Why Agencies Should Stop Pretending They're in the Technology Business

Shops Should Select the Best Tech for Clients, Not Pretend to Create Their Own

By Published on .

Judy Shapiro
Judy Shapiro
The practice of "white labeling" (a.k.a. re-skinning), where a reseller slaps its own brand on a technology it didn't create, is standard practice in enterprise tech. But should ad agencies be doing it?

I remember my first agency "white label" moment when I realized that an agency had re-skinned a Twitter influence grading tool and marked it as their own. I could spot it a mile away; the UI was exactly the same including the "crunching" graphics. It was jarring, partly because it bore no resemblance to standard practice in tech, where resellers generally add some value before slapping their own brand on it.

But with marketing changing fast to be tech heavy, white labeling is a dangerous practice for agencies, or any marketing services firms.

Why it hurts agencies
When an agency white labels someone else's technology without adding value of its own, it is done, largely, to show technology depth so it can up-charge for services that, if clients knew better, could be had via low cost tech platforms. One PR executive even chided me once for telling a client that that digital PR distribution can be had for a few hundred bucks because then she can't "charge $5,000 for distribution." I get that agencies are wrestling with how to make money in the no/ low billing of "many to many" marketing. But do agencies really want to make a buck by exploiting a client's ignorance?

But there's an even more troubling danger when agencies play the "tech depth" card via white labeling -- it puts the focus in the wrong place. Agencies have tremendous value as the artists and architects of a new paradigm where the message and the medium are becoming intrinsically bonded. Technology competency is required of course, but architects are valued for their ability to create systems -- not for having manufactured every facet of the system itself.

Once agencies adopt the artist/architect mindset and they don't have to worry about up-charging for technology tools, they can freely educate clients about all great tools out there. Then, if clients want an agency to manage a tool -- it's a win/win. The agency can bill for the time needed to manage the technology and clients know exactly what they are getting. Best of all, now agencies can focus on delivering artistically architected, immersive online experiences to match "Judy Consumer's" increasing control over her connected world.

Finally, just in case these philosophical arguments didn't convince you, then me offer what I think is the final nail in the white label coffin. The pace of technological change will continue to quicken, yet white labeling commits an agency to a specific provider and technology type, constraining the agency's ability to evolve. White labeling might let an agency fake it for a while -- but ultimately clients are not well served.

Why it hurts clients
The true value of an agency should be to lead clients through their marketing evolution. It's always been a challenge for agencies to take the technological lead since there's no "learning curve fee" that agencies can charge to offset the real cost of keeping pace with the evolving technology landscape. Yet, unrealistically, clients expect their agencies to be technological advanced somehow so that all political bases are covered. No wonder agencies turn to white labeling as a response to this impossible dilemma. By re-branding technologies, like social media monitoring, agencies can charge a premium to offset the inevitable reduction in fees clients often demand. Sounds like a plan, right?

Actually no -- and it turns out to be a lose/lose scenario. Clients lose because without knowing what technological competencies an agency really has, it has no way of knowing whether an agency is exploring a diversity of options that today's marketing requires. Agencies also lose because they must spend a lot of time/ money to appear to be technological sophisticated so clients don't penalize them for not being experts across the board. Unchecked, white labeling runs the risk of causing the price compression race to the bottom that tech solutions usually trigger, aggravating the problem immeasurably.

Far better all-around for there to be clarity of competency between client and agencies because then we begin to turn around the agency business model forever into a profitable win-win scenario. In this new model, clients will put a premium around an agency's ability to successfully navigate the "many-to-many" road to monetization rather than expecting agencies to have built the entire road itself. Technologically untethered, agencies can explore alternate visions on how to create the "message plus medium" type of marketing that uses the latest and greatest technology to powerfully serve a diversity of clients.

More than ever, white labeling -- or "black boxing" -- of technology should be relegated to the "old" model where agencies would profit from a client's lack of access/ knowledge. Any good agency will convincingly tell clients that today the road to monetization lies in transparency. Surely, that must be true for agencies too.

Judy Shapiro is chief brand strategist at CloudLinux and has held senior marketing positions at Paltalk, Comodo, Computer Associates, Lucent Technologies, AT&T and Bell Labs. Her blog, Trench Wars, provides insights on how to create business value on the internet.
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