At my agency, Red Door, one of our core values is evolve. It is with this spirit that we have to perpetually assess whether what we're doing today is going to help us survive and thrive in the future. We celebrate our twelve-year anniversary this month, and as we do every year, we took some time to reflect on how we have adjusted to this constantly changing environment -- and more importantly, how the environment is going to continue to change in the coming years.
Within the larger, delicate ecosystem of marketing where marketers and other agencies have historically lived, there is still a ruthless and nascent biome that continues to reshape every quarter. That environment in which we live exists at the intersection of marketing and technology. Consumers are spending more and more of their time there, and consequently, the marketers, agencies, consultants, and software companies are moving in.
After taking a look around, here are my observations of the current challenges to agencies and how they are being addressed.
Clients are on the lookout
Clients are keeping their eyes open like never before, and they are far more comfortable with trying out someone new. They are open to talking to technology companies that aim to solve a particular problem or to agencies that have solved other clients' problems in unique ways. The consumer trend FOMO (fear of missing out) applies to clients, too. They don't want to miss out on some great new thing that they could have tried just because their current agency didn't bring it to them. All agencies need to be vigilant because size doesn't matter as much as results do.
But clients are also settling down
While clients are looking for the next thing that will help them meet their short-term goals, clients are also looking to settle down with someone who can support them for the long term. As the economy recovers, clients don't want to scramble as they did before. Rather, they need long-term strategies to deliver methodical and precise results. Agencies need to structure themselves to build strategic chops and planning infrastructure from which to execute on long-term strategies and, thereby, cultivate relationships. This is a case where a little size, and the ability to quickly scale, does help.
A crowd of gimmicks
As the environment has gotten harder to compete, agencies have taken new cuts at an age old problem -- how to differentiate themselves. We have all heard these concepts and more: "We only serve eco-friendly clients," "We only work with X number of clients at a time," "We have a different pricing model," "We crowdsource the work," "We are data-driven," "We are completely virtual and pass the savings to you," "We only serve clients from country X trying to break into country Y," etc.
Many of these concepts are truly authentic, legitimate, and maybe even aligned with personal beliefs. All are attempts to stand out from the crowd through at least some kind of published focus, which any marketer can appreciate. Unfortunately, however, most of these are "gimmicks" or false fronts that offer no real value to the client.
To be successful for the long-term, a differentiator has to align with client needs, drive the necessary agency revenue and profit, and can't just be a device for new business. It has to last and continue to provide value throughout the relationship. If you value the same things in one another, it can make for a good friendship, but if the work doesn't create value for both the client and the agency, then you will part ways.
Better, faster, and cheaper
More so even over the last few years, clients expect the work not only to improve, but also to be produced faster at lower rates than before. The fact is that this is the expectation in every industry (including your client's), not just ours. The challenge is that on the revenue side, clients want services for less, and on the cost side, employees want to make as much as or more than they have in the past. Hanging in the balance is the rate sheet. Time and materials is a broken model, and in the end, this industry has to find a way for budgets to work within the results delivered on behalf of clients.
Now, get even faster
Blame social media. News (or opinion masquerading as news) travels faster than ever before and clients expect agencies to keep up with it. Everyone expects that, when the lights go out in "The Big Game" that we are standing by with on-brand, opportunistic creative. And the reality is that this only comes by being completely synchronized with clients. Agencies need to be on the same page, have established trust, and then have a handle on the tools that allow for real-time response. If we can't do that, agency functions go in-house.
Client-first rather than operations-first
In the past, agencies often allowed their operations to get in the way of what was best for the client. In other words, they only produced one type of project or used one type of technology. The tools you have, while efficiently delivered because they're easily repeatable, are not always the right tools for the job.
Astute agencies think through what a client needs and know when they need to offer another solution (which might not be within their four walls). In the past, agencies feared that if a client's needs were met elsewhere then the client would not come back. However, agencies need to primarily ensure their clients' needs are met, and they are the resource that helps them figure out exactly what they need. They do that through education, partnerships, and by providing value as a curator, quarterback, and champion.
Develop and maintain healthy partnerships
Technology and resources are changing so fast, it is challenging to keep up. Agencies leverage partners to keep them fresh and capable. We all know that it is our job to bring the freshest thinking, on both the strategic and execution side, and we can't do it alone. Partners extend capabilities, keep the work fresh, and most importantly, keep the agency relevant to clients.
It is important to note that this section illustrates the point that there is a place for functional specialists, which I do believe. However, specialists will bring depth to specific tactics and can no longer be, for example, "digital" as a specialty. The breadth of tools within the "digital" toolbox is expanding; therefore, it creates a need for functional experts within subsets of digital to supplement agencies that lack the necessary depth.
Age-old partner vs. agency debate
Agencies want to be partners. That still hasn't changed, but it continues to be a struggle. The best way that agencies find themselves in the partner role is to be truly, not metaphorically, invested in the client. Short of that, it is difficult to be anything more than a trusted advisor. As soon as the client loses trust, you're at best a vendor and most likely out the door. However, the request lives on and the half-hearted acquiescence by the client that you are more than a vendor continues.
If you want to be a partner, then you have to pony up. If you are good with being the trusted advisor, then you have to maintain the trust on every dimension the client values.
Continue to build digital capabilities or fluency
Traditional agencies far and wide have adapted to the new digital world, though some better than others. I contend that everyone, however, is headed toward integration of traditional and digital. If there is no separation to the consumer, why would the agencies, or more specifically the clients, separate it? From a production capabilities standpoint, I get it, but not from any other direction. Production capabilities can be trained.
Many digital agencies are better poised to take over traditional duties than the other way around. It has a lot to do with access to customer data, a measurability discipline, understanding the voice of the consumer via social media, an always-on mentality, and a penchant for user experience.
Get comfortable with data
In this increasingly digital world, it is critical for agencies to get comfortable with data. Measurability, for all media, is imperative. While not everything can be perfectly measured, everything is still under that scrutiny. If you're going to spend anything, businesses want to know what they're getting for it. Fuzzy measurements are not going to cut it anymore, and the common denominator for it all will be counted in currency. If you thought you left math behind when you opted for a Bachelor of Arts rather than a Bachelor of Science, then you're going to have to catch up a bit. Statistics, finance, algorithms, and quant models are now in the vernacular of the ad world, and agencies need to adapt to it.
The marketing and advertising industry is in the middle of tremendous shift, and if anyone can adapt to the shift, it is the creative spirits within our ranks. No roadmap is the same for anyone, and certain clients fit certain agencies better than others. However, for agencies to continue to be relevant to clients, they need to evolve by truly understanding the client's environment.
"Fighting businessman stair one" image via Shutterstock.