The relationships between marketing agencies and their clients have come under increased scrutiny in past weeks. Recent stories include Honda taking much of its creative work in-house, WPP losing several of its longest-standing clients and an October report which revealed marketing budget growth is at the lowest it has been for three years.
These industry moves have happened as brands are pushed to reduce marketing costs while delivering increasingly personalised content which is more tailored to the needs of each channel, increasingly quickly – quite a tall order. The pressure is especially felt at the bigger holding companies, and the cracks are beginning to show in their fragmented business model – not helped by widespread mistrust of billing practices and multiple regulatory investigations.
It’s time for a new kind of agency model to come to the fore and begin to repair damaged agency-client trust levels. The agency of tomorrow will have to answer five key questions:
- Can we deliver seamlessly and cost-effectively along the entire path to purchase?
- Does our offering reflect that consumers spend the majority of their time online today?
- How are we ensuring clients’ needs come first, over internal bonus structures and cost targets?
- Are our contractual arrangements fully transparent and is our billing of the highest possible integrity?
- Can we deliver globally/internationally to achieve brand consistency and cost efficiency across borders?
If agencies can answer all of these questions, they will be in a strong position to grow over the coming years.
Seamless and cost-effective
A pinch point for the holding company model is that having so many different agencies and brand identities causes higher overheads as administration efforts are often duplicated and teams are spread across more sites. It is estimated that the top five hold corps have £10bn in overheads.
Transparency and integrity
One of the more corrosive issues for brands has been the perceived, and sometimes actual, lack of agency transparency. This can come from a ‘wild west’ approach to internal agency co-operation and competition which inevitably erodes client trust. Clients want to understand how their campaign is going and where their money is being spent, something that can become murky, especially for global campaigns. With these issues inflating costs while clients feel they are kept in the dark, it is little wonder so many CMOs are taking more creative work in-house.
The single P&L
One of the main purported benefits of the holding company model is the driving force of internal competition within an organisation structure. However, this can only be truly effective when working to a single group-level P&L and account team. When agencies have competing P&Ls, the success of one agency can become a loss for another. This drastically reduces the desire to collaborate for the benefit of the client as pressure from the top becomes focused on each individual agency rather than looking at the health of the group as a whole. For example, sharing talent between agencies should be encouraged so that the client can benefit from the specialised knowledge of a range of people, but this is only possible if group finances allow for this flexibility.
Digitally native teams
When it comes to internal talent, management looking to have the most effective teams in place must now look to reward a different set of values within the marketing structure, to promote the sharing of talent and ideas across agency lines. Bringing in and supporting team members who have a true understanding of the digital customer experience, and who have spent as much of their time online as customers now do can provide real benefit to clients, especially when all agencies are able to work harmoniously. Rather than following the creative from the TV advertising campaign, agency equality ensures that each channel has the right creative for their channel and market, rather than forcing a square concept into a round channel.
By reducing complexity in their structures, agencies can focus on creating great campaigns which may end up being very complex themselves. Barclaycard recently ran an email campaign that had 1,000 variants to ensure the message was right for each individual customer – that is the kind of complexity agencies should be working with, rather than structural ones. With the right technology in place, this kind of agency can provide real cut-through and better ROI at a lower cost.
The measure of what a good agency looks like is changing. Clients want their agencies to be fully transparent and prepared for today and tomorrow’s world. To survive, the agency of the future should do all it can to ensure the agency structure is built around client satisfaction rather than internal competition and friction.
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