The future of ad agencies lies in two tiers: consultancy and production management

Advertising has become an almost ‘dirty word’. Some of the smartest people I know are leaving or have already left. As someone who also teaches advertising, every year I come across a bunch of ex-students with just one-to-two-years of experience who are quite keen to quit and have this typical response, “I enjoy advertising but I just am tired by how ad agencies function”. Ad agencies are failing to build the love both internally and externally!

There are also many who are choosing to stay and be part of the evolution. An evolution where we are opening new divisions, building additional skillsets, entering into global partnerships ('synergies') and even merging existing agencies.

But these are short term solutions, and we ourselves recognize that. Despite so many innovations and acquisitions, we still jump onto the next buzzword… desperately hoping that the solution will lie there.

That’s a beautiful romantic notion that is ironically quite similar to the promise marketers make when they tell consumers that a certain product is all you need to get your life sorted. If only it was that simple.

To come to a solution and to ‘get some love back’ from clients and employees, we need to start re-looking at how agencies are structured and function, starting with the primary challenges agencies facing them today:

1. Consultancies, in-house agencies and tech players are grabbing agency clients.

2. Every company is trying to do everything and we all end up undercutting each other with quality standards generally falling.

3. Clients keep complaining the agency doesn’t understand the business enough or doesn’t bring valuable insights.

4. Agencies complain about the time wasted on countless unpaid pitches and falling margins for the existing business.

5. As a result, agency employees are getting frustrated with longer working hours in a dynamic and demanding industry and hardly enough pay.

Currently, all our changes to solve the above are incremental. We are, in fact, really just adding or modifying layers to existing structures.

Levis Strauss & Co president and CEO Chip Bergh, said, “the big agencies know they have to change; the old agency model is dead.” Quotes like this are common in the business but the response doesn’t seem adequate.

I believe that understanding businesses and their future in the current internet driven, app-based, always-on, global economy is a whole new ball game and not a simple one at that. It can’t do with incremental improvements, it needs a completely different structure.

There may be different solutions and, frankly, it’s quite risky to gaze into the future but I believe at this stage it’s imperative more of us look there to explore a direction-and, not from a tech perspective, but a more comprehensive perspective grounded in structure and culture.

My solution lies in having two layers in terms of the type of agencies:

1. The top layer has ‘consultancies’ who understand brand strategy including digital media but not confined to any medium and will help bring creative and strategic direction to businesses by using various tools including data analytics and AI.

A few of these consultancies already exist but I see more being established. Where their entire structure has a strategic mindset on business and communication and some will extend into creating a creative idea without getting into the actual production and execution.

With time, domain specialization will happen whether it be consumer retail, health, airlines etc. They will spend time and money on their consultants gathering knowledge about the domain, thus bringing actual strategic value.

A number of these consultancies will be interacting only with the CEO and other CXO levels, not the marketing chain. That will make sense since the consultancy itself doesn’t look into day-to-day operations but gives solutions. Meanwhile, it’s the second layer which will interact with the marketing and operation wings to manage the brand and campaigns.

2. The second layer consists of the proverbial ‘Mad Men’ who manage the brand/campaign: The ‘mad men’ symbology of advertising had been popular but the same should evolve for the future. First, from a role perspective, they become more focused on production and managing the brand/campaign, the custodian and not the strategic partner. The simple reason being that in a world coming closer and getting more complex, business strategy will dictate advertising strategy completely and anybody trying to do both will just end up not doing great work on either.

This layer will consist of people who actually make the ad, execute the social media campaign and optimize the media plan. They take the insight or the creative idea from the top layer and execute it while taking inputs from the client.

Secondly, their existing verticals, such as mainline, below the line etc will dissolve and communication will become truly free-flowing, where an idea flows freely across mediums.

This two-layered model will solve problems for both sides. People who spend time on understanding the business and the market will be adequately compensated and judged on the insights and solutions they deliver. People who create marketing campaigns based on those insights won’t spend time pitching insights and ideas until they are on-board and that will happen based on their existing portfolio.

Clients will be happier because they can hold people accountable with clearer defined key result areas.

Is this perfect? Not at all. But I believe any solution to the current challenge will not come by thinking ‘out of the box’. Because let’s face it, the box is changing before our eyes and the one we created in the 1970s is a little too old. Perhaps it’s time to just forget the box altogether and re-imagine the industry.

Saurabh Parmar is a consultant and trainer for brand, digital and start-up growth.