Brave New World: The Agency of Tomorrow
As companies continue to bring marketing and advertising capabilities in-house, agencies have no choice but to reshape and remodel themselves when strategizing their futures.
Big brands like Proctor & Gamble and Unilever are building out their in-house marketing capabilities, with other smaller companies following suit. With an increase in in-house capabilities, the size of the independent agency pie is bound to shrink. Under the traditional model, agencies are not equipped to keep pace with the range of tactics that are needed to navigate organizations now.
Agencies as a whole are continuing to underperform, with holding companies at the forefront of producing sluggish growth results. According to AdAge, total U.S. agency revenue growth was 1.8 percent last year, the slowest since the post-recession era of 2010. However, digital work is growing, accounting for more than half of the total U.S. agency revenue last year.
Between technology, data science, talent, financial pressures, and ever-changing consumer demands, marketer’s needs are changing at a rapid rate. What do agencies have to do to stay ahead of this constantly shifting industry? What does the agency of tomorrow look like?
Don’t worry–the agency business is not going anywhere, anytime soon. Instead, this strong trend towards client control will create a benefit to nimbler agencies over the massive ones and will favor project-based work over retainers. As with anything, adaptability is the key to ensuring survival.
The Current Model – A Need For Change
The traditional agency model is primarily tactical, acting as more reactionary than proactive to client needs. They lack the strength to compete in the scope of a full-service review because they often lack a strong understanding of business dynamics and product creation. While design and user experience have become commoditized, true strategy building has remained a rare but beneficial offering.
The more tactical and repetitive the work, the more the client can bring in-house. A reaction to that is a shift towards project-based work. Unlike longer campaigns or retainers, project-based work can be done quicker and requires fewer resources. According to a survey released in January from development firm RSW/US, 35 percent of 115 agencies surveyed said a majority of their assignments are now project-based, while 16 percent said over 80 percent of their work is now project-based.
With the rise in project-based work, agencies have had to make internal adjustments such as coordinating smaller teams to work one-on-one with clients, giving them specialized treatment. Smaller teams comprised of diverse job functions help get jobs done in shorter, more concentrated periods of time.
2018 truly cemented that it is now the age of the consumer. Not only is it important to look at consumers habits but it is important to look at how brands should be utilizing that data. Brands need a data strategy and the right technology to help them analyze data, which is where agencies come in.
The future is all about marrying creativity with data and technology, meaning agencies will have to make sure they are equipped with the right talent that can dissect that data in unique ways. This doesn’t mean that agencies need to try and compete with technology firms. The tides will always turn back to human ingenuity, favoring strong storytelling and big ideas, which is where tech companies pale in comparison.
How the Current Model is Evolving
The evolution of an agency must start with breaking away from the endless hamster wheel of cookie-cutter services. Putting senseless time and passion into empty pitches along with chasing work to replace completed work is tiresome and wasteful. Agencies that are looking to survive need to incorporate technology and data in radically earth-shattering ways by becoming more of a partner with brands and clients.
Businesses are coming to agencies with a wealth of data and a lack of understanding of how to best utilize it to their advantage. Data and the way it is used is changing. An agency must do more than simply analyze the available data of their clients. They must practice data sifting and siphoning, transforming it into usable currency for client needs. Data will always be data but it is useless if it is not procured and utilized in efficient ways.
Overall, the goal for the agency of tomorrow should be to influence and target through impactful messaging that cuts through the clutter. Agencies must become a partner, not a commodity through smart and effective strategizing. The service offerings of the future are the people that make up every facet of the agency. Agencies, and the people that work there, need to be agile, lean, and have the accuracy to forecast the trends of tomorrow.
Our Philosophy in Action
321 is one of the agencies currently pioneering this new model. “We are taking a shift from merely creating something pretty to actually combining all of our departments to build data-backed solutions for our clients.” 321 founder and CEO, Joe Boutin, said on the future of agency services “That is the new frontier. By leveraging data and using it to influence the creative and technical aspects of our process, we are amending the shortcomings that the creative-reliant strategies of the current model have.” The conversations have changed from simple order-taking to holistic conversations with clients.
With a researched-based approach, we ask the important questions to get down to the issue at hand and develop strategies around those specific problems. We are more interested in how data feeds into development and how that feeds into technology which feeds into operations. Third party integration is just one of the ways we have tackled client pain points, specifically through Pipedrive CRM and Salesforce integrations. With a razor-sharp focus on developing tailored technological strategies and solutions, we have amplified the growth of our clients.
Creating something bigger than just a campaign or advertisement is more ambitious and world-changing than continuing on a traditional agency trajectory. Let the old model fall – it is time for agencies to do something that has never been done before.