Why agencies struggle with an innovation model

Working with start-ups has been the biggest buzzword of the business world, with many MNCs looking to disrupt their models with a start-up culture.

This throws up many questions for the marketing and agency landscape. Can their businesses work with a start-up culture? How should marketers get involved? Do start-ups even need ad land and are they beating agencies to the best talent?

Marketing spoke to founding partner of start-up accelerator Rockstart and former chief technology officer of OgilvyOne Asia Pacific Chi Tran on where ad land sits in the newfound start-up economy.

Can agencies really innovate?

It depends on how you define innovation. Agencies have an amazing talent pool with in-depth understanding of how to unlock the full value of consumers, however, they are not true innovators. They are able to drive innovative experiences, develop amazing brand innovation, but essentially these are short-term campaigns that don’t have to be supported long-term.

In my view, the true innovators are the start-ups that have created disruptive experiences and platforms that have changed and driven consumer behaviour for the better. When was the last Dropbox, Spotify or Airbnb solution that an agency created?

What’s the challenge holding them back?

I do believe that agencies have the potential and opportunity to create the next Spotify or Airbnb because they create brand value, understand the consumer experience, creative, strategy and deliver digital solutions.

When I first arrived in Singapore, an agency with a digital innovation lab came up with a concept similar to Dropbox, however, they didn’t know how to monetise it or how to get traction in financing the concept.

You have amazing world-class talent, but when the business is not structured to support these digital innovations or are not connected to the right eco-system, ideas remain a dream and the opportunity is lost.

In addition, an agency’s business model is to wait for a client brief, deliver on it, which in turn restricts the opportunities these talents can work on.

Finally, with all the funding and eco-system available to entrepreneurs and start-ups, attracting the best talent is only going to become a greater challenge for agencies.

Are clients actually doing a better job at it and why?

It’s not about whether agencies are doing a better job than clients, it’s about whether they understand that they need to get involved because their clients are doing it and they are doing it now.

You have initiatives that I like to call innovation marketing, where clients create an accelerator model focused on their core vertical so that it drives their eco-system, cross-pollinates enterprise skill sets with those of the start-up community and be innovative through actions rather than advertising.

PepsiCo10 has been doing it for several years, and now within this region, you have initiatives such as DBS Accelerator, AIA Accelerator and Unilever Foundry.

Everybody talks about innovation, but when do you consider a business to truly be embracing it – either from the client or agency side?

When’s the last time a large enterprise tells their employees it’s OK to fail? I believe that when they have a great eco-system and are structured to foster entrepreneurs and to reward them accordingly, they have the potential to be truly innovative.

There is one large multinational insurance company that has created a separated structure where the entrepreneurs within the innovation division have a potential upside on the innovations that are created. Now that to me is how you get the best opportunity to create the right eco-system to truly innovate.

Does innovation belong to the marketing industry?

To be successful in the industry, people have to start with understanding the consumer and how to reach them. I believe innovation absolutely should be a part of the industry because marketers have to find new ways to reach out to consumers.

What do start-ups have to gain from the marketing profession?

There are benefits both ways actually. Start-ups provide expertise and a perspective on building a business and product with lean marketing or growth hacking techniques that typical marketing professionals could learn from. Marketing professionals have expertise in brand, consumer insights and market access that start-ups could benefit greatly from. It is a cross-pollination of skills and collaboration that would be beneficial for both groups.

Which are the best examples of companies (either brands or agencies) that have nailed a strong innovation model and why?

AIA has launched an accelerator programme that focuses on health tech. They’re doing the right thing in creating the eco-system that benefits their business and drives and fosters innovation in the vertical that has a direct impact on their business.

Describe the digital start-up scene in Asia at present?

The start-up scene in Asia is growing at a tremendous rate and will continue to grow as the eco-system matures.

Governments are providing financial incentives directly for entrepreneurs in addition to supporting the eco-system such as support to investors, co-working spaces, visas, events, etc.

There are new venture capital funds that have been established to focus their investments, while private investors are diversifying from their traditional portfolios to the digital space.

Accelerators are being launched, either through brands such as AIA and DBS, in addition to global accelerators such as ours at Rockstart. We believe there is tremendous talent in Asia and that we will see ideas flowing from Asia to the rest of the world instead of the other way around.

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