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As ad agencies face disruption unimagined in Mad Men era, how one company leveraged tech

The cast of the TV show Mad Men.

Lionsgate Entertainment/THE ASSOCIATED PRESS

The series: We look at decision makers among Canada's mid-sized companies who took successful action in a competitive global digital economy.

While nobody appreciates a funny story more than Zak Mroueh, investing in technology for his award-winning ad agency was no laughing matter.

"From Day 1, we invested in the most advanced and best equipment for our studio and production facilities," says Mr. Mroueh, chief creative officer and CEO of Zulu Alpha Kilo Inc. (the agency name's first letters spell out "Zak"). "It was part of our operating philosophy from the outset."

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The ad agency industry has always been hyper-competitive – think Mad Men – and it's now prone to disruption more than many sectors, as clients migrate online and embrace social media.

Zulu Alpha Kilo – founded in 2008, headquartered in Toronto and with nearly close to 100 full-time employees and growing, plus a roster of major clients that include financial, communications and consumer firms, as well as not-for-profit organizations – was named Small Ad Agency of the Year at the 2016 Ad Age Small Agency Awards, held in Miami Beach. It was the first time a non-U.S. company took the top honour.

The agency is also known for its spoof website, which makes fun of the clichés used in the advertising world. "We're the country's leading user of marketing buzzwords," the parody site notes. "We take these buzzwords and combine them. … For those, we'll charge you handsomely."

While creative energy is obviously key to the success of an organization like Mr. Mroueh's, he credits his early tech investments with laying the groundwork. Not only did it make it easier to execute the intricate moves often required for multimedia ad campaigns, he says that IT also helped him recruit top-quality staff.

"In our startup phase, a freelance studio artist told me we had the best tech of anywhere [else] she'd worked. It was easy for her to work here because it made her job fast and efficient," Mr. Mroueh says. "When I heard that, I knew the investment had paid off. It was a proud moment for a fledgling startup."

That proud moment appears to be a wise one, as well. One of the first steps Mr. Mroueh took was to hire a full-time IT director for his startup, which was unusual for small to mid-size Canadian companies. Research suggests, however, that Canadian companies should actually move more quickly to embrace new digital technology, as the Fourth Industrial Revolution is well under way.

In the fourth revolution, companies are seeking and gaining an edge by embracing and deploying the Internet of Things, cloud computing and, increasingly, artificial intelligence (AI). This new revolution is moving even faster than the first three, which were driven by the advent of steam and hydraulic power, then electricity, and then mass communications.

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Yet, despite the fourth revolution's blinding speed, a recent study reported that progress has been patchy among Canadian companies when it comes to embracing digital technology. According to the independent global survey of 16 countries conducted by Britain-based market researchers Vanson Bourne, only a small minority of companies have come close to completing their transformation toward the digital technology that's critical to competitiveness in these revolutionary, disruptive times.

"Many have taken a piecemeal approach. …While only parts of many businesses are thinking and acting digitally, the vast majority – 73 per cent – admits digital transformation could be more widespread throughout their organization," the study said.

Meanwhile, earlier research by multinational professional-services corporation PwC found that companies that score highest for embracing digital technology are 50 per cent more likely to achieve rapid revenue growth and twice as likely to achieve quick profit growth, compared with companies that don't make substantial moves on tech.

And yet, according to PwC's 2015 Digital IQ survey, fewer than half (44 per cent) of Canadian companies were putting more than 15 per cent of revenue toward digital investments.

This does not make sense to Mr. Mroueh. "It was important to ensure [that] our staff were set up with the best technology and tools at their disposal," he says. "We wanted everyone focused on great ideas [and] not worrying about the tech tools they had to work with."

It was rare, he notes, for a fledgling ad agency of Zulu Alpha Kilo's size to put such emphasis on tech in the company's early days. "But it was an important investment for the future. It was a no-brainer. We knew in the short term it probably didn't make sense financially, but we believed there would be a long-term benefit. This has proven to be the case. Tech and IT are areas that we never have to worry about [now]."

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Embracing the future comes with challenges, he acknowledges. "In a few cases, we had to retrain and educate a few people to ensure [that] the investment paid off across the board," he says.

"It's always easier to go with a safer, low-cost choice in the short term. But in the end, we've found [that] the benefits of embracing technology always outweigh the costs."

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