Can you spot the kind of agency you are?

It has been a summer spent visiting ad agencies. Since May, I have invested my time getting reacquainted with the agency marketplace.  If I had to share these learnings, it would be that almost no one is feeling comfortable in their current skin.

Why? Here are a few reasons:

-The market is experiencing a complete overhaul (which will bring innovation, with a little pain along the way).

-Talent has long left the building at full services shops causing them to reshape and go into survival mode.

-Agency search consultants are running pitches with eight to 10 agencies ranging in size from a 20 to a 250+ people causing huge disparity in pitching capabilities and positioning clarity.

-The work we need to do has changed (no one knows where to put that leftover millions in banner money spend).

-There seems to be a new agency popping up daily, cluttering the marketplace and creating more noise around the death of AOR trend (which i don’t fully buy, but i do believe in project work).

This has lead to fear. It’s actually palpable when you walk into more established agencies which have seen their market and profit lines shift over the past three years.

The traditional, full-service teams and established digital agencies have a look of “I’m looking for another job”. And also “Just tell us what clients want to hear” when you walk in the room. That may seem harsh, but it happens to be the reality.

Meanwhile, the smaller boutique groups are busy right now and being calculated with their time that they won't make time for you unless you rank high on their prospective conversion list.

This makes for an interesting market. And a lot to talk about.

Below I am sharing a few of the things my team observed in five core agency categories and potential thought starters for each on where to go and what’s important to keep top of mind. Please note - I use "agency" as a catchall for any company that provides a service in our industry.

  1. The mid-sized full-service agencies

Sometimes it feels like you can’t get a break. Even if you are 100 people, the flaws of the 5,000 person agency may fall squarely on your shoulders. All the market trends have hit you the hardest and you have to work twice as hard to prove why you are different. Clients look at you in a state of change and protect mode, which makes sense. Be honest about this. Play up your greatest strengths.

At your core, you offer the ability to be integrated and most importantly offer communications and media planning during the upfront. It’s more important than ever to have this seamlessly connected to the creative platform. With quick decision-making leadership, you can showcase a collaborative integrated model that functions through smaller teams within your organisation.

If you are on the larger side of this category — you have every opportunity to recreate parts of how you work, and I mean really blow it up. With all the teams under one roof and senior staff that most likely will only start a new agency if they leave you, why not empower them with a financial model that works for all parties? Take one client along for the ride and see how it goes.

2.The smaller full-service agency groups

A good bulk of agencies are lead by ex-full service agency veterans. Many of you are big idea shops who have got it all going for you in terms of satisfying a large brand marketer. You’ve done some of the best work in the industry, sat through a few years in a big spot at a top agency( to fund your own), and learned how to pitch from some of the best.

In today’s market, you will win accounts. So it’s all in your hands to be smart about growth and management. Lead positioning with your expertise, but be sure to show that you won’t slip on the perceived inherent weaknesses associated with your low overhead model.

Some examples include:

-Clients know you are in growth mode: How will you stay dedicated to their needs?

-Client service and senior project management is considered overhead. You most likely don’t have a ton of this in-house: What is the plan?

-Everyone always needs coverage. If you have a small team of experts, what is your coverage strategy?

3.The ex-digital production agencies

“Ex” because these are gone and so are those budgets. It was a great run. Those remaining in this space is still trying to cash out on banners and keep saying they will now go “direct to client” because their revenue source has dried up.

That direct to client part is a long discussion. For those stuck in transition mode, it is important to be thoughtful in how you say what you do and pick your new direction. Based on the meetings we had, here is where we saw the transition shake out:

Content agency: If you did video production before, a content agency could be your game now. Staffing with DP’s and low ego allows in-house creative teams to have you snap on to their existing content projects. If you represent directors, be thoughtful about who you tap as your contact at a brand as marketers may not understand this model — they still look to their lead creative agencies to make that hire.

Creative technology agency: If this is your language- AI,VR, AR, Cinder, openFrameworks,WebGL, you fit here. Your work may take place at an event, in a retail environment, on a media platform — but it finds creative uses of technology for a marketing purpose. Spend here is on the rise, and direct relationships as well — but for particular briefs that come from clients who are familiar with working with specialty agencies. Expect longer lead times for projects that are worth their while. Stay nimble keeping your top talent in house while bringing production staff in when you close projects.

Activation agency: Have you moved from video production to social content, and your form of production is more on the event side? You fit here — see #4.

(Note: You can also shutter your current brand if you are going direct to client as a new entity. It could be helpful on several fronts including how you structure this new business model with your partners.)

4.The new crop of ‘activation agencies’

When your sweet spot is pulling off everything for a live event — from strategy to the creative execution(s) to casting the influencers and brand ambassadors to capturing content to dealing with the permits & cleaning up at the end — this is you. You also tap the creative technology groups referenced above.

The word “experiential” has created confusion in the marketplace because in the age of brand experience, it that could mean any form of tactic. One camp thinks about it as creative technology while another camp sees it as event marketing. You bring many forms of capabilities together that are silos that should be no more. There is trust to go direct from a marketer if you continue to prove the synthesis of creative ideas (from within or by tapping partners) and execution that is hassle-free.

Activation agencies who plug in nicely with larger AOR relationships or in-house teams can see big business in the coming years. Be cognizant of the need for strong client services and a showcase an understanding of data collection. As this will be cluttered quickly, be smart in your positioning, calling out that uniqueness about your company.

”Spending on brand activation marketing in the US rose 5.5% in 2015 to more than US$560 billion, accounting for almost 60% of advertisers’ budgets,” said  an  ANA Report 2016 .

  1. The soul-searching digital creative agencies

A long time ago the digital creative agency as we knew it morphed — you went enterprise or social. Those who stayed in the middle were production companies building digital experiences online that have slowly consolidated to a small handful. People who grew up working with the web were just ready to explore other things. Teams have a desire to make something with utility and longevity.

I found these groups were just lost in explaining what they did with work to back it up. Some were making social digital campaigns, others for startups, others were making a few game apps for brands. But they all wanted to be called product and service agencies in their pitch. When questioned, most said — “Well, that’s just what a website is these days — it has to be a useful product.”

Or, “It’s the direction we are going in, we just have to take advertising work to pay the bills.”

Personally, I believe in true product companies that build platforms and business models from beginning to distribution.

For these transitional digital teams, it seems like a core struggle is in finding the right revenue model to satisfy their team that wants to be experimental and I suspect — build products. But if you were previously ad-focused, that is not necessarily in your nature. Here are some trends we saw in how these groups repositioned:

Option 1: Digital experience agency

Marketing related platforms that take shape as things that are connected to the internet- websites, apps, creative digital consulting to campaigns. Not hardcore digital installations. Yes, these can be "product-like" but they are not the sole revenue generator and are created to promote or sell the core business.

Option 2: Digital product agency

Non-marketing related platforms, applications, and services. Yes, non-marketing. These are products with revenue models tied to the technology. This is extremely challenging and lucrative only for a few with scale. The process is best with an in-house team because of the iteration and connection to the business strategy and marketing/distribution teams that is crucial.

Option 3: A hybrid of both

Where I saw many “ex-digital agencies” trying to fit. Take caution around trying to do both and if you do, have great financial advisors. There are two different sides to the businesses — one that supports service revenue versus one that supports product revenue. You also may have staff who have might be on the creative advertising side have not endured the rigor of understanding how to create a product and really take it to market.

The marketplace feels bumpy ahead for some and smooth sailing for others. But in reality, even if you are a more established agency trying to adapt or a fresh new incorporation with your first office downtown, we’re all facing the similar struggles and striving to stand out in a cluttered market.

While you search for your place in the right category, don’t forget to connect it to your story — Who you are; Why you do what you do, and that uniqueness that only you offer.

Because there always is one, even if you have to dig deep. The clients that knock on your door tomorrow expect incredibly smart thinking that will optimise their budget with your savvy approaches to getting things done and shaking things up.

Make them look good for selecting to work with you.

The author is Lindsey Slaby, partner and brand consultant at Sunday Dinner.

(Photo courtesy: 123RF)