Year after year there are articles written about the need for agencies to change, evolve, or whatever word you want to use to explain the desire to be different than they are now.
Well, I think agencies need to reorganise around the needs of the client and less around their desires for specialisation and price amplification
Agencies love to specialise — that’s how they position themselves. There are digital agencies, outdoor agencies, search agencies, agencies that focus on video, social media, and more. Even within the big holding company agencies there are divisions focused on video, audio, programmatic, etc.
This model allows them to attempt to charge more for the specialised experts who “know all the tips and tricks” about each channel and can provide the highest level of service for their clients. What’s more, agencies then need account managers and service reps to manage all those resources, and even a reporting team to manage the measurement for these campaigns.
Bloated structure
This is a very bloated structure to manage a customer’s market spend, and probably necessary for less than 5% of the total advertiser landscape. Most companies cannot afford to pay for this bloat, and that leaves agencies trying to figure out what they can do to service the rest of the world.
I have led agencies, consultancies and in-house teams, and I can tell you that the evolution of the digital media industry is such that a small team who knows the ins and outs and objectives of a client can accomplish a heck of a lot with a small team of digital-focused marketers who are generalists.
Anyone can be a generalist with a much deeper level of expertise in today’s world because of the platforms we have access to. Programmatic, self-service platforms are certainly complicated, but if you spend some time and dive in, you can figure them out. These platforms can all be integrated easily with simple UIs focused on enabling no-code or low-code connections.
Practical AI
A small group, even one to two people, can develop a strong digital media campaign in a short time. This gets even easier with the advent of practical AI, which is being built into all the platforms we use and which can quickly implement, manage, and report on any scale campaign.
Also, specialisation creates bureaucracy. When dollars need to flow from one channel to another, or when strategic changes need to be made, specialisation requires committee consensus.
A group of experienced, veteran generalists can be nimbler. They can make changes, test new ideas, and either scale on the good ones or dial back the ones that didn’t work. Of course, the argument against this model is that if you establish smaller, nimble teams around a client and that client leaves, you potentially risk having to cut those teams.
Inherent risks
There are inherent risks in this staffing model, but good agencies can sell based on their performance and they can take on new clients, potentially rotating teams around to enable longer lifespans for teams and a stronger perception of them as experts in a strategy rather than a channel.
I would think that creates a better margin, and a stronger attraction for new business.
The agency world is cyclical. Agencies staff up to meet the demands of new channels and strategies, and they dial things back when the belts need tightening. This is but one of those times, and I’m suggesting a potential strategy that works for the long term.
This story was first published by MediaPost.com and is republished with the author’s permission.
Cory Treffiletti is chief marketing officer at generative AI-powered product placement platform, Rembrand. He was previously SVP at FIS. He has been a thought leader, executive and business driver in the digital media landscape since 1994. In addition to authoring a weekly column on digital media, advertising and marketing since 2000 for MediaPost‘s Online Spin, Treffiletti has been a successful executive, media expert and/or founding team member for a number of companies, and published a book, Internet Ad Pioneers, in 2012.
