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At creative agency Huge’s coffee shop in Atlanta, wearable smart watches notify baristas when customers walk in to place an order and what their order will be. The café proves Huge can deliver smart retail solutions to clients.
 

With blond-wood tables and friendly environmental graphics—one white wall simply says “Hello”—this café in an artistic enclave of Atlanta looks nothing like a creative agency, and it serves lattes alongside a Japanese food menu. But all of the to-go cups betray the café’s purpose: the label stamped on the side reads “Huge”—as in Huge, the agency known for its digital work for some of the world’s best-known brands, not for its double espressos.

In fall 2015, the agency opened the café to manifest its user-centered design values in the physical world. The real café has a real need to turn a real profit, but it also serves as a laboratory of sorts for Huge to try out its digital design and retail ideas on living and breathing customers. “We made a conscious decision not to make an internal lab that’s hidden in the agency that you only focus on when you have the time,” explains Michael Koziol, president of Huge. “We wanted to be face-to-face with customers and put real ideas in their hands or right in front of them.”

The coffee house–cum–innovation lab has put Apple Watches on its baristas. The watches deliver messages about orders and customers, and Huge fine-tunes how often to vibrate baristas’ wrists so they never accidentally oversteam a cappuccino. The café has placed radio-frequency IDs on the sides of coffee mugs to recognize customers and their usual orders as soon as they walk in the door. Once the barista is notified, she will start brewing a patron’s favorite coffee. “You don’t have to talk to a human to make an order,” Koziol says. And Huge can now deliver solutions to their retail clients with the confidence of an agency that has been there, done that.

Innovation labs in creative agencies have been around for a decade. In that time, they’ve evolved into new forms, always trying to stay ahead of the tech curve to prove just how cutting-edge they are. With new tools popping up seemingly monthly—augmented reality, virtual reality (VR), 3-D printing, artificial-intelligence bots—ad agencies have formed departments simply to keep up with new devices as they arise.

In some particularly gutsy agencies, incubators create their own businesses and consumer-facing products. Some formats are informal, such as Grey Group, which simply partners with clients to scale products. For Volvo, the ad agency came up with LifePaint— a coating invisible during the daytime, but reflective by nightfall. It hopes to roll out the paint for cyclists as well as drivers, making a profit on its own product as well as from its client relationship. On the other end of the spectrum, Wieden+Kennedy (W+K) has developed its own incubator to cultivate startups from inception to exit.

With the development of labs, incubators and consumer-facing products, agencies stand to make a profit while demonstrating their innovative chops to clients. What’s to lose? Quite a lot, actually. In Digiday, former staff writer Jack Marshall notes, “Despite the few shiny success stories, agencies—for better or worse—appear consigned to the services business, and any product forays will remain firmly on the sidelines, used more for PR and recruitment than anything else.”

Although it has garnered positive reviews overall, Huge Café has a few Yelp raters who stand in agreement with Marshall: “So this is what happens when advertising people THINK they know what people want! Good luck to them and this place!” writes Vert S. “HUUUGE MISTAKE!!!!” writes Carol H.

Will labs and incubators improve agencies’ reputations across the board or will agencies embarrass themselves by going too far outside their artistic element?

Digital agency 360i’s line of Adaptoys (left) utilizes voice-control technology to make playing possible for people who can’t use hand-controlled consoles. The agency prides itself on staying at the forefront of the technological frontier, with gadgets like a 3-D printer (right).
 

Department of Tinkerers

Walking into digital agency 360i and looking through a pair of glass doors will clue you in to its priorities. You might see someone wobbling around the open floor wearing a pair of VR goggles. Or you might find creatives wandering in to ogle at the 3-D printer as it spools out a new plaything. It’s the job of the vice president of innovation technology and leader of this funhouse to be a tech geek—literally. “You have to have dorks like me who cannot get enough of technology—that has to be your starting point,” Layne Harris says. “If you have someone in your agency who loves tech and loves the latest gadget, who owns the Apple Watch before everyone else, encourage that behavior.”

Harris spends his time keeping up-to-date on the latest tools and sharing his enthusiasm with the rest of the agency. With a team of three other developers and designers, Harris and his lab constantly prototype tech gadgets. They guide 360i’s creatives and clients so they don’t use technology simply for technology’s sake. Creative directors who glom onto new tech like VR without a technologist are starting from “a place of ignorance,” in Harris’s words. “You’re hoping VR will do what you need it to. You should already have a [staffer] who can tell you everything there is to know about VR and give the creatives hands-on thinking, in real time, and come up with a program that’s much more suitable to how the technology works. You don’t go through progressive failures, but come up with something exceptional from the get-go.”

Through its explorations, the lab came up with its own product by chance. For the Christopher & Dana Reeve Foundation, the in-house creative team approached the lab about giving disabled people a way to play with children. They came up with Adaptoys, a line of games that people with disabilities can play alongside their loved ones, including headset-controlled race cars and a voice-controlled pitching machine. “We happened to be doing a deep dive on hands-free interfaces,” Harris says. “It was kismet.”

With the right minds in the right place, an agency could develop a product it can brag about. However, 360i is still trying to raise the total $155,000 needed to build the toys. “We aren’t really in the business of creating products,” Harris says. “Adaptoys was unique in that way. ... Manufacturing requires resources and skills that go beyond what most agencies have available in-house. Mistakes can be quite expensive, so it’s important to partner with consultants and services that can manage the manufacturing process.”

Some brave agencies have found those partners—and hired them.

PIE, a Portland, Oregon–based incubation agency fathered by Wieden+Kennedy (W+K), brings entrepreneurs and advertising together to create startups. Not only does it give W+K insight into the startup world, but also it shows startup founders the importance of design and advertising.​
 

Incubator Cookbook

For someone obsessed with helping startups succeed in Portland, Oregon, Rick Turoczy has a dream job. In 2009, W+K tasked him with creating one of the first incubators within an agency: the Portland Incubator Experiment (PIE). It has helped launch some of Portland’s most successful startups, including Urban Airship, Cloudability, Little Bird and Geoloqi.

“All you’re doing is creating an environment of trust where creative people can be vulnerable and open,” Turoczy says. “The typical creative agency types can very much be on the same page as early startup founders, and they share a lot of the same traits and approaches.”

Here’s how it works: Entrepreneurs with big ideas apply to W+K’s PIE accelerator. They bring their own technological know-how and spend three months working on their business in the company
of other founders who provide emotional support and feedback. Eventually, they tap into W+K’s world-class creative teams for help promoting their products. W+K’s creatives have an “observation deck” to watch what’s happening in the world of startups. The technologists learn why they should value ad agencies. In the end, W+K has a stake in the businesses. It’s a win-win deal.

“One of our founders was dismissive of marketing and branding, and at the end of a brand sprint, he completely turned the corner,” Turoczy says. “On the other side, the creatives came to the [brand sprint] saying, ‘This idea is geeky—we don’t know if we can do much for this startup,’ but they turned a corner and came up with great branding. It’s great on-the-job training for both sides.”

Launched by two Intel engineers within PIE, the now-successful AppThwack tests apps to help software developers be more efficient and effective. “[The founders] had this feeling for what they wanted their company to look like and feel like, but didn’t have the creative talent to proceed with that,” says Turoczy. “One of the founders said, ‘We would have never come up with the mark [W+K] designed for us, and there’s nothing more perfect.’” In the end, Amazon Web Services acquired the company. Win-win.

Incubators have since sprouted up in other agencies. R/GA Ventures has its own program for nurturing startups. Outside Portland, W+K has launched apprenticeships, training programs and record labels from Amsterdam to Tokyo. But these incubators are still in their infancy, Turoczy says. “I don’t think we’ve begun to scratch the surface of how this method can be applied in a mutually beneficial way.” So he’s writing the open-source PIE Cookbook to teach other agencies—and people everywhere—how to start their own. “This generation of accelerators was generally tech,” he says. “I’m looking forward [to what] springs up when people understand how to lead this process and apply it to more than tech. You can create new ad agencies or retailers—that’s when it’s going to get really interesting.”

The agency lab of the future could be an incubator that incubates other ad agencies. Hold onto your VR goggles—you might need 3-D technology to see all the layers of the ad agency of tomorrow. ca

Rebecca Huval writes about design and the many ways it intersects with our world, from technology to business to food. Her byline has appeared in print and online publications, including the Awl, GOOD and Sactown Magazine. Now a journalist and copywriter in Sacramento, she formerly served as the managing editor of Communication Arts.

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