The agency of the future is about vision and talent.

Quite recently I tweeted an observation about the seemingly unappreciation of experienced creative and strategy talent on behalf of agencies and the reaction quickly escalated into an interesting exchange of views on the changing agency business.

What everyone is noticing is how — disrupted by the changes in the media landscape and the subsequent shift of clients’ budgets — all agencies are struggling to adapt their structures and services while maintaining a viable business model. They are cutting down costs, mainly cutting down talent and creating a hollowed out middle “that means agencies are run by a handful of very expensive senior execs who don’t do the work, and phalanxes of replaceable, cheap juniors” — as the always accurate @Faris put it.
Needless to say this does not agree with clients, that are asking — actually demanding — that agencies evolve their services to become more strategic partners and less commoditized production or media buying factories. They want innovation, new capabilities, better and more experienced service. But at the same time they are asking to pay less for traditional services.
It’s hard to figure out what a new business model might be for agencies. And it is quite possible that there isn’t a single solution that fits all. And by ‘all’ I mean all clients and all agencies.
The issue in today’s digital world is that the traditional idea of an ‘agency’ — an outlet with a fixed structure for providing creative, digital or media services — seems obsolete.
Don’t get me wrong, businesses still need partners that provide these services, actually they need more capabilities on top of them (data processing, socialmedia managing, e-commerce..), but depending on their strategies they need those services in a cherry picking fashion, without too many strings attached. But this isn’t compatible with most big agencies’ business models.
For a long time agencies have stated they ‘put clients at the center of their business’, meaning that their service model and focus was flexible for clients’ needs. I feel this has massively downplayed their own business needs and goals when discussing contracts and often led to ambiguous relationships that have only become muddier with the rising of digital technologies.
On their side, agencies have pretended not to acknowledge how procurement was using digital to negotiate savings they could not (or would not) find elsewhere. Some of them have even leveraged technology to bypass contracts and milk margins that had disappeared. The issue has reached a tipping point last year in the US, with a public outcry and a call for ‘transparency’, mainly interpreted as a way of putting legal and procurement at work to prevent frauds.
The real transparency the industry needs is in a new model of relationship that ditches the ambiguity and starts from an honest conversation about a healthier way to reinvent the industry.
Maybe it’s time to go back to the days where there was a true partnership between agencies and brands, and they were benefiting from each other’ success.
In my experience the place to start lies in two key factors: vision and talent.
The most important conversation an agency and a client can have when they start a relationship is how they think the future of both their businesses will look like and what’s their plan to succeed. It’s an incredible exciting conversation to have, one that galvanizes both parties, and it lays the common ground for a truly profitable solution in terms of capabilities, service model and contract. It doesn’t hurt that both parties can use this occasion to learn from each other and become a smarter organization by growing together and evolving over time.
I participated in pitches where vision was the main part of the assignment and I can say it was a great foundation for creating innovative and profitable solutions.
The second factor is the one that has been squeezed and marginalized in recent times: talent. With all the discussion about the potential of new technologies there’s seems to be a general forgetfulness about what makes an agency’s capabilities better and its services more effective: the people that work there.
The best work a client can expect will come from individuals that live and breathe their business as if it was their own while at the same time bring new skills and a much needed outside perspective. These people need to be identified, dedicated (not stretched), incentivized and remunerated for the value they provide.
The current relentlessness pursuit of margins of the industry is alienating a generation of talented individuals, who are now looking elsewhere to find the working culture and the environment they can thrive in.
Rather than commoditizing their people, agencies need to step up their game in spotting talent, recruiting it (or creating exclusive relationship with it) and leveraging it at best.
That includes managing sensible work hours and getting the right remuneration for quality work. In this respect the term ‘agent’ is an apt on: someone who knows what good looks like, that is always up to date and can see what the next big thing will be.
Clients realize the value of it and some are now either refocusing their pitch remuneration on services and structures -as opposed to percentage of marketing spend- and even re-hiring the same talent that agencies have laid off as consultants or brand execs.
These two elements –vision and talent — are the foundation for an agency/client relationship based on transparency of intentions as well as behavior. It’s a way of operating that requires mutual trust, generosity and commitment, but it is the recipe to reinvent the industry and create long-term success.
