Designing the Modern Agency

Once upon a time, the phrase "advertising agency" conjured up a very definite image -- one of smoked-filled rooms and mile-long conference tables, across which creative geniuses would rapid-fire pitches at one another in hopes of hitting on that one "big idea." It's the nostalgic scotch-soaked notion of the ad agency famously portrayed on the hit show "Mad Men."

But that's not the modern agency. In fact, most industry participants today would be hard-pressed to define what exactly the phrase "the modern agency" means. However, few would argue that the digital revolution has forever changed the marketing game. And it's little wonder that many of today's advertising agencies are going through an identity crisis.

Large traditional creative shops are rethinking their offerings, expanding into all things digital. Agency holding companies are restructuring to better leverage their digital resources. And all the while, new digitally focused agencies continue to spring onto the scene.

What Agency Model is working?

1. The first model is one in which a client selects one lead entity -- at either the holding company or agency level -- and grants it the power to oversee all marketing efforts and partners.
2. The second model is one in which the client itself assumes that leadership role.
3. And the third model is one in which a client hires a slew of agencies and tells them to go collaborate.

Two of the models work, and one of them absolutely does not. The third model, is destined to fail -- and yet it's the model being used most often. And that's where the fighting comes in because there is no clear mission, it's imperative from a marketer's perspective to have one throat to choke at the end of the day.

Whether it's a specialized digital agency looking to broaden its client base or a traditional agency looking to expand its offerings into the interactive realm, few industry participants dispute that much of the future growth in marketing will come on the interactive side.

In spite of the lack of available digital talent, everyone I have talked to has an open head count and is hiring. The trick is making the agency side of the marketing business attractive to candidates with the needed digital expertise.

It's not all about recruiting new digital talent to the agency side of marketing. It's also about retraining industry veterans. We have people with 15 to 25 years in the business, and they are making a choice to change and adapt into this digital culture. Smart digital agencies are the ones that are embracing these people, involving them in the process, and training and educating them. They have a lot of intangible assets, and they bring a level of talent that some of the new digital folks just aren't going to pick up on the fly.

Agencies must also find a way to clearly convey their value in an increasingly cluttered marketplace. When it comes to agencies clients are getting tired of having to listen to so many voices.

Traditional agencies see the handwriting on the wall...that they're going to be out of business if they don't jump over to digital media and digital technology. Marketers today are less likely to simply hire a traditional agency and a digital agency and then tell them to play nice together. The lines are blurring, and so are agency distinctions.

It is about being relevant and not losing a seat at the table.

Big Advertisers Say Goodbye to Big Agencies

A lot of big clients are hiring smaller agencies to handle their business because of the speed and lack of red tape they offer. Large agencies that are owned by holding companies are surely feeling the effects of this shift of perspective. MMB in Boston picked up Subway when they fired Omnicom Group agency Goodby Silverstein. How did MMB land Subway? They were already working for Subway on a project basis. This is not a trend it is the way things will be working from now on. Even large advertisers are beginning to avoid the monster that has been created in our industry by the conglomerate holding companies. Advertising just doesn’t work well when fashioned like its GM. Come to think of it, GM doesn’t work so well that way either.

The fact that clients are recognizing that smaller is better will probably overhaul the way large agencies do things. Clients today are looking for nimble, focused service. They expect the senior management of their agency to work on their business. They are willing to walk away the perceived security of the behemoth agency to get it.

Small agencies are thinking smarter and more strategically than the larger agencies. As a result, big agencies are slipping into playing the role of the ‘middle man’ and some forward thinking clients are skipping them all together and going straight to the source for new ideas.

Corporately held agencies are being seen as an older model these days that are not as effective as it was believed size could make it. From a creative point of view they haven’t helped our industry do better work either. The trend of clients moving to smaller agencies can be a very good thing for advertising’s creativity. The large agencies are not going to sit still and let significant pieces of business walk away for long. One day they will become more focused on the work and less on their corporate approval process and meeting revenue demands of the mother ship.