Everyone is talking about the bloated agency structures and business models that keep their own interests at heart, instead of their clients.The Drum spoke to four industry experts from Sky, The Fawnbrake Collective, Bacardi and LinkedIn - all judges of The Drum Agency Business Awards - on what’s next for the faltering agency model.
Is the agency model dying or adapting?
Debarshi Pandit, head of multicultural business/special projects, Sky: The process has already been initiated and if you look at the recent sweeping changes across WPP starting with Y&R becoming an enlarged YMLY&R, the birth of Wavemaker, etc. you get the picture. Agencies have to pass over bureaucracy and structures and give way to being nimbler and faster.
Amelia Torode, founder, The Fawnbrake Collective: From our experience as judges this year, agencies have understood that structures have to change. It's not just enough to ask "how do we do less with more" (although that is a critical question), the question is how do we re-create working structures better optimised for the new working realities of the 21st century.
James Gill, director of agency and channel sales EMEA, LinkedIn: The agency model isn’t dying, but it is evolving. Clients are demanding smaller teams with client-focussed, full-service capabilities. We're seeing a move away from huge teams with multiple touch points, instead smaller teams with bespoke skill sets are doing the thinking and inter-agency working is being streamlined to reduce turnaround times on campaigns.
Lisa Jedan, global head of brand PR and corporate communications, Bacardi: “Consumers and customers are demanding a new, more direct relationship with businesses, brands and institutions and being part of the cultural conversation is critical to their success. The biggest shift is away from telling your brand story and towards finding ways to be part of the story. If agencies can help clients transcend their category and product to do things in culture, they will create more meaningful and interesting roles and deeper connections with their audiences, in turn driving greater brand loyalty that leads to sales.”
What’s next for the agency model?
DP: The coming together of all departments. In my experience, I have seen that all the different businesses operate in silos – for example, the media team don’t know how the creative looks like as they have not been involved in the creation and vice-versa for the creative team.
AT: Re-birth. The traditional agency model is suited for a different era, the world has moved on and the game has changed. We need multiple new models that better reflect how people want to work. Clients and agency talent alike. No client is identical, which is why the idea of one agency model is impossible.
JG: There is no shortage of speculation when it comes to asking, “What’s next?” for the agency model. We’re seeing agencies embed themselves even deeper within their clients in order to truly understand the business challenges they face and how they can solve them. Agencies are increasingly becoming more nimble and agile to suit those client needs, with an increased focus on everyone “thinking and doing” versus layers of gate-keeping account management.
Do you think the agency of the future will be smaller, specialised, and focused?
DP: Definitely the first, can’t say of the other two.
AT: I do, it is one of the reasons why I picked my Chair Award for The Drum Agency Business Awards. The issue will then be, how do these new breeds of faster, flatter and more flexible agencies joined up together to create the scale that they might need.
JG: In a word, yes. Within the bigger agencies, we’re likely to see reorganisation take place to establish smaller, nimble, more specialist teams. Start-up independent agencies and digital ad tech companies are building compelling offerings around previously unmet client needs around real-time bidding, dynamic creative and personalisation at scale which are key to creating value, rather than traditional trading heft.
What is the biggest threat to the agency model?
DP: Bureaucracy, lack of accountability and the inertia of treading into the unknown for the fear of getting it wrong. Agencies have stopped being bold and that is not good for our business.
AT: The biggest threat to the current agency model is a belief that tweaking around the edges of a legacy model is going to cut it, it won't. We need to start again. We need to blank canvas more and tweak less. Often I see clients innovating faster than some agencies and that’s a worry.
JG: Already, clients are taking more capabilities in-house or slimming down their agency roster. Clients are questioning the value of having different agencies for individual disciplines, each working against their own P&L in buildings in every capital of the world. This is a threat for for the holding companies who have built huge networks across the world. However, there is huge opportunity here if they truly believe and understand that to be successful in the future requires a completely different approach to the one that has served them so well in the past.
How would you describe the agency of the future?
DP: It will probably be a one stop shop… Life is complicated as it is and I can’t imagine clients having different agencies / suppliers for different business requirements. We need to make things easier for clients and also provide accountability in the process.
AT: The future's bright, just as Orange said all those years ago. I’m more optimistic about the future of our industry than I ‘ve been since 1999 when technology was creating such huge creative and strategic possibilities.
JG: Successful agencies will be those who are fixated on helping clients solve their business problems. More simplified team structures and full-service offerings will thrive as clients prefer to engage less touch points to do great work. In a world where always-on dialogue with target audiences is growing ever more complex, those who provide simplicity will win. In order to simplify, agencies will need to be more data-driven and tech enabled with gaps in capabilities and expertise increasingly filled through partnerships with outsourced specialists.
In this new agency model conversation, what is the role of culture?
DP: As they say, ‘culture eats strategy for breakfast’ and success will only be in the offing for the agency that gets the culture context right and that starts with hiring the right people in the business who have the passion for the ad business.
AT: Culture is the oil that makes everything work, culture brings a business to life, no culture, no agency model and no movement. Culture is at the heart of everything. You'll see the importance of culture in the agencies that we have cited as winners. It wasn't just about profit margins, “burn and churn” is too prevalent in our industry.
JG: One thing is constant and that’s the importance of attracting and retaining the best talent. Increasingly, businesses - not just agencies - need to focus on creating more diverse, representative and inclusive cultures and teams. Ultimately, clients still buy teams and culture, more than they buy corporate organisations. Creating a sense of purpose, belonging and meaning around the business’s mission and building an environment that people want to be a part of is absolutely crucial.
Pandit, Torode, Gill and Jedan are all judges of The Drum Agency Business Awards. The finalists have been announced, view the full list here. Winners will be revealed at a ceremony on 27 November at the Marriott Grosvenor Square, London. Tickets are available now.