ON: 2008 The Year of Agency Change

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December 26, 2007

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8 min read

The agency world is going through a change that is so drastic that holding companies are looking at all of their assets and mashing up resources to create new agencies that take a business consultants approach to strategy and converge in the creative agency space. While the debate over rebundling media and creative continues, some media shops are building their capabilities in digital creative. Even the "Digital" agencies are revamping to stay viable against small nimble shops that are being gobbled up by their holding companies or media conglomerates. (good times)

If in 2008, your if agency is still being called "Traditional" I would venture to say that it will not reflect positively on your bottom line. As the sole digital resource and practitioner in an print centric agency I share the moments of triumph and more often the moments of frustration. A little over a year ago I sent up a list of observations and recommendations on how to begin the metamorphosis into an agency that could compete in an age where the media is fragmented and explosion of the information distribution vehicle (the web) has been rampantly adopted by over 70% of consumers.

What I found is that you cannot mandate change. You can facilitate it, encourage it and reward it. Change comes from the top and you must embrace the outcomes of that change. (purging the old or people who are paralyzed by change that they are not willing to learn the new) Change is not easy, and often takes a long time to see the effects of it in a service-based organization's bottom line. The web is no longer an afterthought by most savvy marketers thus making the traditional shop not so savvy.

Sean Scott, has issued a call to action for "traditional" agencies. Sean and I have spent a number of late nights trading advise and comparing notes on how to affect change in organizations that were not sure they needed to change. He has written a lovely manifesto at http://www.twofortyeight.com/?p=102 (and part two http://www.twofortyeight.com/?p=104 )

http://static.slideshare.net/swf/ssplayer2.swf?doc=the-manifesto-1197345817194363-5

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I have spent 14 years of my agency years in shops that started out as digital content developers and went to print, outdoor and customer marketing during the web 1.0 bust to survive. Shops like BBG and Digitas were great as we could do it all because we had a culture of innovation baked in to our DNA. Shops like this work with great speed and profit. My perspective comes from shops that served the clients strategy and added to their bottom lines. Sean's approach is a very good start, I thought I would add the other part of the equation and some learnings from the past year as the Vice President of Interactive at a "Traditional" shop.

Being the Change Agent
Making change in an agency is NEVER easy (i cannot say that enough) - It is also not an impossible mission. But I assure you that it is one of the most difficult missions I have ever undertaken. This past year, I have realized that it requires a complete overhaul of what has up to now and in some instances continued to be successful methodologies and structure. I have also noticed that all too often agency executives coddle those against progress hoping/wishing that somehow magically the culture will be transformed into one that is conducive to doing innovative work regardless of medium, but including digital.

I have argued that it would take a massive change at the top - or a client that demanded change and was willing to pay for it. For some that very thing has happened - WPP, an agency group who was positioned for a change and a client, Dell, who would pay to see a change. That deal has served as a catapult to mandate change across a network of agencies that will serve their client's strategy with smart data-centric marketing ideas and solutions. This is a case study in the making.

But what if...

Your agency was never data-centric?
The agency never really did CRM or Direct?
What if your creative department never saw direct insights that were derived from their creative?
Your agency has become a print production arm of your largest client?
Your agency has no financial incentives to change?

These are many questions that I have fielded this past year. I do not claim to have all the answers but i do have some recommendations based upon my experience as and agency owner and executive.

1. Your agency was never data-centric?
Answer: You have a long education cycle in front of you. If your agency never collected data, analyzed it and optimized the next campaign from it they are merely a creative production shop. An agency by definition not only needs to be creative but needs to have financial accountably to their clients. Start with the basics and hire good consultants who teach the creative team that their work is a hypothesis and the campaign's purpose is to gather data to prove the scientific equation.

2.The agency never really did CRM or Direct?
Answer: You have another long education cycle in front of you. You will need to seek the counsel of database marketers who have run their campaigns off of data and consumer feedback loops. Agency's who participated in email, print or online direct advertising know that it is all in the data. I would also state that these agencies who concentrated on 1-to-1 marketing are properly positioned to have the easiest migration in to the Agency 2.0 world.

3. What if your creative department never saw direct insights that were derived from their creative?
Answer: I call this one the ad guy syndrome. Arrogant copy and art directors who believe they're work deserves a wall at MoMA. They also do not see interactive as creative. They see them as IT or production staff to throw their ill concept-ed .PSDs to break up into HTML or flash. The time for this type of creative is gone. The digital creative teams (experience planners and designers) who work hand in hand with business logic layer developers are on top and earning top dollars. If your creative department consists of Art Directors who can not code a stitch of HTML, I would start by giving incentives to your creative teams to build a web page off a basic brief, get them to contribute to an agency blog, make sure they attempt the creation of a viral video and upload it and market it on YouTube, make sure they have one or more social media personas and the last and most important is training creative team to realize their work is ALWAYS IN BETA. (work not meant for the walls of MoMA but the walls of a consumers Facebook accounts)

4.Your agency has become a print production arm of your largest client?
Answer: Your agency needs to reposition itself, bring on talent that supports the new position, then begin selling its repositioned self to a new crop of clients looking for a "Change Agent" Agency. It is likely that your largest client's perception cannot be changed without action. Baby steps... gain their trust with small ventures and prove successes one at a time. In time that client will come around one marketing manager at a time.

5. Your agency has no financial incentives to change?
Answer: This is a tough one! (because we are in the business of making money)
There are many agencies who have gotten by on their good looks and charm and have had no dire or absurdly obvious financial incentives. NO AGENCY WILL CHANGE WITHOUT A FINANCIAL INCENTIVE.
The vast majority of medium sized advertising agency CEOs, CFOs and Presidents do not have to implement the changes. Everything is just comfortable enough. Most mid-sized agencies (300 to 500 employees) will continue to be able to coast on their meager AAAA’s-certified, cost-plus markups for the next 3-5 years. When the top dogs of those agencies no longer call it an “experiment" the perception of tremendous risk will not appear as a barrier.

I recommend building multiple financial models to show how you will build larger billings while the decreasing production based work which always requires more people overhead. Once you have financial buy in on the right plan then one through four should be a slightly easier ride.

As you can see there are no easy answers or easy steps. The one prediction I will make for 08 is if you are at an agency who is attempting these changes this will be a year of many ups and downs. Hang in there and negotiate your financial incentive to help facilitate the change!
The vast majority of agency executives I have spoken to are making these changes. They have a clear financial incentive and have begun moving to align creative into the fold with the addition of analytics and engagement delivery teams.
If you are at an agency that does not support this type of change it is highly likely that your clients do not support it either, thus lacking financial incentives. If you are a digi-rati in the making then I would recommend that you resolve to make a change in '08 and find an agency or media company that is looking for your expertise.

Embrace my mantra for 2008: Engage, Interact, Sell

When you engage the consumer they will interact with your brand and you will sell more product!