What marketing agencies did next
(Guardian Web Via Acquire Media NewsEdge) Talk of agencies' need to change is nothing new. But in a digital world in which consumer behaviour is constantly evolving, how best to evolve the agency model has become a pressing concern.
"The main change agencies are having to deal with is the degree to which they must now be digital – which has changed how they work, the nature of their work, and how they make money," says Ian Millner, joint global CEO at Iris Worldwide. "Digital is now embedded in most agencies' DNA. Getting to that point has been hardest for those with the strongest traditional agency legacy and agencies within larger groups."
It's not just about putting in place the appropriate digital infrastructure and recruiting the talent capable of creating the best digital campaigns – just as important is bridging the cultural divide.
"A key challenge is bringing together creatives and technologists – combining lateral thinkers with those who think in more linear, binary ways," says Stephen Maher, chief executive of independent agency MBA.
Over the past few years MBA has significantly broadened its skillset, recruiting experts in coding, social media and communications architecture. But the less tenable challenge has been to create an internal culture underpinned by open-mindedness and flexibility.
"You've got to shift your centre of gravity if you're going to move on from the old-fashioned silo culture that many of the industry's more traditional agencies have long struggled to shed," says Maher.
The move towards integration has, perhaps, been one of the biggest shifts in recent years, as agencies break down traditional barriers between different disciplines in order to deliver the integrated communications brand owners now need.
But don't think this means the imminent demise of the specialist agency – or, indeed, automatic victory for small agencies that claim only they can be nimble. Attitude and flexibility are key.
"It's a challenge to be truly integrated and deliver competently across multiple disciplines, and many fail because they end up being a jack of all trades, master of none," says Guy McConnell, founder and MD of Burns Marketing, a small, London-based independent agency.
Integration depends on a fine balance between integrated thinking and specialists in a variety of creative disciplines. "Too many generalists in the mix and you struggle to break new ground," McConnell says. "Too many campaigns, though well integrated across each channel, lack even one creative element that stands out. Just having everything look the same should not be the objective of an integrated campaign."
Connected thinking that creates effective cross-platform communications comes from a connected group of people geared towards collaboration, says SapientNitro senior vice-president and European managing director Nigel Vaz. "Above all else, your agency culture must support and encourage different points of view," he adds.
To ensure just this, Sapient Nitro offices are open plan with no formal departments. Instead, people with different specialisms work in cross-discipline "idea engineering" teams. There is an emphasis on training, too – to ensure, for example, that those with non-technology skills understand technology and that technology specialists are similarly well versed in branding and strategy. The agency also offers incentives and bonuses built around collaboration and knowledge sharing.
Agencies of every size and background face challenges when it comes to how best to evolve their structures and approach. "For some bigger agencies, change is like turning around a supertanker," McConnell says. "On the other hand, some small agencies simply lack the required breadth of skills, while some digital agencies lack knowledge about how data can be used in marketing – the depth of understanding you find in an agency with a grounding in sales promotion or direct marketing."
Sarah Todd, UK chief executive of WPP-owned activation agency Geometry Global, which operates in 56 markets, believes larger organisations can have the edge. "We are big but agile, and we don't work in silos. With scale comes breadth of skills – and that's essential if you are to respond to what's needed and react fast," she insists.
If there are challenges associated with developing different agency structures, even greater challenges face those eager to evolve the traditional agency business model, says Maher.
"What is a communications idea and what is a product idea nowadays?" he observes. "Nike Fuel [which tracks your body's everyday activity] is a combination of both, and agencies are increasingly working across what was once a clearly demarcated divide."
Yet some believe an evolution from the traditional fee-based agency remuneration system to a system of payment that reflects results and the business value generated is essential if agencies are to evolve. "This would create greater opportunity for an agency to invest, to develop its talent and to try things that are new and different that – even if they fail – enable an agency to become more innovative," says Vaz.
Change to financial models remains slow, however. This is due, in part, to client procurement driven by a focus on managing margins and costs downwards rather than cultivating entrepreneurial relationships with agency suppliers.
"Change to the financial model is required for clients to benefit fully from the most capable agencies in this respect," says Miller. "Clients are trying to keep up, but while agencies are trying to evolve, the rate at which they can do so depends on how they are paid. In today's marketplace, consumers are leading the way."
(c) 2014 Guardian Newspapers Limited.
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