$43.6B U.S. agency revenue
It used to be marketers sought advertising ideas. Now they just want ideas.
As marketing moves toward products and services that forge connections with consumers, such as the Nike FuelBand, advertisers are increasingly sending out broad-scale RFPs that ask for expertise well beyond marketing. Consider Audi, which sent out a call for a "digital innovation agency," or T-Mobile, which is searching for a "customer-service-transformation" partner.
Agency executives say the first half of 2014 has seen a flurry of these innovation requests, mainly sent to digital agencies. "People are so inundated with ads that brands need to come up with different ways to engage with a consumer and offer a utility," said Jeff Brecker, managing director at Interpublic's R/GA, Chicago.
In the past, those assignments may have gone to new-product or design shops like Ideo and Frog. Today, marketers are approaching digital agencies for both product ideas and ways to bring them to market.
Marketers are "looking for not only an agency that can come up with those innovation ideas, but can also frame them in a business and consumer context and market them," said one digital-agency chief creative officer. "There are lots of product-design agencies that are great at the innovation part of it, but don't know how to bring it to market, and marketers want to see that."
Like other pitches, though, the concern for agencies is monetary. The fees associated with an innovation RFP can be nominal because there's no guarantee anything will ever reach market. And for companies that house innovation within marketing, some do not have sufficient funding to develop the product or service on a broad scale, which can result in only minimal fees for agencies.
But as brands' marketing remit widens to include new services and products, industry executives are seeing more marketers shift funding toward innovation, and therefore boost agencies' earning potential. "We're seeing that more marketing spend is being tied to innovation," said Jonah Disend, founder of Redscout, a product- and brand-development agency.
Some observers caution, however, that innovation needs a solid strategy behind it, no matter what kind of agency is in charge. "A lot of people are saying, 'We want our FuelBand,' whether it makes any sense for their company or not," said Mr. Disend. "People just want that new, shiny thing."