The Future of Agencies: What Do You Think?


Sean Corcoran [Posted by Sean Corcoran]



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We’re in the process of pondering a very important question in the industry today: what is the future of agencies? Agencies have played such a crucial role in helping companies market their products and services for more than a century. Names like McCann Erickson, Young & Rubicam, J. Walter Thompson, Ogilvy, and Saatchi & Saatchi (among others) are practically household names. There’s even a massively popular and critically acclaimed television show capturing life in the golden age of legendary agencies on Madison Avenue.


Yet the agency model was built during a time when there were only a handful of channels in which they could push one way messages en masse. Does that model still work in a time when nearly a quarter of online US adults now create content online? Many more questions begin to arise as we open Pandora’s Box: Can one agency do it all? Are holding companies the answer? Can digital agencies compete with them and lead brands? Do marketers rely on agencies like they used to? Should marketers consolidate their agencies or de-centralize to dozens of agency partners? Are technology providers and crowd sourcing legitimate threats? Where is this all going?


To conduct this research we’re speaking with some of the most influential agencies, marketers, and service providers. However, what better way to get a feel for the pulse of the industry than to crowd source it? So we’re reaching out to get your take on the space. Please give us your thoughts in the comments section on the question: What is the future of agencies?


We’re looking forward to your input (and please try to keep it to one or two paragraphs)! Since this research is a collaborative report across roles, this post is also cross-posted on the Marketing Leadership, Customer Experience and Customer Intelligence team blogs.



Comments

Re: the future of agencies

The future of agencies will be the ability to optimize business outcomes across all channels, online and offline. To be able to deliver a 3D view of the customer by marrying insight with analytics, continously testing, gathering ongoing feedback, and starting conversations that lead to conversions. To do it right will require changing their DNA, restructuring to eliminate silos, and developing the ability to tell customers not just where they are now, but where they need to head next.

I like Aaron Savage's comment

I like Aaron Savage's comment that, long term, the successful agency will be one that doesn't focus on mere tactics (i.e. leveraging the lastest whiz-bang tech device and/or cool channel for its clients), but rather finds a way to engage an audience in a relevant, meaningful way.

But hasn't that always been the challenge of advertisers?

It comes down to how you do it differently -- and more effectively -- than the other guy. Which media you use is secondary. Form follows function.

Brings to mind this Adweek article about how ho-hum advertising has become the standard (from an exacting Creative Director, Philadelphia):

http://www.adweek.com/aw/content_display/community/columns/other-columns...

re: The Future of Agencies: What Do You Think?

Big agency's current deliverable- media and creative
Big agency's future deliverable- insights, innovation and creative

If that is adopted all else will follow.

Collin Douma,
VP Social Media
Proximity BBDO

re: The Future of Agencies: What Do You Think?

The ad agency of the future does what the ad agency of the past did - increase the client's revenue and profits. The difference is the consumer. Now they are the digital consumer and their relationship to brands and each other is defined by how they use digital channels. Behavior is the new advertising and the only thing that matters is measurable results.

re: The Future of Agencies: What Do You Think?

The need for a good agency isn't going away. In fact, I'd argue that brands will increasingly seek outside counsel to navigate an increasingly complex and ever-changing marketing landscape.But the role companies are looking for their agencies to play has changed significantly. Successful agencies moving forward need to be (from a client perspective) customer-centric, media-agnostic, and revenue/sales-driven.

re: The Future of Agencies: What Do You Think?

My guess is the agency becomes largely becomes virtual as it tries to compete in the competition of ideas whether from the creative or media POV.Fancy graphic here:http://www.adexchanger.com/agencies/the-virtual-agency-model/

re: The Future of Agencies: What Do You Think?

As long as we market things, we will need agencies. What changes is the role played by an agency as we move forward. Already, they have to be digitally aware (if they don't know anything about online and web 2.0, why would you use them?)But as we increasingly use the Internet as our "meeting place", the traditional role of marketing is changing from an Outbound perspective (shouting longer and louder), to in Inbound one (listening carefully to more and more people). The need for a good Marketing Strategy still exists, but more and more we are bringing technology to bear on how we do this. And the technology moves very quickly and is complex (lots of pieces). Usually, agencies are not that technical and would thus be advised to form partnerships with technology companies. The two make good bed-fellows: typical techie types don't do much marketing, and typical marketers don't like playing with the bits.

re: The Future of Agencies: What Do You Think?

A very important role for agencies will be empowering consumer communities by becoming the connection elemets for them with brands. This also means a big part of their contribution to companies will be adding value thorugh crowdsouscing coordination and motivation. This topic is explained a little more in depth here http://blog.digitalingredients.co.uk/2009/11/crowdsourcing-motivation-an...

re: The Future of Agencies: What Do You Think?

Agencies need to become more flexible and more adept at Inbound (Internet) Marketing. As consumer use of social networking and rejection of traditional advertising channels become more pervasive, agencies must adapt or go under. There will always be a need for print and media, but these channels will become fused with Internet marketing . No more one-size-fits-all marketing. Now we have personalized strategies, and focus on community building. Agencies that understand the importance of these trends and embrace them will succeed.

re: The Future of Agencies: What Do You Think?

It's undeniable, Madison Avenue times are over! Love the show though :-) Todays world: too many media, too many specializations, too much fragmentation. Which agency in the world would be capable of orchestrating all that? Even multi-agency groups find it (too) hard to keep track of the Big Bang that has been taking place in channels and specializations. The marketing universe is expanding with the speed of light. So, businesses need to work with multiple agencies to obtain best of class solutions in each field. Just like the practice of medicine has evolved into an array of specialists who (need to) work together to treat complicated health issues for their patients. Who would trust the traditional house doctor to perform a heart transplant? I know I would'nt :-)New technology and crowd sourcing are factual and legitimate developments opening up new options and setting new playing rules along the way. So, yes, the times of simply outsourcing a good marketing idea to the Donald Drapers of this world are gone forever.

re: The Future of Agencies: What Do You Think?

This is a conversation that is going on from the four corners of view points, and is starting to get very interesting.The first question is whether clients still need agencies and I think the answer is yes, they just wont look the same as they do now. That isn’t anything new. A quick look at an episode of Mad Men (which I am reliably informed is spot on in terms of the politics, work and bonking that went on) will show a working environment then that doesn’t exist in the same way now, so evolution isn’t a stranger to agency land.A better question is what kind of agency will exist, or more specifically what kind of lead agency will clients want.I should probably declare bias at this point and say that I head up a small digital marketing agency and that we concentrate on digital strategy to put my points into perspective. Also I am based in the UK where digital marketing spend (across all disciplines) has just outstripped advertising spend for the first time ever.So basically I am one of those web types who reckons the geek will inherit the earth so here goes.Digital agencies started off as boutiques offering tactical services to direct clients whilst partnering with offline agencies to have access to the big guy's client lists and that worked quite nicely. As soon as one tactical discipline became mature it was either championed by a super tanker sized digital agency or was brought in house in what was termed integrated agencies.Integrated effectively meant shoe horned into the offline agency’s accepted ways of doing things, and worshipped phrases such as ‘the big idea’ and ‘the message’. That didn’t really matter though because there was a new tactical technique coming round the corner to keep the digital types interested.Repeat ad infinitum whilst change and evolution took place. Digital is generally in a permanent state of evolution as it is new and fast paced. We wouldn’t be talking about Twitter as part of the Interactive Marketing Mix a few years ago but today no conversation seems to be complete without it. Except that something else has changed and that is customers. Customers don’t want to hear the megaphone of the ‘big idea’ anymore and they don’t care about ‘the message’. They care even less about whether it is direct, brand focused or anything else.All they care about is whether a company is prepared to be brave enough to listen to them and develop a relationship. This is big stuff because clients have got wind of it and have also been told that this digital stuff is cheaper to implement and performs better. Problem is that most of the digital boutiques are still thinking in terms of tactics when the client wants strategy.Using Twitter isn’t a strategy (no matter how many times some idiot writes about implementing one), neither is facebook, neither is your website. I would argue that neither is search on its own and neither is social media. In fact you only get strategy when you stop looking at tactical disciplines and start looking at the customer and the journey they need to go on in order to become and remain a customer.Oddly enough we wrote a blog post about it today before we saw this so feel free to look at more of our thoughts there.The point though is that there is a race going on, digital marketing agencies need to start looking across the tactics to create an overall strategy to engage with customers, whilst traditional offline agencies need to take the focus away from their broadcast mentality and place the customer at the centre. Whichever agencies get there first will be the ones that clients want to work with, and who will create the great marketing for the next few years.It’s reasonable to expect that the winners enclosure will include both offline and online agencies to give choice to clients, but unless the focus is the customer then its probably time to pack it in.Aaron SavageInteractive Mix Ltdhttp://www.interactive-mix.com

re: The Future of Agencies: What Do You Think?

Good to see your post Sean. I'd like to see agencies stay high level: market research and consumer messaging / brand strategy, creative. Their value dilutes when they attempt to dive into individual channels. Inevitably they end up engaging a specialty provider to deliver for each channel. Frankly these companies are much better suited to handle the particulars of the channel and often they show up the agency who brings them in. Embarrassing...Agencies are only dragging themselves into the fray with this "all ownership" approach. Better for them to find strong channel partners and agree on who's doing what. Stick to the strategy and design, and they'll be valued and paid well for what they do. Move into down-market services and they'll find themselves giving the strategy away.

re: The Future of Agencies: What Do You Think?

I think the days of pure agency-of-record relationships are fading. I think brands need to look at what they are trying to accomplish and then map out options for partnering. The map for established brands looks very different than a map for a newer brand. Also, the type of product or service will have an impact on the type of agency requirements. Winning agencies will help their clients understand this.So...the agency model in the future may become one of a general contractor. Successful agencies should own strategy, excel at core services such as information architecture, user experience design, and measurement. With the rise of so many technologies that are interoperable, picking the right ones that work with each other, becomes a new and necessary skill set. Therefore, development and execution become a skill of knowing what technologies go together and how they need to be coordinated. This is where marketers struggle to keep up.The question then becomes for marketers: what agencies best help me establish and fulfill my marketing objectives and how do I create an agency mix that is streamlined yet effective. I do believe there needs to be a lead agency or general contractor for the mix to work well. Holding companies may have a leg up here due to experience working together, but at the end of the day they are a set of disparate companies.

re: The Future of Agencies: What Do You Think?

My gut is that we're ten years out from a seismic shift similar to what we're seeing right now in publishing.The cost of the media buy is a big driver on budget for creative. This makes a simple sort of sense: if you're a brand spending all that money on a media buy, you better not squander it with bad creative. And big companies get good creative by throwing lots of money at the problem.That equation is going to change. New efficiencies will be realized and the agency business will contract.The real lesson with publishers has been that it's one thing to see the writing on the wall, and quite another to do the right thing about it at the right time.It's too early to say how it will shake out.As a principal at a digital agency, I would love to forecast that we will reap big benefits from such a contraction. But a smaller pie isn't good for anybody in the business.Alan PetersPrincipal/Founder, Singlebound Creative

re: The Future of Agencies: What Do You Think?

My view is a little more pessimistic (for agencies) and optimistic for all of us Marketers. Agencies had the crucial role of “agenciating” creatives, producers, media companies, film producers, etc, etc. “Talents” in a nutshell. In a very short period of time we marketers won’t be needing that anymore (I already don’t).With networking and ridiculously easy group formation (Clay Shirky – Here Comes Everybody) made possible with social technologies we don’t need pay a fee to anyone to guide marketers through the advertising and communication world. Linkedin is already doing it for us, Facebook, Twitter as well and we can expect ever more specialised social networks where marketers can browse through professionals that will work free-lanced to deliver what we need. A marketer will not have to pay expensive fees, no bureaucracy. Simply talent management through social platforms.

re: The Future of Agencies: What Do You Think?

Excellent question (as I am interested in the future of marketing). It amazes how the two are still confused. I posted on how agencies can't be trusted to manage a brand at marketinpi.net. I don't believe it's their fault, marketers are to blame for out-sourcing this fundamental part of their job so they can attend more cross- functional project team meetings and KPI update briefs (see Forrester research piece on adaptive brand management at http://www.forrester.com/Research/Document/Excerpt/0,7211,55526,00.html). The business of marketing is too important to be left to Don Draper wannabes.

re: The Future of Agencies: What Do You Think?

I literally just posted a blog today on how "the agency of the future is not an agency," and listed some actionable insights for advertisers who are looking for new solutions.Here is the blog link: http://actionableinsights.covario.com/1037/the-agency-of-the-future-will...

re: The Future of Agencies: What Do You Think?

A very timely report Sean.We keep hearing the same thing from our clients: They want to create authentic and helpful tools and content and take them to engage where their target audiences are (the content side of the page of 3rd party sites). They then want to track, manage and test these experiences in a manner similar to Google Adwords.This is very different from a standard agency approach that is focused on the brand message, contests and ad networks for distribution with little to no self-service tools and in-market changes possible by the client.The world is shifting away from a blank sheet of paper on which a creative expert creates an ad to a systematic approach to engage directly and more deeply with target customers.

re: The Future of Agencies: What Do You Think?

McCann Erickson, Young & Rubicam, Ogilvy, etc. all benefit from their ability to offer structure, proven process and large-scale solutions to big brands that need these two things to feel safe about spending millions with an agency.For big brands though, consolidation under a big agency only offers a streamlined process, while risking limitations in creativity.Smaller agencies will always win in their ability to be more flexible in their process, more competitively priced and arguably more creative in their solutions than the big shops.Big shops will need to be more adaptable and leave broadcast or print for the Web. They need to either acquire smaller shops, but let these shops preserve their identity or stand to subside in the next 10 years.Those agencies that are not acquired will grow up together, while a whole new generation starts their own digital shops. More of these agencies will then partner than acquire each other.Crowd sourcing is not a threat, it's just an alternative. Any market will always have small, medium and large players. The difference now is that it is easier for two people working out of a garage to score a client with a global brand. This increases competition and increases in competition can lead to more creativity.But who knows, these are all unqualified projections and even qualified projections should be drawn with unicorns and pots of gold.Twitter: www.twitter.com/MisterZafarnia

re: The Future of Agencies: What Do You Think?

Agencies are being asked to think like management consultancies, but with brand marketing, technology and cultural anthropology prowess (among many other things). I think on the deployment and execution side of things, they will become more like content producers and editorial experts, particularly as brands evolve as publishers. As media adoption becomes more and more of a function of people and communities rather than inventory, we will see more and more progressive thinking and execution coming from the smaller and nimbler shops, who have worked hard to develop methodologies like transmedia planning (Naked, Big Spaceship et al). With ad networks, portals and media companies converging at their own quick pace, this new role seems to be taking shape faster than most agencies as we know them can adapt.Interesting times...

re: The Future of Agencies: What Do You Think?

At the heart of your question is "what is the future of marketing?". One of my favorite blog posts of the year is from Zeus Jones, that says Operations is Marketing (http://www.zeusjones.com/blog/2009/great-examples-of-how-operations-can-...). We're quickly moving past the day of monologue marketing and advertising campaigns. Successful brands will first, create great products/services, and second, cultivate relationships with their customers via ongoing dialog and consistent engagement.Given this new direction, agencies of the future will look much more like management consultants than traditional agencies. They will help brands organize for customer engagement, build community around their products/services, and enable advocates to carry their message broadly. All of these activities require operational discipline, which is sorely lacking from most marketing departments today.Dustin JohnsonPrincipal, Ant's Eye View

re: The Future of Agencies: What Do You Think?

Great question - and those above have provides some great insights.I would like to look the issue from a slightly higher level perspective - how the internet impacts the Agency-Client relationship across all verticals - not just the marketing / advertising space.Traditionally, agencies have been required to provide specialized expertise in their respective discipline - travel, real estate, insurance, etc.The best agents offered:1) access to information that was not otherwise readily available to the client, and2) the ability to both develop strategies and apply tactics that were tailored to the client's specific future goals, available resources and current circumstances.The internet has dramatically changed the environment and websites now compete (with various degrees of success for certain tasks) with traditional agencies.Zillow has not eliminated real estate agents, but it has armed homebuyers with information that was previously only available through an agent.Expedia has not eliminated travel agents, but its access to detailed travel pricing, inventory, descriptive & multimedia information for thousands of travel products and destinations is well beyond even a great agent's reach a dozen years ago.Esurance promotes an accurate rate quote in six minutes, hundreds of dollars in average savings and access to other providers if Esurance did not offer the lowest price. Again, a good step beyond a traditional agent's breadth of product.In each case, the Internet has enabled consumer-driven product search and returned available product. In many cases, the websites also enable filtering of alternatives based on product attributes. The Internet works exceptionally well for commoditized products.The internet does not work well yet (assuming the promise of semantic discovery is fulfilled) for identifying the best strategies & tactics based on a myriad of inter-related conditions. This is why good agencies will continue remain relevant for the foreseeable future.The internet has caused individual agents and agencies that served merely a transaction processing or order taking role to become redundant. If one does not provide incremental benefit at an appropriate cost - i.e. create value, any system or process seeking efficiency will eliminate the resource drain.As a result, marginal agencies closed. Those that remain however, continue to provide value by 1) clearly understanding customer needs, 2) providing specialized knowledge regarding available solutions, 3) creating strategic and tactical plans to efficiently and cost-effectively align and prioritize those solutions to best address the customer's needs.The agencies that will flourish will be more customer focused, nimble, flexible, and intelligent than those that merely survive by being relegated to providing generic services at commodity prices.Exceptional agencies will also be able to compete effectively against internet-based services, but it will not be easy. New technologies, social computing and semantic search will continue to enhance communications and make increasing amounts of information available to more people with a lower cost and time investment.While many might say that this trend signals the demise of any business function with a title including "agent or agency," I disagree. These same technologies can also enhance the capabilities of the innovative agent or agency by creating opportunities across diverse geographic regions or market segments.In the future, to succeed, agents and agencies will need to focus on specific niche markets or specialize in addressing highly complex or challenging needs - at a reasonable level of compensation.The days of agencies milking the cash cow client - getting big compensation for relatively little effort are gone. Value is king, but that does not mean the cheapest cost wins - the world is seeking quality product at affordable prices.Smart, experienced agency leaders have been providing great value for years and there is every reason to believe that with a little creativity, they will continue to do so for a long time into the future. But they must adapt - clinging to old business practices is not an option.

re: The Future of Agencies: What Do You Think?

It is a good question, but the real question is this: what is the future of the consumer?--will they remain spectators or become content creators to a greater degree than they are now?--will they insist on on-demand content and information at every brand encounter, including at retail?--will they expect brands to pitch them one on one in an RFP process. i want a TV, here are the specs, pitch me?--will they give brands their GPS location and product preferences so that when I am walking within half mile of Apple store and Apple knows where I am and what I might want, they can ping me with an offer?--will they create their own personal communities of experts in product and service areas, a resource to which they'll go for advice in a new way of using search to find answers?--will they continue to abandon traditional media and turn increasingly to blogs and customized RSS feeds to determine their daily intake of content?--will they willingly pay for content of high value (they pay for virutal goods) or tolerate intrusive ads for better online experiences?These and others are the real questions. I have written about the many contradictions and ask some similar questions here: http://edwardboches.com/the-future-of-advertising-and-the-answer-isAs for the answer, it's who can deal with, anticipate, respond to and solve the above. Should be fun getting there.

re: The Future of Agencies: What Do You Think?

You also should talk with consumers and the very people agencies are trying to influence. Trust is a big variable, and the agencies of the future will be the ones who can jockey equally or more in favor of the audience versus the marketer. Call them trust arbiters.Btw, it would be equally interesting to conduct this analysis of the market research agencies, as well as syndicated market research firms. Probably a little too close to home for you, but would be interesting, nonetheless. (If there is one industry that's been impacted by emerging digital and social technologies, it's yours.)Cheers. Btw, nice contribution to the FTC panel at WOMMA.

re: The Future of Agencies: What Do You Think?

As with the oil tycoons, the big ad boys aren't going to let their hard fought for money slip into the hands of a few who believe the world is forever going to change--whether it is or it isn't. There is just too much money at stake. Remember, this country is firmly rooted in the monetary benefits of capitalism.They will find a way to adapt, to survive and to continue to make money.

re: The Future of Agencies: What Do You Think?

A couple of take-outs from the client side at Marketing Week's Agency Evolution conference back in September:Will Harris, Nokia marketing director: 'At Nokia we are using those agencies that can get our message to the right people in ways that can enable those people to share the message. We’re looking at smaller, agile agencies with smart people and cohesive offerings.‘We see the right agencies as partners, not suppliers. They need to understand our business more. We value truely transparent relationships and that means getting remuneration off the table as soon as possible. Lastly it’s about people. The best agencies have the best people.’And Phil Rumbol, Cadbury's marketing director:‘I see an agency’s main role as working much closer with its client and acting as a purveyor of brand ideas and as guardians of brand behaviour.’The three preconditions for this to take place were as follows:- Stronger client/agency relationship (agencies need to be more flexible and responsive to clients’ needs)- Reconcile artistic and commercial tensions- Volume of activity up and cost per unit down

re: The Future of Agencies: What Do You Think?

Seth Goldstein, CEO at SocialMedia.com just answered this exact question in a Q&A on AdExchanger. I'll include his thoughts below. If you'd like to speak with him more on this subject, I can set up a phone call.From Seth:The agency model is evolving dramatically. The adverting agency industry is going to change as much, if not more, than the financial industry has in last couple years, in terms of the need for transparency and efficiency. Agencies are emerging as trading platforms, as buying platforms, and as investable pools of audience liquidity.If I were running an agency I would:1. Hire smart quants and traders from former hedge funds and Wall Street firms.2. Set aside a budget for $10-100 million to buy access to proprietary data, join all available exchanges such as Right Media, DoubleClick, etc., and utilize all of the data targeting technology available like you mentioned with BlueKai and eXelate.3. Leverage all the dynamic creative units coming onto marketplace including ours - SocialMedia.com.4. Work with ad clients on a hedge-fund-like model, i.e. collect a management fee but keep any upside from an increase in performance.---Here is the link to the full article: http://www.adexchanger.com/social-media/socialmedia-com-focused-on-turni...

re: The Future of Agencies: What Do You Think?

Agencies of tomorrow will be curators of sorts for communication.We will be relied by marketers to create messages, utilities, applications, conversations and experiences that consumers will find useful in some way.

re: The Future of Agencies: What Do You Think?

We're exploring this topic daily, redefining what skills are needed to lead in the digital (agency) environment. At our workshops, classes, modules, and meetings, this topic is often explored: what will the new agency look like? And beyond that, what will the new worker need to know? We already see a few brave souls stepping out of the agency model we all know, however we need a few more. Fortunately, BDW sits at the interaction of daily insight and expertise and we're clearly right smack in the middle of agency re-definition.

re: The Future of Agencies: What Do You Think?

Great question, but I think we're at such an early stage in the media revolution that we need to ask what the questions are, not what are the answers...

re: The Future of Agencies: What Do You Think?

The person on the street doesn't care about the difference between her online and offline life, she doesn't think in terms of new media and old media. So, why should the agency? She is also ready for a conversation with her brands.The future agency will stop thinking in terms of the medium (digital vs. traditional). Working on new models of communication that don't rely on the "single most important point" - conversations don't happen over "one most important point". Understanding the customer is not only paramount now but has to go one step further. Crowdsourcing & User Generated Content is not a threat, but has to be made part of the agency model.It has to move from Agency-Client model to Agency-Consumer-Client model.

re: The Future of Agencies: What Do You Think?

How about the following 5 macro changes affecting the advertising agency industry.1. The definition of what is creative work is exploding to include pretty much anything where digital technologies touch peoples lives -- games, applications, displays, mobile phones.2. We're seeing the 80 / 20 flip in action -- the spend for a campaign is flipping from 80% media / 20% creative to 20% media / 80% creative.3. We're seeing the creative process opened and reconstructed to fit the creative output needed. Team making and idea creation are happening on the fly through web-based tools. I'm seeing it on AdHack with small clients, big clients and big agencies. Sometimes this gets called crowdsourcing.4. Advertising is becoming a software-driven industry, subject to software economics and processes and requiring a software development understanding.5. We're seeing a shift to metric-driven decision making, replacing opinion-driven decision making. Big Ideas not longer spring fully formed from a creative director, they emerge from lots of small ideas based on iterations and feedback loops.Overall, I don't think we'll see new models from inside the advertising industry though the agency will continue to control the relationships, which are the real scarcity and value drivers.If any of the above sounds interesting, I'd love to be part of the process of interviews for the report.