Adapt or lose that top table seat: why it's time for agencies to grow up beyond their teen years and re-imagine
If disruption is the new norm, transformation is the antidote to long term decline. 88% of the Fortune 500 from 1955 no longer exist in the same form. While we might expect business to radically reform over 60 years, that’s less than a fifth of businesses with any real longevity.
Tomorrow, companies that dominate and die within a decade may well become the norm. Rapid re-imagination and improving the experience for customers has become the key to unlocking growth.
Netflix started as a DVD sales business, after a year it moved to delivering DVDs by post and now it is the world’s biggest streaming service in 170 countries. Amazon pivoted from books to wider online commerce and then to both an "always on" software revenue model through Amazon Prime and into hardware with the Kindle and Alexa. Google re-invests millions every year searching out its next Adwords scale product and is now having success of its own in hardware.
The lesson here is swift experimentation in adjacent, scalable sectors.
Standing still is no longer an option but I would argue that this is largely what the ad industry has done for much of the last two decades. We had full service agencies, then independent media and creative and now many digital specialists, but I would argue that in the last decade, there's been minimal deviation from the same underlying DNA. Today, the ad industry faces unparalleled disruption as a result of technology radically changing not just media consumption, but the automation of buying and content creation and the dis-intermediation of existing models.
As a nation we love to bemoan red tape. Nothing can get done in the NHS, in banking, in government because of red tape. It is upheld as the nemesis of progress. It is blamed for goals not being met, for hindering great ideas and for change and modernisation being slowed down. And I get that argument. Over-governance does get in the way of progress and can certainly slow things down in a business, but what happens if you go to the other extreme? Fuzzy tramlines, bespoke approaches for the same thing in different teams, limited long term planning and an underlying habit of being distracted by clients and shiny new things.
The advertising and media business has struggled with growing up, as it really enjoys living in its teenage years. I have been immersed in this wonderful industry for 20 years and it has many standout attributes that other industries lack, such as valuing and over-indexing on culture, creativity and ideas. However, I have watched all other sectors around us evolve and adapt their operating models. Banking, retail, FMCG, automotive, finance… They have instigated new organisational design, end-to end processes and implemented enterprise technology to aid visibility and workflow. Whilst most FTSE100 businesses are only just getting their heads around digitisation and the transformation that demands, they are slick when it comes to organisational and operational governance. Agencies? Well, less so.
Whilst other industries are just getting to grips with the importance of culture, brand and storytelling to better engage with customers and talent - where the ad industry excels - there are reciprocal lessons we can learn. The ad business is still overly reliant on relationship as the response to everything; whilst relationships and trust are core to all successful operations, if that doesn't also equal results, it is short lived. Equally, when an agency is defined by personality-led management it causes problems. Output is too often defined by a small set of individuals, rather than established, scalable operating models. We've all witnessed agencies rise and fall fast. Agencies have long benefitted from inspiring, high profile leaders at their helm, and this remains essential, but today those leaders are responsible for creating the environment for success through every one of their staff, not just a chosen few.
Being in the service business means agencies will spend significant times being “reactive”, but this has translated into habitual short-term behaviour. Innovation and big ideas remain the ultimate kudos, so there is a constant bun fight for headlines that proclaim re-invention of a legacy approach – too often this is simply rhetoric rather than a fundamental shift of reality. Our industry is being attacked from all sides – from tech giants and also minnows, the rise of both automation and machine learning and from new entrants like the management consultants. Not enough time is spent on scenario planning for the future and on organisational design to best service future needs. Many agency groups have delivered healthy growth through aggressive M&A but as advertisers shift to pursue integration and simplicity, these groups find themselves lost in a maze of logos, departments and duplication. Consolidation and merging of agencies is already becoming a trend and is one that will continue..
I’ve always considered myself, very simply, to be a businessman who works in marketing services, not the boss of an agency, but I think many lose sight of the former. With multiple awards ceremonies and media owner bashes every week, you could be forgiven for thinking success is defined by only fame and not fortune. The ad industry has only recently acknowledged the need for change and has yet to whole-heartedly sit back and re-design what the future looks like in five years’ time. A valid defence for the past would be that the client community has forced such short term behaviour, but that defence will not stand up moving forwards.
Over the last decade, we have let the market define us, rather than define it ourselves. Many say we are too performance-led, too obsessed with data. Rather than fear this, I would argue this evolution should be celebrated as a means to helping convince brands of the value of their marketing investment. Data has been proven to deliver creativity with the right culture as much as creativity has unlocked new angles for data. It is time to build bridges not walls, to truly collaborate rather than nod meekly towards cooperation.
Sarah Golding’s brave new agenda for the IPA to balance 'magic with the machines' is absolutely the right one. For starters, it is an “and” not an “either/or” narrative as Sarah recognises and encourages us all to get more comfortable and competent with technology and data as the new normal. The world has changed so the good old days, if indeed they were good, are gone. Technology opens up endless opportunities. It will help evolve how agencies service their clients but, critically, it should also optimise and industrialise much of the drudgery and admin at the lower levels within agencies. Agencies have so many of the ingredients to go upstream if they are better organised and orchestrated.
Embracing a world where we find the right balance of workflow and governance with adequate freedom and agility to move fast and be creative should not be beyond the brilliant brains in our industry. I may be too much of a dreamer but if we get this right as an industry, our talent will spend more time on high value work and thus make a more meaningful difference to the clients we serve. This in turn will give permission to go more upstream and to become trusted board level partners taking collective responsibility for marketing transformation and business growth, not just awareness or web traffic.
The advertising industry has a habit of changing slower than most. We must first be willing to acknowledge that and then look five years out and re-imagine. The world of marketing is changing faster than ever before but simultaneously the door is ajar for agencies to become the business partners they have always aspired to be. Adapt and we could be at that top table much more often and dislodge the trusted management consultants who are looking to eat agencies' breakfast and lunch. (more on that in a follow up piece). It's time to get on the front foot. It's time to re-imagine.
Paul Frampton, chief executive of UK and Ireland at Havas Media Group