The agency business had been constantly soul searching even prior to when Covid-19 hit. However, the virus has surely driven good internal cleansing of an agency mind, heart, soul and body, as it was about time and badly needed to reboot afresh for the future challenges facing clients and brands.
Agencies should not forget that their business is the client’s business; they exist to serve brands and clients in a solution neutral and no-agenda way. However, in the past few decades, agencies had developed strong executional mindsets and had been operating like businesses almost independent of their clients. They developed structures, talent and teams around those tendencies. This approach served them well when it was business as usual. However, when a once in a century crisis like Covid-19 struck, leaving clients and brands badly affected, many agencies were left exposed. Collectively, we all had the wind taken out of our sails – and in order to sail to the future, we need to be build a new boat.
A client’s business problem is often bigger than what traditional agencies or communication can fix. However, the positive part of this is that the longer this virus continues, the more cleansing will take place among agencies and within the marketing services ecosystem – and all to the good of the clients and the industry. Here are two examples of the cleansing that is already taking place.
One, pre Covid-19, agencies maintained that a commercial could only be shot in Turkey, followed by the importance of being there in person and in large numbers to ensure 100% delivery. Today, the approach is the total opposite; agencies are buying existing footage from the internet or asking people to shoot themselves in foreign locations, while they provide guidance via video calls or even just shooting locally in Pakistan. It seemed so foreign at first, but they quickly adapted. In my opinion, those agencies that have not embraced this new world will be in trouble. Secondly, pre Covid-19, agencies maintained they must hold a PR event to launch a brand or a new initiative and invite all the top celebrities. Today, brands and new initiatives are launched with equal aplomb but without the PR event that in the first place had nothing to do with the consumer but was all about creating photo archives for clients and agencies. A must have item on the marketing checklist is now looked upon as a nice thing to have but a tremendous waste of company money.
In this time of crisis, clients who are looking to cut back or pause expenses have told their agencies that retainers will be reviewed as they cannot continue to pay such high fixed costs, thereby putting the agency compensation model under scrutiny. Client payments have been delayed by a minimum of 120 days, putting an already weakened advertising industry in a situation that could hurt the agencies. However, what is key is the fact that an opportunity exists for agencies to restructure resources and their revenue models.
This changing landscape for agencies is happening at a time when even the tenure of marketing directors at the client end continues to shorten. To add perspective, almost half of clients’ key contacts with the agency have changed during this time; the reasons may differ, but what is evident is a trend at the client end to downsize and cut costs.
Nevertheless, the functions and skills that support strong margins will remain in demand despite the changes taking place. These include strategic planning, data and analytics driven insights, digital development, creative technology solutions and experiential marketing. I want to emphasise that customer-journey analyses and strategic skills are vitally important to marketing success and therefore consumer-experience designs and creative content for digital marketing are key for the future. This is the time to double down on what is new and rather than invest in the bottom line, invest in future strategic functions that will be of use to the agency. The issue is that too many agencies were set up to produce commercials or deliver executions (such as OOH or in-store promotions) and therefore developed a typical bottom heavy pyramid organisational structure. Today, the need is for the reverse; be top-end loaded and back-end slim. The need is to address all client briefs with an agenda neutral approach aimed at delivering the result they want.
Now is the time to realise that both consumers and clients are changing and agencies that cannot change will be left behind. Agencies must become all-rounders if they want to be valued more – and any agency that can successfully part think, part engineer and part create will be the one in demand.
Shoaib Qureshy is CEO, Bulls Eye DDB Group. firstname.lastname@example.org