On why the agency business model must die
Let’s usher in the era of marketing communication services up in the cloud
In the following words, I will try to convince you that all advertising agencies out there should get rid of their swanky offices, fire every single one of their staff (with the exception of the relationship owners and the creatives), and move all their Excels, Powerpoints and Photoshop files to Google Drive.
But before I’ll start by saying this: there’s no other industry I know that has a higher concentration of effective problem-solvers than the advertising industry. Maybe third-world brain surgeons are up there too.
So what’s all this grudge I have with the ad world?
First, there’s an issue with incentives. Institutions are motivated to sustain the problem to which they are the solution, and the advertising agency business is no different. Agencies are still keen on keeping the media-buying model that James Walter Thompson helped make popular around 1877 (yes, that old). There are no incentives to change that, and still (as far as I know), there isn’t an automated online marketplace for traditional advertising space. Google, hello?
Second, a traditional agency is usually two steps behind true innovation. In general, they only start working when their clients have reached out for them in the form of a brief. The folks issuing briefs, on the other hand, are incentivized to play it safe. Any marketing manager I’ve presented campaigns to throughout my carreer will rather choose constant 3% sales growth year-on-year than the possibility of 30% growth if there’s also chance of market loss.
Third, it’s a highly concentrated business. Four or five of the holding companies control the agencies that manage almost the entirety of the available communication budgets out there. I’ve worked for three of these, and I can assure you, they are trying as hard as they can to persuade clients that they are still the best service provider out there.
So what does the future hold?
A completely new business model for ad agencies. One that relies on only the two pieces that deliver true strategic value to clients: the relationship owners and the vision shapers. That’s it. All the rest is superflous. The secretary? Ditch her. Accounts payable? Harvest can automate that for you. When you remove all the fat of an agency, all that remains is the guy who truly understands the business problem, and the other guy who can solve it.
I’m currently trying to turn this concept into a reality through a collective I’ve founded called Mecenato. We have no offices, and never will have. We’re just a bunch of business and creative people scattered around the world bearing web-connected MacBooks. We all worked in big agencies before. All our finance, cash flow, time sheeting, file management and production systems are up in the cloud (right now as a big mash-up of different web services, but ideally a cohesive browser-based offering that will be the first digital product we can sell to the very ad agencies we now wish to destroy).
The fallback plan has always been to go back to work in an agency if this experiment fails. After all, they are everywhere, they work in the exact same way, use the same jargons and their offices are identical in their belief that they are all different. Thinking again, maybe I should change the post title.