Specialization Was a Mistake: How Agencies Can Restructure for the Future
Three Types of Agencies Will Lead the Way in the Digital World
Marketing and advertising agencies have embraced specialization to such a degree that how we work is slow, expensive, repetitive and shows disregard for consumers and the modern world.
We talk a lot about media fragmentation in the industry, and we use the complexity of the marketplace to justify why so many agencies exist and why specialist talent is vital, and to safeguard profits. However, this is a smoke screen. In an age when everything is becoming digital, we have made the mistake of arranging ourselves into vertical silos that make decreasing sense. Why structure for print, press, retail, TV, digital, mobile or social when we're watching TV on iPads, listening to the radio on our phones, reading the newspaper on desktops and buying everything from everywhere?
We went wrong around the year 2000. Until that time, advertising and marketing were quite simple. Even with media agencies spun off in the 1970s and the advent of planning in the 1960s, we had a structure that made total sense. We had PR agencies, media agencies, retail agencies and creative agencies. Around this time, a large client in one market with a couple of brands might have employed a handful of agencies, each with clearly defined roles.
When interactive agencies came along around the turn of the millennium, we did what we'd always done and created a new vertical. The people who understood programming and computers and could take our physical assets -- print ads, brochures and CD-ROMs -- and turn them into code were placed in their own unit. So far, so good. These new processes seemed so small, so specific and so complex that nobody wanted to bring these production capabilities into their existing agencies.
A few years later, our muscle memory mindlessly replicated the same additive process with any new form of marketing that came along—from SEO to social media, from content marketing to mobile advertising—and created a siloed new vertical to act alone. Now, it's not uncommon for large global companies to have several hundred digital agencies. While the cost inefficiencies are huge and the management impossible, the biggest loss of all is the quality of ideas. How can any campaign span all these agencies with any hope of meaning or integrity? What happens when something like social advertising falls at the intersection of six types of agencies that can all claim expertise?Ad unit
We made a huge mistake by aligning ourselves around verticals, when we should have added these new consumption contexts as horizontals. Mobile should have become a specific place for media, advertising and retail agencies to help shape and embellish holistic campaigns. Social should have been glued to everything, not designated a specialty. And no agency should ever have been labeled "digital." Digital is like electricity; it's not a thing -- it's everything.
For me, the solution lies in developing an entirely new approach. Our prime problem in the marketing world as we move toward real-time marketing and an abundance of live data streams is that our focus shifts from the next few months to the next few minutes. Urgent issues naturally tend to trump nonurgent -- but often more important -- decisions, and it's easy to lose focus on what matters.
So how do we ensure that the urgent is managed as well as the long-term? All agencies—from media to retail, from creative to digital and everything in between -- should be merged and arranged based on timescale.Under this model, we would split into three types of agencies:
Visionary agencies: These agencies would handle long-term investments to build business for clients with a focal point of two years out and beyond. They would be a group of innovators, technologists, futurists and business strategists. Their scope would be to improve products and services based on branding and positioning, and on understanding the future of marketing.
Brand agencies: These agencies would focus on medium-term storytelling to build brands over three months to two years. This would be the closest concept to what we consider "advertising" today -- a mixture of talent across all current agencies, to include PR, some retail and experts from all new technologies. Their job would be to build brands and classic upper-funnel activity. These agencies would employ artists and creative types who would design and shape the brand, and then produce ads and marketing to tell that story and build brand equity.
Performance agencies: These agencies would develop programs for short-term sales and other immediate metrics, with a focus of less than three months out. Their scope would be to understand how to tweak marketing and communication tactics, how to use automation, clever SEO, retail out-of-home advertising, flow advertising, creative optimization, real-time marketing, short-term PR, promotions at retail and many other tools to perfect the conversion of equity into sales -- in other words, largely lower-funnel activity.
This isn't the perfect solution, but it's purpose-built for the digital world. This type of model would ensure that our focus remains on people and not our own P&L. It's time to work around people, not technology.