Published in Jan-Feb 2019
Agencies have forever taken pride in being service providers. Yet, I believe that all the fundamentals of the agency business need to be completely relooked in order for them to be able to answer the question of what business they are in and rather than being service providers, they will have to turn themselves into product providers.
Technology, data, consumer needs, brand demands, talent and financial pressures are changing rapidly. The big question is: What will agencies have to do in order to stay ahead of this increasingly changing industry? I don’t have a crystal ball but every year Aurora asks me to predict the future; it gives me the opportunity to step out of the chaos of the daily agency world and look ahead.
There is one thing that I can say with 100% conviction. Agencies will have to be adaptive and reflective of clients’ evolving needs. Agencies have long acted as the executional arm of marketing departments. Clients outsourced their ideas to a dedicated creative team able to conceptualise and execute the communication at a cost that was less than what it would cost them to have permanent staff in place. However, what happens when clients say they want the best ideas and why should they restrict themselves to just one agency, in one market and in one country when they have the whole world to source ideas from? Agencies will fall like nine pins.
So when I say that agencies will have to become product providers, I mean that agencies will have to create proprietary products that clients are willing to buy, license, rent or use; products that are not available anywhere else and will thereby make the agency invaluable and not easy to dispense with. This also means that agencies will have to deploy their own creativity and business in order to create their own products.
Agencies have all the ingredients to become part product outfits. They have in-house creative capabilities. The ones with a strong digital mindset also have in-house engineering talent. Combine this with their business acumen honed through years of working with different clients and their knowledge of how consumers think and behave. Yet, the reality is not quite that simple. Despite the few success stories, agencies have consigned themselves to the services business and any foray into products has remained on the sidelines and used more for PR and recruitment purposes than for anything else. For many agencies, these sidelined units are little more than R&D initiatives or marketing efforts aimed at demonstrating their capability to innovate to current or prospective clients.
There is a huge opportunity for agencies to play the role of technology agents, providing personalised recommendations based on their in-depth knowledge of client needs. As clients become reliant on the recommended technologies, they are less likely to end a partnership with the expert on those technologies (the agency who recommended them).
The crux lies in the business model. Agency priorities have traditionally been to maximise billable hours and source new clients, a model that is at odds with the approach of start-ups and product development outfits. Agencies may dedicate 10 or 20% of their time to a project, but their focus is on servicing their clients; as a result, the products they create end up on the backburner rather than viewed as legitimate business opportunities.
What I am suggesting will require agencies to hire dedicated staff to push forward this agenda; it cannot depend on agency employees working on this in their spare time amidst all of the client work they have to deliver. They will have to behave like start-ups, where the founders use every waking hour pouring over the smallest details.
There is a huge opportunity for agencies to play the role of technology agents, providing personalised recommendations based on their in-depth knowledge of client needs. As clients become reliant on the recommended technologies, they are less likely to end a partnership with the expert on those technologies (the agency who recommended them). But it does not stop at recommendation; agencies will have to go the extra mile to create solutions and turn them into their own offering for the clients. Technological solutions allow the development of proprietary and intellectual property, which is what is needed. The agencies that succeed in the future will be those that use technological advances to work with new (and different) people, who, until now, have never walked down the agency corridors.
You may wonder why I have not mentioned any of the specific products the agencies of the future could create and sell to clients. Obviously I will not tell what’s on my mind or what I or my agency is cooking. Just wait and you will see them in real life, transforming marketing solutions in advertising, activation and digital touchpoints and winning consumers for our clients.
Shoaib Qureshy is CEO, Bulls Eye DDB. firstname.lastname@example.org