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11 reasons ad agencies will never die

11 reasons ad agencies will never die Jay Friedman

Imagine you're in your late 20s. You know saving for retirement is the right thing to do, so you're participating in your company's 401(k) plan and hopefully even putting some additional money away from each paycheck. At this point, your best bet is likely to use an online platform, pick a very low cost fund, and let it build and grow. But now imagine it's 20 years later. You've done well for yourself and have built up a respectable savings, both through 401(k) plans and your own savings. Now, some diversification makes sense, and doing this right can get complicated. Those who are penny-wise and pound-foolish (or those with a hidden talent for making strong financial predictions) may scoff at paying a professional to help with this task. But most folks in this situation will seek the help of a professional to guide them.

11 reasons ad agencies will never die

It's not just in financial matters where this plays out. It holds true with working out with a professional trainer, seeing medical specialists, and in marketing or advertising. Anyone with a meaningful budget will almost always do better with the help of an outside professional. Professional expertise is just one of the reasons ad agencies are valuable and will never lose their important place in the marketing ecosystem.

Being a product or category expert is not the same as being a messaging, media, and targeting expert

You've likely heard of Lake Wobegon, a town where all the children are above average. Most of us are no different in evaluating our own talents. In a still-soft-science like advertising, overestimating your own abilities comes easily. But let's flip the coin. How often do we look at our hospital clients and think, "I could run this place so much better than you." Gosh, I hope...never. There is so much expertise required in running any business that it should be clear to outsiders they couldn't easily do your job. If your clients think they could do your job, perhaps the largest marketing task you have in front of you is to help your client see why running an ad agency, or even just that client's team within the agency, is not as easy as it looks.

Shared tool costs

This might not be a big deal to top 10 advertisers, but start getting further down the list and the cost of research and other tools becomes prohibitive for advertisers to buy solely for themselves. An agency could very easily spend $500,000 just on a few digital tools such as comScore/Nielsen, Kantar, and a social media listening tool.

Leveraging spend and enterprise pricing

Did you know you could save 15 percent or more on car insurance in just 15 minutes? Or wait, is it 7.5 minutes now? Or is Dennis Haysbert the one who will save me more? The problem with everyone saying they'll save you the most is that now it doesn't seem that anyone will actually save me more on car insurance. Such has been the media industry with each agency promising each client in new business pitches that no one buys cheaper in the market than they do. But think beyond price and instead consider getting certain publishers' attention at all. Getting a large publisher to pay attention to your $500,000/year PMP deal might be challenging. But for an agency with 10 clients your size, this becomes a much easier discussion. Similarly, getting a feature built in your DSP may be challenging as a single advertiser, but when your agency goes to bat for you on behalf of you and its 10 other clients, you can be sure those heavier pockets carry influence an individual marketer might not otherwise have.

Scaling quickly

Most organizations are like large ships; they don't turn fast. When a marketer has the need to grow its marketing -- or shrink it down -- quickly, it's a lot easier to look at your agency contacts, tell them your needs, and give them a timeline. Agencies have significant experience in scaling up and down quickly and are likely to be more nimble than your own organization at responding to scale needs.

Fresh eyes, especially for creative

Have you ever tried to put together something from Ikea and found yourself at a point where no matter how you look at it, it's just not making sense? It happens to us all, but when a client does creative in-house, what happens when the eyes are no longer fresh? Of course it's not guaranteed -- none of these maxims are absolute -- but a fresh perspective, especially around creative and messaging to keep your brand current within its competitive environment, is more likely accomplished with an external agency.

Sharing cross-client and cross-vertical experience

We're fortunate here at Goodway to work with hundreds of clients across nearly every vertical. So often we see an amazing idea or result from a campaign that we can quickly share with clients in other verticals to improve their results or marketing. Of course, we only share when information isn't confidential or proprietary to that client. We look at tactics, ways of measuring success or success with new technologies, share them between clients, and everyone wins. It's nice when a client doesn't always have to be the first to try something and can see some real results from other users. This is tough when a single client is the only user.

Agencies are "pitch-and-test" magnets, and that's good for a client

I'm not sure which version of the LumaScape we're on now, but we can all agree the digital marketing space is cluttered and challenging to navigate. Part of this learning and education comes through getting pitched and doing internal compare/contrasts against other vendors. The other part comes from testing what sounds right and learning. As a result, agencies' broader scope of campaign types and clients enables them to test more technologies and tactics, giving broader learning and additional ear-to-the-ground support to a client.

Much of this agility comes from the ability to quickly shift budgets from one platform or partner to another. But perhaps the biggest benefit is that test-and-trial contract terms tend to be less binding for agencies than when executed with clients directly. Set-up costs and long-term commitments are often waived for larger agencies that have larger spending potential. This is all in addition to bringing greater buying power to bear with technology and media vendors, which we've already discussed.

You want in on that beta?

Being first is fun, but it also can be a competitive advantage. Being able to execute a new kind of targeting before your competition could be the difference between meeting forecasts and not. It's safe to say, though, that if you're not a top 10 advertiser -- or one who is known as incredibly progressive and risk free -- direct clients won't be invited to product betas. A big reason for this is that the benefit of that client's learning begins and ends within their company. With an agency, one team can test it out, but instantly 10 more teams and clients will sign up for the product or feature if the beta was successful. Ad tech firms spend their time where they can generate the best long-term result. That is most often with agencies.

Timeshares, but for people

Timeshares have gotten a bad rap, but the theory behind them is spot on. Recently rebranded as "fractional ownership," the concept has done better and now even has taken root with small companies hiring CMOs, CTOs, and CFOs this way. When clients work with agencies, they are getting fractional ownership of various specialties and high-level positions. Matt Powell, executive media director at Moroch Partners, has seen numerous clients benefit from this model: "Increased media complexity requires specialists, many of which didn't exist years ago. Social content writers didn't exist 10 years ago, but now no brand can live without them. Agencies enable brands to share specific sets of narrow expertise efficiently."

Large ships, part II

Scaling up and down in size is one component, but scaling learning, expertise, and knowledge evolution is another significant advantage clients get when working with agencies. Not only will your agency likely be able to get access to beta programs, but it can take that learning and scale it across the organization and your account quickly as well. This scale comes with internal advantages for clients as well. Asking for new headcount or changing out old headcount simply to keep up with new knowledge in the industry will not go over well in most companies. Additionally, what we may perceive as a crucial knowledge need today may be fleeting -- we've all been taken unnecessarily with a trend. You can and should require your agency to be current with trends, but you'll be glad you weren't the one who put in the new hire requisition to cover something that it turns out you no longer need.

"If I had a nickel…"

...for every time someone predicted "the death of" and it never happened, well, I'd be doing pretty well for myself. According to prophecies over the past 10 to 15 years, TV will die, banners will die, the worldwide web will die, and agencies will die. But none of these have perished. Even newspapers are still printed every day!

Agencies will not die. The agency model from 50 years ago will die if it's not already dead. The agency model of today may ultimately cease to exist -- but not before agencies evolve to be intelligent and vital brand partners for their clients.

Jay Friedman is the COO of Goodway Group.

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"Locker 11" image via iStock.

Jay Friedman is COO of Goodway Group, and a partner in the 3rd-generation family company founded by Milton Wolk in 1929. Friedman joined in 2006 to add a digital media component to Goodway’s offerings, beyond the existing print and promotional...

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