Modern Marketing Agency

Efficiency costs: Why agencies playing the short game will fail

By Duncan Smith | CEO

July 12, 2022 | 6 min read

While cost cutting may not seem so bad, US chief executive officer at Journey Further, Duncan Smith, argues that it’s at the expense of your team in the long run, as the key to any successful organization is building your business around your people.

employees talking in an office

Smith says the most successful agencies invest in their workforce / Adobe Stock

While it’s been encouraging to see the communications industry rebound after the pandemic – at least in terms of revenue and ad spend – it’s hard to escape a certain feeling. The opportunity to pivot towards a healthier, valuable and more sustainable model for all has been lost, all in favor of short-term cost cutting and consolidation. Ultimately, this move doesn’t benefit brands and clients that fund the work, neither does it serve the talented and ambitious employees who produce it.

To some extent, this is no surprise. As all media channels become more measurable, it allows advertising to be held to a greater account. As marketing leaders transform into chief growth officers, the need to see immediate return has never been greater. But this runs the risk of being a reductive exercise and this acceleration towards immediacy at all costs (or, more likely, the lowest cost possible) has had a direct effect on brands, agencies, products and people.

The re-emergence of the debate around brand purpose relates to this desire to see sales results, data capture and increased brand metrics, the moment the spend hits the market. With brands focused less on the long-term (with some notable exceptions), and more on the short-term ROI, it’s understandable that this reactive thinking has affected the agencies and their output from both a product and a financial perspective.

Perhaps nowhere has felt this more so than media agencies. Beholden to legacy structures based around where they earned their money, not how real people choose to spend their time with media and brands, the agency model was an anachronism before the pandemic.

As revenue dried up, so did culture and collaboration, as well as the separation of media activation from clients and agency brands. In an effort to provide a more cost-efficient solution to defend against the external, the internal has suffered greatly and has become harder to believe in for employees. It’s why we continue to see record high attrition rates and open roles, especially across the larger, networked agencies.

But it didn’t have to be this way. And outside of those networks, it isn’t. Just as a forest will spring back to life after a fire, we are starting to see some new and exciting green shoots of how things can be different in our industry. Yes, some of those big, burnt-out trees will remain looming over everything but, in many ways, pre-pandemic behaviors have changed too much for those ever to take up as much of the light as before.

We’ve passed the tipping point in so many areas, from e-commerce to streaming TV. We’ve seen the rise of the individual as a merchant and media platform. And we now face a growing population that places as much value on the virtual as the physical. While all of this is powered by digital and measurable technology that delivers in the immediate term, more enduring, meaningful value on an individual level are the primary motivating factors driving these new behaviors. Working from home plays into this and when the “office” is the same every day, irrespective of whom you work for, the drivers of change can only be monetary or personal value.

Today's most successful media platforms and consumer brands are those who have grasped that it’s the personal value that counts for more in the long run. As a consequence, it is the agencies that have also built their businesses around these principles that stand to win. Everyone else is quickly running short on vision, people and cash to pay the longer standing employees in line with their new recruits.

By building organizations around how people want to engage with brands and media, and focusing on the value their employees get from their jobs, the next generation of agencies deliver a better balance between short-term impact and commitment to a long-term purpose.

It’s these agencies that will take their clients and their people further, deliver the best work, attract the most valuable brands and retain the best talent for the long-term.

Duncan Smith is the US CEO of New York-based media agency Journey Further.

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