A few weeks ago, news broke that ZenithOptimedia U.K. will be going through a restructuring. There are rumors that Starcom MediaVest Group might also shuffle things around in the U.K. And this is just the beginning: Every week we learn about marketing professionals coming and going, departments being dissolved, departments being merged or created. In addition, new agency models are coming to life, from the crowd-sourced to the brand innovation studio for the 21st century.
What will it take for agencies to prosper in the new marketing reality?
As the marketing industry continues to mature, and as new channels and platforms need our attention each and every day, it's imperative for us to contemplate the structure of the agency of the future. Our livelihood will depend on it because not being ready for the demands of the future will likely lead to the demise of your agency.
Office mansion or garage? Neither.
Just this month, Bloomberg and Fast Company painted a black and white picture of the future of advertising agencies. Bloomberg believes in big agencies:
"The little hot shops, says Lubars, who are thumping their chests and declaring the end of mass marketing and the death of the Big Dumb Agencies, do so as a business posture, an attitude for journalists, and a sales pitch to clients. 'They don't believe a word of it,' he says.
"What he sees instead is an evolution, firms heading to the same place from different directions. Technologically able marketers are trying to scale up into full-service agencies; and full-service agencies are mastering the new channels and a world with 6 billion individual markets. 'They're racing to figure out what an idea is,' says Lubars. 'We're racing towards technology. It's easier to pick up the technology. That's why we got there first... They are desperate to take down the agencies that are doing it now.'"
Meanwhile, Fast Company predicts Armageddon for holding companies:
"In its fight for survival, the advertising industry is at war with itself. Generalists are competing with specialists. Interactive shops are vying to become full-service agencies, while traditional shops are yearning to become digitally integrated. 'The Great Race,' as Forrester Research dubbed it in March, drives a more intense competition over an already shrinking pie, and there won't be room for everyone. En route to the center, agencies are chasing one another to the bottom. 'I spoke to a high-level CMO the other day,' says Profero's Reitkopf. 'She said, 'I work with a holding company's promotions company, its social-marketing company, its response-marketing company. Every time we're in the room together, it's fine, but the minute I walk out to get a cup of coffee, someone will follow me and tell me they can do what the other agencies do for cheaper.' Adds Harley CMO Richer: 'Agency networks supposedly combine all these experts together on your behalf, but it only really happens when the business is at risk of walking out the door. Before then, these creative entities are locked off in separate P&Ls. They're not built to solve clients' problems, they're built to satisfy individual P&Ls.'
"That may be a vision for the industry as a whole. With all the defections of top agency talent over the past year -- Alex Bogusky from Crispin, Gerry Graf from Saatchi, Kevin Roddy from BBH -- it's easy to imagine a new advertising ecosystem of pods built around industry stars who have left their lumbering institutions behind. The holding companies will still exist, but around them could emerge a chaotic pattern of startups, independent talent, and connectors who thrive with minimum overhead. That kind of industry would be a fraction of the size of the current one. It would create opportunities for the most talented and hurt everyone else. It would be harder work, with fewer assistants and fewer million-dollar paydays. But this smaller business would be aloft on its new creative potential rather than sinking under the weight of its past."
As usual, the truth is somewhere in between: The likely solution is that successful agencies of the future will have a core group of professionals. This core group will accommodate both the size of the brand and the scope of engagement. Account management will continue to be crucial for client retention and, more importantly, better understanding the heart and soul of the brand. Small agencies often have challenges becoming part of the organization, while bigger agencies often see account management as being account servants. The core group will consist of highly paid professionals from all facets of life to serve the brand better and deliver real value based on insights.
The demise of Politburo structures
Basically, China is run by 24 people: Members of the Central Politburo of the Communist Part of China, overseeing the Communist Party of China. Just like your agency is run by a few people -- creative directors, client services directors, media directors, head of IT, HR, CFO -- specific structures vary from agency to agency. Each department head has their own fiefdom that they own and rule. Gladly, these structures will disappear very soon.
As described above, the core group will be a small group of professionals without a big staff or fiefdom. Instead, they will be working with more freelancers and highly specialized professionals that are physically present and those that are virtually present. I've experienced this shift in thinking in many agencies: People in organizations are now mature enough for freelancers to become a valuable asset. Agencies of the future will follow the concept of dynamic work force, forcing management to keep an elastic mind and create an organization that can be scaled better. Decentralization is an inevitable path as technology advances and the necessity for all of us to be holed up in cubicles becomes, well, unnecessary. A distributed, decentralized workforce enables agencies to be more flexible due to shrinking overheard, allowing more face-to-face interaction and a more human workplace.
It's not about messages: It's about content -- and storytelling
It's become common knowledge that content (stories, blogs, videos, etc.) will be a cornerstone of any brand's marketing. Producing great content is something many companies are increasingly embracing. But that's only the beginning. Increasingly, brands will embrace the art of storytelling.
The idea of storytelling, as it applies to business, is not about fairy tales or a thrilling plot. Instead, it's about how your business lives in the real world -- how everyday people use your product, how it makes their lives easier, adds value to their lives, eases certain pain points, and, ultimately, intersects with their needs and desires. It's about telling a true story very well. Increasingly, agencies will have to dig up and spotlight stories how a business lives in the world. And use people as their inspiration.
Agencies have been too timid in transforming into content creators, leaving the lead to traditional publishing companies (Meredith, Time, etc.). Agencies already have the power players on their staff (art director, copywriter) to become a publishing power house. They just need to be put to work.
Integration was a Band-Aid: Rip it off and turn to collaboration
From the first meetings when digital marketing reared their geeky heads, nobody has stopped talking about integration. Traditional and digital. Earned and paid. PR and advertising. And, you know what? It never worked.
In a world of hyper-specialization, integration is an impossible task. By the time you have integrated one new discipline, two new disciplines have popped up. Multiple disciplines need to work well with each other and collaborate constantly. This is a bigger challenge than just collaboration within the agency: Future agencies will need to collaborate with all brand stakeholders without fear and jealousy.
Without collaboration, the agency of the future will not succeed. Today's marketing reality requires more custom thinking, more custom execution, more attention paid at every turn, more real-time interaction with people, and a seamless delivery of creative, media, and communication services. How can we expect agencies that tried to integrate unsuccessfully for the last decade to deliver, create, and earn deeply enriching engagements?
Well, they can't right now. The skill sets are often incompatible and counter-productive. To adapt and be flexible for the changing marketplace, agencies need to stop integrating and start collaborating.
Don't even bother with mobile or social departments
In case you didn't get the memo yet: Everything is digital. Having a social, mobile, brand, display ad, search strategy is just an expression of how broken the current agency model is. And that your agency is too focused on itself.
Focus on the consumers. They don't care about any of your strategies. They are constantly connected and expect a holistic expression of a brand, on mobile, on social, on display ad, on mobile social -- wherever. Everything is potentially the medium for your content. Structure your agency the way people look at a brand: holistic and channel-agnostic.
Insights are the new data analysis
Customer insights and analytics are the basis for improving experience in sales, marketing, and customer service. Most agencies just deliver data and weekly reports, not analytical insights that can lead to real innovation.
As the analytical capabilities of agencies mature so does the depth of insights they deliver. From customer/insights/marketing effectiveness studies over customer attrition modeling to real-time behavioral analytics and product/service innovation, the changing marketing landscape has increased the need for advanced analytics. Agencies of the future need to leverage a 360-degree view of marketing data in an integrated approach to stay competitive. This includes marketing financial planning, management and reconciliation, as well as campaign planning, marketing effectiveness reporting, asset management, and distribution. Tying all the data together into a consolidated view will require advancements in the underlying marketing capabilities. Most importantly, it's about delivering business value through continuous analytic capability development.
Small is beautiful
The transformation of consumers into producers has brought on the democratization of the big idea: Agencies are not anymore the sole generators of solutions. Increasingly, clients will look to their agencies as strategic consultants, not big idea factories. Real agency value comes from having a partner with a broad perspective and insight on your business, a team with peripheral vision, foresight, and hindsight, ensuring that the whole plan is greater than the sum of its parts.
Agencies are going out and creating small-scale experiments that demonstrate there might be gold in the hills. And, depending on success of the initiative, scale up or down. Implement successful small ideas in other channels, adjust to the desires and needs of that channel audience. This is not a new idea: Direct marketing has prospered by being people-centric and always guided by response analytics. It's just something new for big agencies with the desire to develop ideas: The era of putting all your money on one number on the roulette table is over. You need to spread your bets.
Merge creative and technology
The future agency is based around technology, because technology is the link to everything. If technology is not one of your core competencies, you won't be around by 2015.
We can no longer work in agencies where IT, technology, and marketing are not working together. We need to create a role within the agency that combines core skills in marketing and technology in one role; Call that position chief marketing technologist, call it chief technologist -- it doesn't matter. What matters is that to deliver valuable marketing programs, you need to live and breathe technology. Location-based apps can't be just a buzzword, it has to be experienced by anybody in marketing. This role has to work closely together with IT to find agreeable solutions regarding security, infrastructure, etc. This position has to be on par with the CMO, CIO, and CD.
While this is a mission-critical position, we need to be careful. We all have seen when technologists try to be marketers (boy, that is ugly) and marketers just push buzzwords without understanding technology (even uglier). Finding that right balance of technical savvy and marketing know-how in one person could prove to be a major challenge. A challenge you need to conquer as quickly as you can.