The advertising/marketing ecosystem is too large and complex to offer all services in-house
It’s an old illusion in the advertising business that agencies wanted to look larger then they actually were. The thinking behind this was that the more services you claimed to offer, the better chance you had of reeling in new accounts. It was this mindset that coined the phrase “full service” agency.
Today’s advertising/marketing ecosystem is far too complex for any one agency to possess all of the needed skill sets in-house. In fact, the major advertising holding companies have been on a buying spree acquiring specialized agencies and then trying to integrate them into their multinational brand name agencies.
What clients are ending up with is a convoluted mix with a lead agency that directs different specialized groups under the holding company umbrella. Of course, what goes along with this are turf battles, divergent strategies, off-brand messaging and a revolving door of well-intentioned agency people operating with a minimum amount of knowledge, trying to keep the client happy.
The small agencies specialize and the big agencies get bigger
Advertising Age recently published an article about how the forces of technology are ushering in and shaping new business models that will affect advertising agency service offerings, size, and profitability.
What we are seeing now is the rise of small boutique agencies that specialize in category, market, or technology expertise. These agencies have no illusions as to their service offering and are very transparent with their clients about what they bring to the table. They also offer their clients the greatest amount of flexibility, because they can contract with best of breed suppliers when a specialized service is required.
The multinational holding company agencies will continue to gorge, fueled by large brands that use advertising as a blunt force weapon. For all the prediction that consumers want to engage with brands and have a relationship, the majority of consumers just want to watch TV and tune out of their socially hectic worlds for a few hours entertained by mediocre television programming, supported by advertising that makes it hard to remember the name of the brand or what it is actually supposed to accomplish with daily use.
The forecast for the future does not bode well for mid-sized agencies
Mid-sized agencies suffer in two areas. First, they try to staff for too many specialized skill sets in the belief that their clients care about this. There is too much technology and infrastructure at play for any small department to be competent in the nuances of code and the required updates of operating systems to keep this humming along.
Secondly, mid-sized agencies suffer from non-billing personnel “creep,” ranging from administration to human resources to accounting. This starts to take a bite out of agency profitability at a time when clients are demanding more services for less cost.
Finding the right agency requires being honest with yourself
Do you want a long-term or a project-by-project business relationship? Do you need strategic planning and research or more of a tactical execution of internal strategy? Are you looking for an agency of record or interested in working with several agencies based on the need at hand? Each relationship has its pros and cons based on resources and expectations. I believe the agency of the future is small and nimble, creatively driven and staffed by a small team of experienced managers that can bring forth the forces and talent needed to complete the task at hand in an efficient manner.
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