Do you remember the nursery rhyme 'Humpty Dumpty'?
Well there been something similar going on in agency land for the past decade or so, as such they really are struggling to put 'Humpty back together again'.
There appears to be a view held in ad land that it was this crisis that created the need for change and innovation.
The agency model that's been around for decades has been in decline since the birth of the internet, in the early days they simply added the digital media inventory into the roster of services to sell into existing clients, and utilise it as a way of attracting new ones.
For years they held the internalised view that as service businesses that they have the scaled expertise across categories to identify best practices in addressing changes to consumer sentiments, preferences and behaviours like media agencies.
"We are in the unique position of having a fairly holistic view of the insights about shifts and trends in consumption, content and sentiment that are otherwise disparate and disconnected – giving us a thorough understanding of what has really changed". link below.
Agencies’ fee-based business model hasn’t evolved in decades — and that may be a significant factor in the industry’s struggle to manage costs. With clients suppressing fees, asking for longer payment windows and seeking more project work, rather than long-term relationships, agencies may need to reimagine their business model.
In my experience the ‘interactive marketing services’ (media agency) industry is still relatively immature. It tells us that it has a holistic view and insights around shifts in trends in consumption.
The issue for agency land sits with what has rapidly become an outdated service model, something that was kickstarted long before they got a well earned kick up the arse by Covid.
It was characterised by a number of entrants, who saw a massive growth opportunity as a result of the dot-com ‘boom’ back in 1998 – 2000.
Companies from various industry sectors sought to develop a range of services to become a one-stop shop for clients. This occurred as follows:
- IT companies moving into Internet technologies, hosting and later acquiring a creative capability;
- Business consulting companies writing ‘dot-com’ business plans to secure funding and later acquiring both creative and technical capabilities to extend their revenue opportunities into the implementation of the business plans;
- New start ‘Interactive agencies’, which were designed to provide a balance of strategy, design, build and hosting.
Just like the multi-channel retail sector rationalisation within the industry was already leading towards significant staff reductions and a return to a more narrow range of services. There have been a number of accelerators for this like the gradual growth in social platforms along with the programmatic ad tech industry.
Over time this was also being impacted with companies taking control of a lot of those digital services in-house.
Furthermore, very few, if any have a ‘business focus’ based on practical ‘client-side’ experience of developing and delivering marketing strategies within a multi-channel organisation.
I often see the same thing with organisations that agencies have encouraged them to have an outsourced approach to social media, this is because the strategic value is yet to be unlocked and understood by the leadership team.
So post Covid will social just be another channel to 'advertise and promote' your products and services in the same way you've always done?
Or is now the time to take a look at what a cohesive upskilled internal team can deliver around an enterprise wide social strategy.
When consumer habits and behaviours changed literally overnight, it was this unique vantage point that allowed us to quickly identify the optimal approach. And, as marketing budgets were suddenly cut around the world, we maximised the intelligence our data and insights provided to make the remaining dollars work harder to achieve our clients’ business goals.