Learning from the tech giants — how to build an agency from scratch in a world dominated by GAFA
By James Schad, Founder of We Grow Startups
“Always lean into the future; when the world changes around you — what used to be a tail wind is now a head wind — you have to lean into that and figure out what to do because complaining isn’t a strategy.” Jeff Bezos, Amazon CEO
It was around four years ago, when I was a planner at GroupM’s MEC, that I first sensed the winds were changing for media agencies.
Management consultancies had started poking their noses into our business (Accenture were testing the water with early acquisitions of small marketing agencies); artificial intelligence had conquered chess and had marketing next in its sights; and the tech giants — Google, Amazon, Facebook and Apple (GAFA) — were well on their way to world domination, with media agencies potentially collateral damage on their rise to the top, as they cut out the middle man and made it easier for clients to work with them directly.
Fast forward to March 2017 and I was standing on a stage in Austin, Texas in front of an audience of tech enthusiasts trying not to sound too dystopian about the rise of these tech giants. One heckler aside (that’s a story for another time), speaking at SXSW was an amazing experience and had got me thinking about how agencies needed to adapt to survive.
By that point, I’d also left the world of big holding companies to set up on my own. It was my attempt to build something new, something fit for purpose in an age dominated by the Big Four, consultancies and AI. I’d loved working at big agencies — the brilliant people, the massive scale, the buying power — but this was an opportunity to do things differently, to focus on speed, flexibility and transparency.
So, rather than accepting defeat at the hands of Google and their kin I’ve been spending time thinking about what us agency folk can learn from GAFA and how we can be more like them:
Be more Google, be more automated
Self-driving cars. The self-teaching progeny of AlphaGo. Self-service, auto-optimising AdWords. Google’s platforms are focussed on removing the need for human intervention. For advertising purposes this allows them to work directly with more clients and tap into the long tail of small businesses.
But automation for agencies could mean a couple of things:
1) Automating platforms to serve clients using a software as a service model — subscription-based, light human touch systems.
2) Automating internal processes to make them more cost and time efficient and allow more decisions to be informed by data. Check out hedge-fund billionaire Ray Dalio’s Dot Collector, which his company uses to collect real-time feedback and aid decision-making in management meetings.
Be more Amazon, be more customer centric
“Your margin is my opportunity.” Jeff Bezos’ attitude towards competitors is telling. Amazon puts its customers first, offering them lower costs and increased choice. In The Innovator’s Dilemma, management guru Clayton Christiansen, talks about how tech disrupts industries by driving down costs and opening up new potential customers. In this way, the power of automation allows us to lower overheads and pass on those saving to our clients.
Be more Facebook, be more iterative
Build, measure, learn and repeat is the philosophy of The Lean Startup, and Facebook is an embodiment of its principles. It continually optimises user experience to grab and hold our attention, working out how best to give us our next dopamine hit.
Technology means that improvements can be achieved through low cost, incremental changes without the need for big risky bets. Why do we need to rely on focus groups and endless debate to build marketing plans and executions when we are able to test and learn quickly in the real world?
Be more Apple, be more of an ecosystem
Apple not only designs great products but has created an ecosystem to lock in its users and disincentivise them from ever leaving.
Holding companies like the Dentsu Aegis Network with their single P&L operating model and multiple specialisms are already creating ecosystems for clients to lock them in. However, these fixed cost centres need sustaining. Big agencies have to sell services to clients which might not be in their best interests. Smaller businesses are at an advantage here as they can retain their neutrality using a more flexible approach, building informal networks of complimentary businesses.
So, if you’re building a new agency or trying to make an existing one better then you need to try being more like GAFA; more automated, more customer-centric, more iterative, and more of an ecosystem. And above all, as Bezos so rightly advises, lean in to the future.
On which note, why not come along to the IPA on 27 November where I’ll be developing on the themes of my SXSW talk “GAFA, The Relentless Rise Of the Tech Giants” and examining how these four businesses are changing the world in which we live and work? Book your place