The Agency’s Secret Weapon: Sellers

by Doug Weaver on February 20, 2013 at 12:49PM

Agency secret weaponI read with great interest Giselle Abrovovich’s recent Digiday article on “5 Ways Brands are Cutting Out Agencies.”     It seems that whether they’re flirting with digital start-ups, generating social content or running their own programmatic trading machinery, clients just can’t wait to elbow their agencies out of the way.  Or so it would seem.  To me the whole issue is a little more complicated, interesting and full of opportunity.

Let’s start with the premises that are prompting marketers to “do it themselves” or work directly with publisher and technology suppliers.  There’s likely an assumption — often correct — that the agency is still a service business that’s going to bill the client by the middle-man-hour for new practices and capabilities where they may not have any deep expertise.  Essentially, that the agency will be “learning on the client’s dime” and not adding enough value to justify the extra steps and fees.

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The pendulum will swing the other way, of course.  Clients will at some point realize that their own bench strength and capabilities can’t keep up with these one-on-one vendor relationships.  This could result in the emergence of “intellectual middleware” companies — specialized service providers (mini-agencies perhaps) who can help the marketer sort and execute social publishing, dynamic content generation, etc.  The bigger agencies and holding companies could then do what they’ve traditionally done:  either (a) set up an in-house mascot who’ll carefully study these practices and sound good in meetings, (b) acquire these service companies once they get fat enough or (c) both a and b.  Or they can try something I suggested in this space back in 2007:  become an “intellectual router.”
 For most of the first century of its existence, the agency biz has been about locking down the smartest people and generating all the best ideas yourself.  No more. There are just too many directions and too much complexity for any shop to become more than an average generalist.I think the central value embraced by the very best agencies will be their ability and willingness to channel the best thinking of media companies and publishers on behalf of their clients.  It’s not about being a powerful mainframe any more; it’s about being a router.  This may seem to fit nicely into all the happy talk of the standard agency brochure, but realizing this role will demand a big shift in behavior, culture and orientation.  Rather than bragging about all the smart people they control, the true Intellectual Router will brag about the number of great relationships it can activate.

In the near term, pay attention to all those sellers who are banging down your doors with crazy ideas that don’t neatly fit your buying models.  Teach your planners and supervisors to find ways to quickly and effectively bring non-standard concepts to the attention of clients.  Forget the long-winded POVs and “innovation summits.”  Instead start rewarding the right-brain thinkers and connectors in your organizations. They’re more than a bridge to your future:  they’re your bulwark against commoditization of your core value.

Reader Comments (7)

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  1. Rich Nadworny February 20, 2013 at 2:39 pm

    It’s a great idea Doug. But how would the “router” get compensated? As someone who’s asked to “route” that’s what I find the biggest issue to be. I think some clients would be shocked to hear that something like that is billable.

  2. Jacki Kelley February 20, 2013 at 2:49 pm

    Easy for agencies to be compensated if they are paid based on their impact on business performance v. billable hours or FTE’s. Here’s to the best ideas always winning based on their business impact.

  3. Doug Weaver February 20, 2013 at 2:51 pm

    I agree with you Rich… Compensation is a thorny issue. But the current model of time for dollars is already going away. And it’s why so many agencies are never getting in the ring at all relative to new and emerging services. I’m afraid if they don’t bring big creativity and vision to the compensation issue, then their world continues to get smaller and less interesting with each passing year.

  4. Jerry Shereshewsky February 20, 2013 at 3:54 pm

    In creating new revenue opportunities agencies need to look both at the upside as well as their current relationships. On the principle that it is better to give than to receive, you should always err on the side of give first, bill later. If the ‘give’ has real value then the money will almost always follow. If the client is all ‘take’ and no ‘give’ then you might rethink the whole relationship.

  5. Mark McLaughlin February 20, 2013 at 7:05 pm

    The agency business was built on an unusual business model where you got a very nice mark-up on your commodity services but you gave away your game-changing strategic services for free.

    It was always a bit odd but it worked when agencies marked up creative production plus 25% and took and a 15% commission for media buying. Agencies made a lot of profit on their commodity services which they only got to execute if their big ideas were home runs.

    It’s hard to buy great strategy, insights and big ideas through the procurement process and it is even harder to pay for that kind of service when the providers can’t break the habit of giving it away for free.

    Agencies and clients have both participated in a race to the bottom for compensation when it comes to the easily commoditized services. We protect an illusion that media buying is a big deal but the machines are determined to prove us wrong. So, now we are trying to earn a premium because our machine is better than their machine. Good luck with that.

    There has been no counter-balance of a race to the top in terms of compensation for premium strategic services and so agencies can’t afford to provide them anymore. The introduction of the procurement executive into the mix has pretty much guaranteed that there is no easy way to climb out of this hole.

    The gap is filled by media companies who can invest in top research, strategy, creative and media talent in order to get upstream with marketers. They are getting good at this and their business strategy is smart. But, it is a hollow solution compared to having David Ogilvy or Tom Messner or Leo Burnett thinking about how to persuade your consumers to do what you want them to do.

  6. Norm Page February 20, 2013 at 8:04 pm

    Seems like Jacki Kelley is a step ahead on the compensation issue @ IPG Mediabrands. It would be nice to hear how that model is being embraced by clients and what lessons learned can be shared along the way. You’d think a client would love to hear an agency describe their fee model as tied to something measurable and accountable like, um, customers, revenue, profit, and stock price.

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