Rebecca Crook, MD of the Marketing Agency Association, predicts that agencies will need to become better strategic big thinkers and change how they charge for their services, to survive in the future.
When I entered the agency world in 1997 some twenty years ago it was a much-envied industry. Nowadays, the likes of tech businesses and management consultancies attract not just graduates but professionals like me, making it really tough for agencies to attract the best people. It is a real challenge for the industry and probably a key contributor to the changing landscape.
With few agencies actually owning any IP, their staff are their business and the reason why they win clients and keep clients. Technology businesses such as Google and Apple can pay much higher salaries as well as often providing much cooler office environments with much-improved work/life balance. Management consultants arguably have easier access to senior ‘C’ level stakeholders at brands and as a result get the opportunity to work on more transformative projects. Even clients have jumped on the bandwagon and are poaching experienced agency staff to help them build their own in-house capabilities.
The threats on talent are all-around agencies. Agencies need to develop cultures that attract staff and offer flexibility in employment practices. Agencies are renowned for long hours and even longer hours during pitches - often with unbearable pressure - so it’s no surprise that companies that prioritise a strong work/life balance can attract the best staff.
Looking beyond talent recruitment and retention, the industry needs to grapple with how it develops eco-systems that give brands a single view of the customer by harnessing data and technology. This is an area no agency has solved yet and every brand in the country wants to know how they effectively use all this new data they have on their customers.
We all know that by bringing data and technology together seamlessly it can create beautiful, meaningful and useful customer experiences that delight. However, with so many touch-points to consider and such a fast-paced emerging technology scene, it’s a real challenge for agencies to give clients what they want.
It’s a particular challenge for brands because of the time and budget commitments required to invest into these areas. Many brands operate platforms and systems that are creak- ing at the seams. These systems simply can’t cope with customer expectations for an always-on mentality. The aspiration is there from brands to transform and change but how they move from A to B within their complex landscape is regularly a real conundrum. Agencies need to be far more pragmatic and grown-up in their approach in helping brands develop solutions in this area.
The third major change that agencies need to face up to is remuneration - they need to be more creative in their approach to remuneration particularly with more and more procure- ment specialists involved in the negotiating who see what agencies offer as a very commodity-based service.
How agencies charge is going to be an ongoing developing change for the industry. Retainers will go, which for many agencies have been their core bread and butter. The industry will move to much more project based work with performance related pay than we’ve ever seen before. As margins are squeezed with brands, that squeeze passes through to agencies who need to be more inventive in how they charge for services.
My prediction is that for those agencies who don’t embrace change, they simply won’t be around. Sad but true. I anticipate more acquisitions from management consultants into the traditional agency space and a big return to brand is king. More clients will invest heavily into their brand to help them develop a differential stand-out in the marketplace. Agencies with smart, creative and intelligent thinkers who have an eye on where industries are moving to will be the winners. And of course, those agencies who can be imaginative in developing new pioneering financial models will flourish.
Rebecca is an awarding-winning business woman and adviser working across multiple industries and sectors. She is currently MD of The Marketing Agency Association and sits on the National Trust Advisory Board