Death by a thousand cuts: why the agency network structure is slo-mo self-destructing
I have always wanted to use the term ‘disintermediated’ in an article. Seems more scholarly than ‘cutting out the middle man’. We all know the everyday examples that are disrupting industries like banking and finance, transportation, property and entertainment, etc.
Is the agency network structure doomed in a hyper-connected world?
The advertising industry faces that pressure quite acutely, yet seems to be resisting the change – advertising greats poo poo the impact and importance of data; the process of developing, sourcing, producing and paying for ads has remained the same since the middle of the last century.
Trouble in paradise
Cracks have appeared at the edge and centre of the agency network. Seismic shifts caused by technologies are real – digital advertising demands creative output at a pace that creative agencies are not designed to work at and advertisers are looking elsewhere for alternatives. User generated content delivers similar results to million dollar production budget ads. Advertisers are re-examining their procurement models and demanding greater measurement and performance-based fees.
As the ultimate punishment for the worse crimes in ancient China, Death by A Thousand Cuts was a public spectacle meant to punish but also to send a message to all. I don’t really want to explain how the grim punishment was meted out, you can guess from the name. What’s the takeaway here? Can the ad industry do anything to save itself from a gruesome death? What should advertisers be aware of?
As the best and brightest in the industry gathered recently at Cannes to celebrate the best creative work the world has to offer (and drink champagne, of course), this is a good time to re-examine the agency network model.
It's broken but can it be fixed?
Agency networks still dominate the industry – large advertisers look to them to help their global marketing plans, they attract and retain large pools of talent, they have the dollars to acquire technologies and other innovations. But, I would argue that the slo-mo self-destruction is accelerating.
Wiser heads from within and outside the industry have noted the same, so I will try not to repeat their points. My observation is that the very structure is outmoded. Agency networks grew and globalised with their clients and it made sense to provide clients with the same resources they enjoy in HQ, elsewhere. There was a cost in duplication, but it didn’t matter when the internet wasn’t invented yet.
Today, it is possible to brief dispersed teams in real time and for them to collaborate effectively, while based thousands of kilometers apart from each other. An A-Team of creative rock stars from anywhere can be pulled onto any advertiser account to produce Cannes-worthy work.
Why then are so many separate corporate structures scattered globally? Can these costs be eliminated, so they are not passed on to advertisers? There is an advantage to have local agency teams to service local clients. But advertisers have already embraced the same collaborative tools and multi-geo way of working. Some agency groups have bravely started the process of restructuring in the face of these pressures to align closer to client needs.
Both sides have the opportunity to ride this disruption and emerge stronger from it.
The future is here
Imagine a future where an advertiser has a dashboard where she can view past campaigns, read performance reports and insights and also read the profiles of the creative team that worked on those campaigns.
Briefs are uploaded and reviewed by AI and a dream team of available talent is suggested by the AI based on their past performance. The AI can put together data sets and references for the planning team and creative director from global and local sources.
All meetings are virtual and the AI does a once-over across all creative submissions and makes performance recommendations. Production follows the same process.
The dashboard is integrated with publishers and media owners and ad is ‘lived’ to the approved media plan with a click. Performance is monitored and alerts made when any dips are anticipated.
Multiple ad variations are used simultaneously and A/B testing at this scale narrows down optimal target segments and creative direction. The creative team is alerted and tasked to develop more versions of optimal creatives. The advertiser team monitors a global campaign from a single dashboard, that is shared with creative and media teams.
This isn’t a picture of the future but a net description of various open-sourcing, reporting and collaborative tools available today. The future is here and change is at hand. The question is when advertisers will demand radical changes and if agency networks will lead change or be led by it.
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