The Future of Advertising Agencies
Spend an hour in any agency and you’ll likely hear a stressed-out account exec wishing that their clients would stop treating them like vendors and start treating them “like partners.” Agencies have long wanted to be integral to their clients’ businesses, but it’s mostly been an uphill battle because the success of advertising campaigns has typically been measured only by vague awareness goals.
Goals that can’t be directly tied to sales never fully resonated in the C-suite, and in today’s data-driven marketing world, awareness campaigns are an even harder sell. Instead, brands are investing in delivering delightful and hyper-personal customer experiences that drive the bottom line.
While the shift has opened new budgets to agencies – for things like digital transformation, IT, and product development – it’s also released the floodgates to competition. “Agencies need to compete with media and technology companies […] and consulting firms are taking on more advertising work and often acquire agencies,” David Berkowitz, CSO of Sysomos, explains. Some firms even compete with their own clients in a sense, as brands bring more work in-house.
So, is advertising dead? Not quite, but here’s how you need to evolve to stay ahead.
1. Broaden your mission.
In the 1980s and 90s, while agencies focused on increasing awareness with creative ads, consulting firms made a big play around strategy. They thrived where agencies were weak – return on investment, data, and technology. In his book Madison Avenue Manslaughter, Michael Farmer advises agencies to rethink their missions and be less driven by “creativity and service” and more by “results for clients.” By focusing on results, he explains, agencies can close the gap between themselves and the consulting companies, which have traditionally had access to executive ears (and wallets).
The biggest shift for agencies is that they need to work harder to demonstrate the value they provide, expands Berkowitz. “That’s not always about performance marketing,” he says. “A lot of the value revolves around brand and corporate strategy, or preventing or mitigating crises.”
2. Double-down on hiring and retaining talent.
To find and keep the right talent, agencies need to hire for the future and to invest in training. Consultancies have always placed a premium on training and if agencies want to compete, they’ll have to do the same. How else can a traditional creative agency suddenly bring analysts, engineers, and strategists to the table?
But focusing on talent isn’t limited to these new functions. As consulting agencies take on creative work, they’re also poaching the creatives who are responsible for the campaigns and commercials that have been hallmark of agencies since the Mad Men era.
“You need to double down on finding and keeping creative talent, especially the digital natives who can work across multiple channels,” explains Erik Mednis, executive creative director at Arnold Worldwide. That will sometimes even mean protecting them from clients who are increasingly trying to woo creatives to the brand side as they bring more creative work in-house.
3. Be flexible.
Get ready to get paid in different ways. A 2017 Econsultancy report found that as agencies expand their capabilities, they’re taking on more project-based work and the traditional retainer model is falling by the wayside.
This can be scary for agencies who’ve worked with the same billing structure for decades, but a project-based model might actually be key for agencies who want to move beyond delivering services, to becoming real partners. In fact, according to the report’s author, Neil Perkin, agencies will work on more short-term, measurable projects and more long-term programs that are core to the business. They’ll even work on projects together with their clients at the same location.
This is the era of people-based marketing, big data and performance marketing – and it’s clear that the next agency darlings will look very different from the current cream of the crop. Those who rise to the top will be more creative and valuable than ever because they invested in the right staff, worked flexibly, and were determined to drive growth for their clients.
Perhaps this is the unlikely path to the partnership agencies have always dreamed of.