Agencies, Do Your Clients Really Need You?
July 12, 2010 2 Comments
I’m seeing a lot of chatter lately about the relevancy of the 20th Century agency business model and the demise of the client-agency symbiotic relationship. This post from a London-based BBH Labs raises some provocative questions and proposed some intriguing alternatives to the future relationship between the two entities.
Digital technology, social networks and tools have fully empowered consumer to being content creators, critics, participants in the marketing enterprise. The behaviors technology and tools are enabling, along with the companion erosion of the MASS in mass media they cause, does call into question the whole value proposition of having an agency or 50 agencies (such as some clients have) handle work that the client should be doing.
It’s clear there’s much duplication of costs between firms handling different silos of a clients business….account people, creatives, overhead, profit….each firm has to have these to deliver client work and stay in business and yet, multiply these costs 10, 20, 50 times over and a huge portion of the client’s marketing budget is paying for outside staff and expertise that many are saying should now be residing inside the client’s organization.
Another post I ran across last week was even more dismal in it’s prediction of the agency’s future, as evident from the title: “RIP: 20th Century Agencies”. According to Forrester Research, the firm that provides ongoing tracking of 300,000 global consumer’s online behavior and participation with their Social Technographic Profiling tool, we’ve now entered an era of Adaptive Marketing. In this ear, marketers take advantage of media addressability and more effective data-driven decision making. Larry Flanagan, CMO for MasterCard put it this way: “We are moving form decades of push stategy to a more holistic 360 consumer strategy”.
Or, Trevor Edwards, head of global marketing at Nike said: “We’re not in the business of keeping media companies (or agencies) alive. We’re in the business of creating consumer connections”. And Nike has done this, building the largest community of runners in the world with Nike+…a product, a service, a community. Now, Nike doesn’t need to conduct focus groups with consumers or rely on the newest creative idea from it’s agency to breakthough to runners. It has over a million runners who use this connection, giving them unprecedented data on actual, instead of self-reported, consumer behavior. It can eavesdrop into conversations their hundreds of thousands of community members are having on a real time basis. And, it’s changed every aspect of their marketing…research and development, promotions, CRM, advocacy, customer service…you name it. As brands become media producers and publishers, creating their own content, connections and communities, the power of traditional mass media and the agencies that craft the mass marketing interruptions (ad units, PR, etc.) brands relied on so much in the past has to fade.
Agencies are struggling to adapt to this new age for many reasons, according to the post. Among the biggest challenges agencies face:
* They are focused on campaigns rather than experiences
* They’re good at talking but not at listening
* Agencies create media-centric ideas
* They treat customers as an audience instead of participants
* They are mostly “unbundled”, offering services in disparate skill sets
* They have trouble mastering many new specialties at once
* Agencies have moved down the value chain. Purchasing in now involved in agency selection and compensation and there’s little difference between agencies.
* Marketers don’t trust traditional agencies with digital and interactive agencies struggle for a seat at the strategic table.
So, what’s an agency to do to survive in this Brave New World? The path forward is simple but it’s not easy.
* Agencies must focus on developing big ideas that work across multiple communication channels and consumer touch points and they need to adopt a more iterative process for creating ideas.
* Agencies need to understand experiences that foster interactions drive marketing success from here on out. Media has now fragmented into distinct categories of paid, earned and owned and there has been a dramatic shift from viewing media as the foundation of campaigns to being seen as a catalyst of experiences.
* Agencies need to become more intelligent and adaptive…relying more on analytics to drive customer insights and developing a business and staffing model that gives clients access to the the talent that can do this and help solve their business and marketing challenges.
The big question that remains is: Can clients also make the adaptations they need to make? For all the talk about integration and holistic effort, the fact remains, clients still fund marketing activities based on legacy allocations of dollars in various “buckets” or slices of the marketing pie as well as managing this with internal staff in very defined silos tied to those buckets…above-the-line, CRM, digital, media buying, promotions, etc. It’s difficult to near impossible for an agency to provide an integrated idea to a client that isn’t integrated.
In fact, I don’t think the issue is integration, I think the real issue is orchestration. Some clients interpret integration in a very wooden, literal sense. To them, integration means: same thing everywhere. To me, this makes about as much sense as going to see a symphony concert where the conductor forces every musician to play every note in the same key at the same time. Where’s the artistry or beauty in that? Boring! And frankly, a lot of integrated marketing is executed in the same boring manner….same thing, everywhere. No wonder campaign results are so pitiful.
Rather, I propose the real secret to success in the new realities is orchestration…where there are levels of interest and discovery that the consumer uncovers at different touch points along their path to purchase. Yes, it all looks like it’s coming from the same company and yes, the message is consistent. In this sense it’s fully integrated. But the idea is orchestrated to reveal itself in delightful ways in social media, on mobile, in live experiences and at retail in ways that are unique, relevant and compelling for each channel or environment.
To pull this off, continuing with our orchestration analogy, it requires a beautiful piece of music (the strategic idea), skilled musicians (the client and agency stakeholders) and instruments (the tools and technologies) and a masterful conductor…but who is this? It’s that last individual that is the big question mark in today’s marketing organization. Are there people on the client side of the equation that can masterfully conduct?