I went to a very interesting New Business Conference this week sponsored by Think LA and Mirren.
A number of speakers from different agencies focused on the common problems facing the industry. The move to more project based assignments versus AOR relationships, declining revenues, the shift to clients having multiple agency relationships, etc, etc, etc. It wasn’t pretty. A sea of laments.
There was a very interesting presentation by Tim Williams from Ignition Consulting on New Emerging Business Models for Agencies. He outlined the days when agencies did things that clients couldn’t do. Setting type, preparing mechanicals, producing TV commercials. Yes agencies did things that seemed like magic potients for clients. Elixirs of creativity. Then came the computer which changed the playing field.
Certainly agencies very quickly jumped on the benefits of technology and the new creative software that accompanied it. But clients could also buy computers and do many of the same commodity things in house. Maybe not originally with the same degree of creativity but how many clients really want creativity? It is more a platitude than an attitude? Most companies aren’t Nike or Apple.
The next day I had an early morning coffee with the CMO of a pretty significant company in Orange County. He had started his long and successful marketing career in the advertising industry. He felt that he could do in house most of the things that agencies could do and do it better. He could do social media, videos, produce ads, hire photographers for product shoots, and update his web site. The 22 year old AE wasn’t going to take him to the next Marketing Valhalla. He really didn’t need to pay an agency to resize ads. Then he said one thing that stopped me.
He said the one thing that had great value for him was ideas. That sounded good for agencies. Then he said something else that wasn’t good. He said that agencies gave their ideas away for free. Now I don’t know what agencies he had talked to or what his agency experiences were but he was right that agencies often give things away for free. I wrote about this recently in a blog called Why Agencies Need to Stop Giving it Away. I have painfully learned in my business that giving away your knowledge for free is not a great way to pay the mortgage.
The conference and my breakfast left me with the conclusion that to grow agencies really need to focus their future services on the things that clients can’t do. I think that menu may change based on the clients you encounter. There is a good chance that what many clients can’t do is to live at the forefront of today’s dynamically changing technology. Many clients don’t have centers of innovation for instance. I certainly believe that agencies have the creative fire power to develop these services and productize them. The scale of agency innovation surpasses most client organizations in my opinion. I still hear plenty of client ahs when I do agency searches.
The problem is that many agencies have commoditized their offerings and can offer little more than their clients can do at less cost and probably with more insight. It’s time to stop billing for low hanging fruit and go to a higher level and get paid for it.
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