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Why Agencies Are Going The Way Of The Dodo

I’ve been meaning to write about the broken agency model for a long time, and Jeremiah Owyang’s post about how social media agencies are increasingly turning to advertising gave me the excuse I needed. Caveat: Owyang is an analyst; I am a former two-time agency owner and get my information from my gut. Or pull it out of the gestalt.

Here are my seven points about the future of agencies:

1. The shift to digital blew the doors off traditional advertising agencies, who can’t get money for creative anymore and can’t get the same commissions they used to, because most media buyers pay for performance-based ads, and not "branding." It’s all about CPMs. Those agencies have been struggling with how to buy media digitally.

2. Their slowness to recognize the shift gave rise to the digital agencies who know how to place online ads. The only problem here is that online ads really don’t get good results, and when social media arrived, advertising fell into disfavor as a way to get attention.

3. Now social media, too, has become commoditized, as brands broadcast messages all day long on Facebook and Twitter, and no one pays attention. PR has also shifted, since all the journalists can go straight to the source and no longer need the PR person.

4. Paid, owned, and earned media have converged. Brands create their own content, and advertise less. The new hero of the agency is the trafficker, who knows how to get content from one place to another, and the brand manager, who has to keep track of the multiple brand assets and agencies involved in any marketing campaign and try to implement them consistently.

5. It now takes a dashboard to be a marketing person at a major brand. That dashboard keeps track of brand assets, agencies, and hopefully, objectives. The agencies are relegated to the "arms and legs" role, not the conceptual role. And that will get worse and worse.

6. You can’t be an agency anymore and just collect your commission or fee. Almost everything you used to do has been automated and commoditized, just like in other industries. When you try to act in the old ways, you look silly, as PR people do when they send out blanket pitch letters or press releases.

7. You now have to a a partner with the entity formerly known as the client, and take the same risks s/he does: pay for performance. You and your client/partner are exploring new ground together: what combination of paid, earned, and owned media will fulfill the marketing and sales objectives of the brand? It’s a guessing game. Don’t let any guru tell you they know.

The consumer doesn’t know either. Like you, he’s glomming on to the next shiny object, and that will get his attention for a while, until he gets browsing burnout, or social media burnout, or direct marketing burnout.

Back to the drawing board. Make a product everyone loves. As an agency, help your client/partner design love into the product or service. Be less cynical about the value of a brand. Be less certain that you know what you are doing, even if you have been doing it for 25 years. In fact, if you have been doing it that long, you should be even less certain.

[Image: Flickr user BioDivLibrary]