Top 10 Agency Organizational Challenges

Posted: January 24, 2011 in Agencies, Client/Agency Therapy

The main objective of the Client / Agency Therapy series is to help address some of the fundamental causes behind the changing client-agency relationship, and to offer some insight and guidance that can facilitate more productive relationships. Even at digital agencies, most brand / agency relationships are being challenged by factors both internally within the agency organization as well as externally based on increased client demand and expectations, and changing market conditions.

The symptoms of many less-than-stellar agency relationships are often misconstrued as “the agency model is broken”, which is a broad stereotype statement and in many cases a misnomer – albeit a great headline. Granted, the agency model is being challenged. Granted some agencies are just broken – forget the model. But there are some great agencies out there as well.

However … The “big idea” is rarely big and impactful. The media landscape has become fragmented, and breaking through the clutter has become difficult. Digital channels are evolving and social actions have made discoverability and sharability mandatory strategies. Technology has disintermediated certain agency services. Influence, engagement and sentiment have replaced more subtle branding measures of the not too distant past. The shades of gray have multiplied.

The “agency model” usually being referred to as broken, has BEEN broken for a long time – one where a full service agency builds a strategy from the brand outwards. But that madmen model has also already been replaced, for years. So what model is broken now?

The new agency model is not per se broken – dollar for dollar it is just a lot harder to influence consumers than ever before. The range of agencies is so vast and there’s no way to bucket them all together. They range from  ‘cut them some slack’ to ‘you gotta be freakin’ kidding me’.

I put together a list of what I feel are the top 10 agency challenges and/or opportunities that hopefully shed a little more realistic light and are food for thought on the complex situation.

1) People Make The World Go ‘Round
Many agencies are trying to change their cultural DNA in order to ride the next wave of marketing and consumer influence. Likewise, many new and specialized agencies have emerged in the last handful of years to fill the perceived void of “the agency of the future”. Ultimately an agency’s proficiency is based on one simple thing –  the caliber of their people. Passion can only get you so far. Technology, process, and resources all mean nothing when the weakest link is the team. Let me not cut clients any slack here either –  the client team needs to own up to the responsibility of being collaborative with their agencies, including owning some of the strategy. Your brand teams must be knowledgeable enough about their own businesses and the market opportunities at-large, in order to work closely with your agencies. Don’t just be the squeaky wheel to get the grease, but rather become a valuable voice in the collaborative effort to grow your business. It IS much harder work than ever before.

2) Agencies Get The Short End of the Stick
Agencies today struggle with several key organizational challenges, all requiring executive level commitment to step outside their comfort zone and facilitate change. Clients do need to recognize that agencies are marginalized every day, remembered only for what they did yesterday, and are expected to do more with less and to often perform against unrealistic expectations. This brings us to a significant organizational challenge – fostering a culture of realistic aspiration and breaking the mold of “saying yes and figuring out how to do it later”. While a noble intention to want to always please a client, agencies set their teams up for failure by over-promising and under-delivering. The art has become refined to the point that sometimes the agencies don’t even realize that they are doing it. This is a symptom of trickle down management styles – sometimes trickling down from way up top, and other times from supervisors. Often this stems from the fear of losing a client; the fear of a supervisor losing their job; the fear of an account person having an uncomfortable conversation with a client about unrealistic goals. Breaking the cycle of fear and being honest with clients can go a long way, particularly when the relationship commences with that attitude. If being honest with a client means that you lose the client – you should be happy to lose that client.

3) Mo Money, Mo Problems
Margins begin eroding the moment a new client engages an agency. Most agencies are always on the hunt for new work, and often pull their best and brightest minds into the process. It’s usually not the day-to-day teams, but some of the brain-trust that you would rather have supporting your brand’s account team, rather than impressing a new potential client. Your day-to-day team isn’t immune from the process either. Sometimes account managers or planners get shifted to new accounts based on specific experience. Other times staff is shifted because other clients are simply more profitable. Unless you’re one of the top few clients of an agency, you would have experienced this several times by now (which means most clients). This doesn’t necessarily negatively affect account performance, but needs to be meticulous managed and monitored by the internal brand team. Remember, the agency team working on your account will make or break performance.

4) Fostering Business Savvy
This is not an agency-only issue. Both agency and client teams can benefit from teammates that are a little more business savvy. We need to ensure that we are fostering a culture that stops to take the blinders off, and takes breathers between tactical executions to think about how our efforts truly affect our businesses, looks at the bigger picture from time to time and cares about how to make a business grow, not just how to complete a list of tasks. Yes – focus on creating efficiencies and increasing output, but the best work comes when people understand the real world dynamics that impact the spreadsheets that they work with day-in and day-out.

5) Embracing the Iteration Generation
We are surrounded by data. Each year the applications of marketing data become more sophisticated – some more actionable than others. Data should not be thrown around for data-sake. We have the ability to iterate based on actionable key learnings. Every brand should have a measurement plan that includes cycles of iteration that result from actionable analytics. Agencies need to staff key individuals to lead the charge, but also foster an environment where all team members understand how to craft the right questions that data can seek answers to. Clients also need to collaborate in this process.

6) Great Creative is a Rare Commodity
Can you name a handful of recent memorable online ad campaigns? With so much creative talent in the world, you’d think that we would have re-emerged in a creative renaissance by now. Sure – there are often limitations from a budget perspective, and digital media efficiency and the costs of doing something out-of-the-proverbial-box can be staggering. The industry gets that and is slowly but surely changing to adopt new and more impactful creative formats. We’ll get there. But the lack of proactive creative innovation is rampant.

7) Social Media and Engagement Agencies Are Darlings
The new kids on the block are always the coolest. I remember the early years of digital when my team would accompany the traditional media or agency team to a client meeting, and it was a love fest. The client loved the digital guys (and gals) – everything about us – our ideas, our passion, our energy, even the way we dressed. It was new and exciting, it represented change and hope and the future. Well, the social media agencies are today’s darlings. But remember – social media is not a replacement of traditional media, or digital media for that matter. It is an additive component of a well rounded consumer engagement and communications plan. Understand the benefits of social actions – sharing and discoverability – this is huge for brands. Social media falls under the larger bucket of consumer engagement. It’s important…but right now it’s also the shiny object in the room. Clients need to be reigned in a little and strategies need to be practical in addition to aspirational. Traditional agencies (and even many digital agencies) took too long to embrace social media and an entire industry to emerged. These agencies are already being acquired and merged into bigger shops. Today, agencies need to be able to speak to their ability to engage consumers, period.

8 ) Mobile Is Here, Really it Is
We’ve been joking for year about how “next year will be the year of mobile, again”. Well guess what folks, it snuck up and bit many of you in the ass while you weren’t looking. Mobile is such a powerful platform because it is a digital channel in a real world environment. The volume of mobile shopping, reviews, scanning and comparative shopping  in retail locations this past holiday season blew retailers minds, and most did not take advantage of the behavior. I can’t wait until holiday 2011. Mobile strategy will play a significantly bigger role. Mobile payments are coming soon. Check out the Starbucks mobile card app, now rolling out nationally after tests in Seattle and New York. This is just the tip of the iceberg of the future.

9) Money Matters
There was talk for sometime about how agencies need to change their compensation models to some type of pay for performance structure. Agencies acted like politicians and when facing the press claimed that they would love such an opportunity, while in actuality they loathed being marginalized and expected to be paid based on so many factors out of their control. Why isn’t pay for performance the norm? Because it is simply unrealistic to ask an entity with intellectual property (in theory) to be paid this way. Agencies are running businesses. Like any industry, some are better than others. Clients must perform a more rigorous due diligence when selecting agency partners to ensure that they are working with the right ones – and then pay them for the work that they do. Good agencies that help further clients’ businesses deserve the big bucks for their work. Short changing agencies only leads to lackluster work that lack passion and

10) Thought Leadership and Trend Spotting
Clients hire agencies for multiple reasons, but one vital component of being  a valuable business partner is providing an ear to the ground and an eye towards the future. Agencies must provide thought leadership, spot trends and memes as they are happening, separate the hype from reality, and identify the true opportunities amidst a world of fragmented distraction. Specialized agencies must be experts at what they do, they must live, eat , breathe and sleep their specialty and help their clients stay one step ahead of their competition and consumer behavioral shifts. But they must also have a general understanding of the interrelationship between what they do and the overall marketing communication strategy employed by their clients, and even more importantly – how what they do fits into the evolving life of the consumer. While execs often have this understand – you can be sure that the day-to-day team working on your business does not. A narrow focus is great tactically. An amalgam of specialists has become the solution to the “broken agency model”. But there is usually a missing component. But client must ensure that there is a cohesive overarching strategy and dissemination of learnings and and thought leadership across all the specialists in their roster into a bigger picture. Otherwise you are left looking through multiple narrow lenses and missing the forest for the trees.

When looking up the definition of generalist vs specialist, relating to animal species, the crux of the definition comes down to survival and thriving of the species, not benefit to the environment.

A generalist [species] is able to thrive in a wide variety of environmental conditions and can make use of a variety of different resources. A specialist [species] can only thrive in a narrow range of environmental conditions. Most [organisms] do not all fit neatly into either group, however. Some [species] are highly specialized, others less so, while some can tolerate many different environments. In other words, there is a continuum from highly specialized to broadly generalist.

Agencies will always be a vital part of the equation – but clients must take ownership of their businesses. That’s part of the new model.

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Comments
  1. Kimberly says:

    What a welcomed sight in my inbox upon returning from vacation! It seems as though we are always seeking new seminars and other venues for rejuvination and insight on how to keep up with the trendy. I think sharing this with a few key colleagues over a cup of coffee should be enough to generate some great discussion this week.

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