Brave New Agency.

by Doug Weaver on September 18, 2012 at 10:08PM

Last week in this space I commented on the look of publisher’s sales force going forward (“Media Seller 3.0”).  I hadn’t intended to bookend that with a discussion of the future media agency, but Brian Morrissey’s Digiday interview with Forrester Analyst Joanna O’Connell (“Agencies in the Age of Machines”) got me going.  O’Connell has some pretty crisp analysis and evocative comments; notably that agency trading desks won’t last more than another couple of years and that clients (rightly) don’t seem to be too worked up about all this programmatic stuff…at least not yet.

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Accepting the fact that automated, programmatic buying will be a permanent part of the landscape, guessing the new look of Madison Avenue is an irresistible parlor game.  But since I haven’t worked in an agency for more than 30 years, I’m probably not qualified to predict what the future media agency model will look like, or to prescribe specific solutions.   So I’ll just offer these four  questions for holding companies and agencies to consider as they plot their evolution over the next 5 years.

  1. Joanna O’Connell and I have both predicted a bifurcated business where programmatic buying and the right brain work of marketing and business problem solving split apart.  Being public companies, how will the agency holding companies be able to defend the high cost of the “Marketecture” business to shareholders when the machine driven media buying  side will be so relatively profitable?
  2. Accepting that there will be fewer and fewer staffers at the agency doing the “grunt work” of RFPs and spreadsheets:  Do you really see more than a tiny handful of those people being retrained and redirected into right-brain Marketecture jobs?  Any?  Is the new agency workforce going to be made up of fundamentally different kind of people and will it be substantially smaller in size?
  3. A reliable growth strategy for holding companies has always been to launch or acquire new agencies and service brands where new billings could reside and where issues of competitive client conflict could be overcome.  But the brave new world is going to be about bringing things together, synthesizing, building bridges.  Are you ready to start retiring many of your specialty nameplates and rely on a handful of “cross-trainer” agency brands?
  4. The biggest challenge for agencies isn’t the shift from analog to digital, but rather moving from certainty to uncertainty.  The agency has been a power player in an age marked by fixed marketplaces, swim lanes, hard numbers.  Now and forever it’s going to be about navigating and thriving amidst uncertainty and chaos.  How will you manage your corporate cultures so that change becomes fuel for growth, rather than an obstacle to be overcome?  And what kind of leaders will you hire to light the path for that journey?

Nobody has the answers, but when you’re framing a mystery sometimes asking the right questions is even more important.  Maybe these are the right ones…perhaps not.  If you’ve got better ones, share them below.

Reader Comments (2)

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  1. Mark McLaughlin September 19, 2012 at 6:26 pm

    A couple of executives from the client side recently said, more or less, the same thing to me. To paraphrase their insight, it sounds like this… “My agency keeps selling me on the idea that a machine can buy digital media better and cheaper, they will eventually win me over and when that happens, I will go out and pick my own machines. If the machine is better what do I need my agency for?”

    Combine this insight with an industry practice that might be unfair but is nonetheless very real. Major marketers will accept the idea that machine based networks/exchanges/DSPs make their money through a non-transparent up-charge on the media impressions they buy. But, these same marketers will not accept non-transparent buying practices from their media agency. Agencies can beat their head against this oak tree all they want but I don’t think will change.

    Agencies that are pushing machine based solutions are upsetting their clients because of the non-transparency issue while creating momentum for a buying tactic that could easily make the agency irrelevant.

    Bottom line, clients want their agency’s to offer premium strategic services that align media investments with business objectives. They will pay a premium for those services if the agency will do a better job of off loading the labor intensive buying logistics to outside companies that can handle executional details more efficiently.

    Forward looking media agencies will get smaller through outsourcing while improving their margins by concentrating on the premium strategic services that require human talent.

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