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'Look at new ways of generating revenue' - Ignition Consulting founder urges agencies to stop relying on clients

Tim Williams, founder of Ignition Consulting, has urged agencies to waken up to the fact that they need to find new ways of generating income beyond simply creating a piece of advertising.

“There’s just as much money being spent on marketing today as there ever was but less and less of that money is being spent on us and what we do,” said Williams as he gave his keynote presentation at The Drum’s Agency Acceleration Day.

He added that it was essential for more CEOs, CFOs and COOs to embrace alternative ways of generating revenue and offered a series of key principles that agencies should consider.

Agencies as Inventors

Williams gave numerous examples of brands launching their own products, from liquor to nail polish and mobile phones.

"It’s a way to learn your way around product development and use that knowledge when talking to clients," he explained.

“Agencies want to learn from experience. They want to be able to talk to their clients about manufacturing problems, distribution problems, they want to say, ‘yes we know what you mean’. It gives an agency credibility,” he said. “This is the model of the future; not be so dependent on what goes on our timesheets and what gets billed to a client."

Agencies as Incubators

“To help clients incubate new ideas, new brands, new services, is highly valuable,” he continued.

Williams said that there had been a benefit for agencies like R/GA and W+K who have set up incubators, as not only would they will be able to learn from the innovation and technology but they would also be able to help a start-up launch, potentially get an equity deal on the back of its success, and ultimately generate a new source of revenue.

Agencies as Labs

Williams went on to advise that agencies look at creating, in a business solely dedicated to experimentation and innovation, something away from the classic advertising work of the “mother-ship” that develops something that could be a new revenue stream for the wider company.

“You have to have faith that over time this will not only produce additional revenues, but it will have tremendous reputational capital” said Williams, adding that it’s no coincidence some of the most famous and well-regarded agencies in the world like BBH and Razorfish are have their own labs.

Agencies as Talent Networks

Looking at where agencies should be generating ideas from, he suggested that they look at creating a global talent pool.

“We still tend to define our people as those within our four walls, but we have a global pool of talent, and a new model emerging with agencies being deliberate in wanting to access the talent and ideas of people outside their agency,” he said.

By creating a crowd-sourcing platform an agency can go into a pitch with 20 or 30 ideas while competitors will go in with four or five, he stated.

Agencies as IP owners

Williams also urged marketers to get out of the ‘work for hire service’ and move away from just giving away their ideas, innovations and product and instead “rent” them out to brands.

“You are knowledge workers, not labourers. We sell intellectual capital, expertise, and we’ve got to change the paradigm we’ve carried around,” he said.

Music, motion pictures, television, publishing, photography have all figured out a way to own their own intellectual property and Williams said that it was time for the ad industry to do the same.

Agencies as start-ups

Finally, Williams advisedl agencies to think like start-ups.

“We’ve got to be willing to disrupt our own brand before the client or procurement does it for you,” he said.

“Be 20 per cent more selective in chasing new business and invest that cost saving into innovating your own brand. Take 20 per cent of new client budgets and reinvest it in your own research and development.

“All profit is derived from risk. You want to make more money, take more risks. Apply the same creativity to revenue generating as you do to solving client problems,” he concluded.

Agency Acceleration Day was a conference run by The Drum to help agency leaders understand how to develop their businesses.

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