, more engagement. Then we wait for the results. We wait for the customer to return to the site or click on an ad or see a TV show so that we can use our content management solution, applications and email marketing model to deliver the right message at the right time.   The engagement model is limited to a specific destination.  We only want to engage individuals on our site rather than engaging people at the point of dialog.  Firms as well as agencies are not staffed to be everywhere online and monitoring tools can’t canvas the billions of sites publishing content everyday. Maybe the answer is as simple as engaging individuals to be connected in a unique way to the brands, products and services they love so that firms can expand content views to drive the impression counter higher.  That’s something we can all be proud of!

As a founder of a "socially native" company, there is an expectation, even with paid media programs, for us to generate earned media results. Five years ago, this couln't be quantified or predicted; it was considered a nice perk of buying media on a social network (back then we activated on blogs only). Today, brands/media buyers want to get a sense of what their paid media will yield. So now we pull estimated outcomes from our benchmark data (developed over the years, across many programs) and back into that. In essence, paid media pays for both paid and guaranteed earned impressions. But as we continue to benchmark, I see no reason why earned outcomes should not be performance-based. That is, provided the real boundary between paid and earned is kept sacred.

Frankly speaking, the vast majority of the agencies I believe your referring to aren't delivering now. Impressions, awareness, engagement? These are all terms embraced by an industry that thrives on distracting the vast majority of their clients from what really matters -- sales. I know this might sound cynical, but I've seen firsthand evidence of too many big players (self-proclaimed experts in the field) in marketing play this game. I, for one, have grown tired of marketers harming clients and themselves by turning distraction into a craft. Yes, it's much more difficult to educate our clients, guide them, prove our worth and (heaven forbid) help them make a buck, but that's the point.

There is a seismic shift happening within marketing and PR and I think organistions (both client and agency side) are working out how to accommodate the change - which largely focuses around definitive Marketing Return on Investment. The challenge as I see it is understanding how to accurately and practically trace impressions through to engagement. How did that impression lead, ultimately to a purchase? So impressions won't be replaced as a measurement, but will instead need to be more consistently and comprehensively linked to engagement.

Ad agencies are structured and staffed to optimize the efficiency of their media planning and buying.  Therefore they have a vested interest in maintaining media-related activity which absorbs a high amount of fixed costs (e.g, high creative services/production value) and can be placed at scale (e.g. TV spots).  This is how they make money.  Asking them to do otherwise ie providing custom output for a variety of social media and/or alternative engagement channels, is asking them to cannibalize or sub-optimize themselves which historically very very few firms are willing and able to  do.

David Armano's answer is a great one, and he's basically right. But even his correctness doesn't even begin to approach an ugly truth in the marketing and advertising/ PR world. That truth is that big CMO's don't care about returns. No one does. They say they do, and they can hire and fire based on their belief that they do. But at the end of the day, through thick and thin, recessions and busts,firms have budgets to spend and there is only one known known: those budgets will be spent somehow or another. Sure there will be firms that come along and challenge the existing ones, and some of them will do well and even perhaps replace the behemoths they challenge, but very little of it will have to do how well either manages impressions, engagement, or ya know, sales...

From a European, specifically Nordic perspective, digital departments at most media agencies are under increasing pressure from their advertiser clients to get media deals that not CPM based. The CPM measure is a measure of Impressions, not Engagement.   Integrating the two measures is the real challenge facing media owners and media buyers. Measuring Engagement is mainly about tracking post-impression activities;  the consumer´s follow-up actions over the next 15 to 30 days. Online brand-name searches for example, or visits to the advertiser´s website. To capture this kind of data, most ad serving systems have something called "view-through" and "buy-thru measures. The problem is that these measures are usually not properly weighted in the ad server itself. This is because most ad serving systems are set up to "reward" transactional or immediate responses - clicks. So more ad impressions are automatically served to those campaigns that demonstrate the most immediate clicks. Despite the numerous studies that show that those who click on banners tend not to be the best qualified leads for most advertisers. Finding a way to integrate Engagement and Impressions within the same tracking system (and avoiding the ad serving distortion effect) would create a ton of value for everybody.

The point highlighted by Armano on inability of the CMO's & agencies to sustain engagement & marketing is rather critical in today's context also, and limiting the use of social technology by brands & organizations. What will be interesting to see is who is able to align best the 4 pillars. Advertising & PR of course are expected to lead from the front & lead the alignment. But today, even traditional web agencies & technology media companies are also looking at offering a 360 degree digital perspective to clients. I think the race has just begun.

EmpowHER just completed a campaign for a large medical device company that involved a blend of engagement and impressions over 30 days. The campaign was a success achieving 150% more views than stated in the goal. The key to this campaign was two fold: 1.  The campaign used an intriguing ad that asked a provocative question to drive people to view a video to address a targeted health-related question.  2.  The video was funny and entertaining. I believe that reach is the first step.  Engagement and influence will produce the ROI.